By: John Black
“I’ve been waiting for you, Obi-Wan. We meet again, at last. The circle is now complete.” –Darth Vader, Star Wars
Darth Vader’s reign ended; so too has the ITAR controls on many commercial communication satellites.
Some of us remember when commercial satellite export controls moved from the ITAR to the EAR in 1996. Soon after that came the Loral and Hughes case, which resulted in millions in penalties for transferring technology to the Chinese to help them figure out why a Chinese Long March rocket carrying a US satellite crashed. (The primary violations in that case were related to the transfer of rocket technology, not the transfer of satellite technology.) Then, in 1998, Congress passed the FY 1999 National Defense Authorization Act that transferred export control jurisdiction of commercial satellites from the flexible, exporter-friendly EAR to the rigid, exporter-unfriendly ITAR.
Now, the US Government has decided to change satellite spacecraft controls so that the USML controls only the most sensitive satellites/spacecraft and related items, while shifting the less sensitive items to the CCL. Importantly, the revised USML Category XV uses performance capabilities and functions as the basis for defining which items warrant ITAR export controls-Category XV does not focus on whether the item is designed for military or commercial applications. So, in some cases, the new Category XV will not control certain satellites designed for the military, and it will control satellites designed for commercial applications. It is not important who you designed it for or who is going to use it. The important decisive factors are capabilities and functions.
(Please do not use the words “military” or “commercial” for describing what is and is not in Category XV. That type of loose and inaccurate description of the post-Export Control Reform (ECR) USML is rapidly becoming one of my biggest pet peeves.)
In the May 13, 2014 Federal Register, the departments of Commerce and State published notices shifting a wide range of satellites/spacecraft and related items off the US Munitions List (USML) and on to the Commerce Control List. And, as we have seen in past ECR list shifts, when things shift off the USML, the Commerce Department creates new ECCNs in the Commerce Control List to impose CCL-controls on the shifted items. Past reform list shifted items have gone into 600 series military ECCNs. Most list-shifting satellites, spacecraft and related items go into four new 9X515 space ECCNs. Commerce has also adjusted other ECCNs for various reasons.
The majority of the new changes do not enter into force until November 10, 2014, although I will mention below some instances when certain aspects of the changes have a different effective.
The Waning Influence of Darth Vader: How Does the New Category XV Work?
To understand what happened, we need to look at the new Category XV to identify what has shifted and then at the EAR to see how it controls the shifted items.
“I’m Luke Skywalker. I’m here to rescue you.” Woops! I mean, “I’m John Reg-Whisperer. I am here to rescue (some of) you.”
The new Category XV uses many more detailed descriptions than its predecessor and generally controls fewer items. Most of the items that shift off of Category XV go to 9×515 ECCNs in the CCL. Importantly, some of the USML changes enter into force prior to the regular November 10, 2014 effective date. Integrated circuits formerly controlled by XV(d) and (e) shift to 9A515.d and 9A515.e effective June 27, 2014. The same June 27 effective date applies to 9D515 software and 9E515 technology related to those 9A515.d and .e integrated circuits.
Paragraph XV(a) controls “spacecraft, including satellites and vehicles,” regardless of whether they were designed or developed for research, military or commercial applications. Paragraphs (a)(1) – (a)(13) identify the functions and performance that Category XV uses to control spacecraft.
Paragraph XV(b) now is limited to ground controls systems and simulators specially designed for telemetry, tracking, and control of XV(a) items.
Paragraph XV(c) controls certain GPS-receiving equipment, which will move to Category XII when Category XII is revised.
Paragraph XV(d) no longer controls anything. It formerly controlled radiation-hardened integrated circuits. This change is effective on June 27, 2014. The earlier effective date means that these components will shift to 9A515.d before most of the other Category XV changes.
Paragraphs XV(e)(1) – (21) control specified parts, components, accessories, attachments, equipment or systems. Items not controlled here (or anywhere else in the USML) shift to the 9×515 ECCNs. An interesting aspect of XV(e) is that, in a few places, it says that EAR-controlled spacecraft with certain Category XV content remains EAR controlled-explicitly cancelling out the unwritten, arbitrary so-called ITAR see-through rule. More specifically, XV(e)(17) controls payloads that perform any of the functions in XV(a). Note 2 for XV(e)(17) explains that a spacecraft classified as ECCNs 9A004 of 9A515 keeps that classification even when incorporating a “hosted” payload performing a function in XV(a). (Note 1 to (e)(17) defines “hosted” and other types of payloads.) The, Note 2 to paragraph (e) says paragraph (e) items are subject to EAR controls when they are integrated into an EAR item.
An important aspect of the new XV(e) is that integrated circuits that otherwise would have been controlled by (e) are now 9A515.e, effective June 27, 2104.
Paragraph XV(f) controls technical data and defense services. Paragraph (f) has some non-standard controls on tech data that are worth noting. It clarifies that the scope of defense services may apply, for example, to activities related to EAR controlled spacecraft:
“Defense services include the furnishing of assistance (including training) in the integration of a satellite or spacecraft to a launch vehicle, including both planning and onsite support, regardless of the jurisdiction, ownership, or origin of the satellite or spacecraft, or whether technical data is used. It also includes the furnishing of assistance (including training) in the launch failure analysis of a satellite or spacecraft, regardless of the jurisdiction, ownership, or origin of the satellite of spacecraft, or whether technical data is used.”
Paragraph (f) also has a Note 1 that says that XV(f) does not control technical data related to XV(c) or XV(e) items when such items are integrated into an EAR-controlled satellite. Such data is 9E515. Note 2 says that certain activities and technical data are not subject to the ITAR or EAR: “Activities and technology/technical data directly related to or required for the spaceflight… passenger or participant experience, regardless of whether the passenger or participant experience is for space tourism, scientific or commercial research, commercial manufacturing/production activities, educational, media, or commercial transportation purposes…” This Note 2 appears to exclude from control information related to getting into the spacecraft, lifting weights in the spacecraft gym, using the bathroom and even cooking a steak while onboard, among other things.
Note 3 to paragraph (f) says that EAR99 is the classification for “housekeeping data,” which is “data transmitted to or from a satellite or spacecraft, whether real or simulated, when limited to information about the health, operational status, or function of, or measurements or raw sensor output from, the spacecraft, spacecraft payload(s), or their associated subsystems or components.”
Other ITAR Changes
To make clear that USML Category IV controls may apply when a non-ITAR satellite spacecraft is to be used with a Category IV launch vehicle, Category IV(i) now states:
“Defense services include the furnishing of assistance (including training) in the integration of a satellite or spacecraft to a launch vehicle, including both planning and onsite support, regardless of the jurisdiction, ownership, or origin of the satellite or spacecraft, or whether technical data is used. It also includes the furnishing of assistance (including training) in the launch failure analysis of a launch vehicle, regardless of the jurisdiction, ownership, or origin of the launch vehicle, or whether technical data is used.”
Finally, DDTC revised the ITAR 120.10 definition of technical data to clarify that telemetry data as defined in XV(f) is not technical data.
EAR Controls: “Help me EAR-Bi-Wan Kenobi. You’re my only hope.”
To some extent, many exporters got what they wanted; while DDTC did not shift all commercial satellites off the USML, less-sensitive satellites, spacecraft and related items are not controlled by the EAR and the EAR has 4 new space ECCNs (9A515, 9B515, 9D515 and 9E515) that join other existing ECCNs, such as 9A004, that control space-related items. At the end of the day, most items shifted continue to be fairly highly controlled.
Prior to this list shift, various ECCNs, such as 9A004 controlled items, were used in space. 9A004 is revised so that its paragraph .a controls the International Space Station (ISS) and its paragraph x. controls parts, components, accessories and attachments specially designed for the ISS.
The new 9×515 ECCNs, however, are the highlight of the EAR revisions. The 9×515 ECCNs generally are eligible for No License Required to Canada, have some License Exception STA availability for Country Group A:5 and require a license for everywhere else. The EAR does offer some flexibility to exporters and reexporters, as certain license exceptions, such as RPL, TMP, GOV, LVS, and AVS, are available in certain cases subject to limitation and restrictions similar to those that apply to 600 series items.
The EAR includes the various ITAR clarifications discussed above, such as the explicit limitations on the see-through rule for EAR items containing ITAR content, no controls on housekeeping data, passenger space flight information being classified as EAR99 and telemetry data not being controlled. The EAR also reflects the June 27, 2014 effective date for the shift of integrated circuits from Category XV(d) and (e) to 9A515.d and .e, respectively, so exporters may take advantage of these changes sooner than the other changes.
The new 9A515 is structured similarly to 600 series ECCNs and contains enumerated controls in paragraphs .a – .e and .y, and a catch all control in paragraph .x, catching specially designed items. 9A515.x, however, unlike most 600 series ECCNs, says that 9A515.x does not apply to specially designed items that are
–Microelectronic circuits: This means 9A515.x does not want to control integrated circuits that are not controlled by 9A515.d or .e. Look elsewhere in the CCL for those items.
–Described in certain named ECCNs and paragraphs: This means that if an item is described in one of the specified ECCNs and paragraphs, that ECCN controls the item, not 9A515.x.
9A515.y, which requires a license only for China, Cuba, Iran, North Korea, Sudan and Syria, only applies to items for which there is an interagency approved commodity classification (CCATS) that assigns 9A515.y as the classification.
[Confusion Warning: Because the 9A515.d and .e changes enter into force before the other 9A515 changes, the Federal Register notice actually changes 9A515 twice. The first change is to create 9A515.d and .e effective in June and the second change is to create the rest of 9A515 effective in November.]
Good News for Universities: Universities are eligible to take advantage of a new authorization in License Exception AVS 740.15(e) that authorizes the export of spacecraft and components for fundamental research purposes. AVS authorizes an accredited institution of higher learning to export items to another accredited institute of higher learning, a government research center or to a government funded research center in any country outside of Country Group D:5 and involving only non-D:5 nationals. This must occur in a fundamental research environment where all resulting technical data and information will be shared broadly and will be restricted for proprietary reasons.
Other Changes: In many respects, the new 9×515 space ECCNs are subject to many of the ITAR-lite or ITAR-like policies in the EAR that already apply to the 600 series military ECCNs. For example, the special rules applicable to 600 series ECCNs apply to 9×515 in these cases:
• 734.4 De minimis rule Limitations for Country Group D:5
• 740.2 Prohibitions on the use of license exceptions
• 744.21 Prohibition on export/reexport to China
• 758.1 and 758.2 AES filing requirements
• 758.6 Identify ECCN on the same documents requiring a Destination Control Statement
Action Items for the New ITAR and EAR Rules
Stormtrooper: Let me see your identification.
Obi-Wan Kenobi: [waves his hand] You don’t need to see his identification.
Stormtrooper: We don’t need to see his identification.
Obi-Wan Kenobi: These aren’t the droids you’re looking for.
Stormtrooper: These aren’t the droids we’re looking for.
Export Compliance Expert: These rules are complex.
EAR-Bi-Wan: [waves his hand]. These rules are easy to understand.
Export Compliance Expert: These rules are easy to understand.
EAR Bi-Wan: These changes and classifications will be easy to implement.
Export Compliance Expert: These changes and classifications will be easy to implement.
Unfortunately, while the force was helpful in the movie, I would not be looking for a miraculous force to come to your rescue, unless you consider the force to include the fact that you may continue to use ITAR licenses and approvals for these shifted items as you could for items in earlier ECR list shifts. Some spacecraft, satellites and related items have been freed from the ITAR dark side, but you still have to figure out exactly which of your items and technologies shifted off the USML to the CCL and how you will have to control the shifted items.
Instead of slaying storm troopers with your light saber, you need to get the Federal Register notices and read through them and study them. Those notices are at:
It might help to play the theme music from Star Wars as you grind through the new regs–it certainly will cause your co-workers to wonder about you (again). Or more appropriately, as you grind through the regs, you might want to hear that famous quote from Chewbacca:
“May the Force be with you.”