Relaxed ‘munitions’ rules pave way for aerospace exports

LOUISVILLE — For the aerospace industry in the Boulder Valley and across the nation, the sky’s not quite the limit – but it’s much closer.

Government rules designed to keep American-made components with possible military uses from falling into hostile hands – the International Traffic in Arms Regulations (ITAR) – increasingly hampered U.S. companies’ ability to compete with foreign producers who were under no such restrictions. Years of pressure from the satellite industry finally pushed Congress to act, and late last year most civil and commercial satellites and components were moved from the U.S. Munitions List to the Commerce Control List.

Sen. Michael Bennet, D-Colo., “took a lead role in pushing the changes through,” said John Roth, vice president for business development at Sierra Nevada Corp.’s Louisville-based Space Systems Division. “It’s huge for us.”

It’s huge as well for Boulder-based Ball Aerospace and Technologies Corp.

“We support the new federal rules,” said Leonard Anthony, assistant general counsel for Ball Aerospace’s export and control office. “They make business easier for us to conduct with U.S.-allied customers while maintaining appropriate controls around sensitive technologies.”

Before the statutory shift, all satellites were controlled under ITAR including those for commercial, research, and communications. Moving those items to the Commerce Control List makes them eligible for less restrictive licensing including some exceptions under the Export Administration Regulations.

Four categories of products are covered under the relaxed rules, according to Eric Hirschborn, undersecretary for industry and security in the Commerce Department. “Items transferred include, certain commercial communication satellites and lower-performing remote sensing satellites; ground-control systems and training simulators specially designed for telemetry, tracking and control of spacecraft, …  radiation hardened microelectronics formerly controlled in Category XV of the ITAR; and parts and components of satellite bus and payloads not listed on the USML.”

Some items remain on the list of items the government deems to have military uses, such as high-precision pointing devices. The new regulations, which were authorized by Congress in late 2012 and early 2013 and went into effect in November, actually tighten some restrictions, imposing special rules for exports to China and foreign-made items that incorporate U.S.-originated components.

Still, Roth said, “probably 90 percent of products we sell are off the list now.”

The list of affected items is voluminous, Roth said – from drivers and other electronics for satellites’ solar-power arrays to hinges, latches, actuators, solar-cell sheaths and more.

“We were able to sell them before,” Roth said, “but going through the ITAR hoops made it much more complicated.”

It’s up to special customs agents from the Department of Homeland Security to physically enforce ITAR and other U.S. import and export laws. Inspections are made at U.S. border crossings and international airports.

People and companies had faced heavy fines if they exported ITAR-protected defense articles, services or technical data without authorization. In 1996, for instance, the State Department charged Palo Alto, Calif.-based Space Systems/Loral with violating ITAR and the Arms Export Control Act as part of an investigation that resulted in tightened control over the technology surrounding satellites and launch vehicles.

Memories of the strict ITAR controls still linger, Roth said. “We’ve had our marketing folks over in Europe last week, as a matter of fact. We want to start educating our overseas customers about the new rules.

“ITAR was more of a problem with customers’ perceptions,” he said. “They’d say ‘Oh, it’s ITAR. We don’t want to deal with it. It’s too hard.’ ”

Other than JAXA, the Japanese space agency, most of Sierra Nevada’s foreign customers are private companies, Roth said, “although often their contracts are with governments.”

Sierra Nevada has yet to estimate the extra revenue the relaxed rules will mean, Roth said, but “we expect to see an uptick.”

Dallas Heltzell can be reached at 970-232-3149, 303-630-1962 or dheltzell@bizwestmedia.com. Follow him on Twitter at @DallasHeltzell.

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