BIS and DDTC Announce New Rules to Modernize Space-Related Export Controls

The rules, four in total (two of which are at the proposed rule stage), stem from responses to the March 8, 2019, Advance Notices of Proposed Rulemaking by both agencies seeking reactions to potential revisions to space-related controls and, more recently, the 2023 meetings of the National Space Council that tasked BIS and DDTC to review and update its controls.

The October 2024 rules consist of complementary proposed rules by BIS and DDTC (BIS PR and DDTC PR), a BIS final rule (BIS FR), and a BIS interim final rule (BIS IFR). Collectively, the rules significantly update and advance the controls on commercial space-related items under the International Traffic in Arms Regulations (ITAR) and Export Administration Regulations (EAR), but lack the decontrols, at least from the ITAR, that many in the commercial space industry were hoping for. The throughline traceable in each of the final, interim, and proposed rules is the need to modernize and clarify controls on civil space-related items and to facilitate collaboration with allies and stronger US competition in these sectors while maintaining important protections on US national security and foreign policy interest. (In case that sounds familiar, yes, those are the faint echoes of Export Control Reform reverberating throughout this initiative.)

This alert highlights the key changes to the controls in the four rulemakings. Companies involved in the commercial space industry should review the new rules carefully to understand the controls and new opportunities for cross-border collaboration and transactions under reduced export licensing obligations.

BIS Final Rule

The BIS FR removes export licensing requirements under the EAR for Australia, Canada, and the United Kingdom (UK) for certain remote sensing and space-based logistics, assembly, and servicing spacecraft and related technology. More specifically, the BIS Final Rule’s removal of licensing requirements to these countries applies to spacecraft controlled in ECCNs 9A515.a.1 (remote sensing), .a.2 (remote sensing beyond NIR), .a.3 (radar remote sensing), .a.4 (space-based logistics), and .g (remote sensing components for .a.1 through .a.4 spacecraft). It applies also to specified technology for these spacecraft and components specified in ECCN 9E515.g. Importantly, it does not apply to other 500-series space items or to technology or other specially designed parts, components, accessories, attachments, or software for these items, although many of those items are addressed by the October 23 BIS Interim Final Rule discussed below.

Previously, the EAR Section 742.6(a)(9) imposed a worldwide licensing requirement for these items. The BIS Final Rules amends that section of the EAR, and the corresponding Licensing Requirement Notes in each ECCN, to now exclude Australia, Canada, and the UK.

BIS Interim Final Rule

Concurrently with the BIS Final Rule, BIS issued its IFR which became effective on October 23, 2024, and is subject to a period for public comments. The BIS IFR implements numerous revisions to ECCNs 9A004 and 9A515 to ease and clarify controls on space-related items.

Most notably, the BIS IFR eases licensing requirements for “specially designed” parts, components, accessories, and attachments for space commodities. It does this primarily by shifting the reasons for control on ECCN 9A004.x and 9A515.x items from NS1 and RS1, the most restrictive national security (NS) and regional stability (RS) controls, to NS2 and RS2. This eliminates export licensing requirements to some 40 countries that are not subject to NS2 controls on the Commerce Country Chart.

The BIS IFR makes numerous other refinements, clarifications, and easing of controls throughout the space-related ECCNs. This includes adding 68 new .y paragraphs to ECCN 9A515 and similar or corresponding new .y paragraphs under ECCN 9A004 for specially designed items that would otherwise be controlled under paragraph .x but have been determined through an interagency-cleared commodity classification (CCATS) to not warrant such control. BIS has advised that exporters may self-classify items in the .y paragraphs if the items (1) meet the described control parameter, and (2) are “specially designed for a referenced item or category in the respective .y paragraph.” In addition, BIS has removed export licensing requirements for certain 9D515 software and 9E515 technology when used in standards-related activities for space-based services, assembly, and logistics activities, which BIS has deemed to be critical to US participation and competition in global space flight safety and operations.

BIS Proposed Rule

The BIS PR complements the corresponding proposed rule by DDTC, setting up the regulatory framework in the EAR for proposed changes to US Munitions List (USML) Categories IV and XV. Under the BIS PR, BIS would amend the CCL to clarify certain provisions and to accommodate DDTC’s proposed changes to the USML. This would include changes to ECCN 9A515 to accommodate classes of spacecraft and related items that would move from the USML to the CCL, including, for example:

• Spacecraft performing remote proximity on-orbit services to other spacecraft, space hotels and other life-sustaining spacecraft; and spacecraft for collecting or removing space debris.
• Certain classes of space-qualified optics and x-ray grazing incidence optics.
• Certain electric (plasma/ion) thrusters for spacecraft that have a thrust of at least 400 milli-Newtons.
• Control moment gyroscopes providing an angular momentum of less than 2.0 Newton meter seconds (N m sec) and provide a torque of less than 6.0 Newton meters (N m).
• Hold-down or satellite release mechanisms not described in USML Cat. IV(e)(5), excluding those for 1U (10 cm3) CubeSats or less.

In addition, the BIS PR would add new ECCN 9C515 to control materials, coatings, and treatments for reducing in-orbit signatures of spacecraft not controlled under the ITAR; new ECCN 9D515.c to control Space Situational Awareness (SSA) software, which is used for spacecraft maneuvering, trajectory planning, and debris tracking; and new paragraphs in ECCN 9E515 for various technology relating to new CCL commodities.

The BIS PR also proposes to adopt new license exception Commercial Space Activities (CSA), mirroring similar license exemptions that would be adopted under the DDTC PR. License Exception CSA would authorize exports, reexports, and transfers (in-country) of 9A004 and 9A515 items for official space agency programs (e.g., NASA’s Lunar Gateway project) listed in the exception, and manned spacecraft and related items for space tourism and research, subject to enumerated exclusions.

DDTC Proposed Rule

In conjunction with the BIS rules, DDTC has issued complementary Proposed Rule that would modernize and ease export controls on civil space-related items controlled under the ITAR. The Proposed Rule, if implemented, would make relatively modest changes to the ITAR, primarily to improve the overall organization and clarity of provision on civil space-related controls. There are, however, a few notable proposed revisions to the scope of ITAR controls, including to the USML Categories IV and XV, which govern launch vehicles and certain spacecraft, respectively. DDTC also proposed some categories of items would fall out of ITAR controls to be controlled under the EAR instead. As of this writing, DDTC continues to mull over the more than 800 public comments it received on the Proposed Rule and has not yet issued an interim or final rule updating the ITAR.

DDTC’s Proposed Rule would overhaul USML Categories IV and XV to consolidate and restructure civil space-related provisions. Among the numerous proposed structural changes is the relocation of definitions of terms in the USML, currently peppered throughout their respective categories, to the dedicated definitions section at ITAR § 121.0. The Proposed Rule would also reorganize under separate USML paragraphs descriptions of “specially designed” “parts,” “components,” “accessories,” and “attachments” of controlled items and other descriptions that use the “specially designed” criteria to describe compositional terms (in ITAR § 120.40). According to DDTC, these and the score of other changes proposed in the DDTC PR will align Categories IV and XV with the overall composition of the USML and the ITAR’s “Order of Review,” promoting clarity and consistency in applying the USML.

More significantly, the DDTC Proposed Rule would modify over 40 entries in USML Category IV and 30 entries in USML Category XV. The majority of those modifications would be minor, organizational, stylistic, or for clarity and consistency. Others, however, would materially impact the scope of items controlled under the ITAR. This includes sending some less-sensitive items, which DDTC has determined no longer provide a critical military or intelligence advantage or otherwise do not warrant ITAR control, to be controlled under the EAR. In addition to such items described above, under the BIS PR, the DDTC PR would also implement the following:

• A new Category IV paragraph to enumerate loitering munitions (e.g., UAVs capable of multiple missions).
• A new Category IV catch-all control for heat shields and heat sinks for atmospheric re-entry vehicles or warheads.
• New controls on test equipment for certain Category IV rockets, missiles, SLVs, and missile seekers.
• New catch-all controls for non-electronic radiation hardened parts and components of non-nuclear warheads and parts and components specially designed for underwater launch.
• New controls on electrical connectors specially designed for hostile nuclear radiation environments (such as those used in ballistic missile systems).
• New controls on turbo pumps used in Category IV propulsion systems.
• Updates to the remote sensing capabilities thresholds for spacecraft in Category XV(a)(7), including reducing the ground sample distance criterion from 30 meters to 20 meters, and increasing the bandwidth criterion for USML Category VX(a)(8) radar remote sensing to 500 MHz.
• New controls on spacecraft capable of non-cooperative grappling or docking, in-orbit controls of other defense articles, and deploying multiple spacecraft into different orbits.

Finally, DDTC’s Proposed Rule would add three new Civil Space-Related license exemptions to ITAR § 126.8. These include exemptions would authorize transactions involving certain defense articles and defense services (1) conducted under an official US government agency space program; (2) supporting certain launch, safety, fundamental research, and certain radiofrequency transmission; and (3) space tourism and research. These are intended to promote US industrial base participation in civil space activity, as aligned with national security and foreign policy goals.