Order Code IB93062
CRS Issue Brief for Congress
Received through the CRS Web
Space Launch Vehicles:
Government Activities,
Commercial Competition,
and Satellite Exports
Updated September 7, 2001
Marcia S. Smith
Resources, Science, and Industry Division
Congressional Research Service ˜ The Library of Congress

CONTENTS
SUMMARY
MOST RECENT DEVELOPMENTS
BACKGROUND AND ANALYSIS
U.S. Launch Vehicle Policy
From “Shuttle-Only” to “Mixed Fleet”
Clinton Administration Policy
U.S. Launch Vehicle Programs and Issues
NASA’s Space Shuttle Program
Future Launch Vehicle Development Programs
DOD’s Evolved Expendable Launch Vehicle (EELV) Program
Government-Led Reusable Launch Vehicle (RLV) Programs
Private Sector RLV Development Efforts
U.S. Commercial Launch Services Industry
Congressional Interest
Foreign Competition (Including Satellite Export Issues)
Europe
China
Russia
Ukraine
India
Japan
LEGISLATION


IB93062
09-07-01
Space Launch Vehicles: Government Activities, Commercial
Competition, and Satellite Exports
SUMMARY
Launching satellites into orbit, once the
X-33, suffered delays and on March 1, 2001
exclusive domain of the U.S. and Soviet gov-
NASA decided to end the program.
ernments, today is an industry in which compa-
Companies developing new launch vehicles are
nies in the United States, Europe, China, Rus-
reassessing their plans, and NASA has initiated
sia, Ukraine, Japan, and India compete. In the
a new “Space Launch Initiative” (SLI) to
United States, the National Aeronautics and
broaden the choices from which it can choose
Space Administration (NASA) continues to be
a new RLV design. Some of the SLI funding
responsible for launches of its space shuttle, and
is going to companies that have been trying to
the Air Force has responsibility for launches
develop their own new launch vehicles. Sepa-
associated with U.S. military and intelligence
rately, DOD has been reassessing its EELV
satellites, but all other launches are conducted
program in light of the lower market forecasts.
by private sector companies. Since the early
1980s, Congress and successive Administra-
Until a replacement is developed, NASA
tions have taken actions, including passage of
will rely upon the space shuttle for launching
several laws, to facilitate the U.S. commercial
humans into space, including to the Interna-
space launch services business. The Federal
tional Space Station. Safe operation of the
Aviation Administration (FAA) regulates the
shuttle remains a top NASA concern.
industry.
In the commercial launch services market,
During the mid-1990s, demand for
U.S. companies are concerned about foreign
launching commercial communications satellites
competition, particularly with countries that
was forecast to grow significantly through the
have non-market economies such as China,
early 21st Century. Those forecasts sparked
Russia, and Ukraine. The U.S. signed bilateral
plans to develop new launch vehicles here and
trade agreements with each of those countries
abroad. In the United States, NASA and the
setting forth the conditions under which they
Department of Defense (DOD) created
can participate in the market, including quotas
government-industry partnerships to develop
on how many launches they can conduct. The
new reusable launch vehicles (RLVs) and
agreement with China expires in 2001;
“evolved” expendable launch vehicles (ELVs),
discussions have begun between the two
respectively. The U.S. space shuttle is the only
countries on whether to renew it. The Clinton
operational RLV today. All other operational
Administration ended quotas for both Ukraine
launch vehicles are expendable (i.e., they can
and Russia in 2000. The U.S. has leverage
only be used once). Some U.S. private sector
because almost all satellites that require launch
companies began developing their own launch
are made in the United States or have U.S.
vehicles without direct government financial
components and hence require U.S. export
involvement, although some have sought gov-
licenses. Export of U.S.-built satellites has
ernment loan guarantees or tax incentives.
become an issue in terms of whether U.S.
H.R. 2177 would create tax incentives.
satellite manufacturing companies provide
militarily significant information to those
Since 1999, projections for launch services
countries in the course of the satellite
demand have decreased dramatically, however.
launches.
At the same time, NASA’s main RLV program,
Congressional Research Service ˜ The Library of Congress

IB93062
09-07-01

MOST RECENT DEVELOPMENTS
The House Armed Services Committee reported the FY2002 DOD authorization bill
(H.R. 2586, H. Rept. 107-194) on September 4. The committee approved full funding for
the EELV program.

The House and Senate have passed the FY2002 VA-HUD-Independent Agencies
appropriations bill (H.R. 2620), which includes NASA. NASA’s major space transportation
development effort, the Space Launch Initiative (SLI), is fully funded at the requested level
of $475 million in the House-passed version, a 64% increase over the FY2001 level of $290
million. Regarding the space shuttle, the House allocated $65 million for repairing the
Vehicle Assembly Building at Kennedy Space Center, adding $35 million and taking $30
million from a project (which NASA already had decided to cancel) that was to have
developed a new type of advanced auxiliary power unit for the space shuttle. The Senate
version of the bill reduced SLI funding by $15 million, and added $50 million for safety
upgrades to the shuttle. A hearing on space shuttle safety was held by a Senate Commerce
subcommittee on September 6.

On August 1, the House International Relations Committee adopted a Berman
amendment to the Export Administration Act (H.R. 2581) that would, inter alia, return
jurisdiction over export decisions for commercial communications satellites from the State
Department to the Commerce Department.

BACKGROUND AND ANALYSIS
U.S. Launch Vehicle Policy
The National Aeronautics and Space Administration (NASA) and the Department of
Defense (DOD) have each developed expendable launch vehicles (ELVs) to satisfy their
requirements. NASA also developed the partially reusable space shuttle. DOD developed the
Atlas, Delta, and Titan families of ELVs (called expendable because they can only be used
once) from ballistic missile technology. NASA developed Scout and Saturn, both no longer
produced. Atlas and Titan rockets today are built by Lockheed Martin. Delta is built by
Boeing. Private companies also have developed ELVs: Pegasus and Taurus (Orbital Sciences
Corporation), and Athena (Lockheed Martin). Which launch vehicle is used for a particular
spacecraft initially depends on the size, weight, and destination of the spacecraft.
From “Shuttle-Only” to “Mixed Fleet”
In 1972, President Nixon approved NASA’s plan to create the first reusable launch
vehicle, called the space shuttle, and directed that it become the nation’s primary launch
vehicle, replacing all the ELVs except Scout (later discontinued for unrelated reasons). This
would have made NASA and DOD dependent on a single launch vehicle, but the resulting
high launch rate was expected to reduce the cost per flight significantly. The shuttle was first
launched in 1981, and was declared operational in 1982. The phase-out of the ELVs began,
but in 1984 the Air Force successfully argued that it needed a “complementary” ELV as a
CRS-1

IB93062
09-07-01
backup to the shuttle for “assured access to space” and initiated what is now known as the
Titan IV program. Production lines for the Delta and Atlas began to close down, and it was
expected that only the shuttle, Scouts, and Titan IVs would be in use by the mid-1980s.
Everything changed on January 28, 1986, however, when the space shuttle Challenger
exploded 73 seconds after launch. The space shuttle program had enjoyed 24 successful
missions prior to Challenger. Apart from the human tragedy, the Challenger accident deeply
affected U.S. space launch policy, demonstrating the vulnerability of relying too heavily on
a single system. Many military and civilian satellites had been designed specifically to be
launched on the shuttle, and could not have been transferred to ELVs even if the ELVs were
not already being phased out. The few remaining ELVs had their own problems in 1986. A
Titan exploded in April and a Delta failed in May, which also grounded Atlas because of
design similarities. As a result of these failures, U.S. policy was significantly revised from
primary dependence on the shuttle to a “mixed fleet” approach. The country once again has
a wide variety of launch vehicles from which to choose. The shuttle is used principally for
missions that require crew interaction, while ELVs are used for other spacecraft.
President Reagan also decided that commercial payloads could not be flown on the
shuttle unless they were “shuttle-unique” (capable of being launched only by the shuttle or
requiring crew interaction) or if there were special foreign policy considerations. That action
facilitated the emergence of a U.S. commercial space launch industry whose participants had
long argued that they could not compete against government-subsidized shuttle launch prices.
The White House and Congress had taken steps beginning in 1983 to assist in developing a
commercial space launch services business, including President Reagan’s 1983 designation
of the Department of Transportation as the agency responsible for facilitating and regulating
the commercial space launch sector, and passage of the 1984 Commercial Space Launch Act
(P.L. 98- 575). But removing the shuttle as a competitor was the major factor in fostering the
U.S. launch businesses. Passage of the Commercial Space Launch Act Amendments of 1988
(P.L. 100-657) and the Commercial Space Act of 1998 (P.L. 105-303) also have helped.
Clinton Administration Policy
On August 5, 1994, President Clinton released a National Space Transportation Policy
that gave DOD lead responsibility for improving ELVs and NASA lead responsibility for
upgrading the space shuttle and technology development and demonstration of new reusable
launch vehicles. The policy set guidelines for the use of foreign launch systems and
components, the use of excess ballistic missile assets for space launch, and encourages an
expanded private sector role in space transportation R&D. Unless exempted by the President
or his designee, U.S. government payloads must launched by U.S. manufactured launch
vehicles. On September 19, 1996, the Clinton Administration released a comprehensive
space policy, covering civil, military and commercial space activities.
U.S. Launch Vehicle Programs and Issues
NASA’s Space Shuttle Program
The space shuttle is a partially reusable launch vehicle (the large, cylindrical external tank
is not reused) and is the sole U.S. means for launching humans into orbit. The 1986
CRS-2

IB93062
09-07-01
Challenger accident and occasional shuttle launch delays have led to questions about the
reliability of the shuttle system. Challenger, however, is the only failure so far in more than
100 launches since 1981. Nonetheless, concerns remain that cuts to the shuttle budget and
associated personnel reductions, and NASA’s decision to turn much of the ground operations
of the shuttle over to a “single prime contractor,” could affect shuttle safety. NASA signed
a $7 billion, 6-year Space Flight Operations Contract (SFOC) with United Space Alliance
(USA)—a joint venture between Boeing and Lockheed Martin—to serve as single prime
contractor on September 26, 1996 with the goal of reducing shuttle operational costs. The
total shuttle budget for FY2001 is $3.1 billion; the request for FY2002 is $3.3 billion.
NASA is still deciding what the future holds for the shuttle. The 1994 Clinton policy
directed NASA to pursue technology development and demonstration efforts to support a
decision by the year 2000 on developing a new reusable launch system to replace the shuttle.
This led to the X-33 program (see below). Meanwhile, NASA outlined and began
implementing a four-phase “shuttle upgrades” program to improve shuttle reliability,
performance, and longevity. Initial upgrades (Phases I and II) were designed to combat
obsolescence and ensure shuttle safety, while longer term upgrades (Phases III and IV) were
to be implemented if a replacement for the shuttle was not anticipated soon. When 2000
arrived, it was clear that the X-33 program would not meet its deadlines and NASA initiated
a new development program (SLI, see below) and pushed the decision point on the future of
the shuttle to 2005. More recently, NASA has referred to it as a “mid-decade” decision.
NASA also abandoned the 4-phase upgrade concept and instead added $1.3 billion to what
it had planned for shuttle upgrades in FY2001-2005, for a total of $1.86 billion for “safety
and supportability” upgrades. Shuttle advocates insist that the four space shuttle orbiters are
less than 30% through their useful life and NASA says the shuttle will be one of the
competitors in the mid-decade decision on what vehicle NASA should use in the future.
Last year, NASA emphasized that one of the most critical upgrades needed was a new,
safer type of auxiliary power unit (APU) powered by electricity. However, NASA now has
terminated that program because of development cost and schedule concerns. In its report
on the FY2002 appropriations bill (H.R. 2620, H. Rept. 107-159) that includes NASA, the
House Appropriations committee expressed concern with NASA’s decision, questioning
whether the shuttle upgrades plan NASA provided to Congress last year was valid. The
committee took $30 million of the $50 million that NASA had planned to spend on the
electric APU, added another $35 million to it, and allocated $65 million for repairs to the
Vehicle Assembly Building at Kennedy Space Center. The remaining $20 million is to be
spent on electric APU technology development. The Senate-passed version of the bill adds
$50 million for shuttle safety upgrades. The Senate Appropriations Committee (S. Rept. 107-
43) expressed concern about aging shuttle infrastructure and called on the Bush
Administration to request sufficient resources to upgrade shuttle hardware and infrastructure.
A Senate Commerce subcommittee held a hearing on shuttle safety and NASA’s upgrade
plans on September 6, 2001.
The independent Aerospace Safety Advisory Panel (ASAP) oversees safety in NASA
human spaceflight programs. For several years, ASAP has expressed concern about the loss
of critical skills and experience in the shuttle workforce after years of downsizing and the
transition to the single prime contractor. In August 2000, GAO released a report
(GAO/NSIAD/GGD-00-186) that echoed the ASAP concerns. In its most recent report
(February 2001), ASAP strongly recommended that NASA acknowledge that the space
CRS-3

IB93062
09-07-01
shuttle will be the primary U.S. launch vehicle to take crews to the International Space
Station (ISS) through the station's lifetime and implement a program to ensure the shuttle's
safe operation through that time frame.
Future Launch Vehicle Development Programs
Despite hopes that the space shuttle would reduce the cost of reaching orbit, U.S. launch
systems remain expensive and less efficient and reliable than desired. Thus, efforts continue
to reduce costs for both expendable and reusable U.S. launch systems. DOD and NASA
initiated several efforts in the late 1980s and early 1990s to develop a new ELV system (see
below), but each was terminated in turn because Congress or the agencies themselves were
not convinced that the required investment had sufficient priority. In response to the 1994
Clinton policy, two programs were initiated: DOD’s Evolved Expendable Launch Vehicle
(EELV) program and NASA’s Reusable Launch Vehicle (RLV) program.
DOD’s Evolved Expendable Launch Vehicle (EELV) Program. The EELV
program is the successor to several failed attempts to begin new ELV programs since 1985.
DOD began what is now known as the EELV program in FY1995 (P.L. 103-335) with a $30
million appropriation. EELV was first formally identified in DOD’s FY1996 budget. EELV’s
goal is to reduce launch costs by at least 25%.
In 1996, the Air Force selected Lockheed Martin and McDonnell Douglas (later bought
by Boeing) for pre-engineering and manufacturing development contracts worth $60 million.
Originally, one of those companies would have been selected in 1998 to develop the EELV.
In November 1997, responding to indicators at the time that the commercial space launch
market would be larger than expected, DOD announced that it would help fund development
of both the Lockheed Martin and the Boeing vehicles (Atlas V and Delta IV, respectively).
In October 1998, DOD awarded Boeing $1.88 billion for the Delta IV ($500 million for
further development plus $1.38 billion for 19 launches). At the same time, it awarded
Lockheed Martin $1.15 billion for the Atlas V ($500 million for further development plus
$650 million for 9 launches). The companies are expected to pay the rest of the development
costs themselves. The launches are scheduled to take place in 2002-2006. In 2000,
however, new market forecasts showed a reduction in expected demand, and DOD
reevaluated its EELV strategy. It reportedly has renegotiated the contracts with both
companies, relieving Lockheed Martin (reportedly at the company’s request) of the
requirement to build a launch pad at Vandenberg AFB, CA, and shifting two of the launches
previously awarded to Lockheed Martin to Boeing instead. Thus Boeing now has 21
launches while Lockheed Martin has seven. For FY2001, Congress authorized and
appropriated $333 million for R&D and $283 million for procurement (a reduction of $5
million from the procurement request) for the EELV program. However, FY2002 DOD
budget documents show $330 million for R&D and $280 million for procurement. The
FY2001 supplemental appropriations (P.L. 107-20) adds $48 million for a test flight of the
largest (“heavy”) version of Boeing’s new Delta IV launch vehicle. For FY2002, DOD is
requesting $320 million for R&D and $98 million for procurement. The House Armed
Services Committee approved the requested levels in its report on the FY2002 DOD
authorization bill (H.R. 2586).
Government-Led Reusable Launch Vehicle (RLV) Programs. The 1994
Clinton policy gave NASA lead responsibility for technology development for a
CRS-4

IB93062
09-07-01
next-generation reusable space transportation system. NASA initiated the Reusable Launch
Vehicle (RLV) program to develop and flight test experimental RLVs to form the basis for
next-generation vehicles to replace the space shuttle and replace or augment ELVs.
Proponents believe that RLV technology can dramatically lower the cost of accessing space.
The X-33 and X-34 Programs. From 1995 to 2000, NASA’s approach to
developing new RLVs was based on establishing new forms of cooperation with industry by
sharing the costs of developing technology with the intent that industry take over
development, operation, and financing of the operational vehicle. Two “X” (for
“experimental”) flight test programs were begun under this philosophy: X-33, a large RLV
based on single-stage-to-orbit (SSTO) technology to demonstrate technologies in the Mach
13-15 range (13-15 times the speed of sound); and X-34, a small RLV “testbed” to
demonstrate reusable technologies at Mach 8. The SSTO concept involves a rocket that can
attain orbit with only one stage (instead of two or more as is common today) carrying people
or cargo. The goal had been to develop a vehicle capable of being launched, returning to
Earth, being serviced quickly, and flying again within a very short time.
In March 2001, NASA announced the termination of X-33 and X-34. X-33 was a
cooperative program between NASA and Lockheed Martin. According to the contract
signed in 1996, NASA’s costs were fixed at $912 million (not including civil service costs,
which raise NASA’s cost to about $1.2 billion). Lockheed Martin says that by the end of the
program it had spent $356 million of its own funding on the program. X-33 was a suborbital
prototype of a vehicle which, if it had been built, would been called VentureStar. Technical
problems with the X-33, particularly with its new “aerospike” engines and construction of its
composite hydrogen fuel tanks, led to delays in test flights from 2000 to 2003. NASA
concluded that the cost to complete the program was too high compared to the benefits and
terminated its participation in the program. X-34 was a “technology testbed” being built
under contract to NASA by Orbital Sciences Corporation. The program had begun as a
cooperative program like X-33, but the companies (Orbital and Rockwell International) that
partnered with NASA decided not to continue it under those terms. NASA later modified the
program and signed a traditional contract with Orbital. As with X-33, NASA concluded that
the cost to complete the program was too high relative to the value of the technologies to be
demonstrated. NASA spent $205 million on X-34. Lockheed Martin and Orbital each
approached DOD about continuing their respective programs, but DOD reportedly has
declined to do so.
Space Launch Initiative (SLI). In its FY2001 budget request, NASA restructured
its program to develop new space launch vehicles. The agency initially selected 2005 as the
next point at which it would make a choice between the shuttle and a 2nd generation RLV,
although NASA now refers to it as a “mid-decade” decision. NASA announced that in the
meantime it would spend $1.86 billion (FY2001-2005) in “safety and supportability” upgrades
to the space shuttle and $4.4 billion (FY2001-2005) in a new Space Launch Initiative (SLI).
SLI includes the 2nd generation RLV program, designed to encourage development of a
variety of RLV technologies rather than focusing on a single concept such as SSTO as was
done with X-33. Thus NASA hopes to have more than one competitor for a new RLV
system in 2005. SLI also funds development of “NASA Unique” launch systems, i.e., for
taking humans to or from space, which at this time is a uniquely NASA activity; and of
“alternative access to the space station” to help private companies compete to service the
space station. The failure of the X-33 and X-34 programs, and of the National AeroSpace
CRS-5

IB93062
09-07-01
Plane (NASP) program before them, has made some observers skeptical about NASA’s
ability to successfully develop a next generation space launch vehicle. Hence, the SLI
program is expected to receive considerable scrutiny.
For FY2001, NASA requested and received $290 million for SLI. The FY2002 request
is $475 million, a 64% increase, but less than the $610 million NASA had projected it would
request for FY2002. NASA requested bids from companies for SLI funds and the winners
were announced on May 17, 2001. In total, 22 contractors will receive $767 million. The
list of companies and universities that were awarded funding is available at
[http://www.slinews.com/]. The top winners were: Boeing, $137 million for 5 technology
areas, and Rocketdyne (part of Boeing), $65 million for upper stages and propulsion; Kistler
Aerospace, $136 million for flight demonstrations of its K-1 two-stage-to-orbit launch
vehicle; Pratt & Whitney, $126 million for upper stages and propulsion; and Lockheed
Martin, $94 million for 6 technology areas. The awards are for 10 months, with options for
one or more additional years.
At a House Science Subcommittee hearing on June 20, GAO testified about the results
of a study (GAO-01-826T) it conducted on the X-33 and X-34 programs, and cautioned
NASA against making similar mistakes with SLI. GAO cited a lack of “realistic cost
estimates, timely acquisition and risk management plans, and adequate and realistic
performance goals” with X-33 and X-34. It identified three critical areas to be addressed by
the SLI program: the technical complexity of SLI requires realistic cost estimates and risk
mitigation plans and appropriate funding; NASA must ensure that the numerous interrelated,
complex efforts involved in developing the technology move forward with effective
coordination and communication; and performance measures must be implemented and
periodically validated. The House-passed FY2002 VA-HUD-IA appropriations bill (H.R.
2620) approves full funding for SLI, while the Senate Appropriations Committee
recommended a cut of $15 million due to an unobligated balance of funds from prior year
appropriations and concern that deadlines are slipping (S. 1216).
Private Sector RLV Development Efforts. In addition to the government-led
programs, several entrepreneurial U.S. companies have been attempting to develop RLVs
through private financing. The companies have encountered difficulties in obtaining financing
from the financial markets, and have been seeking government loan guarantees or tax credits.
Some (e.g. Kistler Aerospace and Universal Space Lines) were included in the SLI contract
awards announced on May 17, 2001 (see above), so will receive direct government funding.
H.R. 2177 (Calvert) would provide tax incentives to investors in private sector companies
attempting to develop commercial space transportation systems with significantly lower costs
than those in use today. H.R. 2443 (Lampson) would provide, inter alia, loan guarantees for
developing transportation systems needed for space tourism.
U.S. Commercial Launch Services Industry
Congressional Interest
The 107th Congress is debating several issues involving satellite export issues (discussed
below) and the domestic launch services industry, many of which also were debated in the
106th Congress. Several bills are pending in the 107th Congress. One issue is what the
CRS-6

IB93062
09-07-01
government should do to stimulate development of new launch vehicles by the private sector.
Debate has focused on whether tax incentives or loan guarantees should be created for
companies attempting to develop lower cost launch vehicles. In general, companies
developing launch vehicles with high initial capital costs have sought loan guarantees, while
companies developing smaller vehicles with lower initial capital costs have sought tax
incentives. Tax incentive advocates argue that loan guarantee programs allow the
government to pick winners and losers; loan guarantee advocates argue that tax incentives
are insufficient to promote necessary investment in capital intensive projects. In the 106th
Congress, S. 469 (Breaux) would have established a loan guarantee program, while H.R.
4676 (Cook) would have created tax incentives. There was no action on either bill. In the
107th Congress, legislation somewhat similar to the Cook bill, H.R. 2177 (Calvert), has been
introduced. No bill similar to the Breaux bill has yet been introduced in the 107th Congress,
but H.R. 2443 (Lampson) would provide loan guarantees specifically for developing
transportation systems needed for space tourism. It also would provide tax incentives for
space tourism companies.
Other commercial space transportation issues have also been the subject of hearings or
legislation. In the 106th Congress, the House Science Committee held hearings on barriers
to the commercial space launch industry (June 10, 1999) and modernization and privatization
of the nation’s space launch sites or “ranges” (March 24; June 29,1999, jointly with the
House Armed Services Committee; and September 28, 2000). Commercial space launch
companies use Air Force launch ranges in Florida and California, raising issues about who
should pay for range improvements now that commercial launches outnumber those for the
government. The Clinton Administration released a range management and use plan in
February 2000. Several states also have or plan to establish “spaceports” for commercial
space launches; spaceports are licensed by the FAA. Bills to make spaceports, like airports,
eligible for tax exempt bonds were introduced in the 106th Congress, but there was no action
on them. They have been reintroduced in the 107th Congress (H.R. 1931/S. 1243).
One difficulty facing entrepreneurial companies attempting to develop new launch
vehicles, and existing launch service providers, is dramatically changed market forecasts for
launch services. In the mid- to late-1990s when many of the entrepreneurial companies
emerged, a very large market was predicted for placing satellites into low Earth orbit (LEO),
particularly for satellite systems to provide mobile satellite telephony services. Many of the
entrepreneurial companies targeted the LEO market, but it has shrunk markedly in the
intervening years with the bankruptcies of two satellite mobile telephone companies, Iridium
and ICO. Though both were later brought out of bankruptcy, many investors remain
skeptical about the prospects for such systems. The latest annual launch market forecasts
published by FAA (available at [http://ast.faa.gov]) reflect this skepticism. Last year, the
FAA showed a sharp decline in LEO launches over the next decade, and this year’s forecast
shows another decline. The market for traditional geosynchronous satellite (GSO) launches
had been expected to grow over the next decade, but the FAA forecasts now show a market
with little growth over a 10 year period. One factor is that technological advances permit
longer satellite lifetimes and enlarge capacity, reducing the need for new satellites.
Foreign Competition (Including Satellite Export Issues)
Europe, China, Russia, Ukraine, India, and Japan offer commercial launch services in
competition with U.S. companies. Most satellites are manufactured by U.S. companies or
CRS-7

IB93062
09-07-01
include U.S. components and hence require export licenses, giving the United States
considerable influence over how other countries participate in the commercial launch services
market. The United States negotiated bilateral trade agreements with China, Russia, and
Ukraine on “rules of the road” for participating in the market to ensure they did not offer
unfair competition because of their non-market economies. Launch quotas were set in each
of the agreements, but President Clinton terminated the quotas for Russia and Ukraine in
2000. They remain in place for China (see below).
Europe. The European Space Agency (ESA) developed the Ariane family of launch
vehicles. Ariane was first test-launched in 1979, and began operational launches in 1982.
ESA continues to develop new variants of Ariane. Operational launches of Ariane 4 and
Ariane 5 are conducted by the French company Arianespace, which is owned by the French
space agency (CNES) and European aerospace companies and banks. Arianespace also
markets Russia’s Soyuz launch vehicle as part of a French-Russian joint venture, Starsem.
In 1985, a U.S. company (Transpace Carriers Inc.) filed an unfair trade practices
complaint against Arianespace, asserting that European governments were unfairly subsidizing
Ariane. The Office of the U.S. Trade Representative (USTR) investigated and found that
Europe was not behaving differently from the United States in pricing commercial launch
services (then offered primarily on the government-owned space shuttle). The incident raised
questions about what “rules of the road” to follow in pricing launch services. In the fall of
1990, USTR and Europe began talks to establish such rules of the road and assess how to
respond to the entry of non-market economies into the launch services business. The only
formal negotiating session was held in February 1991.
Each side has been concerned about how much the respective governments subsidize
commercial launch operations, but another controversial topic (not formally part of the talks)
is whether Arianespace should be able to bid for launches of U.S. government satellites, which
now must be launched on U.S. launch vehicles as a matter of U.S. policy. Arianespace wants
that restriction lifted. France and other European governments do not have written policies
requiring the use of Ariane for their government satellites. However, the member
governments of ESA agreed to pay a surcharge of as much as 15-20% if they chose Ariane.
The surcharge led some cost-conscious European governments to buy launch services from
other (notably U.S.) suppliers. In the fall of 1995, ESA’s member governments reached
agreement with Arianespace to reduce the surcharge to encourage use of Ariane. (ESA itself
does give preference to using Ariane, but is not legally constrained from using other launch
vehicles.)
China. The People’s Republic of China offers several versions of its Long March
launch vehicles commercially. China poses special issues not only because of its non-market
economy, but because of technology transfer and political concerns. Launch services are
offered through China Great Wall Industry Corp. (CGWIC).
U.S.-China Bilateral Trade Agreements for Launch Services. In 1989, China
and the United States signed a 6-year bilateral trade agreement restricting the number of
Chinese commercial space launches to ensure China, with its nonmarket economy, did not
unfairly compete with U.S. companies. A new agreement that was reached in 1995 and
amended in 1997 will expire on December 31, 2001. Under the existing agreement, China
is allowed to launch up to 20 foreign satellites to geostationary orbit (GEO). There are no
CRS-8

IB93062
09-07-01
numerical limits on the number of launches to low Earth orbit (LEO), but if China, Russia,
and Ukraine combined launch more than 50% of any individual LEO system, the United
States would consider that cause for concern. GEO launches must be priced on a par with
Western prices. If the price is within 15%, it will normally be considered consistent with this
obligation. Prices more than 15% below will be examined in detail. LEO launches must be
priced on a par with Western LEO launch prices. Discussions about whether to renew the
agreement began in March 2001.
U.S. Satellite Exports to China: 1988-1997. In September 1988, the U.S.
government agreed to grant three export licenses for satellites manufactured by Hughes to
be launched by CGWIC. Two were Optus communications satellites (formerly called
AUSSAT) built for Australia and the third was AsiaSat 1, owned by the Hong Kong-based
Asiasat Co. (of which China’s International Trust and Investment Corp. is a one-third owner).
The Reagan Administration granted the export licenses on the conditions that China sign three
international treaties related to liability for satellite launches and other subjects; agree to price
its launch services “on a par” with Western companies; and establish a
government-to-government level regime for protecting technology from possible misuse or
diversion. China met the conditions and the two countries signed a 6-year agreement in
January 1989. The now-defunct Coordinating Committee on Multilateral Export Controls
(COCOM) approved the licenses that March.
On June 5, 1989, after the Tiananmen Square uprising, President George H. Bush
suspended all military exports to China. At the time, exports of communications satellites
were governed by the State Department’s Munitions List. The satellites counted as military
exports and the licenses were suspended. Then Congress passed language in the FY1990
Commerce, Justice, State and Judiciary appropriations (P.L. 101-162) and the 1990-91
Foreign Relations Authorization Act (P.L. 101-246, Section 902) prohibiting the export of
U.S.-built satellites to China unless the President reported to Congress that (1) China had
achieved certain political and human rights reforms, or (2) it was in the national interest of
the United States. In December 1989, President Bush notified Congress that export of the
satellites was in the national interest and the licenses were reinstated. AsiaSat-1 became
China’s first commercial launch of a U.S.-built satellite in April 1990. Final export approval
for Optus 1 and 2 was granted in April 1991. They were launched in 1992.
A different issue arose in 1990. China signed a contract to launch an Arabsat
Consortium satellite for $25 million, much less than what many consider “on a par” with
Western companies. The main competitor was Arianespace, which turned to both the French
and U.S. governments to prohibit export of the satellite (the prime contractor was French and
it included American components). No formal action was taken by the United States. In
1991, the Arabsat Consortium terminated the contract with the Chinese and signed an
agreement with Arianespace, so the case became moot, but the issue of what constituted “on
a par” remained. China argued that because its costs are so low, it could offer lower prices
and still adhere to international norms as to what costs are included in setting the price. Yet
another issue arose in 1991 — linkage of satellite export licenses with U.S. concern over
China’s ballistic missile proliferation policies. On April 30, 1991, the Bush Administration
approved final export licenses for Optus 1 and 2, and for U.S. components of a Swedish
satellite called Freja (launched by China in October 1992). To emphasize its concern about
Chinese missile proliferation, however, the White House disapproved export of U.S.
components for a satellite China itself was building (Dong Fang Hong 3). Then, on June 16,
CRS-9

IB93062
09-07-01
the White House announced that it would be “inappropriate for the United States to approve
any further export licenses for commercial satellite launches at this time.” On July 17, the
State Department identified CGWIC as one of two Chinese entities engaged in missile
technology proliferation activities that require the imposition of trade sanctions in accordance
with the Arms Export Control Act, including denial of license applications for export items
covered by the Missile Technology Control Regime (MTCR). Although the MTCR does not
cover satellites (only satellite launch vehicles, which are close cousins of ballistic missiles),
the identification of CGWIC as a cause of concern complicated China’s marketing plans.
China agreed to adhere to the MTCR, and the sanctions were lifted on February 21, 1992.
China’s fortunes improved. In May 1992, the International Telecommunications Satellite
Organization (Intelsat) agreed to launch at least one of its satellites on a Chinese launch
vehicle. On September 11, 1992, the State Department notified Congress that it was waiving
legislative restrictions on U.S. exports for six satellite projects with China: APSAT,
AsiaSat-2, Intelsat 7A, STARSAT, AfriStar, and Dong Fang Hong 3. The first five were
satellites China wanted to launch; the sixth was for satellite components for which export was
disapproved in April 1991. (The satellite was launched in 1994, but failed once it was in
orbit). Many observers saw the move as a conciliatory gesture in the wake of the U.S.
decision to sell F-16s to Taiwan.
On August 25, 1993, however, the U.S. government again imposed sanctions against
China for ballistic missile proliferation activities, and the State Department said that satellite
exports would not be permitted. The State Department announced October 4, 1994 it would
lift the sanctions after China pledged to abide by the MTCR. During this period, U.S.
tensions were acute between those who view the sanctions as harmful to U.S. business
interests (notably satellite manufacturers Hughes and Lockheed Martin), and those who want
to prevent sensitive technology from reaching China and/or to punish China for MTCR
infractions. The debate centered on whether the satellites should continue to be governed by
export guidelines of the State Department (Munitions List) or the Commerce Department
(Commerce Control List). Some responsibility for export of commercial communications
satellites was transferred from the State Department to the Commerce Department in 1992,
and in October 1996 primary responsibility was transferred to Commerce.
In January 1995, the launch of the Hughes-built APStar-2 satellite failed in-flight.
Falling debris killed 6 and injured 23 on the ground. On February 6, 1996, President Clinton
approved the export of four satellites to China for launch (2 COSAT satellites, Chinasat 7,
and Mabuhay) despite concerns about China exporting nuclear weapons-related equipment
to Pakistan. The COSAT (now Chinastar) satellites are built by Lockheed Martin and the first
was successfully launched on May 30, 1998. Chinasat 7 was built by Hughes, and Mabuhay
(now Agila 2) by Loral. The 6-year trade agreement signed in 1989 expired at the end of
1994. A new 7-year agreement was signed on March 13, 1995. On February 14, 1996, a
Long March 3B rocket carrying the Intelsat 708 communications satellite built by Loral
malfunctioned seconds after liftoff impacting the ground and spreading debris and toxic fumes
over the launch site and a nearby village. The Chinese reported 6 dead and 57 injured, but
other reports suggested a higher figure. After this second Chinese launch failure involving
fatalities, some customers, including Intelsat, canceled contracts.
In May 1997, USTR stated that it believed China violated the pricing provisions of the
bilateral agreement for the launching of Agila 2 (formerly called Mabuhay) for the Philippines.
CRS-10

IB93062
09-07-01
Chinese officials disagreed. On September 10, 1997, the Washington Times published a story
that Chinese and Russian entities (including CGWIC) were selling missile technology to Iran.
China denies the allegations.
Satellite Exports to China: 1998-2000 (Including the “Loral/Hughes”
Issue, the Cox Committee Report, and Lockheed Martin). On February 18, 1998,
the President notified Congress that it was in the national interest to export Loral’s Chinasat
8 to China. On April 4, 1998, the New York Times reported that a 1997 classified DOD
report alleged that Space Systems/Loral (part of Loral Space & Communications) and
Hughes Electronics (a subsidiary of General Motors; the satellite manufacturing division of
Hughes was acquired by Boeing in 2000) provided technical information to China that
improved the reliability of Chinese nuclear missiles. The assistance was provided in the wake
of the February 1996 Intelsat 708 launch failure (see above). The Intelsat satellite was built
by Loral, which participated in an inquiry into the accident at the request of insurance
companies seeking assurances that the Chinese had correctly diagnosed and solved the cause
of the failure. Loral formed a review committee that included representatives of other satellite
companies, including Hughes. According to Loral, the review committee did not itself
investigate the accident, but listened to Chinese officials explain their investigation and then
wrote a report. Loral conceded that a copy of the report was given to the Chinese before it
was provided to the State Department, in violation of Loral’s internal policies. Loral says it
notified the State Department when it learned that the Chinese had been given a copy.
According to media sources, DOD’s 1997 report says that the companies provided technical
information in violation of the export license that allowed the export of the satellite to China
for launch. The companies insist they did nothing that violated the export license. The
Justice Department investigated the allegations and reportedly expanded the probe to include
Hughes’ response to the 1995 APStar-2 failure. A grand jury reportedly was empaneled in
1999. On December 11, 2000, the Los Angeles Times reported that the grand jury had
adjourned and the government was exploring a plea agreement that “would probably include
monetary penalties. Loral and Hughes continue to deny any wrongdoing.” The Wall Street
Journal
reported on August 31, 2001, that the government and Loral were close to reaching
a civil settlement, and a similar settlement was expected for Hughes.
Many hearings on the “Loral/Hughes” issue were held by various House and Senate
committees. In addition, the House established the Select Committee on U.S. National
Security and Military/Commercial Concerns with the People’s Republic of China chaired by
Representative Cox to investigate the issues. The Cox committee unanimously adopted its
report on December 30, 1998, but public release was delayed until May 25, 1999 pending
preparation of an unclassified version. The Cox committee concluded that Hughes and Loral
deliberately transferred technical information and know-how to China during the course of
accident investigations. The committee investigated other cases of China acquiring technical
information from the United States and made 38 recommendations (see CRS Report
RL30231), including that the United States should increase its space launch capacity.
The FY2000 DOD authorization Act (P.L. 106-65) included language implementing
many of the Cox committee recommendations. In brief, the Department of Justice must notify
appropriate congressional committees when it is investigating alleged export violations in
connection with commercial satellites or items on the munitions list if the violation is likely
to cause significant harm or damage to national security with exceptions to protect national
security or ongoing criminal investigations; companies must be provided with timely notice
CRS-11

IB93062
09-07-01
of the status of their export applications; enhanced participation by the intelligence community
in export decisions is required; adequate resources must be provided for the offices at DOD
and the State Department that approve export licenses; individuals providing security at
overseas launch sites do not have to be DOD employees, but must report to a DOD launch
monitor; and DOD must promulgate regulations concerning the qualifications and training for
DOD space launch monitors and take other actions regarding those monitors and the records
they maintain.
In February 1999, the Clinton Administration denied Hughes permission to export two
satellites for the Asia Pacific Mobile Telecommunication (APMT) system to China for launch.
Export permission for APMT had been granted in 1997 (the President notified Congress on
June 25, 1997), but Hughes changed the spacecraft design, necessitating new export approval.
That application was denied. On May 10, 2000, the White House made its first certification
to Congress under the new process detailed in the FY1999 DOD authorization bill, approving
the export to China of satellite fuels and separation systems for the Iridium program. On
August 18, 2000, the State Department stated it would continue the suspension of a technical
assistance agreement for Loral regarding launch of Chinasat 8 because the concerns that
initiated the suspension in December 1998 have not been rectified. In January 2001, Space
News
reported that the Chinasat 8 export application was returned to Loral without action.
Loral President Bernard Schwartz was subsequently quoted by Reuters (March 29, 2001) as
remaining optimistic about ultimately getting approval to export Chinasat 8, however.
In April 2000, it became known that Lockheed Martin also was under investigation, in
this case for performing a technical assessment, without an export license, of a Chinese “kick
motor” used to place a satellite into its final orbit. On June 14, 2000, the State Department
announced it had reached agreement with Lockheed Martin involving $13 million in penalties
— $8 million that the company will pay over a 4-year period and $5 million that was
suspended and that the company can draw upon to fund a series of remedial compliance
measures specified in the consent agreement.
Satellite Exports to China: 2001. In July 2001, Senators Helms, Thompson,
Shelby, and Kyl wrote to President Bush reportedly asking the President not to grant waivers
for the export of satellites to China. As noted earlier, such waivers are required under the
FY1990-91 Foreign Relations Authorization Act (P.L. 101-246). According to a July 9
Space.com story, two European companies (Astrium and Alenia Spazio) have built satellites
for two multinational satellite organizations (Intelsat and Eutelsat, respectively) that are
scheduled for launch by China. The satellites contain U.S. components, and therefore require
U.S. export licenses. The companies reportedly already received State Department approval
to ship the satellites to China, but waivers still are needed. In late August, Intelsat canceled
its contract with Astrium for the APR-3 satellite, citing several factors including the delay in
obtaining U.S. export approval. Other satellites being manufactured by U.S. companies, such
as Chinasat 8 and another being built by Loral (Apstar-5, for APT Satellite Co.), or containing
U.S. components also may require waivers in the future (see CRS Report 98-485 for a list of
pending satellite exports). The FY2002 Commerce, Justice, State appropriations bill (H.R.
2500/S. 1215) as passed by the House and reported from the Senate Appropriations
Committee, requires 15 days notice to Congress before processing licenses for exporting
satellites. H.R. 2581, discussed in the next section, also has specific provisions regarding the
launch of satellites from China.

CRS-12

IB93062
09-07-01
Agency Jurisdiction Over Satellite Export Licenses. Between 1992 and 1996,
the Bush and Clinton Administrations transferred responsibility for decisions regarding export
of commercial satellites from the State Department to the Commerce Department. A January
1997 GAO report (GAO/NSIAD-97-24) examines that decision. In response to concerns
about the Loral/Hughes issue, Congress directed in the FY1999 DOD authorization bill (P.L.
105-261) that export control responsibility be returned to the State Department effective
March 15, 1999. Which agency should control these exports remains controversial. In the
106th Congress, Representative Gejdenson introduced a bill to return control to the
Commerce Department. A hearing on the issue was held by the Senate Foreign Relations
Committee on June 7, 2000. The Department of Commerce witness called for Commerce to
regain jurisdiction over these exports. The State Department’s witness said State neither
sought nor welcomed the decision to return jurisdiction to them, but the department is
committed to administering those responsibilities. The Security Assistance Act (P.L. 106-
280) called for a reexamination of the jurisdiction question.
Some of the controversy reflects concerns of the aerospace and space insurance
industries in the United States and abroad that the new regulations are being implemented too
broadly and vigorously and exports for launches on non-Chinese launch vehicles (such as
Europe’s Ariane) also are being affected. DOD officials and others have cited potential harm
to the U.S. defense industrial base if U.S. exports are stifled, too. One of the concerns is the
length of time needed to obtain a State Department approval, one factor being whether State
has sufficient export license examiners. Section 309 of the FY2000 State Department
authorization act (incorporated into the FY2000 Consolidated Appropriations Act, P.L. 106-
113) directed the Secretary of State to establish an export regime that includes expedited
approval for exports to NATO allies and major non-NATO allies. The State Department
announced those new rules in May 2000; they took effect July 1. Also in May 2000, the State
Department reportedly notified France that it would not apply strict technology export control
on satellites to be launched by Ariane (Space News, May 29, 2000, p. 1). Other reforms to
broader U.S. export controls for NATO allies also were announced the same month. The
Security Assistance Act (P.L. 106-280) reduces from 30 days to15 days the time Congress
has to review decisions on exporting commercial communications satellites to Russia,
Ukraine, and Kazakhstan, making the time period the same as for NATO allies.
On May 3, 2001, Representatives Berman and Rohrabacher introduced H.R. 1707 to
return jurisdiction to the Commerce Department. Under the bill, Commerce must consult
with the State and Defense Departments, the Central Intelligence Agency (CIA), and other
appropriate agencies. Within 30 days of such referral, the department or agency would have
to make a recommendation to approve or deny the license; no response would be deemed as
approval. If the agencies cannot agree, the dispute would be resolved by the President within
60 days. Export licenses would need approved technology transfer plans, and the Secretary
of Defense would monitor all aspects of the launch to ensure no unauthorized technology
transfer occurs and sufficient personnel are provided to ensure 24-hour, 7-day-per-week
security of the satellite and related items (the licensee must reimburse DOD for associated
costs). The bill also places launch failure investigations under controls imposed by section
38 of the Arms Export Control Act (AECA) and requires that they be monitored by DOD.
On August 1, the House International Relations Committee adopted a Berman
amendment to the Export Administration Act (H.R. 2581). A modified version of H. R.
1707, it establishes the same procedures for export license decisions as H.R. 1707, but omits
CRS-13

IB93062
09-07-01
provisions regarding technology transfer, failure investigations, and specific mention of the
CIA as a reviewing agency. It adds a section under which “defense services” provided in
connection with a satellite launch from China or by Chinese nationals are subject to the AECA
and Congress must receive 30 days notice before any export license or technical assistance
agreement is so approved.
GAO released a report (GAO-01-528) in June 2001 concluding that the length of time
required to process export license applications through the Department of Commerce versus
the State Department is similar. The report notes, however, that the type of commodity being
exported can have a significant impact on processing time. It includes launch vehicles,
military and space electronics, and space systems and technology among those items that
require the longest processing times at State. The Satellite Industry Association (SIA)
released figures in May 2001 showing U.S. satellite manufacturers losing market share to
foreign companies. SIA and others attribute that loss in part to the shift in jurisdiction to
State, which they assert creates uncertainty for satellite customers over when and whether
export licenses will be approved.
Russia. Following the collapse of the Soviet Union, interest developed in loosening
U.S. policy to permit export of U.S.-made satellites to Russia for launch. In June 1992,
President George H. Bush said he would not oppose Russia launching an Inmarsat
(International Maritime Satellite Organization) satellite and the United States would negotiate
with Russia over “rules of the road” for future commercial launches. Discussions were held
in the fall of 1992, agreement in principle was reached in May 1993, and the agreement was
signed on September 2, 1993, after Russia agreed to abide by the terms of the MTCR (see
below). On January 30, 1996, the countries amended the agreement. Prior to Russia’s first
launch of a U.S.-built satellite, an agreement to protect American technology was reached.
For subsequent launches, an exchange of diplomatic letters extended that agreement, but the
State Department decided in 1998 that a formal Technology Safeguard Agreement was
needed. The agreement, among the United States, Russia, and Kazakstan (where the launch
site is located) was signed in January 1999. A similar agreement for launches from Russia’s
Plesetsk, Svobodny, and Kapustin Yar launch sites was signed in January 2000.
The 1993 agreement was signed only after Russia agreed to comply with the MTCR in
a case involving a Russian company, Glavkosmos, that planned to sell rocket engine
technology to the Indian Space Research Organization (ISRO). The United States declared
it violated the MTCR and imposed 2-year sanctions against Glavkosmos and ISRO. In June
1993, the United States threatened to impose sanctions against Russian companies that did
business with Glavkosmos. The two countries finally agreed that Russia would cease
transferring rocket engine technology (the engines themselves were not at issue) to India.
As noted, on September 10, 1997, the Washington Times published a story that Russian
and Chinese entities, including the Russian Space Agency, were selling missile technology to
Iran. In July 1998, Russia announced that it had identified nine entities, not including the
Russian Space Agency, that might be engaged in illegal export activities. The United States
imposed sanctions against seven of them on July 28 and three more on January 12, 1999. The
State Department said the United States would not increase the quota of geostationary
launches that Russia can conduct under the 1996 agreement unless Russian entities cease
cooperation with Iran’s ballistic missile program (see CRS Report 98-299). The launches are
conducted primarily by a U.S.-Russian joint venture composed of Lockheed Martin and
CRS-14

IB93062
09-07-01
Russia’s Khrunichev and Energia, companies that have not been sanctioned. Lockheed
Martin was anxious to have the quota raised to 20 and eventually eliminated. On July 13, the
White House agreed to raise the quota to 20. A Senate Governmental Affairs Committee
hearing was held on July 21, 1999. The agreement that set the quotas was due to expire on
December 31, 2000. The Wall Street Journal reported on December 1, 2000 (page A4) that
the White House decided to eliminate the quota. That action was taken even though Russia
had informed the United States that, as of December 1, 2000, it would withdraw from a 1995
agreement to stop selling conventional arms to Iran.
Ukraine. Ukraine also offers commercial launch services, chiefly as part of the Sea
Launch joint venture among Boeing, Ukraine’s Yuzhnoye, Russia’s Energomash, and
Norway’s Kvaerner. The Sea Launch vehicle consists of a Ukranian two-stage Zenit rocket
with a Russian third stage. The vehicle is launched from a mobile ocean oil rig built by
Kvaerner. The rig is stationed in Long Beach, CA, where the launch vehicle and spacecraft
are mated, and then towed into the ocean where the launch takes place. The United States and
Ukraine signed a bilateral trade agreement in February 1996 (see table), that would have
expired in 2001, but President Clinton terminated it on June 6, 2000, in recognition of
“Ukraine’s steadfast commitment to international nonproliferation norms.” The first
successful commercial launch was in October 1999. In 1998, Boeing agreed to pay $10
million for not abiding by export regulations in its dealings with Russia and Ukraine.
Separately, Ukraine signed an agreement with the U.S. company Globalstar to launch
its satellites on Zenit from Baikonur. The first attempt failed in September 1998, destroying
12 Globalstar satellites. Globalstar switched to Russian Soyuz launch vehicles (marketed
through Starsem) for subsequent launches.
India. India conducted its first successful orbital space launch in 1980. Its ASLV and
PSLV launch vehicles can place relatively small satellites in low Earth orbit. India conducted
its first commercial launch (of German and South Korean satellites) using the ASLV to low
Earth orbit in May 1999. India is developing a larger vehicle (GSLV) capable of reaching
geostationary orbit. The first GSLV test launch was completed in April 2001. The GSLV
uses Russian cryogenic engines that were the subject of a dispute between the United States
and Russia (discussed elsewhere in this report). India has been seeking opportunities to
launch satellites on a commercial basis, and Taiwan had planned to launch its Rocsat 2 remote
sensing satellite on an Indian vehicle. Rocsat 2 is being built by Europe’s Astrium, but
contains U.S. components. According to Space News (July 16, 2001, p. 1,18), the United
States will not grant an export license for the U.S. components because of economic
sanctions imposed against India following nuclear weapons tests in 1998. Hence, Space News
reports that Taiwan has selected a U.S. launch vehicle instead.
Japan. Japan successfully conducted the first launch of its H-2 launch vehicle in 1994,
the first all-Japanese rocket capable of putting satellites in geostationary orbit. Previous
rockets used for this purpose were based on U.S. technology and a 1969 U.S.-Japan
agreement prohibited Japan from launching for third parties without U.S. consent. With the
H-2, Japan was freed from that constraint. Japan’s Rocket Systems Corp. (RSC), created in
1990, offers commercial launch services, but H-2 was not cost effective and encountered
technical problems that led to the Japanese government abandoning the program in 1999. A
new version, H2A, successfully completed its first launch in August 2001. RSC had contracts
with two U.S. satellite builders, Hughes and Loral, for 10 launches each between 2000 and
CRS-15

IB93062
09-07-01
2005, but Hughes canceled its contract in May 2000. In June 1997, the Japanese government
reached agreement with the fishing industry to allow more launches from Tanegashima.
Fishermen must evacuate the area near the launch site during launches. The agreement
extends from 90 to 190 the number of days per year that launches may be conducted, and
permits up to eight launches a year instead of two.
LEGISLATION
H.R. 1931 (D. Weldon)/S. 1243 (Graham)
Spaceport Equality Act. H.R. 1931 introduced May 22, 2001; referred to Ways and
Means Committee. S. 1243 introduced July 25, 2001; referred to Finance Committee.
H.R. 2177 (Calvert)
Invest in Space Now Act. Introduced June 14, 2001; referred to Ways and Means
Committee.
H.R. 2443 (Lampson)
Space Tourism Promotion Act. Introduced July 10, 2001; referred to Committees on
Science, and Ways & Means.
H.R. 2500 (Wolf)/S. 1215 (Hollings)
FY2002 Commerce, Justice, State appropriations. Reported from House Appropriations
Committee July 13 (H. Rept. 107-139); passed House July 18. Reported from Senate
Appropriations Committee July 20 (S. Rept. 107-42).
H.R. 2581 (Gilman)
Export Administration Act of 2001. As marked up by the House International Relations
Committee August 1, includes language that would affect satellite exports.
H.R. 2586 (Stump)
FY2002 DOD Authorization Act. Reported from Committee on Armed Services
September 4.
H.R. 2620 (Walsh)/S. 1216 (Mikulski)
FY2002 VA-HUD-Independent Agencies Appropriations (including NASA). Reported
from House Appropriations Committee July 25 (H. Rept. 107-159); passed House July 30.
Reported from Senate Appropriations Committee July 20 (S. Rept. 107-43); passed Senate
August 2.
CRS-16