Order Code IB93062
Issue Brief for Congress
Received through the CRS Web
Space Launch Vehicles:
Government Activities,
Commercial Competition,
and Satellite Exports
Updated July 1, 2002
Marcia S. Smith
Resources, Science, and Industry Division
Congressional Research Service ˜ The Library of Congress

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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

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Space Launch Vehicles: Government Activities, Commercial
Competition, and Satellite Exports
SUMMARY
Launching satellites into orbit, once the
Since 1999, projections for launch ser-
exclusive domain of the U.S. and Soviet gov-
vices demand have decreased dramatically,
ernments, today is an industry in which compa-
however. At the same time, NASA’s main
nies in the United States, Europe, China, Rus-
RLV program, X-33, suffered delays. NASA
sia, Ukraine, Japan, and India compete. In the
terminated the program in March 2001.
United States, the National Aeronautics and
Companies developing new launch vehicles
Space Administration (NASA) continues to be
are reassessing their plans, and NASA has
responsible for launches of its space shuttle,
initiated a new “Space Launch Initiative”
and the Air Force has responsibility for
(SLI) to broaden the choices from which it can
launches associated with U.S. military and
choose a new RLV design. Some SLI funding
intelligence satellites, but all other launches are
is going to companies that have been trying to
conducted by private sector companies. Since
develop their own new launch vehicles. DOD
the early 1980s, Congress and successive
also is reevaluating its EELV plans.
Administrations have taken actions, including
passage of several laws, to facilitate the U.S.
Until a replacement is developed, NASA
commercial space launch services business.
will rely upon the space shuttle for launching
The Federal Aviation Administration (FAA)
humans into space, including to the Interna-
regulates the industry.
tional Space Station. Safe operation of the
shuttle remains a top NASA concern.
During the mid-1990s, demand for
launching commercial communications satel-
In the commercial launch services
lites was forecast to grow significantly through
market, U.S. companies are concerned about
the early 21st Century. Those forecasts sparked
foreign competition, particularly with
plans to develop new launch vehicles here and
countries that have non-market economies
abroad. In the United States, NASA and the
such as China, Russia, and Ukraine. The U.S.
Department of Defense (DOD) created
has leverage over how these countries
government-industry partnerships to develop
compete because almost all commercial
new reusable launch vehicles (RLVs) and
satellites are U.S.-built or have U.S.
“evolved” expendable launch vehicles (ELVs),
components, and hence require U.S. export
respectively. The U.S. space shuttle is the only
licenses. The U.S. signed bilateral trade
operational RLV today. All other operational
agreements with each of those countries
launch vehicles are expendable (i.e., they can
setting forth the conditions under which they
only be used once). Some U.S. private sector
could participate in the market, including
companies began developing their own launch
quotas on how many launches they can
vehicles without direct government financial
conduct. The agreement with China expired
involvement, although some have sought
Dec. 31, 2001. The Clinton Administration
government loan guarantees or tax incentives.
ended quotas for Ukraine and Russia in 2000.
H.R. 2177 would create tax incentives; H.R.
Export of U.S.-built satellites to became an
2443 would offer loan guarantees for vehicles
issue in terms of whether U.S. satellite
intended to be use for space tourism.
manufacturing companies provide militarily
significant information to those countries in
the course of the satellite launches.
Congressional Research Service ˜ The Library of Congress

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MOST RECENT DEVELOPMENTS
On June 27, the Senate passed the FY2003 DOD authorization bill (S. 2514), approving
the $58 million requested for EELV R&D, and adding $14.5 million to the $159 million
requested for procurement. The Senate also adopted a Nelson (FL)/Allard amendment
expressing the sense of Congress that the Air Force evaluate all options to sustain the U.S.
space launch industrial base, develop a plan for assured access to space, and report to
Congress on that plan as soon as practicable. The House approved the requested amounts
for R&D and procurement in its version of the authorization bill (H.R. 4546), and the
FY2003 DOD appropriations bill (H.R. 5010). Meanwhile, Undersecretary of the Air Force
Pete Teets reportedly is considering adding substantial funds to the EELV budget for
FY2004 and beyond to ensure that both Lockheed Martin and Boeing can adequately support
the vehicles in a depressed launch services market environment.
NASA has indefinitely delayed the launch of the next space shuttle mission pending
investigation of cracks found in propellant lines in two other space shuttle orbiters. As a
precaution, NASA is inspecting all the orbiters. The next mission, STS 107, will use the
orbiter Columbia. It is a 16-day dedicated science mission unrelated to the International
Space Station program, and will carry the first Israeli astronaut into space.
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
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.
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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 launching 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. Passage of the 1984 Commercial Space Launch Act
(P.L. 98- 575), 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. But removing the
shuttle as a competitor was the major factor in fostering the U.S. launch businesses.
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
Challenger accident and occasional shuttle launch delays 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
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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
contract expires in September 2002, but has options to extend for two two-year periods.
NASA asserts that SFOC has saved the agency approximately $1 billion per year. NASA
currently indicates that it anticipates extending the contract for two more years, while it
assesses privatization options (see below). For FY2002, NASA requested and received $3.3
billion for the shuttle program. The FY2003 request is $3.2 billion.
NASA is still deciding what the future holds for the shuttle. The debate is over whether
to continue to rely on the shuttle for the indefinite future, or replace it with a new “second
generation” reusable launch vehicle (RLV) in the next decade or so. Shuttle advocates insist
that the four space shuttle orbiters are less than 30% through their useful life, and, with
adequate upgrades, can operate through 2030. Advocates of a 2nd generation RLV argue that
the shuttle is too expensive and must be replaced by a more cost effective vehicle.
The 1994 Clinton policy directed NASA to pursue technology development and
demonstration efforts to support a decision by the year 2000 on developing a 2nd generation
RLV. This led to the X-33 program (see below). At the same time, NASA 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) to
improve performance were to be implemented if efforts to develop a 2nd generation RLV
were unsuccessful. When 2000 arrived, it was clear that the X-33 program would not meet
its deadlines and that program was cancelled. Instead of moving forward with the Phase III
and IV upgrades to the shuttle, however, NASA initiated a new 2nd generation RLV program,
the Space Launch Initiative (SLI, see below). The decision on whether to retain the shuttle
or replace it with a new vehicle was pushed to 2005 (NASA now refers to it as a “mid-
decade” decision). NASA asserts that the shuttle will be one competitor in the decision on
what RLV to use in the future. In the meantime, NASA is funding only those shuttle
upgrades needed for safety and “supportability,” not to improve the shuttle’s performance.
The question then arises as to what safety and supportability upgrades are needed while
awaiting the outcome of the SLI effort. A key issue is when a replacement for the shuttle
might be operational. NASA uses the year 2012, but many are skeptical that a new vehicle
will be operational by then. Debate over shuttle upgrades became more intense during the
FY2002 budget cycle after NASA decided to terminate what it earlier had described as its
highest priority safety upgrade, the Electric Auxiliary Power Unit, because of cost increases
and weight gain. The issue remains controversial because of NASA’s decision to
significantly reduce how much it plans to spend on both safety and supportability upgrades
in the FY2002-2006 time period. In the FY2002 request, NASA planned to spend $1.836
billion on those upgrades. In the FY2003 request, that figure is $1.220 billion, a 34%
reduction. Of the $1.836 billion, $1.306 billion was slated for safety upgrades. That would
decline to $745 million in the FY2003 request, a 43% reduction. In response to questions
at a House Science Committee hearing on February 27, 2002, NASA Administrator O’Keefe
assured the committee that the funding level proposed in the FY2003 budget would not
compromise shuttle safety. The conference report on the FY2002 VA-HUD-IA
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appropriations act (P.L. 107-73) requires NASA to submit a report by March 15, 2002 on the
shuttle upgrades program.
The independent Aerospace Safety Advisory Panel (ASAP), created after the 1967
Apollo fire that killed three astronauts, reviews safety in NASA human spaceflight programs.
In its March 2002 report, ASAP concluded that “current and proposed budgets are not
sufficient to improve or even maintain the safety risk levels of operating the Space Shuttle
or the ISS.” At an April 18 hearing before a House Science subcommittee, ASAP’s outgoing
chairman, Richard Blomberg, said that: “In all the years of my involvement, I have never
been as concerned for Space Shuttle safety as I am right now.”
The 1996 decision to choose a single prime contractor for the shuttle was described as
a first step towards shuttle privatization, although the precise meaning of that term remains
unclear. The Bush Administration intends to move forward with privatization as well. Some
envision the shuttle someday being operated entirely the private sector, similar to an airline,
with the government as one customer. Others believe that the shuttle’s high operational costs
will not attract private sector customers, and it will remain a vehicle used primarily by, and
paid for by, the government. NASA is assessing different options, and hopes to release a
Request for Information to industry in 2002. NASA has targeted FY2004 as the time when
it would move to a new business arrangement.
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, 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 were expected to pay the rest of the
development costs themselves. The launches are scheduled to take place beginning in 2002.
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In 2000, however, new market forecasts showed a reduction in expected commercial
demand, and DOD began reevaluating its EELV strategy. It 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. On January 25, 2002, the Wall
Street Journal reported that the companies had approached DOD to obtain “hundreds of
millions of government assistance” because of the downturn in the commercial market.
Inside Defense reported on May 15, 2002, that the Air Force is considering adding up to $200
million per year for FY2004 and beyond. Undersecretary of the Air Force Teets told the
Commission of the Future of the U.S. Aerospace Industry on May 14 that the Air Force “may
need to augment the industrial base to keep both companies competing head-to-head for the
life of the program.” [http://www.aerospacecommission.gov/051402testimony/teets.shtml].
For FY2002, DOD requested $320 million for R&D and $98 million for procurement.
Congress appropriated $315 million for R&D and $98 million for procurement (P.L. 107-
117). The FY2003 request is $58 million for R&D and $159 million for procurement. The
House approved both requests in the FY2003 DOD authorization act (H.R. 4546) and the
FY2003 DOD appropriations act (H.R. 5010). The Senate added $14.5 million for
procurement (S. 2514).
Government-Led Reusable Launch Vehicle (RLV) Programs. The 1994
Clinton policy gave NASA lead responsibility for technology development for a
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, was to be called VentureStar. Technical
problems with the X-33, particularly 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
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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 declined.
Space Launch Initiative (SLI). In 2000, as part of its FY2001 budget request,
NASA restructured its RLV program and initiated the Space Launch Initiative (SLI). Under
SLI, NASA is working with the private sector and universities to develop new technologies
that will allow a decision in 2006 (a slip of one year from the original plan) on what new
RLV could be developed. NASA hopes that by funding a variety of companies and
universities, at least two RLV “system architecture” choices will be available in 2006. At
that point, the government and industry would have to decide what, if any, new RLV to
build, and who would pay for it. NASA initially specified that it expected the private sector
to pay some of the development costs, but more recently has conceded that market conditions
make it unlikely that the private sector will do so. Cost estimates for a new RLV are notional
at this time, but are on the order of $10 billion, in addition to the approximately $5 billion
NASA plans to spend on SLI from FY2001 to FY2006. A more definitive cost estimate will
not be available until SLI is completed. According to NASA, the goal is an RLV developed
from technology demonstrated through the SLI program that will be “10 times safer and crew
survivability 100 times greater, all at one-tenth the cost of today’s space launch systems.”
The focus of the SLI program is to meet NASA’s future needs, primarily servicing the
International Space Station. However, NASA also is trying to “converge” its requirements
with those of the commercial sector so the new RLV can serve both markets. NASA also
is in discussions with the Air Force to assess the possibility of developing a vehicle that
could also meet DOD requirements.
Two rounds of contract awards have been made by NASA to companies and universities
to develop RLV technologies—the list is available at [http://www.slinews.com/]. Boeing,
Lockheed Martin, and an Orbital Sciences/Northrop Grumman team presented candidate
system architectures to NASA in April 2002.
At a House Science Subcommittee hearing on June 20, GAO testified about 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: 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 failure of the X-33 and X-34 programs, and of the National AeroSpace Plane
(NASP) program before them, has made some observers skeptical about NASA’s ability to
develop a next generation space launch vehicle successfully. Hence, the SLI program is
under scrutiny. Total planned SLI funding for FY2001-2006 is $4.8 billion. For FY2001,
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NASA requested and received $290 million for SLI. For FY2002, NASA requested $475
million and received $465 million. The FY2003 budget request is $760 million.
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 issues involving satellite exports (discussed below) and
the domestic launch services industry. Several bills are pending. One issue is what the
government should do to stimulate development of new launch vehicles by the private sector,
particularly in a market that is stagnant or declining. Debate has focused on whether tax
incentives or loan guarantees should be created for companies attempting to develop lower
cost launch vehicles. In the past, companies developing launch vehicles with high initial
capital costs sought loan guarantees, while companies developing smaller vehicles with
lower initial capital costs 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. H.R. 2177 (Calvert) would create tax incentives, while H.R. 2443
(Lampson) would provide loan guarantees for developing transportation systems needed for
space tourism, and tax incentives for space tourism companies. Bills to make spaceports,
like airports, eligible for tax exempt bonds are pending (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. Three satellite mobile telephone companies (Iridium, ICO, and
Globalstar), and a company that offered data services using LEO satellites (Orbcomm), all
declared bankruptcy. Though Iridium and ICO were later brought out of bankruptcy, and
Orbcomm was purchased by another company at auction, many investors remain skeptical
about the prospects for such systems. (Globalstar declared bankruptcy in February 2002 and
is working to restructure its debt.) Declining launch market forecasts published by FAA
(available at [http://ast.faa.gov]) reflect this skepticism. One factor is that technological
advances permit longer satellite lifetimes and enlarge capacity, reducing the need for new
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satellites. The slowdown in commercial satellite launches is demonstrated by the FAA’s
“2001 Year in Review” report, which notes that only five FAA-licenses launches took place
in 2001, compared with 22 in 1998. The constricting market affects existing launch service
providers, both here and abroad, as well as companies planning to introduce new vehicles.
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
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. President Clinton terminated the quotas for Russia and Ukraine in 2000.
Europe. The European Space Agency (ESA) developed the Ariane family of launch
vehicles. The first test launch of an Ariane was in 1979; operational launches began in 1982.
ESA continued to develop new variants of Ariane and two models, Ariane 4 and Ariane 5,
are now in use. ESA also is developing a smaller launch vehicle, Vega, whose first launch
expected in 2005. Operational launches are conducted by the French company Arianespace,
which is owned by the French space agency (CNES) and European aerospace companies and
banks. Arianespace conducts its launches from Kourou, French Guiana, on the northern
coast of South America. 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 is concerned about how much the respective governments subsidize
commercial launch operations, but another controversial topic (not formally part of the talks)
was 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 originally 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 gives preference to using Ariane, but is not legally constrained from
using other launch vehicles.) Arianespace is encountering significant financial difficulties,
however, posting a loss of $178 million for 2001, higher than the $48 million loss its
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chairman had earlier forecast. In 2001, ESA agreed to pay additional costs associated with
operating the Kourou launch site, but, according to media reports, is now considering
additional measures to support the company. At a June 2002 meeting, ESA proposed to its
member governments that ESA make a guaranteed purchase of three Ariane and two Vega
launches annually, at a reported cost of $650 million euros ($613 million) per year.
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 7-year agreement was reached in 1995, and
amended in 1997. The agreement expired on December 31, 2001. The Office of the U.S.
Trade Representative (USTR) reports that the United States has made no determination as
to whether to seek a new arrangement. Under the expired agreement, China was allowed to
launch up to 20 foreign satellites to geostationary orbit (GEO). GEO launches had to be
priced on a par with Western prices. If the price was within 15%, it would normally have
been considered consistent with that obligation. Prices more than 15% below would have
been examined in detail. There were no numerical limits on the number of launches to low
Earth orbit (LEO). LEO launches had to be priced on a par with Western LEO launch prices.
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.
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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,
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.
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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 satellites, now called Chinastar, 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.] 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. 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 denied 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’ satellite manufacturing division (then a subsidiary of General Motors;
now Boeing Satellite Systems) 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. 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.
The settlement with Loral was announced on January 9, 2002. Loral will pay a $14 million
civil fine, and spend $6 million on strengthening its export compliance program.
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
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Representative Cox to investigate the issues. 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 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 had not been rectified.
In January 2001, Space News reported that the Chinasat 8 export application was returned
to Loral without action.
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,
2001 Space.com story, two European companies (Astrium and Alenia Spazio) built satellites
for two multinational satellite organizations (Intelsat and Eutelsat, respectively) that were
scheduled for launch by China. The satellites contain U.S. components, and therefore require
U.S. export licenses. The companies reportedly had received State Department approval to
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ship the satellites to China, but waivers still were 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
Act (P.L. 107-77) 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. As noted, the U.S.-China launch services trade
agreement expired on December 31, 2001.

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.
H.R.2581, as reported from the House International Relations Committee on November
16, 2001, includes Title VII, which would return jurisdiction over commercial
communications satellite exports to the Commerce Department. Commerce would be
required to consult with the State and Defense Departments and other appropriate
departments and agencies. The Director of Central Intelligence would be consulted as
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appropriate. 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.
“Defense services” provided in connection with a satellite launch from China or by Chinese
nationals would be subject to section 38 of the Arms Export Control Act and Congress must
receive a presidential certification 30 days before any export license or technical assistance
agreement is so approved. The language is a modified version of H.R. 1707 (Berman). The
House Armed Services Committee (HASC) reported its version of the bill on March 8, 2002
(H. Rept. 107-297, Part II), striking Title VII and thereby retaining jurisdiction at the State
Department. The Center for Strategic and International Studies [htp://www.csis.org] released
a report in April 2002 concluding that jurisdiction should be shifted to the Commerce
Department to help ensure the competitiveness of the U.S. satellite manufacturing industry.
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. For 2001, however, U.S. companies won 19 of the 22
commercial satellite manufacturing contracts world-wide (Space News, Jan. 21, 2002).
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. A formal Technology Safeguard 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
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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
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, 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 earlier). 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.
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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. In 1990, a joint venture, Rocket Systems Corp.
(RSC), was created to develop and market the H-2; the Japanese government provides the
development funding and purchases launches for its own needs. H-2 was not cost effective,
and encountered technical problems that led the Japanese government to abandon the
program in 1999. A new version, H2A, successfully completed its first launch in August
2001. RSC signed contracts with two U.S. satellite builders, Hughes (now part of Boeing)
and Loral, for 10 launches each between 2000 and 2005. Hughes canceled its contract in May
2000, however, and Loral lowered its agreement to eight. In 2002, the Japanese government
announced that it will privatize production of the H2A by 2005. Mitsubishi Heavy
Industries, one of the companies participating in RSC, reportedly will take over development
and marketing from RSC. Development of an enhanced version of H2A is being considered.
H-2 launches are conducted from Tanegashima, on an island south of Toyko. 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. 2581 (Gilman)
Export Administration Act of 2001. Referred to House International Relations and
House Rules. Reported by House International Relations Committee November 16, 2001
(H.Rept. 107-297, Part I). Reported by House Armed Services Committee March 8, 2002
(H.Rept. 107-297, Part II).
H.R. 4546 (Stump)/S. 2514 (Levin)
FY2003 National Defense Authorization Act. H.R. 4546 reported from House Armed
Services Committee May 3, 2002 (H.Rept. 107-436); passed House May 9. S. 2514 reported
from Senate Armed Services Committee May 15 (S.Rept. 107-151); passed Senate June 27.
H.R. 5010 (Lewis)
FY2003 DOD appropriations act. Reported from House Appropriations Committee
June 25 (H. Rept. 107-532); passed House June 27.
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