Order Code IB93062
Issue Brief for Congress
Received through the CRS Web
Space Launch Vehicles:
Government Activities,
Commercial Competition,
and Satellite Exports
Updated February 3, 2003
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
George W. Bush Administration Activity
U.S. Launch Vehicle Programs and Issues
NASA’s Space Shuttle Program
DOD’s Evolved Expendable Launch Vehicle (EELV) Program
NASA’s Efforts to Develop New Reusable Launch Vehicles (RLVs)
X-33 and X-34
Space Launch Initiative (SLI)
November 2002 SLI Restructuring Proposal
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 declined dramatically, and
ernments, today is an industry in which compa-
NASA’s efforts to develop a new RLV to
nies in the United States, Europe, China, Rus-
replace the shuttle have faltered. Most re-
sia, Ukraine, Japan, and India compete. In the
cently, NASA announced plans to refocus its
United States, the National Aeronautics and
latest RLV development program, the Space
Space Administration (NASA) continues to be
Launch Initiative, towards building an Orbital
responsible for launches of its space shuttle,
Space Plane to take crews to and from the
and the Air Force has responsibility for
space station. It will be launched on an EELV
launches associated with U.S. military and
rather than a new RLV. NASA also said it no
intelligence satellites, but all other launches are
longer had a near-term goal of lowering the
conducted by private sector companies. Since
cost of launching spacecraft, and will continue
the early 1980s, Congress and successive
to rely on the shuttle until at least 2015, in-
Administrations have taken actions, including
stead of 2012. DOD’s new EELVs (Atlas 5
passage of several laws, to facilitate the U.S.
and Delta 4) were successfully launched in
commercial space launch services business.
2002, but the companies that built the vehicles
The Federal Aviation Administration (FAA)
reportedly are seeking additional funding from
regulates the industry.
DOD to defray their costs in the wake of
diminished commercial demand.
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
components, and hence require U.S. export
(EELVs), respectively. The U.S. space shuttle
licenses. The U.S. signed bilateral trade
is the only operational RLV today. All other
agreements with each of those countries
operational launch vehicles are expendable
setting forth the conditions under which they
(i.e., they can only be used once). Some U.S.
could participate in the market, including
private sector companies began developing
quotas on how many launches they could
their own launch vehicles without direct gov-
conduct. The agreement with China expired
ernment financial involvement, although some
Dec. 31, 2001. The Clinton Administration
have sought government loan guarantees or tax
ended quotas for Ukraine and Russia in 2000.
incentives. P.L. 107-248 (H.R. 5010), the
Export of U.S.-built satellites to China is an
FY2003 DOD appropriations act, creates loan
issue in terms of whether U.S. satellite
guarantees for companies building in-orbit
manufacturing companies provide militarily
commercial reusable space transportation
significant information to those countries in
systems, but they are not launch vehicles.
the course of the satellite launches.
Congressional Research Service ˜ The Library of Congress

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MOST RECENT DEVELOPMENTS
On February 1, 2003, NASA’s space shuttle Columbia broke apart during its descent
from orbit following a 16-day science mission. CRS Report RS21408 discusses the
Columbia tragedy. The text of this issue brief will be updated shortly with relevant
information. Currently, it reflects activities through January 23, 2003.
The Senate is debating H.J.Res. 2, the Omnibus Continuing Appropriations resolution,
which includes FY2003 funding for NASA. The Senate Appropriations Committee revised
its FY2003 funding recommendations in January 2003 as part of Senate Amendment 1 (SA
1) to H. J. Res 2. The revised recommendations reflect NASA’s amended FY2003 budget
request, submitted to Congress in November 2002, after both the House and Senate
Appropriations Committees had marked up the 107th Congress version of the FY2003 VA-
HUD-IA appropriations act (H.R. 5605/S. 2797), which did not clear Congress. The revised
recommendations support NASA’s decision to reshape its efforts to develop new space
transportation systems through the Space Launch Initiative (SLI), but modify NASA’s
proposed funding. Total funding for the restructured SLI would be reduced from $879
million to $800 million. Within that, $115 million would be allocated for the new Orbital
Space Plane effort, instead of the $296 million requested. The remaining $685 million would
be allocated to the new Next Generation Launch Technology program, comprising what
remains of efforts to develop a “2nd generation” reusable launch vehicle (RLV), and “3rd
generation” launch vehicle technologies. NASA had proposed $584 million for NGLT.
On December 26, 2002, the State Department charged Hughes Electronics and Boeing
Satellite Systems (which had been the satellite manufacturing unit of Hughes Electronics
prior to Boeing’s purchase of it in January 2000), with 123 counts of export violations. The
charges stem from investigations in the late 1990s into whether China obtained militarily
useful information while Hughes and another company (Loral) assisted in the investigation
of two Chinese launch failures of U.S.-made satellites.
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.
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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.
Everything changed on January 28, 1986, however, when the space shuttle Challenger
exploded 73 seconds after launch. 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 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 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. Consequently, the Reagan Administration revised U.S. launch policy
from primary dependence on the shuttle to a “mixed fleet” approach where a wide variety of
launch vehicles are available. 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
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 sets 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.
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George W. Bush Administration Activity
On June 28, 2002, President Bush ordered the National Security Council to chair a
review of several U.S. space policies. The review of space transportation policy was due by
December 31, 2002, but has been delayed.
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
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 has options to extend for two two-year periods. On August 2, 2002, NASA
exercised the first option, extending the contract to September 30, 2004. NASA asserts that
SFOC has saved the agency approximately $1 billion per year. For FY2002, NASA requested
and received $3.3 billion for the shuttle program. The FY2003 request is $3.2 billion. The
House and Senate Appropriations Committees approved that request in the FY2003 VA-
HUD-IA appropriations bill (H.R. 5605/S. 2797). That bill did not clear Congress, however.
NASA’s FY2003 funding is now part of the FY2003 Omnibus Continuing Appropriations
resolution (H.J.Res. 2). The Senate Appropriations Committee issued revised
recommendations in January 2003, which still approve the $3.2 billion request.
In November 2002, the Bush Administration submitted to Congress an amended
FY2003 NASA budget request that answered some questions about the future of the shuttle.
The shuttle is one element of NASA’s “Integrated Space Transportation Program” (ISTP),
and the November budget amendment reflected significant changes to the ISTP. NASA had
planned to phase out the shuttle beginning 2012, replacing it with a new, lower-cost “2nd
generation” reusable launch vehicle (RLV)—the shuttle is the 1st generation RLV—based
on technologies developed through NASA’s Space Launch Initiative (SLI). The debate
over retaining shuttle versus building a new vehicle has waged for years. 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. NASA
now has decided to retain the shuttle until at least 2015, and perhaps 2020 or longer, and
plans to shift $470 million from the SLI program into the shuttle (FY2003-2007) to extend
its lifetime. SLI is discussed in more detail below.
NASA has been engaged in a program of safety and supportability upgrades for the
shuttle for many years to ensure its safe operation. Debate over shuttle upgrades became
more intense during the FY2002 budget cycle after NASA decided to terminate what it
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earlier had described as its highest priority safety upgrade, the Electric Auxiliary Power Unit,
because of cost increases and weight gain. Then, in the FY2003 original budget submission,
NASA reduced how much it planned to spend on both safety and supportability upgrades in
the FY2002-2006 time period by 34%— from $1.836 billion to $1.220 billion. NASA
Administrator O’Keefe insisted the proposed funding level will not compromise shuttle
safety. However, the independent Aerospace Safety Advisory Panel (ASAP) concluded in
March 2002 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.”
In September 2002, NASA canceled its highest priority supportability upgrade, the
Checkout and Launch Control System (CLCS) because of cost overruns and schedule delays.
In its report on the FY2003 VA-HUD-IA appropriations bill (H.Rept. 107-740), the House
Appropriations Committee directed NASA to report within 60 days of the law’s enactment
on steps being taken to correct deficiencies in the upgrade program. The bill did not clear the
107th Congress. In the November amended budget request, NASA announced plans to create
a new line item, “Future Shuttle Life Extension Program,” that will incorporate funding
previously identified for shuttle upgrades. Of the $470 million NASA plans to add to the
shuttle program in the FY2003-2007 period, $236 million is allocated to the life extension
program. What projects will be funded were not specified.
The amended budget request also signaled a change in NASA’s projected annual shuttle
launch rate. Historically, shuttles have been launched at a rate of 7-8 per year, but that was
cut to 6 per year, and then to 4 per year, for budgetary reasons. In the amended budget
request, NASA indicated that it would increase the flight rate to 5 per year beginning in 2006
to support the space station program.
One remaining question concerns shuttle “privatization,” which also has been discussed
for many years. As noted, in 1996, NASA selected a “single prime contractor”—United
Space Alliance (USA)—for the shuttle in what was described as a first step towards shuttle
privatization, although the precise meaning of that term remains unclear. The Bush
Administration said it would move forward with privatization, but later changed the
terminology to “competitive sourcing.” Some envision the shuttle someday being operated
entirely by 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. According to media reports, a study by RAND,
commissioned by NASA, was not encouraging about the prospects for privatizing the shuttle.
In the November budget amendment, NASA said it was “examining options for competing
shuttle operations” and still hopes to move to a new arrangement in FY2004, but, if not, can
extend the contract with USA for another two years.
DOD’s Evolved Expendable Launch Vehicle (EELV) Program
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,
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two programs were initiated: DOD’s Evolved Expendable Launch Vehicle (EELV) program
and NASA’s Reusable Launch Vehicle (RLV) program (see below).
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. Two EELVS were developed in joint government-private sector
programs: Boeing’s Delta IV and Lockheed Martin’s Atlas V. Both vehicles were successful
in their first launch attempts in 2002. The goal of the EELV program 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 first Atlas 5 was successfully launched in August 2002;
the first Delta 4 launch was successfully launched in November 2002. 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.
NASA’s new plan to develop an Orbital Space Plane to take crews to and from the
space station launched via EELVs would require the EELVs to be “human-rated.” That is,
their level of reliability would have to be acceptable for taking humans, rather than just
cargo, into space. How much it will cost to human-rate the EELVs and who will pay for it
has not been announced. The added reliability could make EELVs stronger competitors in
the global commercial launch services market.
For FY2003, DOD requested $58 million for R&D and $159 million for procurement.
The FY2003 DOD appropriations act (P.L. 107-248)) added $8 million for EELV
procurement. The FY2003 DOD authorization act (P.L. 107-314) added $14.5 million for
procurement. Both acts fully fund the R&D request.
NASA’s Efforts to Develop New Reusable Launch Vehicles (RLVs)
The 1994 Clinton policy gave NASA lead responsibility for technology development
for a next-generation reusable space transportation system. NASA initiated the Reusable
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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.
X-33 and X-34. 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 and X-34. X-33 was a joint program with Lockheed
Martin to build a subscale prototype of a large RLV based on single-stage-to-orbit (SSTO)
technology. 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. X-34 was a small
RLV “testbed” to demonstrate reusable two-stage-to-orbit technologies, which was being
built under a traditional contract with Orbital Sciences Corporation. (Initially, X-34 also was
a government-industry cooperative effort with Orbital and Rockwell International, but those
companies withdrew from the cooperative agreement. NASA then signed a contract with
Orbital for a scaled-back program.) NASA terminated X-33 and X-34 in March 2001.
NASA spent approximately $1.2 billion on X-33, and Lockheed Martin said that it spent
$356 million of its own funding. 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. X-34 was terminated for similar reasons. NASA spent
$205 million on X-34.
Space Launch Initiative (SLI). Recognizing the problems in the X-33 and X-34
programs, NASA restructured its RLV program in 2000 (as part of its FY2001 budget
request) and initiated the Space Launch Initiative (SLI). As described in the next section,
NASA now is proposing to restructure that program. Congress has not yet approved the new
plan, so the following text describes SLI as it currently exists. Under SLI, NASA is working
with the private sector and universities to develop new technologies to 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 the private
sector will do so. The goal of the program 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.”
SLI is focused on meeting NASA’s future needs, primarily servicing the International
Space Station. Part of the SLI program is development of “NASA Unique” capabilities,
meaning those to support human spaceflight, which to date is a uniquely NASA activity.
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.
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SLI was budgeted at $4.8 billion from FY2001-2006 . For FY2001, NASA requested
and received $290 million. For FY2002, NASA requested $475 million and received $465
million. The original FY2003 budget request was $759.2 million.
November 2002 SLI Restructuring Proposal. The SLI program has been under
scrutiny. Congressional testimony by GAO in 2001 (GAO-01-826T) on lessons learned from
X-33 and X-34 cautioned NASA against making similar mistakes with SLI. A September
2002 GAO report highlighted the challenges facing the SLI program (GAO-02-1020). 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.
NASA Administrator O’Keefe and the Bush Administration apparently agree. T h e
November 2002 amended FY2003 budget request would significantly change the SLI
program. Mr. O’Keefe was quoted as calling the SLI goal of sharply reducing launch costs
“a bumper sticker” and that he knew of no technology that could achieve that goal. The
Administration’s budget amendment documentation states that a new RLV lacks economic
justification because the commercial launch market is too uncertain, and it is premature to
base new requirements on future DOD or NASA missions. It also says that although the SLI
program had estimated the cost of a new RLV at $10 billion (not including the funding spent
on SLI), a new estimate by the SLI program office was $20 billion, and four independent
estimates sponsored by NASA suggested $30-35 billion. Therefore NASA concluded “the
economic case for a new RLV is in doubt for the foreseeable future.”
If the amended budget request is approved by Congress, SLI funding for FY2003-2007
would be reduced by $2.133 billion—from $3.899 billion to $1.766 billion. Although the
SLI terminology would continue, the thrust of the program would change to development of
an Orbital Space Plane (OSP) for taking crews to and from the space station. The space
plane would be launched on an EELV, rather than a new reusable vehicle. In addition,
NASA’s ongoing technology efforts to develop 3rd generation RLV technology would be
combined with remaining 2nd generation technology development into a “Next Generation
Launch Technology” (NGLT) technology program. NGLT would be comprised of the
remaining funding for the 2nd generation RLV program plus funding allocated for “3rd
generation” technologies (an existing line item in the NASA budget, which includes
hypersonics, an area in which DOD is interested). Thus, the new SLI would consist of two
components: OSP and NGLT. The decision emphasizes NASA’s decision to separate the
functions of launching crews and launching cargo. The space shuttle does both. In this
approach, OSP, launched via an EELV, would take crews back and forth to space. The new
launch vehicle developed through NGLT would launch cargo only. For FY2003, NASA
proposes $879 million for SLI, of which $296 million is for the OSP, and $584 million is for
NGLT. In the January 2003 revised recommendations from the Senate Appropriations
Committee, the plan to restructure SLI was approved, but the committee cut SLI from $879
million to $800 million, and designated $115 million (instead of $296 million) for OSP. The
remainder ($685 million) would be for NGLT, an increase over the $584 million requested.
Of the $2.133 billion that would be shifted away from SLI over the FY2003-2007
period, $882 million would be for the OSP program, with the remainder going to the space
shuttle program ($470 million, discussed earlier), the space station program ($706 million,
see CRS Issue Brief IB93017), and to Biological and Physical Research ($75 million, for
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research that will benefit from the higher shuttle flight rate proposed in the budget
amendment). The OSP builds on work already being conducted under the “NASA Unique”
portion of the SLI program. Added to funding already planned for NASA Unique
technology, the total for OSP for FY2003-2007 would be $2.405 billion. Despite being
part of SLI, OSP is not a launch vehicle. It is a spacecraft to take crews to and from
the space station, and will not be discussed further in this report—see CRS Issue Brief
IB93017 (Space Stations) instead.
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 some 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. Legislation related to loan
guarantees and tax incentives is discussed in the next section.
U.S. Commercial Launch Services Industry
Congressional Interest
The 107th Congress debated issues involving satellite exports (discussed below) and the
domestic launch services industry. These issues are expected to be of interest to the 108th
Congress as well. 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. 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 107th Congress, H.R. 2177 (Calvert)
would have created tax incentives, while H.R. 2443 (Lampson) would have provided loan
guarantees for developing transportation systems needed for space tourism, and tax
incentives for space tourism companies. There was no action on those bills. Congress did
add Title IX to the FY2003 DOD appropriations act (P.L. 107-248), which creates a loan
guarantee program for companies developing commercial, reusable, in-orbit space
transportation systems. Such systems would move satellites from one orbit to another, but
not place them in orbit. Hence they are not launch vehicles and are not discussed further in
this report. Bills to make spaceports eligible for tax exempt bonds also were introduced in
the 107th Congress (H.R. 1931/S. 1243); there was no action on them.
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
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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. Another factor is that technological advances permit
longer satellite lifetimes and enlarge capacity, reducing the need for new satellites in
established markets. Declining launch forecasts published by FAA (available at
[http://ast.faa.gov]) reflect the changing market conditions. 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. However, President Clinton terminated the quotas for Russia and Ukraine
in 2000, and the agreement with China expired at the end of 2001.
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
is 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%
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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
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. While the agreements
were in force, they established quotas on how many commercial satellites China could launch
each year, and included pricing provisions to try to ensure that China did not unfairly
compete with U.S. commercial launch service providers because of its non-market economy.
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. W. 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
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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,
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, tensions
were acute between those viewing the sanctions as harmful to U.S. business interests and
those seeking to prevent sensitive technology from reaching China and/or to punish China
for MTCR infractions. The debate centered on whether the satellites should 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;
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 government reacted a civil settlement with Loral on January 9, 2002 wherein
Loral agreed to pay a $14 million civil fine, and spend $6 million on strengthening its export
compliance program. Although the Wall Street Journal reported on August 31, 2001 that a
similar settlement was expected with Hughes, on December 26, 2002, the State Department
charged Hughes Electronics and Boeing Satellite Systems with 123 export violations. In a
statement, Boeing asserted that its acquisition agreement with Hughes stipulates that Hughes
is responsible for resolving these matters, which occurred prior to Boeing’s purchase.
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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 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-Present. 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
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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 ship the satellites to China, but waivers still were
needed. In August 2001, Intelsat canceled its contract with Astrium for the APR-3 satellite,
citing several factors including the delay in obtaining U.S. export approval. Eutelsat
switched the launch of its satellite to Arianespace. Other satellites being manufactured by
U.S. companies, however, such as Chinasat 8 and another being built by Loral (Apstar-5, for
APT Satellite Co.), or containing U.S. components 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.

Agency Jurisdiction Over Satellite Export Licenses. Between 1992 and 1996,
the George H. W. 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. 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.
The 107th Congress considered, but did not pass, legislation on the agency jurisdiction
question. Title VII of H.R.2581, as reported from the House International Relations
Committee on November 16, 2001 (H.Rept. 107-297, Part I), would have returned
jurisdiction over commercial communications satellite exports to the Commerce Department.
The House Armed Services Committee, however, struck Title VII when it reported its
version of the bill on March 8, 2002 (H.Rept. 107-297, Part II), thereby retaining jurisdiction
at the State Department. There was no further action.
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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, but the type of commodity being exported can have a
significant impact on processing time. 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. U.S. policy prohibited U.S.-built satellites from being exported to the Soviet
Union. In June 1992, however, following its collapse, President George H. W. 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
to Iran. In July 1998, Russia announced that it had identified nine entities 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 on geostationary launches that Russia could conduct
under the 1996 agreement unless Russian entities ceased cooperating 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 were not among those sanctioned. Lockheed Martin was anxious
to have the quota raised to 20 and eventually eliminated. On July 13, 1999, the White House
agreed to raise the quota to 20. The agreement that set the quotas was due to expire on
December 31, 2000, but the White House eliminated the quota on December 1 (Wall Street
Journal, December 1, 2000, p. A4). That action was taken even though Russia had informed
the United States that, as of December 1, 2000, it was withdrawing from a 1995 agreement
to stop selling conventional arms to Iran.
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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).
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. 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, is taking 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.
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LEGISLATION
H.J.Res. 2 (Young)
FY2003 Omnibus Continuing Appropriations Act. Includes FY2003 funding for NASA
as part of the VA-HUD-IA portion of the resolution. Passed House January 8, 2003; Senate
consideration began January 16, 2003.
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