Order Code IB93062
CRS Issue Brief for Congress
Received through the CRS Web
Space Launch Vehicles:
Government Activities,
Commercial Competition,
and Satellite Exports
Updated May 27, 2005
Marcia S. Smith
Resources, Science, and Industry Division
Congressional Research Service ˜ The Library of Congress

CONTENTS
SUMMARY
MOST RECENT DEVELOPMENTS
BACKGROUND AND ANALYSIS
U.S. Launch Vehicle Policy
From “Shuttle-Only” to “Mixed Fleet”
Clinton Administration Policy
George W. Bush Administration Policy
U.S. Launch Vehicle Programs and Issues
NASA’s Space Shuttle Program
The Challenger and Columbia Tragedies
Return to Flight (RTF)
The United Space Alliance (USA)
The Shuttle’s Future
FY2005 and FY2006 Budgets
Proposal for a “Shuttle-Derived Launch Vehicle”
NASA’s Efforts to Develop New Reusable Launch Vehicles (RLVs)
DOD’s Evolved Expendable Launch Vehicle (EELV) Program
Private Sector Launch Vehicles (Including Space Tourism and the X-Prize)
U.S. Commercial Launch Services Industry
Congressional Interest
Foreign Launch Competition
Europe
China
Russia
Ukraine
India
Japan
Satellite Exports: Agency Jurisdiction and Other Issues
LEGISLATION


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Space Launch Vehicles: Government Activities, Commercial
Competition, and Satellite Exports
SUMMARY
Launching satellites into orbit, once the
ers. The joint venture, if approved by regula-
exclusive domain of the U.S. and Soviet
tory authorities, would be named the United
governments, today is an industry in which
Launch Alliance. Commercial launch services
companies in the United States, Europe,
would not be affected.
China, Russia, Ukraine, Japan, and India
compete. In the United States, the National
NASA’s space shuttle fleet remains
Aeronautics and Space Administration
grounded following the 2003 Columbia trag-
(NASA) owns and launches its space shuttle.
edy. NASA hopes the shuttle will return to
Private sector companies provide launch
flight (RTF) in July 2005. How much longer
services for other NASA launches and most
to fly the shuttle is a subject of debate because
Department of Defense (DOD) launches.
of concerns about its safety, and President
Commercial customers purchase launch ser-
Bush’s January 2004 directive that the shuttle
vices from the U.S. companies or their com-
be retired in 2010 as part of his new Vision for
petitors. Since the early 1980s, Congress and
Space Exploration. A December 2004 Bush
successive Administrations have taken ac-
space transportation policy directs NASA to
tions, including passing several laws, to facili-
develop options for any new launch vehicle
tate the U.S. commercial space launch ser-
that may be required to accomplish the Vision.
vices business. The Federal Aviation Admin-
One option under consideration is a shuttle-
istration (FAA) regulates the industry.
derived launch vehicle wherein the part of the
shuttle that carries the crew and cargo (the
Forecasts in the 1990s suggesting signifi-
Orbiter) would be replaced by a cargo pod (no
cant increases in launch demand sparked plans
crew).
to develop new launch vehicles. NASA and
DOD created government-industry partner-
In October 2004, Burt Rutan’s
ships to develop new reusable launch vehicles
SpaceShipOne suborbital spacecraft won the
(RLVs) and “evolved” expendable launch
$10 million Ansari X-prize. Some believe
vehicles (EELVs), respectively. (The space
this heralds an era of comparatively affordable
shuttle is the only RLV today. All other
space tourism. Congress passed a law in 2004
launch vehicles are “expendable” — they can
(P.L. 108-492) to establish a regulatory envi-
only be used once). Several U.S. private
ronment for space tourism.
sector companies began developing their own
launch vehicles. Projections for launch ser-
Concerns that China benefitted militarily
vices demand declined dramatically beginning
from knowledge gained through commercial
in 1999, however. NASA’s efforts to develop
satellite launches in the 1990s led to changes
a new RLV to replace the shuttle faltered.
in U.S. satellite export policy. The changes,
DOD’s new EELVs (Atlas V and Delta IV)
especially returning control over such exports
began service, but, with reduced demand, the
to the State Department from the Commerce
companies that build them (Lockheed Martin
Department, remain controversial because of
and Boeing) want more DOD funding to
what some claim is a negative impact on U.S.
defray their costs. In 2005, the two companies
satellite manufacturing companies whose
announced they would merge their EELV
clients may choose European suppliers to
launch services for U.S. government custom-
avoid the U.S. export control regulations.
Congressional Research Service ˜ The Library of Congress

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MOST RECENT DEVELOPMENTS
NASA’s space shuttle fleet has been grounded since the February 1, 2003 Columbia
accident (see CRS Report RS21408). NASA hopes to return the shuttle to flight status
during a July 13-31, 2005 launch window. Under President Bush’s 2004 “Vision for Space
Exploration” (see CRS Report RS21720), NASA is to retire the shuttle fleet in 2010. NASA
has not decided what new launch vehicle(s) it needs to accomplish the Vision — returning
humans to the Moon by 2020 and someday sending them to Mars. The FY2006 request for
the shuttle is $4.5 billion, out of a total NASA request of $16.5 billion. The House
Appropriations Subcommittee on Science, State, Justice, and Commerce marked up its
FY2006 bill (no number yet) on May 24, 2005. According to a committee press release, the
space shuttle was fully funded.
For FY2006, DOD is requesting $838 million for procurement of EELVs and $26
million for research and development (R&D). The $838 million includes $345 million in
“assured access” costs to maintain the two launch service providers in the wake of lower than
expected commercial launch demand. The House has passed, and the Senate Armed Services
Committee has reported, the FY2006 DOD authorization bill (H.R. 1815/ S. 1042), fully
funding EELV. The House Appropriations Subcommittee on Defense marked up its FY2006
appropriations bill on May 24; details are not yet publicly available.
BACKGROUND AND ANALYSIS
U.S. Launch Vehicle Policy
The National Aeronautics and Space Administration (NASA), the Department of
Defense (DOD), and the private sector have developed expendable launch vehicles (ELVs)
— they can only be used once — to place satellites in orbit. NASA also developed the
partially reusable space shuttle. U.S. ELVs currently in use include Titan and Atlas
(manufactured by Lockheed Martin), Delta (manufactured by Boeing), and Pegasus and
Taurus (manufactured by Orbital Sciences Corporation). Delta IV and Atlas V are the most
recent additions to the fleet, and were developed through DOD’s Evolved Expendable
Launch Vehicle (EELV) program, a government-industry partnership.
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. 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), the Commercial Space Act of 1998 (P.L.
105-303), and the Commercial Space Launch Act Amendments of 2004 (P.L. 108- 492) also
have helped. But removing the shuttle as a competitor is seen as the major factor in fostering
the U.S. commercial space launch business.
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 of new reusable launch vehicles.
The policy also set guidelines for the use of foreign launch systems, the use of excess
ballistic missile assets for space launch, and encourages an expanded private sector role in
space transportation R&D.
George W. Bush Administration Policy
On December 21, 2004, President Bush authorized a new U.S. Space Transportation
Policy that supersedes the 1994 Clinton policy. A fact sheet on the Bush policy was released
on January 6, 2005 [http://www.ostp.gov/html/SpaceTransFactSheetJan2005.pdf]. The new
policy calls both for continued government support for space transportation capabilities, and
for capitalizing on the U.S. private sector’s “entrepreneurial spirit.” DOD is directed to
maintain the capability to develop, evolve, operate and purchase services for space
transportation systems, infrastructure, and support activities necessary for national security
requirements. NASA is directed to maintain the same capability for the civil sector, and to
engage in development activities only for those requirements that cannot be met by
capabilities being used by the national security or commercial sectors. The policy also directs
NASA, in cooperation with DOD, to develop options to implement the President’s January
2004 Vision for Space Exploration (the “Moon/Mars” program). NASA is to evaluate the
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comparative costs and benefits of a new system, a shuttle-derived system, or an EELV-
derived system. The policy states that the government will continue to support both Boeing’s
Delta IV, and Lockheed Martin’s Atlas V, EELVs until the Secretary of Defense certifies to
the President that U.S. assured access to space can be maintained without both providers.
U.S. Launch Vehicle Programs and Issues
NASA’s Space Shuttle Program
The Space Transportation System (STS) — the space shuttle — is a partially reusable
launch vehicle and is the sole U.S. means for launching humans into orbit. It consists of an
airplane-like Orbiter, with two Solid Rocket Boosters (SRBs) on each side, and a large,
cylindrical External Tank (ET) that carries fuel for the Orbiter’s main engines. The Orbiters
and SRBs are reused; the ET is not. NASA has three remaining spaceflight-worthy Orbiters:
Discovery, Atlantis, and Endeavour.
The Challenger and Columbia Tragedies. A total of 113 shuttle launches have
taken place since April 1981. Two ended in tragedy, each killing seven astronauts. In 1986,
the space shuttle Challenger exploded 73 seconds after launch because of the failure of a seal
(an O-ring) between two segments of an SRB. In 2003, the space shuttle Columbia
disintegrated as it returned to Earth after 16 days in orbit (see CRS Report RS21408).
Columbia broke apart from aerodynamic forces after the left wing was deformed from the
heat of gases that entered the wing through a hole caused during launch by a piece of foam
insulation that detached from the ET. The Columbia Accident Investigation Board (CAIB)
found that the tragedy was caused by technical and organizational failures, and made 29
recommendations, 15 of which it said must be completed before the shuttle returns to flight
(see CRS Report RS21606 for a synopsis of the CAIB report).
Return to Flight (RTF). NASA currently hopes to return the shuttle to flight status
in July 2005 (the date has slipped a number of times). Sean O’Keefe, NASA’s Administrator
from December 2001-February 2005, said NASA would comply with the CAIB
recommendations. He established an RTF Task Group [http://www.returntoflight.org]
chaired by two former astronauts, Tom Stafford and Dick Covey, to oversee NASA’s
implementation of the CAIB recommendations as they relate to RTF. The Stafford/Covey
Task Group is not addressing management and culture changes, and is not tasked to
determine whether the shuttle is ready to return to flight. Its assignment only is to evaluate
NASA’s implementation of the CAIB recommendations for RTF. The Task Group issued
its third interim report on January 28, 2005. It closed out (i.e., approved NASA’s
implementation of) six of the 15 recommendations, and conditionally closed one more.
Eight of the CAIB recommendations remain open, as well as another that the Stafford/Covey
group added to its responsibilities — the ability to use the space station as a “safe haven” for
shuttle crews if the shuttle is damaged and the crew must await rescue by another shuttle.
Dr. Michael Griffin became NASA Administrator on April 14, 2005. On April 18, he said
he will listen carefully to advice, such as that of the Stafford/Covey group, but NASA and
contractor personnel are those responsible and accountable for determining if and when the
shuttle is ready for RTF; he would not commit to meeting every CAIB recommendation.
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The United Space Alliance (USA). In 1995, NASA decided to turn most shuttle
operations over to a “single prime contractor” — the United Space Alliance (USA), a limited
liability company owned 50-50 by Boeing and Lockheed Martin. USA was created to pull
together the 86 separate contracts with 56 different companies under which the shuttle
program was then operating. NASA signed a $7 billion, six-year Space Flight Operations
Contract (SFOC) with USA on September 26, 1996, with the goal of reducing shuttle
operational costs while ensuring safety. The SFOC contract has been extended to 2006.
NASA officials assert that SFOC has saved NASA $1 billion a year compared to what the
costs would have been without it. Contracts for the External Tank, Solid Rocket Boosters,
and Space Shuttle Main Engines have not been incorporated into SFOC. NASA manages
those contracts, with Lockheed Martin, ATK Thiokol, and Boeing Rocketdyne, respectively.
(Boeing is in the process of selling Rocketdyne to United Technologies.)
The Shuttle’s Future. As discussed below, NASA attempted unsuccessfully for
many years to develop a “2nd generation” reusable launch vehicle (RLV) to replace the shuttle
(which is the 1st generation RLV). In a November 2002 amendment to its FY2003 budget
request, NASA announced a new space transportation strategy that indicated the shuttle
would continue flying until at least 2015, and perhaps 2020 or beyond. The Columbia
tragedy, and President Bush’s January 2004 announcement of a new “Vision for Space
Exploration” — to return astronauts to the Moon by 2020 and someday send them to Mars
— forced NASA to reassess that plan.
The President’s Vision (discussed in CRS Report RS21720) calls for the shuttle
program, which absorbs approximately 25% of NASA’s annual budget, to be terminated
once construction of the International Space Station (ISS) is completed, with 2010 as the
goal. A primary motivation is to make that funding available to implement other aspects of
the Vision. Congress is debating the Vision, including its impact on the shuttle and on U.S.
human access to space. Some Members want to terminate the shuttle earlier than 2010
because they feel it is too risky and/or that the funds should be spent on accelerating the
Vision. Others want to retain the shuttle at least until a new spacecraft, the Crew Exploration
Vehicle (CEV), is available to take astronauts to and from the ISS. Under the plan
announced by the President, CEV would not be ready at least until 2014, leaving a multi-year
gap during which U.S. astronauts would have to rely on Russia for access to the ISS (see
CRS Issue Brief IB93017). NASA Administrator Griffin has stated his intent to minimize
that gap as much as possible by accelerating CEV. He has made clear in congressional
testimony and elsewhere that he views 2010 as a firm deadline for terminating the shuttle.
NASA’s FY2006 budget request includes budget projections showing a sharp decline
in shuttle funding — $4.2 billion in FY2007, $3.9 billion in FY2008, $2.8 billion in FY2009,
and $2.4 billion in FY2010. Some question whether the budget can be reduced that quickly
considering that NASA currently expects to conduct 28 shuttle launches during that period
to complete ISS construction. NASA Administrator Griffin is reevaluating how many shuttle
launches are needed for ISS construction, and whether to launch one additional shuttle
mission to service the Hubble Space Telescope (see CRS Report RS21767).
A related issue is what steps NASA and USA must take to make certain that the shuttle
workforce retains the needed personnel and skills to ensure the shuttle flies safely through
its remaining years of service. A 2005 GAO report (GAO-05-230) concluded that NASA
needs to better position itself to address future shuttle workforce needs.
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FY2005 and FY2006 Budgets. The FY2005 request for the shuttle was $4.3
billion. NASA informed Congress in November 2004 that it needed an additional $762
million in FY2005. Congress appropriated the requested $4.3 billion level in P.L. 108-447
(FY2005 Consolidated Appropriations Act). NASA is reprogramming funds to make up the
difference. According to NASA briefing charts accompanying its May 10, 2005 operating
plan update, funding was reprogrammed as follows: $55 million from the Science Mission
Directorate ($20 million from space science, $35 million from earth science); $375.8 million
from the Exploration Systems Mission Directorate ($73 million from biological and physical
research, $204 million from human and robotic technology, and $98 million from
transportation systems); and $331.2 million from the Space Operations Mission Directorate
($160 million from the space station, $170 million from space shuttle upgrades, and $1.2
million from space flight support). For FY2006, NASA is requesting $4.5 billion for the
shuttle program. The House Appropriations subcommittee on Science, State, Justice, and
Commerce marked up its FY2006 appropriations bill on May 24, 2005. According to a
committee press release, the shuttle program was fully funded.
Proposal for a “Shuttle-Derived Launch Vehicle”. Dr. Griffin has stated on
several occasions that he believes a shuttle-derived launch vehicle (SDLV) is a promising
option for delivering cargo to space in support of the Vision. The concept of building a
version of the space shuttle that replaces the Orbiter with a cargo pod (with no crew) is
decades old. Dr. Griffin argues that accomplishing the Vision will require a “heavy lift”
launch vehicle (one capable of taking heavy masses into orbit), and since NASA already
owns the space shuttle, the agency should make use of what it has rather than spending large
sums to develop something else. Thus, although the discussion is about the future of “the
shuttle,” that actually is a reference to the shuttle in its current form. A version without the
Orbiter is under consideration. Others want to use Evolved Expendable Launch Vehicles
(EELVs, see below) for the Vision, not a SDLV. An EELV could place approximately 20
tons of mass into low Earth orbit, while a SDLV could launch approximately 100 tons.
Under the new national space transportation policy (see above), NASA, in cooperation with
DOD, is to evaluate the relative costs and benefits of EELVs, an SDLV, or a new system.
NASA’s Efforts to Develop New Reusable Launch Vehicles (RLVs)
U.S. expendable and reusable launch systems remain expensive and less efficient and
reliable than desired. DOD and NASA initiated several efforts in the late 1980s and early
1990s to develop new systems, 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 (see below) and NASA’s Reusable Launch
Vehicle (RLV) program. Proponents believe that RLV technology can dramatically lower
the cost of accessing space. NASA’s efforts to develop a “2nd generation” RLV to replace
the shuttle have not fared well, however.

From 1995 to 2000, NASA’s approach 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: 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
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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. NASA
terminated X-33 and X-34 in March 2001 because the cost to complete them was too high
relative to the benefits. NASA spent $1.2 billion on X-33, and Lockheed Martin said that
it spent $356 million of its own funding. NASA spent $205 million on X-34.
NASA restructured its RLV program in 2000 (as part of its FY2001 budget request) and
initiated the Space Launch Initiative (SLI). It then restructured the SLI program in 2002,
and terminated it following President Bush’s announcement of the Vision in January 2004.
The goal was to develop RLV technology that would be “10 times safer and crew
survivability 100 times greater, all at one-tenth the cost of today’s space launch systems.”
The failure of the X-33 and X-34 programs, and of the National AeroSpace Plane (NASP)
program before them, made some observers skeptical about NASA’s ability to develop a 2nd
generation RLV. In documentation accompanying a November 2002 budget amendment,
NASA conceded that a new RLV lacked economic justification. SLI was restructured into
two components: building an Orbital Space Plane (OSP), a spacecraft (not a launch vehicle)
to take crews to and from the space station, and developing “Next Generation Launch
Technology” (NGLT). Concurrent with President Bush’s announcement of the Vision,
NASA terminated SLI, although individual NGLT projects may continue under other
auspices if they are needed for the Vision.
DOD’s Evolved Expendable Launch Vehicle (EELV) Program
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 have successfully entered service
(although the first launch of the Delta IV “heavy” — i.e., the version that can launch the
greatest amount of mass — in December 2004 did not reach its intended orbit). The goal
of the EELV program is to reduce launch costs by 25%.
In 1996, the Air Force selected Lockheed Martin and McDonnell Douglas (later bought
by Boeing) for 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 Atlas V and Delta
IV. 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), and 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. (Boeing officials state that Boeing invested $2.5 billion in design, development,
and infrastructure for the Delta IV, of which the company wrote off $2 billion.)
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, including relieving Lockheed Martin (reportedly at the company’s request)
of the requirement to build a launch pad at Vandenberg AFB, CA. Each company built a
launch pad for its vehicle at Cape Canaveral, FL for east coast launches. Both were expected
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to build them at Vandenberg for west coast launches (which launch site to use is determined
by the type of orbit required by the satellite), but under this agreement, only Boeing would
be able to launch from the west coast, giving it a monopoly on those EELV contracts. The
companies also approached DOD to obtain additional government funding because of the
downturn in the commercial market. This is called “assured access to space” in the sense of
assuring that both companies remain in the EELV business so DOD has redundancy in
capability should one of the launch vehicles experience difficulties. The FY2004 DOD
authorization act (P.L. 108-136) codified “assured access” as U.S. policy.
In May 2003, Boeing revealed that it was under investigation by the Justice Department
about whether it illegally obtained proprietary information about Lockheed Martin’s EELV
program in the 1996-1999 time frame. On July 24, 2003, DOD suspended three Boeing
business units from eligibility for new government contracts, shifted seven existing launch
contracts from Boeing to Lockheed Martin, and disqualified Boeing from bidding for three
new launch contracts. Certain exceptions were allowed, and the government awarded several
contracts to those Boeing units nonetheless, including two launch contracts. Boeing
withdrew the Delta IV from competition for commercial contracts because it did not believe
it could successfully compete (it reportedly is reconsidering that decision now). DOD
reinstated the plan for an Atlas V launch pad at Vandenberg, so Boeing no longer would have
a monopoly on west coast launches. DOD conditionally lifted the Boeing suspension on
March 4, 2005; it can be reimposed if additional ethics violations are uncovered.
DOD notified Congress that the EELV program breached the “Nunn-McCurdy” limit
of 25% cost growth, which requires DOD to cancel or restructure the program, or certify that
it is essential to national security. In April 2004, DOD made that certification. Congress
appropriated $511 million for procurement in FY2005, $100 million less than the request,
and $25 million for R&D (the requested level). The House Appropriations Committee
directed DOD to study whether both families of EELVs are really needed (H.Rept. 108-553).
The committee argued that “assured access” might be better ensured by adequately funding
only one vehicle, instead of inadequately funding two, and raised other issues. The
December 2004 Bush space transportation policy directs DOD to continue to support both
EELVs until the Secretary of Defense certifies to the President that assured access can be
maintained without two EELV providers.
On May 2, 2005, Boeing and Lockheed Martin announced they would merge the
production, engineering, test, and launch operations associated with providing EELV launch
services to the U. S. government. Both vehicles will continue to be built, but at a single
location, Boeing’s facility in Decatur, AL; engineering and administrative activities will be
consolidated at Lockheed Martin’s offices in Denver, CO. The joint venture, to be owned
50-50 by the two companies, is called United Launch Alliance (similar to the United Space
Alliance for the space shuttle program). The companies said that, if approved by U.S. and
foreign regulatory authorities, the merger would save $100-150 million per year for the U.S.
government (although details of how those savings would be achieved were not released).
As part of the arrangement, the companies would drop pending lawsuits against each other.
Some analysts view the merger as a result of DOD attempts to reduce its costs for the
program; others view it as an attempt by the two companies to delay a potential DOD
decision to “downselect” to only one provider. The merger does not affect commercial
launch services provided through Boeing Launch Services (including the Sea Launch
program), or International Launch Services (including Russia’s Proton launch vehicle).
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For FY2006, DOD is requesting $838 million for procurement of EELVs and $26
million for research and development (R&D). The $838 million includes $345 million in
“assured access” costs to maintain the two launch service providers in the wake of lower than
expected commercial launch demand. The House has passed, and the Senate Armed Service
Committee has reported, the FY2006 DOD authorization bill (H.R. 1815/S. 1042). Both
versions fully fund the EELV request.
Private Sector Launch Vehicles (Including Space Tourism and the
X-Prize)

Several entrepreneurial U.S. companies have been attempting to develop RLVs through
private financing. Many have encountered difficulties in obtaining financing from the
financial markets, and some have sought government loan guarantees or tax credits. Some
have received limited direct government funding through various contracts. One company,
SpaceX, headed by Elon Musk (creator of PayPal), asserts that it will dramatically reduce the
cost of reaching orbit with its partially reusable Falcon launch vehicle. The first Falcon
launch, of a small DOD communications satellite, was scheduled for 2004, but has been
delayed by a variety of factors.
Some companies are focusing on suborbital rockets instead of those that can attain orbit,
anticipating that suborbital space tourism will be a substantial market. Twenty seven teams
from seven countries competed in the “Ansari X-Prize” contest [http://www.xprize.com] to
win $10 million by becoming the first privately-financed company to launch a vehicle
capable of carrying three people (one person actually had to be aboard) to an altitude of 100
kilometers (62.5 miles), return safely to Earth, and repeat it within two weeks using the same
vehicle. On October 4, 2004, Burt Rutan’s Scaled Composites Inc. won the X-prize with the
SpaceShipOne vehicle, financed by Microsoft co-founder Paul Allen. On a June 21, 2004 test
flight of SpaceShipOne, pilot Mike Melvill became the first person to reach space on a
vehicle built entirely with private funds. The two flights needed to win the X-prize were
flown on September 29 and October 4, 2004 (Mr. Melville piloted the first; Brian Binnie the
second). SpaceShipOne is carried aloft by an aircraft, released, and then fires a rocket engine
to reach the required altitude. The SpaceShipOne flights were all suborbital. Sir Richard
Branson, head of the Virgin Group, is licensing the SpaceShipOne technology. He founded
a company, Virgin Galactic, to offer commercial suborbital flights, and someday orbital
flights, on a new generation of spaceships. He reportedly expects to invest about $100
million in the new spaceships and associated ground infrastructure, and charge $200,000 per
person per flight.
The 108th Congress passed a law (P.L. 108-492) creating a regulatory environment for
commercial human space flight (“space tourism”). It sets requirements for protecting third
parties, and for the crews of commercial spacecraft. There are few regulations for passengers
(“spaceflight participants”), based on the philosophy that anyone who is willing to take the
risk to fly on these new spacecraft should be allowed to do so as long as they are informed
of the vehicle’s safety record. Others believe that the commercial human space flight
industry should be regulated more strongly, akin to today’s commercial aviation industry.
Under the act, if there are a significant number of accidents, or incidents that could have led
to accidents, the FAA may set further passenger regulations. After eight years, the FAA may
set any regulations it wishes. Representative Oberstar introduced H.R. 656 in February 2005
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to strengthen safety requirements for passengers. The House Science Committee’s Space and
Aeronautics subcommittee held a hearing on April 20, 2005, where Mr. Rutan sharply
criticized FAA’s regulatory process, asserting that it led to cost overruns and increased the
risk to his test pilots, with no reduction in risk for the general public.
U.S. Commercial Launch Services Industry
Congressional Interest
Congress has been debating issues involving the domestic launch services industry for
many years. Part of the debate has been focused on satellite export issues (discussed below).
Another part concerns 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.
That debate focuses 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. Congress created (Title IX, FY2003 DOD
appropriations Act, P.L. 107-248) a loan guarantee program for companies developing
commercial, reusable, in-orbit space transportation system, but such systems are not launch
vehicles (they move satellites from one orbit to another) and are not discussed further here.
In 2004, Congress passed legislation extending third-party liability indemnification for the
commercial space launch industry. Since 1988, the government has indemnified commercial
space launch companies for third-party claims between $500 million and $2 billion. That
authority was due to expire on December 31, 2004, but P.L. 108-428 extends it for 5 more
years. Other legislation that passed in 2004 relating to regulation of space tourism is
discussed above.
Foreign Launch Competition
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. Ariane 5 is the only version 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.
Arianespace conducts its launches from Kourou, French Guiana, on the northern coast of
South America. Arianespace also markets Russia’s Soyuz launch vehicle and ESA is
planning to build a launch site for Soyuz at Kourou.
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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 currently encountering significant financial
difficulties both because of the constrained market, and because of the failure of a new, more
capable variant of the Ariane 5 in 2002. In May 2003, the ESA Council of Ministers adopted
a European Guaranteed Access to Space (EGAS) program that would provide 960 million
euros for Arianespace to return the more capable version of the Ariane 5 to flight after it
failed on its maiden launch in 2002 (it successfully returned to flight in February 2005), and
acquire Ariane 5 launch vehicles through 2009, while the commercial launch market is down.
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). Because the United States
currently will not issue export licenses for satellites or satellite components destined for
China (see below), the Chinese commercial space launch program is dormant.
U.S.-China Bilateral Trade Agreements for Launch Services. In 1989, China
and the United States signed a six-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 seven-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. The Reagan Administration granted the licenses on the conditions
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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 six-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. The satellites were
launched by China in 1990-1992.
A different issue arose in 1990. China signed a contract to launch an Arabsat
Consortium satellite for $25 million, much less than what many considered “on a par” with
Western companies. The main competitor, Arianespace, turned to both the French and U.S.
governments to prohibit export of the satellite. 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 two satellites and for U.S. components of
another, but to emphasize its concern about Chinese missile proliferation, disapproved export
of U.S. components for a communications satellite China itself was building. On June 16,
1991, the White House announced that it would not approve any further export licenses for
commercial satellite launches. 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 under 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. In May 1992, INTELSAT agreed to launch at least one satellite 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. 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
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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
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.
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, despite concerns about China
exporting nuclear weapons-related equipment to Pakistan. 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 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 satellite 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 Loral’s export license. The companies insist they did not violate
the licenses. The Justice Department investigated, and expanded the probe to include
Hughes’ response to the 1995 APStar-2 failure. A grand jury reportedly was empaneled in
1999. The government reached a civil settlement with Loral on January 9, 2002 where Loral
agreed to pay a $14 million civil fine, and spend $6 million on strengthening its export
compliance program. On December 26, 2002, the State Department charged Hughes
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Electronics and Boeing Satellite Systems with 123 export violations. The companies settled
with the government on March 5, 2003, accepting a civil penalty of $20 million in cash, and
$12 million in credits for money already spent ($4 million), or that will be spent ($8
million), on export program enhancements.
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. 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 other U.S.
technical information and made 38 recommendations (see CRS Report RL30231).
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 to China for launch. Export permission for those satellites (called APMTs) had
been granted in 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 the Chinasat 8 satellite
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 four-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
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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). At the
time, attention was focused on two European companies (Astrium and Alenia Spazio) that
had built satellites for two multinational satellite organizations (INTELSAT and
EUTELSAT, respectively) that were scheduled for launch by China. The satellites contain
U.S. components. 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 Europe’s Ariane. 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), and the FY2003, FY2004, and
FY2005 Consolidated Appropriations Acts (P.L. 108-7, 108-199, and 108-447) require 15
days notice to Congress before processing licenses for exporting satellites to China.
Russia. U.S. policy prohibited U.S.-built satellites from being exported to the Soviet
Union. Following the collapse of the Soviet Union, President George H. W. Bush said he
would not oppose Russia launching an International Maritime Satellite Organization
(Inmarsat) satellite and the United States would negotiate with Russia over “rules of the
road” for future commercial launches. Discussions in the fall of 1992 led to agreement in
principle in May 1993; 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, a 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 two-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 entities 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
raised the quota to 20, and eliminated it on December 1, 2000. (Wall Street Journal,
December 1, 2000, p. A4).
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Ukraine. Ukraine 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 one attempt failed in September 1998, destroying 12 Globalstar satellites. Sea Launch
announced plans in October 2003 to offer launches from Baikonur using Zenit beginning in
2005; the effort is called Land Launch.
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 is
developing a larger vehicle (GSLV) capable of reaching geostationary orbit. The GSLV,
which uses Russian cryogenic engines that were the subject of a dispute between the United
States and Russia (discussed earlier), made it first operational flight in September 2004.
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. H-2 was not cost effective, and encountered
technical problems that led the Japanese government to abandon it in 1999. A new version,
H2A, successfully completed its first launch in August 2001. In 2002, the Japanese
government announced that it would privatize production of the H2A Mitsubishi Heavy
Industries has taken over development and marketing. H-2A launches are conducted from
Tanegashima, on an island south of Tokyo. 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.
Satellite Exports: Agency Jurisdiction and Other Issues
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 launch of
satellites by China (discussed above), 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 108th Congress debated, but did not clear, legislation on this topic. The House
International Relations Committee (HIRC) reported H.R. 1950 (H.Rept. 108-105, Pt. 1), the
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FY2004 State Department Authorization Act, with language that would have left the decision
on agency jurisdiction to the President if the export was to a NATO country or major non-
NATO ally. Exports to China would have remained under State Department jurisdiction.
The House Armed Services Committee rejected the HIRC language in its markup of the bill
(H.Rept. 108-105, Pt. 3), however, and the House-passed version did not include that
language. There was no further legislative action on that bill.
Some of the controversy reflects concerns of the aerospace and space insurance
industries that the new regulations are being implemented too broadly and vigorously. DOD
officials and others have cited potential harm to the U.S. defense industrial base if U.S.
exports are stifled, too. One concern is the length of time needed to obtain State Department
approval. 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 with expedited approval for exports to NATO allies and major
non-NATO allies. The new rules took effect July 1, 2000. 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). The
Security Assistance Act (P.L. 106-280) reduced 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 Satellite Industry Association (SIA) released figures in May 2001 showing U.S.
satellite manufacturers losing market share to foreign companies. SIA and others attributed
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. The trade
publication Space News reports on the number of new commercial satellite orders awarded
world-wide each year. According to that source, U.S. companies won 19 of the 22 contracts
in 2001; three of the four in 2002; nine of the16 in 2003; and nine of the 12 in 2004.
LEGISLATION
H.R. 656 (Oberstar). To enhance the safety of the commercial human space flight
industry. Introduced February 8, 2005. Referred to House Science Committee.
H.R. 1815 (Hunter)/S. 1042 (Warner). FY2006 DOD authorization bill. H.R. 1815
reported from House Armed Services Committee May 20, 2005 (H.Rept. 109-89); passed
House May 25. S. 1042 reported from Senate Armed Services Committee May 17 (S.Rept.
109-69).
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