WASHINGTON-Congress last week continued taking steps to strengthen a weak and noncompetitive U.S. commercial space launch industry that has forced mobile satellite firms to contract overseas, a trend contributing to the export of American jobs and to alleged technology transfers to China and Russia.
On one front, the House and Senate are pushing to extend commercial space launch indemnification for 10 years. The current arrangement of risk-sharing, whereby the U.S. government pays third-party claims above $500 million, sunsets on Dec. 31. Previously, indemnification was extended for five years.
“Barriers in the U.S. space launch industry have caused U.S. satellite firms to go elsewhere, raising concerns about the transfer of sensitive technology to other nations,” said Sen. John McCain (R-Ariz.), chairman of the Senate Commerce Committee and sponsor of a bill last week to extend space launch indemnification to 10 years.
“Liability remains to be one of the biggest obstacles,” he added. “We must extend indemnification if were are to expect domestic companies to launch in the United States.”
In the House last week, the Science Committee heard testimony that supported-to varying degrees-extending the commercial launch indemnification provision in the 1988 Commercial Space Launch Act.
“This indemnification coverage is vital to every aspect of the U.S. satellite business community and, as such, is of paramount importance to the member companies of SIA,” stated Patricia Mahoney, chairwoman of the Satellite Industry Association and assistant general counsel of Iridium Inc. in written testimony.
Indeed, with smaller, lower-orbiting satellites having great potential to further revolutionize wireless communications, delays and obstacles to launches could seriously disrupt business plans and satellite operations of Motorola Inc., Loral Corp., Hughes Electronics Corp. and others.
Owing to tighter export licensing oversight-a fallout from the technology transfer controversy-Hughes this month lost a $450 million contract to build a satellite-based mobile telephone system to serve Southeast Asia.
Asia-Pacific Mobile Telecommunications Pty. Ltd. of Singapore, terminated the contract with Hughes after the Clinton administration blocked the deal in February. The White House initially approved the Hughes-APMT transaction.
“We regret this action had to be taken, but we understand the position of our customer,” said Michael Smith, chairman and chief executive officer of Hughes.
In addition to losing the contract, Hughes had to take a $92 million charge for capital expended on the APMT project to date.
The Justice Department is probing Loral and Hughes over technology transfer allegations.
Following charges that it broke federal export laws, Boeing, a U.S. investor in the Russia-Ukraine Sea Launch venture, had to pay a $10 million fine last October as part of a consent decree with the State Department.
A federal grand jury in Seattle reportedly is investigating whether Boeing violated criminal laws by sharing secrets with its Sea Launch partners.
The political firestorm over alleged technology transfers got so hot last year that Republicans passed legislation to move oversight of satellite export licensing from the trade-orientated Commerce Department back to the more cautious State Department.
The export control jurisdictional change became effective March 15.
A House select committee on American high-tech trade with China, chaired by Christopher Cox (R-Calif.), is due to release a 700-page report in the next two weeks that concludes U.S. national security was compromised by China’s acquisition of sensitive U.S. technology.
With that, the satellite industry is concerned not only that State will be tougher than Commerce in evaluating satellite export license applications but that processing will take longer because State lacks the personnel to do the job.
“Apparently, they (the State Department) aren’t approving any exports in a timely manner, even to our close allies, like France,” Rep. Dana Rohrabacher (R-Calif.)-chairman of the House Science subcommittee on space and aeronautics-said at an industry conference last month.
“Instead of intelligently using their expertise to scrutinize exports to threatening nations, State Department bureaucrats appear to have blindly adopted a risk-averse policy of going slow for everybody … The resulting harsh business climate is leading to fewer satellite sales, uncertain investors and wary future customers,” Rohrabacher continued.
As such, Rohrabacher, who also serves on the House International Relations Committee, tried-but failed-to win approval for an amendment that would have imposed stricter export controls on commercial satellite sales to non-allies, like China.
Instead, the panel passed a watered-down version of the amendment-sponsored by Sam Gejdenson (D-Conn.)-to set up a two-tier regulatory structure at State for handling commercial satellite license applications.
In addition, the committee authorized $2 million for State to expeditiously hire staff to review commercial satellite export license applications.
Elsewhere, Sen. John Breaux (D-La.) and Senate communications subcommittee Chairman Conrad Burns (R-Mont.) are expected to hold a hearing soon on a bill that would provide $500 million initially for U.S. private-sector development of commercial space transportation vehicles.
