Space Tourism and Export Controls: A Prayer for Relief

Journal of Air Law and Commerce

Volume 75 | Issue 3 Article 3

2010

Space Tourism and Export Controls: A Prayer forReliefMark J. Sundahl

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SPACE TOURISM AND EXPORT CONTROLS: A PRAYERFOR RELIEF

MARK J. SUNDAHL*

TABLE OF CONTENTS

I. INTRODUCTION... ...................... 581II. ITAR AND HUMAN SPACEFLIGHT ............ 585

A. THE ARMS EXPORT CONTROL ACT .............. 589B. ITAR CONTROLS APPLICABLE To HUMAN

SPACEFLIGHT .................................... 590C. SPECIAL CONSIDERATIONS WHEN PASSENGERS ARE

FOREIGN NATIONALS ............................ 593D. SPECIAL CONSIDERATIONS WHEN LAUNCHING

FROM NON-ALLIED COUNTRIES .................. 599E. THE DDTC's DISCRETION TO GRANT EXCEPTIONS

FROM ITAR............................. 601III. THE BIGELOW AEROSPACE COMMODITY

JURISDICTION REQUEST .................... 602IV. EXTENDING THE BIGELOW RULING TO

SPACE TOURISM COMPANIES ................ 606V. ADMINISTRATIVE DISCRETION AND THE

FUTURE OF EXPORT CONTROL REFORM ..... .613VI. CONCLUSION ............................. 617

I. INTRODUCTION

T HE RECENT EMERGENCE of the commercial humanspaceflight industry is a transformative moment in the his-

tory of mankind. Although the story of human spaceflight be-

*Associate Professor of Law, Cleveland State University, Cleveland-MarshallCollege of Law; Member, International Institute of Space Law. This article stemsin part from a paper entitled Bigelow Aerospace's Commodity jurisdiction RequestUnder ITAR and Its Impact on the Future of Human Spaceflight, which the authorpresented at the 2009 International Astronautical Congress in Daejeon, SouthKorea. The author would like to thank Mike Gold, James Bartlett, Petra Vorwig,Gretta Rowold, Kay Morrell, Alan Weinstein, and Joan Flynn for their helpfulcomments on earlier drafts of this article.

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gan when Yuri Gagarin first orbited the Earth in 1961, recenttechnological developments coupled with the dedication of well-funded entrepreneurs have taken spaceflight from the provinceof governmental action and delivered it into the private sector.'Multiple space tourism companies are planning to send privatepassengers on suborbital and orbital flights within the comingyears, private spaceports are being built around the world, andat least one company is well on its way to placing private spacestations into orbit to serve as manufacturing facilities, laborato-ries, or even space hotels.2 Moreover, changes to the U.S. SpacePolicy recently proposed by the Obama Administration wouldaccelerate the development of the human spaceflight industry.3

These proposals call for the abolition of NASA's Constellationprogram that entailed the development of the next generationof government space vehicles-and instead recommend that thegovernment set aside six billion dollars to purchase crew andcargo delivery services from private companies to meet govern-ment requirements for ferrying cargo and crew to the Interna-tional Space Station and placing satellites into orbit.4 Thisincreased demand for services will enable private space compa-nies to develop the next generation of space vehicles that willlikely include a line of reusable launch vehicles that should im-prove greatly upon the current space shuttle technology.5

Despite this bright outlook for commercial human spacef-light, the industry faces several significant challenges before itachieves sustainability. Although these challenges are largelytechnological and financial, one of the more serious obstacles tothe industry's success is regulatory in nature, namely, the bur-densome export control regulations under U.S. law. Export

I See infta Part II.2 See infra Part II.3 Kenneth Chang, Obama Calls for End to NASA's Moon Program, N.Y. TIMES

(Feb. 1, 2010), http://www.nytimes.com/2010/02/02/science/02nasa.html.4 Id. Even before this new policy emerged, a private company, Elon Musk's

SpaceX, already received a NASA contract to deliver cargo to the InternationalSpace Station. Press Release, NASA, NASA Awards Launch Services Contract toSpaceX (Apr. 22, 2008), http://www.nasa.gov/home/hqnews/2008/apr/HQCO8023 KSClaunch_ services.html; see also Dana Hedgpeth, Smaller Companies WinNASA's Space Race, WASH. POST, Dec. 24, 2008, at Dl.

5 The Obama Administration's proposal has met with resistance both in theSenate and, in particular, in the House of Representatives, thus making it unclearto what extent the President's policy will be implemented. Kenneth Chang, Sen-ate Committee's NASA Plan Cuts Moon Program, N.Y. TIMES, July 15, 2010, at A16;Kenneth Chang, House Panel's NASA Spending Bill Cuts Back Obama Plan, N.Y.TIMES, July 20, 2010, at A12.

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2010] SPACE TOURISM AND EXPORT CONTROLS

controls on space technology are notoriously strict in the UnitedStates, where all technology related to spacecraft is subject tothe same complicated and restrictive export controls that gov-ern the export of munitions under the International Traffic inArms Regulations (ITAR).6 In fact, the United States is the onlycountry in the world that treats commercial space technologylike munitions, rather than as dual-use technology that has a pri-marily commercial application.' The application of ITAR tospace technology has harmed the ability of U.S. space compa-nies to compete on the world market, as is perhaps best illus-trated by the practice of certain European satellitemanufacturers to market "ITAR-free" satellites-that is, satellitesthat do not incorporate any components manufactured in theUnited States and are therefore free of the regulatory complexi-ties and compliance costs that flow from ITAR.8 As a result, Eu-ropean satellite sales have increased sharply, cutting deeply into

6 International Traffic in Arms Regulations, 22 C.F.R. §§ 120.1-130.17 (2009).There is no shortage of commentators who criticize the complexity of ITAR. See,e.g., R. Aylan Broadbent, U.S. Export Controls on Dual-Use Goods and Technologies: Isthe High Tech Industry Suffering?, 8 CURRENTS: INT'L TRADE LAw L.J. 49 (1999);Jason A. Crook, National Insecurity: ITAR and the Technological Impairment of U.S.National Space Policy, 74 J. AIR L. & COM. 505 (2009); Trevor Hiestand, Swords intoPlowshares: Considerations for 2 1st Century Export Controls in the United States, 9 EMORYINT'L L. REv. 679, 690-91 (1995); Cecil Hunt, U.S. Export Controls, in COPING WITH

U.S. EXPORT CONTROLS 19 (2000) (describing the U.S. system of export controlsas a "frightful labyrinth"); Jere W. Morehead & David A. Dismuke, Export ControlPolicies and National Security: Protecting U.S. Interests in the New Millenium, 34 TEX.

INT'L L.J. 173, 180 (1999); Ronald J. Sievert, Urgent Message to Congress-NuclearTriggers to Libya, Missile Guidance to China, Air Defense to Iraq, Arms Supplier to theWorld: Has the Time Finally Arrived to Overhaul the U.S. Export Control Regime?-TheCase for Immediate Reform of Our Outdated, Ineffective, and Self-Defeating Export ControlSystem, 37 TEX. INT'L LJ. 89, 92 (2002). Even the Department of Defense has nowopenly criticized the complexity of the current export control regime. DEP'T OF

DEF., QUADRENNIAL DEFENSE REVIEW REPORT 83 (2010), http://www.defense.gov/QDR/images/QDR as_of_12FeblO_1000.pdf (explaining that "our overly com-plicated system results in significant interagency delays that hinder U.S. industrialcompetitiveness and cooperation with allies").

7 For a description of the European approach to export controls with respectto space technology, see generally Laurent Crapart, The Implementation of ExportControls in the European Community-Making Balance Between Security and CommercialConsiderations, in PROCEEDINGS OF THE FORTY-SixTH COLLOQUIUM ON THE LAW OF

OUTER SPACE 246 (2004); Antonella Bini, Export Control of Space Items: PreservingEurope's Advantage, 23 SPACE POLIcY 70 (2007); Frans von der Dunk, A European"Equivalent" to the United States Export Controls: European Law on the Control of Inter-national Trade in Dual-Use Space Technologies, 7 ASTROPOLITICS 101 (2009).

8 See Center for Strategic and International Studies, Briefing of the Working

Group on the Health of the U.S. Space Industrial Base and the Impact of Export Controls,at 10, Executive Summary, Findings 10 & 11 (Feb. 2008); Bini, supra note 7, at 70

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the market share of U.S. manufacturers.9 U.S.-based space tour-ism companies and other private spaceflight companies are sureto suffer the same ill effects of ITAR unless relief is providedeither by legal reform or through the granting of special discre-tionary relief by the Directorate of Defense Trade Controls(DDTC), which is the administrative agency that oversees theapplication and enforcement of ITAR.'0

On August 13, 2009, the Obama Administration announcedthat the President had established a task force to undertake abroad-based review of U.S. export controls, which will include areview of those controls applicable to satellites and other spacetechnology." In order to expedite the process of reform, Presi-dent Obama issued Presidential Study Directive 8 on December21, 2009, which required that recommendations for reformbased on the findings of the review process be submitted to himby January 21, 2010.12 However, this deadline passed withoutthe public release of any such recommendations, and, given thecomplexity of the regulations and the political sensitivity of thetopic of export controls, significant changes are not expected tobe implemented anytime soon.'" In the meantime, the only

(discussing Alcatel's development of ITAR-free satellites); Eligar Sadeh, ExportControls of Space Technologies, 6 ASTROPOLITICS 105, 109 (2008).

9 See Bini, supra note 7, at 70 (stating that the market share of U.S. manufactur-ers shrank from 64% in 1998 to 36% in 2002, while Alcatel's market share of theglobal satellite business doubled between 1998 and 2004); Philip L. Spector, Satel-lite Export Controls: Five Years and Counting, 18 AIR & SPACE LAw. 12, 13 (2003)(stating that from 2002 to 2003, foreign customers purchased twice as many satel-lites from foreign manufacturers than from U.S. manufacturers); Ryan Zelnio,The Effects of Export Control on the Space Industry, SPACE REv. (Jan. 16, 2006), http://www.thespacereview.com/article/533/1 (explaining that prior to the shift of ju-risdiction over satellite exports to the Department of State in 1999, U.S. satellitemanufacturers enjoyed, on average, an 83% market share of the global satellitesales, but that this market share declined to 50% by 2006).

10 Major Ronald L. Spencer, Jr., State Supervision of Space Activity, 63 A.F. L. REv.75, 92 n.96 (2009).

11 White House, Statement of the Press Secretary, Aug. 13, 2009, http://www.whitehouse.gov/the-press-office/Statement-of-the-Press-Secretary; see also AmyKlamper, Obama Memo Puts Export Reform on Front Burner, SPACE NEWS (Jan. 15,2010), http://www.spacenews.com/policy/100115-obama-memo-puts-export-re-form-front-burner.html. Legislation was proposed in 2008 and 2009 that wouldhave required a review of the current export regime, but both bills stalled in theSenate. Security Assistance and Arms Export Control Reform Act of 2008, H.R.5916, 110th Cong.; Foreign Relations Authorization Act, Fiscal Years 2010 and2011, H.R. 2410, 111th Cong. (2009).

12 Klamper, supra note 11.13 Id. (explaining that "export control reform is a polarizing topic that pits

national security hawks against the American aerospace industry").

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hope for relief from the burdens of ITAR lies in the hands ofthe DDTC. As described in this article, the DDTC has indicatedthat it is willing to exercise its administrative discretion in a man-ner that will enable the nascent human spaceflight industry tosurvive and even flourish in the global marketplace.1 4 This indi-cation was given last year when the DDTC excepted BigelowAerospace from the need to acquire a license and comply withother requirements under ITAR before allowing foreign nation-als aboard their expandable space stations.1 5 This ruling washeralded as a breakthrough for the human spaceflight industry,which now hopes to be granted the opportunity to operateunder a reduced regulatory burden, provided that the Bigelowruling is extended to other spaceflight companies, such as thoseoffering space tourism services.

This article tells the story of the DDTC's landmark Bigelowruling and makes the case for why a similar exception should begranted to the space tourism companies that will soon be carry-ing their first customers into space. The following section setsthe stage for this discussion by providing a preliminary descrip-tion of the regulations that govern the export of space technol-ogy and discussing how these regulations should be applied tothe space tourism industry. This article also examines theDDTC's Bigelow ruling in the greater context of administrativelaw and argues that the DDTC's actions provide a striking exam-ple of how an administrative agency can reshape the lawthrough administrative discretion when Congress is paralyzed byparty factionalism and political pressures.

II. ITAR AND HUMAN SPACEFLIGHT

Whenever a company exports a spacecraft, a launch vehicle,or a satellite, the export is subjected to the same controls thatare applied to the export of arms under the Arms Export Con-trol Act (AECA) and the AECA's implementing regulations,ITAR.'" It was not always the case that space technology was

14 See infra Part III.15 See infra Part III.16 In addition to implementing the policies of the U.S. government, the export

controls imposed by ITAR and the Export Administration Regulations (which, asexplained below, govern the export of dual-use technology) also implement theprinciples of two international export control arrangements: (1) the WassenaarArrangement on Export Controls for Conventional Arms and Dual-Use Goodsand Technologies, an international system designed to prevent certain roguecountries, including Iran, North Korea, and Syria, from obtaining advanced mili-

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treated as munitions under ITAR. In the 1990s, under PresidentH.W. Bush, a movement began to transfer jurisdiction over theexport of commercial communications satellites from the De-partment of State to the Department of Commerce (DOC)."This movement continued during the Clinton presidency andby 1996 most of the licensing responsibilities for the export ofcommunications satellites had been transferred to the DOC.1 8

However, the DOC's jurisdiction over commercial satellites wasshort-lived due to an incident in which Hughes Space and Com-munications Company and Loral Corporation divulged informa-tion related to two failed launches of Chinese rockets that werecarrying their payloads to an insurer without the necessary li-cense from the DOC." In response to this incident, Congresspassed the Strom Thurmond National Defense Authorization Act forFiscal Year 1999, which transferred export licensing of "all satel-lites and related items" back to the jurisdiction of the Depart-ment of State, with the result that virtually all space technologywas once again subject to ITAR.20

While certain space technology should unquestionably be sub-ject to strict export controls in order to prevent the proliferationof dangerous weapons, such as technology related to ballisticmissiles, it is often argued that technologies that have a commer-cial as well as a potential military application, so-called "dualuse" items like communications satellites, should be controlledunder the less restrictive Export Administration Regulations,which are administered by the DOC.2 1 The benefit of ajurisdic-

tary technology; and (2) the Missile Technology Control Regime (MTCR), a mul-tilateral arrangement to prevent the proliferation of missiles capable of carryingweapons of mass destruction. See FImNis LYALL & PAUL B. LARSEN, SPACE LAw: ATREATISE 459-61 (2009); Kenneth A. Dursht, From Containment to Cooperation: Col-lective Action and the Wassenaar Arrangement, 19 CARDozo L. REV. 1079, 1106-10(1998); Elizabeth Seebode Waldrop, Integration ofMilitary and Civilian Space Assets:Legal and National Security Implications, 55 A.F. L. REv. 157, 189-91 (2004).

17 See Ram Jakhu & Joseph Wilson, The New United States Export Control Regime:Its Impact on the Communications Satellite Industry, 20 ANN. AIR & SPACE L. 157,171-72 (2000); Zelnio, supra note 9.

18 Jakhu & Wilson, supra note 17, at 171-72; Zelnio, supra note 9.'9 Jakhu & Wilson, supra note 17, at 171-72; Zelnio, supra note 9.20 Jakhu & Wilson, supra note 17, at 171-72; Zelnio, supra note 9; Strom Thur-

mond National Defense Authorization Act for Fiscal Year 1999, Pub. L. No. 105-261, § 1513, 112 Stat. 1920 (1998) (codified at 22 U.S.C. § 2778). The DOCmaintains jurisdiction over export matters related to the International Space Sta-tion (ISS) and hardware related to the ISS that has been transferred to the juris-diction of the DOC through Commodity Jurisdiction Requests. CommerceControl List, 15 C.F.R. § 774 Supp. 1 9A004 (2010).

21 See, e.g., Spector, supra note 9, at 13.

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tional transfer to the DOC is significant because the Export Ad-ministration Regulations are notably less burdensome than arethe controls under ITAR. Generally speaking, a company is lesslikely to be required to seek a license from the DOC prior to theexport of a controlled item because licenses for the export ofcontrolled items are frequently not required for export to alliedcountries, and moreover, various exceptions to the license re-quirement (such as for a low value shipment or for export to acivilian end-user) are also available.2 2

Although the debate regarding the appropriate level of ex-port controls over the last decade has centered on commercialsatellites, the DDTC now faces a new question, namely, howITAR should apply to new space technologies that haveemerged in recent years, in particular, the suborbitalspaceplanes that have been developed by space tourism compa-nies and the private space stations that are under developmentby Bigelow Aerospace. Virgin Galactic, the space tourism com-pany launched by Sir Richard Branson, will be the first to beginoperations by flying tourists into suborbital space from Space-port America, which is currently under construction in NewMexico.2 3 (As a brief aside, despite being the brainchild of aBritish citizen, Sir Richard Branson, Virgin Galactic is operatingin the United States through a Delaware corporation and istherefore treated as a U.S. space tourism company.) Thespaceplanes being built by Virgin Galactic are reusable launchvehicles that differ significantly from anything seen before. Thespaceplane, carrying a crew of two and six passengers, begins itsjourney into space on the underbelly of an airplane that will liftthe spaceplane to an altitude of 52,000 feet at which point thespaceplane will disengage, fire its rocket engine, and fly to analtitude of approximately 65 miles above the Earth-just abovethe generally accepted border of outer space, known as theKrmin Line, which is located approximately 100 kilometers (or62 miles) above the Earth. 24 After reaching its apogee, the

22 The Export Administration Regulations are similar to ITAR in one impor-tant respect, namely, that both the Export Administration Regulations and ITARtreat the sharing of controlled technology with a foreign national as an export(such sharing of information termed a "deemed export" in the Regulations). 15C.F.R. § 734.2(b) (2) (ii).

23 JeffJones, Bill Would Prevent Space Tourist Lawsuits, ALBUQUERQUE J., Feb. 10,2009, at Al.

24 See Spaceships, VIRGIN GALACTIc, http://www.virgingalactic.com/overview/spaceships (last visited Aug. 18, 2010). Regarding the KArmdn Line, see LYALL &

LARSEN, supra note 16, at 167-68.

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spaceplane will begin a slow descent back into the atmosphere,its speed broken by an innovative pivoting wing design that en-ables the plane to flutter through the upper layers of the atmos-phere like a shuttlecock. Once it reaches the heavieratmosphere, the spaceplane glides back to Earth like an air-plane.2 1 Other space tourism companies are also offering subor-bital flights on spaceplanes, such as Rocketplane, an Oklahoma-based company offering suborbital flights for $250,000, andXcor Aerospace, a California company offering suborbitalflights for the competitive price of $95,000.27 Starchaser, basedin the United Kingdom, plans to use both rocket-launchedspace capsules as well as spaceplanes to send private passengersinto suborbital space.28 Other approaches to human spaceflightare also being pursued by private enterprises. For example,Blue Origin, a space tourism company founded by Amazonfounder Jeff Bezos, is developing a unique spacecraft that takesoff and lands vertically.29 Excalibur Almaz, a company based onthe Isle of Man, plans to put tourists into orbit in Soviet-madeAlmaz space capsules.3 0 The company is also preparing to placean Almaz space station into orbit to be used as a space hotel orfor other civilian purposes. 1 Similarly, Bigelow Aerospace'splanned private space stations (of which two prototypes have al-ready been placed into orbit) utilize a new technology that al-lows for expandable modules to be placed in orbit, which arethen configured to the needs of the client (whether the purposeis for manufacturing, research, or pleasure).3 The expandable

25 See Spaceships, supra note 24.26 Id.27 Jacqui Goddard, Up, Up and Ka-Ching! In a Time of Tight Budgets and Earthly

Priorities, the Space Business Is Getting a RejuvenatingJolt from Entrepreneurs Who Do theRight Stuff on the Cheap, NEWSWEEK (Feb. 11, 2008), http://www.newsweek.com/2008/02/02/up-up-and-ka-ching.html; Reservations, ROCKETPLANE GLOBAL, INC.,

http://www.rocketplane.com/reservations.asp (last visited Sept. 22, 2010); Re-serve Your Ticket to the Edge of Space Today!, XCOR AEROSPACE, http://xcor.com/contact/ticket.php (last visited Sept. 22, 2010).

28 See Typical Space Tourism Mission, STARCHASER, http://www.starchaser.co.uk/index.php?view-tourism-missionoverview&mgroup=tourists (last visited Sept.22, 2010).

29 Leonard David, Jeff Bezos' Secretive Rocket Program Picks Science Projects,SPACE.COM (Nov. 23, 2009), http://www.space.com/news/091123-blue-origin-bezos-rocket.html.

- Stephen Baird, Space: The New Frontier!, 67 TECH. TCHR. 13, 18 (2008).3' Id.32 Mike N. Gold, Lost In Space: A Practitioner's First-Hand Perspective on Reforming

the U.S.'s Obsolete, Arrogant, and Counterproductive Export Control Regime for Space-

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modules can be packed into launch farings in a highly space-and weight-efficient manner, thus dramatically reducing thecost of placing space stations into orbit."

The following sections provide a detailed look at how the cur-rent export control regulations under U.S. law apply to spacetechnology and, in particular, how the regulations are likely toapply to the new spaceplane technologies being developed bythe space tourism companies.

A. THE ARMs ExPoRT CONTROL ACT

Our analysis of export controls applicable to space technologybegins with section 38 of the Arms Export Control Act (AECA),which addresses export controls over munitions.3 4 Section 38opens with the following provision setting forth the President'sauthority to control the export of munitions, primarily bydesignating what technology should be included on the UnitedStates Munitions List (USML):

In furtherance of world peace and the security and foreign policy of theUnited States, the President is authorized to control the importand the export of defense articles and defense services and toprovide foreign policy guidance to persons of the United Statesinvolved in the export and import of such articles and services.The President is authorized to designate those items which shall be consid-ered as defense articles and defense services for the purposes of thissection and to promulgate regulations for the import and exportof such articles and services. The items so designated shall con-stitute the United States Munitions List."

In addition to granting the President the authority to designatecontrolled items, this provision states the overarching purposeof these export controls-to promote world peace as well as thesecurity and foreign policy goals of the United States. The newcommercial space technologies of Virgin Galactic and BigelowAerospace do not threaten peace and security and should there-

Related Systems and Technologies, 34J. SPACE L. 163, 168 n.17 (2008); see also FrankMorring, Jr., High Mileage, 168 AVIATON WK. & SPACE TECH. 21 (2008).

3 Leonard Davis, Private Space Stations Edge Closer to Reality, SPACE.COM (Jan. 20,2010), http://www.space.com/businesstechnology/private-space-stations-bige-low-100120.html.

3 22 U.S.C. § 2778 (2006).35 Id. § 2778(a) (1) (emphasis added). The opening provisions of ITAR restate

the President's authority to regulate the export of munitions and describe howthis authority has been delegated to the Department of State and, ultimately, tothe directorate of Defense Trade Controls under the Bureau of Political-MilitaryAffairs. 22 C.F.R. § 120.1(a) (2009).

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fore enjoy relief from these controls under the AECA. This ar-gument is strengthened in light of the factors set forth in theAECA that are to be taken into account when determiningwhether an export license should be granted." These factorsinclude whether the export of the article would contribute to (i)the proliferation of weapons of mass destruction, (ii) the spreadof terrorism, or (iii) the escalation of armed conflict.17 Theseare important concerns to be sure, but if these are truly Con-gress's concerns, then there is no reason for the government tosubject purely commercial space technology to the AECA. Asdiscussed further below, the absence of such policy concerns inthe context of the technology being used by space tourism com-panies should facilitate the granting of exceptions by the DDTCto reduce the regulatory burden on these companies.

B. ITAR CONTROLs APPLICABLE TO HuMAN SPACEFLIGHT

At the core of the ITAR regime is the requirement that a li-cense from the DDTC be acquired prior to the export of any"defense article."3 8 A "defense article" is any item listed in sec-tion 121.1 of ITAR, better known as the United States MunitionsList-as well as any "technical data recorded or stored in anyphysical form, models, mockups or other items that reveal tech-nical data directly relating to items" on the USML." Section120.3 of ITAR sets forth specific criteria for determiningwhether a particular item that is not already listed on the USMLcould be classified as a "defense article" and thus subjected toITAR control.4 0 Such a determination can be made if the itemin question (1) is designed for military use, does not have a pri-mary civilian application, and exceeds the performance stan-dards of equivalent civilian equipment, or (2) is designed formilitary use and has "significant" military value (regardless of itsperformance standards or whether it has a predominant civilapplication).41

The threshold question for Bigelow Aerospace and the spacetourism companies is whether their equipment would bedeemed a "defense article." Under the section 120.3 criteria, itappears that neither the Bigelow space stations nor Virgin Ga-

36 22 U.S.C. § 2778(a) (2).3 Id.3 22 C.F.R. § 127.1(a) (1).39 Id. § 120.6.40 Id. § 120.3.41 Id.

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lactic's spaceplanes should qualify as "defense articles."4 2 Theyare not designed for military use, they only have a civil applica-tion, and they cannot be said to exceed the performance stan-dards of comparable civilian equipment since no comparablecivilian equipment exists-Bigelow's space stations and VirginGalactic's spaceplanes are alone in their class." Nevertheless,despite the apparent failure of this technology to meet the crite-ria for being designated a "defense article" under section 120.3,the space stations and spaceplanes still come under a specificlisting of controlled technology on the USML, and are thereforesubject to ITAR control. The relevant entry in the USML for thehuman spaceflight industry is Category XV, which includes lan-guage that brings spacecraft and other space-related technologywithin the scope of ITAR."

An analysis of Category XV reveals that the entry has fourmain parts. First, all "spacecraft" and all "ground control sta-tions" engaged in the telemetry, tracking, and control of space-craft are "defense articles" and therefore come within the ambitof ITAR.15 The term "spacecraft" is not defined in the regula-tion, which allows for a wide net to be cast by the DDTC whenapplying the regulations. The only guidance given in the regu-lations is that the term "spacecraft" includes commercial satel-lites (which, in turn, includes Bigelow's orbiting spacestations).46 The space tourism companies should argue in theircommodity jurisdiction requests (seeking the removal of theirspaceplane technology from the USML)" that although theirspaceplanes are "spacecraft" in the colloquial sense, they arepurely commercial and therefore should not be subject to ITAR.This interpretation is consistent with the treatment of aircraft,which are subject to ITAR only if "designed, modified, or

42 See id.4 See id.- Id. § 121.1 Category XV.4 Id. § 121.1 Category XV(a), (b). The exact language from subsection (a) is:

"[slpacecraft, including communications satellites, remote sensing satellites, sci-entific satellites, research satellites, navigation satellites, experimental and multi-mission satellites."

- Id. § 121.1 Category XV(a). That Bigelow's space stations are defense arti-cles has been established by the DDTC's denial of Bigelow's request for a rulingthat its technology was not covered by, or should be removed from, the USML.See infra Part III.

4 Regarding commodity jurisdiction requests, see infra Part III.

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592 JOURNAL OF AIR LAW AND COMMERCE [ 75

equipped for military purposes"-thus, commercial aircraft arenot regulated by ITAR.4 8

In addition to being on the USML, spacecraft are also treatedas "significant military equipment" (SME), for which "special ex-port controls" can be applied due to the military utility of thetechnology (which designation is indicated by an asterisk priorto the USML entry).49 Happily, this SME designation does notapply to commercial satellites unless they are used for militarypurposes, thus sparing Bigelow Aerospace from the threat ofthese special controls.o

The second part of Category XV is made up of paragraphs (c)and (d), which bring two special categories of space technologywithin the scope of ITAR: global positioning systems (GPS) re-ceivers and radiation-hardened circuitry.5 1 These categories ofcontrolled items would only apply to space tourism companiesto the extent that such equipment is used.

The third part of Category XV, set forth in paragraph (e),significantly expands the scope of ITAR by applying it to "[a] llspecifically designated or modified systems or subsystems, com-

ponents, parts, accessories, attachments," and other equipmentassociated with spacecraft, ground controls stations, and the spe-cial GPS and radiation-hardened technology.53

The fourth and final component of Category XV is found inparagraph (f), which applies ITAR to all "technical data" and"defense services" directly related to any of the items mentionedin Category XV or any "launch support activities," such as pro-viding launch parameters to a launch provider.54

The definition of "defense service" includes, among otherthings, providing a foreign person with "technical data" relatingto a defense article. The sharing of such data will constitute a"defense service" whether the data is divulged in the United

- 22 C.F.R. § 121.1 Category VIII(a).49 Id. §§ 120.7, 121.1 Category XV(a), Note.50 Id. § 121.1 Category XV(a), Note.51 Id. § 121.1 Category XV(c), (d).52 See id.53 Id. § 121.1 Category XV(e). This section excludes from ITAR's control nine

specific types of components, such as space-qualified data recorders and certaintypes of photovoltaic arrays, unless they are designed for military use. Id.

54 Id. § 121.1 Category XV(f).55 Id. § 120.9(2). "Defense services" also include: (1) "[t]he furnishing of assis-

tance (including training) to foreign persons" in the design, manufacture, modi-fication, use, testing, repair, or even the destruction of a defense article; and (2)the provision of military training. Id. § 120.9(a) (1), (3).


States or abroad.5 1 "Technical data," in turn, is broadly definedin section 120.10 to include the following four concepts:

(1) Information [in whatever format] . . . which is required forthe design, development, production, manufacture, assembly,operation, repair, testing, maintenance or modification of de-fense articles....(2) Classified information relating to defense articles and de-fense services;(3) Information covered by an invention secrecy order; and(4) Software . . . directly related to defense articles.

The scope of controlled "technical data" related to launch sup-port activities is particularly broad by explicitly including "tech-nical data provided to the launch provider on form, fit,function, mass, electrical, mechanical, dynamic, environmental,telemetry, safety, facility, launch pad access, and launch parame-ters, as well as interfaces for mating and parameters forlaunch."5 8 Of particular concern to the space tourism industryis the inclusion of safety information in this expanded definitionof technical data.59 For example, a space tourism companycould potentially be found to be providing a "defense service"merely by training a foreign customer in safety procedures, suchas the operation of safety hatches on the vessel. This concernwill be addressed, and hopefully allayed, in the following sectionwhere the safety training requirements of the U.S. humanspaceflight regulations are discussed.o As a final comment, itcomes as some measure of relief that "basic marketing informa-tion" is explicitly excluded from the definitions of both "techni-cal data" and "defense article."" And so space tourismcompanies can at least rest assured that they need not seek alicense before launching websites that market their suborbitaladventures.

C. SPECIAL CONSIDERATIONS WHEN PASSENGERS AREFOREIGN NATIONALS

Even assuming that suborbital spaceplanes come within thedefinition of "spacecraft" under Category XV of the USML andare therefore defense articles, a license from the DDTC is still

56 Id. § 120.9(a) (2).-7 Id. § 120.10.58 Id. § 121.1 Category XV(f).59 See id.60 See infra Part II.C.61 22 C.F.R. §§ 120.10(a) (5), 120.6.

593


not required unless the spaceplanes are exported. Thus if, forexample, Virgin Galactic's spaceplanes are flown by its U.S. sub-sidiary from a U.S. spaceport, such as Spaceport America in NewMexico, and land there as well, no exportation would seem totake place, thus apparently avoiding the burdens of ITAR.6 2

This is, however, not the case. The concept of an "export" isbroadly defined under ITAR to include not only the physicalmovement of defense articles across the borders of the UnitedStates, but also the following actions:

* "Transferring registration, control or ownership to a for-eign person of any aircraft, vessel, or satellite covered bythe U.S. Munitions List. . .";

* "Disclosing (including oral or visual disclosure) or trans-ferring in the United States any defense article to an em-bassy, any agency or subdivision of a foreign government

* "Disclosing (including oral or visual disclosure) or trans-ferring technical data to a foreign person . . ."; and

* "Performing a defense service on behalf of, or for the ben-efit of, a foreign person .... "6

This broad concept of what constitutes an export under ITARthus includes not only selling controlled items into foreigncountries, but embraces the disclosure of information related tocontrolled technology to a "foreign person,"64 regardless of howsuch disclosure is made."

Once again, of particular concern to Bigelow Aerospace, Vir-gin Galactic, and the other human spaceflight companies iswhether in the course of their discussions with, and training of,

62 See id. § 120.17(a), (b).6- Id. § 120.17.6 The definition of "foreign person" includes: (1) "any natural person who is

not a lawful permanent resident" of the United States (or a lawful refugee orasylee); (2) any corporation (or other organization) "that is not incorporated ororganized to do business in the United States"; and (3) "international organiza-tions, foreign governments and any agency or subdivision of foreign governments... ." Id. § 120.16.

65 Space technology is accorded special treatment in two respects in the defini-tion of "export." First, the mere transfer of registration, control, or ownership ofsatellites (even if no physical transfer takes place-presumably due to the factthat the satellite is in orbit) constitutes an export. Id. § 120.17(a) (2). That alicense is needed before such transfers take place is reiterated in section 123.8.Id. § 123.8(a). Exportation also takes place if a satellite located in the UnitedStates is registered in a foreign country. Id. § 123.8(b). Second, the definitionmakes clear that exportation is not deemed to have taken place merely because alaunch vehicle or payload is launched into space. Id. § 120.17(a) (6).

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their foreign customers they will be deemed to have disclosed"technical data" relating to their spacecraft-which might, inturn, be treated as the export of a defense article or the per-formance of a "defense service."" As explained above, "techni-cal data" includes information "required for the . . . operation"of the spacecraft, which could be broadly interpreted to includesafety information provided to passengers regarding the opera-tion of hatches and other onboard safety equipment." If thisinterpretation is adopted by the DDTC and such safety informa-tion is deemed to be controlled data, the disclosure of the infor-mation without DDTC approval would be prohibited regardlessof the form in which such data is displayed or stored (whetherin documents, models, or other items) and regardless of howthe data is communicated (whether by the sharing of docu-ments, email, conversation, or by visual inspection).* There-fore, the mere presence of a foreign national on a Bigelow spacestation or a spaceplane could be deemed to be an "export" oftechnical data on the grounds that the passenger was providedwith the opportunity for a visual inspection of the design of theequipment." As a result, a license from the DDTC would berequired before any foreign passengers could set foot on thespace station or spaceplane.o

On the other hand, it is not clear that information regardingsafety operations would necessary come within the definition of"technical data."" Under a more reasonable interpretation ofthe definition, information regarding safety operations wouldnot be treated as "technical data" since such safety operationsare not strictly "required" for the operation, i.e., the flight of thespaceplane-just as the instructions given to airplane passengersseated in the exit row of an airplane prior to take-off regardingthe opening of the emergency hatches does not provide themwith the information needed to fly the airplane.7 2 In fact, theAir Force routinely puts on air shows that often provide the civil-ian attendees, whether U.S. citizens or foreign nationals, thechance to view military aircraft up close and sometimes even sit

ss See id. §§ 120.9, 120.10.67 Id. § 120.10(a) (1).68 See id. §§ 120.10 (a) (1), 125.2 (c).69 See id. § 120.17(a) (4).70 See id. § 125.2(c).71 See id. § 120.10.72 See id.

595


in the cockpits."7 There is apparently no concern about thetransfer of technical data in these situations-just as thereshould be no concern about the transfer of technical data tospace tourists. If the DDTC adopts this more reasonable inter-pretation, no license would be required prior to training thepassengers.

In a recent article, P.J. Blount examined the possibility thatthe disclosure requirements under the FAA's Human SpaceFlight Requirements for Crew and Space Flight Participants(Space Flight Regulations) may compel the disclosure of "tech-nical data."74 One of the provisions of the Space Flight Regula-tions that poses this risk is the requirement that the spaceflightcompany train passengers how to respond to emergency situa-tions on board, which could include information about how tooperate emergency hatches and other safety mechanisms on thespacecraft. In addition, prior to the company receiving anycompensation or entering into a flight agreement, the regula-tions require that the company disclose in writing to prospectivepassengers information regarding "each known hazard and riskthat could result in a serious injury, death, disability, or total orpartial loss of physical and mental function .... "6 Moreover,prior to flight, the company must provide "an opportunity to askquestions orally to acquire a better understanding of thehazards and risks of the mission" prior to the passenger provid-ing written consent that indicates that the passenger under-stands the risks of the mission.

Although there is certainly a risk that the safety training andother disclosures required under these provisions may amountto the disclosure of "technical data," there is also a strong likeli-hood that ITAR would not be triggered, depending in part on

73 For example, the public air show at Scott Air Force Base in Shiloh, Illinois,allows visitors to view planes up close and meet pilots and crew members. ScottAFB Airshow Information, ScorrARSHOW.COM, http://scottairshow.com/info.html(last visited July 17, 2010). A Florida airshow reportedly let a civilian sit in thecockpit of a militaryjet. Mark Spivak, F-15 Demo Team, 33rd RCS Team for Interna-tional Air Show, INSIDE AETC (Mar. 23, 2009), http://www.aetc.af.mil/news/story.asp?id=123140976.

74 P.J. Blount, Informed Consent v. ITAR: Regulatory Conflicts that Could ConstrainCommercial Human Space Flight, 66 AcTA ASTRONAUTICA 1608, 1610 (2010).Human Space Flight Requirements for Crew and Space Flight Participants, 71Fed. Reg. 75,616-75,645 (Dec. 15, 2006) (to be codified at 14 C.F.R. pts. 401,415, 431, 435, 440, & 460).

75 14 C.F.R. § 460.51 (2010).76 Id. § 460.45(a).77 Id. § 460.45(f).

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the nature of the information disclosed. Blount argues that anyinstruction provided regarding the operation of safety hatchesor other safety procedures would likely be treated as a disclosureof technical data under ITAR, particularly in light of the lan-guage in Category XV of the USML, which states that "safety"data related to "launch support activities" is deemed to be tech-nical data "without exception."" However, this language shouldnot be interpreted as requiring information provided to a pas-senger in the course of safety training to be treated as technicaldata "without exception" since the paragraph is limited to infor-mation disclosed in connection with "launch support activi-ties."" This language contemplates information disclosed tolaunch providers, not passengers, as is indicated by the exampleprovided in the text which states that an example of such techni-cal data provided in connection with launch support activitiesincludes "technical data provided to the launch provider on theform, fit, function, . . . safety, . . . [and] launch parameters, aswell as interfaces for mating and parameters for launch."" De-spite these arguments against the treatment of safety training asinvolving the disclosure of technical data, the risk remains thatthe DDTC will come to a different conclusion.

As Blount points out in his article, a more difficult situationcould arise during the question and answer session required bythe Space Flight Regulations in order to allow the passengers tobecome fully informed of all risks.8' It is conceivable that pas-sengers will inquire into more sensitive aspects of spacecrafttechnology, such as the type of propellant used by the spacecraftor engine mechanics-inquiries that would not be unreasonablesince this information is relevant to a thorough understandingof the risks of spaceflight." However, if the company disclosestechnical information of this type to a foreign customer, theDDTC could find that the company has exported "technicaldata" under ITAR."1

There is some irony in the fact that, on the one hand, ITARprohibits space tourism companies from disclosing safety infor-mation to foreign customers without first acquirng an exportlicense, while, on the other hand, the Space Flight Regulations

78 See Blount, supra note 74, at 1610; 22 C.F.R. § 121.1 Category XV(f) (2010).79 See 22 C.F.R. § 121.1 Category XV(f).80 See id.81 Blount, supra note 74, at 1610-11.82 See id.88 Id. at 1610.


may very well require the disclosure of such information. How-ever, even if ironic, the regulations are not contradictory, andcompliance with both is necessary. The result is that a spacetourism company will have to acquire a license from the DDTCbefore making any disclosures to a foreign passenger or pro-spective passenger that may rise to the level of "technical data"under ITAR. An alternative approach would be for a companyto limit the type of information provided to its passengers andrely on the advice of lawyers that the information provided doesnot qualify as "technical data"-but this may be an unwise risk.Moreover, the refusal to provide certain types of informationwhen requested by the passenger during the question and an-swer session may constitute a violation of the Space Flight Regu-lations and could lead to increased exposure to tort liability dueto a failure to obtain the fully informed consent of a passenger.

If a space tourism company is deemed to disclose technicaldata to foreign customers, whether in discussions with the cus-tomer, during flight training, or by virtue of the mere presenceof the customer on the spaceplane, the company will need tofirst register with the DDTC 4 (which registration must be re-newed annually) and must then acquire a separate license fromthe DDTC with respect to each customer prior to making anydisclosures. 5 The average processing time reported by theDDTC for acting on license requests is approximately two tothree weeks."

If the only requirement imposed by ITAR were the license re-quirement, the burden on space tourism companies would notbe so severe. However, substantial additional obligations are infact imposed by the regulations. For example, space tourismcompanies will be required to enter into a Technical AssistanceAgreement (which describes the parties to the transaction, theinformation to be disclosed, and the nature of the project) witheach of its foreign customers prior to the disclosure of the con-trolled information. A Technical Assistance Agreement is re-quired whenever a company discloses technical data to a foreignperson or engages in a "defense service."" Although the DDTC

84 22 C.F.R. § 122.1. In fact, a space tourism company would be required toregister with the DDTC as soon as it manufactured or acquired a spacecraft. Id.

85 Id. § 123.1.86 License Processing Times, DiRECTORATE OF DEFENSE TRADE CONTROLS, http://

www.pmddtc.state.gov/metrics/index.html (last updated Sept. 1, 2010).87 22 C.F.R. §§ 120.9, 124.1 et seq.; Gold, supra note 32, at 168 n.18.- 22 C.F.R. § 124.1(a).

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strives to approve Technical Assistance Agreements within sixtydays of submission, it is not unusual for approval to take up tothree months after the agreements are submitted for approval."The renegotiation of the conditions (or "provisos") placed onthe disclosure of the controlled information with the DDTC cantake an additional one to three months."o When U.S. spacetourism companies are competing for foreign customers, thistime-consuming approval process would be a dangerous hin-drance that could destroy the ability of U.S. companies to com-pete with foreign operators. Imagine a customer that would liketo fly into space who has a choice between a U.S. company thatmust seek approval of a Technical Assistance Agreement and aforeign company that need not. The customer could potentiallyface a delay of up to six months before the U.S. company couldeven begin training. It would not be surprising if prospectiveforeign customers instead decided to fly with a foreign spacetourism company to avoid such regulatory delays.

In order to avoid the complications of obtaining the approvalof a Technical Assistance Agreement, space tourism companiescould argue for an exemption under section 124.2(a), whichstates that "[t]echnical assistance agreements are not requiredfor the provision of training in the basic operation . . . of de-fense articles lawfully exported."' This exemption would ap-pear to apply to the training of passengers in safety operation,provided that a license permitting the disclosure was granted.Of course, it would be preferable if the DDTC would make adetermination excepting the space tourism companies entirelyfrom ITAR with respect to their interactions with passengers.

D. SPECIAL CONSIDERATIONs WHEN LAUNCHING FROM NON-ALLIED COUNTRIES

The burdens of ITAR could grow far greater when a U.S. com-pany launches its satellites from the territory of a country that isneither a member of NATO nor another "major non-NATOally" as defined in section 120.32 of ITAR." First, under section

9 See, e.g., Gold, supra note 32, at 168.go Id. at 168-69.91 22 C.F.R. § 124.2(a).92 See id. §§ 120.32, 124.15(a) (1). NATO consists of twenty-eight current mem-

bers including Albania, Belgium, Bulgaria, Canada, Croatia, Czech Republic,Denmark, Estonia, France, Germany, Greece, Hungary, Iceland, Italy, Latvia,Lithuania, Luxembourg, the Netherlands, Norway, Poland, Portugal, Romania,Slovakia, Slovenia, Spain, Turkey, the United Kingdom, and the United States.

599

600 JOURNAL OF AIR LAW AMD COMMERCE [ 75124.15, a Technology Transfer Control Plan (TTCP) has to beapproved by the Department of Defense (DOD).9 A TTCP is awritten plan that describes the process for transferring the con-trolled information to foreign nationals and explains how theinformation will be safeguarded from improper disclosure aswell how proper disclosures will be documented." The processof developing and obtaining approval of a TTCP can take any-where from one to three months." The entire process of ob-taining a license, receiving approval of a Technical AssistanceAgreement, and obtaining approval of a TTCP has reportedlytaken as long as one year." If these regulatory burdens wereplaced on U.S. space tourism companies, the delay would almostcertainly send prospective customers to foreign competitors thatwere not subject to such delays.

In addition to the approval of a TTCP, when U.S. companiesconduct launches from non-allied territories the DOD has to benotified in advance of any discussions with foreign nationals re-lated to the launch-and the DOD then has the right to moni-tor these discussions.97 These monitoring activities are carriedout by the DOD's Defense Technology Security Administration(DTSA)."8 The DTSA also has the right to send agents to thelaunch site to monitor the launch as well as all related activityand discussions with all monitoring expenses, as well as all travelexpenses, being borne by the owner of the space object."These monitoring expenses can be significant. For example, af-ter Bigelow Aerospace launched its first prototype space stationfrom Russia, it received a bill of $161,896 from the DTSA merelyfor monitoring expenses, which came out to a rate of approxi-mately $130 per hour (and which did not include the travel ex-

Member Countries, NATO, http://www.nato.int/cps/en/natolive/natocountries.htm (last visitedJuly 14, 2010). "Major non-NATO allies" include Argentina, Aus-tralia, Bahrain, Egypt, Israel, Japan, Jordan, Kuwait, Morocco, New Zealand, Paki-stan, the Philippines, Thailand, Taiwan, and the Republic of Korea. Id.

9 22 C.F.R. § 124.15(a) (1).94 Gold, supra note 32, at 169 n.19.95 Id. at 169.

6 Id.7 22 C.F.R. §§ 124.15(a)(1), 124.15(a) (2).

98 Space Directorate, DTSA, http://www.dtsa.mil/Directorates/SD.aspx (last vis-ited Sept. 22, 2010).

- 22 C.F.R. § 124.15(a)(2). Section 124.15 also requires a license prior to theparticipation of any U.S. party in a launch failure investigation or analysis-andallows for DOD monitoring of any activities related to such investigation. Id.§ 124.15(b).


penses of the DTSA monitors).'o Although these specialcontrols are intended to apply to launches from non-alliedcountries, the regulations state that these controls can be ex-tended to launches from allied countries. 01

While these special controls are undeniably applicable to thelaunch of Bigelow Aerospace's expandable space stations from aRussian launch site, these controls should not necessarily applyto the launch of suborbital space tourism flights. The languageof section 124.15 is reproduced here to show how it is limited tothe launch of "satellites" and therefore would not apply to thelaunch of suborbital spacecraft:

The export of any satellite or related item (see § 121.1, CategoryXV(a) and (e)) or any defense service controlled by this sub-chapter associated with the launch in, or by nationals of, a coun-try that is not a member of the North Atlantic TreatyOrganization or a major non-NATO ally of the United States al-ways requires special exports controls ... 102

The reference to "any defense service controlled by this sub-chapter associated with [a] launch" presents the possibility thatthe operations of a suborbital spaceflight company could comewithin the scope of this provision when flying out of a non-alliedcountry. If the government adopts this interpretation, oral dis-closures made to foreign space tourists could be deemed to be atechnical discussion that would be subject to monitoring. Onthe other hand, it would be more reasonable to argue that thisprovision was intended to apply only to the launch of satellites(and defense services related to the launch of satellites) and notto the taking off of a spaceplane.

E. THE DDTC's DIsCRETION To GRANT EXCEPTIONS

FROM ITAR

Despite the strict controls on the export of space technologydescribed in the preceding sections, section 126.3 of ITARgrants the DDTC broad discretion to grant exceptions from theapplication of the regulations as follows: "In a case of excep-tional or undue hardship, or when it is otherwise in the interestof the United States Government, the Director, Office of De-fense Trade Controls may make an exception to the provisions

100 Gold, supra note 32, at 181.10 Id.; 22 C.F.R. § 124.15(c).102 22 C.F.R. § 124.15(a) (emphasis added).

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of this subchapter."s0 3 This provision allows the DDTC to grantan exception from ITAR (which composes the entire "sub-chapter" referred to in this section) under the circumstances de-scribed. As written, the discretion should be utilized primarilyin cases of "exceptional or undue hardship," but can also be ap-plied under any circumstances in order to serve "the interest ofthe United States Government."O4 No further guidance is givenregarding the type of governmental interest that would allow forthe suspension of ITAR, which means that it could potentiallybe of any nature, whether based on national security, diplomaticconcerns, or commercial interests. The discretion provided bysection 126.3 was apparently instrumental in the Bigelow rulingand also allows for the granting of similar exceptions to spacetourism companies, as explained in the following sections.

III. THE BIGELOW AEROSPACE COMMODITYJURISDICTION REQUEST

Some of the most eloquent and incisive comments regardingthe regulatory burdens imposed by ITAR are found in the writ-ings of Michael Gold, the Corporate Counsel and Director ofthe Washington office of Bigelow Aerospace.1 0 5 In various publi-cations, Mr. Gold has described the surprisingly onerous (andoften nonsensical) demands that have been placed on BigelowAerospace as the company launched its prototype space stationsinto orbit from Russia.'0 6 In what has become one of the morefamous examples of the unreasonable requirements imposedunder ITAR, Mr. Gold has described how Bigelow Aerospacewas required (by a proviso in its Technical Assistance Agree-ment) to guard on a 24/7 basis a simple stand that was used tohold the prototype space station prior to its being loaded intothe launch faring.'0 7 Although the stand was from a functionalperspective not much different from a card table, it was deemed

1os Id. § 126.3.104 Id.05 See Gold, supra note 32, at 164; Mike N. Gold, Thomas Jefferson, We Have a

Problem: The Unconstitutional Nature of the U.S.'s Aerospace Export Control Regime asSupported by Bernstein v. U.S. Department of Justice, 57 CLuv. ST. L. REv. 629,642-43 (2009); see also Interview with Michael Gold, REs COMMUNIS (Apr. 28, 2008),http://rescommunis.wordpress.com/2008/04/28/interview-mike-gold-corpo-rate-counsel-bigelow-aerospace.

106 See sources cited supra note 105.107 Gold, supra note 32, at 172-73.

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to be modified for use with controlled space technology andwas, therefore, itself subject to ITAR controls.10

Prior to the DDTC's ruling that excepted Bigelow from cer-tain aspects of ITAR, Bigelow Aerospace feared that it wouldhave been required to acquire a license from the DDTC beforeallowing any foreign national to set foot on one of its space sta-tions."o' For example, if Bigelow placed into orbit a space sta-tion that was to be visited by foreign nationals, ITAR would haverequired that Bigelow obtain a license (by submitting a DSP-5form) for each foreign national that was anticipated to inhabitthe space station.o This requirement would also apply to anythird party that might purchase a Bigelow space station. That is,if Bigelow placed a space station into orbit and then transferredthe station to a U.S. purchaser, the purchaser would have to ob-tain a license prior to permitting a foreign national to enter thespace station. In addition to the costs of seeking such a license,there would also have been a risk that the DDTC would deny alicense, thus preventing the foreign national from entering thespace station at all.

In addition, Bigelow would have been required to enter into aTechnical Assistance Agreement with each foreign passenger,which would then have to be submitted to the DDTC for its ap-proval."' Bigelow was also concerned that the more burden-some requirements regarding the creation of a TechnologyTransfer Controls Plan and DTSA monitoring of all conversa-tions with foreign passengers would be triggered if the space sta-tions were launched from non-NATO countries.' 12 If theseprovisions of ITAR would have been applied strictly to Bigelow'soperations, it may have jeopardized the success of the companysince it would have made it far more difficult to attract andmaintain foreign customers. The pool of potential customersfor Bigelow's space stations is small to begin with and a signifi-cant portion of that pool is composed of foreign companies andspace agencies. Therefore, the possibility that ITAR would in-terfere with Bigelow's ability to fully tap into the foreign marketwas a threat to the company's viability.

One way that a company can escape the burdens of ITARcompliance is to ask the DDTC to remove the company's tech-

108 Id.

oo See Klamper, infra note 117.110 See Gold, supra note 32, at 176.111 See id. at 177-79.112 See supra Part II.D.

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nology from the USML by way of a "commodity jurisdiction re-quest" (CJ request)."' When submitting a CJ request, theapplicant is requesting that the DDTC remove the applicant'stechnology from the USML, thus transferring the technology tothe jurisdiction of the DOC, which oversees exports of dual-useitems under the EAR.1 1 4

On December 27, 2007, Bigelow Aerospace submitted a CJ re-quest to the DDTC seeking to remove its expandable space plat-form technology from the USML."5 Although the DDTCtypically makes a determination within three or four months af-ter receiving a request, a decision was not to be issued in thiscase for sixteen months." The suspense was broken on April22, 2009, when Bigelow Aerospace announced that the DDTChad responded favorably to its CJ request.1 1 7 The DDTC hadruled that the presence of foreign nationals on a Bigelow spacestation, as well as the training of these private astronauts, re-ferred to collectively by Mr. Gold as the "passenger experience,"was "non-licensable" under ITAR, meaning that the obligationsimposed by ITAR would not apply to this aspect of Bigelow'soperations."' Michael Gold had succeeded in his argumentthat just because a person has seen a space station does notmean that he or she can build one.

This ruling was rather unusual in that the DDTC will typicallydecide either to remove the technology at issue from the USML(thus transferring jurisdiction to the DOC) or to keep the tech-nology on the USML (and continue to require licenses for ex-

113 22 C.F.R. § 120.4 (2010).114 See Introduction to Commerce Department Export Controls, BUREAU OF IN-

DUSTRY AND SECURITY, http://www.bis.doc.gov/licensing/exportingbasics.htm(last visited July 17, 2010). Section 120.4 explains that a commodity jurisdictionrequest can be used either "if doubt exists as to whether an article or service iscovered by the U.S. Munitions List" or "for consideration of a redesignation of anarticle or service currently covered by the U.S. Munitions List." 22 C.F.R. § 120.4.

115 Bigelow Petitions State for ExportJurisdiction Change, SPACE NEWS, Mar. 3, 2008;

Space Technology: Earthbound. Export Control in the Space Business Has Gone Over-board, ECONOMIST, Aug. 23, 2008; Gold, supra note 32, at 171 n.21.

116 In the course of this decision process, Michael Gold remained philosophi-cal during what was unquestionably a suspenseful time for him and Bigelow Aero-space. When asked about the long wait, he showed no impatience, but insteadinsisted that he was more interested in a good decision rather than a speedy one.

117 Bigelow Aerospace has not released to the public either its commodityjuris-diction request or the DDTC's response. See Amy Klamper, Mike Gold, CorporateCounsel and Director of Washington Operations, Bigelow Aerospace, SPACE NEWS (Aug.31, 2009), http://www.spacenews.com/profiles/091009profile-mike-gold.html.

118 Id.


port)."' In Bigelow's case, the technology remained on theUSML, but the requirements for a license, Technical AssistanceAgreement, Technology Transfer Control Plan, and monitoringwill no longer apply with respect to the "passenger experi-ence.""o Despite the fact that it was not expressly stated in theruling, the DDTC was apparently exercising the discretiongranted to it under section 126.3 to grant an exception from theapplication of ITAR when it made this ruling.

Although it may appear that Bigelow Aerospace fell short bynot succeeding in having its technology removed from theUSML, this ruling appears to have been the best result for Bige-low since a transfer of its technology to the DOC would havelikely meant that a license would have to have been soughtunder the Export Administration Regulations. However, underthe "non-licensable" ruling, Bigelow does not have to apply forlicenses from either the DDTC or the DOC. Prior to this DDTCdecision, the presence of foreign nationals on a Bigelow spacestation would have triggered the various burdens under ITAR.The continuation of this policy would have placed an extraordi-nary burden on Bigelow due to the expensive and time-consum-ing process of complying with these requirements for eachforeign national present on a Bigelow space station. BigelowAerospace's successful CJ request has removed these obstaclesand, as a result, has promised to breathe new life into the pri-vate spaceflight industry.

It is worth noting that the DDTC ruling is not without its lim-its. First, the ruling only applies to Bigelow Aerospace. There-fore, unless the ruling is replicated for other spaceflightcompanies, it will, in reality, have no effect on the space industrybecause, as explained below, there is no value in an exceptionfor people on a space station if the spaceflight companies thathave to deliver the people to the space station are subject to thedebilitating burdens of ITAR. Second, prospective passengerswho are nationals of the so-called "[s]ection 126.1 countries"would still need a license from the appropriate agency beforebeing able to enter a Bigelow space station.121 Section 126.1 ofITAR states that "[i]t is the policy of the United States to denylicenses and other approvals for exports and imports of defensearticles and defense services, destined for or originating in cer-

119 See supra Part II.B.120 See Klamper, supra note 117.121 22 C.F.R. § 126.1 (2009).

605

606 JOURNAL OF AIR LAW AND COMMERCE [ 75tam countries . . . [including] Belarus, Cuba, Eriteria, Iran,North Korea, Syria, and Venezuela" as well as to "countries withrespect to which the United States maintains an arms embargo(e.g., Burma, China, Liberia, and Sudan)." 2 2

Despite these limitations, the DDTC's ruling on Bigelow's CJrequest was heralded by other spaceflight companies as a majorbreakthrough that promises to significantly ease the regulatoryburden on their operations. 1 23 For example, Marc Holzapfel,counsel to Virgin Galactic, called the ruling a "major develop-ment" that will enable space companies to avoid the "compli-cated, expensive, and dilatory export approval process. "124Likewise, the chief counsel of SpaceX, Tim Hughes, praised theDDTC for adopting "a common-sense approach to ITAR."125

However, since the Bigelow ruling only provides relief to Bige-low Aerospace and does not apply to either Virgin Galactic orother space tourism companies, these companies will have toseek similar relief on their own.

IV. EXTENDING THE BIGELOW RULING TO SPACETOURISM COMPANIES

Since Bigelow Aerospace announced the receipt of itsfavorable ruling, there have been reports that Virgin Galactichas already filed a CJ request that will rely on the Bigelow rulingas precedent. 1 26 Other space tourism companies will likely fol-low suit. The typical method of requesting a section 126.3 ex-ception is through the submission of a General Correspondenceletter to the DDTC. That Virgin Galactic has submitted a CJrequest indicates that the company is attempting to have itsspaceplane technology removed from the USML or else receivea ruling that the term "spacecraft" in Category XV of the USMLdoes not include commercial spaceplanes (just as commercialaircraft are not covered by ITAR) .127 The criteria considered bythe DDTC when determining whether to remove a particular

122 Id.12s Natasha Loder, Breaking News on US Export Control, OVERMATTER (April 22,

2009), http://natashaloder.blogspot.com/2009/04/breaking-news-on-us-export-control.html.

124 Id.125 Id.126 Commercial Space Transportation Advisory Committee, Meeting Minutes

(May 21, 2009), http://www.faa.gov/about/officeorg/headquarters offices/ast/advisory-committee/meeting-news/archive/media/May%2021%202009.pdf.

127 See supra Part II.B.


technology from the USML are the same criteria that are takeninto account when determining under section 120.3 whether aparticular technology should be designated as a "defense arti-cle," namely, whether the technology: (1) is designed for mili-tary use, does not have a primary civilian application, andexceeds the performance standards of equivalent civilian equip-ment; or (2) is designed for military use and has "significant"military value.1 28 These criteria receive further elaboration insection 120.4, but the primary criteria remain the same.12 9

Looking at the plain language of ITAR, suborbital spaceplanetechnology of the type being developed by space tourism com-panies should be removed from the USML since it has not beendesigned for military use and does not exceed the performanceof equivalent civilian space tourism equipment.13 0 That said, theDDTC is likely to consider the potential military application ofthe spaceplane technology when making its determination.With respect to this issue, the DDTC should take into accountthe fact that the spaceplanes that are currently under develop-ment are not in the same class of launch equipment that loftssatellites into orbit and can easily double as ballistic missiles. Al-though there may be some concern that these spaceplanescould deliver weapons of mass destruction to a target, the cur-rent state of spaceplane technology should eliminate any suchconcerns since the suborbital vehicles are not capable of point-to-point flight to any significant degree, but only return to theirpoint of departure."3 ' In light of this, it appears that the test forremoving spaceplanes from the USML has been met, and the

128 See supra Part II.B.129 22 C.F.R. § 120.4.I3 See id.131 It should be obvious that the space tourism equipment should not be char-

acterized as any of the controlled items under the MTCR, whether as a rocket, a"space launch vehicle," or a "reentry vehicle," simply because spaceplanes are notmissiles and such technology was not contemplated by this control regime. SeePeter van Fenema, Export Controls and Satellite Launches: What's New?, in PROCEED-INGS OF THE FORTY-SIXTH COLLOQUIUM ON THE LAW OF OUTER SPACE 239, 241(2004) (citing the MTCR guidelines which make clear that the purpose of theMTCR is to prevent the transfer of technology that can deliver weapons of massdestruction and that the MTCR is "not designed to impede national space pro-grams"); see also Waldrop, supra note 16, at 176, 190 (explaining that the "greatestconcern ... is that space launch vehicles essentially are ballistic missiles"). Like-wise, the International Code of Conduct against Ballistic Missile Proliferation(ICOC) is concerned with the proliferation of ballistic missile technology andshould be not applied to the launch of commercial spaceplanes. For a discussionof the nature and scope of the ICOC, see van Fenema, supra at 241-45.

607


DDTC would be able to make such a ruling in response to a CJrequest from Virgin Galactic and the other space tourismcompanies.

On the other hand, perhaps Virgin Galactic is simply follow-ing Bigelow Aerospace's example by submitting a CJ requestwhile still expecting nothing more than a section 126.3 excep-tion of the "passenger experience." And whether this narrowerrequest to render the "passenger experience" excepted fromITAR-as was done for Bigelow Aerospace-is made either inthe form of a CJ request or a General Correspondence letter,the DDTC should grant the request for two reasons. First, therefusal to grant such an exception to the space tourism compa-nies would render the Bigelow ruling a nullity. Second, the cir-cumstances for granting an exception under section 126.3 ofITAR are clearly met in the case of space tounsm companies inlight of (i) the exceptional hardship that would be caused by thestrict application of ITAR and (ii) the strong interest that theUnited States has in supporting the success of the privatehuman spaceflight industry.1 2

The first point is a rather obvious one, namely, that theDDTC's previous ruling regarding Bigelow's operations wouldbe meaningless unless similar relief is granted to the companiesthat will deliver people to the Bigelow space stations. The com-panies that Bigelow will rely on to deliver scientists, manufactur-ers, and recreational visitors to its space stations are likely to bethe same companies that are now offering suborbital tourismservices. These companies will continue to refine their technol-ogy until they are able to provide orbital delivery. However,without relief from ITAR, the tourism companies may not beable to survive even for the short term, let alone long enough todevelop orbital delivery capabilities. And without such servicesbeing available, Bigelow Aerospace's space station venture willcollapse as there is no sense in placing a space station in orbit ifits stands empty.

In addition to this first point, the DDTC should except the"passenger experience" of the space tourism companies fromITAR under section 126.3 because the grounds for grantingsuch an exception are clearly met. As explained above, theDDTC has the power to grant an exception from the applicationof ITAR in the event of "exceptional or undue hardship, or

132 See 22 C.F.R. § 126.3.

[ 75608


when it is otherwise in the interest of the United States."1 33 Al-though it is only necessary to show either exceptional hardshipor that the exception is in the interest of the United States, bothprerequisites are easily met in this case. First, it is undeniablethat the space tourism companies face exceptional hardshipunder the ITAR regulations. In fact, the space tourism compa-nies face even greater hardship than the hardship faced by Bige-low Aerospace. This is true because space tourism companieswill have a much higher number of passengers per year thanBigelow would have on its space stations and will therefore haveto apply for many more export licenses to allow for the disclo-sures to the passengers that are mandated under the HumanSpace Flight Regulations, as well as for allowing the passengerson board (and thereby potentially disclosing "technical data" re-lated to the spacecraft by means of visual inspection). For exam-ple, Virgin Galactic plans on eventually launching multipleflights per day with six passengers per flight, which could even-tually amount to thousands of passengers every year."34 In addi-tion, the disclosure of technical data will also require spacetounsm companies to enter into a Technical Assistance Agree-ment with each individual passenger-an agreement whichmust then be submitted to the DDTC for approval prior to thedisclosure of any such data.'13 The cost and complexity of ac-quiring licenses and entering into Technical Assistance Agree-ments for each passenger would be colossal and wouldunquestionably harm a company's ability to attract foreign cus-tomers who would likely prefer to fly with a foreign space tour-ism company that is not subject to the cost, uncertainty, anddelay of the U.S. regulatory regime.

The success of the space tourism industry would also bethreatened by the special controls under section 124.15, whichare triggered by the provision of defense services related to alaunch from a non-allied territory. As described above, thesespecial controls require Technology Transfer Control Plans aswell as permit the DTSA to monitor all discussions and activitiesrelated to the launch (with the expense of such monitoring be-ing borne by the company).xs3 While Bigelow was concernedthat section 124.15 would be triggered by the presence of their

13s See supra Part II.E.134 See, e.g., Leonard David, Virgin Galactic Details Its Space Travel Plans,

MSNBC.com (Nov. 11, 2006), http://www.msnbc.msn.com/id/15654772/.135 See supra Part II.C.136 22 C.F.R. § 124.15.

609


customers on their space stations, there is a good argument thatthis provision would not have been triggered since Bigelow willnot be involved with the launch of these customers.1 3 7 Passen-gers will be delivered to the space stations by other compa-nies.138 And if Bigelow is not involved in the launching of itscustomers, then the customers' presence on the space stationwould not be subject to section 124.15.131 Of course, Bigelowwould still be subject to section 124.15 when launching its spacestations from non-allied territory,140 but that is a less contentiousissue since, although burdensome, such launches would takeplace relatively infrequently (compared with the frequency ofspace tourism flights).

In contrast, it seems far more likely that the activities of spacetourism companies will trigger the application of the specialcontrols under section 124.15 when the flights are launchedfrom non-allied territories since customers of space tourismcompanies will actually be involved on a first-hand basis in thelaunching of the spacecraft.' 4 ' Therefore, not only do thesecompanies run the risk that they may be found to be providingdefense services by disclosing to their passengers (through visualinspection and safety training) technical data relating to theirspacecraft, but this defense service may be deemed to be pro-vided in connection with the launch of the spacecraft, thus trig-gering the controls of section 124.15.

Admittedly, the special controls of section 124.15 only apply ifthe tourism companies launch from non-allied territories. Itmay seem that space tourism companies may easily avoidlaunching from non-allied territories and thus avoid the bur-dens of section 124.15.142 After all, the list of NATO countriesand major non-NATO allies is a long one, including at this pointforty-three countries.14 However, there are significant omis-sions from this list. For example, Sweden is neither a member

137 See supra Part III.-n See supra Part III.

139 At the most, the presence of the customers on a Bigelow space stationwould be treated as an export of the space station (through visual disclosure) orthe provision of a defense service, which would only require an export licenseand Technical Assistance Agreement. See supra notes 93-96 and accompanyingtext.

140 See supra Part II.D.141 See supra Part II.D.142 See supra Part II.D.143 Mmber Countries, supra note 92.

[75610

2010] SPACE TOURISM AMD EXPORT CONTROLS

of NATO nor a major non-NATO ally.'4 4 This is significant be-cause Spaceport Sweden is one of the spaceports that plans toprovide services to the space tourism companies.1 4 5 Some for-eign space tourism companies are also pursuing the possibilityof launching flights from a spaceport in Abu Dhabi or Dubai.146Once again, U.S.-based space tourism companies will have ahard time following foreign competitors to these launch sitesdue to the fact that neither Sweden nor the United Arab Emir-ates are on the list of allied countries. These launch sites areattractive due to their ability to serve the customer pools of Eu-rope and the Middle East-where a large number of potentialcustomers with sufficient funds for this type of adventure tour-ism are to be found. Unfortunately, U.S.-based companies maybe locked out of this market unless they are relieved of the bur-dens of section 124.15.

To make one final point regarding section 124.15, the DDTCcould also choose to interpret the section as applying only to"defense services" related to the launch of satellites (and not thelaunch of a spaceplane), since the opening of the section men-tions the export of satellites in particular-in which case the en-tire specter of section 124.15 would evaporate.14 7 In the eventthat this narrow reading of the section is not adopted, theDDTC should at least grant an exception under section 126.3with respect to disclosures made to space tourists.

In addition to the grounds of exceptional hardship that spacetourism companies would suffer under ITAR, a "passenger expe-rience" exception from ITAR should be granted solely on thegrounds that such an exception would be in the interest of theUnited States. The interest that would be served is two-fold.First, the space tourism industry is a significant development inthe commercialization of space, and the technological develop-ments that result from these early tourism ventures are likely tolead to more substantial commercial ventures, such as orbitalmanufacturing, orbital research laboratories, point-to-pointspace travel, and even the mining of the moon or other celestialbodies. The United States has a great interest from an eco-

144 Id.145 Virgin Galactic Appoints First Space Travel Agents in Scandinavia, SPACEPORT

SWEDEN (Mar. 17, 2009), http://www.ssc.se/?id=9504&cid=14435.14 Loveday Morris, Space Tourism Set for Gulf Blast-Off THE NATIONAL (May 3,

2009), http://www.thenational.ae/article/20090503/NATIONAL/705029935/1010.

147 22 C.F.R. § 124.15(a) (2009).

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nomic perspective in being at the forefront of this industry andshould therefore modulate the application of ITAR in a mannerthat will foster the competitiveness of U.S. companies.

In addition to the economic interests at stake, the UnitedStates has a strong interest in ensuring the success of U.S.human spaceflight companies from the standpoint of nationalsecurity. A strong space presence has for a long time been animportant component of American strength and national secur-ity. 14 8 And now that the Obama Administration plans to elimi-nate NASA's spaceflight program and rely instead on the privatespace industry to meet the government's spacefaring needs, ithas become essential for the government to make every effort tofacilitate the success of the private spaceflight industry-whichat this point means supporting the space tourism industry. Thisdoes not mean that certain export controls cannot be kept inplace when required to prevent the proliferation of dangeroustechnologies, but it does mean that the DDTC should grant ex-ceptions wherever possible in order to ease the regulatory bur-den on these young companies.

The DDTC should also be confident that granting a "passen-ger experience" exception to the space tourism companieswould not result in the proliferation of the dangerous technolo-gies that ITAR is designed to prevent. As discussed above, thespaceplanes that are currently under development are designedfor purely commercial purposes and do not have the potentialof delivering weapons to a target." 9 Moreover, the tourismequipment is not designed for military use and therefore doesnot come within the criteria for ITAR control set forth in sec-tion 120.3.150 And not only is technology not of a type thatshould raise national security concerns, but the transmission ofthe "technical data" to space tourists is also of a nature that failsto warrant the application of export controls. Even if theHuman Space Flight Regulations are interpreted broadly to re-quire disclosure about every aspect of spacecraft safety and po-tential risks, it is highly unlikely that the information divulged topassengers (or the equipment that is visible to passengers) willentail the level of technological detail that is relevant to the con-struction and flight operation of the spaceplanes (unless a pas-

148 For a discussion of the history of the United States' reliance on the com-mercial space industry for national security needs, see Waldrop, supra note 16, at158, 199.

149 See supra Part IV.150 See supra Part II.B.

[ 75612


senger happens to inquire about engine mechanics or otherhighly technical matters).

For the reasons set forth above, the U.S. government has littleto fear and much to gain from easing the regulatory burdens onthe space tourism industry by excepting the "passenger experi-ence" from ITAR. The discretion that the DDTC has beengranted in section 126.3 allows the agency to adjust the applica-tion of ITAR in an appropriate manner to achieve the policygoals of maintaining security while also protecting the interestof the Unites States in supporting this new industry of privatehuman spaceflight. The relaxation of ITAR in order to supportthe innovative and important ventures undertaken by the newspace tourism industry is precisely the situation that section126.3 was intended to address. And as discussed in the follow-ing section, if the DDTC does not provide relief to the spacetourism industry, then it is likely that no relief will be provided,since Congress does not seem capable of reforming the lawgiven the political paralysis that has gripped our nation's capital.

V. ADMINISTRATIVE DISCRETION AND THE FUTURE OFEXPORT CONTROL REFORM

The stated commitment of the Obama Administration to ex-port control reform provides hope that the unnecessary regula-tory burdens described in this article will be lifted from theshoulders of commercial human spaceflight companies, thus al-lowing them to thrive in the global marketplace. The recentbills that passed the House in 2008 and 2009 also show that sup-port for reform exists in Congress."' However, when these re-forms will take place and what the nature of these reforms willbe is uncertain. The mere removal of commercial satellitesfrom the USML will not benefit tourism. These reforms, if theyoccur at all, may not be implemented for years. In themeantime, space tourism companies are on the verge of begin-ning their operations, and therefore regulatory relief must begranted to these companies through the exercise of the DDTC'sadministrative discretion to grant exceptions from ITAR or toremove spaceplane technology from the USML entirely.

The DDTC's actions connected with the Bigelow ruling andthe potential for the DDTC to grant relief to the space tourismcompanies provide a striking example of an interesting phe-nomenon in the field of administrative law. One of the more

151 See H.R. 5916, 110th Cong. (2008); H.R. 2410, 111th Cong. (2009).

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JOURNAL OF AIR LAW AMD COMMERCE

debated issues in the field of administrative law is the matter ofadministrative discretion and, in particular, the benefits anddangers of providing administrative agencies with discretion totailor the application of law to individual cases.1 -

2 By easing theregulatory burdens on Bigelow Aerospace, the DDTC has illus-trated the benefit of administrative discretion in two distinctways. First, the DDTC has shown how administrative discretioncan be used to adjust the application of a statute to new technol-ogies and fact scenarios that were not contemplated during thedrafting of the statute. Second, the DDTC has shown how anadministrative agency, through its discretionary powers, can actin place of the constitutionally established organs of govern-ment when these organs are unable to take action themselvesdue to political paralysis.

The idea that administrative discretion is useful, and evennecessary, in order to adjust the application of law to unforesee-able circumstances has been widely recognized.' 3 KennethCulp Davis identifies this primary purpose of administrativeagencies in his seminal 1969 book, Discretionary justice, when heexplains that one of the main reasons for the tremendous in-crease in administrative discretion in the United States duringthe nineteenth century was that the legislature was unable tocraft a set of rules in advance to cover unforeseeable future cir-cumstances or new developments that were sure to arise duringa time when society, technology, and business were evolving at arapid pace.15 4 As Davis points out, the mechanical applicationof an inflexible rule (such as the blanket rule subjecting allspace technology to ITAR) will certainly lead to unjust or unde-sirable results. 5 5 Discretion is needed in order to tailor the gen-eral rule to the unique circumstances of a particular case inorder to produce a result that properly balances the relevantinterests and policies.'55 This careful balancing of various poli-cies in light of the specific facts of a case is best carried out on acase-by-case basis at the administrative level-which was the ra-

152 See, e.g., Ronald M. Levin, The Administrative Law Legacy of Kenneth CulpDavis, 42 SAN DIEGO L. REv. 315, 331-37 (2005).

153 Id.154 Kenneth Culp Davis, DISCRETIONARYJUSTICE: A PRELIMINARY INQUIRY 15-17,

20, 24 (1969). See, in particular, Davis's statement that "[i]nventing rules to an-swer all regulatory questions is far beyond the intellectual capacity of the ablestmen." Id. at 42.

155 Id. at 19.156 Id.

[ 75614


tionale behind the inclusion of section 126.3 in ITAR, giving theDDTC discretion to grant an exception from the application ofthe regulations in the event of "exceptional or undue hardship,or when it is otherwise in the interest of the United States."15 7

The Bigelow CJ request was the perfect scenario for the appli-cation of the DDTC's discretion to grant an exception from theregulations. The DDTC was faced with a request to determinewhether Bigelow space stations were subject to ITAR. Unable torule that the space stations were not satellites (since they orbitthe Earth), the DDTC could only respond by ruling that ITARwould apply to the export of the space stations.1 58 However, it isto the credit of the DDTC that it recognized that the impositionof the regulations would threaten the viability of this new indus-try. Bigelow Aerospace was not a communications satellite man-ufacture or a provider of launch services-it was instead a newtype of business that provided for the private habitation ofspace. And if ITAR were strictly applied to Bigelow's operations,the burden could crush the new company. This was the perfectopportunity for the DDTC to use the discretion that had beengranted to it in section 126.3 to issue an exception since therewas every indication that the strict application of the regulationswould result in "exceptional or undue hardship."1 5 9 Moreover,it was also in the interest of the United States to ease the regula-tions and allow this groundbreaking company to grow in a rea-sonable regulatory environment since the company's success willcontribute greatly to the evolution of a vibrant new private spaceindustry.

The other benefit of the administrative discretion wielded bythe DDTC under section 126.3 is of a type that has not beenwidely recognized in scholarly literature-at least not in the par-ticular form illustrated by the Bigelow ruling. This benefit isfound in the ability of the DDTC to grant an exception to com-mercial space companies from the burdens of ITAR when thelegislative branch is so paralyzed by the politics of the day that itis unable to modify the law to remove commercial satellites fromthe scope of ITAR, as has been demanded by industry andacademia for years.1 60 In other words, the DDTC has shown howadministrative discretion allows for the law to be modified in its

157 22 C.F.R. § 126.3 (2009).158 See supra Part III.159 22 C.F.R. § 126.3.160 See supra note 5.

615

616 JOURNAL OF AIR LAW AND COMMERCE [ 75application by the administrative agency when the legislature isunable to make necessary amendments to the law due to theparalyzing effects of political pressures.

The current highly factionalized political environment hasmade it virtually impossible for any meaningful legislative re-forms to pass both houses-and the reform of arms traffickingregulations poses special challenges.' Any politician who rec-ommends relaxing ITAR (even if they are really only talkingabout the exemption of purely commercial technology) openshimself to political attacks for being soft on national defense.1 6 2

In this political climate, the legislature is paralyzed. And with-out the legislature being able to enact the necessary ITAR re-forms, the only hope lies with the DDTC, which has thediscretion to grant an exception from the regulations when nec-essary. The use of administrative discretion to solve the prob-lem of political paralysis in the age of terror, party factionalism,and divided government strikes a chord that is similar to the"public choice" theory in administrative law, which, as enunci-ated in Pierce's treatise on administrative law, states that politi-cians prefer to allow administrative agencies to makecontroversial policy decisions rather than make a decision thatmay alienate a segment of voters and thus place the politicians'political career in jeopardy.' Although the reality of politicalparalysis is an unfortunate development that signals a profoundflaw in our democracy, it has illustrated how, when the tradi-tional constitutional organs of government are paralyzed bypolitics or are otherwise dysfunctional, administrative agenciescan step in and shape the law in a reasonable manner pursuantto their discretionary powers.

161 For a first-hand account of the current paralysis of Congress, see Evan Bayh,Why I'm Leaving the Senate, N.Y. TIMES, Feb. 21, 2010, at WK9; see also RICHARD J.PIERCE, JR., ADMINISTRATIVE LAw TREATISE 134-35 (4th ed. 2002) (explaining howparty factionalism has led to gridlock because different parties control the Presi-dency and Congress-and each has the power to thwart the other branch); PeterBeinart, Why Washington Is Tied Up in Knots, TIME, Mar. 1, 2010, at 20.

162 See Spector, supra note 9, at 14 (explaining that at the time of his writingthe article there was a "strong group within Congress that ... is largely suspiciousof any efforts that might appear to make satellite exports easier" and that "[i]tseems unlikely that meaningful reforms will be enacted .. . when U.S. representa-tives are not likely to embrace any bill that exposes them to a charge of being'soft' on national security").

163 PIERCE, supra note 161, at 99; see alsoJerry Mashaw, Prodelegation: Why Admin-istrators Should Make Political Decisions, 1 J.L. ECON. & ORG. 81 (1985).


This reliance on the authority and discretion of the DDTC togrant an exception from the ITAR regulations in order to allowfor the successful operation of the new human spaceflight indus-try may, given the current political climate, be a more realisticalternative to the revision of the regulations. By giving theDDTC officers an opportunity to tailor the application of theexisting regulations in a reasonable manner, the burden ofITAR on commercial space enterprises could be reduced signifi-cantly. However, since an exception under section 126.3 onlyaffects the operations of the requesting company, broad reliefacross the industry would require each of the space companiesto file their own request. This task could be made easier if com-panies would share their CJ requests in order to enable others tosubmit similar requests. This would obviously require the shar-ing of valuable information with competitors-but would bedone in order to achieve the greater goal of improving the com-petitiveness and viability of the spaceflight industry as a whole.If the DDTC granted a series of exceptions from the applicationof ITAR with respect to the "passenger experience," it wouldpave the way for a formal revision of the USML to remove theburdens of ITAR from this aspect of the spaceflight companyoperations. For once the section 126.3 exceptions are grantedand the spaceflight industry proves itself to be an important andviable industry, the suggestion to formalize the exception in arevision of the regulations should entail less politicalcontroversy.

VI. CONCLUSION

The United States is entering a new age of space commerciali-zation that will be fueled by the Obama administration's newreliance on services provided by private companies. Now morethan ever the strength of the U.S. space program will depend ona robust domestic industry that is able not merely to service theneeds of the government, but actually replace the governmentspaceflight program. The policy is daring and forward-thinking,but it also comes with risks. An entrepreneur in the space indus-try will have to surmount the impossible by succeeding in anexotic venture that is capital intensive, technologically challeng-ing, and-if that were not enough-burdened by a byzantineregulatory system that promises substantial attorneys' fees and, ifviolations occur, crushing penalties. Fortunately, these regula-tory hurdles can be largely removed by easing the impact of the

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ITAR regulations in a manner that properly balances commer-cial needs with security concerns.

Although the current political environment-characterizedby factionalism, a split government, and, in the end, governmen-tal paralysis-has made it impossible for Congress to respond tothe clear need to reform ITAR, the DDTC has used its discretionwisely to except Bigelow Aerospace from the those aspects ofITAR that threatened the survival of the company. This use ofadministrative discretion to modify the application of law whenthe constitutional organs of government are unable to act is apowerful example of the importance of administrative agenciesto our democracy-when government breaks down, the agen-cies can take over the work of government. This article hasmade the case for why the DDTC should continue to exercise itsdiscretion by granting similar exceptions for the "passenger ex-perience" to the space tourism companies that will soon beginto fly customers into space. The need for such an exception iseven stronger for such companies than was the case for BigelowAerospace since their number of customers will be significantlylarger than those of Bigelow and the nature of their operationswill be more likely to trigger ITAR controls. The interests of theUnited States demand that these exceptions be granted. A suc-cessful domestic commercial spaceflight industry will not onlybring jobs, prosperity, and technological advantages to theUnited States, but will also ensure the strength of our govern-ment space program, which, under the Obama Administration'snew space policy, will rely more than ever on private industry.

618 [ 75

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Space Tourism and Export Controls: A Prayer for Relief