A little-noticed provision in a massive, $633 billion military spending bill approved by Congress last week will end a decade-old battle over whether to ease export restrictions on U.S. satellite technology.
If signed by President Barack Obama, the measure would be a boon for federal space contractors in Maryland and elsewhere who have long argued that the strict rules — intended to prevent foreign countries from obtaining sensitive technology — are so broad they have allowed other countries to surpass the United States in the satellite business.
Lawmakers, responding to concerns that China had acquired proprietary U.S. technology in the late 1990s, classified all satellite components as weapons for purposes of trade — severely restricting exports. Even bolts and screws, if they were being manufactured for use on a satellite, were categorized with firearms, fighter planes and explosives.
The satellite industry estimates that the additional restrictions lowered the U.S. share of worldwide exports of their products from a peak of 73 percent before the rules were implemented to around 23 percent today. The restrictions mainly affect private satellite companies, but many of those firms have contracts with the federal government, such as for communication satellites.
"This only hurts U.S. businesses," George Torres, a spokesman for ATK Aerospace, which employs about 600 people working on satellite technology in Beltsville, Md. "For sure there were opportunities lost in past years where we could have had some good high tech jobs there."
Now, satellite contractors and their suppliers hope the looser rules included in the National Defense Authorization Act will open new markets and allow firms to hire more high-tech workers.
The far-reaching legislation would also authorize spending for the war in Afghanistan next year as well as weapons, ships and aircraft used by the military.
The Republican-controlled House of Representatives approved the measure Thursday on a bipartisan vote. The bill passed by a wide margin in the Senate on Friday.
Lawmakers had approved the restrictions on satellites after the high-profile crash of a Chinese rocket in 1996 that was supposed to carry a U.S.-made satellite into orbit. At the time, some in Congress questioned whether the Chinese had recovered technology in the debris.
A subsequent investigation of the incident led regulators to believe U.S. companies were unintentionally revealing sensitive information to the Chinese as they tried to help improve their launches.
Rep. C.A. Dutch Ruppersberger, the top-ranking Democrat on the House Intelligence Committee, has been working on the issue for years. The Baltimore County lawmaker said he believes Washington overreacted in its effort to address the threat.
"Typical Congress when we pass laws with unintended consequences," Ruppersberger said. "As a result of this law, France and other countries would start making the same product we have and advertising it" as free of the restrictions.
He said the measure wouldn't eliminate the rules but would give the administration flexibility to decide whether certain products should be easier to export.
It would leave in place restrictions on satellite sales to China, North Korea and nations the State Department has identified as state sponsors of terrorism, such as Syria and Iran.
Patricia Cooper, president of the Satellite Industry Association, said the provision would level the playing field for U.S. satellite companies.
"Being able to right-size it allows the export control regulators to focus on the items that matter," she said. "And it allows the industry to trade."
Some Republicans have taken a different view, arguing that looser export restrictions could allow sensitive technology to be traded on the black market with enemy states or terrorists. Others say that freeing satellite exports amounts to ceding congressional oversight on the issue. But many who previously opposed the provision did not raise objections this time — at least not publicly.
Criticism was quieted somewhat by a report released in April by the Pentagon and State Department that concluded that many types of satellites could be moved out of the restrictive categories without posing a threat to national security.
Maryland is home to a significant contracting community. The state was awarded $27 billion in federal work in 2010, trailing only the District of Columbia and Virginia in per-capita spending on contracts. Hughes Network Systems, a global player in satellite broadband, is based in Germantown, for instance.
The measure "will enable a more sensible approach to satellite export regulation," Dean A. Manson, executive vice president at Hughes, said in a statement, "that will further U.S. leadership in the satellite communications industry."
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