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Snipping the red tape that keeps private enterprise earthbound

For the United States, trying to play a leading commercial role in space is not a test of orbital skill. It is an exercise in bureaucracy. The US has an abundance of expertise and space technology. But putting that astronautical muscle to work in the burgeoning new field of space commerce means clearing away a tangle of laws, regulations, and other pre-space-age obstacles that inhibit private enterprise.

Tony Calio, deputy administrator of the National Oceanic and Atmospheric Administration (NOAA), likes to cite the case of tariff rules that need to be changed so that products made by US companies in space are not taxed as imports. ''Customs laws were fine when they were first started,'' he told reporters during a recent White House briefing. But he added that they ''did not anticipate producing products in space.'' And space, like the high seas, is considered beyond the national borders.

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That is why the motto adopted by Washington bureaucrats concerned with US competitiveness in space is Ronald Reagan's observation that pioneers of the new enterprises ''should see blue sky, not red tape.''

In a sense, space commerce began in the 1960s with the communications satellite business. But the commercial opportunities now beginning to open are of far wider scope and have the potential, ultimately, to have a much greater impact on the gross national product. They include manufacture of a variety of high-value products such as pharmaceuticals, metal alloys, and electronic materials, which can only be made, or are best made, under weightless conditions in orbit.

They also include the fast-growing business of launching commercial satellites. Calio says the administration hopes that the US can capture 60 to 70 percent of the world market for this business, not only for the National Aeronautics and Space Administration's shuttle, but for the private companies that are ready to take over the operation of unmanned launch vehicles.

For such fledgling enterprises, the present potential for becoming tangled in red tape is indeed inhibiting.

Even laws meant to encourage business growth turn out to have self-defeating language. For example, Congress allowed a 25 percent tax credit to encourage US business to invest more in research. But the law specifies that the companies must be organized for profit. Companies organized primarily to do research and development don't qualify - and that excludes most space companies.

These pioneering companies may also be excluded from the 10 percent investment tax credit and accelerated cost recovery system which Congress legislated to encourage new business investment. The law specifies that the business must be physically located in the United States - meaning on the ground - to qualify for this tax incentive.

Even the Freedom of Information Act can cause unintended problems. The government will have to know what private companies are doing in space, both for the protection of other space assets and for reasons of national security. But such trade secrets should not be freely available to the company's competitors. Yet, as the law now stands, the government could not honor that commercial secrecy in the face of a demand for information as provided for in the act.

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NOAA, the Department of Transportation, which has primary responsibility for encouraging the new launch vehicle business, and other relevant agencies are now working under presidential mandate to modernize regulations, propose needed legislative changes, and generally to smooth the path for space business people.

Even sensitive security areas such as those governed by the Munitions Control Act and the International Traffic in Arms Regulations are being reexamined. Calio notes that, as these stand, they apply to space commerce and subject this young business field to ''a much more elaborate and time-consuming review system than the circumstances justify.'' Thus the Departments of Defense and State are trying to find a streamlined way of protecting national security in this area without bogging down the new enterprises.

Private launch vehicle operations face a particular challenge because, up to now, satellite launching has been exclusively a government operation. Safety regulations, siting rules, licensing procedures, and many other regulatory matters have to be set up for the private operators. As just one example, it now could take three years and permits from several agencies just to assign radio frequencies for a launch company's use.

An interagency working group expects to develop a system that will cut that time down to six months. Also, some launch companies will use existing federal sites. Rules still have to be worked out to accommodate commercial activities at such centers.

Congress, too, is beginning to write new laws to assist the emergence of US space business.

Former Astronaut Donald K. (Deke) Slayton, president of Space Services Inc., which is developing its own launch rocket, recently told a Senate hearing that he is encouraged by the progress being made. But he urged the Senate to quickly pass legislation to help establish a clear policy for his type of business. He pointed out that lack of such clear guidelines has ''resulted in a significant expenditure for legal fees just to penetrate the regulatory morass.''

Fortunately for Slayton and fellow space business people, both the administration and the Congress are sympathetic to their needs. There is wide awareness that the Western European company Arianespace is already in the field and determined to sew up a large share of the satellite launching market. Japanese and Soviet competition is on the horizon. Then too, foreign competitors are eyeing space manufacturing and other facets of space commerce.

There is also wide recognition that the opportunity is at hand to begin to turn the massive public investment in US space capability into taxpaying businesses on what, eventually, is expected to be an equally massive scale. The launch vehicle business, to cite one example, is seen as the beginning of a space transportation industry that, within a decade or two, can become as significant, in its way, as railroads, shipping, or airlines.

There could scarcely be a clearer sign that space activity is becoming integrated into human activity than is provided by the current hustling of Washington bureaucrats to help the new businesses get under way.

A Thursday column. Robert C. Cowen is the Monitor's natural science editor.

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