Jen DiMascio/Washington

For 14 years, the U.S. commercial satellite industry has tried to reverse a law that aimed to limit dual-use satellite technology but has instead, industry insiders insist, put U.S. exports at a competitive disadvantage.

The restriction on satellite exports was instituted in 1998, in response to fears that China could use U.S. commercial satellite components to bolster its own launch and missile capabilities. The law classified even commercial satellites and components as military ones and left the decision as to which could be exported in the hands of the State Department.

Now, the House version of the defense authorization bill for fiscal 2013 includes a provision that would remove commercial satellites and components from the U.S. Munitions List (USML) and allow the president to decide which satellite technologies are the most important to protect. The bill still restricts the export and transfer of technology to China, Cuba, Iran, North Korea, Sudan and Syria. But the change would vastly improve the U.S. satellite industry's ability to compete in the global marketplace, industry advocates say

Inclusion in the defense policy bill represents a significant milestone in a gridlocked Congress. The defense bill is considered must-pass legislation that has not failed to clear both chambers in half a century. To pass, the trick will be retaining the provision in the Senate version, which has been quashed in the past by powerful senators including Jon Kyl (R-Ariz.).

The language is not in the version of the defense bill passed last month by the Senate Armed Services Committee, though on May 23, Sen. Michael Bennet (D-Colo.) introduced a companion bill in the Senate.

Without a Republican co-sponsor for Bennet's bill, industry officials say they may rather place their bets on the House-Senate conference committee, because two of the four top negotiators, the leaders of the House Armed Services Committee—Rep. Buck McKeon (R-Calif.) and Rep. Adam Smith (D-Wash.)—are both advocates of loosening the restrictions on satellite exports.

If it comes to a vote on the Senate floor, Kyl still backs the ban on exports and will oppose its reversal.