Reminder: Comments on BIS Rule to Move USML Items to CCL due Sept 13

Rule Would Create Processes to Transition Items from USML to CCL

This rule proposes to amend the EAR¹ to, among other things: (i) establish a regulatory framework for transitioning certain items from the U.S. Munitions List (USML) to the Commerce Control List (CCL); (ii) transfer an initial tranche of items from USML Category VII (Tanks and Military Vehicles) to the CCL; (iii) establish a process for making certain transferred items eligible for License Exception Strategic Trade Authorization (STA); (iv) establish new definitions for "specially designed," "end items," "parts," etc.; and (v) establish a new holding Export Control Classification Number (ECCN) in which items that warrant a significant level of control, but are not otherwise classified on the CCL, may be temporarily placed.

The following are select highlights of the changes in the proposed rule, which BIS grouped into the four categories below (See ITT's Online Archives or 07/15/11 news, 11071519, for full BP summary):

Addition of "600 Series" on CCL to Control Former USML Items

"xY6zz" Control Series Would be Added to CCL to Control Former USML Items

In Supplement No. 1 to part 774 of the CCL, this rule proposes to add a new "xY6zz" control series to the CCL to control most items formerly on the USML moved to the CCL and to consolidate the thirteen existing WAML entries (i.e., those entries currently under "xY018") to this new "600 series." This new control series would be added to each of the 10 CCL categories and would fall after the "300 series" and before the "900 series" on the CCL.

This proposal would effectively create a "Commerce Munitions List," comprising distinct ECCNs, that allows for identification, classification, and control of items transferred from the USML that, based on their technical or other characteristics, are not classified under an existing ECCN that is subject to controls for any reason other than Anti-Terrorism (AT) reasons. BIS would retain the existing CCL Category (x) (i.e., 0 through 9) structure and the existing Group (Y) (i.e., A, B, C, D, and E) structure for the types of items that move to the CCL.

Series Would Capture WAML/Former USML End Items, Cover Parts, Accessories

Each of the new "600 series" entries would capture Wassenaar Arrangement Munitions List (WAML) and formerly USML end items that are not identified in either (i) the revised USML or (ii) another existing ECCN controlled for more than AT-only reasons.

Generic "parts," "components," "accessories" and "attachments" moved from the USML would be controlled using a similar structure in each of the "600 series" ECCNs that would be added to the CCL. Former USML "parts," "components," "accessories and attachments" that are not: (i) identified in the revised, positive USML; (ii) specifically identified in a new 600 series entry; or (iii) described in another ECCN controlled for more than AT-only reasons would be controlled at the end of each new corresponding 600 series ECCN as "parts," "components," "accessories and attachments" ‘specially designed’ for (i) items controlled elsewhere in that ECCN or (ii) defense articles controlled in the corresponding USML category."

Comments Sought on Processing Timeframe for "600 Series" License Apps

BIS states that license decisions under the EAR must be made within 39 calendar days, although the average processing time for BIS in 2011 has been 31 calendar days. For licenses processed by the State Department, the average processing time has been generally around 17 calendar days. BIS welcomes public comments on an appropriate processing time for license applications involving these "600 series" items, in light of these timeframes. If commenters recommend a shorter review period, it would be useful if they also specify what processing times would be appropriate and identify any unique aspects of the "600 series" that may necessitate a need for a shorter review period, as well as the historical timeframes of the State Department's processing of license applications involving such items.

Creation of Process to Make Transferred Items Eligible for STA Exception

This rule proposes to amend 15 CFR 740.20 by adding new paragraph (g) to create a new interagency process through which license applicants could request License Exception Strategic Trade Authorization (STA) eligibility for "600 series" "end items" (as opposed to "parts," "components," "accessories," or "attachments") classified in an ECCN "xA6zz" entry at the same time that they submit license applications covering such items. This new interagency review process would be a key component of the new control structure that is included in this proposed rule for addressing the movement of items from the USML to the CCL and ensuring that the governments of the STA-36 destinations would have access to these "600 series" "end items" once an interagency review and determination is made that such "end items" should be exportable under License Exception STA.

With respect to the timeframe for U.S. Government reviews of License Exception STA eligibility requests pursuant to proposed section 740.20(g), BIS states that it welcomes public comments, particularly in light of the connection between license applications involving "600 series" items and License Exception STA requests.

Creation of New Miscellaneous ECCN 0Y521 Equivalent to USML Cat XXI

Would Add New ECCN 0Y521 for Miscellaneous Items Not Yet Controlled

As a mechanism for situations in which an item that warrants control is not controlled yet (e.g., as with an emerging technology), this rule proposes the addition of a new, miscellaneous ECCN to the CCL, similar to USML Category XXI (Miscellaneous Articles).

This new temporary holding classification would be included in Supplement No. 1 to part 774 in ECCNs 0A521, 0B521, 0C521, 0D521 and 0E521 (the 0Y521 ECCNs). The 0Y521 ECCNs would be designed as a temporary "holding" category for items not elsewhere classified on the CCL for which the U.S. Government is determining an appropriate control.

Creation of New Definition of "Specially Designed"

New Definition of "Specially Designed" Would be Created for ECCNs, USML

The Administration has determined that it cannot completely eliminate "specially designed" as a control parameter. The term is commonly used in the multilateral export control regimes’ control lists upon which much of the CCL and USML are based. A basket category for controlling militarily less significant items "specially designed" for defense articles that move to the CCL is still necessary to achieve the larger national security objectives of the reform effort.

Therefore, the proposed rule would create a new definition of "specially designed" to apply to (i) 600 series ECCNS, (ii) existing ECCNs using the term, and (iii) revised USML categories using the term.

A Specially Designed Item Has CCL Number & Exceeds Performance Levels

Under the proposed definition, a “specially designed” item, other than a "part" or "component," would be an item that is enumerated on the CCL and, as a result of "development," has properties peculiarly responsible for achieving or exceeding the controlled performance levels, characteristics, or functions of the referenced item identified in the CCL.

For the purposes of this definition, an item would not be considered "specially designed" if it is separately ‘enumerated’ in an USML subcategory or an ECCN that does not have "specially designed" as a control criterion.

Items that are not separately "enumerated" for purposes of this definition would also not be considered "specially designed" in any category of the CCL if they are: single unassembled parts (screws, bolts, nuts, etc.); specifically excluded from control on the USML or the CCL; a part or component of an end-item in serial production and not enumerated on the USML or CCL; etc. (See proposed rule for additional details.)

(BIS notes that this definition is not applicable to the similar phrase "specifically designed" which is used throughout the USML, or to the phrase "especially designed or prepared for" in use throughout the Nuclear Regulatory Commission regulations.)

Comments Sought on Whether New Definition Would Cause Change in Controls

The Administration believes this proposed definition would accomplish the regulatory and definitional harmonization objectives of the State and Commerce Departments' December 2010 ANPRs. BIS particularly seeks public comments on whether there would be any anticipated change in controls based on adoption of this definition, relative to the current situation where "specially designed" is only defined for MT-controlled items.

Public Encouraged to Apply Definition as May Not be Able to After Final Rule

Through this proposed definition, if an item is "specially designed" today, it would continue to be "specially designed" after adoption of this definition. If it is not "specially designed" today (meaning prior to adoption of the definition included in this rule), it also should not, except in rare cases, become "specially designed" after adoption of this definition in a final rule.

As a result, BIS strongly encourages the public to apply the proposed definition to items, particularly "end items," "parts" and "components," it believes are or are not currently covered by "specially designed" and report to BIS any instances in which the proposed definition produces different results from the current definition. Such comments should describe the item and why the commenter believes that the item at issue is not now "specially designed" but would be as a result of the application of the new definition.

Other Changes to Assist in Structural Alignment of USML and CCL

Would Revise CCL Product Group A Headings, Add New Definition of "Materials"

As a conforming change, this proposed rule would update the product group heading for A in each Category of the CCL. The proposed rule would also add a new definition of the term "materials" as it is used in the CCL Product Group C heading and in other parts of the EAR to mean "any list-specified crude or processed matter that is not clearly identifiable as any of the types of items defined in section 772.1 under the defined terms, "end item," "component," "accessories and attachments," "part," "software," "system, "equipment," or "facilities."

¹This rule proposes to amend the following parts of the EAR (15 CFR): 730, 732, 734, 738, 740, 742, 743, 744, 746, 748, 756, 762, 770, 772 and 774.

BIS contact -- Timothy Mooney (202) 482-2440

(D/N 110310188-1335-01, FR Pub 07/15/11)