State and BIS Propose Rules for New USML Cat XIX for Gas Turbine Engines, "Tiering" on Hold, Etc.

Written comments on both proposed rules are due by January 20, 2012.

State Dept Proposed Rule

Proposed Rules Do Not Reflect Tiering

In their December 2010 advanced notices of proposed rulemaking, the State Department and BIS described the Administration’s plan to make the U.S. Munitions List and the Commodity Control List positive, tiered, and aligned so that eventually they can be combined into a single control list. While these remain the Administration’s ultimate Export Control Reform objectives, their concurrent implementation would be problematic in the near term. As a result, the Administration has decided, as an interim step, to propose and implement revisions to both the USML and the CCL that are more positive, but not yet tiered.

(See ITT's Online Archives 10121021 and 10120921 for summary of State and BIS ANPRs, respectively, on the Administration's plan to make the USML and CCL positive, tiered, and aligned, and to establish a "bright line" between the two.)

Proposed New USML Category XlX

The State Department's proposed rule would establish USML Category XIX to cover gas turbine engines and associated equipment currently covered in Categories VI, VII, and VIII. The USML identifies engine subcategories in all three of these categories, but there has been confusion concerning the controls in Category VI (which currently lists only ‘‘naval nuclear propulsion plants,’’ leading exporters to question whether other types of propulsion systems are controlled as ‘‘components’’ in Category VI(f)), Category VII (which controls both diesel and gas turbine engines under the same general term ‘‘engines’’ in Category VII(f)), and Category VIII (which controls ‘‘military aircraft engines’’ but not reciprocating engines).

Engines with certain parameters are USML-controlled. The intent of this change is to make clear that gas turbine engines for surface vessels, vehicles, and aircraft that meet certain objective parameters are controlled on the USML.

Positive list of generic parts. The most significant aspect of this more positive, but not yet tiered, proposed revision to this USML category is that it does not contain controls on all generic parts, components, accessories, and attachments that are in any way "specifically designed" or modified for a defense article, regardless of their significance to maintaining a military advantage for the U.S. Rather, it contains a positive list of specific types of parts, components, accessories, and attachments that continue to warrant control on the USML. All other parts, components, accessories, and attachments will become subject to the new 600 series controls in the CCL as described in the BIS companion proposed rule.

Revisions to jurisdictional status. Revising the jurisdictional status of certain militarily less significant end items that do not warrant USML control (but the primary impact of this proposed rule will be with respect to current USML controls on parts, components, accessories, and attachments that no longer warrant USML control).

Proposed Definition for "Specially Designed"

For the purposes of this proposed rule, the draft definition for “specially designed” in the State Department's December 2010 ANPR should be used. The draft definition provided at that time is as follows: “For the purposes of this Subchapter, the term “specially designed” means that the end-item, equipment, accessory, attachment, system, component, or part (see ITAR 121.8) has properties that (i) distinguish it for certain predetermined purposes, (ii) are directly related to the functioning of a defense article, and (iii) are used exclusively or predominantly in or with a defense article identified on the USML.”

(BIS subsequently published on July 15, 2011, for public comment, the Administration’s proposed definition of “specially designed” that would be common to the CCL and the USML. The public provided more than 40 comments on that proposed definition on or before the September 13 deadline for comments. The Departments of State, Commerce, and Defense are now reviewing those comments and related issues, and the Departments of State and Commerce plan to publish for public comment another proposed rule on a definition of “specially designed” that would be common to the USML and the CCL. See ITT's Online Archives 11071519 for summary of the July 2011 BIS proposed rule for new definitions for "specially designed" end items, parts, etc.; the proposed rule also covers an EAR control structure to transfer less significant items from the USML to the CCL, the transfer of an initial traunche of items from USML Category VII to the CCL, etc.)

BIS Proposed Rule

Five New 600 Series ECCNs Are Proposed

The Bureau of Industry and Security's proposed rule describes how military gas turbine engines and related articles that the President determines no longer warrant control under USML Category VI, VII, or VIII would be controlled under the CCL in new Export Control Classification Numbers (ECCNs) 9A619, 9B619, 9C619, 9D619 and 9E619.

In addition, this proposed rule would control military trainer aircraft turbo prop engines and related items, which are currently controlled under ECCN 9A018.a.2 or .a.3, 9D018 or 9E018, under new ECCN 9A619, 9D619 or 9E619.

State proposed rule (FR Pub 12/06/11, Public Notice 7703) available here. BIS proposed rule (FR Pub 12/06/11, D/N 11020646--1645--01) available here.