State and BIS Propose Rules to Revise USML Cat XIII & CCL, "Tiering" on Hold, Etc.

Written comments on both proposed rules are due by July 2, 2012.

State Dept Proposed Rule

Does Not Reflect Tiering

In December 2010 advanced notices of proposed rulemaking, the State Department and the Bureau of Industry and Security 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 (ECR) 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 Revision of USML Category XIII

The State Department's proposed rule would revise USML Category XIII, covering materials and miscellaneous articles, to establish a clear bright line between the USML and the CCL for the control of these articles. The proposed revisions would move certain items to the CCL and other USML Categories, define certain articles more narrowly and specifically, create a paragraph in the USML for classified articles, etc.

Proposed changes include:

Cameras and specialized equipment to CCL & Cat XII. Cameras and specialized equipment controlled in paragraph (a) of Category XIII would be controlled in revised category XII or the CCL. Paragraph (a) would be removed and reserved. BIS said photointerpretation, stereoscopic plotting, and photogrammetry equipment, “specially designed” for military use, currently controlled in paragraph (a) of Category XIII would be controlled on the CCL under ECCN 0A617.e.

Diving and underwater breathing apparatus to CCL. The articles currently controlled at paragraph (c) of Category XIII, self-contained diving and underwater breathing apparatus, would be moved to the CCL and controlled in ECCN 8A620.f. Paragraph (c) of Category XIII would be removed and reserved.

Expanded and more specific descriptions of certain articles. Paragraphs (d), (e), (g), and (h) of category XIII of the USML, which control ablative materials, armor and armor materials, concealment and deception equipment; and energy conversion devices, respectively, would be reorganized and expanded. The definitions for these items would be more specific.

For example, paragraph (h) of Category XIII, which currently says “energy conversion devices for producing electrical energy from nuclear, thermal, or solar energy, or from chemical reaction that are specifically designed, developed, modified, configured or adapted for military application” would be modified to say “energy conversion devices, as follows: (1) fuel cells “specially designed” for platforms or soldier systems specified in this subchapter; (2) thermal engines “specially designed” for platforms or soldier systems specified in this subchapter; (3) thermal batteries (MT); or (4) thermionic generators.”

Designation for “classified” articles. Classified materials would be controlled by redesignated paragraph (f). The proposed definition says “any material that: (1) is classified; (2) is manufactured using classified production data; or (3) is being developed using classified information.” State said articles in current paragraph (f), structural materials, are to be controlled on the CCL in proposed ECCN 0C617 and in revised USML Categories VII, VIII, and XIII.

Redesignated paragraph (h) would define “classified” as “classified pursuant to Executive Order 13526, or predecessor order, and a security classification guide developed pursuant thereto or equivalent, or to the corresponding classification rules of another government.”

Signature reduction software described on USML; embrittling agents moved to CCL. Signature reduction software, technical data, and services would be described in redesignated paragraph (i). Embrittling agents, currently described in paragraph (i), would be moved to the CCL under ECCN 0A617.f, says State.

Interpretations expanded to reflect changes. The interpretations contained in paragraph (m) of Category XIII would be expanded to include 9 subparagraphs defining terms such as, among other things, transparent material, spaced armors, composite armor, etc. Current paragraph (m) only includes 2 subparagraphs.

Special identification for MTCR articles. Finally, articles common to the Missile Technology Control Regime (MTCR) Annex and the USML would be identified on the USML with the parenthetical “(MT)” at the end of each section containing such articles. State said a future proposed rule will address the sections in the ITAR that include MTCR definitions.

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 by the September 13 deadline. State and the Department of 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, which is currently under review by the Office of Management and Budget. 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 tranche of items from USML Category VII to the CCL, etc.)

BIS Proposed Rule

Proposed Revisions to the CCL

BIS’ proposed rule describes how auxiliary and miscellaneous military equipment and related articles that the President determines no longer warrant control under Category XIII (Materials and Miscellaneous Articles) of the USML would be controlled under the CCL, as follows:

Five new “600 series” ECCNs. The BIS proposed rule would create five new "600 series" Export Control Classification Numbers (0A617, 0B617, 0C617, 0D617, and 0E617) in the CCL to control items that the President determines no longer warrant control under USML Category XIII. All of these proposed 0Y617 ECCNs (except items in the .y paragraphs) would be subject to national security (NS 1), regional stability (RS 1), and antiterrorism (AT 1) controls.

ECCNs 0Y617 would also contain a paragraph y.99 that would control any item that (i) has been determined, in an applicable commodity jurisdiction determination issued by State to be subject to the EAR; and (ii) would otherwise be controlled elsewhere under one of the Category 0 “600 series” ECCNS. Items in the .y paragraphs would be subject only to antiterrorism (AT 1) controls.

Construction equipment, searchlights to move to 0Y617. The proposed rule would also move “construction equipment built to military specifications, including specially designed for airborne transport; and specially designed parts and accessories for such construction equipment, including crew protection kits used as protective cabs” from current ECCN 0A018.a to the .a paragraph of proposed ECCN 0A617. Technology for such items would be classified under ECCN 0E617.a. It would also move “power controlled searchlights and control units therefor, designed for military use, and equipment mounting such units; and specially designed parts and accessories therefor” from ECCN 0A918.a to the .y.3 paragraph of proposed ECCN 0A617.

Construction equipment under ECCN 0A617.a would be controlled for RS 1, AT 1, and NS 1 reasons, while searchlights under 0Y617.y.3 would be controlled for AT 1 reasons only.

(While BIS said that it originally proposed to classify items from 0A018.a (construction equipment) to 0A606.a, it subsequently concluded that expressly identifying military construction equipment in 0A617.a would be more informative and less likely to confuse the public.)

State proposed rule (FR Pub 05/18/12) available here.

BIS proposed rule (FR Pub 05/18/12) available here.