BIS' CCL 'Clean-Up' Rule Would Implement 'Parts' & 'Components' Definitions, Restructure Control List

The proposed rule would only implement changes that can be made to the CCL without requiring changes to multilateral export control regime guidelines or lists, BIS said. But BIS has identified changes that would require a decision of a multilateral regime to implement, it said. The U.S. government is developing regime change proposals for consideration by members of those multilateral export control regimes. Those changes will be implemented in separate rulemakings if approved, BIS said.

The proposed rule includes the following types of changes: (1) clarifications to existing CCL controls, including the use of the terms “parts” and “components” on the CCL; (2) changes to conform the CCL to the multilateral export control regime control lists and previous amendments to the EAR; (3) structural changes to improve the clarity of the CCL; and removal of fourteen ECCNs subject to the exclusive jurisdiction of the Nuclear Regulatory Commission.

Clarifications to Existing Controls to Implement 'Parts' and 'Components' Definitions

Some of the changes BIS is proposing would align existing controls with the definitions of “parts”¹ and “components”² included in a proposed rule issued July 15, 2011 (See ITT’s Online Archives 11071519 for summary). According to BIS, the bulk of the changes would be non-substantive and would amend the CCL without changing the scope of controls. The proposed changes include adding references to “part” and “component” where needed in certain ECCNs to clarify that the scope of those ECCNs also extends to “parts and “components,” even if previously those ECCNs may have only referenced part or component, but not both together. The changes would not be finalized until revised definitions of “part” and “component” are published in a separate final rule. Specific changes would include (see the BIS rule for a list of affected ECCNs):

Applicability of List of Items Controlled. The proposed rule would add or alter the placement of the phrase “(see List of Items Controlled)” in 24 ECCN headings. If the phrase appears at the end of the heading, then that would mean the “items” paragraph in the List of Items Controlled section is the exclusive, complete list of the items the ECCN controls. If the phrase appears in the middle of the heading, then that would mean only that portion of the heading prior to the phrase “(see List of Items Controlled)” is specifically identified in the “items” paragraph in the List of Items Controlled section, and that the remaining part of the heading is an exclusive, complete description. This distinction is important for controls for “parts” and “components” because if references to “parts” and “components” appear before the phrase “(see List of Items Controlled),” then that means the entry only controls “parts” and “components” specifically identified in the “items” paragraph in the List of Items Controlled section.

Use of “as follows” for multilateral controls.13 ECCNs would be amended by adding the phrase “as follows” to be consistent with the terminology used in multilateral export control regime lists, which do not use the phrase “(see List of Items Controlled).”

Fixes to references to “parts” and “components.” BIS said the terms “parts” and “components have been used interchangeably in various ECCNs. To clarify use of these terms as defined in the July 15, 2011, proposed rule, BIS is adding references to “parts” and “components” for many ECCNs, especially those based on multilateral lists. These proposed changes would revise 158 ECCNs where BIS has identified the following issues:

• “Parts” is used, but “specially designed” “components” or “components” “as follows” is intended, or “specially designed” “parts” and “components” is intended.
• The hybrid “component parts” is used, but “parts” and “components” is intended.
• The term “spare parts” is used, but “parts” is intended.
• “Parts” or “accessories” is included, but is not within the scope of the ECCN.
• “Accessories” is included, but is not within the scope of the ECCN.
• “Parts or “components” is used, but BIS intends the ECCN to mean “parts” and “components.”

Removal of “assemblies” from headings. As the proposed definition for “components” includes “assemblies,” BIS would remove the term “assemblies” from various ECCNs to eliminate confusion about any distinction.

Removal of 1 ECCN.While most changes do not affect the scope of controls, the rule does propose to remove ECCN 8A918 and add certain boilers to ECCN 8A992, where they would be controlled for anti-terrorism and United Nations sanctions reasons.

Other changes. The proposed rule would also change the terminology for certain ECCNs, such as by substituting “commodities” for “items” in the heading, and removing the term “equipment”; and amend and clarify other ECCNs.

Definition of 'Subject to the ITAR' Added to the EAR

The proposed rule would add the term “subject to the ITAR” to the list of definitions in Section 772.1 of the EAR, to be used in parallel with the term “subject to the EAR” and simplify references to the jurisdiction of the State Department throughout the EAR. The definition would read as follows: “A term used in the EAR to describe those commodities, software, technology (e.g., technical data) and defense services over which the U.S. Department of State, Directorate of Defense Trade Controls (DDTC) exercises regulatory jurisdiction under the ITAR (see 22 CFR 120-130).”

Changes to Conform CCL to Multilateral Regimes

BIS is proposing changes to conform the CCL to the multilateral export control regime control lists and to conform the CCL to the intent of past amendments to the EAR, it said. Changes include:

TSR limitations of Wassenaar Very Sensitive List Items.The U.S. has limited the use of License Exception TSR (“Technology and software under restriction”) to a list of 19 countries contained in the TSR paragraph in the License Exception section of nine ECCNs. BIS is proposing expand the exception to the list of 36 countries eligible for License Exception Strategic Trade Authorization (Section 740.20(c)(2) of the EAR. The TSR paragraph would simply refer users to the STA list.

Changes to 15 ECCNs. The proposed rule would also amend 15 other ECCNs to conform to multilateral export control regimes, including the Missile Technology Control Regime (MTCR) Annex, Nuclear Suppliers Group control list, and Wassenaar Arrangement.

Structural Changes to Improve Clarity of the CCL

BIS would also change the standard section headings used in most ECCNs on the CCL. These proposed changes would affect most ECCNs, BIS said. The proposals are as follows:

Revision of License Exceptions section heading. The proposed rule would revise this section heading by changing it from “License Exceptions” to the more specific section heading to “List-Based License Exceptions (See Part 740 for a complete listing of license exceptions and requirements).”

Removal of License Exception STA paragraphs. The rule also proposes removing the License Exception STA paragraph in the License Exceptions section of 49 ECCNs, and move the text of these paragraphs to a new section titled “Special Conditions for STA.” This new section would be listed directly after the proposed list-based license exceptions section, because the STA paragraphs do not perform the same function as the other list-based license exception paragraphs, BIS said. No changes would be made to the regulatory text in the old section, BIS said.

Cross-reference after Country Chart. BIS would revise the “Country Chart” paragraph heading in the License Requirements section to add instructions on where to find the Country Chart. The revised heading would read “Country Chart (See Supp. No. 1 to part 738).”

New “Reporting Requirements” section to certain ECCNs. BIS proposes to add a new section heading called “Reporting Requirements” where the existing reporting requirements found in ECCNs would be consolidated. To implement this change, the proposed rule would remove the “License Requirements Notes” paragraphs in the License Requirements section for 39 ECCNs, and would add the new section for reporting requirements sections titled “REPORTING REQUIREMENTS See Section 743.1 of the EAR for reporting requirements for exports under License Exceptions, Special Comprehensive Licenses, and Validated End-User authorizations” after the License Requirements section for each ECCN.

Removal of 14 ECCNs Subject to Exclusive NRC Jurisdiction

Finally, the proposed “clean-up” rule would remove 14 ECCNs that are subject to the exclusive jurisdiction of the Nuclear Regulatory Commission. BIS said this is to eliminate the potential for references becoming out-of-date if the NRC updates its regulations and corresponding changes are not made in time to the EAR.

¹Under the July 15, 2011 proposed rule, “parts” are “any single unassembled element of a component, accessory, or attachment which is not normally subject to disassembly without the destruction or the impairment of design use. Examples include threaded fasteners (e.g., screws, bolts, nut plates, studs, inserts), other fasteners (e.g., clips, rivets, pins), common hardware (e.g., washers, spacers, insulators, grommets, bushings), springs and wire.”

²Under the July 15, 2011 proposed rule, “components” are an item that is useful only when used in conjunction with an “end item.” Components are also commonly referred to as assemblies. For purposes of this definition, an assembly and a component are the same. There are two types of “components”: “major components” and “minor components.” A “major component” includes any assembled element which forms a portion of an “end item” without which the end item is inoperable. A “minor component” includes any assembled element of a “major component.” “Components” consist of “parts.”