Reforms on Satellites Arrive

State Department announced sweeping amendments to ITAR Category XV, moving most commercial, scientific, and civil satellites and their parts and components (including radiation-hardened microelectronic microcircuits) over to the CCL, within which new ECCNs (9A515, 9B515, 9D515, 9E515) were created to help accommodate the migrating items. This was called an interim final rule, scheduled to go into effect on November 10, 2014, other than section 121.1, Category XV(d), which is effective June 27, 2014. This is a significant milestone in the Export Control Initiative.

“Today’s action reflects the cooperation that has made the President’s Export Control Reform Initiative such an extraordinary success story,” said Under Secretary of Commerce Eric L. Hirschhorn. “For the many American businesses that compete in this key technology sector, it means a stronger United States defense industrial base, the ability to focus the government’s limited resources on the technologies and destinations of greatest concern, an increase in the competitiveness of the U.S. satellite industry, and a reduction in the licensing burden on U.S. exporters.”

Provided below are the first sections of the Federal Register announcements from both Department of Commerce/BIS and the Department of State/DDTC, compliments of Jim Bartlett. Use link for full text.

Commerce/BIS Revises EAR re Control of Spacecraft Systems no Longer Warranting Control Under USML/ITAR

(Source: Federal Register)

79 FR 27417-27443: 15 CFR Parts 732, 734, 736, 740, 742, 744, 748, 758, 772, 774; Revisions to the Export Administration Regulations (EAR): Control of Spacecraft Systems and Related Items the President Determines No Longer Warrant Control Under the United States Munitions List (USML); Final Rule

* AGENCY: Bureau of Industry and Security, Department of Commerce.

* ACTION: Interim final rule with request for comments.

* SUMMARY: This interim final rule adds controls to the Export Administration Regulations (EAR) for spacecraft and related items that the President has determined no longer warrant control under United States Munitions List (USML) Category XV–spacecraft and related items. New Export Control Classification Numbers (ECCNs) 9A515, 9B515, 9D515, and 9E515 created by this rule and existing ECCNs on the Commerce Control List (CCL) will control such items. This rule also revises various sections of the EAR to provide the proper level of control for the new ECCNs.

This rule is being published in conjunction with the publication of a Department of State, Directorate of Defense Trade Controls rule revising USML Category XV to control those articles the President has determined warrant control on the USML. Both rules are part of the President’s Export Control Reform Initiative. The revisions in this final rule are also part of Commerce’s retrospective regulatory review plan under Executive Order (EO) 13563 (see the SUPPLEMENTARY INFORMATION for availability of the plan). This rule is being published as an interim final rule because the Departments of Commerce and State acknowledge that additional internal analysis of and industry input regarding the control threshold for various aspects of the amendments is warranted, particularly with respect to civil and commercial remote sensing satellites and civil and commercial space flight-related items. The Departments did not want to wait until this review is done to publish this rule in final form because of the substantial national and economic security benefits that will flow from the various amendments to the controls on satellites and related items.

* DATES: Effective Date: This rule is effective June 27, 2014 except for amendatory instruction 8, which is effective July 1, 2014, and amendatory instructions 28-47, 49-50, 52, and 54, which are effective November 10, 2014. Comment Date: Comments must be received by November 10, 2014. . . . .

* SUPPLEMENTARY INFORMATION:

Background

The Bureau of Industry and Security (BIS) is publishing this interim final rule with request for comments as part of the Administration’s Export Control Reform (ECR) Initiative. President Obama directed the Administration in August 2009 to conduct a broad-based review of the U.S. export control system to identify additional ways to enhance national security. In April 2010, then-Secretary of Defense Robert M. Gates, describing the initial results of that effort, explained that fundamental reform of the U.S. export control system is necessary to enhance our national security. The implementation of ECR includes amending the International Traffic in Arms Regulations (ITAR) and its U.S. Munitions List (USML) so that they control only those items that provide the United States with a critical military or intelligence advantage or otherwise warrant such controls, and amending the Export Administration Regulations (EAR) to control the formerly ITAR-controlled items that do not warrant the controls of the ITAR. . . . .

This interim final rule implements the proposal of the May 24 (spacecraft) rule to create four new 9×515 ECCNs in CCL Category 9 (ECCNs 9A515, 9B515, 9D515, and 9E515) to describe the EAR controls over items the President determines no longer warrant control under USML Category XV and that are not otherwise within the scope of an existing ECCN. New ECCN 9A515 applies to spacecraft, ground stations, and “specially designed” parts, components, accessories and attachments. New ECCN 9B515 applies to related test, inspection and production equipment and the “specially designed” parts and components. New ECCN 9D515 applies to related software. New ECCN 9E515 applies to related technology.

This rule also makes a number of conforming changes to the EAR and existing ECCNs to implement the creation of the 9×515 ECCNs and the appropriate controls on the export of those items. In several existing ECCNs, BIS added or revised the related controls to provide cross references to relevant paragraphs in the revised Category XV or the new 9×515 ECCNs. The sections below set out the issues identified in the public comments to the May 24 (spacecraft) rule and describe BIS responses to those comments and changes from the proposed text.

This rule will be implemented in two stages. On the first effective date, 45 days following the publication of this interim final rule, the controls on radiation-hardened microelectronic circuits in Category XV(d) will be deleted from the USML, and microelectronic circuits will be removed from USML Category XV(e). In addition, the ITAR controls on software and technical data directly related to such microelectronic circuits will be removed from USML XV(f). The EAR will simultaneously create ECCNs 9A515.d and .e to control radiation-hardened microelectronic circuits, and 9D515.d and .e and 9E515.d and .e, to control software and technology specially designed for or required for such radiation-hardened microelectronic circuits. All changes in the EAR outside the CCL needed to give effect to these new controls will also become effective 45 days following the publication of this interim final rule. The reason for the 45-day period is explained in response to public comment 38 below.

On the second effective date, 180 days following the publication of this final rule, the remainder of USML Category XV will be revised. The remaining changes in this rule will then become effective, including the revisions to several non-9×515 ECCNs, the rest of ECCN 9A515 to provide the controls in paragraphs .a, .b, .x and .y, adding ECCN 9B515, and the rest of ECCNs 9D515 and 9E515 to control software and technology specially designed for or required for the remaining items that become subject to the controls of the 9×515 ECCN simultaneously with the amendments to the rest of USML XV.

This interim final rule requests public comment on the changes to the EAR implemented in this rule and the continued applicability of USML Category XV of the ITAR to commercial and civil spacecraft. In particular, BIS seeks comments on the continued application of USML controls to civil and commercial communications satellites, civil and commercial remote sensing satellites, commercial space launch vehicles, human spaceflight and academic or scientific satellites and other spacecraft. BIS would like to study if controls can and should be revised to allow continued control of spacecraft with uniquely military or intelligence related capabilities on the USML, while allowing most, if not all, civil, commercial and scientific spacecraft to be shifted to the CCL. In addition, BIS seeks comments on any other aspect of this interim final rule and, in particular, whether the new controls described in this interim final rule are clear and, if not, how they could be revised to help ensure understanding of and compliance with the controls. DDTC will accept comments on paragraphs (a)(7) and (e)(11) of USML Category XV and ITAR Sec. 124.15, as described in its interim final rule amending USML Category XV. Any revisions made by DDTC to the ITAR as a result of those comments may necessitate further revisions to the EAR, including to the new license documentation requirements for the export of satellites for launch, described in the new paragraph (y) of Supplement No. 2 to Part 748.

As required by Executive Order (EO) 13563, BIS intends to review this rule’s impact on the licensing burden on exporters. Commerce’s full plan is available at: http://open.commerce.gov/news/2011/08/23/commerce-plan-analysis-existing-rules. Data are routinely collected, including through the comments to be submitted, and new information and results from AES data on an ongoing basis. These results and data have been, and will continue to form, the basis for ongoing reviews of the rule and assessments of various aspects of the rule. As part of its plan for retrospective analysis under EO 13563, BIS intends to conduct periodic reviews of this rule and to modify, or repeal, aspects of this rule, as appropriate, and after public notice and comment. With regard to a number of aspects of this rule, assessments and refinements will be made on an ongoing basis.

Note: Use link above for full text of Federal Register posting.

Dated: May 7, 2014.

Kevin J. Wolf, Assistant Secretary of Commerce for Export Administration

State/DDTC Amends ITAR Parts 120, 121, and 124 re USML Category XV (Spacecraft and Related Articles)

(Source: Federal Register)

79 FR 27180-27189: 22 CFR Parts 120, 121, and 124; Amendment to the International Traffic in Arms Regulations: Revision of U.S. Munitions List Category XV

* AGENCY: Department of State.

* ACTION: Interim final rule.

* SUMMARY: As part of the President’s Export Control Reform (ECR) effort, the Department of State is amending the International Traffic in Arms Regulations (ITAR) to revise Category XV (Spacecraft and Related Articles) of the U.S. Munitions List (USML) to describe more precisely the articles warranting control in that category. The revisions contained in this rule are part of the Department of State’s retrospective plan under Executive Order 13563 completed on August 17, 2011. This rule is published as an interim final rule because the Department believes that substantial national security benefits will flow from the changes to the controls on spacecraft and related items, but acknowledges that additional analysis of and public comment on the control thresholds for remote sensing satellites are warranted.

* DATES: This rule is effective November 10, 2014, except for Sec. 121.1, Category XV(d), which is effective June 27, 2014. Interested parties may submit comments on paragraphs (a)(7) and (e)(11) of USML Category XV and ITAR Sec. 124.15 by June 27, 2014. . . . .

* SUPPLEMENTARY INFORMATION: The Directorate of Defense Trade Controls (DDTC), U.S. Department of State, administers the International Traffic in Arms Regulations (ITAR) (22 CFR parts 120-130). The items subject to the jurisdiction of the ITAR, i.e., “defense articles” and “defense services,” are identified on the ITAR’s U.S. Munitions List (USML) (22 CFR 121.1). With few exceptions, items not subject to the export control jurisdiction of the ITAR are subject to the jurisdiction of the Export Administration Regulations (“EAR,” 15 CFR 730-774, which includes the Commerce Control List (CCL) in Supplement No. 1 to part 774), administered by the Bureau of Industry and Security (BIS), U.S. Department of Commerce. Both the ITAR and the EAR impose license requirements on exports, reexports, and retransfers. Items not subject to the ITAR, or to the exclusive licensing jurisdiction of any other set of regulations, are subject to the EAR.

All references to the USML in this rule are to the list of defense articles and defense services controlled for the purpose of export or temporary import pursuant to the ITAR, and not to the defense articles on the USML that are controlled by the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) for the purpose of permanent import under its regulations. See 27 CFR 447. Pursuant to section 38(a)(1) of the Arms Export Control Act (AECA), all defense articles controlled for export or import are part of the USML under the AECA. For the sake of clarity, the list of defense articles controlled by ATF for the purpose of permanent import is the U.S. Munitions Import List (USMIL). The transfer of defense articles from the ITAR’s USML to the EAR’s CCL for the purpose of export control does not affect the list of defense articles controlled on the USMIL under the AECA for the purpose of permanent import.

Changes in This Rule

The following changes are made to the ITAR with this interim final rule: (i) Revision of U.S. Munitions List (USML) Category XV (Spacecraft and Related Articles); (ii) amendment to paragraph (i) of USML Category IV, regarding spacecraft-launch vehicle integration and launch failure analysis services; (iii) conforming edits to ITAR Sec. 124.15, regarding special export controls for satellites and satellite launches; and (iv) amendment to ITAR Sec. 120.10(b) to include telemetry data to the list of exclusions from technical data. The Department notes that there is a shorter implementation period for radiation-hardened microelectronic circuits formerly described in paragraph (d) of USML Category XV; 45 days following publication of this rule, they are controlled in ECCN 9A515.d. In addition, microelectronic circuits that would otherwise have been within the scope of paragraph (e) of USML Category XV are no longer subject to the ITAR 45 days following the publication of this rule; instead, they are controlled in ECCN 9A515.e. Software and technical data directly related to such microelectronic circuits are controlled in ECCNs 9D515 and 9E515, respectively, 45 days following the publication of this rule as well.

Note: Use link above for full text of Federal Register posting.