{"id":443,"date":"2021-02-12T00:06:45","date_gmt":"2021-02-12T05:06:45","guid":{"rendered":"http:\/\/exportcompliancesolutions.com\/blog\/?p=443"},"modified":"2021-02-12T00:06:45","modified_gmt":"2021-02-12T05:06:45","slug":"flurry-activity-state-commerce-treasury-rules-issued-ahead-change-administration","status":"publish","type":"post","link":"https:\/\/exportcompliancesolutions.com\/blog\/2021\/02\/12\/flurry-activity-state-commerce-treasury-rules-issued-ahead-change-administration\/","title":{"rendered":"A Flurry of Activity \u2013 State, Commerce, and Treasury Rules Issued Ahead of Change in Administration"},"content":{"rendered":"

January saw a number of updates to export compliance regulations and policies to close out a number of Trump administration initiatives.\u00a0 On January 20, 2021, the Biden administration announced a regulatory freeze<\/a>.\u00a0 How do these relate?\u00a0 Read on.<\/p>\n

Regulatory Freeze<\/strong><\/p>\n

Let\u2019s start with the regulatory freeze, since what everyone wants to know is whether new rules are really going into effect or not.\u00a0 The White House announcement requested executive agencies to (1) refrain in most cases from sending new rules to the Federal Register before review by new political appointees, (2) withdraw pending rules not yet published, and (3) postpone the effective dates of published but pending rules.\u00a0 This is typical for changes in administrations.\u00a0 Rules already published and effective may be revised in the future through normal administrative processes and we will report on notable changes.\u00a0 Most of the changes below were effective before January 20th<\/sup>, with a few notable exceptions.<\/p>\n

Commerce Updates Chemical Weapons Lists<\/strong><\/p>\n

On January 7, 2021, the Department of Commerce, Bureau of Industry and Security (BIS) published a rule (86 FR 936<\/a>), also effective January 7th<\/sup>, amending the Chemical Weapons Convention Regulations (CWCR) and the Export Administration Regulations (EAR).\u00a0 This amendment adds three chemical families and one chemical now controlled under the Chemical Weapons Convention (CWC) and revises the definition of \u201cproduction\u201d of CWC chemicals.<\/p>\n

The Chemical Weapons Convention is an international arms control treaty that seeks to eliminate chemical weapons by the parties to the treaty.\u00a0 The parties have agreed to a number of restrictions for listed chemicals.\u00a0 The new changes reflect decisions adopted at the November 2019 CWC Conference of the States Parties.<\/p>\n

The specific chemicals are identified in the Federal Register Notice<\/a> and the full list is in Part 745 of the EAR<\/a>.\u00a0 The revised definition of \u201cproduction\u201d applies to the CWCR only, not the EAR.<\/p>\n

Commerce Clarifies Vaccine Controls<\/strong><\/p>\n

Also on and effective January 7, 2021, BIS published a rule (86 FR 944<\/a>) clarifying controls on vaccines under Export Control Classification Number (ECCN) 1C991.<\/p>\n

The new rule amends 1C991 to:<\/p>\n

    \n
  1. Include vaccines containing or designed for use against pathogens and organisms listed under ECCNs 1C351, 1C353 or 1C354.\u00a0 According to BIS:
    \nPrior to the effective date of this final rule, ECCN 1C991 indicated that it controlled vaccines \u201cagainst\u201d such items, but was not specific about whether all vaccines \u201ccontaining\u201d such items were controlled, irrespective of whether the vaccines were designed for use \u201cagainst\u201d such items.<\/li>\n
  2. Control medical products containing genetically modified organisms and genetic elements described in ECCN 1C353.a.3 and adjust definitions.<\/li>\n
  3. Renumber 1C991.c and .d based on level of export control.<\/li>\n<\/ol>\n

    These changes are based on a decision of the Australia Group June 2019 Plenary meeting.\u00a0 The Australia Group is a multilateral forum for the harmonization of export controls related to chemical and biological weapons.<\/p>\n

    Commerce Unmanned Aerial Systems Licensing Policy Amended<\/strong><\/p>\n

    On January 12, 2021, BIS published a final rule (86 FR 2252<\/a>), also effective January 12th<\/sup>, which amends the Unmanned Aerial Systems (UAS) licensing policy in the EAR.<\/p>\n

    The amended policy replaces a presumption of denial with case-by-case review for systems with \u201ca range and payload capability equal to or greater than 300 km\/500 kg but a maximum true airspeed of less than 800 km\/hr.\u201d<\/p>\n

    A corresponding proposal was made to the Missile Technology Control Regime (MTCR), a multilateral export control group, but has not been adopted within the MTCR by the required consensus.\u00a0 The change in U.S. review policy was announced in July 2020<\/a>.<\/p>\n

    The Missile Technology licensing policy is located in the EAR at \u00a7742.5<\/a>.<\/p>\n

    Commerce Removes Anti-Terrorism Controls on Sudan<\/strong><\/p>\n

    As anticipated<\/a>, on January 19, 2021, BIS issued a rule (86 FR 4929<\/a>), effective January 14th<\/sup>, removing Anti-Terrorism (AT) controls for items destined for Sudan and removing Sudan from Country Group E:1.<\/p>\n

    Sudan\u2019s removal is based on an agreement reached between the U.S. and Sudan in 2020 resolving claims related to victims of terrorism.\u00a0 Sudan is now listed in Country Group B and is newly eligible for a number of license exceptions and the 25% de minimis level for U.S. content.\u00a0 Notably, Sudan joins Ukraine as the only members of Country Group B not eligible for License Exception GBS (Shipments to Country Group B Countries, EAR \u00a7740.4<\/a>).<\/p>\n

    Sudan remains subject to an arms embargo, as listed under ITAR \u00a7126.1(v)<\/a> and EAR Country Group D:5.<\/p>\n

    As revised, there are currently no countries subject to AT controls except to the extent that Cuba, Iran, North Korea, and Syria are subject to comprehensive sanctions.<\/p>\n

    U.S. Person Activities and ICTS Supply Chain Rules Issued, But Not Yet Effective<\/strong><\/p>\n

    On January 15, 2021, BIS issued an interim final rule (86 FR 4865<\/a>) imposing license requirements on specified U.S. person activities related to \u201cnuclear explosive devices, missiles, chemical or biological weapons, whole plants for chemical weapons precursors, foreign maritime nuclear projects, and foreign military intelligence services.\u201d\u00a0 This rule is effective March 16, 2021 and may be subject to the regulatory freeze described above.\u00a0 It would amend the EAR to control activities by U.S. persons wherever located regardless of whether the items involved are subject to the EAR.\u00a0 Comments have been requested through March 1, 2021.<\/p>\n

    On January 19, 2021, BIS issued an interim final rule (86 FR 4909<\/a>) that establishes regulations and requests comments on \u201cSecuring the Information and Communications Technology and Services Supply Chain.\u201d\u00a0 This rule is effective March 22, 2021 and may be subject to the regulatory freeze described above.\u00a0 It is intended to provide a process to review information and communications technology and services (ICTS) supply chain transactions, \u201csimilar to the process by which entities may inform the Committee on Foreign Investment in the United States (CFIUS) of investments in U.S. businesses.\u201d\u00a0 A related proposal was published in November 2019<\/a>.\u00a0 Comments have been requested through March 22, 2021.<\/p>\n

    State Department Precision-Guided Munitions Policy Announced<\/strong><\/p>\n

    On January 19, 2021, the Department of State, Directorate of Defense Trade Controls (DDTC) announced<\/a> a policy for the review of direct commercial sale (DCS) precision-guided munitions (PGMs).\u00a0 Notably, DDTC stated:<\/p>\n

    \u201c\u2026before authorizing DCS exports, reexports, or retransfer of U.S.-origin PGMs, their critical components, and\/or related technical data or defense services, as enumerated below, the U.S. government will confirm the foreign end-user government possesses or is in the process of procuring sufficient U.S., indigenous, or third-party [advanced target development] capabilities\u2026<\/p>\n

    No action will be required on the part of the U.S. applicant. A valid ATD solution is current for five years, after which the technical support and data need to be refreshed.\u00a0 Within the five-year period of currency, in-scope licenses will be adjudicated as normal.\u201d<\/p>\n

    This process is intended to ensure that U.S.-origin PGMs are used \u201cconsistent with U.S. intent when approving the transfer\u201d including the ability to mitigate the risk of civilian casualties.<\/p>\n

    Civil Monetary Penalties Adjusted for Inflation<\/strong><\/p>\n

    Inflationary adjustments to civil monetary penalties were issued by both the Department of Commerce (86 FR 1764<\/a>) and the Department of State (86 FR 7804<\/a>).\u00a0 Maximum penalties depend on the specific kind of violation and both notices also update a number of additional regulatory penalties.<\/p>\n

    The ITAR \u00a7127.10 civil penalties were amended as follows:<\/p>\n