RAPTAC / Regulations & Procedures Roundup

The Commerce Department’s Bureau of Industry and Security Regulations and Procedures Technical Advisory Committee met September 12^th, with little news, but steady progress on the rulemaking front.

The meeting began with a presentation on repressive technologies by Annie Boyajian, VP Policy & Advocacy with the human rights organization Freedom House, concluding with the following ask:

 “We would strongly urge the advisory Committee to recommend to Commerce a formal mechanism of ongoing engagement with civil society organizations and human rights defenders.  The Department of State and Department of Treasury do this, particularly with global Magnitsky sanctions, but this has also evolved into engagement on other targeted sanctions.

BIS Review

Hillary Hess, Director, Regulatory Policy Division at BIS reviewed the summer’s rulemaking activity, including:

• Additions to the entity list involving entities from Greece, Hungary, Ireland, and North Macedonia on July 19th.
• Expansion of nuclear nonproliferation controls on China and Macau as of August 14th in response to the military-civil fusion strategy, with a focus on preventing misuse of dual-use items and nuclear forces.
• An update on August 18th to the Nuclear Suppliers Group controls based on meetings held in June 2019 and June 2022.
• Revisions to the unverified list (UVL) on August 22nd where several entities were removed, primarily because they complied with end-use check requirements.
• An adjustment to the temporary denial order rules on August 29th, providing an option for renewal under certain circumstances for a period not exceeding one year.

As well as the following updates:

• “The interim rule on semiconductors we published last October,  we're looking at updates to it.”
• “We continue to be particularly engaged with allies on Russia and staying coordinated. Certainly our end user review committee is constantly working.”
• US persons controls. “Congress used the NDAA to tweak the wording, so we’re working on that [implementation in the EAR]“.   By inserting the words and punctuation “security, or” before “intelligence” Congress gave BIS authority to create and impose controls on the activities of U.S. persons, wherever located, in “support” of “military, security, or intelligence services”—even when all the underlying items at issue are not subject to the EAR.   [For a thoughtful review of this topic, see this paper by Kevin Wolf and the team at Akin Gump]
• Standards Body Participation: September 9, 2022 BIS published an interim final rule [87 FR 55241]amending the EAR to authorize the release of specified items subject to the EAR without a license when that release occurs in the context of a “standards-related activity,” as defined in the rule. “We got a lot of very helpful comments on it. We've been through the comments, and we are in the process of preparing to address those.  We would like to have that out in 2023, still in the calendar year. It will then have to clear other agencies.  It will be significant. It’s been a real education process, between standards & controls people.   We’ve certainly raised awareness.”

Treasury Conflict Rooted Out

Export Control Legend Bill Root brought to the Committee’s attention a regulatory nuance of vital import.  The Treasury  Department’s proposed  “Provisions Pertaining to U.S. Investments in Certain National Security Technologies and Products in Countries of Concern” could create a material conflict with Commerce export controls.

“I think the important issue is, does Treasury intend to have a separate definition for the national security technologies and products that are involved in the investment executive order?  

“It would be very confusing if Treasury and Commerce were operating on two different definitions of just six words: technologies, products, Semiconductor Microelectronics. Quantum, and artificial intelligence. Those are the keywords in both the Executive order and the ANPRM, and although Treasury does not explicitly state, it's going to have a definition which is different from commerce on these six points.”

Committee member Jim Bartlett brought to the groups attention that Mr. Root will celebrate his 100^th Birthday September 20^th, and commended his dedication to his country’s service, beginning with the US Navy in World War II and a distinguished career with the State Department.   [A marvelous 2002 oral history of his career can be found here]