BIS Final Rule Amends EAR to Implement Understandings Reached at Australia Group Meeting, Etc.

The Bureau of Industry and Security (BIS) has issued a final rule, effective August 5, 2005, which amends the Export Administration Regulations (EAR) to implement the understandings reached at the April 2005 plenary meeting of the Australia Group (AG). This final rule also updates the list of countries that currently are States Parties to the Chemical Weapons Convention (CWC).

According to BIS, the AG is a multilateral forum, consisting of 39 participating countries, that maintains export controls on a list of chemicals, biological agents, and related equipment and technology that could be used in a chemical or biological weapons program.

BIS explains that the AG periodically reviews items on its control list to enhance the effectiveness of participating governments' national controls and to achieve greater harmonization among these controls.

Revisions to EAR Based on Understandings Reached at April AG Plenary Meeting

In its final rule, BIS states that the EAR is being amended so as to incorporate the following understandings reached at the April 2005 AG plenary meeting:

Clarification of controls on certain pumps. BIS states that the AG "Control List of Dual-Use Chemical Manufacturing Facilities and Equipment and Related Technology'' is being revised to clarify controls on pumps usable for making chemical weapons and AG-controlled precursor chemicals.

This final rule implements this change by amending the EAR to clarify the types of pumps controlled under Export Control Classification Number (ECCN) 2B350 on the Commerce Control List (CCL) (Supplement No. 1 to 15 CFR Part 774). Specifically, this final rule revises the control language for certain pumps in ECCN 2B350.i to read "multiple-seal and seal-less pumps with manufacturer's specified maximum flow rate greater than 0.6 m/hour'' in which all surfaces that come into direct contact with the chemical(s) being processed are made from certain specified materials.

Prior to the publication of this final rule, the control language in ECCN 2B350.i referred to "multiple-seal, canned drive, magnetic drive, bellows or diaphragm pumps.'' This change is expected to simplify the process of determining if a particular type of pump is controlled under ECCN 2B350.i, because exporters will no longer need to determine if a pump is a "canned drive, magnetic drive, bellows, or diaphragm pump.'' The rationale for this change was to ensure a more uniform implementation of these AG controls by participating countries, thereby enhancing compliance and enforcement efforts.

BIS notes that ECCN 2B350.i continues to control vacuum pumps with manufacturer's specified maximum flow-rate greater than 5 m/hour (under standard temperature (273 K (0 C)) and pressure (101.3 kPa) conditions) in which all surfaces that come into direct contact with the chemical(s) being processed are made from certain specified materials.

This ECCN also continues to control casings (pump bodies), preformed casing liners, impellers, rotors or jet pump nozzles designed for pumps controlled by 2B350.i. Items controlled by 2B350.i require a license to all countries or destinations indicated under CB Column 2 or AT Column 1 on the Commerce Country Chart (Supplement No. 1 to 15 CFR Part 738). A license generally will not be required to export or reexport these systems and components to AG participating countries; however, certain transactions may be subject to license requirements described elsewhere in the EAR (e.g., 15 CFR Part 744).

Adoption of controls on complete spraying or fogging systems, spray booms, & arrays of aerosol generating units, etc. Another understanding reached at the April 2005 AG plenary meeting was the adoption of controls on complete spraying or fogging systems, spray booms or arrays of aerosol generating units, and components therefor that are: (1) Specially designed or modified for fitting to aircraft, "lighter than air vehicles,'' or unmanned aerial vehicles ("UAVs'') and (2) capable of delivering, from a liquid suspension, an initial droplet "VMD'' (volume median diameter) of less than 50 microns at a flow rate of greater than 2 liters per minute. According to BIS, these controls do not apply to spraying or fogging systems demonstrated to be incapable of delivering biological agents in the form of infectious aerosols.

BIS states that this final rule amends ECCN 2B352 on the CCL to include these systems, units, and certain components therefor. These items will require a license to all countries or destinations indicated under CB Column 2 or AT Column 1 on the Commerce Country Chart (Supplement No. 1 to 15 CFR Part 738). A license generally will not be required to export or reexport these items to AG participating countries; however, certain transactions may be subject to license requirements described elsewhere in the EAR (e.g., 15 CFR Part 744).

Amendment of controls for certain "UAV systems." In a related change, BIS states that this final rule amends ECCN 9A120, which controls certain "UAV'' systems designed or modified to dispense an aerosol, by revising the Related Controls paragraph in the List of Items Controlled for that ECCN to include a reference to the spraying and fogging systems, and components therefor, that are now controlled under ECCN 2B352.h.

Technical note for certain genetic elements, genetically modified organisms revised. A third understanding reached at the April 2005 AG plenary meeting was the revision of the Technical Note for certain AG-controlled genetic elements and genetically modified organisms.

According to BIS, this final rule revises the Technical Note in ECCN 1C353 to clarify the scope of the chemical/biological (CB) controls that apply to genetic elements and genetically modified organisms that contain nucleic acid sequences associated with the pathogenicity of any AG-controlled microorganisms in 1C351.a to .c, 1C352, or 1C354, consistent with the AG "Control List of Biological Agents,'' the AG "Control List of Animal Pathogens,'' and the AG "Control List of Plant Pathogens.''

Specifically, this final rule adds a new paragraph at the end of the Technical Note to indicate that the phrase "nucleic acid sequences associated with the pathogenicity of any of the microorganisms controlled by 1C351.a to .c, 1C352, or 1C354'' refers to any sequence specific to the relevant AG-controlled microorganism that: (1) In itself or through its transcribed or translated products represents a significant hazard to human, animal or plant health or (2) is known to enhance the ability of an AG-controlled microorganism, or any other organism into which it may be inserted or otherwise integrated, to cause serious harm to human, animal or plant health.

Addition of Ukraine as an AG country & updated list of all participating countries. This final rule also amends the EAR to reflect the addition of Ukraine as the newest participating country in the Australia Group (which now includes a total of 39 countries). Supplement No. 1 to 15 CFR Part 738 (Commerce Country Chart) is revised to remove the license requirements indicated for Ukraine, under CB Column 2 and CB Column 3, to conform with the country scope of the CB license requirements that apply to other AG participating countries (see 15 CFR 742.2). Supplement No. 1 to 15 CFR Part 740 (Country Groups) is revised to add Ukraine to Country Group A:3 (Australia Group) and remove Ukraine from Country Group D:3 (Countries of Concern for Chemical and Biological Reasons).

In addition, this final rule updates the definition of "Australia Group'' in 15 CFR 772.1 to include a current listing of all participating countries.

Revisions to EAR based on CWC additions, updates, and clarifications. This final rule revises Supplement No. 2 to 15 CFR Part 745 (titled "States Parties to the Convention on the Prohibition of the Development, Production, Stockpiling, and Use of Chemical Weapons and on Their Destruction'') by adding Niue, which became a State Party to the CWC on May 21, 2005. As a result of this change, the CW (Chemical Weapons) license requirements and policies that apply to Niue now conform with those applicable to other CWC States Parties, as described in 15 CFR 742.18.

This final rule also clarifies the entry for the "Netherlands'' in the list of CWC States Parties by adding a footnote to this entry to indicate that, for CWC purposes only, the Netherlands includes "Aruba and the Netherlands Antilles.'' In addition, this final rule updates the list by removing "Yugoslavia (Federal Republic of)'' and replacing it with "Serbia and Montenegro.''

Savings Clause

BIS' final rule provides that shipments of items removed from eligibility for export or reexport under a license exception or without a license (i.e., under the designator "NLR'') as a result of this regulatory action that were on dock for loading, on lighter, laden aboard an exporting carrier, or en route aboard a carrier to a port of export, on September 6, 2005, pursuant to actual orders for export or reexport to a foreign destination, may proceed to that destination under the previously applicable license exception or without a license (NLR) so long as they are exported or reexported before September 19, 2005. However, any such items not actually exported or reexported before midnight, on September 19, 2005, require a license in accordance with this regulation.

"Deemed'' exports of "technology'' and "source code'' removed from eligibility for export under a license exception or without a license (under the designator "NLR'') as a result of this regulatory action may continue to be made under the previously available license

exception or without a license (NLR) before September 19, 2005. Beginning at midnight on September 19, 2005, such "technology'' and "source code'' may no longer be released, without a license, to a foreign national subject to the "deemed'' export controls in the EAR when a license would be required to the home country of the foreign national in accordance with this regulation.

-public comments are welcome on a continuing basis

BIS contact - Douglas Brown (202) 482-7900

BIS final rule (D/N 050719191-5191-01, FR Pub 08/05/05) available athttp://a257.g.akamaitech.net/7/257/2422/01jan20051800/edocket.access.gpo.gov/2005/pdf/05-15530.pdf