BIS Clarifies its Regulations on Encryption Simplification
The Bureau of Industry and Security has adopted as final, with some changes, its October 2008 interim final rule amending the Export Administration Regulations (EAR) to make the treatment of encryption items (EIs) more consistent with the treatment of other items subject to the EAR, as well as to simplify and clarify regulations pertaining to the export of EIs.
The final rule also corrects errors published in the interim final rule and resolves inconsistencies in that rule identified by the public. It is effective October 15, 2009.
(See ITT's Online Archives or 10/07/08 news, 08100735, for BP summary of the interim final rule.)
Highlights of Final Rule's Corrections and Clarifications
In addition to finalizing the October 2008 interim final rule, the final rule makes the following corrections and clarifications (partial list):
Items not authorized for government end-users. 15 CFR 740.17(b)(1)-(4) is changed for clarity, transparency, and simplification of language. For example, prior to the final rule, paragraph (b)(4) authorized immediate export under (b)(2) or (b)(3) for source code and key length limited items. However, with the authorization under (b)(4), it was no longer clear that (b)(2) items were not authorized for immediate export to ''government end-users" outside the Supplement 3 countries. The final rule makes clear that this continues to be true and that products that would not be authorized for permanent export to certain ''government end-users'' should not be authorized for temporary export to those end-users.
Review requests and SNAP-R procedures. Supplement No. 6 to 15 CFR Part 742 "Guidelines for Submitting Review Requests for Encryption Items" is amended by removing the fourth and fifth sentences of the introductory paragraph to harmonize with the new mandatory SNAP-R procedures1 for submission of review requests. The final rule also adds text to introductory paragraph (a), which was inadvertently omitted in the interim final rule, explaining that appropriate technical information must accompany the review request.
Nota Bene for PAN and ancillary cryptography. As exporters have been confused by the Nota Bene to the ''personal area network'' (PAN) definition in the note to 15 CFR Part 772, the final rule deletes some of the text in that note for clarity. The final rule also revises the Nota Bene for the term ''ancillary cryptography'' by making editorial clarifications, and adding a footnote to clarify that for the purpose of this definition, the term 'transportation systems' does not include any Automatic Identification System (AIS)/Vessel Traffic Service (VTS).
ECCNs 5E002 and 5E992. The final rule revises Supplement No. 1 to Part 774 by amending ECCN 5E002 to add License Exception ENC to the License Exception section to clarify that this ECCN may be considered for License Exception ENC eligibility. In addition, it amends ECCN 5E992 by inserting "according to the General Technology Note" into the heading to more clearly define the scope of this ECCN.
Certain ECCNs eligible under de minimis rules. 15 CFR 734.4(b)(2) is revised to simply state that all items classified under Export Control Classification Numbers (ECCNs) 5A992, 5D992, or 5E992 are eligible for consideration under the de minimis rules.
Reference to mass market review requirements. 15 CFR 738.4(a)(2)(ii)(B) is amended by removing a reference to the mass market review requirements in section 742.15(b) for 5A992 and 5D992, and replacing it with an instruction that the export may be executed under the No License Required (NLR) principle unless the License Requirement section refers the reader to another section of the EAR.
References to a removed section. The last sentence in paragraph (d) of 15 CFR 730.5 is removed, because it makes reference to technical assistance in section 744.9,2 which was removed by BIS' October 2008 interim final rule. Likewise, 15 CFR 734.5(c), 736.2(b)(7)(ii) and 744.1(a)(1) were edited to remove references to technical assistance in section 744.9.
1In August 2008, BIS issued a final rule, effective October 20, 2008, which requires all export and reexport license applications (with some exceptions), classification requests, encryption review requests, License Exception AGR notifications, and ''attached'' related documents to be submitted to BIS via its Simplified Network Application Process Redesign (SNAP-R) system unless BIS authorizes paper submissions. (See ITT's Online Archives or 08/22/08 news, 08082210, for BP summary.)
215 CFR 744.9 previously required authorization from BIS for U.S. persons to provide technical assistance (including training) to foreign persons with the intent to aid a foreign person in the development or manufacture outside the U.S. of encryption commodities or software that, if of U.S.-origin, would be "EI" controlled under Export Control Classification Numbers (ECCNs) 5A002 or 5D002.
BIS contact - Sharron Cook (202) 482-2440
BIS final rule (D/N 080211163-9110-02, FR Pub 10/15/09) available at http://edocket.access.gpo.gov/2009/pdf/E9-24697.pdf