Rule2024-15810
Standards-Related Activities and the Export Administration Regulations
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
July 18, 2024
Effective
July 18, 2024
Issuing agencies
Commerce DepartmentIndustry and Security Bureau
Abstract
In this interim final rule, the Bureau of Industry and Security (BIS) amends the Export Administration Regulations (EAR) to revise the scope and the terms used in the EAR to describe "standards- related activities" that are subject to the EAR. BIS is making these revisions to ensure that export controls and associated compliance concerns do not impede the participation and leadership of U.S. companies in legitimate standards- related activities.
Full Text
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<title>Federal Register, Volume 89 Issue 138 (Thursday, July 18, 2024)</title>
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[Federal Register Volume 89, Number 138 (Thursday, July 18, 2024)]
[Rules and Regulations]
[Pages 58265-58274]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-15810]
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DEPARTMENT OF COMMERCE
Bureau of Industry and Security
15 CFR Parts 734, 744 and 772
[Docket No. 240712-0190]
RIN 0694-AI06
Standards-Related Activities and the Export Administration
Regulations
AGENCY: Bureau of Industry and Security, Commerce.
ACTION: Interim final rule with request for comments.
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SUMMARY: In this interim final rule, the Bureau of Industry and
Security (BIS) amends the Export Administration Regulations (EAR) to
revise the scope and the terms used in the EAR to describe ``standards-
related activities'' that are subject to the EAR. BIS is making these
revisions to ensure that
[[Page 58266]]
export controls and associated compliance concerns do not impede the
participation and leadership of U.S. companies in legitimate standards-
related activities.
DATES:
Effective date: This rule is effective July 18, 2024.
Comment date: Comments must be received by BIS no later than
September 16, 2024.
ADDRESSES: You may submit comments, identified by docket number BIS-
2020-0017 or RIN 0694-AI06, through the Federal eRulemaking Portal:
<a href="http://www.regulations.gov">http://www.regulations.gov</a>. Follow the instructions for submitting
comments. You can find this interim final rule by searching for its
<a href="http://regulations.gov">regulations.gov</a> docket number, which is BIS-2020-0017.
All filers using the portal should use the name of the person or
entity submitting comments as the name of their files, in accordance
with the instructions below. Anyone submitting business confidential
information should clearly identify the business confidential portion
at the time of submission, file a statement justifying nondisclosure
and referring to the specific legal authority claimed, and also provide
a non-confidential version of the submission.
For comments submitted electronically containing business
confidential information, the file name of the business confidential
version should begin with the characters ``BC.'' Any page containing
business confidential information must be clearly marked ``BUSINESS
CONFIDENTIAL'' on the top of that page. The corresponding non-
confidential version of those comments must be clearly marked
``PUBLIC.'' The file name of the non-confidential version should begin
with the character ``P.'' The ``BC'' and ``P'' should be followed by
the name of the person or entity submitting the comments. Any
submissions with file names that do not begin with a ``BC'' or ``P''
will be assumed to be public and will be made publicly available
through <a href="http://www.regulations.gov">http://www.regulations.gov</a>.
FOR FURTHER INFORMATION CONTACT: Susan Kramer, Regulatory Policy
Division, Bureau of Industry and Security, Department of Commerce.
Phone: (202) 482-2440; Email: <a href="/cdn-cgi/l/email-protection#f2a18781939cdcb980939f9780b2909b81dc969d91dc959d84"><span class="__cf_email__" data-cfemail="70230503111e5e3b02111d1502301219035e141f135e171f06">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION:
A. Background
Participation and leadership in standards development is crucial to
protecting and enhancing U.S. national and economic security and has
been instrumental to the global technological leadership of the United
States. Standards development underpins U.S. economic prosperity and
fortifies U.S. leadership in critical and emerging technologies. The
U.S. standards development system is unique because it is built upon a
wide variety of processes that are open, voluntary, decentralized, and
led by the private sector. These processes feature openness to
participation by materially interested stakeholders and consensus-based
decision making. Finalized standards are primarily published by private
sector standards organizations, not the U.S. Government.
On May 4, 2023, the Biden-Harris Administration announced the
``United States Government National Standards Strategy for Critical and
Emerging Technology'' (USG NSSCET). The USG NSSCET is intended to
support and complement existing private sector-led activities and
plans, including the American National Standards Institute (ANSI)
United States Standards Strategy (USSS), with a focus on critical and
emerging technology(ies) (CET). Consistent with the USG NSSCET
strategy, the Commerce Department is committed to engaging ``with a
broad range of private sector, academic and other key stakeholders,
including foreign partners, to address gaps and bolster U.S.
participation in [CET] standards development activities.'' As outlined
in the USG NSSCET, the U.S. Government is prioritizing efforts for CET
standards development in identified areas that are essential to U.S.
national security and competitiveness in critical industries including
biotechnologies; positioning, navigation and timing services;
communications and networking technologies; and quantum information
technologies among others. The USG NSSCET outlines four objectives
(investment, participation, workforce, and integrity and inclusivity)
and eight corresponding lines of effort to ensure that the United
States remains a global leader in developing merit-based standards that
embrace transparency, openness, impartiality and consensus,
effectiveness and relevance, coherence, and broad participation. More
information regarding the USG NSSCET can be found here: <a href="https://www.whitehouse.gov/wp-content/uploads/2023/05/US-Gov-National-Standards-Strategy-2023.pdf">https://www.whitehouse.gov/wp-content/uploads/2023/05/US-Gov-National-Standards-Strategy-2023.pdf</a>.
Since 2019, BIS has made a number of revisions to the EAR (15 CFR
parts 730-774) that have affected U.S. participation and leadership in
standards-related activities. Most recently, BIS published an interim
final rule, ``Authorization of Certain ``Items'' to Entities on the
Entity List in the Context of Specific Standards Activities'' (see 87
FR 55241 (September 9, 2022)) (the September 2022 rule), that amended
the EAR to authorize the release of specified items subject to the EAR
when such release is for a ``standards-related activity'' as defined in
the EAR (a term in double quotes indicates the term is defined in part
772 (Definition of Terms) of the EAR). Additional information about
that process, the listing of Huawei Technologies Co., Ltd and its non-
U.S. affiliates (collectively ``Huawei''), and associated licensing
requirements can be found at 84 FR 22961 (May 21, 2019) (background
section providing a brief overview of how entities are added to the
Entity List); see also 87 FR at 55241 (background section describing
licensing requirements for Huawei as a result of being added to the
Entity List).
The revisions promulgated in the September 2022 rule sought to
ensure that export controls do not impede the participation and
leadership of U.S. companies in standards-related activities. As noted
in that rule, any impediment to U.S. participation in standards
development forums is a national security threat to the United States
because it not only limits U.S. leadership in standards development,
but other countries are already racing to replace U.S. participation
with their own leadership and standards. In many cases, a decrease in
U.S. participation not only undermines U.S. national security and
foreign policy interests but also contributes to a potential future
global standards environment that works to oppose U.S. interests.
BIS Regulatory Actions and Standards
BIS has been actively involved on issues related to standards and
export controls since the addition of Huawei to supplement no. 4 to
part 744 (Entity List) of the EAR on May 16, 2019 (See 84 FR 22961 (May
21, 2019)). The addition of Huawei to the Entity List imposed a license
requirement on all exports, reexports and transfers (in-country) to
Huawei and its listed affiliates. Since that action and subsequent
additions of other Huawei affiliates to the Entity List, BIS has
engaged with industry as well as the interagency on export controls and
standards-related activities and has published two interim final rules
specific to how the EAR treat standards-related activities.
(a) TGL and the June 2020 IFR
First, to avoid disruption to existing U.S. and global
telecommunications networks, on May 22, 2019, BIS issued
[[Page 58267]]
a Temporary General License (TGL) to authorize certain activities with
Huawei, including, among other things, U.S. industry's participation as
necessary for the development of 5G standards by a duly recognized
standards body when Huawei was also participating in the standards-
related activities (see 84 FR 23468 (May 22, 2019)). The TGL was
subsequently extended through August 13, 2020. As the TGL was set to
expire, BIS published an interim final rule with a request for comment,
``Release of ``Technology'' to Certain Entities on the Entity List in
the Context of Standards Organizations'' (see 85 FR 36719, June 18,
2020) (the June 2020 rule), that amended the EAR to authorize the
release of certain technology to Huawei and its affiliates on the
Entity List.
The June 2020 rule defined ``standards'' and ``standards
organizations'' on the basis of the Office of Management and Budget
Circular A-119 (OMB A-119) definitions and authorized limited releases
of low-level ``technology'' and ``software'' to Huawei in the context
of ``standards'' in a ``standards organization.'' In public comments
received in response to the June 2020 rule, U.S. industry raised
concerns that the definitions and provisions promulgated in the June
2020 rule were chilling U.S. industry's participation in standards
development.
Standards development in the United States, unlike in other
countries, is driven by the private sector (e.g., industry, academia,
etc.), which is an important factor that has fueled effective U.S.
leadership in standards development. The U.S. Government takes a
consultative role in this process through the work of the Department of
Commerce's National Institute of Standards and Technology (NIST).
Although the countries from which standards proposals originate are
identified during standards development and setting activities, company
affiliations are generally not known and are not a requirement for
membership or participation.
Certain export control-related factors in the standards-making
process, including but not limited to BIS's increased use of end-use
and end-user controls, led to an environment of uncertainty for U.S.
companies. They stopped sharing information and data in international
standards bodies and in legitimate standards development activities
because of, e.g., the participation of entities listed on the Entity
List (other than Huawei) in standards bodies and standards development
activities. Standards bodies began to view the United States as a less
than ideal place to hold standards meetings and discussions, as U.S.
export controls introduced an element of non-openness which is contrary
to the spirit and definition of standards organization espoused by OMB
A-119. As a result, U.S. leadership in international standards
development was at risk in key industries. The lack of U.S.
participation in standards that form the foundation of future
industrial and commercial development worldwide directly and negatively
impacts U.S. national security, and limits U.S. global commercial
influence. This encourages foreign actors to develop and promote their
own standards across the global community at the expense of the United
States. Additionally, U.S. non-participation in the development of
standards affects U.S. companies as they must manufacture items that
meet foreign standards.
(b) September 2022 IFR
In response to the public comments received on the June 2020 rule
and following renewed consultation among government agencies, BIS
published the September 2022 rule amending the EAR to authorize the
release of specified items subject to the EAR without a license to
entities added to the Entity List pursuant to Sec. 744.11 in the
narrow circumstance when that release occurs in the context of a
``standards-related activity,'' as defined in the September 2022 rule.
Specifically, BIS clarified the scope and application of standards
activities covered by the authorization by removing the defined terms
for ``standards'' and ``standards organization'' from the EAR and
adding a new definition for ``standards-related activity'' that more
accurately reflects the standards-setting landscape. BIS authorized the
release of ``software'' controlled for anti-terrorism (AT) reasons only
and items designated EAR99 (i.e., items subject to the EAR but not
identified on the Commerce Control List (supplement no. 1 to part 774)
(CCL)) in the scope of the authorization and included the release of
specific ``software'' and ``technology'' only for the ``development,''
``production,'' and ``use'' of cryptographic functionality in the
authorization. The rule also required that the items were authorized
for release only if there was an intent to ``publish'' the resulting
standard. Additionally, the language regarding ``standards-related
activity'' was removed from the License Requirement column in the
Entity List and added to Sec. Sec. 744.11 and 744.16 of the EAR. The
September 2022 rule thus revised the scope of the standards
authorization to apply to entities on the Entity List with license
requirement solely referencing Sec. 744.11 and not other end use and
end user license requirements in other sections of parts 744 (Control
Policy: End-User and End-Use Based) and 746 (Embargoes and Other
Special Controls) of the EAR.
Prior to the June 2020 rule, the majority of entities on the Entity
list had, and continue to have, a license requirement that refers to
Sec. 744.11. Since the publication of the June 2020 rule, however, BIS
has published a number of rules that have expanded end-use and end-user
controls. As a result, since the publication of the June 2020 rule,
over 400 additional entities have been added to the Entity List with a
license requirement that references a provision other than Sec.
744.11. In recognition of these circumstances, in the September 2022
rule, BIS requested comments on whether excluding these other end-use
and end-user provisions of the EAR from the authorization would
negatively impact and prevent U.S. industry from actively participating
and leading in ``standards-related activities,'' or if export controls
and compliance concerns would continue to limit U.S. leadership and
participation in standards-related activities, thereby negatively
impacting U.S. commercial and national security interests.
B. Changes to Licensing Requirements in the Context of Specific
Standards Activities
Based on public comments received from the September 2022 rule (as
summarized in Section D), as well as continued discussions with other
U.S. Government agencies and industry, BIS is amending the EAR to
ensure that export controls and associated compliance concerns do not
continue to impede or jeopardize U.S. participation and leadership in
legitimate standards-related activities. The national security threat
that results from ceding, and in some cases ceasing, U.S. participation
and leadership in standards development and promulgation far outweighs
the risks related to the limited release of the authorized low-level
technology and software to parties on the Entity List when released in
the context of a ``standards-related activity.'' BIS has concluded that
excluding end-use and end-user controls from the authorization has had
and will continue to have unintended negative consequences on the U.S.
national security interests by curtailing U.S. involvement in
legitimate standards-related activities.
As further detailed in the White House report on USG NSSCET
[[Page 58268]]
discussing the key objective of U.S. participation, the U.S. Government
is taking action to ``remove and prevent barriers to private sector
participation in standards development.'' Standards activities and
development will continue to drive technological and industrial growth
with or without input from U.S. companies. For U.S. industry to keep
its leadership role and continued participation in standards
development, especially in critical and emerging technologies
identified in the USG NSSCET, the U.S. Government must address this
issue comprehensively. As public comments to prior efforts to control
exports related to standards development have shown, not addressing
U.S. industry's uncertainty regarding the end-use and end-user controls
in the EAR is counterproductive and endangers U.S. commercial and
strategic interests over the long term. To address these concerns and
to further streamline and clarify controls over technology and software
subject to the EAR as related to standards-related activities, BIS is
making the following revisions to the EAR:
1. Moving the authorization for ``standards-related activity'' that
was added to Sec. 744.11 in the September 2022 rule to Sec. 734.10.
BIS is also making necessary conforming changes to Sec. 744.16 and the
introductory paragraph to supplement no. 4 to Part 744. This final rule
does not change existing provisions in these sections regarding patents
and whether they are subject to the EAR.
2. Revising the existing definition of `standards-related activity'
and adding the revised definition to Sec. 734.10. This rule clarifies
that a ``standards-related activity'' includes activities conducted
with the intent to ``publish'' a standard as well as those conducted
for an already ``published'' standard. BIS revises the definition of
``standards-related activity'' to remove the phrase ``with which
compliance is not mandatory.'' In addition, in Part 772, BIS is
revising the definition for ``standards-related activity'' to reference
Sec. 734.10.
When ``technology'' or ``software'' is released for a ``standards-
related activity,'' the same item scope promulgated in the September
2022 continues to apply, i.e., specific ``technology'' or ``software''
is not subject to the EAR if the item is designated EAR99, controlled
on the CCL for anti-terrorism (AT) reasons only, or the release is of
specified ``software'' and ``technology'' when specifically for the
``development,'' ``production,'' and ``use'' of cryptographic
functionality.
C. Request for Additional Public Comments for This Interim Final Rule
Instructions for submission of comments, including comments that
contain business confidential information, are found in the ADDRESSES
section of this interim final rule. BIS is requesting comment on
whether the revisions promulgated in this interim final rule
effectively promote Objective 2 of the USG NSSCET by removing and
preventing barriers to private sector participation in standards
development.
D. Summary and Response to Comments Received Regarding the September
2022 Standards Interim Final Rule
The summary and responses to the nine relevant comments that BIS
received from the September 2022 interim final rule have been separated
into seven topic areas. For topics in which the comments expressed the
same or very similar viewpoints, BIS has addressed them by topic area
rather than by individual comment. For topic areas in which the
commenters expressed unique viewpoints, thoughts, or ideas, BIS has
addressed the individual comments. The majority of comments have been
addressed by the revisions to the EAR promulgated in this rule. BIS
greatly appreciates the public comments received and encourages
continued engagement and feedback.
Topic Area 1: Limits on standards-related activities due to export
controls creates economic and national security risks for the United
States.
Five commenters noted that any chilling of U.S. participation and
leadership in standards development creates new security risks and
vulnerabilities that threaten U.S. economic and national security
interests. For example, one commenter stated that when its organization
is restricted from engaging in information-sharing activities because
those activities are not covered under the definition of ``standards-
related activities,'' its organization loses the opportunity to receive
valuable and potentially time-sensitive information about cyber
incidents, threats, and vulnerabilities as well as the ability to
further discuss those issues among the organization's members and
identify needed and appropriate resolutions.
Another commenter stated that ``it is important that there be a
two-way communication regarding security vulnerabilities discovered in
hardware and software items. If participation of Entity List entities
is restricted, then security vulnerabilities discovered by these
entities, many of which are quite large, may be withheld as they
develop their own competing standards after being locked out of access
to participation.'' The same commenter went on to state that ``we
believe that the revised EAR exemption, as amended by the IFR,
continues to work against the stated intent of the IFR and against the
national security interests of the United States by prohibiting the
dissemination of technology and software subject to the EAR in the
context [of] standards-related activity when these specified items are
released by open membership organizations'' that develop their
standards via an open process available to any member.
Response: BIS understands, as commenters have stated, that limits
on the sharing of information in a standards development environment
have both economic and national security implications. The national
security threat that results from ceding U.S. participation and
leadership in standards development and promulgation far outweighs the
risks related to the limited release of low-level technology and
software to parties on the Entity List in the context of a ``standards-
related activity'' that supports U.S. commercial and economic
interests. Therefore, in this rule, BIS is amending part 734 of the EAR
so that activities that meet the definition of ``standards-related
activity'' are no longer subject to the EAR. Specifically, when
released for a ``standards-related activity,'' ``technology'' or
``software'' is not subject to the EAR if it meets the item scope of
734.10(b)(1) and is released for a ``published'' standard and/or occurs
with the intent that the resulting standard will be ``published.''
The USG NSSCET specifically highlights U.S. leadership in standards
development of critical technologies. The USG NSSCET Executive Summary
explicitly states that: ``strength in standards development has been
instrumental to the United States' global technological leadership.
Standards development underpins economic prosperity across the country
and fortifies U.S. leadership in the industries of the future at the
same time. Bolstering U.S. engagement in standards for critical and
emerging technology (CET) spaces will strengthen U.S. economic and
national security.''
Additionally, the Export Control Reform Act of 2018 (ECRA; 50
U.S.C. 4801-4852) states under Sec. 4811(3) that: ``the national
security of the United States requires that the United States maintain
its leadership in the science,
[[Page 58269]]
technology, engineering, and manufacturing sectors, including
foundational technology that is essential to innovation. Such
leadership requires that United States persons are competitive in
global markets.''
Both the USG NSSCET and ECRA support and endorse the revisions to
the EAR to ensure that export controls and licensing requirements do
not prove detrimental to or limit the ability of U.S. industry to
participate in and lead international standards development across
industries, especially in areas critical to United States industrial,
commercial, and national security leadership.
Topic Area 2: U.S. export controls continue to hinder U.S.
leadership and participation in international standards development.
Six commenters expressed concern that the export controls and
license requirements related to the sharing of information in a
standards-development forum, as implemented in the September 2022 rule,
were continuing to hinder and chill U.S. companies' participation in
international standards development. Specifically, one commenter stated
that ``[o]pen standardization is critical to U.S. leadership across
established and emerging technology areas and limiting [the] ability of
SSO's [standard setting organizations] would provide significant
barriers to U.S. participation and leadership in standardization.''
Another commenter noted that the current authorization is
``[i]nsufficient to maintain U.S. leadership at organizations that work
on standards'' and that it does not adequately ``support global
cooperation on other critical activities conducted by standards
organizations.'' One commenter stated that unless BIS broadens the
scope of the authorization, they anticipate that the organization's
legal department will not allow it to participate in any meetings at
which Entity List parties could potentially be in attendance.
Four commenters noted that the export controls and license
requirements that apply only to U.S. companies have the effect of
walling off U.S. standards development from global development and
allowing foreign actors to develop and promote their own standards
across the global community at the expense of the United States. One of
the commenters stated that controls that lead SSOs to limit U.S.
entities' participation in global standards development will ``fragment
the standardization ecosystem that has served U.S. interests well to
date . . . .'' Another commenter stated that compliant use of the
limited authorization ``would impose a significant compliance burden as
international standards organizations would need to restructure groups
to isolate standards related activities from other activities and spend
resources to monitor communications among members.'' As noted above,
another commenter said, ``if participation of Entity List entities is
restricted, then security vulnerabilities discovered by these entities,
many of which are quite large, may be withheld as they develop their
own competing standards after being locked out of access to
participation.'' Finally, a commenter noted that artificial limits on
sharing of information favors compliance by larger commercial
enterprises at the expense of smaller parties, including other
standards organizations that do not have the same resources as large
commercial operations.
Response: BIS agrees that the September 2022 authorization is not
broad enough to allow U.S. companies to participate freely in standards
development due to uncertainty regarding whether the information they
are sharing is subject to the EAR and, if so, whether EAR license
requirements apply. BIS recognizes the importance of protecting
sensitive and leading-edge U.S. technology but understands the national
security implications of limiting U.S. participation and leadership in
international standards development. BIS appreciates that the U.S.
Government needs to apply U.S. export controls in a way that supports
and encourages U.S. technological leadership in standards development,
particularly in light of efforts by adversarial countries to
coordinate, subsidize, and promote activities in international
standards bodies for the benefit of their own enterprises and industry
leadership. BIS also recognizes that an environment of competing
national standards or the exclusion of U.S. companies in international
standards development is not advantageous to U.S. commercial or
national security interests. Therefore, in this final rule, BIS has
made ``standards-related activities'' not subject to the EAR as long as
the ``release'' of the ``software'' or ``technology'' during these
activities meets the criteria contained in revised Sec. 734.10 of the
EAR. This treatment of ``standards-related activity'' as defined in
Sec. 734.10 will support U.S. companies' efforts to create and
maintain a leadership position in the global standards community in all
industries.
BIS further agrees that fragmentation in the standards development
environment could provide foreign actors and organizations with an
opening to develop their own unique and separate international
standards, without U.S. industry input or participation, and at the
expense of U.S. commercial and national security interests. This
fragmentation leads to significant disadvantages for U.S. industry by
providing foreign actors with the opportunity to specify their own
indigenous benchmarks that U.S. companies must adhere to or lose market
share. U.S. non-participation in the foreign development of such
standards also affects U.S. companies' bottom line as they must revise
their manufacturing processes to meet the foreign standards. This final
rule alleviates such concerns by providing U.S. companies the ability
to freely participate in all standards-development forums by making the
release of software or technology in such forums not subject to the
EAR, provided the releases meet the criteria of new Sec. 734.10(b) of
the EAR. It also obviates the need for U.S. companies to wall off their
input into global standards development.
Topic Area 3: Revise the definition of ``standards-related
activity.''
BIS received comments requesting that the agency revise, expand,
and clarify the definition of ``standards-related activity.''
Four commenters suggested that BIS should expand the definition of
``standards-related activity.'' One commenter stated that the
definition should include but not be limited to ``the sharing of
technical assistance and exchange of information within conformity
assessment procedures, with the intent that the resulting standard will
be ``published'' in order to clarify that sharing and exchanging
technical information is within the scope of the authorization. Another
commenter suggested that the definition is too narrow and should be
expanded to ``activities outside of ``standards-related activities'' ''
so as to include ``many vital functions of international standards
organizations that are necessary and incidental to standards related
activity but may be conducted outside the context of standards
development, such as fostering the exchange of information on
developing industry trends and discussions of emerging issues among
members.'' Another commenter suggested expanding the definition ``to
include information sharing activities by members of standards
organizations on emerging issues and developments.'' The last commenter
on this topic proposed allowing a standards-related activity to occur
if conducted in a Voluntary Consensus Standards Body
[[Page 58270]]
(VCSB), as defined by OMB Circular A-119. In the September 2022 rule,
BIS removed the ``standards organization'' definition and replaced it
with a ``standards-related activity authorization.'' According to the
commenter, however, the VCSB definition does not require that standards
be ``published.''
Five commenters requested that BIS remove the word mandatory from
the definition of ``standards-related activity'' in part 772 of the
EAR. Essentially all of the commenters stated that in the context of
standards development, whether or not a standard will be voluntary or
mandatory makes no difference to the stakeholders involved in the
development of the standard. Additionally, some voluntary standards
become mandatory when adopted through national (domestic) regulations,
such as international aircraft standards promulgated by the
International Civil Aviation Organization (ICAO).
Five commenters stated that the current wording of the
authorization implied that standards-related activities were covered by
the authorization only before or during publication of the standard.
These commenters asked for clarification that such activities continued
to be covered by the authorization after publication of the standards.
One commenter noted that conformance testing is a vital component in
the commercialization of standards compliant products and that the
``vast majority of such activities only usefully occur after a standard
has been published and compliant products have been produced.'' Another
commenter noted that ``BIS already provides examples of activities that
occur in connection with already published standards (promulgating,
revising, amending, reissuing, interpreting, implementing . . .)'' but
that such actions do not occur for a standard that does not yet exist.
These commenters gave examples of three SSOs engaged in cellular,
wireless, and other devices that routinely engage in standards-related
activities for already published standards, such as conformity
assessments. Two commenters requested clarification on whether
organizations that are not VCSBs that ``require a party to be a member
of an organization to receive standards in their final form'' would
qualify for the authorization.
One commenter suggested that BIS extend the current authorization
to additional standards activities that occur before the standard is
published. According to this commenter, in information and
communications technology (ICT) ``compliance testing also includes pre-
product release activities intended to help products reliably
interoperate with other products implementing the same standards. The
need for such activities arises from the fact that ICT standards
frequently do not provide sufficient detail to ensure complete
interoperability without additional tinkering.'' This commenter
suggests that the additional tinkering is often done via a ``plugfest''
which is ``an activity that allows competing vendors to meet and test
their products against each other, often anonymous to each other, to
work out the final technical changes necessary to allow consumers and
business purchasers to achieve the type of `plug and play' ease of use
they require. Because plugfests are usually conducted before products
reach the marketplace, and often before their existence or
specifications have been publicly disclosed, they are non-public and
conducted on a confidential basis. Typically, the technical information
exchanged one on one between two vendors includes only that information
that is necessary to allow each vendor to work out the cause of a lack
of compatibility.''
Response: BIS agrees with most of these comments. In new Sec.
734.10(b), BIS revises and clarifies the scope of what is authorized
when released for a ``standards-related activity.'' When released for a
``standards-related activity,'' ``technology'' or ``software'' is not
subject to the EAR once it meets at least one condition in both Sec.
734.10(b)(1) and (2). The scope of the ``technology'' or ``software''
covered by the authorization has not been revised and is now listed in
Sec. 734.10(b)(1). The conditions in Sec. 734.10(b)(2) clarify that
activities that occur after the publication of a standard are included
in the definition of ``standards-related activity''--i.e., a
``standards-related activity'' occurring specific to an already
``published'' standard is included in the authorization. BIS also
removed the phrase ``with which compliance is not mandatory'' from the
definition of ``standards-related activity.''
BIS is not expanding the definition of ``standards-related
activity'' to include activities that are conducted in a VCSB as the
expansion is unwarranted. Based on public comment and engagement with
other agencies, BIS has determined that the relevant activities of a
VCSB are already captured in the definition of ``standards-related
activity'' or, as in the example provided by the commenter, not subject
to the EAR (see discussion in Topic Area 4). BIS welcomes public
comments on whether there are additional VCSB activities that are
excluded from the current definition of ``standards-related activity''
and remain subject to the EAR.
Topic Area 4: Expand the definition of ``published in Sec. 734.7
of the EAR.''
Comment: Six commenters suggested that the definition of
``published'' be expanded to cover standards development activities.
One commenter suggested that the EAR's definition of ``published''
should be expanded to include the ``sharing of technical assistance and
exchange of information within conformity assessment procedures.''
Response: The definition of ``standards-development activity'' in
part 772 already explicitly includes the exchange of technical data in
the conformity process provided it is for the purpose of standards-
development activities. Therefore, no further revisions are warranted
to the definition of ``published'' to reference the exchange of
technical data.
Comment: Another commenter suggested amending the text of Sec.
734.7 of the EAR to replace the phrase ``without restrictions upon its
further dissemination'' with the phrase ``in hard copy or electronic
form available from, or viewable at, one or more public websites.'' The
commenter makes this suggestion because ``virtually all standards bear
copyright notices, and many standards setting organizations (SSOs) add
further legends highlighting that copying and further distribution of
their standards are prohibited. Some vigorously defend their copyrights
in court.'' While it is true that many SSOs (and particularly
consortia) give their standards away for free, most traditional SSOs
derive a significant percentage of their revenues from the sale of
their standards. Thus, in the view of this commenter, ``requiring
unlimited downstream distribution'' as provided in existing Sec. 734.7
``would violate the copyrights of SSOs.''
Response: BIS believes that the regulatory amendments to Sec.
734.10 of the EAR promulgated in this rule obviate the need to amend
Sec. 734.7 of the EAR to account for standards that may be
copyrighted. In this final rule, BIS has removed ``standards-related
activities'' from being subject to the EAR, as long as the release of
the ``software'' or ``technology'' meets the definition of a
``standards-related activity'' as defined in part 772 of the EAR, and
meets the requirements for ``release'' in new Sec. 734.10(b)(1) and
the conditions of its ``release'' in new Sec. 734.10(b)(2) of the EAR.
[[Page 58271]]
According to the criteria in new Sec. 734.10(b)(2), the
``standards-related activity'' must be either for a ``published''
standard or occurs with the intent that the resulting standard will be
``published.''
Comment: Another commenter asked for confirmation that ``the
references to `published' standards in the definition are not limited
to standards-related activities only by those involved in the
standard's development.'' The commenter also asked for confirmation
that a third-party entity that is not a member of the organization that
published the standard (for example, a consortium or a certification
authority) but engages in ``standards-related activity'' with that
standard is consistent with the definition of ``published'' as used in
the definition of ``standards-related activity.''
Response: BIS confirms that this scenario is consistent with the
definition of ``standards-related activity'' in Sec. 734.10 and the
definition of ``published'' in Sec. 734.7 of the EAR. The changes in
this rule remove standards-related activities from being subject to the
EAR when the stated conditions are met; as long as the conditions in
new Sec. 734.10(b)(1) and (2) are met, then the activities would not
be subject to the EAR.
Comments: One commenter stated that their organization's ``model of
open membership dissemination does not publish in conformity with the
strict publish definition used in the IFR'' because although it makes
standards readily available to the public, the interested member of the
public must also be ``willing to agree to the terms and conditions in
its membership agreement and pay its dues.'' The organization releases
the resulting standards to all members without restriction. According
to that commenter, ``this model does not conform to the strict
definition of `published', so [the organization's] standards-related
activities do not qualify for the exemption under the terms of the
IFR.''
Another commenter suggested that the definition of ``published'' be
amended ``to include dissemination to membership organization . . .
that are open to the public without restriction, apart from
confidentiality responsibilities, standard terms and conditions, a
demonstrated interest in the design, development, manufacture or sale
of products or services which utilize the standards at issue, and dues
or membership fees.'' An additional commenter requested clarification
regarding the definition of ``published'' to make ``clear whether BIS
recognizes that some standards organizations require a party to be a
member of the organization to receive standards in their final form.''
Response: The relevant criteria in Sec. 734.7 of the EAR that
makes information not subject to the EAR is applicable when the
information has been made available to the public without restrictions
upon its further dissemination. This does not rely on cost or
membership, provided that any member of the interested public could pay
the associated membership dues and become a member if they so desired.
Further, Sec. 734.7(a)(1) states that unclassified ``technology'' or
``software'' is ``published'' and therefore not subject to the EAR,
when it has been made available to the public without restrictions upon
its further dissemination such as through ``subscriptions available
without restriction to any individual who desires to obtain or purchase
the published information.''
Topic Area 5: Apply standards authorization to sections of EAR
other than Sec. 744.11.
Three commenters expressed concern that the September 2022
authorization continued to chill U.S. industry participation in
international standards development because it applied only to releases
of ``software'' and ``technology'' to entities that were added to the
Entity List under Sec. 744.11 of the EAR. These commenters noted that
to allow the United States to freely participate in standards
development forums, the authorization must be extended to all end users
listed in part 744 of the EAR. One commenter stated the ``Entity (L)ist
is not all encompassing of potentially restricted parties, particularly
within context of EAR Part 744. Parties having other [part 744]
designations (such as military end-users (MEU) in Sec. 744.21) may be
present in such meetings or could otherwise receive the output
documentation of such meetings.'' Another commenter noted that the
authorization ``does not address territorial and end-use/end-user
controls beyond the Entity List,'' which have affected standards
organizations and that deter U.S. companies from participating and
requiring standards organization to restrict their participation. All
three commenters requested the expansion of the authorization to the
release of the same types of items enumerated in Sec. 744.11(a)(1) to
other part 744 end users.
Another commenter stated that modifications such as expansion or
flexibility should be applied to the end-use and end-user controls to
enable U.S. industry to remain a thought-leader on standards-related
activities. According to this commenter, the current authorization
``requires the U.S. party to continually monitor membership of a
standards organization to determine whether only parties on the Entity
List are present or whether other restricted parties are potential
recipients.'' This requires U.S. parties to ``over screen'' and
continuously perform and refresh their due diligence to ensure that a
non-designated party has not been added to one of the restricted lists.
Two additional commenters expressed the same concern with regard to
the amount of resources required to continuously monitor the end-use
and end-user controls in part 744 of the EAR. These commenters
suggested that the standards authorization be extended to other
sections in part 744 but that this extension could be limited to
countries listed in Country Group E (supplement no. 1 to part 740) of
the EAR.
Another commenter noted that the current sanctions and resulting
license requirements for Russia and Belarus extend to certain EAR99 and
AT-only controlled items; therefore, these restrictions have an even
larger effect on U.S. participation in standards development than
Entity List designations. This commenter stated that as long as the
standards-related authorization ``does not apply to MEU or parties in
Russia or Belarus, the international standards environment is likely to
continue to fragment, which undermines U.S. leadership in these
areas.'' This commenter also recommended expanding the authorization to
parties outside of Country Group E that are not on the Entity List ``so
that standards organizations (and U.S. membership) can fully benefit
from the intent of the [authorization].''
Three commenters requested that the current standards authorization
be expanded to all entities on the Entity List (supplement no. 4 to
part 744). One commenter noted that such an expansion would be
``critical to US leadership across established and emerging technology
areas'' and that limiting the authorization to only Entity List
entities provides ``significant barriers to U.S. participation and
leadership in standardization, fragment[s] the standardization
ecosystem that has served U.S. interests well to date and create[s] new
security risks and vulnerabilities that threaten U.S. economic and
national security interests.'' Another commenter noted that unless BIS
broadens the scope of the authorization, they anticipate that the
organization's legal department will
[[Page 58272]]
not allow it to participate in meetings that may include Entity List
entities.
Response: The September 2022 rule expanded the scope of the
authorization of releases of ``software'' and ``technology'' to all
entities that were added to the Entity List under Sec. 744.11 of the
EAR.
This rule addresses the commenter's other concerns by removing from
EAR jurisdiction ``technology'' and ``software'' listed in new Sec.
734.10(b)(1) when they meet at least one condition in new Sec.
734.10(b)(2). This means that the ``technology'' and ``software'' will
not be subject to the EAR when released for standards-related
activities as that term is defined in part 772 of the EAR to all end
users listed in part 744 of the EAR.
BIS notes that this change affects major industries in which global
participation is crucial to create, maintain, and monitor international
safety and operability standards. For example, as two commenters
pointed out, the Russian Federal Air Transportation Agency (FATA) and
the U.S. Federal Aviation Administration (FAA) both participate in the
ICAO, an agency of the United Nations that coordinates the principles
and techniques of international air navigation and sets worldwide
standards for civil aviation safety. ICAO has members that are subject
to unilateral U.S. export controls under part 744 of the EAR beyond the
Entity List; however, U.S. participation in the forum is crucial in
furtherance of U.S. support of civil air safety, security, efficiency,
capacity, and environmental protection and so that the commercial
interests of U.S. aircraft manufacturers and aviation equipment
manufacturers are sufficiently presented in the discussions. Lack of
U.S. participation would cede the development of international
standards to foreign actors that may not only disregard U.S. commercial
and national security interests but actively work to destabilize them.
This rule addresses these concerns by removing from EAR
jurisdiction ``technology'' and ``software'' listed in new Sec.
734.10(b)(1) when they meet at least one condition in new Sec.
734.10(b)(2). This means that the specified ``technology'' and
``software'' will not be subject to the EAR when released for
standards-related activities as that term is discussed in 734.
Topic Area 6: Current authorization and license requirements
increase the compliance burden for U.S. companies.
Four commenters stated that the current authorization increases the
export control compliance burden of U.S. companies and standards
organizations and their members. Two commenters stated this sentiment
explicitly, with one commenter adding that ``compliant use of the
exemption IFR would impose a significant compliance burden as
international standards organizations would need to restructure groups
to isolate standards related activities from other activities and spend
resources to monitor communications among members.'' A third commenter
stated that ``analyzing and complying with uneven or inconsistent rules
and exemptions requires additional resources that [their organization]
could allocate to projects, training, or developing standards.'' The
requester asked that BIS keep in mind that it (and other standards
organizations) do not have the same resources as large commercial
operations.'' However, another commenter stated that the changes
promulgated in the September 2022 rule reduced the compliance burden on
their organization.
Response: One organization's compliance burden has been reduced
under the existing regulations, and with the publication of this rule
and the changed focus on the activities themselves, BIS fully expects
that the compliance burden for the other organizations will also be
reduced. This is because this rule removes from EAR jurisdiction
``technology'' and ``software'' listed in new Sec. 734.10(b)(1) when
they meet at least one condition in new Sec. 734.10(b)(2).
Accordingly, the listed ``technology'' and ``software'' will not be
subject to the EAR when released for ``standards-related activities''
as that term is discussed in part 734 of the EAR.
Topic Area 7: Use clear language and clarification.
One commenter suggested that BIS use clear language and
clarification in future regulations. Specifically, this commenter
stated that ``any efforts to simplify, clarify or limit [the
technology] restrictions would be gratefully received by SSO's, their
decision makers, and their members.''
Response: BIS will continue to strive to use clear language and to
use guidance, including a frequently asked questions (FAQ) document, to
further clarify published regulations in accordance with the Plain
Writing Act of 2010.
Export Control Reform Act of 2018
On August 13, 2018, the President signed into law the John S.
McCain National Defense Authorization Act for Fiscal Year 2019, which
included the Export Control Reform Act of 2018 (ECRA) (codified, as
amended, at 50 U.S.C. 4801-4852). ECRA provides the legal basis for
BIS's principal authorities and serves as the authority under which BIS
issues this rule.
Rulemaking Requirements
1. Executive Orders 13563 and 12866 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). E.O.
13563 emphasizes the importance of quantifying both costs and benefits,
of reducing costs, of harmonizing rules, and of promoting flexibility.
This interim final rule has been designated as significant for purposes
of Executive Order 12866.
2. Notwithstanding any other provision of law, no person is
required to respond to or be subject to a penalty for failure to comply
with a collection of information, subject to the requirements of the
Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.) (PRA), unless
that collection of information displays a currently valid Office of
Management and Budget (OMB) Control Number. This interim final rule
involves the collection currently approved by OMB under control number
0694-0088, Simplified Network Application Processing System, which
includes, among other things, license applications. Total burden hours
associated with the PRA and OMB control number 0694-0088 are not
expected to change because this rule does not impose any additional
license requirements. Current information regarding this collection of
information--including all background materials--can be found at
<a href="https://www.reginfo.gov/public/do/PRAMain">https://www.reginfo.gov/public/do/PRAMain</a> by using the search function
to enter either the title of the collection or the OMB Control Number.
3. This rule does not contain policies with Federalism implications
as that term is defined in Executive Order 13132.
4. Pursuant to section 1762 of ECRA, this action is exempt from the
Administrative Procedure Act (5 U.S.C. 553) requirements, including
prior notice and the opportunity for public comment.
5. Because a notice of proposed rulemaking and an opportunity for
public comment are not required to be given for this rule by 5 U.S.C.
553, or by any other law, the analytical requirements of the Regulatory
Flexibility Act, 5 U.S.C. 601, et seq., are
[[Page 58273]]
not applicable. Accordingly, no regulatory flexibility analysis is
required, and none has been prepared.
List of Subjects
15 CFR Part 734
Administrative practice and procedure, Exports, Inventions and
patents, Research, Science and technology.
15 CFR Part 744
Exports, Reporting and recordkeeping requirements, Terrorism.
15 CFR Part 772
Exports.
Accordingly, parts 734, 744 and 772 of the Export Administration
Regulations (15 CFR parts 730 through 774) are amended as follows:
PART 734--SCOPE OF THE EXPORT ADMINISTRATION REGULATIONS
0
1. The authority citation for 15 CFR part 734 is revised to read as
follows:
Authority: 50 U.S.C. 4801-4852; 50 U.S.C. 4601 et seq.; 50
U.S.C. 1701 et seq.; E.O. 12938, 59 FR 59099, 3 CFR, 1994 Comp., p.
950; E.O. 13020, 61 FR 54079, 3 CFR, 1996 Comp., p. 219; E.O. 13026,
61 FR 58767, 3 CFR, 1996 Comp., p. 228; E.O. 13222, 66 FR 44025, 3
CFR, 2001 Comp., p. 783; E.O. 13637, 78 FR 16129, 3 CFR, 2014 Comp.,
p. 223; Notice of November 1, 2023, 88 FR 75475 (November 3, 2023).
0
2. Amend Sec. 734.3 by revising paragraph (b)(3)(iv) to read as
follows:
Sec. 734.3 Items subject to the EAR.
* * * * *
(b) * * *
(3) * * *
(iv) Appear in patents or open (published) patent applications
available from or at any patent office, unless covered by an invention
secrecy order, or are otherwise patent information or are for a
standards-related activity as described in Sec. 734.10;
* * * * *
0
3. Section 734.10 is revised to read as follows:
Sec. 734.10 Patents and standards-related activity.
(a) Patents. ``Technology'' is not subject to the EAR if it is
contained in any of the following:
(1) A patent or an open (published) patent application available
from or at any patent office;
(2) A published patent or patent application prepared wholly from
foreign-origin ``technology'' where the application is being sent to
the foreign inventor to be executed and returned to the United States
for subsequent filing in the U.S. Patent and Trademark Office;
(3) A patent application, or an amendment, modification, supplement
or division of an application, and authorized for filing in a foreign
country in accordance with the regulations of the Patent and Trademark
Office, 37 CFR part 5; or
(4) A patent application when sent to a foreign country before or
within six months after the filing of a United States patent
application for the purpose of obtaining the signature of an inventor
who was in the United States when the invention was made or who is a
co-inventor with a person residing in the United States.
(b) Standards-related activity. A standards-related activity
includes the development, adoption, or application of a standard (i.e.,
any document or other writing that provides, for common and repeated
use, rules, guidelines, technical or other characteristics for products
or related processes and production methods), including but not limited
to conformity assessment procedures. A ``standards-related activity''
includes an action taken for the purpose of developing, promulgating,
revising, amending, issuing or reissuing, interpreting, implementing or
otherwise maintaining or applying such a standard. When released for a
``standards-related activity,'' ``technology'' or ``software'' is not
subject to the EAR provided it meets at least one condition in both
paragraphs (b)(1) and (2) of this section:
(1) The ``technology'' or ``software'' is:
(i) Designated EAR99;
(ii) Controlled on the CCL for anti-terrorism reasons only; or
(iii) For the following ECCN ``items'' level paragraphs of
``technology'' or ``software'' specifically for the ``development,''
``production,'' or ``use'' of cryptographic functionality once the
release is for a ``standards-related activity:'' ``software'' that is
classified under ECCN 5D002.b or 5D002.c.1 (for equipment specified in
ECCN 5A002.a and 5A002.c only); ``technology'' that is classified under
ECCN 5E002 (for equipment specified in ECCN 5A002.a, .b and .c); and
``technology'' for software controlled under ECCN 5D002.b or .c.1 (for
equipment specified in ECCN 5A002.a and .c only) when the release is
for a ``standards-related activity;'' and
(2) The ``standards-related activity:''
(i) Is for a ``published'' standard; or
(ii) Occurs with the intent that the resulting standard will be
``published.''
PART 744--CONTROL POLICY: END-USER AND END-USE BASED
0
4. The authority citation for 15 CFR part 744 is revised to read as
follows:
Authority: 50 U.S.C. 4801-4852; 50 U.S.C. 4601 et seq.; 50
U.S.C. 1701 et seq.; 22 U.S.C. 3201 et seq.; 42 U.S.C. 2139a; 22
U.S.C. 7201 et seq.; 22 U.S.C. 7210; E.O. 12058, 43 FR 20947, 3 CFR,
1978 Comp., p. 179; E.O. 12851, 58 FR 33181, 3 CFR, 1993 Comp., p.
608; E.O. 12938, 59 FR 59099, 3 CFR, 1994 Comp., p. 950; E.O. 13020,
61 FR 54079, 3 CFR, 1996 Comp., p. 219; E.O. 13026, 61 FR 58767, 3
CFR, 1996 Comp., p. 228; E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp.,
p. 783; E.O. 13224, 66 FR 49079, 3 CFR, 2001 Comp., p. 786; 3 CFR,
2022 Comp., p. 563; Notice of September 7, 2023, 88 FR 62439
(September 11, 2023); Notice of November 1, 2023, 88 FR 75475
(November 3, 2023).
0
5. Section 744.11 is amended by revising paragraph (a) introductory
text and removing and reserving paragraph (a)(1) to read as follows:
Sec. 744.11 License requirements that apply to entities acting
contrary to the national security or foreign policy interests of the
United States.
* * * * *
(a) License requirement, availability of license exceptions, and
license application review policy. A license is required, to the extent
specified on the Entity List, to export, reexport, or transfer (in-
country) any item subject to the EAR when an entity that is listed on
the Entity List is a party to the transaction as described in Sec.
748.5(c) through (f) of the EAR unless otherwise authorized or excluded
in this section. License exceptions may not be used unless authorized
in the Entity List entry for the entity that is party to the
transaction. Applications for licenses required by this section will be
evaluated as stated in the Entity List entry for the entity that is
party to the transaction, in addition to any other applicable review
policy stated elsewhere in the EAR.
* * * * *
0
6. Section 744.16 is amended by revising paragraph (a) to read as
follows:
Sec. 744.16 ENTITY LIST
* * * * *
(a) License requirements. In addition to the license requirements
for items specified on the CCL, you may not, without a license from
BIS, export, reexport, or transfer (in-country) any items included in
the License Requirement column of an entity's entry on the Entity List
(supplement no. 4 to this part) when that entity is a party to a
transaction as described in Sec. 748.5(c) through (f) of the EAR. The
specific license requirement for each listed entity is identified in
the license requirement column on the Entity List in supplement no. 4
to this part.
* * * * *
[[Page 58274]]
0
7. Supplement no. 4 to part 744 is amended by revising the introductory
text to read as follows:
Supplement No. 4 to Part 744--Entity List
This supplement lists certain entities subject to license
requirements for specified items under this part 744 and part 746 of
the EAR. License requirements for these entities include exports,
reexports, and transfers (in-country) unless otherwise stated. A
license is required, to the extent specified on the Entity List, to
export, reexport, or transfer (in-country) any item subject to the
EAR when an entity that is listed on the Entity List is a party to
the transaction as described in Sec. 748.5(c) through (f). of the
EAR This list of entities is revised and updated on a periodic basis
in this Supplement by adding new or amended notifications and
deleting notifications no longer in effect.
* * * * *
PART 772--DEFINITIONS OF TERMS
0
8. The authority citation for 15 CFR part 772 continues to read as
follows:
Authority: 50 U.S.C. 4801-4852; 50 U.S.C. 4601 et seq.; 50
U.S.C. 1701 et seq.; E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., p.
783.
0
9. Section 772.1 is amended by
0
a. Revising the definition of ``Standards-related activity.''
The revisions read as follows:
Sec. 772.1 Definitions of Terms as Used In the Export Administration
Regulations (EAR).
* * * * *
Standards-related activity. See Sec. 734.10 of the EAR.
* * * * *
Thea D. Rozman Kendler,
Assistant Secretary for Export Administration.
[FR Doc. 2024-15810 Filed 7-17-24; 8:45 am]
BILLING CODE 3510-33-P
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This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.