BIS Interim Rule Says It Does Not Determine if Items are "Subject to the EAR"

BIS states this change is expected to reduce the number of license applications it receives. Comments are due by October 1, 2010.

Regs Previously Said BIS Provides “Subject to the EAR” Jurisdiction Advice

Prior to this interim final rule, 15 CFR 748.3(a) had stated that “BIS will advise you whether or not your item is subject to the EAR and, if applicable, the appropriate ECCN. If requested, for a given end-use, end-user, and/or destination, BIS will advise you whether a license is required, or likely to be granted, for a particular transaction. Note that these responses do not bind BIS to issuing a license in the future. This type of request, along with requests for guidance regarding other interpretations of the EAR, is commonly referred to as an ‘Advisory Opinion.’”

BIS Now Says Persons Should Make Own Jurisdiction Decision before Filing

BIS says it does not have the authority to issue commodity jurisdiction determinations or decide if an item is “subject to the EAR”.

A BIS commodity classification only reflects whether each item identified in the commodity classification request is described in the Commerce Control List (CCL). Thus, prior to seeking a commodity classification, the applicant should have already determined -- through a self-determination or with the assistance of another U.S. Government agency¹ -- that the item is not subject to the exclusive export control jurisdiction of another U.S. government agency.

(Such other U.S. agencies include, for example, the Department of State’s Directorate of Defense Trade Controls (DDTC), the Department of the Treasury’s Office of Foreign Assets Controls (OFAC), the U.S. Nuclear Regulatory Commission (NRC), the Department of Energy (DOE), or the Patent and Trademark Office (PTO). If exclusively subject to such an agency, then one must comply with the regulations administered by that agency and need not consider the provisions of the EAR.)

EAR Amended to Indicate BIS’ Lack of Jurisdiction Authority

BIS’ interim final rule amends 15 CFR 734.3 (Items Subject to EAR) by adding paragraph (d) as follows:

"(d) Commodity classification determinations and advisory opinions issued by BIS are not, and may not be relied upon as, determinations that the items in question are “subject to the EAR,” as described in 15 CFR 748.3."

BIS also replaces paragraph (a) of 15 CFR 748.3 (Classification requests, advisory opinions, and encryption registrations) with the following language:

“(a) Introduction. You may ask BIS to provide you with the correct Export Control Classification Number (ECCN) down to the paragraph (or subparagraph) level, if appropriate. BIS will issue you a determination that each item identified in your classification request is either described by an ECCN in the Commerce Control List (CCL) in Supplement No. 1 to Part 774 of the EAR or not described by an ECCN and, therefore, an ‘EAR99’ item. These classification determinations issued by BIS are not U.S. Government determinations that the items described therein are ‘subject to the EAR,’ as this term is defined in 734.3 of the EAR. Those who request commodity classifications and advisory opinions should have determined that the items at issue are not subject to the exclusive export control jurisdiction of one of the other U.S. Government agencies listed in 734.3(b) of the EAR.”

BIS’ rule also adds new paragraphs (b)(3), and (c)(4) to 15 CFR 748.3, as follows:

(b) (3): “BIS assigns each of its commodity classifications a Commodity Classification Automated Tracking System (CCATS) number. Neither the BIS classification nor the CCATS number may be relied upon or cited as evidence that the U.S. Government has determined that the items described in the commodity classification determination are subject to the EAR.”

(c )(4): “Advisory opinions are limited in scope to BIS’s interpretation of EAR provisions. Advisory opinions differ from commodity classifications in that advisory opinions are not limited to the interpretation of provisions contained in the Commerce Control List. Advisory opinions may not be relied upon or cited as evidence that the U.S. Government has determined that the items described in the advisory opinion are not subject to the export control jurisdiction of another agency of the U.S. Government.”

BIS to Insert Reminder on All Commodity Classifications

To further the educational and compliance objectives of this amendment, BIS will begin inserting the following reminder on all commodity classifications it issues:

“This commodity classification sets forth the classification of the above-listed items if they are subject to the EAR. This commodity classification is not a determination by BIS as to whether the above-listed items are subject to the EAR. As defined and described in sections 734.2 through 734.4 of the EAR, the term “subject to the EAR” means, among other things, that the item(s) are not exclusively controlled for export or reexport by another agency of the U.S. Government. See 15 CFR 734.3(b)(1). Thus, this document is not, and may not be relied upon as, a U.S. Government determination that the above-listed items are not, for example, subject to the export control jurisdiction of the International Traffic in Arms Regulations (ITAR) (22 CFR Parts 120-130), which are administered by the U.S. Department of State.”

¹DDTC has a process by which one may seek and receive a “commodity jurisdiction” (CJ) determination whether an item is subject to the International Traffic in Arms Regulations (ITAR) under 22 CFR 120.4.

BIS contact -- Sheila Quarterman (202) 482-2440

(D/N 100707291-0292-01, FR Pub 08/02/10)