DDTC to Finalize USML Changes, Create Underwater Drone License Exemption
The State Department is finalizing changes from a January rule that will add and remove items on the U.S. Munitions List and clarify the control scope of others. It said some new items should be subject to export controls under the International Traffic in Arms Regulations, while others “no longer warrant inclusion” or will soon be moved to the Commerce Department’s Commerce Control List. The agency will also create a new license exemption for underwater drones and tweak other portions of the January rule, but it declined to make multiple changes requested by exporters.
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The final rule, released Aug. 26 and effective Sept. 15, builds on an interim final rule issued in the last days of the Biden administration, which previewed new ITAR controls for certain exoskeletons, nerve agents, aircraft engines, and uncrewed and untethered vessels while removing other items from the ITAR, including certain anti-jam antennas (see 2501160027).
The agency’s Directorate of Defense Trade Controls is maintaining many of those changes and declined requests from several companies to delete or reconsider some of the new ITAR controls, including its new criterion for certain “Active Electronically Scanned Arrayfire control radar,” which was added to the definition of “foreign advanced military aircraft.”
One commenter told DDTC that the criterion would lead to the “inadvertent inclusion of thousands of minor parts and components” in U.S. Munitions List Category VIII(h)(1) that the commenter believed should remain on the Commerce Control List. DDTC said this was a “misinterpretation of the changes,” stressing that they don’t include a “catchall control for parts used exclusively in foreign advanced military aircraft.”
The agency also declined to remove a control from certain uncrewed and untethered vessels in USML Category XX, even after Kongsberg Discovery, a Norwegian company that makes unmanned underwater vehicles, said the change would place “overly restrictive" thresholds on exports of those vehicles (see 2503270055). The rule carves out certain underwater vessels from license requirements if they use systems “below certain weight and performance thresholds,” but Kongsberg said those parameters are too low.
The company also argued that its vessels are used mainly for civil purposes, such as oceanographic research or the oil and gas industry. Although DDTC acknowledged that while some may have civil purposes, those vessels “nevertheless provide a critical military or intelligence advantage” and shouldn’t be removed from the USML. In addition, the agency declined to update the weight and performance thresholds, saying the change “concisely and accurately describes the [unmanned underwater vessels] that provide a critical military or intelligence advantage.”
DDTC is, however, creating a new license exemption for a subset of those vessels described in USML Category XX(a)(10). “Although they provide a critical military or intelligence advantage such that they warrant description on the USML, the Department assesses they are also highly suitable for scientific research and specific commercial operations.”
The new exemption will authorize temporary exports, reexports and temporary imports of those vessels that “meet the exemption’s size restriction of 8,000 pounds.” It will also authorize certain defense services -- including maintenance, repair and operation -- “when the controlled activities involve one of the exemption’s described civil uses,” which includes scientific research or natural resource exploration; commercial or civil infrastructure maintenance, installation, or repair; and search and rescue operations.
DDTC said the license will also authorize “a similar scope of brokering activities,” but the exemption won’t apply “if the activities entail the transfer of the vessel’s registration, control, or ownership to a foreign person.”
DDTC said it’s accepting public comments on the new exemption at DDTCPublicComments@state.gov, and those comments may be used to inform future rulemakings.
DDTC made changes to other parts of the January rule, including revising USML Category III to exclude “common lead-free birdshot ammunition,” even if that ammunition is made with tungsten or steel. The agency said that ammunition doesn’t provide a “critical military or intelligence advantage” and doesn’t “have an inherently military function.”
It also revised USML Category XI to exclude certain “Global Navigation Satellite System (GNSS) anti-jam and GNSS anti-spoofing systems,” saying the “broad description of counterjamming equipment in USML Category XI(a)(4)(iii) may impede the Department’s intent to improve civil navigation resiliency when it removed certain Controlled Reception Pattern Antennas.” It also noted that USML Category XII(d)(3) already describes certain GNSS anti-jam systems that provide a critical military or intelligence advantage.
Similar to the January rule, DDTC again said some of the items that will be removed from the USML may become subject to Commerce's export licensing authority under the Export Administration Regulations. It urged exporters to determine which agency is responsible for regulating their items and potentially submit a commodity jurisdiction request “if the licensing jurisdiction or USML classification is in doubt.”
For exporters looking to ship items “as soon as possible for items moving from the USML to the CCL,” they may submit license applications “immediately after the publication” of the Bureau of Industry and Security's final rule that adds those items to the CCL “or, in the case of items removed from the USML by this final rule, immediately upon its publication,” the agency said. “Thus, applicants may, in effect, pre-position license applications early to facilitate processing of the license application,” DDTC said. “[I]f BIS completes processing the application prior to the effective date of the applicable final rule removing the item from the USML, BIS will hold the application without action (HWA), until the effective date of that final rule.”
The rule also includes guidance on how exporters should handle DSP-5, DSP-61 and DSP-73 licenses, along with Technical Assistance Agreements, Manufacturing License Agreements, Distribution Agreements and Related Reporting Requirements, involving items transitioning from the USML to the CCL.