Commerce Department, BIS Issues New Rule To Help Safeguard U.S. Role in Global Standards Development

On July 18, 2024, the Bureau of Industry and Security (BIS) issued an interim final rule (IFR) to amend the Export Administration Regulations (EAR) to modify the scope and the terms used to describe “standards-related activities” subject to the EAR. The IFR removes the EAR’s jurisdiction over the release of certain technology and software when the release occurs for a “standards-related activity” for a “published” standard or with the intent that the resulting standard will be “published.”

Background

Since 2019, BIS has revised the EAR in efforts to permit U.S. participation in standards development for critical and emerging technology(ies) in areas that are essential to U.S. national security and competitiveness. For example, on September 9, 2022, BIS published an interim final rule (the September 2022 rule) amending the EAR to authorize the release of certain technology and software in the context of “standards-related activities” involving the entities on the Entity List. More specifically, the September 2022 rule revised standards authorization by: (1) expanding the scope of the authorization to all entities on the Entity List; (2) expanding the scope of the authorization to include certain software and additional technology; and (3) refining the scope of covered standards activities. The gradual expansion of the scope of the rule was in line with BIS’ stated goal of removing barriers to U.S. participation in standards-related activities. Such impediments, according to BIS, can result in negative consequences that “contribute[] to a potential future global standards environment that works to oppose U.S. interests.”

The New Rule

The prior revisions to the EAR focused on authorizing the release of software and technology in the context of “standards-related activity” to those identified on the Entity List. Based on public comments received after the September 2022 rule, as well as continued discussions with other U.S. government agencies and industry, BIS further revises the EAR so that the activities that meet the definition of “standards-related activities” (as defined in the EAR) are no longer subject to the EAR’s jurisdiction.

In addition, BIS also removes the definitions of the terms “standards” and “standards organization” from the EAR to allow for full participation in the intended activities. Previously, the terms “standards” and “standards organization” were defined with reference to OMB Circular No. A-119. However, public comments indicated that such definitions “do not adequately address the breadth of activities and issues that companies run into while participating in standards organizations.” By removing the definitions of the terms “standards” and “standards organization,” the standards-related authority focuses on the activities that fall within the definition of “standards-related activity” rather than the type of organization that performs such activities.

As a result of the IFR, the release of enumerated technology and software would no longer be subject to the EAR when released for a “standards-related activity.” The standards-related activity must be either for a “published” standard or occur with the intent that the resulting standard will be “published.” The term “standards-related activity” includes the following: (1) 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 and (2) an action taken for the purpose of developing, promulgating, revising, amending, issuing or reissuing, interpreting, implementing, or otherwise maintaining or applying such a standard.

Technology and software covered by the provision on standards-related activity remain the same as before. The relevant technology and software are:

• Technology or software designated EAR99
• Technology or software controlled for anti-terrorism reasons only
• 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”

Conclusion

The amendments in the IFR are an effort to ensure that export controls and related compliance concerns do not impede U.S. participation and leadership in legitimate standards-related activities. Interested parties may submit their comments on the rule by September 16, 2024.

For questions about the IFR or U.S. export controls or sanctions more generally, contact the authors or any of their colleagues in Arnold & Porter’s White Collar Defense & Investigations or Export Control & Sanctions practice groups.

© Arnold & Porter Kaye Scholer LLP 2024 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.