BIS Pushes Back Routed Export Rule, Experiencing Other Delays, Official Says

The Commerce Department will not publish its long-awaited proposed regulations on routed export transactions (see 2007150044) this year and is experiencing delays on other rules, including another set of export controls from the 2019 Wassenaar Arrangement, a Commerce official said. Hillary Hess, the Bureau of Industry and Security’s regulatory policy director, cited a combination of internal BIS delays and a backlog at the Federal Register for the slowdown.

“There's a lot of competition for resources," Hess said, speaking during a Dec. 8 Regulations and Procedures Technical Advisory Committee meeting. She added that there are “a lot of rules that we would like to be working on more and that are taking a while.”

Hess said BIS ran out of resources to dedicate to the routed export rule, which is expected to include major changes to the process around assigning filing responsibilities to forwarders and address information sharing among parties in routed export transactions (see 2006020049). The process has required cooperation between BIS and the Census Bureau because of the significant regulatory overlap within the rule between the two agencies.

“Just given the volume of rules and the sort of internal resources that BIS needed to work on it, it's just not going to make it this year. Which is shame, in my opinion,” Hess said. She said the rule is “important” and stressed that BIS has not “abandoned“ it. “It just kind of got elbowed out by other priorities,” Hess said. “It's really a BIS issue rather than a Census issue. It still needs more work on the BIS side and there's just been a lot of other stuff going on.”

The rule was initially expected to be published in 2019 but has been pushed back several times as Census and BIS officials have met to work on it (see 1904170064 and 2003100046). “I can’t think of anything that we spent as much time on as we did the routed transactions rule that was as close as that was and then kind of got just elbowed a little bit,” Hess said. Kiesha Downs, chief of Census’ Foreign Trade Division’s regulations branch, said during the meeting that Census is also still committed to the rule. “Hopefully 2021 will be the year,” she said.

BIS is also experiencing delays around publishing the second half of the export controls agreed to at the 2019 Wassenaar plenary, Hess said. BIS published the first half of those controls in October, which included new restrictions on six emerging technologies (see 2010020042). BIS is “close” to sharing that rule for interagency review but does not yet have a timeline for publication, Hess said. “I'm not terribly sanguine that it'll be finished this year,” she said. “I would hope early next year.”

Hess said there’s “no particular controversy that would be holding it up.” She pointed to a “little bit of a backlog at the Federal Register” and said the rule is just a “mouthful for every group that has to” review it. “I think it's just a lot,” she said. “When you get into the other layers of review with people that aren't as used to dealing with the Commerce Control List, in my experience, it has been more time-consuming.” The agency is already preparing for delays to its emerging technology process next year, particularly surrounding multilateral controls, because Wassenaar did not hold its 2020 plenary due to the pandemic (see 2011250054)

But BIS does expect to publish its list of companies with ties to the Chinese, Russian and Venezuelan militaries before 2021, Hess said (see 2011230007). The list would complement BIS’s April rule that increased license requirements for exports to military end-users and for end-uses in China, Russia and Venezuela, (see 2004270027). “That one you should see this year,” Hess said, adding that industry should expect the list to continually change. “It's not unusual to see repeated iterations, changes, additions, deletions, modifications,” she said. “It wouldn't surprise me if that were the case with almost any list that we do.”