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What's New Out There? A Regulatory Update ("Promising Improvements" Edition)




by:
Mark L. Jensen
Sheppard, Mullin, Richter & Hampton LLP - Washington Office

 
July 24, 2013

Previously published on July 22, 2013

Each month, we try to review the Federal Register and post an update summarizing some of the more interesting developments. This month, two of the topics - a proposed rule from the Department of Energy relating to onerous export requirements, and a final rule from the Small Business Administration relating to increased risks for contractors - are reported separately. But beyond these updates, there were several other interesting developments published in the Federal Register this month, showing hopeful signs of simplified and improved governance. And we all like improvements.

Export Control Reform

We have written extensively in our Global Trade Law Blog reporting on the administration’s efforts over the last few years to streamline U.S. export control regulations. Thankfully, the process is gaining speed and many changes are underway. That momentum has continued into July 2013 with many items being moved from the U.S. Munitions List (“USML”) of the International Traffic in Arms Regulations to the Commerce Control List of the Export Administration Regulations.

On July 8, 2013, the U.S. Departments of State and Commerce both published final rules announcing the movement of items from USML categories VI (surface vessels and naval equipment), VII (ground vehicles), XIII (materials and miscellaneous articles), and XX (submersible vessels) to the EAR. See 78 Fed. Reg. 40,892 (July 8, 2013) (Commerce); 78 Fed. Reg. 40,922 (July 8, 2013) (State). The changes will be effective on January 6, 2014.

Details related to those changes and how they might affect companies operating in those industries will be covered in an upcoming edition of our Global Trade Law Blog, but a few aspects of the changes are worth noting here. First, this is a welcome step toward decreased regulation. Practically speaking, export restrictions on items that will be moved from the USML will likely be significantly reduced (particularly for items such as “technology”), which should facilitate easier access to non-U.S. markets and overseas exports. Second, the number of categories released in the July 8 rules demonstrates that export control reform is moving forward rapidly. Understanding and acting on reforms before they are finally implemented may help companies to cut costs, streamline procedures, and fully recognize the business advantages that could arise from reforms. We’ll keep you posted of these developments, which we hope will make life easier for exporters and contractors everywhere. Improvement? Yes.

DoD Outreach

On July 8, the Department of Defense issued a request for feedback on the data collection requirements from stakeholders relating to how agencies deliver services. See 78 Fed. Reg. 40,729 (July 8, 2013). The feedback mechanism proposed is qualitative, meaning that the results of the feedback will not be statistically meaningful for the overall population of a study. However, DoD does propose to use the feedback to improve its program management through “ongoing, collaborative and actionable” communications and its interactions with its industry stakeholders. DoD anticipates receiving an impressive 322,570 annual responses to its solicitation. Comments are due by August 7, 2013.

How DoD will use the feedback it gathers through the process remains to be seen, but the existence of the process provides a welcome indication that the agency recognizes the value of dialog with industry in reforming its practices. If the process results in significant improvements in program management at DoD, one would hope that the feedback program could serve as a model for tailoring reform at other government agencies. Improvement? Maybe; we’ll see.

Office of Foreign Assets Control - Zimbabwe General License

On July 9, 2013, the U.S. Department of the Treasury, Office of Foreign Assets Control (“OFAC”), published a new General License Number 1 under the Zimbabwe Sanctions Program, which was originally issued in April 2013. See 78 Fed. Reg. 41,192 (July 9, 2013). The new general license authorizes transactions involving the Agricultural Development Bank of Zimbabwe and the Infrastructure Development Bank of Zimbabwe.

Sanctions in Zimbabwe, including the Zimbabwe Sanctions Regulations at 31 C.F.R. Part 541, target several government officials and entities owned or operated by those officials, including large commercial farms. The General License in Zimbabwe will facilitate operations of entities, including Non-Governmental Organizations, involved in development projects in Zimbabwe by easing financing concerns. Along with recent changes to the Syria sanctions facilitating a broader scope of humanitarian assistance to that country, General License Number 1 for Zimbabwe may be part of a trend for OFAC to ease the delivery of aid and development assistance to sanctioned countries. Improvement? Absolutely.



 

The views expressed in this document are solely the views of the author and not Martindale-Hubbell. This document is intended for informational purposes only and is not legal advice or a substitute for consultation with a licensed legal professional in a particular case or circumstance.
 

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