2252 Federal Register / Vol. 86, No. 7 / Tuesday, January 12, 2021 / Rules and Regulations 

DEPARTMENT OF COMMERCE 

Bureau of Industry and Security 

15 CFR Part 742 

[Docket No. 201214–0341] 

RIN 0694–AI13 

Change to the License Review Policy 

for Unmanned Aerial Systems (UAS) 

To Reflect Revised United States UAS 

Export Policy 

AGENCY: Bureau of Industry and 

Security, Commerce. 

ACTION: Final rule. 

SUMMARY: Consistent with President 

Donald J. Trump’s July 24, 2020 

announcement of a change in U.S. 

policy regarding the export of 

Unmanned Aerial Systems (UAS), the 

Bureau of Industry and Security (BIS) is 

amending the Export Administration 

Regulations (EAR) licensing review 

policy with respect to certain UAS that 

are controlled for Missile Technology 

(MT) reasons. UAS that have a range 

and payload capability equal to or 

greater than 300 kilometers (km)/500 

kilograms (kg) are identified on the 

Missile Technology Control Regime 

(MTCR) Annex as Category I items. 

Pursuant to this amendment, BIS will 

review export and reexport license 

applications involving UAS that fall 

within these parameters and a 

maximum true airspeed of less than 800 

km/hour (hr) for export licensing review 

purposes on a case-by-case basis under 

the more flexible review policy 

generally applied to MTCR Category II 

items under the EAR. BIS will also 

review MT items for the design, 

development, production, or use in such 

UAS on a case-by-case basis. This policy 

change reflects a reasonable approach to 

technological change and the protection 

of the national security and economic 

interests of the United States, while 

simultaneously remaining committed to 

the MTCR and its core nonproliferation 

objectives. 

DATES: This rule is effective January 12, 

2021. 

FOR FURTHER INFORMATION CONTACT: 

Sharon Bragonje, Nuclear and Missile 

Technology Controls Division, Bureau 

of Industry and Security, Phone: (202) 

482–0434; Email: sharon.bragonje@

bis.doc.gov. 

SUPPLEMENTARY INFORMATION: 

Background 

The Missile Technology Control 

Regime (MTCR or Regime) is an export 

control arrangement among 35 nations, 

including most of the world’s suppliers 

of advanced missiles and missile-related 

equipment, materials, software and 

technology. The Regime establishes a 

common list of controlled items and a 

common export control policy that 

member countries implement in 

accordance with their national export 

controls. The MTCR seeks to limit the 

risk of proliferation of weapons of mass 

destruction (WMD) by controlling 

exports of goods and technologies that 

could make a contribution to delivery 

systems (other than manned aircraft) for 

such weapons. The United States 

became a member at the Regime’s 

founding in 1987. 

In 1993, the MTCR’s original focus on 

missiles for nuclear weapons delivery 

was expanded to include the 

proliferation of missiles for the delivery 

of all types of WMD, i.e., nuclear, 

chemical, and biological weapons. Such 

proliferation has been identified as a 

threat to international peace and 

security. One way to address this threat 

is to maintain vigilance over the transfer 

of missile equipment, material, and 

related technologies usable for systems 

capable of delivering WMD. MTCR 

members voluntarily pledge to adopt the 

Regime’s Guidelines for Sensitive 

Missile-Relevant Transfers (MTCR 

Guidelines) and to restrict the transfer of 

items contained in the Regime’s 

Equipment, Software, and Technology 

Annex. The Annex consists of Category 

I and Category II items, with Category I 

including items of greatest sensitivity. 

Category I items include rocket systems 

and unmanned aerial vehicle systems 

with a range capability of 300 km and 

greater and a payload capability of 500 

kg and greater, and production facilities 

and major sub-systems for such items. 

Category II items include rocket systems 

and unmanned aerial vehicle systems 

with a range of 300 km or greater but 

below a payload capability of 500 kg. 

Category II also includes a wide range 

of equipment, material, and 

technologies, most of which have uses 

other than for systems capable of 

delivering WMD. 

Pursuant to the MTCR Guidelines, 

transfers (including exports and 

reexports) of Category I items are subject 

to a ‘‘strong presumption of denial.’’ See 

MTCR Guidelines, Paragraph 2. 

Transfers of Category II Items are subject 

to a more flexible case-by-case review 

policy. 

The MTCR Guidelines are 

implemented through the national 

export control laws, regulations and 

policies of Regime members. The United 

States has implemented in § 742.5 of the 

EAR missile technology controls and 

policies that are consistent with the 

MTCR Guidelines, including by 

imposing licensing requirements that 

apply to MTCR Category I and Category 

II items. As a Regime member, the 

United States exercises sovereign 

national discretion in making 

implementing decisions. 

Background on the Revised U.S. UAS 

Policy 

The U.S. Government remains 

committed to the goals of the MTCR, 

including the objective of limiting the 

proliferation of unmanned delivery 

systems for WMD. At the same time, the 

U.S. Government is cognizant of rapid 

advances in the uses of Unmanned 

Aerial Systems (UAS), including 

growing commercial uses for UAS that 

meet the MTCR Category I control 

criteria, as well as the need to protect 

U.S. national security and economic 

security interests. An inflexible 

approach to implementing the MTCR’s 

strong presumption of denial that 

applies to Category I items creates a 

competitive disadvantage for the United 

States and other MTCR partners by 

restraining industry globally from fully 

participating in the expanding 

commercial UAS market, which 

increasingly includes suppliers outside 

of the MTCR. Additionally, the U.S. 

Government recognizes the need to 

enhance security relationships with 

countries that wish to collaborate on 

counter-terrorism, border control, and 

other mutual security interests. 

Accordingly, the U.S. Government has 

recognized the need to update its 

treatment of UAS that meet the 300 km/ 

500 kg threshold as MTCR Category I 

items for the implementation of the 

MTCR’s strong presumption of denial 

and export licensing review purposes to 

ensure U.S. economic, national security, 

and foreign policy interests are 

appropriately addressed. 

The United States has been working 

with its MTCR partners on this issue 

since 2017, in the interest of updating 

UAS controls to address the ongoing 

revolution in both UAS technology and 

its applications. At the MTCR October 

2019 Plenary in Auckland, New Zealand 

the United States put forward a revised 

proposal to increase flexibility for 

export control purposes on a certain 

subset of MTCR Category I UAS, based 

primarily on a speed value, and thus not 

subject their transfer to the Regime’s 

strong presumption of denial. However, 

the MTCR partners have not achieved 

consensus on this proposal. 

Unilateral Modification to U.S. 

Licensing Policy for UAS 

To address the national security and 

economic security concerns described 

above, on July 24, 2020, President 


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Federal Register / Vol. 86, No. 7 / Tuesday, January 12, 2021 / Rules and Regulations 2253 

Trump announced a change in the 

policy of the United States regarding 

exports of UAS (July 24, 2020 Revised 

UAS Export Policy). In this final rule, 

consistent with this revised policy, the 

U.S. Government is amending the 

licensing policy of the United States to 

allow greater flexibility in the export or 

reexport of certain MTCR Category I 

UAS subject to the Export 

Administration Regulations (EAR). 

Pursuant to this revision, the United 

States will invoke its national discretion 

on the implementation of the MTCR’s 

strong presumption of denial to treat a 

subset of MTCR Category I UAS, i.e., 

those that have a range and payload 

capability equal to or greater than 300 

km/500 kg but a maximum true airspeed 

of less than 800 km/hr, as Category II 

UAS for export licensing review 

purposes, which are generally subject to 

a more flexible case-by-case review. BIS 

is accordingly amending § 742.5 

(Missile Technology) of the EAR to 

review license applications involving 

such UAS, as well as MT items for the 

design, development, production, or use 

in such systems, under a case-by-case 

review policy. 

While the updated policy of the 

United States refers to the term UAS, 

the MTCR and the EAR use the term 

‘‘Unmanned Aerial Vehicle (UAV)’’. The 

change in licensing policy set forth in 

revised § 742.5 of the EAR consequently 

uses the term UAV. 

In making this licensing review policy 

change, the U.S. Government is 

exercising its national discretion as a 

member of the MTCR. This change will 

strengthen U.S. national security by 

improving the capabilities of U.S. 

partners and will increase U.S. 

economic security by opening the 

expanding UAS market to U.S. industry. 

The U.S. Government is implementing 

the July 24, 2020 Revised UAS Policy as 

a responsible and reasonable approach 

to technological change, establishing a 

systematic framework for 

implementation of the MTCR’s strong 

presumption of denial for export 

licensing review purposes as applied to 

a particular subset of MTCR Category I 

UAS. This subset of UAS is widely used 

in intelligence, surveillance, and 

reconnaissance (ISR) missions and 

various commercial and other 

applications not involving WMD 

delivery, so a case-by-case license 

review policy is warranted. 

The United States takes seriously both 

its nonproliferation commitments and 

its responsibility to ensure that exports 

and reexports and subsequent use of all 

U.S.-origin UAS are conducted 

responsibly, with appropriate end users 

and for appropriate end uses. To this 

end, UAS that fall within this subset of 

Category I UAS will continue to be 

subject to a strong presumption of 

denial if they are intended for use as 

WMD delivery systems, or if they 

present a risk of diversion to such an 

end use. 

This approach will maintain 

particular restraint on exports and 

reexports of those UAS that present 

higher risk for WMD delivery—such as 

cruise missiles, hypersonic aerial 

vehicles, and advanced unmanned 

combat aerial vehicles—without unduly 

impeding exports for growing 

commercial and conventional military 

applications. Finally, the United States 

notes that while all MTCR-related 

concerns are considered when 

reviewing a potential export or reexport 

of all UAS, the decision to approve—or 

not approve—such an export or reexport 

is a whole-of-government decision that 

takes into account all relevant factors 

and policies, including U.S. national 

security, nonproliferation, and foreign 

policy objectives, as well as the 

recipient country’s capability and 

willingness to effectively and 

responsibly use and safeguard U.S.- 

origin items, including technology, in 

accordance with U.S. laws and policies. 

Amendments to the Export 

Administration Regulations (EAR) 

This final rule revises the EAR’s 

missile technology controls to reflect the 

July 24, 2020 Revised UAS Export 

Policy. Specifically, in § 742.5 of the 

EAR (Missile technology), this final rule 

revises paragraph (b)(1) to add a new 

licensing review policy for UAVs with 

a specified range, payload, and 

maximum true airspeed by adding a 

new Note to paragraph (b)(1). The new 

Note to paragraph (b)(1) added by this 

final rule specifies that UAV systems 

that have a range and payload capability 

equal to or greater than 300 km/500 kg, 

but a maximum true airspeed of less 

than 800 km/hr, and MT items for use 

in UAV systems that meet these 

parameters, will not be subject to a 

policy of denial. Instead, such UAV 

systems will be reviewed on a case-bycase basis to determine whether the 

export or reexport will be used in 

support of WMD activities or military 

activities contrary to U.S. national 

security, or whether there is a risk of 

diversion to such activities. In addition, 

the same, more flexible, review policy 

will apply under the new note to MTcontrolled ‘‘parts’’ and ‘‘components’’ 

and other MT items for the design, 

‘‘development,’’ ‘‘production,’’ or ‘‘use’’ 

(see § 772.1 of the EAR (15 CFR part 

772—Definitions of Terms)) of UAV 

systems that meet these parameters, 

including foreign-made UAV systems 

that do so (whether or not the foreignmade systems are or will be subject to 

the EAR). 

BIS estimates that this licensing 

review policy change will result in an 

increase of twenty license applications 

submitted annually to BIS. This increase 

is anticipated because certain exporters 

that previously may have been deterred 

from applying for a license as a result 

of the more restrictive license review 

policy in place prior to this rule may 

now be motivated to apply for licenses 

under the new case-by-case license 

review policy. In addition, in making 

this estimate, BIS took into account the 

fact that the current number of 

commercial U.S. UAVs with the 

capability described in this final rule is 

rather small. Consequently, under the 

new, more flexible license review 

policy, the anticipated increase in the 

number of license applications will be 

minimal. 

This final rule also makes a 

conforming technical change by revising 

the second sentence in paragraph (b)(1) 

of § 742.5 to add double quotation 

marks around the term parts (‘‘part’’ is 

a defined term in the EAR) and to add 

after it the term ‘‘components’’ 

(‘‘component’’ is also a defined term in 

the EAR). These technical edits clarify 

that the review standard applies to 

replacement ‘‘parts’’ and ‘‘components’’ 

for use in the specified applications (i.e., 

manned aircraft, satellite, land vehicle, 

or marine vessel). 

Export Control Reform Act of 2018 

On August 13, 2018, the President 

signed into law the John S. McCain 

National Defense Authorization Act for 

Fiscal Year 2019, which included the 

Export Control Reform Act of 2018 

(ECRA) (50 U.S.C. 4801–4852). ECRA 

provides the legal basis for BIS’s 

principal authorities and serves as the 

authority under which BIS issues this 

rule. 

Executive Order Requirements 

Executive Orders 13563 and 12866 

direct agencies to assess all costs and 

benefits of available regulatory 

alternatives and, if regulation is 

necessary, to select regulatory 

approaches that maximize net benefits 

(including potential economic, 

environmental, public health and safety 

effects, distribute impacts, and equity). 

Executive Order 13563 emphasizes the 

importance of quantifying both costs 

and benefits, of reducing costs, of 

harmonizing rules, and of promoting 

flexibility. This final rule has been 

designated a ‘‘significant regulatory 

action’’ under Executive Order 12866. 


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2254 Federal Register / Vol. 86, No. 7 / Tuesday, January 12, 2021 / Rules and Regulations 

Commerce estimates that this rule will 

result in a minimal increase to the 

number of license requests submitted to 

BIS annually. 

This rule does not contain policies 

with federalism implications as that 

term is defined under E.O. 13132. 

For the purposes of E.O. 13771, 

‘‘Reducing Regulation and Controlling 

Regulatory Costs,’’ this rule is issued 

with respect to a national security 

function of the United States. The costbenefit analysis indicates that the rule is 

intended to improve national security as 

its primary direct benefit. The U.S. 

Government is acting to protect U.S. 

national security interests, which are 

directly related to U.S. economic 

security interests. An inflexible 

approach to implementing the MTCR’s 

strong presumption of denial for the 

subset of UAS specified in this rule 

presents a competitive disadvantage for 

the United States, and other MTCR 

partners, by restraining industry from 

fully participating in the expanding 

commercial UAS market. Additionally, 

the U.S. Government needs to meet the 

growing demand for key tools, and 

capabilities and the development and 

enhancement of security relationships 

from countries that want to work with 

the U.S. on counter-terrorism, border 

control, and other mutual security 

interests. The revised U.S. national 

policy announced on July 24, 2020, is 

consistent with U.S. national security 

interests, as the United States will 

continue to maintain specific controls 

on transfers of UAS that present higher 

risks of use in or support for WMD 

delivery—such as cruise missiles, 

hypersonic aerial vehicles, and 

advanced unmanned combat aerial 

vehicles—while not unduly impeding 

exports for growing commercial and 

conventional military applications. 

Accordingly, this rule meets the 

requirements set forth in the April 5, 

2017 OMB guidance implementing E.O. 

13771 and is exempt from the 

requirements of E.O. 13771. 

Paperwork Reduction Act 

Requirements 

Notwithstanding any other provision 

of law, no person is required to respond 

to, nor shall any person be subject to a 

penalty for failure to comply with, a 

collection of information subject to the 

requirements of the Paperwork 

Reduction Act of 1995 (44 U.S.C. 3501 

et seq.) (PRA), unless that collection of 

information displays a currently valid 

Office of Management and Budget 

(OMB) Control Number. 

This rule involves the following OMB 

approved collections of information 

subject to the PRA: 0694–0088, ‘‘MultiPurpose Application’’, which carries a 

burden hour estimate of 29.6 minutes 

for a manual or electronic submission; 

0694–0096 ‘‘Five Year Records 

Retention Period’’, which carries a 

burden hour estimate of less than 1 

minute; and 0607–0152 ‘‘Automated 

Export System (AES) Program’’, which 

carries a burden hour estimate of 3 

minutes per electronic submission. This 

rule changes the respondent burden by 

increasing the estimated number of 

submissions by 20. Specific license 

application submission estimates are 

further discussed in the preamble of this 

rule where the regulatory revision is 

explained. The additional burden falls 

within the estimated burden approved 

by OMB for the information collections 

0694–0088, 0694–0096, and 0607–0152. 

Any comments regarding these 

collections of information, including 

suggestions for reducing the burden, 

may be submitted online at https://

www.reginfo.gov/public/do/PRAMain. 

Find the particular information 

collection by using the search function 

and entering either the title of the 

collection or the OMB Control Number. 

Administrative Procedure Act and 

Regulatory Flexibility Act 

Requirements 

Pursuant to Section 4821 of ECRA, 

this action is exempt from the 

Administrative Procedure Act (5 U.S.C. 

553) requirements for notice of 

proposed rulemaking, opportunity for 

public participation, and delay in 

effective date. 

Further, no other law requires that a 

notice of proposed rulemaking and an 

opportunity for public comment be 

given for this final rule. Because a 

notice of proposed rulemaking and an 

opportunity for public comment are not 

required to be given for this rule under 

the Administrative Procedure Act or by 

any other law, the analytical 

requirements of the Regulatory 

Flexibility Act (5 U.S.C. 601 et seq.) are 

not applicable. Accordingly, no 

regulatory flexibility analysis is 

required, and none has been prepared. 

List of Subjects in 15 CFR Part 742 

Exports, Terrorism. 

Accordingly, part 742 of the Export 

Administration Regulations (15 CFR 

parts 730–774) is amended as follows: 

PART 742—[AMENDED] 

■ 1. The authority citation for part 742 

is revised to read as follows: 

Authority: 50 U.S.C. 4801–4852; 50 U.S.C. 

4601 et seq.; 50 U.S.C. 1701 et seq.; 22 U.S.C. 

3201 et seq.; 42 U.S.C. 2139a; 22 U.S.C. 7201 

et seq.; 22 U.S.C. 7210; Sec. 1503, Pub. L. 

108–11, 117 Stat. 559; E.O. 12058, 43 FR 

20947, 3 CFR, 1978 Comp., p. 179; E.O. 

12851, 58 FR 33181, 3 CFR, 1993 Comp., p. 

608; E.O. 12938, 59 FR 59099, 3 CFR, 1994 

Comp., p. 950; E.O. 13026, 61 FR 58767, 3 

CFR, 1996 Comp., p. 228; E.O. 13222, 66 FR 

44025, 3 CFR, 2001 Comp., p. 783; 

Presidential Determination 2003–23, 68 FR 

26459, 3 CFR, 2004 Comp., p. 320; Notice of 

November 12, 2020, 85 FR 72897 (November 

13, 2020). 

■ 2. Section 742.5 is amended by 

revising paragraph (b)(1) to read as 

follows: 

§ 742.5 Missile technology. 

* * * * * 

(b) * * * 

(1) Applications to export and 

reexport items identified in ECCNs on 

the CCL as MT Column No. 1 in the 

Country Chart column of the ‘‘License 

Requirements’’ section will be 

considered on a case-by-case basis to 

determine whether the export or 

reexport would make a material 

contribution to the proliferation of 

missiles. Applications for exports and 

reexports of such items contained in 

Category 7A or described by ECCN 

9A101 on the CCL will be considered 

favorably if such exports or reexports 

are destined to a manned aircraft, 

satellite, land vehicle, or marine vessel, 

in quantities appropriate for 

replacement ‘‘parts’’ and ‘‘components’’ 

for such applications. When an export 

or reexport is deemed to make a 

material contribution to the 

proliferation of missiles, the license will 

be denied. 

Note 1 to paragraph (b)(1): Applications to 

export and reexport an Unmanned Aerial 

Vehicle (UAV) that has a range and payload 

capability equal to or greater than 300 km/ 

500 kg but a maximum true airspeed of less 

than 800 km/hr, and items controlled for 

Missile Technology reasons for the design, 

development, production, or use of UAV 

systems that meet these parameters, will not 

be subject to a policy of denial but will 

instead be reviewed on a case-by-case basis 

to determine whether the export or reexport 

will be used in support of WMD activities or 

military activities contrary to U.S. national 

security, or whether there is a risk of 

diversion to support such activities. 

* * * * * 

Matthew S. Borman, 

Deputy Assistant Secretary for Export 

Administration. 

[FR Doc. 2020–27983 Filed 1–11–21; 8:45 am] 

BILLING CODE 3510–33–P 


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