“Specially Designed” Clauses for Export Compliance: Catch & Release

In U.S. export controls, the designation “Specially Designed” plays a significant role in classifying items subject to either the Export Administration Regulations (EAR) or the International Traffic in Arms Regulations (ITAR). An item deemed “specially designed” often faces tighter export restrictions due to potential military or sensitive applications. However, the Catch and Release clauses provide a structured approach that helps exporters determine whether an item is controlled under these criteria, and if so, whether it qualifies for a “release” from these controls.

This article outlines how to assess “Specially Designed” items using the sequential Catch and Release analysis in 15 CFR 772.1 and provides a practical example to illustrate the process.

Understanding the Catch and Release Criteria for “Specially Designed” Items

The Catch and Release framework within 15 CFR 772.1 is essential for evaluating whether items are controlled under the EAR. This process has two parts:

1. Catch Criteria: These define if the item is “specially designed” based on certain functional or technical characteristics.

2. Release Criteria: If caught, the item is then evaluated against release conditions to determine if it can be exempted from heightened export controls.

Step 1: The “Catch” Analysis

An item is considered “specially designed” under 772.1(a) if:

• It has unique properties, due to development, that are specifically responsible for meeting performance characteristics in the item’s ECCN or USML paragraph.

• It is a part, component, accessory, attachment, or software specifically used with a commodity or defense article controlled by the CCL or USML.

For example, ECCN 2B352 (equipment for handling biological materials) includes items that have been “specially designed” for biological containment or production. If a bioreactor is uniquely modified to handle specific pathogens, it would be “caught” under this category, as its design and function are particularly suited for restricted uses.

Step 2: The “Release” Analysis

If the item meets the “Catch” criteria, it’s essential to review whether it qualifies for any release conditions under 772.1(b). These provisions are meant to exclude certain items with general, commercial, or dual-use functions from being categorized as “specially designed.”

Release provisions include:

1. Non-Controlled Items (772.1(b)(1)):

   • The item is controlled under an ECCN without “specially designed” parameters or classified as EAR99.

2. General-Use Components (772.1(b)(2)):

   • Parts and components, such as bolts, nuts, or other standard fasteners, which are widely used and commercially available, are exempt from heightened controls.

3. Equivalent Functionality in Production (772.1(b)(3)):

   • If the item has equivalent function and form to another item that is not controlled or controlled only for Anti-Terrorism (AT) reasons, it can be released.

4. General Purpose Development (772.1(b)(5)):

   • Items developed with no specific intent for use with controlled commodities, thus serving a broader range of applications, may be released.

5. Commercial and AT-Only Use (772.1(b)(6)):

   • Items developed for use with EAR99 items or for items only controlled for AT reasons can also qualify for release if they meet specific conditions.

Let’s use a bioreactor classified under ECCN 2B352 as an example to illustrate the Catch and Release process in action.

Example: ECCN 2B352 – “Specially Designed” Bioreactors

A U.S. company plans to export a bioreactor under ECCN 2B352. Initially, the bioreactor was configured for use in handling biological toxins, which would categorize it as “specially designed” for restricted applications. However, the company has since modified the model to make it available for a range of commercial uses, including pharmaceutical production and agricultural research.

Step 1: Determining if the Item is “Caught”

The bioreactor, due to its original design for biological containment, is “caught” by 772.1(a)(1) since it was developed to handle biological materials that align with the functions in ECCN 2B352. Additionally, the bioreactor’s unique specifications for containing hazardous materials contribute to it being identified as “specially designed.”

Step 2: Applying the Release Criteria

Since the bioreactor is “caught,” the company must evaluate if it qualifies for any of the release criteria:

1. Release Criterion (b)(3) - Equivalent Functionality in Production:
   The company verifies that the same bioreactor model is now commonly used in the pharmaceutical industry for non-restricted applications, and it matches the form and function of non-controlled items. Thus, it can be “released” based on its equivalent functionality with other general-use bioreactors.

2. Release Criterion (b)(5) - General Purpose Development:
   If the bioreactor was redeveloped for a broad range of commercial uses without a specific intent to handle restricted substances, it can be exempted from control as it is now widely sold in multiple civilian markets.

3. Release Criterion (b)(6) - Commercial and AT-Only Use:
   The company confirms that the bioreactor is used alongside EAR99 and AT-only controlled items in commercial facilities, and as such, the bioreactor is released from the “Specially Designed” designation.

By applying the release criteria, the company can justify reclassifying the bioreactor as EAR99 or as a generally controlled item under 2B352, thereby exempting it from the more restrictive “Specially Designed” classification. The company should document its findings, noting how the bioreactor meets release criteria (b)(3), (b)(5), and (b)(6), in case of an audit or BIS review.

Compliance Tips for Exporters

1. Detailed Documentation: Document each step of the classification process, particularly the rationale for release. Keeping thorough records supports compliance and aids in navigating audits.

2. Use Supplement No. 4 to Part 774: For additional guidance on the order of review for “Specially Designed,” refer to Supplement No. 4. This resource helps clarify the process and provides examples.

3. Stay Informed on Regulatory Changes: Since EAR and ITAR regulations are updated frequently, export control officers should remain current on changes to the “Specially Designed” criteria and the Catch and Release clauses.

Conclusion

The Catch and Release clauses within the “Specially Designed” definition offer a nuanced approach to export classification, balancing regulatory control with flexibility for items intended for commercial use. By understanding and correctly applying the specific criteria outlined in 15 CFR 772.1, exporters can make informed decisions about classification, streamline compliance, and reduce regulatory burdens.

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Sources Cited

• Code of Federal Regulations. "Title 15 CFR Part 772 - Definitions of Terms Used in the EAR." eCFR.gov

• Bureau of Industry and Security (BIS). "Supplement No. 4 to Part 774 - Specially Designed Definition and Guidance." BIS.gov

• Export Administration Regulations (EAR). "Part 774 - Commerce Control List." eCFR.gov