On August 14, 2023, the Department of Commerce’s Bureau of Industry and Security (“BIS”) and the Nuclear Regulatory Commission (“NRC”) each introduced changes to their respective regulations to require certain civil nuclear hardware, software, and technology to be licensed when supplied to the People’s Republic of China (“PRC”) or Macau. BIS announced that it was imposing licensing requirements for exports, reexports or transfers (in country) of hardware, software, and technology to the PRC or Macau that are controlled for Nuclear Non-Proliferation reasons (“NP”) under column 2 at Section § 742.3(a)(2) of the Export Administration Regulations (“EAR”) (15 C.F.R. § 742.3(a)(2)). As a result of this change to the EAR, all exports, reexports and transfers of items controlled for NP Column 2 reasons to PRC or Macau will now require a license from BIS, including the following Export Control Classification Numbers (“ECCNs”):
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1A290 (Depleted uranium (any uranium containing less than 0.711% of the isotope U–235) in shipments of more than 1,000 kilograms in the form of shielding contained in X-ray units, radiographic exposure or teletherapy devices, radioactive thermoelectric generators, or packaging for the transportation of radioactive materials),
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1C298 (graphite and deuterium that is intended for use other than in a nuclear reactor),
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2A290 (Generators and other equipment “specially designed”, prepared, or intended for use with nuclear plants),
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2A291 (Equipment, except items controlled by 2A290, related to nuclear material handling and processing and to nuclear reactors, and “parts,” “components” and “accessories”),
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2D290 (“Software” “specially designed” or modified for the “development,” “production,” or “use” of items controlled by 2A290 or 2A291),
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2E001 (“Technology” according to the General Technology Note for the “development” of equipment or “software” controlled by 2A (except 2A983, 2A984, 2A991, or 2A994), 2B (except 2B991, 2B993, 2B996, 2B997, 2B998, or 2B999), or 2D (except 2D983, 2D984, 2D991, 2D992, or 2D994)),
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2E002 (“Technology” according to the General Technology Note for the “production” of equipment controlled by 2A (except 2A983, 2A984, 2A991, or 2A994), or 2B (except 2B991, 2B993, 2B996, 2B997, 2B998, or 2B999)), and
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2E290 (“Technology” according to the General Technology Note for the “use” of equipment controlled by 2A290 or 2A291).
Certain ECCNs above, including 2A290 and 2A291, include items that are used in the balance of plant of nuclear power facilities, including civil nuclear turbines, generators, and containers used in the transport of nuclear materials.
The NRC issued an order suspending the general licenses for exports of special nuclear material (10 C.F.R. § 110.21), source material (10 C.F.R. § 110.22), and deuterium for nuclear end uses (10 C.F.R. § 110.24) to the PRC. As a result of this suspension, all persons or entities exporting such articles to China will be required to obtain a prior specific license from NRC pursuant to 10 C.F.R. § 110.31 to authorize such exports. This builds upon previous NRC orders, including one published October 1, 2021 that suspended the general license authority to export radioactive material and deuterium to China General Nuclear and its subsidiaries or related entities.
Both the BIS and NRC explained that the new export control restrictions were introduced to permit both agencies to monitor exports of articles subject to nuclear non-proliferation controls to ensure they are only being used for peaceful purposes (such as commercial nuclear power generation, medical developments, production and use) and not by the PRC’s military. However, these new restrictions are consistent with a broadening effort across the U.S. Government to further restrict (direct and indirect) exports of U.S. hardware, software, and technology to the PRC where there has been strong commercial collaboration, such as the civil nuclear industry.
Next steps
Hogan Lovells is experienced in assisting companies to understand and comply with complex regulations applicable to the civil nuclear industry and to implement effective compliance measures. Please reach out to any of the listed contacts if you have any questions.
Authored by Patrick de Laperouse, Ajay Kuntamukkala, Daniel Stenger, and Rob Matsick.
