Valve Companies Urged to Comment by Aug. 30 on Proposed Export License Requirements

Now new export license requirements for valves are close to implementation in an international forum. If they move forward, a change will be implemented in U.S. export control rules. The proposed change could significantly expand export license requirements for multiple international shipments for certain valve manufacturers.

Current State of Play

Currently, bellows seal valves, 304 and 316 stainless valves, and certain large high-pressure valves are listed as controlled products under the U.S. Commerce Control List, which is administered by the U.S. Commerce Department’s Bureau of Industry and Security (BIS). But other valves that fall into the strict definitions of the chemical equipment Export Control Classification Number (ECCN) 2B350.g category have caused the most trouble for industry. That category currently controls valves larger than 1 centimeter, and valve bodies and liners for valves over 1 centimeter, where all of the wetted surfaces (including coatings) are made from:

• g.1. Alloys with more than 25% nickel and 20% chromium by weight;
• g.2. Nickel or alloys with more than 40% nickel by weight (Author comment: When thinking about these first two nickel and alloy metal categories, think about Inconel, certain Hastelloys, and the many other high-nickel content, chemically resistant metal alloys)
• g.3. Fluoropolymers (polymeric or elastomeric materials with more than 35% fluorine by weight) (Author comment: When thinking of fluoropolymers, think Teflon, Kynar, PVDF and the many, many other chemically resistant valve materials that have fluorine content)
• g.4. Glass (including vitrified or enameled coating or glass lining)
• g.5. Tantalum or tantalum alloys
• g.6. Titanium or titanium alloys
• g.7. Zirconium or zirconium alloys
• g.8. Niobium (columbium) or niobium alloys or
• g.9. Ceramic materials, as follows:
  • g.9.a. Silicon carbide with a purity of 80% or more by weight
  • g.9.b. Aluminum oxide (alumina) with a purity of 99.9% or more by weight or
  • g.9.c. Zirconium oxide (zirconia)
  • (Note that a recent rule change instructed companies to ignore certain sealing elements in conducting their classification process under 2B350.)

Proposed Change

The principal international group (including U.S. officials) that establishes which valves need export licenses and which don’t, is seriously contemplating an expansion of the list of valves that would need licenses prior to export to most international destinations. The proposed change would expand the 2B350 valve control to include: 1) valves between 1 to 4 inches, 2) where the closure element is designed to be interchangeable (i.e. not custom made for one valve), and 3) the body or liner of the valve is made from one of the 2B350 controlled materials. (Just the body or liner would be required to meet the material specification for this size range of valves to require an export license, not the entire wetted path.)

Thus, for valves of 1 to 4 inches that could accept a standard closure element for the product line, the focus would only be on the body, liner or coating material as the trigger material for an export license requirement. So, if you are making valve bodies from any of the listed materials, or you are making liners or you are coating your valve body with any of the listed material, your product could come under proposed new controls. Commerce is particularly concerned that standard valves that have fluoropolymer coatings on body interiors would fall under the proposed controls.

Take Action

The new rules are not in place yet. There is still a short window of opportunity in which to get your company’s comments to the Commerce Department regarding the advisability of U.S. policymakers agreeing to this new control language.

If you have comments about the proposed rule change, please contact Eric McClafferty at 202.342.8841 or emcclafferty@kelleydrye.com. McClafferty helps run a joint VMA/Hydraulic Institute international trade task force that is tracking this issue. He is also a member of the Commerce Department’s Technical Advisory Committee that is tracking the development of this proposed rule, which is being considered by the Australia Group (http://www.australiagroup.net). McClafferty can pass your comments along to the Commerce Department or, if you don’t want the company name used, he can work with you to make sure your company’s voice is heard. He can also direct you to points of contact at BIS if you would like to touch base with the agency directly. Comments should be received by BIS before Aug. 30, 2013 to be most effective. Comments that provide empirical evidence that the rule change would lead to a significant increase in export license applications for your company would be of particular interest to the agency.

Eric McClafferty of Kelly Drye LLP leads the export control group at Kelley Drye LLP. Reach him at 202.342.8841 or emcclafferty@kelleydrye.com.