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BUREAU OF INDUSTRY AND SECURITY

During the past two decades, technology transfer from America and its allies has helped accelerate adversaries’ technological and weapons capabilities. This tech- nology transfer on a massive scale has occurred because of adversaries’ exploitation of the U.S.’s open economy and education system through both commercial trans- actions and university and government research programs. Examples include the People’s Republic of China’s dramatic leaps forward in semiconductor design and fabrication, battery energy storage, nuclear weapons capabilities, artificial intel- ligence, space and aerospace engineering, and hypersonic weapons deployment. At the same time, the U.S. has systematically failed to protect critical assets. Rather than promulgate policies to better prevent technology transfer, the U.S. government has either ignored the problem or, worse, from 2008 through 2016 instituted a government-wide “Export Control Reform” process to loosen the Export Administration Regulations (EAR) governing exports of dual-use items to facilitate technology transfer to adversaries, either directly or indirectly through third-country transfers.

Those reforms still present in the Department of Commerce’s EAR must be reversed. The United States needs stronger rules to protect technology transfer to adversaries while promoting technology integration and interoperability with allies. Further, U.S. export control regulations should be utilized to prevent theft of personally identifiable information and to encourage U.S. companies to shift production out of China and further diversify their supply chains to better advance U.S. national security interests.

For all the below recommendations, BIS needs to move unilaterally while it works with allies to implement complementary export control policies. Waiting to act until allies are ready to move in lockstep is not an option while America’s national security is at risk.

Emerging and Foundational Technologies. The Export Control Reform Act of 2018 (ECRA) gave BIS permanent statutory authority to regulate exports of dual-use items (goods, software, and technology). ECRA also mandated that BIS regulate exports of emerging and foundational technologies. Although the scope of such technologies is vast, to date BIS has only controlled just over 40 of these technologies. This does not meet the clear statutory intent of Congress that ECRA be leveraged to ensure that the United States maintains a technological advantage in technologies bearing upon national security interests.

Currently, BIS self-identifies technologies that merit control under the EAR with minimal input from other federal agencies. This mechanism should be improved. BIS should create an open, transparent rulemaking process by which any industry participant, private entity, or branch of the government may, at any time, submit nominations for emerging/foundational technologies for control. Then, on a quarterly basis, BIS should make public such recommendations (while holding the identity of the submitter confidential) for public input, followed by an explanation about its ultimate decision to control or not control the items, its reasons, the level of controls applied (stringent or permissive), and the relevant Export Control Classification Number (ECCN) under the Commerce Control List. Commerce should also institute a mechanism whereby its decisions can be challenged, including on a confidential basis. Licensing Procedures: Adjudication and Transparency. Currently, if the Departments of Defense, State, Commerce, and Energy disagree on an export license decision, the disagreement may be escalated to the Operating Commit- tee—and subsequently to the Advisory Committee on Export Policy led by BIS’s Assistant Secretary for Export Administration. The Assistant Secretary does not need to lead the dispute resolution, and this process should be revised by giving lead authority to BIS’s Under Secretary, who is better able to account for diverging views. Moreover, BIS’s authority to overrule other agency votes should be changed. Each agency should have one equal vote and, if a licensing dispute remains unre- solved, the final decision should be elevated to the National Security Advisor and the Secretaries of Defense, State, Commerce, and Energy.

Additionally, to improve congressional oversight of BIS’s license adjudication process, BIS should provide specific congressional committees with data from the Automated Export System on a quarterly basis. Electronic files should contain U.S. exporter by name; product description (e.g., harmonized system code and ECCN/U. S. Munitions List designation); end user and destination country; and when a license was required, whether the license was granted or denied. BIS cur- rently denies just 1.2 percent of export licenses. These data reporting requirements can help Congress better determine whether BIS is adequately protecting national security through appropriate use of export controls or whether additional direction from Congress is required.

Improve End-Use Checks. The integrity of the export control system may be validated only through adequate end-use checks. BIS must deny export licenses to countries that do not permit adequate end-use checks (e.g., China/Russia) by U.S. authorities. BIS should also strengthen the forensic audit capabilities of its

Export Enforcement officers through improved and frequent training so they are able to detect export-control violations. EAR Revisions. The U.S. Government needs a new export control moderniza- tion effort to tighten the EAR policies governing licenses to countries of concern, including China and Russia (specifically, revise and/or reverse the 2008 through 2016 policies).

When authoritarian governments explain what they plan to do, believe them unless hard evidence demonstrates otherwise. Case in point: China’s and Russia’s stated civil–military fusion policies demand central government command-and-control style systems in which every private entity serves the interests of the state and is forced to provide technology, services, capacity, and data to the central govern- ment and the military. Through this structure, commercial activities are routinely weaponized by authoritarian regimes that repeatedly identify the U.S. as an enemy. Accordingly, U.S. export control policies must be updated to reflect these realities and the associated threats to national security. Key priorities for EAR modernization for countries of concern should be:

Eliminating the “specially designed” licensing loophole; lEliminating license exceptions; lBroadening foreign direct product rules;

Reducing the de minimis threshold from 25 percent to 10 percent—or 0 percent for critical technologies; Tightening the deemed export rules to prevent technology transfer to foreign nationals from countries of concern; Tightening the definition of “fundamental research” to address exploitation of the open U.S. university system by authoritarian governments through funding, students and researchers, and recruitment; Eliminating license exceptions for sharing technology with controlled entities/countries through standards-setting “activities” and bodies; and Improving regulations regarding published information for technology transfers.

Redesignating China and Russia to more highly prohibitive export licensing groups (country groups D or E);

The next few years will prove or disprove the assertion that the U.S. stands on the precipice of a Cold War with China. Many believe that a Cold War has already begun; if so, then strategic decoupling from China is necessary and, fundamentally, any exports of goods, software, and technology to countries of concern, whether directly or indirectly, should be prohibited or controlled in the absence of good cause (e.g., humanitarian and medical aid, food aid).

Entity List and Sanctions. There are currently just over 500 Chinese and over 500 Russian companies on the Department of Commerce’s Entity List, which reg- ulates exports of controlled and uncontrolled items to designated entities. Given China’s Civil–Military Fusion Strategy and Russia’s massive war efforts facili- tated by a broad range of the Russian economy, BIS must add more entities to the Entity List and apply a license review “policy of denial” that prohibits exports to these entities.

Entity List parties that violate export controls should be placed on the BIS Denied Persons List (and thereby lose export privileges) and, if the violations are significant enough, they should also be sanctioned by the Department of Treasury. Data Transfer and Apps Used for Surveillance. Department of Commerce leadership should work across government agencies to address privacy and data concerns arising out of “big tech” from national security and export control per- spectives. In particular, they should draft and implement an executive order (EO) based on the International Emergency Economic Powers Act, which expands export control authority beyond ECRA’s scope (goods, software, technology) to regulate and restrict exports of U.S. persons’ data to countries of concern.

The EO should establish a framework for the types of personal data subject to export controls and licensing policy by country, and the BIS should implement the EO through regulations. BIS should additionally designate app providers (such as WeChat and Byte­Dance/TikTok) known for undermining U.S. national security through data collection, surveillance, and influence operations, to the Entity List. This listing would prevent app users from program updates, which would quickly make these apps non-operational in the United States.

NATIONAL OCEANIC AND ATMOSPHERIC ADMINISTRATION

Break Up NOAA. The single biggest Department of Commerce agency outside of decennial census years is the National Oceanic and Atmospheric Administration, which houses the National Weather Service, National Marine Fisheries Service, and other components. NOAA garners $6.5 billion of the department’s $12 billion annual operational budget and accounts for more than half of the department’s personnel in non-decadal Census years (2021 figures). NOAA consists of six main offices:

The National Weather Service (NWS); — 674 —Department of Commerce lThe National Ocean Service (NOS); lThe Oceanic and Atmospheric Research (OAR); lThe National Environmental Satellite, Data and Information Service (NESDIS); lThe National Marine Fisheries Service (NMFS); and lThe Office of Marine and Aviation Operations and NOAA Corps.

Together, these form a colossal operation that has become one of the main drivers of the climate change alarm industry and, as such, is harmful to future U.S. prosperity. This industry’s mission emphasis on prediction and management seems designed around the fatal conceit of planning for the unplannable. That is not to say NOAA is useless, but its current organization corrupts its useful func- tions. It should be broken up and downsized.

NOAA today boasts that it is a provider of environmental information services, a provider of environmental stewardship services, and a leader in applied scientific research. Each of these functions could be provided commercially, likely at lower cost and higher quality.

Focus the NWS on Commercial Operations. Each day, Americans rely on weather forecasts and warnings provided by local radio stations and colleges that are produced not by the NWS, but by private companies such as AccuWeather. Studies have found that the forecasts and warnings provided by the private com- panies are more reliable than those provided by the NWS.2 The NWS provides data the private companies use and should focus on its data-gathering services. Because private companies rely on these data, the NWS should fully commercialize its forecasting operations.

NOAA does not currently utilize commercial partnerships as some other agencies do. Commercialization of weather technologies should be prioritized to ensure that taxpayer dollars are invested in the most cost-efficient technol- ogies for high quality research and weather data. Investing in different sizes of commercial partners will increase competition while ensuring that the govern- ment solutions provided by each contract is personalized to the needs of NOAA’s weather programs.

The NWS should be a candidate to become a Performance-Based Organization to better enforce organizational focus on core functions such as efficient delivery of accurate, timely, and unbiased data to the public and to the private sector.3 Review the Work of the National Hurricane Center and the National Environmental Satellite Service. The National Hurricane Center and National Environmental Satellite Service data centers provide important public safety and

business functions as well as academic functions, and are used by forecasting agen- cies and scientists internationally. Data continuity is an important issue in climate science. Data collected by the department should be presented neutrally, without adjustments intended to support any one side in the climate debate. Transfer NOS Survey Functions to the U.S. Coast Guard and the U.S. Geo- logical Survey. Survey operations have historically accounted for almost half the NOS budget. These functions could be transferred to the U.S. Coast Guard and U.S. Geological Survey to increase efficiency. NOS’ expansion of the National Marine Sanctuaries System should also be reviewed, as discussed below. Streamline NMFS. Overlap exists between the National Marine Fisheries Service and the U.S. Fish and Wildlife Service. Overly simplified, the NMFS handles saltwater species while the Fish and Wildlife Service focuses on fresh water. The goals of these two agencies should be streamlined.

Harmonize the Magnuson–Stevens Act with the National Marine Sanctuaries Act. Under the auspices of NOS, marine sanctuaries (including no-fishing zones) are being established country-wide, often conflicting with the goals of the Magnu- son–Stevens Act fisheries management authorities of NOAA Fisheries, regional fishery management councils, and relevant states.

Withdraw the 30x30 Executive Order and Associated America the Beautiful Ini- tiative. The 30x30 Executive Order and the American the Beautiful Initiative are being used to advance an agenda to close vast areas of the ocean to commercial activities, including fishing, while rapidly advancing offshore wind energy devel- opment to the detriment of fisheries and other existing ocean-based industries. Modify Regulations Implementing the Marine Mammal Protection Act and the Endangered Species Act. These acts are currently being abused at a cost to fisheries and Native American subsistence activities around the U.S. Allow a NEPA Exemption for Fisheries Actions. All the requirements for robust analysis of the biological, economic, and social impacts of proposed regulatory action in fisheries are contained with the Magnuson–Stevens Act, the guiding Act for fisheries. NEPA overlays these requirements with onerous, redundant, and time-consuming process requirements, which routinely cause unnecessary delays in the promulgation of timely fisheries management actions. The Department of Commerce and the Council on Environmental Quality should collaborate to reduce this redundancy.

Downsize the Office of Oceanic and Atmospheric Research. OAR provides theoretical science, as opposed to the applied science of the National Hurricane Center. OAR is, however, the source of much of NOAA’s climate alarmism. The preponderance of its climate-change research should be disbanded. OAR is a large network of research laboratories, an undersea research center, and several joint research institutes with universities. These operations should be reviewed with an aim of consolidation and reduction of bloat.

Break Up the Office of Marine and Aviation Operations and Reassign Its Assets to Other Agencies During This Process. The Office of Marine and Aviation Operations, which provides the ships and planes used by NOAA agencies, should be broken up and its assets reassigned to the General Services Administra- tion or to other agencies.

Use Small Innovation Prizes and Competitions to Encourage High-Qual- ity Research. Lowering the barriers of entry for startups and small businesses will also provide greater innovation without excessive increases in spending. Reaching beyond traditional partnerships for innovative engagement tools that encourage entrepreneurial innovation will allow NOAA’s research programs to adapt more quickly to the world’s changing needs. Multiple competitions should take place in cities to attract a variety of innovators and investors to propel innovation forward in a way that benefits the needs of NOAA.

Ensure Appointees Agree with Administration Aims. Scientific agencies like NOAA are vulnerable to obstructionism of an Administration’s aims if political appointees are not wholly in sync with Administration policy. Particular attention must be paid to appointments in this area.

Elevate the Office of Space Commerce. The Office of Space Commerce is the executive branch advocate on behalf of the U.S. commercial space industry. This office should be the vehicle for a new Administration to set a robust and unified whole-of-government commercial space policy that cements U.S. lead- ership in one of the most crucial industries of the future. The Office’s current mission has been lost owing to its position within NESDIS, which sees no role for itself in advancing the industry and the space economy, including ensuring global competitiveness. OSC is, by law, the Department of Commerce’s lead on space policy and must therefore link directly to all the bureaus and other orga- nizations within the department. The Office needs to be returned to OS, within which it existed for the first two decades of its existence. From OS, the Office could serve as a coordinating entity for the whole-of-government commercial space policy desperately needed to secure America’s place as the global leader in commercial space operations.

There presently exists no unified U.S. government policy on commercial space operations, with the Federal Communications Commission largely responsible for establishing space policy by default through its regulation of radio spectrum licenses. Now that routine space operations are commercially viable, it is critical that a new Administration establish reasonable government policies that ensure the U.S. will continue to be the flag of choice for commercial space activities. The President should, by executive order, direct the Office of Space Commerce, working with the National Space Council, to establish a whole-of-government policy for licensing and oversight of commercial space operations.