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BIS Issues Interim Final Rule Establishing a Framework for Artificial Intelligence Diffusion

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On January 13, 2025, the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) issued an Interim Final Rule (IFR), establishing new export controls targeting advanced artificial intelligence (AI) chips and model weights for advanced AI models to protect against national security risks associated with AI while promoting American AI technological leadership. This framework is a tailored strategic initiative designed to regulate the spread of advanced AI models and prevent their access by malicious actors. It enables “secure and responsible foreign entities and destinations” to utilize leading U.S. AI models and the powerful IC clusters needed for their training. Entities that do not comply with established safety and security protocols will not be granted access.

The IFR institutes three primary updates:

(1) a global license requirement for advanced AI chips classified under Export Control Classification Numbers (ECCNs) 3A090.a, 4A090.a, and related .z items;

(2) license exceptions for low-risk destinations and transactions that comply with strict safeguards; and

(3) a tiered framework for all other destinations, including country-specific allocations and expanded Data Center Validated End User (VEU) authorization to streamline secure access to advanced technologies.

Global License Requirement on Advanced Computing Integrated Circuits
The IFR imposes a universal license requirement for the export of advanced ICs classified under ECCNs 3A090.a, 4A090.a, and associated .z items listed in the new §742.6(a)(6)(iii)(A) of the Export Administration Regulations (EAR).

The IFR introduces new license exceptions (i.e., Artificial Intelligence Authorization (AIA), Advanced Compute Manufacturing (ACM), and Low Processing Performance (LPP)) specifically to facilitate trade with low-risk countries identified in Supplement No. 5 to §740 as the “Artificial Intelligence Authorization Countries” (Group 1 countries). These countries are considered low-risk due to their robust export control measures, technological ecosystems, and alignment with U.S. policies on the responsible use of advanced AI. Two of the new license exceptions are also available to additional countries provided certain criteria are met, as outlined below.

The updated U.S. export control framework on advanced AI chips and model weights for advanced AI models is illustrated below. As outlined in the below chart, model weights for advanced AI models are subject to stricter controls than Advanced AI chips:

chart

(click to view chart)

Tiered Framework for Other Destinations
For Group 2 countries, which encompass all countries worldwide not explicitly listed in Group 1 or Group 3, the IFR establishes a tiered framework for export controls.

  1. Simplified License Exception for Limited Quantities

As illustrated in the above chart, transactions involving small quantities of advanced ICs, limited to a maximum of 26,900,000 TPP annually per ultimate consignee, may qualify for the LPP license exception under §740.29. This exception is designed to facilitate low-risk transactions involving compute power insufficient for training frontier AI models. Exports under the LPP exception require prior notification to BIS and adherence to strict compliance measures. These provisions ensure that such transactions support non-sensitive applications and do not contribute to the development of cutting-edge AI capabilities.

  1. Licenses for Larger Quantities under Country Allocations

For transactions involving larger quantities of advanced ICs, exporters must obtain licenses, which are governed by country-specific allocations. These allocations, effective from 2025 to 2027, set limits on the export volume permitted to individual countries. By capping access, this measure aims to mitigate diversion risks while still enabling the development of advanced AI models that do not approach frontier levels.

  1. Data Center Validated End User Program (VEU) Program

To encourage responsible trade, the IFR expanded its Data Center Validated End User (VEU) program, bifurcating it into two authorizations:

    1. Universal VEUs (UVEU): available to U.S. and certain allied and partner country entities; and
    2. National VEUs (NVEU): available to entities headquartered outside arms embargoed countries.
  1. Default Allocations for Non-VEU End Users

For entities that do not meet the eligibility criteria for the VEU program, the IFR imposes uniform default country allocations of advanced ICs. These allocations restrict access to advanced technologies while encouraging compliance and future eligibility for the VEU program. All exports to non-VEU end users count against these allocations, further limiting the potential for misuse.

New Controls on AI Model Weights
The IFR also establishes a global licensing requirement for exports, reexports, and in-country transfers of any closed-weight AI model (i.e., a model with weights that are not published) for advanced AI models trained on 10²⁶ or more computational operations. These model weights for advanced AI models are classified under ECCN 4E091 and controlled for regional stability (RS). License applications for items controlled under this RS control will be reviewed under a presumption of denial for all destinations other than those listed in paragraph (a) of Supplement No. 5 to part 740, as established in new § 742.6(b)(14) of the EAR. License applications for destinations listed in paragraph (a) of Supplement No. 5 to part 740 will be reviewed under a presumption of approval. Specifically, new ECCN 4E091 covers “parameters” for advanced AI models having been trained with 10²⁶ or more “operations.”

  • “Parameters” is defined as any value learned during training (e.g., network weights, biases, etc.).
  • “Operations” is defined as any subsequent training, such as fine-tuning the pre-trained model, but does not include the collection and curation of the input training data.

The only license exception available for new ECCN 4E091 is newly-created License Exception AIA in § 740.27. License Exception AIA is available for eligible exports that meet specific criteria, such as ensuring the ultimate consignee is headquartered in a Group 1 country. However, if the AIA license exception cannot be utilized due to ineligible end-use or end-user conditions, a license application must be submitted. Such applications will be reviewed under a presumption of approval.

FDPR regarding AI Model Weights
The IFR establishes a new Foreign Direct Product Rule (FDPR) under § 734.9(l) for AI model weights classified under ECCN 4E091. This rule extends EAR jurisdiction to foreign-produced model weights that are developed using, or incorporate, U.S. technology or equipment (e.g., servers, chips, etc.) classified under specific ECCNs (e.g., 3A090, 4A090), regardless of whether the model weights are further trained abroad, such as through fine-tuning or quantization. The FDPR aims to mitigate risks of misuse, as access to model weights could enable malicious actors to advance military end uses, develop weapons of mass destruction, conduct cyberattacks, or perpetrate human rights abuses. License requirements for this FDPR align with those for ECCN 4E091 and depend on end-use and end-user criteria outlined in Part 744 of the EAR.

IFR Updates to Advanced Computing FDPR and License Exceptions License Notified Advanced Computing (NAC) and Advanced Computing Authorized (ACA)
The IFR also revises the scope of existing restrictions on advanced computing items. Specifically, the IFR updates the existing advanced computing FDPR under § 734.9(h)(2)(i) by expanding its destination scope to “worldwide.” Previously, the rule was limited to specific country groups (D:1, D:4, and D:5) and excluded certain groups (A:5 and A:6). Now, foreign-produced items are subject to the rule if there is “knowledge” that they are destined for any location worldwide or will be incorporated into non-EAR99 items, such as “parts,” “components,” “computers,” or “equipment,” regardless of destination. This change broadens the application of controls on advanced computing items to enhance their global regulatory reach.

The IFR revises License Exceptions Notified Advanced Computing (NAC) and Advanced Computing Authorized (ACA) for items classified under ECCNs 3A090 (except 3A090.c), 4A090, and corresponding .z items. License Exception NAC now authorizes the export and reexport of these items to Macau, Country Group D:5, and entities headquartered in or with ultimate parents headquartered in these locations, provided they meet all applicable criteria and restrictions. License Exception ACA, on the other hand, permits exports, reexports, and in-country transfers of these items to or within any destination worldwide, excluding Macau, destinations in Country Group D:5, and entities headquartered in or with ultimate parents headquartered in those locations. Items designed or marketed for use in data centers and meeting the parameters of ECCN 3A090.a remain excluded from both exceptions.

Impact
The January 13 IFR represents a significant update, introducing stricter requirements for advanced AI technologies while providing targeted exceptions to support trade with low-risk countries. Importantly, exporters, reexporters, and transferors are not required to comply with the changes made in this rule until May 15, 2025, and certain paragraphs (i.e., paragraphs 14-15, and 18 of supplement no. 10 to part 748) have a delayed compliance date of January 15, 2026.