On January 13, 2025, the Department of Commerce’s Bureau of Industry and Security (“BIS”) released its export control titled “Framework for Artificial Intelligence Diffusion.”  This new interim final rule creates a two-pronged framework within the Export Administration Regulations (“EAR”) to impede U.S. adversaries from developing advanced AI models.  Specifically, the new rule introduces (i) new export controls on certain closed-weight AI model exports and (ii) a series of rules designed to restrict the international diffusion of large “clusters” of semiconductors necessary to train AI models.  The interim final rule became effective on January 13, 2025, with a public comment period through May 15, 2025.

       I.            New Export Controls on AI Model Weights

A.                Classification Under ECCN 4E091

ECCN 4E091 is a new export classification that will control the model weights of the most advanced AI models. These model weights are the numerical parameters within an AI model that help determine the model’s outputs in response to inputs. Model weights are produced by training the AI model on vast quantities of data and require significant computing power to develop. Other aspects of the AI code, such as the architecture or ancillary code, are not necessarily covered by this new classification.

Model weights will only be covered if they are related to the most advanced AI models. An AI model is considered sufficiently advanced if it was trained on 10²⁶ computer “operations." Any subsequent training, such as generative AI fine tuning, is included in the calculation of “operations.” 

This classification includes several key de-control criteria: 

• ECCN 4E091 does not control the model weights of any AI model that has been “published” as defined in 734.7(a) of the EAR. This means that many open-source, open-weight models will be excluded from the scope of these new controls, depending on the terms of their license.
• ECCN 4E091 does not control the model weights of a closed-weight model that was developed using an AI model with “published” weights, so long as the additional training constitutes no more than 10²⁵ “operations” or no more than 10% of the training “operations,” whichever is higher.
• ECCN 4E091 also excludes closed-weight models that are less powerful than the most powerful models with “published” weights. Whether a model is more or less powerful is determined by the number of “operations” needed to train the model.

BIS acknowledges that it does not believe there are currently any AI models that meet these control parameters but expects that the most advanced AI models may soon reach this threshold. 

B.                 AI Model Weights Foreign Direct Product Rule

U.S. export control jurisdiction applies to everything “subject to the EAR,” which includes (1) U.S. origin items, (2) items exported from the United States, (3) foreign-made items that contain more than a de minimis amount of U.S. content, (4) and certain foreign-made items that are the “direct product” of U.S. technology or production equipment (the “Foreign Direct Product Rule” or “FDPR”). A new FDPR for AI model weights has been introduced to expand U.S. export control jurisdiction.  In short, any foreign-produced AI model weights that are trained, including fine-tuned and quantized, or otherwise modified using certain integrated circuits, computers, servers, and other equipment subject to the EAR are also subject to the EAR. This FDPR covers exports of ECCN 4E091 items destined for any location in the world.

C.                Licensing Policy

Exports of model weights classified under ECCN 4E091 will require licenses for all destinations worldwide. License applications will be reviewed under a presumption of denial for all destinations other than those specified in paragraph (a) of supplement no. 5 to part 740 (“”), unless the end user, or its ultimate parent, is headquartered in a in a Country Group D:5 location (“Arms Embargoed Country”) or Macau.¹

Deemed exports will not require a license for “permanent regular employees”² of companies headquartered in or with an ultimate parent headquartered in an Artificial Intelligence Authorization Country.

D.                New License Exception

License exceptions allow exporters to export to certain destinations without a license, provided that they meet the conditions of the license exception. The only license exception available for ECCN 4E091 is the newly created Artificial Intelligence Authorization (“AIA”). This license exception authorizes the export of ECCN 4E091 to entities located in an "Artificial Intelligence Authorization Country" (provided that the entity’s headquartered or ultimate parent’s headquarters is also in an Artificial Intelligence Authorization Country). 

It also authorizes the export of ECCN 4E091 to entities not located in an Artificial Intelligence Authorization Country but whose headquarters or whose ultimate parent’s headquarters are located in an Artificial Intelligence Authorization Country. Such exports are subject to additional conditions, including that the entity cannot be located in an Arms Embargoed Country or Macau, and the items will be stored in a facility that complies with certain restrictions. In order to use License Exception AIA, the exporter must comply with certain certification and reporting requirements.

    II.            New Rules Targeting Semiconductor “Clusters”

A.                Worldwide Licensing Scheme for Certain Semiconductors and Computers and Related Exceptions

BIS created a new export licensing requirement for the semiconductors and computers necessary to train AI models.  These semiconductors and computers are controlled for reasons of “Regional Stability.” BIS revised the “Regional Stability” control to impose a worldwide licensing requirement for certain key categories of semiconductors (ECCN 3A090.a, 4A090.a, and corresponding .z items). Additional categories of semiconductors (ECCN 3A090.b, 4A090.b, and corresponding .z items) are controlled if destined for Arms Embargoed Countries and certain other categories of highly restricted destinations. License requests for exports to Artificial Intelligence Authorization Countries will be subject to a presumption of approval; license requests for exports to Arms Embargoed Countries will be subject to a presumption of denial.

The new rules also introduce three license exceptions designed to facilitate the export of semiconductors and computers without a license.  The availability of these license exceptions depends on whether BIS considers a location low risk (i.e., in an Artificial Intelligence Authorization Country), high risk (i.e., an Arms Embargoed Country and certain other categories of highly restricted destinations), or medium risk (i.e., neither  in an Artificial Intelligence Authorization Country nor on the Arms Embargoed Country List). 

• Exports to end users in low-risk locations will qualify for License Exception AIA. License Exception AIA will allow exporters to export certain semiconductors and computers as well as related software and technology to end users in Artificial Intelligence Authorization Country, provided the exporter complies with new certification and reporting requirements. However, the license is not available if the end user is headquartered in a country outside of an Artificial Intelligence Authorization Country. Nor is the license available if the semiconductors and computers will be used to provide Infrastructure as a Service (IaaS) access sufficient to train an AI model classified under ECCN 4E091 to an entity headquartered in an Arms Embargoed Country or Macau.
• Exports to end users in low-risk or medium-risk locations may rely on one of two new license exceptions:
  • License Exception Advanced Compute Manufacturing (ACM) authorizes the export of certain semiconductors and computers to “private end users” that are not located in an Arms Embargoed Country or Macau. The ultimate end-use of the semiconductors or computers must be for the production, development, or storage of certain eligible items. Items produced using these semiconductors and computers must ultimately be destined for customers outside of an Arms Embargoed Country or Macau. Parties that rely on License ACM must adopt certain accounting procedures to account for the flow of controlled items through its facility.
  • License Exception Low Processing Performance (LPP) authorizes the export of low amounts of compute that do not exceed 26,900,000 cumulative total processing performance (TPP) of advanced circuits to a single ultimate consignee. The export must be directly to the ultimate consignee; it is not available for exports made through distributors. The exporter and ultimate consignee must comply with certain certification and reporting requirements to rely on License Exception LPP.
• Exports to end users in high-risk locations (e., an Arms Embargoed Country or Macau) may not rely on any of the new license exceptions.

Additionally, these license exceptions are generally not available to end users headquartered in, or whose ultimate parent is headquartered in, an Arms Embargoed Country or Macau, regardless of where the end user is located.

B.                 Data Center Validated End-Users (DC VEUs)

BIS’s VEU program allows entities that have passed a rigorous interagency review and agree to ongoing compliance obligations to receive certain items without a license. The new rule bifurcates the DC VEU program into a "universal" VEU (UVEU) and a national VEU (NVEU). The UVEU and NVEU programs allow certified end-users to receive a certain amount of computing power calculated on a per-company, per-country basis without a license. This new rule effectively operates an export quota system, which gives BIS the ability to cap the amount of computing power a country is able to receive. 

The UVEU program is available to entities headquartered in an Artificial Intelligence Authorization Country and provides a single authorization that allows qualifying end users to build data centers around the world (except Arms Embargoed Counties and Macau). Most companies not headquartered in an Arms Embargo Country or Macau may apply for the NVEU program, which is granted on a location-by-location basis.

 III.            New Red Flag for IaaS Providers

BIS has introduced new “Know Your Customer” guidance intended to target IaaS providers who may host companies training AI models. The newly created “red flag” states that there is a significant risk that companies not headquartered in, or whose ultimate parent is not headquartered in, an Artificial Intelligence Authorization Country and training ECCN 4E091 model weights will export these model weights to a destination that requires a license. If such exports involve the IaaS provider’s services or equipment, they “will have aided and abetted in a violation of the EAR.”  The red flag guidance further advises IaaS providers to inquire if the customer intends to export the model and, if so, inform the customer of their obligation to apply for a license.  This new red flag indicates that BIS believes that IaaS providers may be held liable for violating 764.2(b) of the EAR, which is a strict liability offense.³ Compliance with this new red flag will likely require more rigorous compliance commitments by IaaS providers.