10.11.16

FOLLOWING MAJOR PUSH, SCHUMER SUCCESSFULLY PUSHES FEDS TO FIX RULE THAT DID NOT ALLOW PHOTONICS COMPANIES TO SELL HIGH-TECH PRODUCTS FOR NON-MILITARY USES OVERSEAS; SENATOR PREVIOUSLY URGED FEDS TO IMPLEMENT RULE BEFORE PHOTONICS & OPTICS PRODUCTS WERE PUT ON OVERLY RESTRICTIVE EXPORT CONTROL LIST

In 2015 Fed’s Proposed Initial Rule Would Have Put Optics & Photonics Products On An Overly Restrictive Export Control List, Preventing Companies From Selling, Non-Military High-Tech Products In Foreign Markets

Then, Schumer Successfully Urged Feds To Go Back & Revise Rule To Ensure Photonics Industry Would Not Be Disadvantaged By Overly Restrictive Regulations, But 4 Key Agencies Had Not Yet Finalized Revised Rule – Schumer Urged Feds Not To Fumble On The 1-Yard Line

Schumer: NY’s Burgeoning Photonics & Optics Industry Will No Longer Be Inhibited From Selling Non-Military High-Tech Products Overseas

U.S. Senator Charles E. Schumer today announced that, following his push, four federal agencies have finalized a newly rewritten rule. The re-worked rule – to be implemented this year – is critical to ensuring the optics and photonics industries can sell their non-military products overseas and continue to expand and support more good paying jobs in New York. The revised rule, that Schumer first pushed to create in 2015 and most recently pushed to make effective this year, was published in the U.S. Federal Register today and will take effect by the end of the year. 

“Without this ruling, companies that are fueling our burgeoning photonics and optics industries in Rochester – like the new AIM Photonics hub – would have been severely restricted, and expanding and creating jobs by tapping into worldwide markets would have been greatly constricted, too. Simply put, these overly restrictive controls on the export of non-military optics and photonics products would have been very harmful for Rochester – which is why I went to bat for our local companies,” said Schumer. “With these rules now finalized, we can help better ensure these thriving industries are not forced to move production overseas or cut jobs just as they gain steam.”

In August 2015, the Department of Commerce and Department of State proposed an initial federal rule that would have continued restrictive limits on optics and photonics exports and effectively prevented the American photonics and optics industry’s from selling certain non-security sensitive components in foreign markets. Schumer said the proposed rule threatened to undermine the ability of Rochester’s photonics and optic industries to compete globally. Moreover, the restrictive proposed rule came just after Schumer successfully aided Rochester’s efforts to become the new American Institute for Manufacturing (AIM) Photonics hub in July 2015. In response, first Schumer went to bat for Rochester optics and photonics companies and successfully pushed federal agencies to rewrite the proposed export rule. The agencies agreed to rewrite the rule and in the spring of 2016 put forward a revised draft rule that gained the seal of approval from the optics and phonics industries.  Schumer then pushed to finalize the revised rule because if it did not take effect by the end of 2016, U.S. optics and photonics industries in New York risked being left with current regulation that inhibit their ability to sell non-military sensitive products abroad.  Specifically in July 2016 Schumer urged the Commerce Department and State Department – along with the Department of Defense and the Office of Management and Budget – to all finalize this revised rule before time ran out within the current Administration. Today, Schumer celebrated the finalizing of this rule, and said it will no longer inhibit Upstate NY’s burgeoning photonics and optics industry from selling high-tech products overseas. 

The Rochester Regional Photonics Cluster (RRPC) and its member companies like Optimax first brought their concerns to Schumer last summer. Schumer said, given the fact that Rochester photonics companies are poised to compete globally, grow and create jobs, the rule needed to be finalized before it was too late. The optics and photonics industries produce cutting-edge military and commercial technology, employing over 125,000 people at over 900 companies nationwide, including over 15,000 workers across 100 companies based in the greater Rochester area. Schumer said these companies needed to be assured that the current restrictive and antiquated export regulations will be revamped this year so that they can compete globally in their rapidly advancing field. Any further delays by federal agencies, Schumer argued, could jeopardize the implementation of this rule before the end of the current Administration, which would hinder years of work to craft these new balanced regulations and could further harm these industries.

Schumer explained that the previously proposed rule, had it been implemented, would have left the optics and photonics labs in Rochester unable to export certain products around the world. Specifically, the rule aimed to place certain products on an export control list that would have put strict limits on the type of products that could be exported. Schumer said this rule was misguided as optics and photonics technology can be used for commercial, non-military purposes, including in life-saving healthcare products. Implementing the initial draft rule would have put this industry as a significant competitive disadvantage and force optics and photonics production overseas. Moreover, unless the revised rule was published in the Federal Register and implemented this year, U.S. optics and photonics industries in New York risked being left with current regulation that inhibit their ability to sell non-military sensitive products abroad. 

Schumer said that the previous proposed rule would have subjected companies like those in Rochester, which produce lasers and infrared components in devices for commercial, non-military use, to unfair regulations that could greatly inhibit their international competitiveness and business opportunities. Schumer said many of the components produced by the optics and photonics industry, which may have initially been used in military technology, are used in products such as laser components in healthcare devices. Under the proposed rule, companies in the Rochester- Finger Lakes region, like Optimax Systems, Inc. – which is a manufacturer of precision optics located in Wayne County New York – could have been negatively impacted. Optimax employs more than 250 people and produces photonics components for defense, semiconductor, medical and aerospace markets, which includes producing the camera lenses for the Mars Rovers and the Pluto probe called New Horizons.

Therefore, in July 2015, Schumer asked these federal agencies to carefully rewrite the proposed rule in a way that more precisely delineates which parts and components fall under the U.S. Munitions List (USML) and which could fall under the less restrictive Commerce Control List (CCL). In September 2015, following Schumer’s push, these federal agencies agreed to go back to the drawing board and revise this rule so as to not threaten the optics and photonics industry, which has experienced significant growth in Rochester. Schumer said this would protect sensitive technology and national security interests, while ensuring optics and photonics products can be exported around the world.

“Senator Schumer’s leadership during the Category XII Export Control Reform process helped ensure that U.S. optics and photonics companies and small businesses – as well as AIM Photonics – remain competitive in the $400 billion global market,” said Elizabeth Rogan, CEO of The Optical Society. “The new rule offers necessary flexibility for the photonics community by reducing export restrictions on optics components and systems compared to equivalent foreign products while also protecting the U.S. national security advantage.”

Tom Battley, Executive Director of the Rochester Regional Photonics Cluster said, “We appreciate Senator Schumer’s support for our photonics and optics industry to ensure this new revised regulation was approved in time so that our Rochester optics, photonics, and imaging companies are not inadvertently blocked from exporting non-military products to their customers overseas.”  

“These final rules are a positive step forward for the U.S export control system. While more work will always be needed as technology constantly evolves and grows, the finalized changes are an improvement for the optics and photonics industry, U.S. research universities, and the extraordinary global talent in the field,” saidSPIE CEO Eugene Arthurs.

 Schumer has long fought to bring the photonics industry the resources it needs, particularly in Upstate NY. Beginning more than three years ago, Schumer lead the federal push that culminated in the Department of Defense (DoD) selecting the Rochester, NY headquartered AIM Photonics proposal as the winner of the DoD’s largest Institute of Manufacturing Innovation (IMI).   This win was the culmination of a multi-year effort by Schumer beginning in February 2013 when, he joined local experts in Rochester’s optics technology and high-tech manufacturing industry at the Eastman Business Park to launch the first-ever plan to create a national network of manufacturing hubs, with the aim of bringing one to Upstate New York. Schumer said that many areas in Upstate New York, including Rochester – with its Rochester Regional Photonics Cluster, Rochester Institute of Technology, and University of Rochester, in combination with SUNY Polytechnic's expertise in nanoscale electronics, the packaging of chips, and photonics – would be a perfect fit to secure funding to establish this new photonics IMI. In October 2014 Schumer announced the Administration had picked Photonics as topic of this latest IMI competition and he pledged to push for a NYS-led applicant. 

In January 2014, Schumer announced that, following their push, the DOD had selected the joint New York application as one of the finalists. In April 2015, Schumer urged the DOD in a personal meeting with DOD Secretary Ash Carter to select the New York-led application. Furthermore, on July 22, 2015 Schumer announced that following this push, the DOD selected the New York- Rochester AIM Photonics proposal as the winner of the $110M Federal Institute, making the AIM Photonics institute in Rochester a reality. The program is being led by the Department of Defense and institutions in New York State, which are currently working to create a nationwide ecosystem of private sector, government and academic partners that can leverage existing U.S. based expertise and industrial assets to launch leapfrog advancements in new cutting edge technologies, like integrated photonics. The center will focus on developing various integrated photonics products, some of which were at risk of being unable to access foreign markets if the proposed rule was implemented.

A copy of Schumer’s July 2016 letter to the Commerce Department, State Department, Department of Defense and the Office of Management and Budget appears below:

Dear Secretary Pritzker, Secretary Kerry, Secretary Carter and Director Donovan:

I write to support the expeditious completion of the proposed rules to update U.S. Munitions List (USML) Category XII and the Commerce Control List (CCL) regulations. The optics and photonics industries in my state have informed me that current regulations are undermining their ability to compete globally. The proposed final rules governing the export of optics and photonics technologies would enable these industries to export their commercial components for years to come, as well as grow and hire more employees.  It is critically important that these rules be finalized as soon as possible.

The U.S. optics and photonics industries in New York are concerned that if the USML Category XII and the bookend CCL rules fail to be finalized, they would be left with current regulations that inhibit their ability to sell their products abroad. The optics and photonics industries produce cutting-edge military and commercial technology employing over 125,000 people at over 900 companies nationwide, including over 15,000 workers across 100 companies based in the greater Rochester, New York, area. These industries are concerned that the continuance of the current restrictive and antiquated export regulations could have the unfortunate effect of driving U.S. production abroad.

I commend the State Department and Commerce Department for their work on the proposed USML Category XII and CCL rules, which were recently submitted to the Office of Management and Budget (OMB) for inter-agency review. These rules are the culmination of many years of collaboration between industry, academia and the agencies governing the export control system. They are carefully devised to protect our sensitive military technology and prevent unfair barriers for exporting commercial components in rapidly advancing industries. The implementation of these rules would be a vital step in assuring that the optics and photonics industries can sell their commercial components in markets worldwide and continue to grow and support more good paying jobs in New York and around the country.  Any further delays could jeopardize the implementation of these rule before the end of the current Administration, which would hinder years of work to craft these new balanced regulations and could further harm these industries.

Again, I urge your agencies to expeditiously finalize the proposed Category XII rules. We must ensure that U.S. industries are not unduly harmed by static regulations. Thank you for your time and attention on this important issue.

Sincerely,

Charles E. Schumer

United States Senator

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