[Federal Register Volume 69, Number 214 (Friday, November 5, 2004)]
[Rules and Regulations]
[Pages 64483-64490]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-24679]


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DEPARTMENT OF COMMERCE

Bureau of Industry and Security

15 CFR Parts 740, 748, and 774

[Docket No. 041020285-4285-01]
RIN 0694-AD18


Computer Technology and Software Eligible for Export Under 
License Exception; and Establishment of ``Foreign National Review'' 
Requirement and Procedure

AGENCY: Bureau of Industry and Security, Commerce.

ACTION: Final rule.

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SUMMARY: This final rule expands the availability of license exceptions 
for certain deemed exports of computer technology and source code under 
the Export Administration Regulations (EAR), partially implementing the 
expansion set forth in a proposed rule published on October 24, 2003. 
In addition, this final rule clarifies certain provisions of License 
Exception CTP. This rule also establishes a new ``Foreign National 
Review (FNR)'' requirement for deemed exports of technology or source 
code under License Exception CTP.

DATES: This rule is effective on November 5, 2004.

FOR FURTHER INFORMATION CONTACT: Sharron Cook, Senior Export Policy 
Analyst, Office of Exporter Services, Regulatory Policy Division, 
Bureau of Industry and Security, Telephone: (202) 482-2440.

SUPPLEMENTARY INFORMATION:

Background

    On June 4, 2002, BIS published a notice of inquiry (67 FR 39675), 
requesting information from industry to assist BIS in evaluating the 
license exception eligibility level of 33,000 MTOPS for exports and 
reexports of computer technology and software controlled under ECCNs 
4D001 and 4E001. BIS received four comments in response to the notice 
of inquiry, all stating that the license exception threshold should be 
adjusted.
    On October 24, 2003, BIS published a proposed rule with request for 
comments from industry (68 FR 60891) to expand the availability of 
License Exception CTP for exports and reexports of computer technology 
and software on the Commerce Control List (CCL) of the Export 
Administration Regulations (EAR) under Export Classification Control 
Numbers (ECCNs) 4D001 and 4E001. These ECCNs control technology and 
software that can be used for the development, production, or use of 
computers. The proposed rule also requested comments to assist BIS in 
evaluating microprocessor technology controlled under ECCN 3E002. BIS 
received eleven comments in response to the proposed rule and the 
questions posed in the preamble. BIS has decided to address computer 
technology and software and microprocessor technology in two different 
final rules. This final rule implements the license exception expansion 
for computer technology and software. The corresponding rule on license 
exception eligibility for microprocessor technology is published 
elsewhere in this issue of the Federal Register.

Current Controls on Computer Technology and Software

    Export controls for computer technology and software are controlled 
multilaterally through the Wassenaar Arrangement. The current Wassenaar 
Arrangement (WA) control thresholds for computer technology and 
software are: 28,000 MTOPS for the Basic List (BL), 75,000 MTOPS for 
the Sensitive List (SL); and 150,000 MTOPS for the Very Sensitive List 
(VSL). (Note: the computer hardware level within WA (under the BL) and 
in the United States is currently at 190,000 MTOPS. Computer hardware 
is not controlled on WA's SL and VSL.).
    The EAR control the export and reexport of technology and software 
for the development, production, or use of

[[Page 64484]]

computers with a CTP greater than 28,000 Millions of Theoretical 
Operations per Second (MTOPS) under Export Control Classification 
Numbers (ECCNs) 4D001 and 4E001 of the Commerce Control List (CCL). 
Such technology and software requires a license, for national security 
(NS) reasons, to all destinations except Canada. Heretofore, ECCNs 
4D001 and 4E001 have provided that License Exception TSR (section 740.6 
of the EAR) is available for exports and reexports of such technology 
and software: (1) For computers of unlimited CTP to 22 countries; and 
(2) for computers with a CTP less than or equal to 33,000 MTOPS to 
countries listed in Country Group B (Supplement No. 1 to part 740). 
License Exception TSR availability for computer software and technology 
differs from License Exception CTP availability for computer hardware 
in two ways: (1) The countries eligible; and (2) the MTOPS level.

Deemed Export Revision

    While the original Federal Register notice proposed the eligibility 
of exports and reexports of computer technology and software equal to 
or less than 150,000 MTOPS to Computer Tier 1 countries under License 
Exception CTP, this final rule raises the level to 190,000 MTOPS, but 
expands License Exception availability for deemed exports of computer 
technology and source code only.
    Computer technology and software is listed by the Wassenaar 
Arrangement on both the Sensitive List (75,000 MTOPS) and the Very 
Sensitive List (150,000 MTOPS). Accordingly, adjustments in control 
limits for actual exports and reexports of computer technology and 
software should be implemented based on agreement with the United 
States' Wassenaar partners. Therefore, the United States may discuss 
raising the level of controls for actual exports and reexports of 
computer technology and software within the Wassenaar Arrangement. 
After a decision is made on the level of controls for exports and 
reexports of computer technology and software in the Wassenaar 
Arrangement, the EAR will be amended accordingly.
    Generally, Wassenaar countries do not have in-country transfer 
controls (deemed export controls), with the exception of classified 
material. A deemed export is any release of technology or source code 
subject to the EAR to a foreign national within the United States. Such 
release is deemed to be an export to the home country or countries of 
the foreign national. The deemed export rule does not apply to persons 
lawfully admitted for permanent residence in the United States and does 
not apply to persons who are protected individuals under the 
Immigration and Naturalization Act (8 U.S.C. 1324b(a)(3)). Deemed 
export license applications for foreign nationals with dual citizenship 
should be based on the most recently obtained country citizenship. 
Applications for foreign nationals with temporary or permanent 
residence status of a third country (i.e., non-U.S. and a temporary or 
permanent residence status other than a foreign national's country of 
origin) should be based on the foreign national's country of 
citizenship.
    Because the United States is one of the only WA country members to 
implement deemed export controls, U.S. industry has been required to 
obtain license authorization for these deemed exports when other WA 
member countries have not imposed such controls on their industries. 
Expanding the availability of a License Exception for deemed exports of 
computer technology and source code provides relief from licensing 
burdens for U.S. industry and levels the playing field in global 
competition. BIS has found that the expansion of license exception 
availability under the technology parameters set forth below will not 
have an adverse impact on the U.S. national security.

Expansion of License Exception CTP for Certain Computer Technology and 
Software Controlled Under ECCNs 4D001 and 4E001

    This final rule provides that the 22 countries previously eligible 
to receive technology and software for computers with unlimited CTP 
under License Exception TSR continue to be eligible for export and 
reexport of unlimited CTP level of technology and software, but this 
eligibility is now pursuant to License Exception CTP. All of these 22 
countries are in ``Computer Tier 1'' for purposes of License Exception 
CTP.
    This final rule provides that countries in Country Group B 
previously eligible to receive technology and software for computers 
and electronic assemblies classified under ECCN 4A003.b and ECCN 
4A003.c, respectively, with a CTP less than or equal to 33,000 MTOPS 
under License Exception TSR continue to be eligible for export and 
reexport under License Exception TSR. In addition, technology and 
software for other equipment, i.e., not controlled under ECCN 4A003.b 
and ECCN 4A003.c, controlled under ECCNs 4E001 and 4D001 will also 
continue to be eligible for export and reexport under License Exception 
TSR.
    However, this final rule amends License Exception TSR eligibility 
paragraphs under ECCNs 4D001 and 4E001 for certain controlled computer 
technology and software, so that technology and software with a CTP 
greater than 33,000 MTOPS to the 22 countries previously listed in the 
TSR paragraph is no longer eligible for export and reexport under TSR. 
In addition, this rule adds License Exception CTP to the License 
Exception section of ECCNs 4D001 and 4E001. License Exception CTP 
formerly applied to only computer hardware classified under ECCN 4A003.
    Also, this final rule provides that for Computer Tier 1 
destinations other than these 22 countries, technology and source code 
for computers with a CTP equal to or less than 190,000 MTOPS are 
eligible for deemed exports under License Exception CTP. Actual exports 
and reexports of computer technology and software will continue to be 
controlled for export and reexport under ECCNs 4D001 and 4E001 when the 
CTP exceeds 28,000 MTOPS, and eligible for License Exception TSR when 
the CTP is equal to or less than 33,000 MTOPS to Computer Tier 1 
countries that are also Country Group B countries.
    Lastly, this final rule provides that technology and source code 
for computers with a CTP equal to or less than 75,000 MTOPS are 
eligible for deemed exports under License Exception CTP to foreign 
nationals of ``Computer Tier 3'' destinations. Certain deemed exports 
to Computer Tier 3 foreign nationals are subject to a Foreign National 
Review requirement.
    Exports and reexports to countries in Country Group E:1 (terrorist 
supporting countries) continue to be ineligible for License Exception 
CTP. The following chart shows the new eligibility thresholds under 
License Exception CTP.

[[Page 64485]]



  Computer Technology and Software Eligibility Thresholds Under License
                              Exception CTP
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Unlimited CTP (deemed exports and actual    22 ``Tier 1'' destinations:
 exports/reexports).                         Australia, Austria,
                                             Belgium, Canada, Denmark,
                                             Finland, France, Germany,
                                             Greece, Ireland, Italy,
                                             Japan, Luxembourg,
                                             Netherlands, New Zealand,
                                             Norway, Portugal, Spain,
                                             Sweden, Switzerland,
                                             Turkey, or the United
                                             Kingdom.
190,000 MTOPS (deemed exports only).......  All other ``Tier 1''
                                             destinations: Antigua and
                                             Barbuda, Argentina, Aruba,
                                             Bahamas (The), Bangladesh,
                                             Barbados, Belize, Benin,
                                             Bhutan, Bolivia, Botswana,
                                             Brazil, Brunei, Burkina
                                             Faso, Burma, Burundi,
                                             Cameroon, Cape Verde,
                                             Central African Republic,
                                             Chad, Chile, Colombia,
                                             Congo (DemocraticRepublic
                                             of the), Congo (Republic of
                                             the), Costa Rica, Cote
                                             d'Ivoire, Cyprus, Czech
                                             Republic, Dominica,
                                             Dominican Republic, East
                                             Timor, Ecuador, El
                                             Salvador, Equatorial
                                             Guinea, Eritrea, Estonia,
                                             Ethiopia, Fiji, Gabon,
                                             Gambia (The), Ghana,
                                             Grenada, Guatemala, Guinea,
                                             Guinea-Bissau, Guyana,
                                             Haiti, Honduras, Hong Kong,
                                             Hungary, Iceland,
                                             Indonesia, Jamaica, Kenya,
                                             Kiribati, Korea (Republic
                                             of), Latvia, Lesotho,
                                             Liberia, Liechtenstein,
                                             Lithuania, Madagascar,
                                             Malawi, Malaysia, Maldives,
                                             Mali, Malta, Marshall
                                             Islands, Mauritius, Mexico,
                                             Micronesia (Federated
                                             States of), Monaco,
                                             Mozambique, Namibia, Nauru,
                                             Nepal, Netherlands
                                             Antilles, Nicaragua, Niger,
                                             Nigeria, Palau,Panama,
                                             Papua New Guinea, Paraguay,
                                             Peru, Philippines, Poland,
                                             Romania, Rwanda, St. Kitts
                                             & Nevis, St. Lucia, St.
                                             Vincent and the Grenadines,
                                             Sao Tome & Principe, Samoa,
                                             San Marino, Senegal,
                                             Seychelles, Sierra Leone,
                                             Singapore, Slovakia,
                                             Slovenia, Solomon Islands,
                                             Somalia, South Africa, Sri
                                             Lanka, Surinam, Swaziland,
                                             Taiwan, Tanzania, Togo,
                                             Tonga, Thailand, Trinidad
                                             and Tobago, Tuvalu, Uganda,
                                             Uruguay, Vatican City,
                                             Venezuela, Western Sahara,
                                             Zambia, and Zimbabwe.
75,000 MTOPS (deemed exports only)........  All ``Tier 3'' destinations:
                                             Afghanistan, Albania,
                                             Algeria, Andorra, Angola,
                                             Armenia, Azerbaijan,
                                             Bahrain, Belarus, Bosnia &
                                             Herzegovina, Bulgaria,
                                             Cambodia, China (People's
                                             Republic of), Comoros,
                                             Croatia, Djibouti, Egypt,
                                             Georgia, India, Iraq,
                                             Israel, Jordan, Kazakhstan,
                                             Kuwait, Kyrgyzstan, Laos,
                                             Lebanon, Macau, Macedonia
                                             (The Former Yugoslav
                                             Republic of), Mauritania,
                                             Moldova, Mongolia, Morocco,
                                             Oman, Pakistan, Qatar,
                                             Russia, Serbia and
                                             Montenegro, Saudi Arabia,
                                             Tajikistan, Tunisia,
                                             Turkmenistan, Ukraine,
                                             United Arab Emirates,
                                             Uzbekistan, Vanuatu,
                                             Vietnam, and Yemen.
Not eligible..............................  Cuba, Iran, Libya, North
                                             Korea, Sudan, and Syria.
------------------------------------------------------------------------

Foreign National Review Requirement for Deemed Exports

    This final rule imposes a foreign national review requirement for 
deemed exports of specified computer technology and source code under 
License Exception CTP and section 748.8(s) and (t), and Supplement No. 
2 to part 748 of the EAR. Prior to disclosing eligible technology or 
source code to a foreign national under License Exception CTP, an 
exporter must submit a Foreign National Review (FNR) request to BIS. 
The FNR requirement only applies to foreign nationals from a country in 
Computer Tier 3 that is not also a country listed in Country Group B of 
Supplement No. 1 to part 740. The exporter must confirm eligibility 
from the System for Tracking Export License Applications (STELA) or the 
Simplified Network Application Procedure (SNAP) prior to using License 
Exception CTP. FNR requests must be submitted using Form BIS-748P 
(Multipurpose Application), or its electronic equivalent, and must 
include information about the foreign national who is to receive the 
computer technology and source code. The information required for the 
FNR request is set forth in paragraphs (s) and (t) of Supplement No 2 
to part 748 of the EAR. BIS will electronically refer the FNR request 
for interagency review within nine business days or, if necessary, 
return the FNR request without action to the applicant, e.g., if more 
information is necessary. Upon receipt of the BIS referral, the 
agencies have 30 days in which to return a recommendation to BIS. 
License exception CTP may not be used until the exporter has received 
official notification from BIS.

Use of License Exception CTP

    Exporters who have current licenses for deemed exports of computer 
technology or source code to Computer Tier 3 destination foreign 
nationals that become eligible for License Exception CTP are no longer 
bound by conditions on their licenses, as provided under section 750.7 
of the EAR. Termination of license conditions does not relieve an 
exporter of its responsibility for violations that occurred prior to 
the availability of the License Exception.
    Although most licenses for computer technology and source code have 
been issued to companies who employ Computer Tier 3 destination foreign 
nationals in their U.S. facilities and who hold work visas issued by 
the U.S. Government, the availability of License Exception CTP for 
deemed exports is not confined to employer releases of technology to 
employees. It is also available for deemed exports of technology and 
source code to Computer Tier 3 destination foreign national visitors 
and customers, under the procedures set forth in License Exception CTP.

Unique Application and Submission Requirements

    This rule revises the heading of Sec.  748.8 and the title of 
Supplement No. 2 to part 748, which currently addresses only unique 
license application requirements, to include other submission 
requirements as well. This rule also adds paragraphs (s) and (t) to 
Supplement No. 2 to part 748. Paragraph (s) sets forth the requirements 
for a Foreign National Review Request under License Exception CTP, 
using the BIS-748P ``Multipurpose Application'' form. Paragraph (t) 
lists the information that an applicant must submit about the foreign 
national to whom the technology or source code will be disclosed, 
either as part of a license application or under the Foreign National 
Review Request.

Additional Amendments

    This final rule adds paragraph (r), ``Encryption Review Requests,'' 
which was inadvertently omitted from a previous amendment to Sec.  
748.8 of the EAR. This final rule also removes a reference to ECCN 
4A003.d in 740.7(b)(1), because ECCN 4A003.d (graphic accelerators) 
were removed from ECCN 4A003. (They continue to be controlled for anti-
terrorism reasons only under ECCN 4A994.g). Also, this rule 
restructures paragraph 740.7(a) ``Scope'' to clarify that computers 
that are controlled under ECCN 4A003.e (equipment performing analog-to-
digital conversion exceeding the limits in ECCN 3A001.a.5.a), and 
computers controlled for MT reasons are not eligible for License 
Exception CTP. In addition, this rule moves a restriction concerning 
proliferation end-users from paragraph 740.7(d)(3) to paragraph 
740.7(b)(5), because this restriction pertains to all exports and 
reexports

[[Page 64486]]

under License Exception CTP, regardless of destination. Also, it 
clarifies within this restriction and within 740.7(b)(3) that 
``retransfer'' is an in-country transfer.
    Although the Export Administration Act expired on August 20, 2001, 
Executive Order 13222 of August 17, 2001 (3 CFR, 2001 Comp., p. 783 
(2002)), as extended by the Notice of August 6, 2004, 69 FR 48763 
(August 10, 2004) continues the Regulations in effect under the 
International Emergency Economic Powers Act.

Comments

    The comments to the proposed rule that were received by BIS may be 
found at http://efoia.bis.doc.gov/pubcomm/Computer%20Tech%20and%20Software/Final.pdf. Set forth below are the questions that were 
posed to industry in the proposed rule, a summary of the comments BIS 
received and, where applicable, BIS's response. BIS's responses to 
questions on microprocessor technology export controls are published in 
the final rule on microprocessor technology exports under license 
exceptions.
1. What impact would the proposed revision of computer technology and 
software controls have on your company?
    The majority of respondents considered the proposed changes a 
``significant improvement to the current system'' and requested that 
BIS publish a final rule as soon as possible. Many respondents 
suggested revisions to improve the proposal. One of the recommendations 
was to make computer technology and software eligible to all of 
Computer Tier 1 countries with an unlimited Composite Theoretical 
Performance (CTP), instead of just the 22 countries that already have 
that authorization under License Exception TSR. BIS has determined that 
U.S. national security interests warrant continuing to control computer 
technology and software exports to Tier 1 countries other than these 22 
countries. The 22 countries that were eligible to receive technology 
and software for computers with unlimited CTP under License Exception 
TSR will continue to be eligible to receive this technology and 
software; however, this eligibility will be under a different License 
Exception--License Exception CTP.
    In addition, respondents recommended that BIS harmonize the CTP 
level for technology and software (150,000 Millions of Theoretical 
Operations per Second (MTOPS)), with that for hardware (190,000 MTOPS) 
under License Exception CTP for Computer Tier 3 countries. The reasons 
given for this recommendation were ease of enforcement and compliance, 
and that there seemed to be no national security reason for having the 
technology and software controls at a lower level, because the hardware 
was already available at these levels to these countries. This final 
rule does not implement such a harmonization, because computer 
technology and software is commonly treated as more sensitive in nature 
than hardware by the Wassenaar Arrangement. Computer technology and 
software is listed on both the Sensitive (75,000 MTOPS) and Very 
Sensitive (150,000 MTOPS) lists of the Wassenaar Arrangement, while 
computer hardware is only listed on Wassenaar's Basic List. While BIS 
agrees with the exporting community that using the CTP of 190,000 MTOPS 
instead of 150,000 MTOPS is easier for enforcement/compliance purposes 
and the difference between the CTPs is minimal, BIS has decided that 
adjustments in control limits concerning actual exports and reexports 
should be negotiated at the Wassenaar Arrangement meetings.
    However, Wassenaar countries generally do not have in-country 
transfer controls (deemed export controls), with the exception of 
classified material. Therefore, this rule makes eligible, under License 
Exception CTP, deemed exports of computer technology and source code 
equal to or less than 75,000 MTOPS to foreign nationals of Computer 
Tier 3 countries and deemed exports of computer technology and source 
code equal to or less than 190,000 MTOPS to foreign nationals of 
Computer Tier 1 countries (other than the 22 countries that were 
previously listed in the License Exception TSR eligibility paragraphs 
of ECCNs 4D001 and 4E001). A decision to raise the level of controls 
for actual exports and reexports of computer technology and software 
should be negotiated in the Wassenaar Arrangement. After a decision is 
made on the level of controls for exports and reexports of computer 
technology and software in the Wassenaar Arrangement, the EAR will be 
amended accordingly.
2. Is there another proposal regarding computer technology and 
software, and microprocessor technology controls that you would like 
Commerce to consider? If so, describe your proposal in detail and 
please give technical and other justifications for your proposal.
    Many comments received suggested creation of a technology license. 
In response to these comments and those received in the past, BIS has 
discussed with other agencies the possibility of allowing certain 
exports and reexports of this technology using a ``Special Intra-
company License (SIL).'' The goal is to create a license that will ease 
the flow of certain authorized technology and source code within the 
global corporate structure, based on an approved Technology Control 
Plan, i.e., an internal control program.
    A number of respondents suggested that BIS do away with the CTP 
metric for control and use end-user and end-use based controls. 
However, computers are listed on the Dual-use and Technologies List of 
the Wassenaar Arrangement under 4.A.3. The agreed controlling parameter 
for computers is Composite Theoretical Performance (CTP) in Millions of 
Operations per Second (MTOPS). Therefore, in keeping with our 
agreements to the Wassenaar Arrangement, BIS will continue to control 
computers using the CTP metric for control.
3. What is the highest CTP level for microprocessors currently being 
manufactured by your company?
    Comments in response to this question are addressed in the final 
rule for microprocessor technology export controls.
4. What should be the CTP MTOPS limitation for microprocessor 
technology under the proposed License Exception CIV? Please provide 
detailed technical and other justification for your proposal.
    Comments in response to this question are addressed in the final 
rule for microprocessor technology export controls.
5. How do other countries license the transfer of computer technology 
and software, and microprocessor technology? Have there been instances 
where your company has been placed at a competitive disadvantage based 
on current U.S. license requirements?
    The majority of respondents did not have enough information to 
comment on procedures or regulations of other countries' export 
policies with regard to computer technology and software, and 
microprocessor technology. None of the respondents felt they had enough 
information to definitively claim that the current export control 
levels put them at a competitive disadvantage.

[[Page 64487]]

6. What are your predictions for the CTP level of microprocessors that 
will be in production 3 and 5 years from now? On what basis did you 
make your predictions?
    Comments in response to these questions are addressed in the final 
rule for microprocessor technology export controls.
7. What percentage of your research and development is accomplished: 
(1) Outside of the United States; and (2) with the assistance of 
foreign nationals within the United States?
    Some respondents said they had already provided such information to 
BIS. None of the respondents addressed this specifically, but one 
respondent noted that in the physical sciences and engineering, nearly 
50 per cent of all Masters and PhD degrees awarded by U.S. schools are 
earned by foreign nationals.
8. Is there an alternative method or parameter for controlling exports 
of computers and microprocessors and the technology and software 
therefore that industry believes would be more in-line with the way 
industry produces, develops, or measures these items?
    Many of the respondents pointed out that performance-based controls 
are ``unsuited'' for general purpose and rapidly advancing technologies 
such as semiconductors and computers. Many respondents would like to 
see end-use and end-user based controls. It has been determined by 
Wassenaar Arrangement members that technology and software to develop 
or produce computers warrants placement on the Sensitive and Very 
Sensitive Lists. The control parameter on these lists are based on 
their performance capabilities, and at this time the only metric that 
the regime members have agreed upon is CTP. In keeping with the 
Wassenaar Arrangement agreements, BIS will not adopt a unilateral end-
use/user based control for computer technology or software.
    However, BIS and industry via the High-Performance Computer (HPC) 
Working Group of the Information Systems Technical Advisory Committee 
are jointing investigating a new metric to replace the Millions of 
Theoretical Operations per Second (MTOPS) parameter, it is called 
``Weighted Teraflop (WT)''. Industry representatives noted that timely 
implementation of the new metric is important because HPC technology 
and computer performance levels are advancing at a rapid pace.
Rulemaking Requirements
    1. This final rule has been determined to be not significant for 
purposes of E.O. 12866.
    2. Notwithstanding any other provision of law, no person is 
required to respond to, nor shall any person be subject to a penalty 
for failure to comply with a collection of information, subject to the 
requirements of the Paperwork Reduction Act (44 U.S.C. 3501 et seq.) 
(PRA), unless that collection of information displays a currently valid 
Office of Management and Budget (OMB) Control Number. This rule 
contains a collection of information subject to the requirements of the 
PRA. This collection has been approved by OMB under Control Number 
0694-0088 (Multi-Purpose Application), which carries a burden hour 
estimate of 58 minutes to prepare and submit form BIS-748. Send 
comments regarding this burden estimate or any other aspect of this 
collection of information, including suggestions for reducing the 
burden, to David Rostker, Office of Management and Budget (OMB), by e-
mail to <a href="/cdn-cgi/l/email-protection#286c495e414c777a475b5c434d5a6847454a064d4758064f475e"><span class="__cf_email__" data-cfemail="763217001f1229241905021d130436191b145813190658111900">[email protected]</span></a>, or by fax to (202) 395-7285; and to 
the Regulatory Policy Division, Bureau of Industry and Security, 
Department of Commerce, P.O. Box 273, Washington, DC 20044.
    3. This rule does not contain policies with Federalism implications 
as that term is defined under E.O. 13132.
    4. The provisions of the Administrative Procedure Act (5 U.S.C. 
553) requiring notice of proposed rulemaking, the opportunity for 
public participation, and a delay in effective date, are inapplicable 
because this regulation involves a military and foreign affairs 
function of the UnitedStates (5 U.S.C. 553(a)(1)). Further, no other 
law requires that a notice of proposed rulemaking and an opportunity 
for public comment be given for this final rule. Because a notice of 
proposed rulemaking and an opportunity for public comment are not 
required to be given for this rule under the Administrative Procedure 
Act or by any other law, the analytical requirements of the Regulatory 
Flexibility Act (5 U.S.C. 601 et seq.) are not applicable. Therefore, 
this regulation is issued in final form. Although there is no formal 
comment period, public comments on this regulation are welcome on a 
continuing basis. Comments should be submitted to Sharron Cook, Office 
of Exporter Services, Bureau of Industry and Security, Department of 
Commerce, P.O. Box 273, Washington, DC 20044.

List of Subjects

15 CFR Part 740

    Administrative practice and procedure, Exports, Reporting and 
recordkeeping requirements.

15 CFR Part 748

    Administrative practice and procedure, Exports, Reporting and 
recordkeeping requirements.

15 CFR Part 774

    Exports, Reporting and recordkeeping requirements.


0
Accordingly, parts 740, 748, and 774 of the Export Administration 
Regulations (15 CFR parts 730-799) are amended as follows:

PART 740--[AMENDED]

0
1. The authority citation for part 740 is revised to read as follows:

    Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; 
Sec. 901-911, Pub. L. 106-387; E.O. 13026, 61 FR 58767, 3 CFR, 1996 
Comp., p. 228; E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 783; 
Notice of August 6, 2004, 69 FR 48763 (August 10, 2004).


0
2. Section 740.7 is revised to read as follows:


Sec.  740.7  Computers (CTP).

    (a) Scope. (1) Commodities. License Exception CTP authorizes 
exports and reexports of computers, including ``electronic assemblies'' 
and specially designed components therefor controlled by ECCN 4A003, 
except ECCN 4A003.e (equipment performing analog-to-digital conversions 
exceeding the limits in ECCN 3A001.a.5.a), exported or reexported 
separately or as part of a system for consumption in Computer Tier 
countries as provided by this section. When evaluating your computer to 
determine License Exception CTP eligibility, use the CTP parameter to 
the exclusion of other technical parameters in ECCN 4A003. Computers 
controlled for missile technology (MT) reasons are not eligible for 
License Exception CTP.
    (2) Technology and software. License Exception CTP authorizes 
exports of technology and software controlled by ECCNs 4D001 and 4E001 
specially designed or modified for the ``development'', ``production'', 
or ``use'' of computers, including ``electronic assemblies'' and 
specially designed components therefor classified in ECCN 4A003, except 
ECCN 4A003.e (equipment performing analog-to-digital conversions 
exceeding the limits in ECCN 3A001.a.5.a), to Computer Tier countries 
as provided by this section. Technology and software for computers

[[Page 64488]]

controlled for missile technology (MT) reasons are not eligible for 
License Exception CTP.
    (b) Restrictions. (1) Related equipment controlled under ECCN 
4A003.g may not be exported or reexported under this License Exception 
when exported or reexported separately from eligible computers 
authorized under this License Exception.
    (2) Access and release restrictions. (i) Computers and software. 
Computers and software eligible for License Exception CTP may not be 
accessed either physically or computationally by nationals of Cuba, 
Iran, Libya, North Korea, Sudan, or Syria, except that commercial 
consignees described in Supplement No. 3 to part 742 of the EAR are 
prohibited only from giving such nationals user-accessible 
programmability.
    (ii) Technology and source code. Technology and source code 
eligible for License Exception CTP may not be released to nationals of 
Cuba, Iran, Libya, North Korea, Sudan, or Syria.
    (3) Computers and software eligible for License Exception CTP may 
not be reexported or transferred (in country) without prior 
authorization from BIS, i.e., a license, a permissive reexport, another 
License Exception, or ``No License Required''. This restriction must be 
conveyed to the consignee, via the Destination Control Statement, see 
Sec.  758.6 of the EAR. Additionally, the end-use and end-user 
restrictions in paragraph (b)(5) of this section must be conveyed to 
any consignee in Computer Tier 3.
    (4) You may not use this License Exception to export or reexport 
items that you know will be used to enhance the CTP beyond the 
eligibility limit allowed to your country of destination.
    (5) License Exception CTP does not authorize exports and reexports 
for nuclear, chemical, biological, or missile end-users and end-uses 
subject to license requirements under Sec.  744.2, Sec.  744.3, Sec.  
744.4, and Sec.  744.5 of the EAR. Such exports and reexports will 
continue to require a license and will be considered on a case-by-case 
basis. Reexports and transfers (in country) to these end-users and end-
uses in eligible countries are strictly prohibited without prior 
authorization.
    (6) Foreign nationals in an expired visa status are not eligible to 
receive deemed exports of technology or source code under this License 
Exception. It is the responsibility of the exporter to ensure that, in 
the case of deemed exports, the foreign national maintains a valid U.S. 
visa, if required to hold a visa from the United States.
    (c) Computer Tier 1 destinations. (1) Eligible destinations. The 
destinations that are eligible to receive exports and reexports under 
paragraph (c) of this section include: Antigua and Barbuda, Argentina, 
Aruba, Australia, Austria, Bahamas (The), Bangladesh, Barbados, 
Belgium, Belize, Benin, Bhutan, Bolivia, Botswana, Brazil, Brunei, 
Burkina Faso, Burma, Burundi, Cameroon, Cape Verde, Central African 
Republic, Chad, Chile, Colombia, Congo (Democratic Republic of the), 
Congo (Republic of the), Costa Rica, Cote d'Ivoire, Cyprus, Czech 
Republic, Denmark, Dominica, Dominican Republic, East Timor, Ecuador, 
El Salvador, Equatorial Guinea, Eritrea, Estonia, Ethiopia, Fiji, 
Finland, France, Gabon, Gambia (The), Germany, Ghana, Greece, Grenada, 
Guatemala, Guinea, Guinea-Bissau, Guyana, Haiti, Honduras, Hong Kong, 
Hungary, Iceland, Indonesia, Ireland, Italy, Jamaica, Japan, Kenya, 
Kiribati, Korea (Republic of), Latvia, Lesotho, Liberia, Liechtenstein, 
Lithuania, Luxembourg, Madagascar, Malawi, Malaysia, Maldives, Mali, 
Malta, Marshall Islands, Mauritius, Mexico, Micronesia (Federated 
States of), Monaco, Mozambique, Namibia, Nauru, Nepal, Netherlands, 
Netherlands Antilles, New Zealand, Nicaragua, Niger, Nigeria, Norway, 
Palau, Panama, Papua New Guinea, Paraguay, Peru, Philippines, Poland, 
Portugal, Romania, Rwanda, St. Kitts & Nevis, St. Lucia, St. Vincent 
and the Grenadines, Sao Tome & Principe, Samoa, San Marino, Senegal, 
Seychelles, Sierra Leone, Singapore, Slovakia, Slovenia, Solomon 
Islands, Somalia, South Africa, Spain, Sri Lanka, Surinam, Swaziland, 
Sweden, Switzerland, Taiwan, Tanzania, Togo, Tonga, Thailand, Trinidad 
and Tobago, Turkey, Tuvalu, Uganda, United Kingdom, Uruguay, Vatican 
City, Venezuela, Western Sahara, Zambia, and Zimbabwe.
    (2) Eligible commodities. All computers, including electronic 
assemblies and specially designed components therefor are eligible for 
export or reexport under License Exception CTP to Tier 1 destinations, 
subject to the restrictions in paragraph (b) of this section.
    (3) Eligible technology and software. (i) Technology and software 
described in paragraph (a)(2) of this section for computers of 
unlimited CTP are eligible for export or reexport under License 
Exception CTP to: Australia, Austria, Belgium, Canada, Denmark, 
Finland, France, Germany, Greece, Ireland, Italy, Japan, Luxembourg, 
Netherlands, New Zealand, Norway, Portugal, Spain, Sweden, Switzerland, 
Turkey, or the United Kingdom; and
    (ii) Technology and source code described in paragraph (a)(2) of 
this section for computers with a CTP less than or equal to 190,000 
MTOPS are eligible for deemed exports under License Exception CTP to 
foreign nationals of Tier 1 destinations, other than the destinations 
that are listed in paragraph (c)(3)(i) of this section, subject to the 
restrictions in paragraph (b) of this section.
    (d) Computer Tier 3 destinations. (1) Eligible destinations. 
Eligible destinations under paragraph (d) of this section are: 
Afghanistan, Albania, Algeria, Andorra, Angola, Armenia, Azerbaijan, 
Bahrain, Belarus, Bosnia & Herzegovina, Bulgaria, Cambodia, China 
(People's Republic of), Comoros, Croatia, Djibouti, Egypt, Georgia, 
India, Iraq, Israel, Jordan, Kazakhstan, Kuwait, Kyrgyzstan, Laos, 
Lebanon, Macau, Macedonia (The Former Yugoslav Republic of), 
Mauritania, Moldova, Mongolia, Morocco, Oman, Pakistan, Qatar, Russia, 
Serbia and Montenegro, Saudi Arabia, Tajikistan, Tunisia, Turkmenistan, 
Ukraine, United Arab Emirates, Uzbekistan, Vanuatu, Vietnam, and Yemen.
    (2) Eligible commodities. None.
    (3) Eligible technology and source code. Technology and source code 
described in paragraph (a)(2) of this section for computers with a CTP 
less than or equal to 75,000 MTOPS are eligible for deemed exports 
under License Exception CTP to foreign nationals of Tier 3 destinations 
as described in paragraph (d)(1) of this section, subject to the 
restrictions in paragraph (b) and the provisions of paragraph (d)(4) of 
this section.
    (4) Foreign National Review (FNR) requirement for deemed exports. 
(i) Submission requirement. Prior to disclosing eligible technology or 
source code to a foreign national of a Computer Tier 3 country that is 
not also a country listed in Country Group B in Supplement No. 1 to 
part 740 of the EAR under this License Exception, you must submit a 
Foreign National Review (FNR) request to BIS, as required under Sec.  
748.8(s) of the EAR. Your FNR request must include information about 
the foreign national required under Sec.  748.8(t) of the EAR and set 
forth in Supplement No. 2 of part 748 of the EAR.
    (ii) Confirmation of eligibility. You may not use License Exception 
CTP, until you have obtained confirmation of eligibility by calling the 
System for Tracking Export License Applications (STELA), see Sec.  
750.5 for how to use STELA, or electronically from the Simplified 
Network Application Procedure (SNAP), see http://

[[Page 64489]]

www.bis.doc.gov/SNAP/index.htm for more information about SNAP.
    (iii) Action by BIS. Within nine business days of the registration 
of the FNR request, BIS will electronically refer the FNR request for 
interagency review, or if necessary return the FNR request without 
action (e.g., if the information provided is incomplete). Processing 
time starts at the point at which the notification is registered into 
BIS's electronic system.
    (iv) Review by other departments or agencies. The Departments of 
Defense, State, Energy, and other agencies, as appropriate, may review 
the FNR request. Within 30 calendar days of receipt of the BIS 
referral, the reviewing agency will provide BIS with a recommendation 
either to approve or deny the FNR request. A reviewing agency that 
fails to provide a recommendation within 30 days shall be deemed to 
have no objection to the final decision of BIS.
    (v) Action on the FNR Request. After the interagency review period, 
BIS will promptly notify the applicant regarding the FNR request, i.e., 
whether the FNR request is approved, denied, or more time is needed to 
consider the request.
    (e) Reporting requirements. See Sec.  743.1 of the EAR for 
reporting requirements of certain items under License Exception CTP.

PART 748--[AMENDED]

0
3. The authority citation for part 748 is revised to read as follows:

    Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; 
E.O. 13026, 61 FR 58767, 3 CFR, 1996 Comp., p. 228; E.O. 13222, 66 
FR 44025, 3 CFR, 2001 Comp., p. 783; Notice of August 6, 2004, 69 FR 
48763 (August 10, 2004).


0
4. Section 748.8 is amended by revising the heading, and adding 
paragraphs (r), (s), and (t), to read as follows:


Sec.  748.8  Unique application and submission requirements.

* * * * *
    (r) Encryption review requests.
    (s) Foreign National Review Request.
    (t) Foreign National Support Statement for deemed exports.

0
5. Supplement No. 2 to part 748 is amended by revising the heading and 
adding paragraphs (s) and (t), to read as follows:

Supplement No. 2 to Part 748--Unique Application and Submission 
Requirements

* * * * *
    (s) Foreign National Review Request. (1) BIS-748P ``Multipurpose 
Application'' form. If you are submitting a Foreign National Review 
(FNR) request for the deemed export of technology or source code, 
you must include the following information on the BIS-748P 
``Multipurpose Application'' form:
    (i) In Block 1 through 3, insert name, telephone, and facsimile 
of the person that is most knowledgeable about the foreign national;
    (ii) In Block 4 (Date of Application), enter the date;
    (iii) In Block 5 (Type of Application), place an ``X'' in the 
box marked ``Other'';
    (iv) In Block 6 (Documents Submitted with Application), place an 
``X'' in ``Other'' to signify that you are submitting the Foreign 
National Review Support Statement(s) with the BIS-748P, and place an 
``X'' in ``BIS-748P-B'' if you are submitting this FNR for multiple 
foreign nationals;
    (v) In Block 9 (Special Purpose), insert the phrase ``Foreign 
National Review (FNR)'';
    (vi) In Block 14 (Applicant), insert the name of the applicant;
    (vii) In Block 18 (Ultimate Consignee), insert the name and 
address of the Foreign National;
    (viii) In Block 21 (Specific End-Use), insert any information 
which may be of interest regarding the export of the technology or 
source code;
    (ix) In Block 24 (Additional Information), insert contact email 
information;
    (x) In Block 25 (Signature), sign the BIS-748P, and insert the 
name and title of the signer; and
    (xi) All other Blocks on the application may be left blank.
    (2) Multiple Foreign Nationals. If you are submitting a Foreign 
National Review Request for more than one individual, you may add 
other foreign nationals by completing and attaching form BIS-748P-B 
``End-User Appendix.''
    (t) Foreign National Review Support Statement. To request review 
of your FNR, you must submit to BIS a FNR support statement as set 
forth below on company letterhead, along with Form BIS-748P 
(Multipurpose Application), or its electronic equivalent. For FNRs 
that include multiple foreign nationals, an FNR support statement 
must be submitted for each foreign national.
    (1) Case number (Z number): Zxxxxxx;
    (2) Name, and all other names ever used;
    (3) Date of birth: dd/mm/yyyy;
    (4) Place of birth: city, state/province, and country;
    (5) U.S. Address: street address, city, state, zip;
    (6) Overseas Address: street address, city, province, country;
    (7) Visa type (with expiration date and place issued, if 
available): type, dd/mm/yyyy, city, country;
    (8) I-94 No. xxxxxxx, dd/mm/yyyy;
    (9) Passport and Country of Issue: xxxxxxxx, country;
    (10) U.S. Education (schools, degrees, and dates received) (if 
any): degree, subject, university, city, state, country, month/year-
month/year;
    (11) Foreign Education: degree, subject, university, city, 
state, country, month/year-month/year;
    (12) Employer (applicant) and address: company, street address, 
city, state, zip;
    (13) Detailed explanation of position requirements and 
individual's qualifications related to the position; and
    (14) Prior Employment Record, (including overseas employment) 
addresses and dates; explain any periods of unemployment.

PART 774--[AMENDED]

0
6. The authority citation for part 774 continues to read as follows:

    Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; 
10 U.S.C. 7420; 10 U.S.C. 7430(e); 18 U.S.C. 2510 et seq.; 22 U.S.C. 
287c, 22 U.S.C. 3201 et seq., 22 U.S.C. 6004; 30 U.S.C. 185(s), 
185(u); 42 U.S.C. 2139a; 42 U.S.C. 6212; 43 U.S.C. 1354; 46 U.S.C. 
app. 466c; 50 U.S.C. app. 5; Sec. 901-911, Pub. L. 106-387; Sec. 
221, Pub. L. 107-56; E.O. 13026, 61 FR 58767, 3 CFR, 1996 Comp., p. 
228; E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 783; Notice of 
August 6, 2004, 69 FR 48763 (August 10, 2004).

Supplement No. 1 to Part 774 [Amended]

0
7. In Supplement No. 1 to part 774 (the Commerce Control List), 
Category 4--Computers, Export Control Classification Number (ECCN) 
4D001 is amended by revising the License Exception section, to read as 
follows:

    4D001 ``Software'' specially designed or modified for the 
``development'', ``production'' or ``use'' of equipment or 
``software'' controlled by 4A001 to 4A004, or 4D (except 4D980, 
4D993 or 4D994), and other specified software, see List of Items 
Controlled.
* * * * *

License Exceptions

    CIV: N/A
    TSR: Yes, except software for commodities controlled by ECCN 
4A003.b or ECCN 4A003.c is limited to software for computers or 
electronic assemblies with a CTP equal to or less than 33,000 MTOPS.
    CTP: Yes to specific countries (see Sec.  740.7 of the EAR for 
eligibility criteria)
* * * * *


0
8. In Supplement No. 1 to part 774 (the Commerce Control List), 
Category 4--Computers, Export Control Classification Number (ECCN) 
4E001 is amended by revising the License Exception section, to read as 
follows:

    4E001 ``Technology'' according to the General Technology Note, 
for the ``development'', ``production'' or ``use'' of equipment or 
``software'' controlled by 4A (except 4A980, 4A993 or 4A994) or 4D 
(except 4D980, 4D993, 4D994), and other specified technology, see 
List of Items Controlled.
* * * * *

License Exceptions

    CIV: N/A
    TSR: Yes, except technology for commodities controlled by ECCN 
4A003.b or ECCN 4A003.c is limited to technology for

[[Page 64490]]

computers or electronic assemblies with a CTP equal to or less than 
33,000 MTOPS.
    CTP: Yes to specific countries (see Sec.  740.7 of the EAR for 
eligibility criteria)
* * * * *

    Dated: October 28, 2004.
Peter Lichtenbaum,
Assistant Secretary for Export Administration.
[FR Doc. 04-24679 Filed 11-4-04; 8:45 am]
BILLING CODE 3510-33-P


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