Federal Register / Vol. 79, No. 25 / Thursday, February 6, 2014 / Proposed Rules 7105 

777F series airplanes, certificated in any 

category, as identified in Boeing Alert 

Service Bulletin 777–52A0050, dated June 

18, 2013. 

(d) Subject 

Air Transport Association (ATA) of 

America Code 52, Doors. 

(e) Unsafe Condition 

This AD was prompted by reports of 

corroded, migrated, or broken spring pins of 

the girt bar floor fitting; in one case the 

broken pins prevented a door escape slide 

from deploying during a maintenance test. 

We are issuing this AD to prevent broken or 

migrated spring pins of the girt bar floor 

fittings, which could result in improper 

deployment of the escape slide/raft and 

consequent delay and injury during 

evacuation of passengers and crew from the 

cabin in the event of an emergency. 

(f) Compliance 

Comply with this AD within the 

compliance times specified, unless already 

done. 

(g) Spring Pin Replacement 

Within 36 months after the effective date 

of this AD: Replace the spring pin at both girt 

bar floor fittings at each passenger entry door 

with a new spring pin, in accordance with 

the Accomplishment Instructions of Boeing 

Alert Service Bulletin 777–52A0050, dated 

June 18, 2013. 

(h) Parts Installation Prohibition 

As of the effective date of this AD, no 

person may install a spring pin having part 

number MS39086–261 or MS16562–252 on 

any airplane. 

(i) Alternative Methods of Compliance 

(AMOCs) 

(1) The Manager, Seattle Aircraft 

Certification Office (ACO), FAA, has the 

authority to approve AMOCs for this AD, if 

requested using the procedures found in 14 

CFR 39.19. In accordance with 14 CFR 39.19, 

send your request to your principal inspector 

or local Flight Standards District Office, as 

appropriate. If sending information directly 

to the manager of the ACO, send it to the 

attention of the person identified in 

paragraph (i) of this AD. Information may be 

emailed to: 9-ANM-Seattle-ACO-AMOCRequests@faa.gov. 

(2) Before using any approved AMOC, 

notify your appropriate principal inspector, 

or lacking a principal inspector, the manager 

of the local flight standards district office/

certificate holding district office. 

(3) An AMOC that provides an acceptable 

level of safety may be used for any repair 

required by this AD if it is approved by the 

Boeing Commercial Airplanes Organization 

Designation Authorization (ODA) that has 

been authorized by the Manager, Seattle 

ACO, to make those findings. For a repair 

method to be approved, the repair must meet 

the certification basis of the airplane. 

(j) Related Information 

(1) For more information about this AD, 

contact Ana Martinez Hueto, Aerospace 

Engineer, Cabin Safety and Environmental 

Systems Branch, ANM–150S, FAA, Seattle 

Aircraft Certification Office (ACO), 1601 Lind 

Avenue SW., Renton, WA 98057–3356; 

phone: 425–917–6592; fax: 425–917–6591; 

email: ana.m.hueto@faa.gov. 

(2) For Boeing service information 

identified in this AD, contact Boeing 

Commercial Airplanes, Attention: Data & 

Services Management, P.O. Box 3707, MC 

2H–65, Seattle, WA 98124–2207; telephone 

206–544–5000, extension 1; fax 206–766– 

5680; Internet https://

www.myboeingfleet.com. You may view this 

referenced service information at the FAA, 

Transport Airplane Directorate, 1601 Lind 

Avenue SW., Renton, WA. For information 

on the availability of this material at the 

FAA, call 425–227–1221. 

Issued in Renton, Washington, on January 

18, 2014. 

Jeffrey E. Duven, 

Manager, Transport Airplane Directorate, 

Aircraft Certification Service. 

[FR Doc. 2014–02520 Filed 2–5–14; 8:45 am] 

BILLING CODE 4910–13–P 

DEPARTMENT OF COMMERCE 

Bureau of Industry and Security 

15 CFR Parts 748, 750, 758, and 772 

[Docket No. 121025583–2583–01] 

RIN 0694–AF67 

Delegation of License Requirements 

Determination and Licensing 

Responsibility to a Foreign Principal 

Party 

AGENCY: Bureau of Industry and 

Security, Commerce. 

ACTION: Proposed rule. 

SUMMARY: This proposed rule clarifies 

the responsibilities under the Export 

Administration Regulations (EAR) of 

parties involved in export transactions 

where the foreign principal party in 

interest (FPPI) is responsible for the 

transportation out of the United States 

of items subject to the EAR. These 

transactions are currently referred to as 

‘‘routed export transactions.’’ In such 

transactions, the U.S. principal party in 

interest (USPPI) may retain the 

responsibility and authority under the 

EAR to determine license requirements 

and, if necessary, to apply for a license 

from the Bureau of Industry and 

Security (BIS). Alternatively, if certain 

criteria are met, the USPPI may allow 

the FPPI, acting through a U.S. agent, to 

assume these responsibilities and 

authority. To enhance clarity, this 

proposed rule would remove the 

defined term ‘‘Routed Export 

Transaction’’ from the EAR and create a 

new term to better define certain 

transactions of particular interest to BIS, 

specifically a ‘‘Foreign Principal Party 

Controlled Export Transaction’’ which 

is a transaction where an FPPI which is 

responsible for the export of items 

subject to the EAR, also assumes the 

authority and responsibility for 

licensing requirements. This proposed 

rule also would refine certain 

procedures for creating a ‘‘Foreign 

Principal Party Controlled Export 

Transaction’’. These proposed changes 

are intended to facilitate enhanced 

public understanding of the EAR by 

eliminating perceived discrepancies 

between the EAR and the Bureau of the 

Census’s Foreign Trade Regulations 

(FTR) with respect to the definition of 

a ‘‘routed export transaction.’’ 

Specifically, this proposed rule will 

clarify the responsibilities of each party 

engaged in a transaction subject to the 

EAR and provide clearer instructions for 

USPPIs to delegate responsibility for 

license requirement determinations. 

DATES: Comments must be received by 

April 7, 2014. 

ADDRESSES: You may submit comments 

by any of the following methods: 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. The identification 

number for this rulemaking is BIS– 

2014–0004. 

• By email directly to 

publiccomments@bis.doc.gov. Include 

RIN 0694–AF67 in the subject line. 

• By mail or delivery to Regulatory 

Policy Division, Bureau of Industry and 

Security, U.S. Department of Commerce, 

Room 2099B, 14th Street and 

Pennsylvania Avenue NW., Washington, 

DC 20230. Refer to RIN 0694–AF67. 

FOR FURTHER INFORMATION CONTACT: 

Robert Monjay, Office of Exporter 

Services, Bureau of Industry and 

Security, by telephone (202) 482–2440 

or email: Robert.Monjay@bis.doc.gov. 

SUPPLEMENTARY INFORMATION: 

Overview 

The Bureau of Industry and Security 

is proposing to amend the Export 

Administration Regulations (EAR) by 

removing the term ‘‘routed export 

transaction’’ from the EAR, including 

the definition of this term in § 772.1, 

and creating a new defined term, 

‘‘Foreign Principal Party Controlled 

Export Transaction.’’ This new term 

would define the export transactions 

currently identified and permitted 

under § 758.3(b) of the EAR. This new 

term will better distinguish between the 

EAR’s concept described in § 758.3(b) 

and other regulations that use the term 

‘‘routed export transaction.’’ In addition 

to improving the clarity of this EARspecific term, this proposed rule will 


tkelley on DSK3SPTVN1PROD with PROPOSALS
7106 Federal Register / Vol. 79, No. 25 / Thursday, February 6, 2014 / Proposed Rules 

also revise the procedures with which 

parties must comply to use § 758.3(b). 

Currently, the Bureau of the Census 

(Census Bureau) determines through 

provisions in the Foreign Trade 

Regulations (FTR) (15 CFR Part 30), 

whether an export transaction is treated 

as a ‘‘routed export transaction’’ for the 

filing of electronic export information 

(EEI) in the Automated Export System 

(AES). However, this term risks creating 

confusion because while ‘‘routed export 

transaction’’ is defined in both the FTR 

and the EAR, each set of regulations has 

a different definition for that term. In 

order to provide greater clarity to 

exporters, the term ‘‘routed export 

transaction’’ would be removed from the 

EAR. That term would be replaced by a 

new term that more accurately describes 

transactions that are of particular 

interest to BIS, specifically, a subset of 

‘‘routed export transactions’’ (as they are 

currently defined in the EAR) where the 

FPPI has assumed from the USPPI 

responsibility for export license 

determinations and licensing. This 

change to the Regulations should 

facilitate enhanced public 

understanding, as the same term would 

no longer be used by both the EAR and 

FTR to refer to potentially different 

types of transactions. 

This proposed rule would remove the 

terms ‘‘routed export transaction’’ and 

‘‘routed transaction’’ in five sections of 

the EAR, specifically from §§ 748.4, 

750.7, 758.1, 758.3 and 772.1, and add, 

as appropriate, the new term ‘‘Foreign 

Principal Party Controlled Export 

Transaction.’’ Each of these sections 

would be revised to clarify the 

responsibilities of each party to a 

transaction. BIS will still allow an FPPI 

to assume responsibility and authority 

for its U.S. agent to determine license 

requirements and apply for a license on 

behalf of the FPPI, subject to the revised 

terms and conditions set forth in 

§ 758.3(b). 

These revisions will clarify the 

responsibilities that accrue to each party 

engaged in a transaction subject to the 

EAR, and will provide clearer 

instructions for USPPIs wishing to 

delegate responsibility for license 

requirement determinations and 

licensing to the FPPI and its U.S. agent. 

Further, this type of transaction would 

be defined as a ‘‘Foreign Principal Party 

Controlled Export Transaction.’’ 

Background 

On January 18, 2011, President Barack 

Obama issued Executive Order 13563, 

affirming general principles of 

regulation and directing government 

agencies to improve regulation and 

regulatory review. Among other things, 

the President stressed the need for the 

regulatory system to allow for public 

participation and an open exchange of 

ideas, as well as promote predictability 

and reduce uncertainty. The President 

also emphasized that regulations must 

be accessible, consistent, written in 

plain language, and easy to understand. 

On August 5, 2011, BIS issued 

‘‘Notice of Inquiry: Retrospective 

Regulatory Review Under E.O. 13563,’’ 

76 FR 47527, soliciting public 

comments on its existing regulations 

and proposed rules as part of BIS’s 

ongoing effort to ensure that its 

regulations are clear, effective, and upto-date. BIS sought comments 

identifying any unnecessary compliance 

burden caused by rules that are unduly 

complex, outmoded, inconsistent, or 

overlapping, and comments identifying 

ways to make any aspect of the EAR 

more effective in protecting the national 

security or advancing the foreign policy 

interests of the United States. This 

proposed rule arose out of a public 

comment submitted in response to that 

notice of inquiry, which is summarized 

and responded to later in this preamble. 

In addition, BIS conducts various 

outreach seminars that include 

representatives from the U.S. Census 

Bureau. During some of these outreach 

seminars, questions arose related to 

‘‘routed export transactions,’’ and in 

particular why the term ‘‘routed export 

transactions’’ can have different 

meanings in the EAR and FTR. This 

proposed rule seeks to address 

questions brought up during the public 

comment period and outreach seminars. 

Routed Export Transaction 

The Census Bureau collects certain 

information regarding nearly every 

export from the United States. One such 

piece of information is whether the 

transaction is a ‘‘routed export 

transaction.’’ 

An export transaction generally has a 

U.S. seller, the USPPI, and a foreign 

buyer, the FPPI. In a typical export 

transaction, the USPPI ships an item out 

of the United States and is responsible 

for all license determinations and for 

obtaining export clearances, including 

applying for a license if one is required. 

The EAR defines a ‘‘routed export 

transaction’’ as a transaction where the 

FPPI agrees to terms of sale that include 

taking delivery of items inside the 

United States and assuming 

responsibility for transporting those 

items from the United States to a foreign 

destination. The FPPI, not being in the 

United States, generally takes 

possession and exports items through an 

agent in the United States. 

The specific terms of sale between the 

USPPI and the FPPI in a ‘‘routed export 

transaction’’ vary with respect to who 

the responsible party is for determining 

if a license is required for the 

transaction and which party will apply 

for a license if one is required. BIS 

structures its regulations to allow the 

parties in each transaction to structure 

the transaction as they see fit, provided 

the export is made in accordance with 

the EAR. 

BIS imposes a general obligation on 

the USPPI, as the exporter, to ensure 

that a transaction is conducted in full 

compliance with all export-licensing 

requirements. However, in a ‘‘routed 

export transaction,’’ § 758.3(b) of the 

EAR authorizes the USPPI to allow the 

FPPI to expressly assume, in writing, 

responsibility from the USPPI for 

determining license requirements and 

for obtaining export authorizations, 

when required. Under the EAR, an 

‘‘exporter’’ must be in the United States. 

As a result, an FPPI must authorize a 

U.S. agent to obtain any necessary 

export authorization when required. 

The FPPI’s U.S. agent becomes the 

‘‘exporter’’ for export control purposes. 

Without such a written authorization, 

the USPPI remains the exporter, with all 

attendant responsibilities, regardless of 

which party, such as the FPPI or any 

other party, directs the export. When the 

USPPI allows the FPPI to assume 

responsibility for export licensing 

determination and licensing, the USPPI 

retains the responsibility to provide the 

FPPI with certain information, 

specifically: Any and all information the 

USPPI knows could affect a licensing 

determination; upon request, an item’s 

export control classification number 

(ECCN); sufficient technical information 

about the item so that the ECCN can be 

determined. 

Response to Comment 

This rule is prompted, in part, by a 

public comment submitted in response 

to the August 5, 2011 Notice of Inquiry. 

The comment noted that the definitions 

of ‘‘routed export transaction’’ in the 

EAR and the Census Bureau’s Foreign 

Trade Regulations are different and that 

this causes confusion for exporters. The 

FTR’s definition contains two elements, 

namely that the FPPI’s U.S. agent is 

given authorization to (1) facilitate an 

export and (2) file the required export 

information through the Automated 

Export System (AES). The EAR 

definition, however, contains only one 

element, that the FPPI’s U.S. agent is 

given authorization to facilitate an 

export. 

The comment stated that members of 

the trade community are confused 


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Federal Register / Vol. 79, No. 25 / Thursday, February 6, 2014 / Proposed Rules 7107 

whether to indicate that a transaction is 

a ‘‘routed export transaction’’ when the 

FPPI’s U.S. agent is physically 

transporting the goods out of the United 

States, but the FPPI has not assumed 

responsibility for determining licensing 

requirements and obtaining a license. 

Members of the trade community are 

further confused whether the FPPI’s 

U.S. agent is authorized to prepare and 

file the electronic export information 

(EEI) in the AES. 

The commenter suggests that BIS 

revise its definition of ‘‘routed export 

transaction’’ to include a second 

element: That the FPPI must authorize 

its U.S. agent to be responsible for 

determining and obtaining the export 

license authority. While this comment 

raises issues of significant concern to 

BIS, the suggested remedy would not 

fully resolve the issues. Therefore, BIS 

proposes the below changes to the EAR 

to clarify the parties’ obligations and 

more clearly distinguish the existing 

FTR ‘‘routed export transaction’’ 

definition from the new term that will 

be added to the EAR to replace the term 

‘‘routed export transaction.’’ 

Revisions to § 748.4, Basic Guidance 

Related To Applying for a License 

Section 748.4, paragraph (a)(2) 

describes the licensing options available 

in a ‘‘routed export transaction.’’ It 

provides that either the USPPI or the 

FPPI’s U.S. agent may apply for an 

export license and specifies that the 

FPPI’s U.S. agent must have written 

authorization from the FPPI before 

submitting an application. 

This rule proposes to revise 

§ 748.4(a)(2) by changing the heading to 

‘‘Foreign Principal Party Controlled 

Export Transaction.’’ It further proposes 

revising the text of § 748.4(a)(2) to 

provide that, unless authorized by 

§ 758.3, the USPPI will be the exporter 

and the party responsible for applying 

to BIS for a license, when required, even 

if the FPPI is responsible for the export 

of the items out of the United States. 

When authorized by § 758.3, the FPPI’s 

designated U.S. agent may apply for a 

license to export items from the United 

States. This revision maintains and 

clarifies the obligations of each party 

and removes the potential confusion 

resulting from the use of the term 

‘‘routed export transaction.’’ 

This rule also proposes to revise 

§ 748.4(b)(2)(i)(a) by removing the 

phrase ‘‘routed transaction’’ and 

replacing it with the phrase ‘‘Foreign 

Principal Party Controlled Export 

Transaction.’’ 

Revisions to § 750.7, Issuance of 

Licenses 

Section 750.7, paragraph (d) describes 

the responsibilities of the licensee, the 

person to whom the license is issued. It 

provides that in a reexport or routed 

export transaction, a U.S. agent, if there 

is one, for an FPPI will be the licensee 

and that both the U.S. agent and the 

FPPI are responsible for ensuring 

compliance with the license. This rule 

proposes to remove the phrase ‘‘routed 

export transaction’’ and replace it with 

‘‘Foreign Principal Party Controlled 

Export Transaction.’’ 

Revisions to § 758.1, Automated Export 

System (AES) Record 

In section 758.1, which describes the 

Automated Export System (AES) record, 

the phrase ‘‘routed transaction’’ is used 

in paragraphs (f)(2) and (h)(1)(i). This 

term means the same as a ‘‘routed 

export transaction.’’ This rule proposes 

to remove both phrases and replace 

them with the phrase ‘‘Foreign Principal 

Party Controlled Export Transaction.’’ 

Revisions to § 758.3, Responsibilities of 

Parties to the Transaction 

Section 758.3 provides that all parties 

who participate in transactions subject 

to the EAR must comply with the EAR. 

It also describes the responsibilities of 

the parties to an export transaction and 

describes the requirements for 

delegating certain of those 

responsibilities to other parties to the 

transaction or to agents. This proposed 

rule would revise this section to clarify 

the responsibilities of the parties to the 

transaction and provide for increased 

information sharing. BIS is not 

proposing to alter the general 

responsibilities of the parties. This rule 

does, however, propose changes to the 

requirements for delegating the 

responsibility for licensing 

determination and licensing to the FPPI, 

by clarifying that the USPPI must agree 

to the delegation, through a written 

authorization, and that the FPPI must 

accept the delegation in writing and 

identify the U.S. agent authorized to act 

as the exporter, as described in detail 

below in the description of the proposed 

changes to § 758.3(b). 

Section 758.3(a), Export Transactions 

This rule proposes to revise § 758.3(a) 

by changing the first sentence to state: 

‘‘The U.S. principal party in interest is 

the exporter, except in certain 

transactions and subject to certain 

requirements, described in paragraph (b) 

of this section.’’ Some exporters, freight 

forwarders, and foreign parties have 

misunderstood the current language to 

require the USPPI to allow the FPPI to 

assume responsibility for determining 

licensing requirements and obtaining 

license authority in all routed export 

transactions, as defined by the Census 

Bureau, because the current language 

states that the USPPI is the exporter 

‘‘except in certain routed transactions.’’ 

This change will clarify that the USPPI 

is the exporter in all export transactions, 

except when the specific requirements 

of § 758.3(b) are met to create a ‘‘Foreign 

Principal Party Controlled Export 

Transaction.’’ However, this does not 

change the USPPI’s responsibilities as 

defined in the Foreign Trade 

Regulations (15 CFR Part 30). 

Section 758.3(b), Routed Export 

Transactions 

This rule proposes to revise § 758.3(b) 

to state that when the agreement 

between the parties to a transaction 

allows the FPPI, through its U.S. agent, 

to take possession and control the 

movement of items sent out of United 

States, the USPPI may allow the FPPI to 

assume responsibility for determining 

licensing requirements and obtaining 

license authority if, and only if, the FPPI 

complies with certain requirements. 

These requirements will be described in 

three new paragraphs: §§ 758.3(b)(1)– 

(b)(3). These requirements will generally 

follow the documentary requirements in 

the current § 758.3(b) and § 758.3(d) and 

the information sharing requirements in 

the current § 758.3(c). These new 

sections will strengthen the 

requirements by providing greater detail 

on the required contents of the 

documentation and information sharing. 

This rule would also remove § 758.3(c) 

and § 758.3(d). 

In addition, the heading for paragraph 

(b) to section 758.3 would also be 

revised to ‘‘Foreign Principal Party 

Controlled Export Transaction.’’ The 

end-use and end-user controls found in 

Part 744 of the EAR and the General 

Prohibitions found in Part 736 of the 

EAR would continue to be applicable to 

all transactions, including ‘‘Foreign 

Principal Party Controlled Export 

Transactions.’’ 

Section 758.3(b)(1), Written Assumption 

of Responsibility 

This rule proposes new § 758.3(b)(1), 

which would state that in order to 

transfer licensing responsibility, the 

USPPI must provide the FPPI with a 

written authorization (such as a 

contract, letter, facsimile, or email) 

which assigns to the FPPI responsibility 

for determining licensing requirements 

and obtaining license authority. The 

FPPI must provide the USPPI with a 

writing that acknowledges its 

assumption of those responsibilities, 


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7108 Federal Register / Vol. 79, No. 25 / Thursday, February 6, 2014 / Proposed Rules 

and which identifies the U.S. agent of 

the foreign principal party in interest 

authorized to act as the exporter for EAR 

purposes. A single writing may still be 

used to cover multiple transactions 

between the same principals. 

Section 758.3(b)(2), Power of Attorney or 

Other Written Authorization 

This rule proposes new § 758.3(b)(2), 

which would state that prior to 

assuming responsibility from the USPPI 

for determining licensing requirements 

and obtaining license authority, the 

FPPI would be required to designate an 

agent in the United States to represent 

the FPPI. The FPPI would also be 

required to provide a power of attorney 

or other written authorization to its U.S. 

agent to authorize the agent to act on its 

behalf. The FPPI’s U.S. agent would be 

required to have the power of attorney 

or other written authorization before the 

agent may represent the FPPI or apply 

for a license on the FPPI’s behalf. The 

FPPI would also be required to provide 

the USPPI with a copy of the power of 

attorney or other written authorization 

prior to the FPPI’s assuming 

responsibility from the USPPI for 

determining licensing requirements and 

obtaining license authority. 

Section 758.3(b)(3), Information Sharing 

Requirement 

This rule proposes a new 

§ 758.3(b)(3), with two sub-paragraphs. 

Section 758.3(b)(3)(i) would require the 

USPPI to provide the FPPI and its U.S. 

agent with the correct Export Control 

Classification Number (ECCN), or with 

sufficient technical information to 

determine a classification, upon the 

request of the FPPI or its U.S. agent. The 

USPPI would also be required to 

provide the FPPI and its U.S. agent with 

any information that the USPPI 

‘‘knows’’ may affect the determination 

of license requirements or export 

authorization. The USPPI will be held to 

the ‘‘knowledge’’ standard defined in 

Part 772 of the EAR. 

Section 758.3(b)(3)(ii) would require 

the FPPI to authorize the USPPI to 

obtain from the FPPI’s U.S. agent certain 

information related to the transaction, 

and direct the U.S. agent to provide 

such information to the USPPI, upon 

request. Specifically, upon request, the 

FPPI’s U.S. agent must provide the 

USPPI with the date of export, port of 

export, country of ultimate destination 

and destination port, method of 

transportation and specific carrier 

identification, and export authorization 

(e.g., license number, license 

exemption, or NLR designation). This 

information sharing will enable the 

USPPI to confirm that the export was 

properly authorized. 

Revisions to § 772.1, Responsibilities of 

Parties to the Transaction 

This proposed rule would revise 

§ 772.1 to remove the term ‘‘routed 

export transaction’’ from the list of 

definitions of terms used in the EAR, as 

this definition will become unnecessary. 

This rule would also revise the 

definitions of ‘‘Forwarding agent’’ to 

remove the term ‘‘routed export 

transaction’’ from that definition and to 

replace it with ‘‘Foreign Principal Party 

Controlled Export Transaction.’’ Finally, 

the term, ‘‘Foreign Principal Party 

Controlled Export Transaction’’ is 

proposed to be added to § 772.1 and 

defined as a transaction meeting the 

requirements of § 758.3(b). It would also 

state that the FPPI may only assume the 

responsibility for determining licensing 

requirements and obtaining license 

authority when the FPPI is responsible 

for the movement of the items out of the 

United States. 

Request for Comments 

BIS seeks comments on this proposed 

rule. BIS will consider all comments 

received on or before April 7, 2014. All 

comments (including any personally 

identifying information or information 

for which a claim of confidentiality is 

asserted in either those comments or 

their transmittal emails) will be made 

available for public inspection and 

copying. Parties who wish to comment 

anonymously may do so by submitting 

their comments via Regulations.gov, 

leaving the fields that would identify 

the commenter blank and including no 

identifying information in the comment 

itself. 

Export Administration Act 

Although the Export Administration 

Act of 1979, as amended, expired on 

August 20, 2001, the President, through 

Executive Order 13222 of August 17, 

2001, 3 C.F.R., 2001 Comp., p. 783 

(2002), as amended by Executive Order 

13637 of March 8, 2013, 78 FR 16129 

(March 13, 2013), and as extended by 

the Notice of August 8, 2013, 78 FR 

49107 (August 12, 2013), has continued 

the EAR in effect under the 

International Emergency Economic 

Powers Act. BIS continues to carry out 

the provisions of the Export 

Administration Act, as appropriate and 

to the extent permitted by law, pursuant 

to Executive Order 13222. 

Rulemaking Requirements 

1. Executive Orders 13563 and 12866 

direct agencies to assess all costs and 

benefits of available regulatory 

alternatives and, if regulation is 

necessary, to select regulatory 

approaches that maximize net benefits 

(including potential economic, 

environmental, public health and safety 

effects, distributive impacts, and 

equity). Executive Order 13563 

emphasizes the importance of 

quantifying both costs and benefits, of 

reducing costs, of harmonizing rules, 

and of promoting flexibility. This rule 

has been designated a ‘‘not significant 

regulatory action,’’ under § 3(f) of 

Executive Order 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 Paperwork 

Reduction Act, unless that collection of 

information displays a currently valid 

Office of Management and Budget 

Control Number. This rule does not 

affect any paperwork collection. 

3. This rule does not contain policies 

with Federalism implications as that 

term is defined under E.O. 13132. 

4. The Regulatory Flexibility Act 

(RFA), as amended by the Small 

Business Regulatory Enforcement 

Fairness Act of 1996 (SBREFA), 5 U.S.C. 

601 et seq., generally requires an agency 

to prepare a regulatory flexibility 

analysis of any rule subject to the notice 

and comment rulemaking requirements 

under the Administrative Procedure Act 

(5 U.S.C. 553) or any other statute, 

unless the agency certifies that the rule 

will not have a significant economic 

impact on a substantial number of small 

entities. Under § 605(b) of the RFA, 

however, if the head of an agency 

certifies that a rule will not have a 

significant impact on a substantial 

number of small entities, the statute 

does not require the agency to prepare 

a regulatory flexibility analysis. 

Pursuant to § 605(b), the Chief Counsel 

for Regulation, Department of 

Commerce, certified to the Chief 

Counsel for Advocacy, Small Business 

Administration that this proposed rule, 

if promulgated, will not have a 

significant impact on a substantial 

number of small entities for the reasons 

explained below. Consequently, BIS has 

not prepared a regulatory flexibility 

analysis. A summary of the factual basis 

for the certification is provided below. 

Number of Small Entities 

The Bureau of Industry and Security 

(BIS) does not collect data on the size 

of entities that apply for and are issued 

export licenses. Although BIS is unable 

to estimate the exact number of small 

entities that would be affected by this 


tkelley on DSK3SPTVN1PROD with PROPOSALS
Federal Register / Vol. 79, No. 25 / Thursday, February 6, 2014 / Proposed Rules 7109 

rule, it acknowledges that this rule 

would affect some unknown number. 

Economic Impact 

For the majority of businesses 

impacted by this rule, including the 

majority of small businesses, the likely 

effect of this rule will be a reduction in 

the burden associated with preparing 

export-related documents. This rule will 

reduce the burden on small entities by 

simplifying the regulatory burden on 

exporters when determining whether or 

not to mark the transaction as a ‘‘routed 

export transaction’’ as required in the 

Foreign Trade Regulations. This rule 

would accomplish this by reducing or 

eliminating potential confusion 

stemming from differences between the 

Foreign Trade Regulations and Export 

Administration Regulations (EAR) 

through the elimination of the term 

‘‘routed export transaction’’ entirely 

from the EAR. In addition, to eliminate 

the use of the term ‘‘routed export 

transaction’’ under the EAR, this rule 

would refine certain procedures for 

creating a ‘‘Foreign Principal Party 

Controlled Export Transaction’’. The 

USPPI would be required to authorize 

the delegation of the responsibility for 

licensing determination and licensing to 

the FPPI, through a written 

authorization, and the FPPI must accept 

the delegation in writing and identify 

the U.S. agent authorized to act as the 

exporter, although this may be 

accomplished within a single writing. 

List of Subjects: 

15 CFR Parts 748, 750, and 758 

Administrative practice and 

procedure, Exports, Reporting and 

recordkeeping requirements. 

15 CFR Part 772 

Exports. 

Accordingly, Parts 748, 750, 758, and 

772 of the EAR (15 CFR Parts 730–774) 

are proposed to be amended as follows: 

PART 748—[AMENDED] 

■ 1. The authority citation for Part 748 

continues 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 8, 2013, 78 FR 49107 (August 12, 

2013). 

■ 2. Section 748.4 is amended by 

revising paragraph (a)(2) and (b)(2)(i)(A), 

to read as follows: 

§ 748.4 Basic guidance related to applying 

for a license. 

(a) * * * 

(2) Foreign Principal Party Controlled 

Export Transaction. In an export 

transaction where the foreign principal 

party in interest is responsible for the 

movement of the items out of the United 

States, either the U.S. principal party in 

interest or, when authorized by 

§ 758.3(b) of the EAR, the foreign 

principal party in interest’s designated 

U.S. agent may apply for a license to 

export items from the United States. 

Prior to submitting an application, the 

U.S. agent that applies for a license on 

behalf of the foreign principal party in 

interest must obtain a power of attorney 

or other written authorization from the 

foreign principal party in interest 

pursuant to § 758.3(b)(2) of the EAR. 

* * * * * 

(b) * * * 

(2) * * * 

(i) * * * 

(A) An agent, applicant, licensee and 

exporter for a foreign principal party in 

interest in a ‘‘Foreign Principal Party 

Controlled Export Transaction;’’ or 

* * * * * 

PART 750—[AMENDED] 

■ 3. The authority citation for Part 750 

continues to read as follows: 

Authority: 50 U.S.C. app. 2401 et seq.; 50 

U.S.C. 1701 et seq.; Sec 1503, Pub. L. 108– 

11, 117 Stat. 559; E.O. 13026, 61 FR 58767, 

3 CFR, 1996 Comp., p. 228; E.O. 13222, 66 

FR 44025, 3 CFR, 2001 Comp., p. 783; 

Presidential Determination 2003–23 of May 

7, 2003, 68 FR 26459, May 16, 2003; Notice 

of August 8, 2013, 78 FR 49107 (August 12, 

2013). 

■ 4. Section 750.7 is amended by 

removing ‘‘routed export transactions’’ 

and adding in its place ‘‘Foreign 

Principal Party Controlled Export 

Transactions’’ in the third sentence of 

paragraph (d). 

PART 758—[AMENDED] 

■ 5. The authority citation for Part 758 

continues to read as follows: 

Authority: 50 U.S.C. app. 2401 et seq.; 50 

U.S.C. 1701 et seq.; E.O. 13222, 66 FR 44025, 

3 CFR, 2001 Comp., p. 783; Notice of August 

8, 2013, 78 FR 49107 (August 12, 2013). 

■ 6. Section 758.1 is amended by: 

■ a. Removing ‘‘routed transactions’’ 

and adding in its place ‘‘Foreign 

Principal Party Controlled Export 

Transactions’’ in paragraph (f)(2); and 

■ b. Removing ‘‘routed transaction’’ and 

adding in its place ‘‘Foreign Principal 

Party Controlled Export Transaction’’ in 

paragraph (h)(1)(i). 

■ 7. Section 758.3 is revised to read as 

follows: 

§ 758.3 Responsibilities of parties to the 

transaction. 

All parties that participate in 

transactions subject to the EAR must 

comply with the EAR. Parties are free to 

structure transactions as they wish, and 

to delegate functions and tasks as they 

deem necessary, so long as the 

transaction complies with the EAR. 

However, acting through a forwarding or 

other agent, or delegating or 

redelegating authority, does not in and 

of itself relieve any party of 

responsibility for compliance with the 

EAR. 

(a) Export transactions. The U.S. 

principal party in interest is the 

exporter, except in a ‘‘Foreign Principal 

Party Controlled Export Transaction’’ 

described in paragraph (b) of this 

Section. The exporter must determine 

licensing authority (License or License 

Exception) or that no license is required 

(NLR), and obtain the appropriate 

license or other authorization, if 

necessary, prior to exporting. The 

exporter may hire forwarding or other 

agents to perform these tasks, but doing 

so does not relieve the exporter of these 

responsibilities. 

(b) Foreign Principal Party Controlled 

Export Transaction. In export 

transactions where the foreign principal 

party in interest is responsible for the 

movement of the items out of the United 

States, the U.S. principal party in 

interest may allow the foreign principal 

party in interest to assume 

responsibility for determining licensing 

requirements and, if necessary, 

obtaining a license or other export 

authorization, subject to the 

requirements set forth in the remainder 

of this paragraph. Absent full 

compliance with these requirements, 

the U.S. principal party in interest is the 

exporter for purposes of the EAR, and 

must determine licensing requirements 

and obtain the appropriate license or 

other export authorization, if necessary. 

All provisions of the EAR, including the 

end-use and end-user controls found in 

Part 744 of the EAR, and the General 

Prohibitions found in Part 736 of the 

EAR, apply to all parties to a Foreign 

Principal Party Controlled Export 

Transaction. 

(1) Written Assumption of 

Responsibility. The U.S. principal party 

in interest may assign the foreign 

principal party in interest, in a writing, 

responsibility for determining licensing 

requirements and obtaining license 

authority, if necessary. The foreign 

principal party in interest must provide 

the U.S. principal party in interest a 

written document that acknowledges 

the foreign principal party in interest’s 

assumption of the responsibility and 


tkelley on DSK3SPTVN1PROD with PROPOSALS
7110 Federal Register / Vol. 79, No. 25 / Thursday, February 6, 2014 / Proposed Rules 

identifies the U.S. agent of the foreign 

principal party in interest authorized to 

act as exporter for export licensing 

purposes. One writing may cover 

multiple transactions between the same 

principals. 

(2) Power of Attorney or Other Written 

Authorization. The foreign principal 

party in interest must designate an agent 

in the United States for a ‘‘Foreign 

Principal Party Controlled Export 

Transaction.’’ The U.S. agent must 

obtain a power of attorney or other 

written authorization from the foreign 

principal party in interest before it may 

act on its behalf or apply for a license. 

Upon request, the foreign principal 

party in interest must provide the U.S. 

principal party in interest with a copy 

of the power of attorney or other written 

authorization. 

(3) Information Sharing Requirements. 

(i) The U.S. principal party in interest, 

upon request, must provide the foreign 

principal party in interest and its 

forwarding or other agent with the 

correct Export Control Classification 

Number (ECCN), or with sufficient 

technical information to determine 

classification. In addition, the U.S. 

principal party in interest must provide 

the foreign principal party in interest or 

the foreign principal’s agent any 

information that it knows may affect the 

determination of license requirements 

or export authorization. 

(ii) The foreign principal party in 

interest must authorize the U.S. 

principal party in interest to obtain from 

the foreign principal party in interest’s 

U.S. agent the following information, 

and direct its U.S. agent to provide such 

information to the U.S. principal party 

in interest, upon request: 

(A) Date of export; 

(B) Port of export; 

(C) Country of ultimate destination; 

(D) Destination port; 

(E) Method of transportation; 

(F) Specific carrier identification; and 

(G) Export authorization (e.g., license 

number, license exemption, or NLR 

designation). 

PART 772—[AMENDED] 

■ 8. The authority citation for part 772 

continues to read as follows: 

Authority: 50 U.S.C. app. 2401 et seq.; 50 

U.S.C. 1701 et seq.; E.O. 13222, 66 FR 44025, 

3 CFR, 2001 Comp., p. 783; Notice of August 

08, 2013, 78 FR 49107 (August 12, 2013). 

■ 9. Section 772 is amended by: 

■ a. Adding the definition for ‘‘Foreign 

Principal Party Controlled Export 

Transaction’’ in alphabetical order, as 

set forth below; 

■ b. Revising the definition for 

‘‘Forwarding agent’’, as set forth below; 

and 

■ c. Removing the definition of ‘‘Routed 

export transaction.’’ 

§ 772.1 Definitions of terms as used in the 

Export Administration Regulations (EAR). 

* * * * * 

Foreign Principal Party Controlled 

Export Transaction. A transaction 

meeting the requirements of § 758.3(b), 

where the foreign principal party in 

interest assumes responsibility for 

determining licensing requirements and 

obtaining license authority through its 

U.S. agent. The assumption of 

responsibility for determining licensing 

requirements and obtaining license 

authority is only authorized when the 

foreign principal party in interest is 

responsible for the movement of the 

items out of the United States. 

* * * * * 

Forwarding agent. The person in the 

United States who is authorized by a 

principal party in interest to perform the 

services required to facilitate the export 

of the items from the United States. This 

may include air couriers or carriers. In 

Foreign Principal Party Controlled 

Export Transactions, the forwarding 

agent and the exporter may be the same 

for compliance purposes under the EAR. 

* * * * * 

Dated: January 15, 2014. 

Kevin J. Wolf, 

Assistant Secretary for Export 

Administration. 

[FR Doc. 2014–01176 Filed 2–5–14; 8:45 am] 

BILLING CODE 3510–33–P 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Part 1 

[REG–143874–10] 

RIN 1545–BJ92 

Calculation of UBTI for Certain Exempt 

Organizations 

AGENCY: Internal Revenue Service (IRS), 

Treasury. 

ACTION: Withdrawal of notice of 

proposed rulemaking and notice of 

proposed rulemaking. 

SUMMARY: This document contains a 

new proposed regulation providing 

guidance on how certain organizations 

that provide employee benefits must 

calculate unrelated business taxable 

income (UBTI). This document also 

withdraws the notice of proposed 

rulemaking relating to UBTI that was 

published on February 4, 1986. 

DATES: The notice of proposed 

rulemaking that was published on 

February 4, 1986, at 51 FR 4391 is 

withdrawn as of February 6, 2014. 

Written or electronic comments and 

request for a public hearing must be 

received by May 7, 2014. 

ADDRESSES: Send Submissions to: 

CC:PA:LPD:PR (REG–143874–10), Room 

5203, Internal Revenue Service, P.O. 

Box 7604, Ben Franklin Station, 

Washington, DC 20224. Submissions 

may be hand delivered Monday through 

Friday between the hours of 8 a.m. and 

4 p.m. to CC:PA:LPD:PR (REG–143874– 

10), Courier’s Desk, Internal Revenue 

Service, 1111 Constitution Avenue NW., 

Washington, DC, or sent electronically 

via the Federal eRulemaking Portal at 

www.regulations.gov (IRS REG–143874– 

10). 

FOR FURTHER INFORMATION CONTACT: 

Concerning the proposed regulation, 

Dara Alderman or Janet Laufer at (202) 

317–5500 (not a toll-free number); 

concerning submissions of comments 

and/or to request a hearing, 

Oluwafunmilayo (Fumni) Taylor at 

(202) 317–6901 (not a toll-free number). 

SUPPLEMENTARY INFORMATION: 

Background 

This document contains proposed 

Income Tax Regulations (26 CFR part 1) 

under section 512(a) of the Code. 

Organizations that are otherwise exempt 

from tax under section 501(a) are subject 

to tax on their unrelated business 

taxable income (UBTI) under section 

511(a). Section 512(a) of the Code 

generally defines UBTI of exempt 

organizations and provides special rules 

for calculating UBTI for organizations 

described in section 501(c)(7) (social 

and recreational clubs), voluntary 

employees’ beneficiary associations 

described in section 501(c)(9) (VEBAs), 

supplemental unemployment benefit 

trusts described in section 501(c)(17) 

(SUBs), and group legal services 

organizations described in section 

501(c)(20) (GLSOs). 

Section 512(a)(1) provides a general 

rule that UBTI is the gross income from 

any unrelated trade or business 

regularly carried on by the organization, 

less certain deductions. Under section 

512(a)(3)(A), in the case of social and 

recreational clubs, VEBAs, SUBs, and 

GLSOs, UBTI is defined as gross 

income, less directly connected 

expenses, but excluding ‘‘exempt 

function income.’’ 

Exempt function income is defined in 

section 512(a)(3)(B) as gross income 

from two sources. The first type of 

exempt function income is amounts 

paid by members as consideration for 

providing the members or their 

dependents or guests with goods, 


tkelley on DSK3SPTVN1PROD with PROPOSALS