This section of the FEDERAL REGISTER

contains regulatory documents having general

applicability and legal effect, most of which

are keyed to and codified in the Code of

Federal Regulations, which is published under

50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by

the Superintendent of Documents. Prices of

new books are listed in the first FEDERAL

REGISTER issue of each week.

Rules and Regulations Federal Register

1059 

Vol. 76, No. 5 

Friday, January 7, 2011 

DEPARTMENT OF COMMERCE 

Bureau of Industry and Security 

15 CFR Parts 732, 734, 740, 772, and 

774 

[Docket No. 100108014–0121–01] 

RIN 0694–AE82 

Publicly Available Mass Market 

Encryption Software and Other 

Specified Publicly Available 

Encryption Software in Object Code 

AGENCY: Bureau of Industry and 

Security, Commerce. 

ACTION: Final rule. 

SUMMARY: The Bureau of Industry and 

Security (BIS) is removing from the 

scope of items subject to the Export 

Administration Regulations (EAR) 

‘‘publicly available’’ mass market 

encryption object code software with a 

symmetric key length greater than 64- 

bits, and ‘‘publicly available’’ encryption 

object code classified under Export 

Control Classification Number (ECCN) 

5D002 on the Commerce Control List 

when the corresponding source code 

meets the criteria specified under 

License Exception TSU. This change is 

being made pursuant to a determination 

by BIS that, because there are no 

regulatory restrictions on making such 

software ‘‘publicly available,’’ and 

because, once it is ‘‘publicly available,’’ 

by definition it is available for 

download by any end user without 

restriction, removing it from the 

jurisdiction of the EAR will have no 

effect on export control policy. This 

action will not result in the decontrol of 

source code classified under ECCN 

5D002, but it will result in a 

simplification of the regulatory 

provisions for publicly available mass 

market software and specified 

encryption software in object code. 

DATES: This rule is effective: January 7, 

2011. 

FOR FURTHER INFORMATION CONTACT: For 

questions of a technical nature, contact: 

the Information Technology Division, 

Office of National Security and 

Technology Transfer Controls at (202) 

482–0707 or by e-mail 

cpratt@bis.doc.gov. 

For questions of a general nature, 

contact: Sharron Cook, Office of 

Exporter Services, Bureau of Industry 

and Security, U.S. Department of 

Commerce at (202) 482–2440 or by 

e-mail to scook@bis.doc.gov. 

SUPPLEMENTARY INFORMATION: 

Background 

This rule removes from the 

jurisdiction of the EAR mass market 

encryption software and specified 

encryption object code that is publicly 

available. Publicly available software, 

other than encryption software, is not 

subject to the EAR. Certain publicly 

available encryption software has 

remained subject to the jurisdiction of 

the EAR since the mid-1990s, when 

commercial items incorporating 

encryption functionality were 

transferred to the jurisdiction of the 

EAR (see § 734.3(b)(3) of the EAR). At 

that time, much less mass market 

software was ‘‘publicly available’’ than is 

the case today. Because of the much 

wider array of ‘‘publicly available’’ mass 

market and other encryption software in 

object code, BIS recently reviewed the 

provisions of the EAR that retained 

jurisdiction over such software. 

Pursuant to this review, BIS determined 

that there are no regulatory restrictions 

on making such software ‘‘publicly 

available.’’ Moreover, because, once it is 

‘‘publicly available,’’ it is, by definition, 

available for download by any end user 

without restriction, removing it from the 

jurisdiction of the EAR will have no 

effect on export control policy. 

Removing these items from EAR 

jurisdiction will also result in a 

simplification of the regulatory 

provisions. Accordingly, BIS believes 

that its regulatory discretion should no 

longer be exercised in a manner that 

such encryption software remains 

subject to the EAR. 

During its review, BIS noted that the 

EAR currently provide that making 

certain encryption software ‘‘publicly 

available’’ by posting it on the Internet 

where it may be downloaded by anyone 

does not establish ‘‘knowledge’’ of a 

prohibited export or reexport. 

Additionally, such activity also does not 

trigger any ‘‘red flags’’ that impose an 

affirmative duty to inquire under the 

‘‘Know Your Customer’’ guidance 

provided in the EAR (see 67 FR 38855, 

38857, June 6, 2002). Therefore, a 

person or company does not violate the 

EAR if it posts ‘‘mass market’’ 

encryption software on the Internet for 

free and anonymous download (i.e., 

makes it ‘‘publicly available’’), and the 

software is downloaded by an 

anonymous person from anywhere in 

the world. In addition, if the person or 

company ‘‘publishes’’ mass market 

encryption software by another means, 

the person or company does not violate 

the EAR. 

Through this rule, BIS removes two 

kinds of encryption software from the 

jurisdiction of the EAR: (1) Publicly 

available encryption software in object 

code with a symmetric key length 

greater than 64-bits that has been 

determined to be mass market software 

under section 742.15(b) of the EAR and 

has been reclassified under ECCN 

5D992; and (2) publicly available 

encryption software in object code 

classified under ECCN 5D002 when the 

corresponding source code meets the 

criteria specified in section 740.13(e) of 

the EAR. 

Publicly available mass market 

encryption object code software: 

Encryption software in object code that 

has been reviewed by BIS and 

determined to be mass market software 

under the section 742.15(b)(3) 

procedure, or software that does not 

require review but has been selfclassified by the exporter as mass 

market software under section 

742.15(b)(1), is reclassified from Export 

Control Classification Number (ECCN) 

5D002 to ECCN 5D992 on the Commerce 

Control List (CCL) (Supplement No. 1 to 

Part 774 of the EAR). ECCN 5D992 

software is controlled for anti-terrorism 

reasons, and requires a license for 

export to Iran, Cuba, Syria, Sudan and 

North Korea (Country Group E:1 

countries; see Supplement No. 1 to Part 

740). The procedure to self-classify 

qualifying mass market software under 

ECCN 5D992 requires both the 

submission of an encryption registration 

to BIS in accordance with section 

742.15(b)(7), and the submission of an 

annual self-classification report in 


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1060 Federal Register / Vol. 76, No. 5 / Friday, January 7, 2011 / Rules and Regulations 

accordance with section 742.15(c). 

Meanwhile, for specified software 

described in section 742.15(b)(3), the 

procedure to obtain ‘‘mass market’’ 

classification under ECCN 5D992 

requires both the submission of an 

encryption registration and a 

classification request to BIS, in 

accordance with section 742.15(b)(7). 

This rule amends the EAR to provide 

that, once the registration is submitted 

and the encryption software is properly 

classified as ‘‘mass market’’ under the 

relevant requirements of section 

742.15(b), if the software is then made 

‘‘publicly available,’’ it is not subject to 

the EAR. Software authorized for export 

and reexport under section 742.15(b)(1) 

pursuant to registration and selfclassification must still be included in 

the exporter’s annual self-classification 

report for the calendar year during 

which it was self-classified as ‘‘mass 

market’’ software. 

Publicly available encryption object 

code corresponding to source code 

made eligible for License Exception 

TSU. Section 740.13(e)(1) of the EAR 

authorizes the export and reexport of 

encryption object code if both the object 

code and the source code from which it 

is compiled would be considered 

publicly available under section 

734.3(b)(3) of the EAR, were they not 

classified under ECCN 5D002. Section 

740.13(e)(3) requires that the source 

code or the location of the source code 

be notified to the BIS and to the ENC 

Encryption Request Coordinator before 

becoming eligible for License Exception 

TSU. As with the publicly available 

mass market encryption software, such 

object code may be exported to any 

destination, via anonymous download, 

without violating the EAR. For the 

reasons discussed above, BIS’s 

regulatory discretion under the EAR 

should no longer be exercised in a 

manner that renders such software 

subject to the EAR. 

Pursuant to section 734.2(b)(9)(ii) of 

the EAR, publicly available encryption 

source code that is classified under 

ECCN 5D002 must be notified to BIS 

and the ENC Encryption Request 

Coordinator under the provisions of 

License Exception TSU (section 

740.13(e)). This rule amends this 

provision to state that the publicly 

available encryption object code 

corresponding to publicly available 

source code eligible for export under 

section 740.13(e) is no longer subject to 

the EAR. 

In addition, the requirements for 

encryption registration and 

classification as described in section 

742.15(b) pertain only to ‘‘publicly 

available’’ mass market encryption 

software with symmetric key length 

exceeding 64 bits. ‘‘Publicly available’’ 

mass market encryption software that 

does not meet the criterion of 

‘‘symmetric key length exceeding 64 

bits’’ is not subject to the EAR; neither 

is any ‘‘publicly available’’ encryption 

software that is classified under ECCN 

5D992 for reasons other than a ‘‘mass 

market’’ determination. Moreover, 

several types of mass market encryption 

software that remain under the 

jurisdiction of the EAR—even when 

they are ‘‘publicly available’’—are no 

longer subject to encryption registration 

and classification requirements under 

section 742.15(b), including, since 

October 2008, software performing 

‘‘ancillary cryptography.’’ The removal 

of the previous classification review 

requirement demonstrates that there is 

no regulatory interest in maintaining 

EAR jurisdiction over these products 

when they are ‘‘publicly available.’’ 

The following specific revisions are 

made to the EAR: 

Section 732.2 ‘‘Steps Regarding Scope of 

the EAR’’ 

This rule revises paragraph (b) in 

section 732.2 and: (1) Replaces the 

phrase ‘‘controlled for EI reasons under 

ECCN 5D002’’ with ‘‘classified under 

ECCN 5D002;’’ (2) replaces the phrase 

‘‘shall be subject to the EAR’’ with the 

phrase ‘‘is subject to the EAR;’’ (3) 

removes the phrase ‘‘and mass market 

encryption software with symmetric key 

length exceeding 64-bits classified 

under ECCN 5D992;’’ and (4) adds the 

phrase, ‘‘except for publicly available 

encryption object code software 

classified under ECCN 5D002 when the 

corresponding source code meets the 

criteria specified in § 740.13(e) of the 

EAR.’’ This revision narrows the scope 

of publicly available software subject to 

the EAR to include only encryption 

source code classified under ECCN 

5D002. The sixth sentence of section 

732.2 is removed by this rule, as it is 

redundant. 

Part 734 ‘‘Scope of the EAR’’ 

This rule removes the phrase ‘‘and 

object code’’ in the last sentence in 

paragraph (b)(9)(ii) and adds a new 

sentence at the end as follows: ‘‘Publicly 

available encryption software in object 

code that corresponds to encryption 

source code made eligible for License 

Exception TSU under section 740.13(e) 

is not subject to the EAR.’’ In section 

734.3, this rule revises paragraph (b)(3) 

by replacing the phrase ‘‘controlled for 

‘EI’ reasons’’ with ‘‘classified’’ and 

removing the phrase ‘‘and mass market 

encryption software with symmetric key 

length exceeding 64-bits controlled 

under ECCN 5D992.’’ In addition, this 

rule adds the following sentence to the 

Note to paragraphs (b)(2) and (b)(3): 

‘‘Publicly available encryption object 

code software classified under ECCN 

5D002 is not subject to the EAR when 

the corresponding source code meets 

the criteria specified in § 740.13(e) of 

the EAR.’’ 

In section 734.7, ‘‘Published 

Information and Software,’’ this rule 

revises paragraph (c) by adding the 

modifier ‘‘published’’ before ‘‘encryption 

software,’’ replacing the word 

‘‘controlled’’ with ‘‘classified,’’ and 

adding a reference to ‘‘Supplement No. 

1 to part 774 of the EAR’’ for the 

Commerce Control List to add clarity to 

the first sentence. This rule also adds 

the phrase ‘‘except publicly available 

encryption object code software 

classified under ECCN 5D002 when the 

corresponding source code meets the 

criteria specified in § 740.13(e) of the 

EAR,’’ and removes the phrase ‘‘and 

mass market encryption software with 

symmetric key length exceeding 64-bits 

controlled under ECCN 5D992’’ to 

remove such software from being 

subject to the EAR for reasons stated in 

the preamble to this rule. This rule also 

replaces the word ‘‘remain’’ with the 

word ‘‘remains’’ in the first sentence of 

section 734.7 to maintain accurate 

grammar in the revised sentence. This 

rule also makes consistent changes to 

sections 734.8 (‘‘Information resulting 

from fundamental research’’) and 734.9 

(‘‘Educational information’’). 

This rule amends Supplement No. 1 

to part 734 ‘‘Questions and Answers— 

Technology and Software Subject to the 

EAR’’ by removing the question and 

answer to G(3). The question and 

answer indicated an exception to the 

published criteria in section 734.7. The 

exception allowed software to become 

not subject to the EAR based on being 

considered published, even if the cost of 

the software was higher than the cost of 

reproduction and distribution. The 

exception required the exporter to 

request this treatment via a 

classification request to BIS. As the 

supplement is guidance, conflicts with 

regulatory text and no known requests 

have come in for this treatment, BIS has 

decided to delete it. 

Section 740.13 ‘‘Technology and 

Software—Unrestricted (TSU)’’ 

Section 740.13 is amended by 

removing the parenthetical phrase ‘‘(and 

corresponding object code)’’ from the 

title of paragraph (e), because publicly 

available corresponding object code is 

not subject to the EAR if the source code 

meets the criteria of 740.13(e) and is 

publicly available. This rule also adds a 


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Federal Register / Vol. 76, No. 5 / Friday, January 7, 2011 / Rules and Regulations 1061 

phrase to the first sentence of paragraph 

(e)(1) that reads ‘‘subject to the 

notification requirements of paragraph 

(e)(3) of this section’’ to link the 

notification requirement with the 

authorization. This rule removes the 

phrase ‘‘without review’’ in the first 

sentence of (e)(1), because it is not 

necessary and may be confusing to state 

what actions are not required to be 

eligible for this license exception. The 

first sentence of (e)(1) is further 

amended by adding the descriptor 

‘‘publicly available’’ in front of 

‘‘encryption source code,’’ to be more 

specific about what type of source code 

is eligible for this license exception. In 

addition, this rule replaces the phrase 

‘‘if not controlled by ECCN 5D002, 

would be considered publicly available 

under § 734.3(b)(3)’’ with ‘‘is subject to 

the EAR pursuant to § 734.3(b)(3)’’ to 

simplify the first sentence in paragraph 

(e)(1). For consistency with the change 

making specified object code not subject 

to the EAR, this rule removes the last 

sentence in paragraph (e)(1), which 

stated ‘‘This paragraph also authorizes 

the export and reexport of the 

corresponding object code (i.e., that 

which is compiled from source code 

that is authorized for export and 

reexport under this paragraph) if both 

the object code and the source code 

from which it is compiled would be 

considered publicly available under 

§ 734.3(b)(3) of the EAR, if they were not 

controlled under ECCN 5D002.’’ 

Section 772.1 ‘‘Definitions of Terms as 

Used in the EAR’’ 

In section 772.1, the definition of the 

term ‘‘commodity’’ is amended by 

removing the last two sentences, 

because they do not contribute to 

defining the term ‘‘commodity,’’ and the 

concepts concerning publicly available 

encryption software can be found in 

more appropriate parts of the EAR, e.g., 

Part 734. 

ECCN 5D002 ‘‘Information Security— 

Software’’ 

In Supplement No. 1 to Part 774 (the 

Commerce Control List), Category 5 

Telecommunications and ‘‘Information 

Security,’’ Part 2 Information Security, 

ECCN 5D002 is amended by revising the 

last note in the License Requirement 

section by replacing the word ‘‘software’’ 

with the words ‘‘source code,’’ and 

removing the parenthetical phrase ‘‘(and 

corresponding object code).’’ This 

amendment is made to conform the text 

of the Note to the revisions made by this 

rule. 

Since August 21, 2001, the Export 

Administration Act has been in lapse. 

However, the President, through 

Executive Order 13222 of August 17, 

2001 (3 CFR, 2001 Comp. 783 (2002)), 

which has been extended by successive 

Presidential Notices, the most recent 

being that of August 12, 2010, 75 FR 

50681 (August 16, 2010), has continued 

the Regulations in effect under the 

International Emergency Economic 

Powers Act (50 U.S.C. 1701 et seq.). 

Rulemaking Requirements 

1. This final rule has been determined 

to be significant for purposes 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 the Paperwork 

Reduction Act of 1995 (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 

involves two collections of information 

subject to the PRA. One of the 

collections has been approved by OMB 

under control number 0694–0088, 

‘‘Multi Purpose Application,’’ and 

carries a burden hour estimate of 58 

minutes for a manual or electronic 

submission. The other collection has 

been approved by OMB under control 

number 0694–0106, ‘‘Reporting and 

Recordkeeping Requirements under the 

Wassenaar Arrangement,’’ and carries a 

burden hour estimate of 21 minutes for 

a manual or electronic submission. Send 

comments regarding these burden 

estimates or any other aspect of these 

collections of information, including 

suggestions for reducing the burden, to 

OMB Desk Officer, New Executive 

Office Building, Washington, DC 20503; 

and to Jasmeet Seehra, OMB Desk 

Officer, by e-mail at 

Jasmeet_K._Seehra@omb.eop.gov or by 

fax to (202) 395–7285; and to the Office 

of Administration, Bureau of Industry 

and Security, Department of Commerce, 

14th and Pennsylvania Avenue, NW, 

Room 6622, Washington, DC 20230. 

3. This rule does not contain policies 

with Federalism implications as that 

term is defined under Executive Order 

13132. 

4. The Department has determined 

that there is good cause under 5 U.S.C. 

553(b)(B) to waive the provisions of the 

Administrative Procedure Act requiring 

notice and the opportunity for public 

comment when such notice and 

comment is contrary to the public 

interest. This rule simplifies the 

regulatory provisions for publicly 

available mass market software and 

specified encryption software in object 

code by removing them from the 

jurisdiction of the EAR. BIS recognized 

that there are no regulatory restrictions 

in making such software ‘‘publicly 

available,’’ and once ‘‘publicly 

available,’’ such software is available for 

download by any end user without 

restriction. Thus, removing such 

‘‘publicly available’’ items from the 

jurisdiction of the EAR has no effect on 

export control policy and clarifies the 

scope of existing BIS controls. The 

greater clarity that this rule provides 

will encourage the exchange of publicly 

available mass market encryption object 

code software and certain publicly 

available encryption object code by the 

exporting community. In effect, this rule 

removes any remaining uncertainty in 

the minds of exporters as to whether 

their actions constitute violations of 

U.S. export control law. Thus, delaying 

the effectiveness of this rule is contrary 

to the public interest. 

For the reasons listed above, good 

cause exists to waive the 30-day delay 

in effectiveness otherwise required by 

the APA. Further, no other law requires 

that a notice of proposed rulemaking 

and an opportunity for public comment 

be given for this direct final rule. 

Accordingly, no regulatory flexibility 

analysis is required and none has been 

prepared. Although notice and 

opportunity for comment are not 

required, BIS is issuing this rule in 

interim final form and is seeking public 

comments on these revisions. 

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, 

14th and Pennsylvania Ave., NW., 

Room 2705, Washington, DC 20230. 

List of Subjects 

15 CFR Part 732 

Administrative practice and 

procedure, Exports, Reporting and 

recordkeeping requirements. 


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1062 Federal Register / Vol. 76, No. 5 / Friday, January 7, 2011 / Rules and Regulations 

15 CFR Part 734 

Administrative practice and 

procedure, Exports, Inventions and 

patents, Research science and 

technology. 

15 CFR Part 740 

Administrative practice and 

procedure, Exports, Reporting and 

recordkeeping requirements. 

15 CFR Part 772 

Exports. 

15 CFR Part 774 

Exports, Reporting and recordkeeping 

requirements. 

■ Accordingly, Parts 732, 734, 740, 772, 

and 774 of the Export Administration 

Regulations (15 CFR Parts 730 through 

774) are amended as follows: 

PART 732—[AMENDED] 

■ 1. The authority citations for Part 732 

continue 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 12, 2010, 75 FR 50681 (August 16, 

2010). 

■ 2. Section 732.2 is amended by 

revising paragraph (b) to read as follows: 

§ 732.2 Steps Regarding Scope of the 

EAR. 

* * * * * 

(b) Step 2: Publicly available 

technology and software. This step is 

relevant for both exports and reexports. 

Determine if your technology or 

software is publicly available as defined 

and explained at part 734 of the EAR. 

Supplement No. 1 to part 734 of the 

EAR contains several practical examples 

describing publicly available technology 

and software that are outside the scope 

of the EAR. The examples are 

illustrative, not comprehensive. Note 

that encryption software classified 

under ECCN 5D002 on the Commerce 

Control List (refer to Supplement No.1 

to Part 774 of the EAR) is subject to the 

EAR even if publicly available, except 

for publicly available encryption object 

code software classified under ECCN 

5D002 when the corresponding source 

code meets the criteria specified in 

§ 740.13(e) of the EAR. 

* * * * * 

PART 734—[AMENDED] 

■ 3. The authority citations for Part 734 

continue to read as follows: 

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

U.S.C. 1701 et seq.; E.O. 12938, 59 FR 59099, 

3 CFR, 1994 Comp., p. 950; E.O. 13020, 61 

FR 54079, 3 CFR, 1996 Comp., p. 219; 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 12, 2010, 75 

FR 50681 (August 16, 2010); Notice of 

November 4, 2010, 75 FR 68673 (November 

8, 2010). 

■ 4. Section 734.2 is amended in the last 

sentence of paragraph (b)(9)(ii) by 

removing the phrase ‘‘and object code’’ 

and adding a new sentence at the end 

to read as follows: 

§ 734.2 Important EAR terms and 

principles. 

* * * * * 

(b) * * * 

(9) * * * 

(ii) * * * Publicly available 

encryption software in object code that 

corresponds to encryption source code 

made eligible for License Exception 

TSU under section 740.13(e) is not 

subject to the EAR. 

■ 5. Section 734.3 is amended by: 

■ a. Revising paragraph (b)(3) 

introductory text; 

■ b. Adding a new sentence to the end 

of the Note to paragraphs (b)(2) and 

(b)(3) to read as follows: 

§ 734.3 Items Subject to the EAR. 

* * * * * 

(b) * * * 

(3) Publicly available technology and 

software, except software classified 

under ECCN 5D002 on the Commerce 

Control List, that: 

* * * * * 

Note to paragraphs (b)(2) and (b)(3) of 

this section: * * * Publicly available 

encryption object code software 

classified under ECCN 5D002 is not 

subject to the EAR when the 

corresponding source code meets the 

criteria specified in § 740.13(e) of the 

EAR. 

* * * * * 

■ 6. Section 734.7 is amended by 

revising paragraph (c) to read as follows: 

§ 734.7 Published information and 

software. 

* * * * * 

(c) Notwithstanding paragraphs (a) 

and (b) of this section, note that 

published encryption software classified 

under ECCN 5D002 on the Commerce 

Control List (Supplement No. 1 to part 

774 of the EAR) remains subject to the 

EAR, except publicly available 

encryption object code software 

classified under ECCN 5D002 when the 

corresponding source code meets the 

criteria specified in § 740.13(e) of the 

EAR. See § 740.13(e) of the EAR for 

eligibility requirements for exports and 

reexports of publicly available 

encryption source code under License 

Exception TSU. 

■ 7. Section 734.8 is amended by 

revising the last two sentences in 

paragraph (a) to read as follows: 

§ 734.8 Information resulting from 

fundamental research. 

(a) * * * Note that the provisions of 

this section do not apply to encryption 

software classified under ECCN 5D002 

on the Commerce Control List 

(Supplement No. 1 to part 774 of the 

EAR), except publicly available 

encryption object code software 

classified under ECCN 5D002 when the 

corresponding source code meets the 

criteria specified in § 740.13(e) of the 

EAR. See § 740.13(e) of the EAR for 

eligibility requirements for exports and 

reexports of publicly available 

encryption source code under License 

Exception TSU. 

* * * * * 

■ 8. Section 734.9 is amended by 

revising the last two sentences to read 

as follows: 

§ 734.9 Educational information. 

* * * Note that the provisions of this 

section do not apply to encryption 

software classified under ECCN 5D002 

on the Commerce Control List, except 

publicly available encryption object 

code software classified under ECCN 

5D002 when the corresponding source 

code meets the criteria specified in 

§ 740.13(e) of the EAR. See § 740.13(e) 

of the EAR for eligibility requirements 

for exports and reexports of publicly 

available encryption source code under 

License Exception TSU. 

Supplement No. 1 to Part 734 

[Amended] 

■ 8. Supplement No. 1 to part 734 is 

amended by removing Question G(3) 

and the answer to G(3). 

PART 740—[AMENDED] 

■ 9. The authority citation for part 740 

continues to read as follows: 

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

U.S.C. 1701 et seq.; 22 U.S.C. 7201 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 12, 2010, 75 

FR 50681 (August 16, 2010). 

■ 10. Section 740.13 is amended by 

revising paragraph (e) to read as follows: 

§ 740.13 Technology and software— 

unrestricted (TSU). 

* * * * * 

(e) Publicly available encryption 

source code. (1) Scope and eligibility. 

Subject to the notification requirements 

of paragraph (e)(3) of this section, this 

paragraph (e) authorizes exports and 

reexports of publicly available 

encryption source code classified under 


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Federal Register / Vol. 76, No. 5 / Friday, January 7, 2011 / Rules and Regulations 1063 

ECCN 5D002 that is subject to the EAR 

(see § 734.3(b)(3) of the EAR). Such 

source code is eligible for License 

Exception TSU under this paragraph (e) 

even if it is subject to an express 

agreement for the payment of a licensing 

fee or royalty for commercial production 

or sale of any product developed using 

the source code. 

(2) Restrictions. This paragraph (e) 

does not authorize: 

(i) Export or reexport of any 

encryption software classified under 

ECCN 5D002 that does not meet the 

requirements of paragraph (e)(1), even if 

the software incorporates or is specially 

designed to use other encryption 

software that meets the requirements of 

paragraph (e)(1) of this section; or 

(ii) Any knowing export or reexport to 

a country listed in Country Group E:1 in 

Supplement No. 1 to part 740 of the 

EAR. 

(3) Notification requirement. You 

must notify BIS and the ENC Encryption 

Request Coordinator via e-mail of the 

Internet location (e.g., URL or Internet 

address) of the publicly available 

encryption source code or provide each 

of them a copy of the publicly available 

encryption source code. If you update or 

modify the source code, you must also 

provide additional copies to each of 

them each time the cryptographic 

functionality of the source code is 

updated or modified. In addition, if you 

posted the source code on the Internet, 

you must notify BIS and the ENC 

Encryption Request Coordinator each 

time the Internet location is changed, 

but you are not required to notify them 

of updates or modifications made to the 

encryption source code at the 

previously notified location. In all 

instances, submit the notification or 

copy to crypt@bis.doc.gov and to 

enc@nsa.gov. 

Note to paragraph (e): Posting 

encryption source code on the Internet 

(e.g., FTP or World Wide Web site) 

where it may be downloaded by anyone 

neither establishes ‘‘knowledge’’ of a 

prohibited export or reexport for 

purposes of this paragraph, nor triggers 

any ‘‘red flags’’ imposing a duty to 

inquire under the ‘‘Know Your 

Customer’’ guidance provided in 

Supplement No. 3 to part 732 of the 

EAR. Publicly available encryption 

object code software classified under 

ECCN 5D002 is not subject to the EAR 

when the corresponding source code 

meets the criteria specified in this 

paragraph (e), see § 734.3(b)(3) of the 

EAR. 

* * * * * 

PART 742—[AMENDED] 

■ 11. The authority citation for part 742 

continues to read as follows: 

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

U.S.C. 1701 et seq.; 22 U.S.C. 3201 et seq.; 

42 U.S.C. 2139a; 22 U.S.C. 7201 et seq.; 22 

U.S.C. 7210; Sec 1503, Pub. L. 108–11, 117 

Stat. 559; E.O. 12058, 43 FR 20947, 3 CFR, 

1978 Comp., p. 179; E.O. 12851, 58 FR 33181, 

3 CFR, 1993 Comp., p. 608; E.O. 12938, 59 

FR 59099, 3 CFR, 1994 Comp., p. 950; 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 12, 2010, 75 FR 

50681 (August 16, 2010); Notice of November 

4, 2010, 75 FR 68673 (November 8, 2010). 

■ 11. Section 742.15 is amended: 

■ a. By revising the fourth sentence of 

paragraph (b) introductory text; and 

■ b. By adding a note to paragraph (b) 

introductory text to read as follows: 

* * * * * 

(b) * * * Exports and reexports 

authorized under paragraphs (b)(1) and 

(b)(3) of this section (including of mass 

market encryption software that would 

be considered publicly available under 

§ 734.3(b)(3) of the EAR) must be 

supported by an encryption registration 

in accordance with paragraph (b)(7) of 

this section and the specific instructions 

of paragraph (r)(1) of Supplement No. 2 

to part 748 of the EAR. * * * 

Note to introductory text of paragraph (b): 

Mass market encryption software that would 

be considered publicly available under 

§ 734.3(b)(3) of the EAR, and is authorized for 

export and reexport under this paragraph (b), 

remains subject to the EAR until the 

encryption registration and all applicable 

classification or self-classification 

requirements set forth in this section are 

fulfilled. 

* * * * * 

PART 772—[AMENDED] 

■ 11. The authority citation for part 772 

continue 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 

12, 2010, 75 FR 50681 (August 16, 2010). 

§ 772.1 [Amended] 

■ 12. In § 772.1, the definition of the 

term ‘‘commodity’’ is amended by 

removing the last two sentences of the 

definition. 

PART 774—[AMENDED] 

■ 13. 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); 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; 15 U.S.C. 1824a; 50 U.S.C. app. 5; 22 

U.S.C. 7201 et seq.; 22 U.S.C. 7210; 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 12, 2010, 75 

FR 50681 (August 16, 2010). 

■ 14. In Supplement No. 1 to part 774 

(the Commerce Control List), Category 5, 

Part 2, Export Control Classification 

Number (ECCN) 5D002 is amended by 

adding the heading ‘‘License 

Requirements’’ after the ECCN heading 

and revising the last note in the License 

Requirements section to read as follows: 

Supplement No. 1 to Part 774 

* * * * * 

5D002 Information Security— 

‘‘Software as follows (see List of Items 

Controlled).’’ 

License Requirements 

* * * * * 

Note: Encryption source code classified 

under this entry remains subject to the EAR 

even when made publicly available in 

accordance with part 734 of the EAR. 

However, publicly available encryption 

object code software classified under ECCN 

5D002 is not subject to the EAR when the 

corresponding source code meets the criteria 

specified in § 740.13(e), see also § 734.3(b)(3) 

of the EAR. 

* * * * * 

Dated: December 20, 2010. 

Kevin J. Wolf, 

Assistant Secretary for Export 

Administration. 

[FR Doc. 2010–32803 Filed 1–6–11; 8:45 am] 

BILLING CODE 3510–33–P 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Part 1 

[TD 9513] 

RIN 1545–BJ30 

Modifications of Debt Instruments 

AGENCY: Internal Revenue Service (IRS), 

Treasury. 

ACTION: Final regulation. 

SUMMARY: This document contains final 

regulations relating to the modification 

of debt instruments. The regulations 

clarify the extent to which the 

deterioration in the financial condition 

of the issuer is taken into account to 

determine whether a modified debt 

instrument will be recharacterized as an 

instrument or property right that is not 

debt. The regulations provide needed 


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