```

[Federal Register Volume 77, Number 97 (Friday, May 18, 2012)]
[Proposed Rules]
[Pages 29564-29575]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-12124]

========================================================================
Proposed Rules
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains notices to the public of 
the proposed issuance of rules and regulations. The purpose of these 
notices is to give interested persons an opportunity to participate in 
the rule making prior to the adoption of the final rules.

========================================================================


Federal Register / Vol. 77, No. 97 / Friday, May 18, 2012 / Proposed 
Rules

[[Page 29564]]

DEPARTMENT OF COMMERCE

Bureau of Industry and Security

15 CFR Parts 742, 772 and 774

[Docket No. 111229800-2073-01]
RIN 0694-AF51

Revisions to the Export Administration Regulations: Auxiliary and 
Miscellaneous Items That No Longer Warrant Control Under the United 
States Munitions List and Items on the Wassenaar Arrangement Munitions 
List

AGENCY: Bureau of Industry and Security, Department of Commerce.

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: The Bureau of Industry and Security (BIS) publishes this 
action to propose how auxiliary and miscellaneous military equipment 
and related articles the President determines no longer warrant control 
under Category XIII (Auxiliary Military Equipment) of the United States 
Munitions List (USML) would be controlled under the Commerce Control 
List (CCL) in new Export Control Classification Numbers (ECCNs) 0A617, 
0B617, 0C617, 0D617, and 0E617 as part of the proposed new ``600 
series'' of ECCNs.
    This rule proposes also to integrate into those five new ECCNs 
items within the scope of Wassenaar Arrangement Munitions List (WAML) 
Category 17 that would be removed from the USML, or that are not 
specifically identified on the USML or CCL but that are currently 
subject to USML jurisdiction. Finally, this rule proposes to control 
some items now classified under ECCNs 0A018, 0A918 and 0E018 under new 
ECCNs 0A617 and 0E617. This action would consolidate the above-
mentioned auxiliary and miscellaneous military equipment and related 
articles on the CCL in the proposed new ``600 series.'' This rule is 
one of a planned series proposing how various types of articles that 
the President determines, as part of the Administration's Export 
Control Reform Initiative, no longer warrant control on the USML under 
the International Traffic in Arms Regulations (ITAR), would be 
controlled on the CCL in accordance with the requirements of the Export 
Administration Regulations (EAR). This proposed rule is being published 
in conjunction with a proposed rule from the Department of State, 
Directorate of Defense Trade Controls, which would amend the list of 
articles controlled by USML Category XIII.

DATES: Comments must be received by July 2, 2012.

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-2012-0014.
     By email directly to publiccomments@bis.doc.gov. Include 
RIN 0694-AF51 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-AF51.

FOR FURTHER INFORMATION CONTACT: Michael Rithmire, Office of National 
Security and Technology Transfer Controls, Bureau of Industry and 
Security, U.S. Department of Commerce, Telephone: (202) 482-6105, 
Email: Michael.Rithmire@bis.doc.gov.

SUPPLEMENTARY INFORMATION:

Background

    On July 15, 2011, as part of the Administration's ongoing Export 
Control Reform Initiative, the Bureau of Industry and Security (BIS) 
published a proposed rule (76 FR 41958) (herein the ``July 15 proposed 
rule'') that set forth a framework for how to transfer articles the 
President determines, in accordance with section 38(f) of the Arms 
Export Control Act (AECA) (22 U.S.C. 2778(f)), no longer warrant 
control on the United States Munitions List (USML) to control under the 
Commerce Control List (CCL) in Supplement No. 1 to Part 774 of the 
Export Administration Regulations (EAR). That framework included a 
proposal by BIS describing a new ``600 series'' set of Export Control 
Classification Numbers (ECCNs) to control defense articles that move to 
the CCL from the USML, as well as Wassenaar Arrangement Munitions List 
(WAML) items. Specifically, the proposed new ``600 series'' entries 
would capture WAML and formerly USML end items and related items that 
have been removed from the USML or that are not specifically identified 
on the USML or CCL. It would also control some items now classified on 
the CCL. These actions would consolidate control of munitions items and 
related articles on the CCL.
    On November 7, 2011 (76 FR 68675), BIS published a proposed rule 
(herein the ``November 7 proposed rule'') proposing several changes to 
the framework initially proposed in the July 15 proposed rule.
    Following the structure of the July 15 and November 7 proposed 
rules, this action proposes to control in new ECCNs 0A617, 0B617, 
0C617, 0D617, and 0E617: Auxiliary and miscellaneous military equipment 
and related items from WAML 17 that would be removed from USML Category 
XIII under the International Traffic in Arms Regulations (ITAR) because 
the President determines they no longer warrant control under USML 
Category XIII; items not specifically identified on the USML or CCL, 
but that currently are subject to USML jurisdiction; and items ending 
in ``018'' on the CCL.
    The proposed changes described in this rule and the State 
Department's proposed amendments to Category XIII of the USML are based 
on a review of the USML by the Defense Department, which worked with 
the Departments of State and Commerce in preparing the proposed rules. 
That review focused on identifying the types of articles that are now 
controlled by USML Category XIII and other relevant USML Categories 
that are either: (i) Inherently military and otherwise warrant control 
on the USML; or (ii) a type common to civil applications, possessing 
parameters or characteristics that provide a critical military or 
intelligence advantage to the United States, and that are almost 
exclusively available from the United States. If an article satisfied 
either or both of those criteria, the article remains on the USML. If 
an article did not satisfy either criterion, but was determined, 
nonetheless, to be a type of article that is now on the corresponding 
USML or the Munitions List of the Wassenaar Arrangement on Export 
Controls for Conventional Arms and

[[Page 29565]]

Dual-Use Goods and Technologies (Wassenaar Arrangement Munitions List 
or WAML), then it has been identified in one of the new ECCNs in this 
proposed rule. The license requirements, license policies and other 
EAR-specific controls for such items that are proposed in this action 
would, when considered in the context of the other proposed amendments 
to the USML and the CCL, enhance national security by: (i) Allowing for 
greater interoperability with North Atlantic Treaty Organization (NATO) 
and other allies while maintaining and expanding robust controls that, 
in some instances, include prohibitions on exports or reexports 
destined for other countries or intended for proscribed end users and 
end uses; (ii) enhancing the U.S. defense industrial base by, for 
example, reducing the current incentives for foreign companies to 
design out or avoid U.S.-origin ITAR-controlled content, particularly 
with respect to generic, unspecified parts and components; and (iii) 
permitting the U.S. Government to focus its resources on controlling, 
monitoring, investigating, analyzing, and, if need be, prohibiting 
exports and reexports of more significant items to destinations, end 
users, and end uses of greater concern than NATO allies and other 
multi-regime partners.
    Pursuant to section 38(f) of the AECA, the President shall review 
the USML ``to determine what items, if any, no longer warrant export 
controls under'' the AECA. The President must report the results of the 
review to Congress and wait 30 days before removing any such items from 
the USML. The report must ``describe the nature of any controls to be 
imposed on that item under any other provision of law.'' 22 U.S.C. 
2778(f)(1).
    As noted above, this action proposes to control under the EAR 
auxiliary and miscellaneous military equipment and related articles 
currently in USML Category XIII under the ITAR that the President 
determines no longer warrant control on the USML. If implemented, this 
rule would control under the EAR: Items from WAML Category 17 that 
would be removed from USML Category XIII; items not specifically 
identified on the USML or CCL but that currently are subject to USML 
jurisdiction; and items ending in ``018'' on the CCL, specifically, 
some items now classified under ECCNs 0A018, 0A918 and 0E018 under new 
ECCNs 0A617 and 0E617. This would consolidate the above-mentioned 
auxiliary and miscellaneous military equipment and related articles on 
the CCL in a proposed new ``600 series.'' As this rule describes the 
controls that would be in place for miscellaneous items, it also 
specifies how the CCL would be amended to clarify where an item may be 
controlled under another USML Category or ECCN.
    In the July 15 proposed rule, BIS proposed creating a series of new 
ECCNs to control items that: (i) Would be moved from the USML to the 
CCL; or (ii) are listed on the Wassenaar Arrangement Munitions List and 
are already controlled elsewhere on the CCL. That proposed rule 
referred to this series as the ``600 series'' because the third 
character in each of the new ECCNs would be a ``6.'' The first two 
characters of the ``600 series'' ECCNs serve the same function as 
described for any other ECCN in Sec.  738.2 of the EAR. The first 
character is a digit in the range 0 through 9 that identifies the 
Category on the CCL in which the ECCN is located. The second character 
is a letter in the range A through E that identifies the product group 
within a CCL Category. In the ``600 series,'' the third character is 
the number 6. With few exceptions, the final two characters identify 
the WAML category that covers items that are the same or similar to 
items in a particular ``600 series'' ECCN.
    This proposed rule would create five new ``600 series'' ECCNs in 
CCL Category 0 (ECCNs 0A617, 0B617, 0C617, 0D617, and 0E617). ECCN 
0A617 would cover miscellaneous equipment, materials, and related 
commodities, including crew kits. ECCN 0B617 would cover test, 
inspection, and production ``equipment'' and related commodities 
``specially designed'' for the ``development'' or ``production'' of 
commodities controlled by ECCN 0A617 or USML Category XIII. ECCN 0C617 
would cover miscellaneous materials ``specially designed'' for military 
use. ECCN 0D617 would cover ``software'' ``specially designed'' for the 
``development,'' ``production,'' operation, installation, maintenance, 
repair, overhaul or refurbishing of commodities controlled by 0A617, 
``equipment'' controlled by 0B617, or materials controlled by 0C617. 
ECCN 0E617 would cover ``technology'' ``required'' for the 
``development,'' ``production,'' operation, installation, maintenance, 
repair, overhaul or refurbishing of commodities controlled by 0A617 
``equipment'' controlled by 0B617, materials controlled by 0C617, or 
``software'' controlled by 0D617.
    BIS will publish additional Federal Register notices containing 
proposed amendments to the CCL that will describe proposed controls for 
additional categories of articles the President determines no longer 
warrant control under the USML. The State Department will publish, 
concurrently, proposed amendments to the USML that correspond to the 
BIS notices. BIS will also publish proposed rules to further align the 
CCL with the WAML and the Missile Technology Control Regime Equipment, 
Software and Technology Annex.

Detailed Description of Changes Proposed by This Rule

    This proposed rule would create five new ``600 series'' ECCNs in 
CCL Category 0--0A617, 0B617, 0C617, 0D617, and 0E617--that would 
clarify the EAR controls that apply to auxiliary and miscellaneous 
military equipment and related articles the President determines no 
longer warrant control under USML Category XIII. This category also 
applies to items from WAML Category 17 that would be removed from USML 
Category XIII; items not specifically identified on the USML or CCL but 
that currently are subject to USML jurisdiction; and items ending in 
``018'' on the CCL, specifically, some items now classified under ECCNs 
0A018, 0A918 and 0E018 under new ECCNs 0A617 and 0E617. This action 
would consolidate the above-mentioned auxiliary and miscellaneous 
military equipment and related articles on the CCL in a proposed new 
``600 series'' consistent with the regulatory construct identified in 
the July 15 proposed rule. Finally, this rule would add a corresponding 
new definition to section 772.1 of the EAR.
    The proposed changes are discussed in more detail below.

New ECCN 0A617: Miscellaneous Equipment, Materials, and Related 
Commodities

    ECCN 0A617.a would control construction equipment ``specially 
designed'' for military use, including such equipment ``specially 
designed'' for transport in aircraft controlled by USML Category 
VIII(a) or proposed ECCN 9A610.a (proposed in the November 7 rule); and 
``parts,'' ``components'' and ``accessories and attachments'' 
``specially designed'' therefor, including crew protection kits used as 
protective cabs. Such items currently are controlled under ECCN 0A018.a 
as ``construction equipment built to military specifications, including 
equipment specially designed for airborne transport; and specially 
designed parts and accessories for such construction equipment, 
including crew protection kits used as protective cabs,'' and are 
identified in WAML Category 17.b.

[[Page 29566]]

    ECCN 0A617.b would control concealment and deception equipment 
``specially designed'' for military application that are not controlled 
in USML Category XIII(g), as well as ``parts,'' ``components,'' 
``accessories and attachments'' specially designed therefor. ECCN 
0A617.c would control ferries, bridges (other than those described in 
ECCN 0A606 or USML Category VII), and pontoons if the ferries, bridges 
or pontoons are ``specially designed'' for military use, also 
identified in WAML Category 17.m. Although not explicitly named or 
described on the USML, these items are currently controlled by USML 
Category VII(g). ECCN 0A617.d would control test models ``specially 
designed'' for the ``development'' of defense articles controlled by 
the USML or commodities controlled in the ``600 series.'' Such items 
are identified in WAML Category 17.n. Although not explicitly named or 
described on the USML, such items would be controlled in relation to 
the defense article they model, such as items in USML Categories VII(g) 
and VIII(h). ECCN 0A617.e. would control photointerpretation, 
stereoscopic plotting and photogrammetry equipment that would not be 
controlled by USML Category XIII(a) or elsewhere in the USML, as well 
as ``parts,'' ``components,'' ``accessories and attachments'' 
``specially designed'' therefor. ECCN 0A617.f would control ``metal 
embrittlement agents'', currently controlled by USML Category XIII(i) 
but not within the scope of the revised Category XIII the State 
Department has proposed. The term ``metal embrittlement agents'' would 
be defined in the EAR the same way it is now defined in the ITAR.
    Paragraphs .g through .x would be reserved for possible future use. 
Unlike other proposed Category rules previously published as a part of 
the Export Control Reform Initiative, ECCN 0A617, and the other ECCNs 
in the 0X617 series, would not contain a catch-all control in the 
``.x'' subparagraph for all parts and components ``specially designed'' 
for items in that category because neither USML Category XIII nor WAML 
Category 17 contain such a catch-all for auxiliary or miscellaneous 
military equipment. To the extent a part or component is controlled in 
this ECCN, it is described in the applicable subparagraphs.
    Paragraph .y would control other commodities, as listed in the .y 
subparagraphs. Specifically, ECCN 0A617.y.1 would control containers 
``specially designed'' for military use, which are currently identified 
in WAML Category 17.l. ECCN 0A617.y.2 would control military field 
generators, which are currently identified in WAML 17.k. ECCN 0A617.y.3 
would control military power-controlled searchlights and related items. 
Such items are currently classified under ECCN 0A918.a as 
``miscellaneous military equipment.'' Paragraphs y.4 through y.98 would 
be reserved for future use.
    Finally, to the extent an item referred to in WAML 17 is already 
clearly controlled in another existing USML Category or ECCN, then the 
``related controls'' note at the beginning of proposed ECCN 0A617 would 
identify where in the CCL and/or USML it is controlled.

New ECCN 0B617: ``Equipment'' ``Specially Designed'' for Commodities 
Controlled by ECCN 0A617.a or USML Category XIII

    ECCN 0B617.a would control test, inspection, and production 
``equipment'' not controlled by USML Category XIII(k) ``specially 
designed'' for the ``production'' or ``development'' of commodities 
controlled by ECCN 0A617 or USML Category XIII. Paragraphs .b through 
.x would be reserved for possible future use.
    ECCN 0B617.y would control specific test, inspection, and 
production ``equipment'' ``specially designed'' for the ``production'' 
or ``development'' of commodities controlled by ECCN 0A617 (except 
0A617.y) and ``parts,'' ``components,'' and ``accessories and 
attachments'' ``specially designed'' therefor. Since this proposed rule 
does not list specific equipment under paragraph .y, sub-paragraphs 
.y.1 through .y.98 would be reserved for possible future use.
    A note to 0B617 explains that field engineer equipment ``specially 
designed'' for use in a combat zone and mobile repair shops ``specially 
designed or modified to service military equipment, which are 
identified in WAML Categories 17.d and 17.j,'' respectively, are 
classified under ECCN 0B617 to the extent that the items are not 
included in USML XIII(k).

New ECCN 0C617: Miscellaneous Materials ``Specially Designed'' for 
Military Use

    ECCN 0C617.a would control materials, coatings and treatments for 
signature suppression, ``specially designed'' for military use and that 
are not controlled by the USML or ECCNs 1C001 or 1C101. Paragraphs .b 
through .x would be reserved for possible future use. ECCN 0C617.y 
would control materials ``specially designed'' for military use, which 
are currently identified in WAML Category 17.c. However, this proposed 
rule would not include in paragraph .y those items that are ``specially 
designed'' for defense articles on the USML. Because this proposed rule 
does not list specific materials under paragraph .y, sub-paragraphs 
.y.1 through .y.98 would be reserved for possible future use.
    Of particular significance to this rule, as noted in the November 7 
rule, materials currently controlled by USML Category XIII(f), not 
identified in another USML Category, and not identified in ECCN 0C617 
through this proposed rule, will likely be captured in other ``600 
series'' ECCNs published in future proposed rules. In each instance, 
the materials will likely be classified in the C entry related to the 
end items for which the materials are specially designed. For example, 
as stated in the November 7 proposed rule, materials specially designed 
for military aircraft that are currently controlled under USML Category 
XIII(f) would be captured by ECCN 9C610, which controls materials 
``specially designed'' for military aircraft controlled by ECCN 9A610.

New ECCN 0D617: ``Software'' ``Specially Designed'' for Items 
Controlled by ECCN 0A617, 0B617 or 0C617

    ECCN 0D617.a would control ``software'' ``specially designed'' for 
the ``development,'' ``production,'' operation, installation, 
maintenance, repair, overhaul or refurbishing of commodities controlled 
by ECCN 0A617, ``equipment'' controlled by ECCN 0B617, or materials 
controlled by ECCN 0C617. Consistent with the other proposed ``600 
series'' software controls, the .y paragraphs for ECCN 0D617 would 
control specific ``software'' ``specially designed'' for the 
``production,'' ``development,'' or operation or maintenance of 
commodities controlled by ECCN 0A617.y, 0B617.y or 0C617.y. Paragraphs 
.b through .x would be reserved for possible for future use. Because 
this proposed rule does not list specific materials under paragraph .y, 
sub-paragraphs .y.1 through .y.98 also would be reserved for possible 
future use.

New ECCN 0E617: ``Technology'' ``Required'' for Items Controlled by 
ECCN 0A617, 0B617, 0C617 or 0D617

    ECCN 0E617.a would control ``technology'' ``required'' for the 
``development,'' ``production,'' operation, installation, maintenance, 
repair, overhaul or refurbishing of commodities controlled by ECCN 
0A617, ``equipment'' controlled by

[[Page 29567]]

ECCN 0B617, materials controlled by ECCN 0C617, or ``software'' 
controlled by ECCN 0D617. Items controlled by ECCN 0E617 would include 
``technology'' currently in ECCN 0E018 for the ``production'' of crew 
protection kits used as protective cabs (currently in ECCN 0A018.a and 
proposed for ECCN 0A617). Paragraphs .b through .x would be reserved 
for possible for future use.
    Subparagraph .y.1 of ECCN 0E617 would control specific 
``technology'' ``required'' for the ``development,'' ``production,'' 
operation, installation, maintenance, repair, overhaul or refurbishing 
of items controlled by ECCNs 0A617.y, 0B617.y, 0C617.y or 0D617.y. ECCN 
0E617.y.1 would control ``technology'' for military power-controlled 
searchlights and related items, which would be classified under 
proposed ECCN 0A617.y.3 (moving from ECCN 0A918.a). The ``technology'' 
for such items is currently not classified on the CCL, but if this rule 
is implemented, it would be classified under ECCN 0E617.y.1. 
Subparagraphs .y.2 through .y.98 would be reserved for possible future 
use.

Including ``.y.99'' Paragraphs in ``600 Series'' ECCNs

    ECCNs 0A617, 0B617, 0C617, 0D617 and 0E617 would also contain a 
paragraph ``.y.99,'' that would control any item that: (i) Has been 
determined, in an applicable commodity jurisdiction determination 
issued by the U.S. Department of State, to be subject to the EAR; and 
(ii) would otherwise be controlled elsewhere under one of the Category 
0, ``600 series.''

Applicable Controls

    All items in these proposed 0Y617 ECCNs (except items in the .y 
paragraphs) would be subject to national security (NS Column 1), 
regional stability (RS Column 1) and antiterrorism (AT Column 1) 
controls. Items in the .y paragraphs would be subject only to 
antiterrorism (AT Column 1) controls.
    Under ECCN 0A018, ``construction equipment built to military 
specifications, including equipment specially designed for airborne 
transport; and specially designed parts and accessories for such 
construction equipment, including crew protection kits used as 
protective cabs'' are currently controlled for national security, 
antiterrorism and United Nations reasons. Under proposed ECCN 0A617.a, 
they would be controlled for national security, regional stability and 
antiterrorism reasons, but no longer for United Nations reasons. 
Controlling these items for United Nations reasons is unnecessary in 
light of the November 7 proposed rule's amendment to the RS Column 1 
licensing policy, which stated that there would be a general policy of 
denial for ``600 series'' items if the destination is subject to a 
United States arms embargo. A list of such destinations is identified 
in proposed section 740.2(a)(12), set forth in the November 7 proposed 
rule.
    In addition, control of power controlled searchlights and control 
units therefor, designed for military use, and equipment mounting such 
units; and ``parts,'' ``components,'' and ``accessories and 
attachments'' ``specially designed'' therefor, would be moved from ECCN 
0A918.a to ECCN 0A617.y.3. Under ECCN 0A918, such items are controlled 
for regional stability, antiterrorism and United Nations reasons, but 
under proposed ECCN 0A617.y.3, they would be controlled for 
antiterrorism reasons only. More advanced alternatives to ECCN 0A918 
items exist today compared to items currently controlled under ECCN 
0A918. For this reason, there is no longer a need to control such items 
for regional stability reasons. The rationale for removing the United 
Nations reason for control is the same as that for crew protection kits 
discussed above.

Revision to Three ECCNs: 0A018, 0A918 and 0E018

    As discussed above, this proposed rule would remove ``construction 
equipment built to military specifications, including specially 
designed for airborne transport; and specially designed parts and 
accessories for such construction equipment, including crew protection 
kits used as protective cabs'' from ECCN 0A018.a and add them to the .a 
paragraph of proposed ECCN 0A617. It would also move ``power controlled 
searchlights and control units therefor, designed for military use, and 
equipment mounting such units; and specially designed parts and 
accessories therefor'' from ECCN 0A918.a to the .y.3 paragraph of 
proposed ECCN 0A617.
    Accordingly, this rule would amend ECCN 0A918 to remove paragraph 
.a and provisions related to that paragraph. The related controls 
paragraph would be amended to provide a cross-reference to proposed 
ECCN 0A617.y.3.
    In addition, this rule would amend ECCN 0A018.a to cross-reference 
new ECCN 0A617.a, and would amend ECCN 0E018 to add a note stating that 
this ECCN no longer controls ``technology'' for items formerly 
classified under ECCN 0A018.a, which would now be classified under ECCN 
0A617.a. Under this rule, the technology for such items, as noted 
above, would be classified under ECCN 0E617.a.
    Note with respect to the proposed movement of ECCN 0A018.a items to 
proposed ECCN 0A617.a that in the July 15 proposed rule, BIS proposed 
moving ECCN 0A018.a items to proposed ECCN 0A606.a. Thereafter, on 
December 6, 2011, BIS published another proposed rule (76 FR 76085) 
that included revisions to the text of ECCN 0A606.a to cover a broad 
array of military vehicles, both armed and unarmed. While the revised 
proposal for ECCN 0A606.a was intended to include 0A018.a items, it did 
not explicitly name such items. After further reflection, BIS has 
concluded that expressly identifying military construction equipment in 
ECCN 0A617.a, rather than including it in a broad category of armed and 
unarmed military vehicles in ECCN 0A606.a, would be more informative 
and less likely to confuse the public. In addition, the items currently 
classified under ECCN 0A018.a are identified in WAML Category 17. 
Accordingly, this rule would include construction equipment specially 
designed for military use and related items in proposed ECCN 0A617.a, 
to promote clarity and to further the Administration's goal of aligning 
the 600 series ECCNs with the WAML. Neither the December 6 proposed 
rule nor this proposed rule would change the license requirements or 
the license exception eligibility originally proposed for construction 
equipment and related items in the July 15 proposed rule.

Corresponding Amendments

    To implement the regional stability controls that apply to the five 
new ``600 series'' ECCNs noted above, this proposed rule would amend 
Sec.  742.6(a)(1) of the EAR to apply the RS Column 1 licensing policy 
to items classified under ECCNs 0A617, 0B617, 0C617, 0D617 and 0E617 
(except the .y paragraphs).
    In conjunction with the proposed control on ``metal embrittlement 
agents'' in new ECCN 0A617.f, this rule proposes adding to section 
772.1 of the EAR (Definitions of terms as used in the EAR) to define 
that term as it currently is in USML Category XIII(m).

Relationship to the July 15 and November 7 Proposed Rules

    As referenced above, the purpose of the July 15 proposed rule was 
to establish the framework to support the transfer of items that the 
President determines no longer warrant control on the USML from the 
USML to the CCL. To facilitate that goal, the July 15

[[Page 29568]]

proposed rule contains definitions and concepts that were meant to be 
applied across categories. However, as BIS undertakes rulemakings to 
move specific categories of items from the USML to the CCL, there may 
be unforeseen issues or complications that may require BIS to reexamine 
those definitions and concepts. The comment period for the July 15 
proposed rule closed on September 13, 2011. In the November 7 proposed 
rule, BIS proposed several changes to those definitions and concepts. 
The comment period for the November 7 proposed rule closed on December 
22, 2011.
    To the extent that this rule's proposals affect any provision in 
either of those proposed rules or that any provisions in either of 
those proposed rules affect this proposed rule, BIS will consider 
comments on those provisions so long as they are within the context of 
the changes proposed in this rule.
    BIS believes that the following provisions of the July 15 proposed 
rule and the November 7 proposed rule are among those that could affect 
this proposed rule, but because those rules remain under review, BIS 
does not know yet how exactly they may impact this rule:
     De minimis provisions in Sec.  734.4;
     Restrictions on use of license exceptions in Sec. Sec.  
740.2, 740.10, 740.11, and 740.20;
     Change to national security licensing policy in Sec.  
742.4;
     Requirement to request authorization to use License 
Exception STA (strategic trade authorization) for end items in 600 
series ECCNs and procedures for submitting such requests in Sec. Sec.  
740.2, 740.20, 748.8 and Supp. No. 2 to part 748;
     Addition of ``600 series'' items to Supplement No. 2 to 
Part 744--List of Items Subject to the Military End-Use Requirement of 
Sec.  744.21; and
     Definitions of terms in Sec.  772.1.
    BIS believes that the following provisions of this proposed rule 
are among those that could affect the provisions of the July 15 and 
November 7 proposed rules:
     Additional ``600 series'' items identified in the RS 
Column 1 licensing policy described in Sec.  742.6.

Effects of This Proposed Rule

    BIS believes that the principal effect of this rule will be to 
provide greater flexibility for exports and reexports to NATO member 
countries and other multiple-regime-member countries of items the 
President determines no longer warrant control on the USML. This 
greater flexibility will be in the form of: availability of license 
exceptions, particularly License Exceptions RPL (servicing and 
replacement of parts and equipment) and STA (strategic trade 
authorization); eliminating the requirements for manufacturing license 
agreements and technical assistance agreements in connection with 
exports of technology; reducing or eliminating exporter and 
manufacturer registration requirements and associated registration 
fees; and applying the EAR's de minimis threshold principle for items 
constituting less than a de minimis amount of controlled U.S.-origin 
content in foreign-made items. Some of these specific effects are 
discussed in more detail below.

De minimis

    The July 15 proposed rule would impose certain unique de minimis 
requirements on items controlled under the new ``600 series'' ECCNs. 
Section 734.3 of the EAR provides, inter alia, that, under certain 
conditions, items made outside the United States that incorporate items 
subject to the EAR are not subject to the EAR if they do not exceed a 
de minimis percentage of controlled U.S. origin content. Depending on 
the destination, the de minimis percentage can be either 10 percent or 
25 percent. If the July 15 proposed rule's amendments at Sec.  734.4 of 
the EAR are adopted, the new ECCNs 0A617, 0B617, 0C617, 0D617, and 
0E617 proposed in this rule would be subject to the de minimis 
provisions set forth in the July 15 proposed rule. Foreign-made items 
incorporating items controlled under the new ECCNs would become 
eligible for de minimis treatment at the 10 percent level (i.e., a 
foreign-made item is not subject to the EAR, for de minimis purposes, 
if the value of its U.S.-origin controlled content does not exceed 10 
percent of foreign-made item's value). In contrast, the AECA does not 
permit the ITAR to have a de minimis treatment for USML-listed items, 
regardless of the significance or insignificance of the U.S.-origin 
content or the percentage of U.S.-origin content in the foreign-made 
item (i.e., USML-listed items remain subject to the ITAR when they are 
incorporated abroad into a foreign-made item, regardless of either of 
these factors). In addition, foreign-made items that incorporate any 
items that are currently classified under an 018 ECCN (e.g., ECCN 
0E018) and that are moved to a new ``600 series'' ECCN (e.g., ECCN 
0E617) would be subject to the EAR if those foreign-made items contain 
more than 10 percent U.S.-origin controlled content, regardless of the 
destination and the proportion of the U.S.-origin controlled content 
accounted for by the former 018 ECCN items.

Use of License Exceptions

    The July 15 proposed rule would impose certain restrictions on the 
use of license exceptions for items that would be controlled under the 
new ``600 series'' ECCNs on the CCL. For example, proposed Sec.  
740.2(a)(12) would make ``600 series'' items that are destined for a 
country subject to a United States arms embargo ineligible for shipment 
under a license exception, except where authorized by License Exception 
GOV under Sec.  740.11(b)(2)(ii) of the EAR. BIS believes that, even 
with the July 15 and November 7 proposed restrictions on the use of 
license exceptions for ``600 series'' items, the restrictions on those 
items currently on the USML would be reduced, particularly with respect 
to exports to NATO members and multiple-regime member countries, if 
those items are moved from the USML to proposed ECCN 0A617, 0B617 or 
0C617. BIS also believes that, in practice, moving items from a 018 
ECCN to a new ``600 series'' ECCN (e.g., the construction equipment 
built to military specifications and related items that would move from 
ECCN 0A018.a to proposed ECCN 0A617.a) would have little effect on 
license exception availability for those items. However, BIS is aware 
of two situations (the use of License Exceptions GOV and STA) in which 
movement of items from a 018 ECCN to a new ``600 series'' ECCN could, 
in practice, impose greater limits on the use of license exceptions 
than currently is the case.
    First, the July 15 proposed rule would limit the use of License 
Exception GOV for ``600 series'' commodities to situations in which the 
U.S. Government is the consignee and end user, or to situations in 
which the consignee or end user is the government of a country listed 
in Sec.  740.20(c)(1). Currently, construction equipment built to 
military specifications and related items, classified under ECCN 
0A018.a, may be exported under any provision of License Exception GOV 
to any destination authorized by that provision if all of the 
conditions of that provision are met and nothing else in the EAR 
precludes such shipment.
    Second, the July 15 proposed rule would: (i) Limit the use of 
License Exception STA for ``end items'' in ``600 series'' ECCNs to 
those end items for which a specific request for License Exception STA 
eligibility (filed in conjunction with a license application) has been 
approved; and (ii) require that the end item be for ultimate end use by 
a foreign government agency of a type

[[Page 29569]]

specified in the July 15 proposed rule. The July 15 proposed rule also 
would limit exports of ``600 series'' parts, components, accessories, 
and attachments under License Exception STA for ultimate end use by the 
same set of end users. Neither the end-item restriction nor the 
restriction applicable to parts, components, accessories, and 
attachments currently applies to the use of License Exception STA for 
commodities classified under ECCN 0A018.a, but the latter restriction 
would apply to these commodities under new ECCN 0A617.a. In addition, 
the July 15 proposed rule would limit the shipment of ``600 series'' 
items under License Exception STA to destinations listed in Sec.  
740.20(c)(1). Currently, the commodities classified under ECCN 0A018.a 
(which would be moved to ECCN 0A617.a by this proposed rule) may be 
shipped under License Exception STA to destinations listed in Sec.  
740.20(c)(1) or (c)(2).
    In addition, this proposed rule provides that STA-eligible items 
controlled under new ECCN 0A617, 0B617, or 0C617 would not be subject 
to the restriction, proposed in the July 15 rule, on using of License 
Exception STA for ``end items'' in ``600 series'' ECCNs unless a 
specific request for License Exception STA eligibility has been 
submitted to, and approved by, BIS.
    Items controlled under proposed ECCNs 0A617, 0B617 or 0C617 would 
be eligible for License Exception LVS (limited value shipments) up to a 
value of $1,500. Note that for items previously classified under ECCN 
0A018.a that would, under this proposal, be classified under ECCN 
0A918.a, the threshold for LVS availability would generally drop from 
$5,000 to $1,500 with this proposed change (and increase from $0 to 
$1,500 for Rwanda). Items controlled under proposed ECCNs 0A617, 0B617, 
0C617, 0D617 or 0E617 also would be eligible for License Exception TMP 
(temporary exports), and items controlled under proposed ECCNs 0A617, 
0B617 or 0D617 would be eligible for License Exception RPL (servicing 
and replacement parts).

Making U.S. Export Controls More Consistent With the Wassenaar 
Arrangement Munitions List Controls

    Since the beginning of the Export Control Reform Initiative, the 
Administration has stated that the reforms will be consistent with the 
United States' obligations to the multilateral export control regimes. 
Accordingly, the Administration will, in this and subsequent proposed 
rules, exercise its national discretion to implement, clarify, and, to 
the extent feasible, align its controls with those of the regimes. For 
example, proposed ECCNs 0A617 and 0C617 implement, to the extent 
possible, the controls in WAML Category 17 pertaining to miscellaneous 
munitions items, while proposed ECCNs 0B617.a, 0D617 and 0E617, to the 
extent possible, implement the controls in WAML Category 18 for 
production equipment, the controls in WAML Category 21 for software, 
and the controls in WAML Category 22 for technology.

Other Effects: National Security and Regional Stability Controls

    Pursuant to the framework identified in the July 15 proposed rule, 
auxiliary and miscellaneous military commodities classified under ECCN 
0A617 (other than ECCN 0A617.y), along with related test inspection and 
production equipment, materials, software, and technology classified 
under ECCNs 0B617, 0C617, 0D617 or 0E617 (except items classified under 
the .y paragraphs of these ECCNs) would be subject to the licensing 
policies that apply to items controlled for national security reasons, 
as described in Sec.  742.4(b)(1)--specifically, NS Column 1 controls. 
In addition, commodities in ECCN 0A617 (other than 0A617.y), along with 
related test, inspection and production equipment, materials, software 
and technology classified under ECCNs 0B617, 0C617, 0D617 or 0E617 
(except items classified under the .y paragraphs of these ECCNs), would 
be subject to the regional stability licensing policies set forth in 
Sec.  742.6(a)(1)--specifically, RS Column 1.
    The July 15 proposed rule would change Sec.  742.4 to apply a 
general policy of denial to ``600 series'' items for destinations that 
are subject to a United States arms embargo. That policy would apply to 
all items controlled for national security (NS) reasons under this 
proposed rule. The November 7 proposed rule would expand that general 
policy of denial to include ``600 series'' items subject to the 
licensing policies that apply to items controlled for regional 
stability reasons, as described in Sec.  742.6(b)(1)--specifically, RS 
Column 1. While this change might seem redundant for the items affected 
by this proposed rule, it ensures that a general denial policy would 
apply to any ``600 series'' items that are controlled for missile 
technology (MT) and regional stability (RS) reasons, but not for 
national security (NS) reasons (as would be the case for certain items 
affected by the November 7 proposed rule).

Section-by-Section Description of the Proposed Changes

     Section 742.6--ECCNs 0A617, 0B617, 0C617, 0D617 and 0E617 
would be added to Sec.  742.6(a)(1) to impose an RS Column 1 license 
requirement and licensing policy, including a general policy of denial 
in Section 742.6(b)(1), for applications to export or reexport ``600 
series'' items to destinations that are subject to a United States arms 
embargo.
     Section 772.1--The definition section of the EAR would be 
amended to include, in alphabetical order, the definition of the term 
``metal embrittlement agents'' to correspond with the proposed 
classification of such items under ECCN 0A617.f.
     Supplement No. 1 to part 774--ECCNs 0A617, 0B617, 0C617, 
0D617 and 0E617 would be added to Supplement No. 1 to part 774. ECCN 
0A018 would be removed and reserved, and the related controls paragraph 
would be amended to include a cross-reference directing the public to 
proposed new ECCN 0A617.a for items currently controlled by ECCN 
0A018.a. ECCN 0A918 would be amended to remove paragraph .a and 
provisions related to that paragraph. The related controls paragraph 
would be amended to include a cross-reference directing the public to 
proposed new ECCN 0A617.y.3. And ECCN 0E018 would be amended to add a 
note cross-referencing controls in proposed ECCN 0E617.a.

Request for Comments

    BIS seeks comments on this proposed rule. BIS will consider all 
comments received on or before July 2, 2012. All comments (including 
any personally identifying information or information for which a claim 
of confidentially is asserted either in 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 www.Regulations.gov, leaving the fields 
that would identify the commenter blank and including no identifying 
information in the comment itself.
    Although the Export Administration Act expired on August 20, 2001, 
the President, through Executive Order 13222 of August 17, 2001, 3 CFR, 
2001 Comp., p. 783 (2002), as extended by the Notice of August 12, 
2011, 76 FR 50661 (August 16, 2011), has continued the Export 
Administration Regulations in effect under the International Emergency 
Economic Powers Act. BIS continues to carry out the provisions of the 
Act, as appropriate and to the extent

[[Page 29570]]

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, distribute 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 ``significant regulatory 
action,'' although not economically significant, under section 3(f) of 
Executive Order 12866. Accordingly, the rule has been reviewed by the 
Office of Management and Budget (OMB).
    2. Notwithstanding any other provision of law, no person is 
required to respond to, nor is 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 OMB 
control number. This proposed rule would affect two approved 
collections: Simplified Network Application Processing + System 
(control number 0694-0088), which includes, among other things, license 
applications, and License Exceptions and Exclusions (0694-0137).
    As stated in the July 15, 2011, proposed rule (76 FR 41958), BIS 
believes that the combined effect of all rules to be published adding 
items to the EAR that would be removed from the ITAR as part of the 
administration's Export Control Reform Initiative would increase the 
number of license applications submitted by approximately 16,000 
annually, resulting in an increase in burden hours of 5,067 (16,000 
transactions at 17 minutes each) under control number 0694-0088.
    Some items formerly on the USML would become eligible for License 
Exception STA under this rule. As specified in the STA eligibility 
paragraph for proposed new ECCNs 0A617, 0B617, and 0C617, such items 
would not need a determination of eligibility per Sec.  740.20(g) of 
the EAR. As stated in the July 15 proposed rule, BIS believes that the 
increased use of License Exception STA resulting from the combined 
effect of all rules to be published adding items to the EAR that would 
be removed from the ITAR as part of the administration's Export Control 
Reform Initiative would increase the burden associated with control 
number 0694-0137 by about 23,858 hours (20,450 transactions at 1 hour 
and 10 minutes each).
    BIS expects that this increase in burden would be more than offset 
by a reduction in burden hours associated with approved collections 
related to the ITAR. This proposed rule addresses controls on auxiliary 
and miscellaneous equipment, materials and related parts, components, 
test and production equipment, software, and technology. The largest 
impact of the proposed rule would likely apply to exporters of end 
items. Under the EAR, such items would become eligible for export to 
NATO member states and other close allies under License Exception STA. 
Use of License Exception STA imposes a paperwork and compliance burden 
because, for example, exporters must furnish information about the item 
being exported to the consignee and obtain from the consignee an 
acknowledgement and commitment to comply with the EAR. However, the 
Administration understands that complying with the requirements of STA 
is likely to be less burdensome than applying for licenses. For 
example, under License Exception STA, a single consignee statement can 
apply to an unlimited number of products, need not have an expiration 
date, and need not be submitted to the government in advance for 
approval. Suppliers with regular customers can tailor a single 
statement and assurance to match their business relationship rather 
than applying repeatedly for licenses with every purchase order to 
supply reliable customers in countries that are close allies or members 
of export control regimes, or both.
    Even in situations in which a license would be required under the 
EAR, the burden likely will be reduced compared to the license 
requirement of the ITAR. In particular, license applications for 
exports of technology controlled by ECCN 0E617 are likely to be less 
complex and burdensome than the authorizations required to export ITAR-
controlled technology, i.e., Manufacturing License Agreements and 
Technical Assistance Agreements.
    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 an initial 
regulatory flexibility analysis (IRFA) for any rule subject to the 
notice and comment rulemaking requirements under the Administrative 
Procedure Act (5 U.S.C. 553) or any other statute. However, under 
section 605(b) of the RFA, if the head of an agency certifies that a 
rule will not have a significant impact on a substantial number of 
small entities, the RFA does not require the agency to prepare a 
regulatory flexibility analysis. Pursuant to section 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.

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 rule, it acknowledges that this rule 
would affect some unknown number of them.

Economic Impact

    This proposed rule is part of the Administration's Export Control 
Reform Initiative. Under that initiative, the United States Munitions 
List (22 CFR part 121) (USML) will be revised to be a ``positive'' 
list, i.e., a list that does not use generic, catch-all controls on any 
part, component, accessory, attachment, or end item that was in any way 
specifically modified for a defense article, regardless of the 
article's military or intelligence significance or non-military 
applications. At the same time, articles that the President determines 
no longer warrant control on the USML will become controlled on the 
Commerce Control List (CCL). Such items, along with certain military 
items that currently are on the CCL, will be identified in specific 
Export Control Classification Numbers (ECCNs) known as the ``600 
series'' ECCNs. In addition, some items currently on the Commerce 
Control List will move from existing ECCNs to the new ``600 series'' 
ECCNs.
    This rule addresses certain miscellaneous equipment and related 
articles currently controlled in WAML Category 17 (Miscellaneous 
equipment, materials and `libraries' and specially designed components) 
and USML Category XIII (Materials and Miscellaneous Articles).
    Changing the jurisdictional status of these USML articles would, 
potentially, reduce the burden on small entities (and other entities as 
well) through: (i) Eliminating some license requirements;

[[Page 29571]]

(ii) increasing availability of license exceptions; (iii) simplifying 
license application procedures; and (iv) reducing or eliminating 
registration fees.
    These amendments are part of the Administration's effort to make 
the USML the U.S. Government's list of critical military and 
intelligence items that warrant the stringent worldwide controls of the 
ITAR, while controlling all other military and intelligence items, 
particularly generic parts and components, through the CCL. BIS 
believes that the economic benefits for the proposed amendments include 
the significant reduction in the time spent determining and addressing 
issues associated with determining the jurisdictional status of such 
items now.
    In addition, parts and components currently controlled under the 
ITAR remain under ITAR control when incorporated into foreign-made 
items, regardless of the significance or insignificance of the item. 
This discourages foreign buyers from incorporating such U.S. content. 
The availability of de minimis treatment for items that are transferred 
to control under the EAR may reduce the disincentive to foreign 
manufacturers for purchasing U.S.-origin parts and components.
    Many exports and reexports of the Category XIII articles that would 
be placed on the CCL by this rule would become eligible for license 
exceptions that apply to shipments to U.S. Government agencies, thereby 
reducing the number of licenses that exporters of these items would 
need. License Exceptions under the EAR would allow suppliers to send 
routine replacement and low level parts to NATO member states and other 
close allies and export control regime partners for use by those 
governments, and for use by contractors building equipment for those 
governments or for the U.S. Government without having to obtain export 
licenses. Under License Exception Strategic Trade Authorization (STA), 
the exporter would need to furnish information about the item being 
exported to the consignee and obtain a statement from the consignee 
that, among other things, would commit the consignee to comply with the 
EAR and other applicable U.S. laws. Because such statements and 
obligations can apply to an unlimited number of transactions and have 
no expiration date, they would impose a net reduction in burden on 
transactions that the government routinely approves through the license 
application process that the License Exception STA statements would 
replace.
    Even for exports and reexports for which a license would be 
required under the proposed rule, the process would be simpler and less 
costly under the EAR. When a USML Category XIII article is moved to the 
CCL, the number of destinations for which a license is required would 
remain unchanged. However, the burden on the license applicant would 
decrease because the licensing procedure for CCL items is simpler and 
more flexible than the license procedure for USML articles.
    Under the USML licensing procedure, an applicant must include a 
purchase order or contract with its application. There is no such 
requirement under the CCL licensing procedure. This difference gives 
the CCL applicant at least two advantages. First, the applicant has a 
way to determine whether the U.S. Government will authorize the 
transaction before it enters into potentially lengthy, complex and 
expensive sales presentations or contract negotiations. Under the USML 
procedure, the applicant must caveat all sales presentations with a 
reference to the need for government approval, and is more likely to 
engage in substantial effort and expense only to find that the 
government will reject the application. Second, a CCL license applicant 
need not limit its application to the quantity or value of one purchase 
order or contract. It may apply for a license to cover all of its 
expected exports or reexports to a specified consignee over the life of 
a license (normally two years, but may be longer if circumstances 
warrant a longer period), thus reducing the total number of licenses 
for which the applicant must apply.
    In addition, many applicants exporting or reexporting items that 
this rule would transfer from the USML to the CCL would realize cost 
savings through the elimination of some or all registration fees 
currently assessed under the USML's licensing procedure. Currently, 
USML applicants must pay to use the USML licensing procedure even if 
they never actually are authorized to export. Registration fees for 
manufacturers and exporters of articles on the USML start at $2,250 per 
year, increase to $2,750 for exporters applying for one to ten licenses 
per year and further increase to $2,750, plus $250 per license 
application (subject to a maximum of three percent of total application 
value) for those who need to apply for more than ten licenses per year. 
Conversely, there are no registration or application processing fees 
for applications to export items listed on the CCL. Once the Category 
XIII items that are the subject to this rulemaking are moved from the 
USML to the CCL, entities currently applying for licenses from the 
Department of State will find their registration fees reduced if the 
number of USML licenses those entities need declines. If an entity's 
entire product line is moved to the CCL, its ITAR registration and 
registration fee requirement will be eliminated.
    De minimis treatment under the EAR would also become available for 
all items that this rule proposes to transfer from the USML to the CCL. 
Items subject to the ITAR remain subject to the ITAR when they are 
incorporated abroad into a foreign-made product regardless of the 
percentage of U.S. content in that foreign-made product. However, 
foreign-made products incorporating items that this rule would move to 
the CCL would be subject to the EAR only if their total controlled 
U.S.-origin content exceeds 10 percent. Because including small amounts 
of U.S.-origin content would not subject foreign-made products to the 
EAR, foreign manufacturers would have less incentive to refrain from 
purchasing such U.S.-origin parts and components, a development that 
potentially would mean greater sales for U.S. suppliers, including 
small entities.
    For items currently on the CCL that would be moved from existing 
ECCNs to the new ``600 series,'' license exception availability would 
be narrowed somewhat and the applicable de minimis threshold for 
foreign-made products containing those items would in some cases be 
reduced from 25 percent to 10 percent. However, BIS believes that any 
increased burden imposed by those actions would be offset substantially 
by the reduction in burden attributable to moving items from the USML 
to CCL and the compliance benefits associated with the consolidation of 
all WAML items subject to the EAR in one series of ECCNs. These changes 
also would reduce the burden on small entities by resolving actual and 
potential jurisdictional uncertainty with respect to items that are 
related to articles controlled by USML Category XIII.

Conclusion

    BIS is unable to determine the precise number of small entities 
that would be affected by this rule. Based on the facts and conclusions 
set forth above, BIS believes that any burdens imposed by this rule 
would be offset by a reduction in the number of items that would 
require a license, increased opportunities for use of license 
exceptions for exports to certain countries, simpler export license 
applications, reduced or eliminated

[[Page 29572]]

registration fees, and application of a de minimis threshold for 
foreign-made items incorporating U.S.-origin parts and components, 
which would reduce the incentive for foreign buyers to design out or 
avoid U.S.-origin content. For these reasons, the Chief Counsel for 
Regulation of the Department of Commerce certified to the Chief Counsel 
for Advocacy of the Small Business Administration that this rule, if 
adopted in final form, would not have a significant economic impact on 
a substantial number of small entities. Accordingly, no IRFA is 
required, and none has been prepared.

List of Subjects

15 CFR Part 742

    Exports, Terrorism.

15 CFR Part 772

    Exports.

15 CFR Part 774

    Exports, Reporting and recordkeeping requirements.

    For the reasons stated in the preamble, parts 742, 772 and 774 of 
the Export Administration Regulations (15 CFR parts 730-774) are 
proposed to be amended as follows:

PART 742--[AMENDED]

    1. The authority citation for 15 CFR 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, 2011, 76 FR 50661 (August 16, 2011); Notice of November 9, 2011, 
76 FR 70319 (November 10, 2011).

    2. Section 742.6 is amended by revising paragraph (a)(1) to read as 
follows:

Sec.  742.6  Regional stability.

    (a) * * *
    (1) RS Column 1 License Requirements in General. As indicated in 
the CCL and in RS column 1 of the Commerce Country Chart (see 
Supplement No. 1 to part 738 of the EAR), a license is required to all 
destinations, except Canada, for items described on the CCL under ECCNs 
0A521; 0A606 (except 0A606.b and .y); 0A617 (except 0A617.y); 0B521; 
0B606 (except 0B606.y); 0B617 (except 0B617.y); 0C521; 0C606 (except 
0C606.y); 0C617 (except 0C617.y), 0D521; 0D606 (except 0D606.y); 0D617 
(except 0D617.y) 0E521; 0E606 (except 0E606.y); 0E617 (except 0E617.y); 
1A607 (except 1A607.y); 1B607 (except 1B607.y); 1B608 (except 1B608.y); 
1C607; 1C608; 1D607 (except 1D607.y); 1D608 (except 1D608.y); 1E607 
(except 1E607.y); 1E608 (except 1E608.y); 6A002.a.1, a.2, a.3, .c, or 
.e; 6A003.b.3, and b.4.a; 6A008.j.1; 6A998.b; 6D001 (only ``software'' 
for the ``development'' or ``production'' of items in 6A002.a.1, a.2, 
a.3, .c; 6A003.b.3 and .b.4; or 6A008.j.1); 6D002 (only ``software'' 
for the ``use'' of items in 6A002.a.1, a.2, a.3, .c; 6A003.b.3 and 
.b.4; or 6A008.j.1); 6D003.c; 6D991 (only ``software'' for the 
``development,'' ``production,'' or ``use'' of equipment classified 
under 6A002.e or 6A998.b); 6E001 (only ``technology'' for 
``development'' of items in 6A002.a.1, a.2, a.3 (except 6A002.a.3.d.2.a 
and 6A002.a.3.e for lead selenide focal plane arrays), and .c or .e, 
6A003.b.3 and b.4, or 6A008.j.1); 6E002 (only ``technology'' for 
``production'' of items in 6A002.a.1, a.2, a.3, .c, or .e, 6A003.b.3 or 
b.4, or 6A008.j.1); 6E991 (only ``technology'' for the ``development,'' 
``production,'' or ``use'' of equipment classified under 6A998.b); 
6D994; 7A994 (only QRS11-00100-100/101 and QRS11-0050-443/569 
Micromachined Angular Rate Sensors); 7D001 (only ``software'' for 
``development'' or ``production'' of items in 7A001, 7A002, or 7A003); 
7E001 (only ``technology'' for the ``development'' of inertial 
navigation systems, inertial equipment, and specially designed 
components therefor for civil aircraft); 7E002 (only ``technology'' for 
the ``production'' of inertial navigation systems, inertial equipment, 
and specially designed components therefor for civil aircraft); 7E101 
(only ``technology'' for the ``use'' of inertial navigation systems, 
inertial equipment, and specially designed components for civil 
aircraft); 8A609 (except 8A609.y); 8B609 (except 8B609.y); 8C609 
(except 8C609.y); 8D609 (except software for the ``development,'' 
``production,'' operation, or maintenance of commodities controlled by 
8A609.y, 8B609.y, or 8C609.y); 8E609 (except ``technology'' for the 
``development,'' ``production,'' operation, installation, maintenance, 
repair, or overhaul of commodities controlled by 8A609.y, 8B609.y, or 
8C609.y); 9A610 (except 9A610.y); 9A619 (except 9A619.y); 9B610 (except 
9B610.y); 9B619 (except 9B619.y); 9C610 (except 9C610.y); 9C619 (except 
9C619.y); 9D610 (except software for the ``development,'' 
``production,'' operation, installation, maintenance, repair, or 
overhaul of commodities controlled by 9A610.y, 9B610.y, or 9C610.y); 
9D619 (except software for the ``development,'' ``production,'' 
operation, or maintenance of commodities controlled by 9A619.y, 
9B619.y, or 9C619.y); 9E610 (except ``technology'' for the 
``development,'' ``production,'' operation, installation, maintenance, 
repair, or overhaul of commodities controlled by ECCN 9A610.y, 9B610.y, 
or 9C610.y); and 9E619 (except ``technology'' for the ``development,'' 
``production'' operation, installation, maintenance, repair, or 
overhaul of commodities controlled by ECCN 9A619.y, 9B619.y, or 
9C619.y).
* * * * *

PART 772--[AMENDED]

    3. The authority citation for 15 CFR 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 
12, 2011, 76 FR 50661 (August 16, 2011).

    4. Section 772.1 is amended by adding a definition for ``metal 
embrittlement agents'' in alphabetical order to read as follows:

Sec.  772.1  Definitions of terms as used in the Export Administration 
Regulations (EAR).

* * * * *
    Metal embrittlement agents. (Cat. 0)--Non-lethal weapon substances 
that alter the crystal structure of metals within a short time span. 
Metal embrittling agents severely weaken metals by chemically changing 
their molecular structure. These agents are compounded in various 
substances to include adhesives, liquids, aerosols, foams and 
lubricants.
* * * * *

PART 774--[AMENDED]

    5. The authority citation for 15 CFR 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, 2011, 76 FR 50661 (August 16, 2011).

    6. In Supplement No. 1 to part 774 (the Commerce Control List), 
Category 0--Nuclear Materials, Facilities, and Equipment [and 
Miscellaneous Items]--Export Control Classification Number (ECCN) 0A018 
is amended

[[Page 29573]]

    a. By adding a sentence to the end of the Related Controls 
paragraph in the List of Items Controlled section; and
    b. By removing and reserving paragraph .a in the Items paragraph of 
the List of Items Controlled section to read as follows:

Supplement No. 1 to Part 774--The Commerce Control List

* * * * *

0A018 Items on the Wassenaar Munitions List

* * * * *
    List of Items Controlled:
    Unit: * * *
    Related Controls: * * * 3) See ECCN 0A617.a for items formerly 
controlled by ECCN 0A018.a.
    Related Definitions: * * *
    Items:
    a. [RESERVED].
* * * * *
    7. In Supplement No. 1 to part 774 (the Commerce Control List), 
Category 0--Nuclear Materials, Facilities, and Equipment [and 
Miscellaneous Items] add a new ECCN 0A617 between ECCNs 0A018 and 0A918 
to read as follows:

0A617 Miscellaneous ``Equipment,'' Materials, and Related Commodities

License Requirements

    Reason for Control: NS, RS, AT

------------------------------------------------------------------------
                  Control(s)                         Country chart
------------------------------------------------------------------------
NS applies to entire entry except 0A617.y....  NS Column 1.
RS applies to entire entry except 0A617.y....  RS Column 1.
AT applies to entire entry...................  AT Column 1.
------------------------------------------------------------------------

License Exceptions

    LVS: $1500
    GBS: N/A
    CIV: N/A
    STA:
    (1) Paragraph (c)(2) of License Exception STA (Sec.  740.20(c)(2)) 
of the EAR may not be used for any item in 0A617.
    (2) Paragraph (c)(1) of License Exception STA (Sec.  740.20(c)(1)) 
may be used for items in 0A617 without the need for a determination 
described in Sec.  740.20(g).

List of Items Controlled

    Unit: End items in number; parts, components, accessories and 
attachments in $ value.
    Related Controls: (1) Defense articles, such as materials made from 
classified information, that are controlled by USML Category XIII, and 
technical data (including software) directly related thereto, are 
subject to the ITAR. (2) See ECCN 0A919 for foreign-made ``military 
commodities'' that incorporate more than 10% U.S.-origin ``600 series'' 
items. (3) For controls on self-contained diving and underwater 
swimming apparatus and related commodities, see ECCN 8A620.f. (4) For 
controls on robots, robot controllers, and robot end-effectors, see 
USML Category VII and ECCNs 0A606 and 2B007. (5) ``Libraries,'' i.e., 
parametric technical databases, ``specially designed'' for military use 
with equipment controlled by USML or a ``600 series'' ECCN are 
controlled by the technical data and technology controls pertaining to 
such items. (6) For controls on nuclear power generating equipment or 
propulsion equipment, including ``nuclear reactors,'' ``specially 
designed'' for military use, and parts and components ``specially 
designed'' therefor, see USML Categories VI, XIII, XV, and XX. (7) 
Simulators ``specially designed'' for military ``nuclear reactors'' are 
controlled by USML Category IX(b). (8) Laser protection equipment 
(e.g., eye and sensor protection) ``specially designed'' for military 
use are subject to the controls of USML Category X(a)(7). (9) ``Fuel 
cells'' ``specially designed'' for a defense article not on the USML or 
a commodity controlled by a ``600 series'' ECCN are controlled 
according to the corresponding ``600 series'' ECCN for such end items. 
(10) See USML Category XV and ECCN 9A515 for controls on fuel cells 
specially designed for satellite or spacecraft.
    Items:
    a. Construction equipment ``specially designed'' for military use, 
including such equipment ``specially designed'' for transport in 
aircraft controlled by USML VIII(a) or ECCN 9A610.a; and ``parts,'' 
``components'' and ``accessories and attachments'' ``specially 
designed'' therefor, including crew protection kits used as protective 
cabs;
    b. Concealment and deception equipment ``specially designed'' for 
military application, including special paints, decoys, smoke or 
obscuration equipment and simulators, and ``parts,'' ``components,'' 
``accessories and attachments'' ``specially designed'' therefor, not 
controlled by USML Category XIII.
    c. Ferries, bridges (other than those described in ECCN 0A606 or 
USML Category VII), and pontoons ``specially designed'' for military 
use.
    d. Test models ``specially designed'' for the ``development'' of 
defense articles controlled by the USML or commodities controlled by a 
``600 series'' ECCN.
    e. Photointerpretation, stereoscopic plotting and photogrammetry 
equipment ``specially designed'' for military use, and ``parts,'' 
``components,'' ``accessories and attachments'' ``specially designed'' 
therefor.
    f. ``Metal embrittlement agents.''
    g. Through x. [RESERVED]
    y. Other commodities as follows:
    y.1. Containers ``specially designed'' for defense articles or 
items controlled by a ``600 series'' ECCN.
    y.2 Field generators ``specially designed'' for military use.
    y.3 Power controlled searchlights and control units therefor, 
``specially designed'' for military use, and ``equipment'' mounting 
such units; and ``parts,'' ``components'' and ``accessories and 
attachments'' ``specially designed'' therefor.
    y.4 to y.98. [RESERVED]
    y.99. Commodities not identified on the CCL that (i) have been 
determined, in an applicable commodity jurisdiction determination 
issued by the U.S. Department of State, to be subject to the EAR and 
(ii) would otherwise be controlled elsewhere in ECCN 0A617.
    8. In Supplement No. 1 to part 774 (the Commerce Control List), 
Category 0--Nuclear Materials, Facilities, and Equipment [and 
Miscellaneous Items], Export Control Classification Number (ECCN) 0A918 
is amended
    a. By revising the License Exception section; and
    b. By revising the List of Items Controlled section to read as 
follows:

0A918 Miscellaneous Military Equipment Not on the Wassenaar Munitions 
List

* * * * *

License Exceptions

    LVS: $1,500, $0 for Rwanda
    GBS: N/A
    CIV: N/A

List of Items Controlled

    Unit: In Number.

[[Page 29574]]

    Related Controls: See ECCN 0A617.y.3 for items formerly controlled 
by ECCN 0A918.a.
    Related Definitions: N/A
    Items: Bayonets.
    9. In Supplement No. 1 to part 774 (the Commerce Control List), 
Category 0--Nuclear Materials, Facilities, and Equipment [and 
Miscellaneous Items], add a new ECCN 0B617 between ECCNs 0B006 and 
0B986 to read as follows:

0B617 Test, Inspection, and Production ``Equipment'' and Related 
Commodities ``Specially Designed'' for the ``Development'' or 
``Production'' of Commodities Controlled by ECCN 0A617.a or USML 
Category XIII

License Requirements

    Reason for Control: NS, RS, AT

------------------------------------------------------------------------
                  Control(s)                         Country chart
------------------------------------------------------------------------
NS applies to entire entry except 0B617.y....  NS Column 1.
RS applies to entire entry except 0B617.y....  RS Column 1.
AT applies to entire entry...................  AT Column 1.
------------------------------------------------------------------------

License Exceptions

    LVS: $1500
    GBS: N/A
    CIV: N/A
    STA:
    (1) Paragraph (c)(2) of License Exception STA (Sec.  740.20(c)(2)) 
of the EAR may not be used for any item in 0B617.
    (2) Paragraph (c)(1) of License Exception STA (Sec.  740.20(c)(1)) 
may be used for items in 0B617 without the need for a determination 
described in Sec.  740.20(g).

List of Items Controlled

    Unit: N/A
    Related Controls:
    Related Definitions: N/A
    Items: a. Test, inspection, and production ``equipment'' not 
controlled by USML Category XIII(k) ``specially designed'' for the 
``production'' or ``development'' of commodities controlled by ECCN 
0A617 or USML Category XIII.
    b. through .x [RESERVED].
    y.1 through .y.98 [RESERVED]
    y.99 Commodities not identified on the CCL that (i) have been 
determined, in an applicable commodity jurisdiction determination 
issued by the U.S. Department of State, to be subject to the EAR and 
(ii) would otherwise be controlled elsewhere in ECCN 0B617.
    NOTE TO 0B617: Field engineer equipment ``specially designed'' for 
use in a combat zone, identified in WAML Category 17.d, and mobile 
repair shops ``specially designed'' or modified to service military 
equipment, identified in WAML Category 17.j, are controlled by 0B617 to 
the extent that the items are not included in USML Category XIII(k).
    10. In Supplement No. 1 to part 774 (the Commerce Control List), 
Category 0--Nuclear Materials, Facilities, and Equipment [and 
Miscellaneous Items], add a new ECCN 0C617 after ECCN 0C201 to read as 
follows:

0C617 Miscellaneous Materials ``Specially Designed'' for Military Use

License Requirements

    Reason for Control: NS, RS, AT

------------------------------------------------------------------------
                  Control(s)                         Country chart
------------------------------------------------------------------------
NS applies to entire entry except 0C617.y....  NS Column 1.
RS applies to entire entry except 0C617.y....  RS Column 1.
AT applies to entire entry...................  AT Column 1.
------------------------------------------------------------------------

License Exceptions

    LVS: $1500
    GBS: N/A
    CIV: N/A
    (1) STA: Paragraph (c)(2) of License Exception STA (Sec.  
740.20(c)(2)) of the EAR may not be used for any item in 0C617.
    (2) Paragraph (c)(1) of License Exception STA (Sec.  740.20(c)(1)) 
may be used for items in 0C617 without the need for a determination 
described in Sec.  740.20(g).

List of Items Controlled

    Unit: End items in number; parts, component, accessories and 
attachments in $ value.
    Related Controls: For controls on other signature suppression 
materials, see USML Category XIII and ECCNs 1C001 and 1C101.
    Related Definitions:
    Items:
    a. Materials, coatings and treatments for signature suppression, 
``specially designed'' for military use and that are not controlled by 
USML Category XIII or ECCNs 1C001 or 1C101.
    b. through x. [RESERVED].
    y.1 through y.98 [RESERVED].
    y.99. Materials not identified on the CCL that (i) have been 
determined, in an applicable commodity jurisdiction determination 
issued by the U.S. Department of State, to be subject to the EAR and 
(ii) would otherwise be controlled elsewhere in ECCN 0C617.
    11. In Supplement No. 1 to part 774 (the Commerce Control List), 
Category 0--Nuclear Materials, Facilities, and Equipment [and 
Miscellaneous Items], add a new ECCN 0D617 between ECCNs 0D001 and 
0D999 to read as follows:

0D617 ``Software'' ``Specially Designed'' for the ``Development,'' 
``Production,'' Operation, Installation, Maintenance, Repair, Overhaul 
or Refurbishing of Commodities Controlled by 0A617, ``Equipment'' 
Controlled by 0B617, or Materials Controlled by 0C617

License Requirements

    Reason for Control: NS, RS, AT

------------------------------------------------------------------------
                  Control(s)                         Country chart
------------------------------------------------------------------------
NS applies to entire entry except 0D617.y....  NS Column 1.
RS applies to entire entry except 0D617.y....  RS Column 1.
AT applies to entire entry...................  AT Column 1.
------------------------------------------------------------------------

[[Page 29575]]

 License Exceptions

    CIV: N/A
    TSR: N/A
    STA: Paragraph (c)(2) of License Exception STA (Sec.  
740.20(c)(2))of the EAR may not be used for any ``software'' in 0D617.

List of Items Controlled

    Unit: $ value
    Related Controls: ``Software'' directly related to articles 
controlled by USML Category XIII is subject to the control of USML 
paragraph XIII(l).
    Related Definitions: N/A
    Items:
    a. ``Software'' (other than ``software'' controlled in paragraph .y 
of this entry) ``specially designed'' for the ``development,'' 
``production,'' operation or maintenance of commodities controlled by 
ECCNs 0A617 (except 0A617.y), 0B617 (except 0B617.y), or 0C617 (except 
0C617.y).
    b. to x. [RESERVED].
    y. Specific ``software'' ``specially designed'' for the 
``production,'' ``development,'' or operation or maintenance of 
commodities controlled by ECCN 0A617, 0B617 or 0C617, as follows:
    y.1. Specific ``software'' ``specially designed'' for the 
``production,'' ``development,'' operation or maintenance of 
commodities controlled by ECCN 0A617.y, 0B617.y or 0C617.y.
    y.2 through y.98 [RESERVED].
    y.99. Software not identified on the CCL that (i) has been 
determined, in an applicable commodity jurisdiction determination 
issued by the U.S. Department of State, to be subject to the EAR and 
(ii) would otherwise be controlled elsewhere in ECCN 0D617.
    12. In Supplement No. 1 to part 774 (the Commerce Control List), 
Category 0--Nuclear Materials, Facilities, and Equipment [and 
Miscellaneous Items]--ECCN 0E018 is amended by adding a note at the end 
of the entry to read as follows:

0E018 ``Technology'' for the ``Development,'' ``Production,'' or 
``Use'' of Items Controlled by 0A018

* * * * *
    Note: This ECCN no longer controls ``technology'' for items 
formerly controlled by 0A018.a. See ECCN 0A617.a for items formerly 
controlled by 0A018.a and see the ``technology'' controls for those 
items in ECCN 0E617.a.
    13. In Supplement No. 1 to part 774 (the Commerce Control List), 
Category 0--Nuclear Materials, Facilities, and Equipment [and 
Miscellaneous Items] add a new ECCN 0E617 between ECCNs 0E018 and 0E982 
to read as follows:

0E617 ``Technology'' ``Required'' for the ``Development,'' 
``Production,'' Operation, Installation, Maintenance, Repair, Overhaul 
or Refurbishing of Commodities Controlled by 0A617, ``Equipment'' 
Controlled by 0B617, Materials Controlled by 0C617, or ``Software'' 
Controlled by 0D617

License Requirements

    Reason for Control: NS, RS, AT

------------------------------------------------------------------------
                  Control(s)                         Country chart
------------------------------------------------------------------------
NS applies to entire entry except 0E617.y....  NS Column 1.
RS applies to entire entry except 0E617.y....  RS Column 1.
AT applies to entire entry...................  AT Column 1.
------------------------------------------------------------------------

License Exceptions

    CIV: N/A
    TSR: N/A
    STA: Paragraph (c)(2) of License Exception STA (Sec.  740.20(c)(2)) 
of the EAR may not be used for any technology in 0E617.

List of Items Controlled

    Unit: $ value
    Related Controls: Technical data directly related to articles 
controlled by USML Category XIII are subject to the control of USML 
paragraph XIII(l).
    Related Definitions: N/A
    Items:
    a. ``Technology'' (other than ``technology'' controlled by 
paragraph .y of this entry) ``required'' for the ``development,'' 
``production,'' operation, installation, maintenance, repair, overhaul, 
or refurbishing of commodities or ``software'' controlled by ECCN 0A617 
(except 0A617.y), 0B617 (except 0B617.y), 0C617 (except 0C617.y), or 
0D617 (except 0D617.y).
    b. through x. [RESERVED].
    y. Specific ``technology'' ``required'' for the ``production,'' 
``development,'' operation, installation, maintenance, repair, or 
overhaul of items controlled by ECCN 0A617, 0B617, 0C617 or 0D617, as 
follows:
    y.1. Specific ``technology'' ``required'' for the ``production,'' 
``development,'' operation, installation, maintenance, repair or 
overhaul of items controlled by ECCN 0A617.y, 0B617.y, 0C617.y or 
0D617.y.
    y.2. through y.98 [RESERVED].
    y.99. ``Technology'' not identified on the CCL that (i) has been 
determined, in an applicable commodity jurisdiction determination 
issued by the U.S. Department of State, to be subject to the EAR and 
(ii) would otherwise be controlled elsewhere in ECCN 0E617.

    Dated: May 14, 2012.
Kevin J. Wolf,
Assistant Secretary of Commerce for Export Administration.
[FR Doc. 2012-12124 Filed 5-17-12; 8:45 am]
BILLING CODE 3510-33-P
```