[Federal Register Volume 65, Number 132 (Monday, July 10, 2000)]
[Rules and Regulations]
[Pages 42565-42575]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-16894]


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DEPARTMENT OF COMMERCE

Bureau of Export Administration

15 CFR Parts 732, 740, 743, 748, 750, 752, 758, 762, 772, and 774

[Docket No. 990709186-0128-02]
RIN 0694-AB88


Parties to a Transaction and Their Responsibilities, Routed 
Export Transactions, Shipper's Export Declarations, the Automated 
Export System (AES), and Export Clearance

AGENCY: Bureau of Export Administration, Commerce.

ACTION: Final rule.

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SUMMARY: The Bureau of Export Administration is revising the Export 
Administration Regulations (EAR) to clarify the responsibilities of 
parties to export and reexport transactions, the filing and use of 
Shipper's Export Declarations, Destination Control Statement 
requirements, and other export clearance issues. In addition, this rule 
adds information about the scope and requirements for the Automated 
Export System (AES) Option 4 provision.

DATES: Effective Date: This rule is effective July 10, 2000.
    Grace Period: A 90 day grace period will apply to the requirements 
set forth in this rule. Until October 10, 2000, Shipper's Export 
Declarations will be accepted with information that complies with the 
rules prior to July 10, 2000.

FOR FURTHER INFORMATION CONTACT: Sharron Cook, Regulatory Policy 
Division, Bureau of Export Administration, at (202) 482-2440.
    For additional information on the AES in general, please contact: 
C. Harvey Monk, Chief Foreign Trade Division, U.S. Census Bureau, (301) 
457-2255, fax (301) 457-2645, e-mail: <a href="/cdn-cgi/l/email-protection#a1c28fc9c0d3d7c4d88fcccecfca8fcbd3e1c2c4cfd2d4d28fc6ced7"><span class="__cf_email__" data-cfemail="7d1e53151c0f0b1804531012131653170f3d1e18130e080e531a120b">[email protected]</span></a>
    For information about obtaining BXA approval to use AES Option 4 
for items subject to the EAR, contact: Tom Andrukonis or Donald Lyles, 
Director, Office of Enforcement Analysis, Bureau of Export 
Administration, (202) 482-4255, fax (202) 482-0971, e-mail: 
<a href="/cdn-cgi/l/email-protection#4f3b2e212b3d3a24200f2d372e612b202c61282039"><span class="__cf_email__" data-cfemail="0470656a6076716f6b44667c652a606b672a636b72">[email protected]</span></a>

SUPPLEMENTARY INFORMATION:

Background

    The Bureau of Export Administration (BXA) is amending the Export 
Administration Regulations (EAR) in order to simplify and clarify the 
export clearance process and facilitate compliance. The amendment 
promotes flexibility so that parties to transactions subject to the EAR 
may structure their transactions freely, consistent with national 
security and foreign policy objectives.
    In this final rule, BXA defines new terms, including ``principal 
parties in interest'', ``routed export transaction'', and ``end-user'', 
and clarifies existing ones (notably the definition of ``exporter''). 
The amendments ensure that for every transaction subject to the EAR, 
some party to the transaction is clearly responsible for determining 
licensing authority (License, License Exception, or NLR), and for 
obtaining the appropriate license or other authorization. The 
amendments also encourage communication among all parties to a 
transaction to ensure that each party knows its responsibilities in 
order to comply with the EAR.
    For export control purposes the exporter has generally been the 
seller. An export transaction, however, has two principal parties in 
interest: a U.S. party and a foreign party--usually the seller and the 
buyer. In a ``routed export transaction,'' the foreign principal party 
in interest agrees to terms of sale that may include assuming 
responsibility for export licensing. This rule provides that when the 
foreign principal party expressly assumes responsibility in writing for 
determining license requirements and obtaining necessary authorization, 
that foreign party must have a U.S. agent who becomes the ``exporter'' 
for export control purposes. Without such a written undertaking by the 
foreign principal, the U.S. principal is the exporter, with all 
attendant responsibilities.
    In addition to clarifying export licensing responsibilities, this 
rule institutes a requirement that the export licensee communicate 
license conditions to those parties to whom conditions apply and, when 
required by the license, obtain written acknowledgment of receipt of 
the conditions. This new provision is part of BXA's License and 
Enforcement Action Program (LEAP), which is designed to enhance 
compliance with the EAR.
    In addition, these amendments significantly revise the first six 
sections of Part 758 of the EAR by reorganizing, streamlining and 
clarifying necessary provisions while deleting unnecessary or redundant 
provisions. Section 758.1 consolidates into one section the export 
control-related provisions pertaining to the SED or AES record. In 
consolidating these provisions into one section, BXA has eliminated 
those that are already contained in the FTSR, or that were otherwise 
unrelated to export controls. Section 758.2 provides new rules for 
BXA's AES Option 4 approval process. Commenters asked that this be 
added to the final regulation. Section 758.3 clarifies and consolidates 
provisions relating to the responsibilities of the parties, and 
Sec. 758.4 consolidates, but does not significantly change, provisions 
concerning the use of an export license. Section 758.4, which contained 
very specific provisions relating to conformity of documents, has been 
greatly simplified in the interest of flexibility, and moved to section 
758.5. Former sections 758.5 (general destination control requirements) 
and Sec. 758.6 (destination control statement) have been combined and 
reduced to one paragraph at Sec. 758.6.
    Lastly, section 762.7 is amended to add language that clarifies 
that BXA has legal authority to issue subpoenas requiring individuals 
to appear and testify during the investigatory phase of an export case. 
The authority for this is found in both the Export Administration

[[Page 42566]]

Act of 1979 in section 12(a)(1), and in the International Emergency 
Economic Powers Act in section 1702(a)(2).
    The Census Bureau initially published a notice of proposed 
rulemaking as to who goes in block 1(a) of the SED in the Federal 
Register on August 6, 1998 (63 FR 41979). As a result of comments 
received on that proposed rulemaking and subsequent discussions with 
the Bureau of Export Administration (BXA), the Census Bureau decided to 
issue a supplementary notice of proposed rulemaking to address the 
issues raised during the comment period and to further clarify 
provisions contained in that notice of proposed rulemaking. The Census 
Bureau published a supplementary notice of proposed rulemaking in the 
Federal Register on October 4, 1999 (64 FR 53861). BXA also published a 
notice of proposed rulemaking in the Federal Register on October 4, 
1999 (64 FR 53854) revising the Export Administration Regulations (EAR) 
regarding the responsibilities of the parties to an export transaction, 
routed export transactions, Shipper's Export Declarations, and export 
clearance. Before and after the publication of those notices in the 
Federal Register, both the Census Bureau and BXA participated in 
numerous meetings, conferences, and seminars with the trade community 
to gain an understanding of business issues, and to more clearly 
explain the provisions of the proposed rules.

Response to Comments

    BXA received twenty-eight (28) comments on the notice of proposed 
rulemaking published in the Federal Register on October 4, 1999 (64 FR 
53861). BXA revised certain provisions in the final rule to address the 
concerns of the respondents and to more clearly explain the 
requirements. The major concerns addressed in the comments and BXA's 
response are as follows:
    1. Requirement to put the Export Control Classification Number 
(ECCN) on the SED or AES record whenever exporting an item that is 
listed on the Commerce Control List. Commenters expressed concern this 
requirement would be very burdensome. These commenters explained the 
greater administrative burden in terms of having to report ECCNs 
subject only to Anti-terrorism (AT) controls even when the ultimate 
destination is a non-terrorism supporting country. BXA also received 
comments supporting the proposed ECCN requirement, because of the vital 
importance of the ECCN both to Government agencies such as the U.S. 
Customs Service, and to the business community as a foundation for 
making correct license determinations. In fact, one company suggested 
that BXA expand the requirement to include requiring the ECCN on the 
invoice and bill of lading in order to provide information to the 
foreign principal for reexport purposes. In response to the comments, 
BXA narrowed the scope of the ECCN requirement in the final rule so 
that exporters only have to report the ECCN on the SED or AES record 
for items exported under a license or License Exception, and ``No 
License Required'' (NLR) shipments of items having a reason for control 
other than anti-terrorism (AT). The only exception to this requirement 
would be for items temporarily in the United States meeting the 
provisions of License Exception TMP, under Sec. 740.9(b)(3) of the EAR.
    2. Clarify the writing required from the foreign principal party in 
interest in routed transactions to permit its agent to become the 
``exporter.'' Some commenters wanted clarification as to what the 
writing should include. Others wanted to know if the Incoterm ``EXW'' 
would be sufficient for the writing. One commenter expressed support 
for an express writing, as opposed to Incoterms, because of the lack of 
understanding of the Incoterms among small and medium size exporters, 
who typically hire clerks to comply with export regulations. In 
response to these concerns, BXA has included in this preamble an 
example of an acceptable writing. This example is similar to the 
language that describes the buyer's responsibiltiy for export licenses 
in the Incoterms 2000 publication. BXA's sample writing would be signed 
by the foreign principal party in interest, and reads, ``I undertake to 
determine any export license requirements, to obtain any export license 
or other official authorization, and to carry out any customs 
formalities for the export of the goods.'' This is just an example of a 
writing. No doubt the exporting community will use good judgement in 
determining the extensiveness of the writing it chooses to use, by 
considering the strategic applications and capabilities of the item 
being exported, its level of relationship with the foreign principal 
party in interest, and the foreign principal's knowledge of U.S. export 
laws. The format or language is not the most important part of the 
writing requirement. The most important aspect of the writing is that 
it reflects an agreement between the principals concerning their 
specific roles in determining the license requirements and obtaining 
any license that is required.
    Some specific questions were submitted by some commenters about the 
writing.
    1. Question: May one writing cover multiple transactions between 
the same principals?
    Answer: Yes, and this has been clarified in this final rule.
    2. Question: In a routed transaction that is supported by an 
assumption of responsibility in writing, must the U.S. principal party 
in interest also obtain a writing from the U.S. agent of the foreign 
principal party in interest stating that the agent has assumed export 
compliance responsibilities on behalf of the foreign principal party in 
interest?
    Answer: While the EAR do not require the U.S. principal party in 
interest to obtain a writing from the agent to establish its export 
compliance role, it would be a good business practice to confirm the 
agent's responsibilities.
    3. The liability of the U.S. principal party in interest when 
complying with the information sharing requirement. Several commenters 
were concerned about the liability that may accrue to the U.S. 
principal party in interest in a routed transaction when it gives the 
foreign principal party in interest or its agent the Export Control 
Classification Number (ECCN), technical specifications of an item, or 
other information related to license determination. This final rule 
does not change the current standards of liability as they apply to 
provision of information. The foreign principal party in interest or 
its authorized agent is responsible for ensuring that the export 
complies with all applicable requirements of the EAR, including, as 
necessary, the accuracy of the product classification. If the foreign 
principal party in interest has reason to doubt the accuracy of the 
ECCN provided, is unclear about the classification of the item based on 
the technical specifications provided or has questions about any other 
aspect of export control requirements, the foreign principal party in 
interest must make inquiries and take appropriate action to ensure 
compliance with the EAR.
    Some companies expressed concern about requests for information 
that is readily available from other sources, proprietary, not in the 
possession of the U.S. principal party in interest, or not available. 
In addition to the availability concern, some companies were concerned 
about the cost of complying with information sharing requests. BXA has 
not made any changes in the final rule in this regard, as the U.S. 
principal is generally in a better position to obtain

[[Page 42567]]

the ECCN or technical specifications than the foreign principal or its 
agent. There is no requirement to go beyond the information necessary 
to classify the item according to the technical parameters of the CCL. 
BXA believes that all these concerns are better dealt with in the 
business environment among the principals, rather than by regulation.
    4. Requirement for the licensee to obtain written acknowledgment of 
license conditions, when it is required per condition on the license. 
Some companies are concerned that BXA licensing officers will overuse 
this condition. Several individuals suggested a notification 
requirement instead of a notification and acknowledgment combination. 
The practice of including a condition for the licensee to notify a 
particular party or parties of the conditions on a license or in some 
case obtain an acknowledgment of this notification has been in use for 
many years by BXA. This rule simply adds the practice to the 
regulations, for transparency.
    One individual expressed concern that it would be unclear as to 
what constitutes compliance if the licensee were required to notify all 
end-users of conditions in a situation where the ultimate consignee was 
a distributor. Applicants must remember that conditions may be 
negotiated between BXA and the applicant. Moreover, if an applicant 
receives a license, but is not comfortable with the conditions, the 
applicant may choose not to proceed with the transaction.
    5. Effective date of publication. There is some industry concern 
about the effective date of these provisions, as it may take some time 
to reprogram automated processes, provide training to personnel, and 
create new compliance procedures within export management systems. BXA 
believes that a 90 day ``grace period'' will give adequate time to the 
exporting community to ensure compliance with the rules set forth in 
this regulation.
    6. Clarify conformity of documents provisions. Several commenters 
stated their belief that BXA's new definition of ``exporter'', coupled 
with the Bureau of Census'' new requirement for the U.S. principal 
party in interest to be placed in block 1(a) of the SED or in the 
``exporter'' block of the AES record, was confusing to some commenters. 
They expressed concern over the fact the ``exporter'' for EAR purposes 
may not be the person in the ``exporter'' block of the SED or AES 
record. Some commenters came to the conclusion that the different 
definitions of ``exporter'' might impact the conformity of documents 
requirement contained in Sec. 758.5(b) of the EAR. To alleviate the 
confusion and the conformity of document conflict caused by BXA's and 
Census' different definitions of the term ``exporter,'' Census will be 
revising the SED and AES record to remove the term ``exporter'' from 
blocks 1a, 1b, and the AES record, and replacing it with the term 
``U.S. Principal Party in Interest.''
    Although the Export Administration Act (EAA) expired on August 20, 
1994, the President invoked the International Emergency Economic Powers 
Act and continued in effect the EAR, and, to the extent permitted by 
law, the provisions of the EAA in Executive Order 12924 of August 19, 
1994, extended by Presidential notice of August 10, 1999 (64 FR 44101) 
(August 13, 1999).

Rulemaking Requirements

    1. This final rule has been determined to be significant for 
purposes of E.O. 12866.
    2. This rule involves collections that have been approved by the 
Office of Management and Budget under control numbers 0694-0038, and 
0694-0096. This rule contains collections that have been approved by 
the Office of Management and Budget under control numbers: 0607-0152, 
0694-0040, 0694-0094, 0694-0095, 0694-0097, 0694-0088, and 0694-0120. 
Notwithstanding any other provision of law, no person is required to 
respond 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, unless that collection of information 
displays a currently valid OMB Control Number.
    3. This rule does not contain policies with Federalism implications 
sufficient to warrant preparation of a Federalism assessment under 
Executive Order 13132.
    4. The provisions of the Administrative Procedure Act (5 U.S.C. 
553) requiring notice of proposed rulemaking, the opportunity for 
public participation, and a delay in effective date, are inapplicable 
because this regulation involves a military and foreign affairs 
function of the United States (see 5 U.S.C. 553(a)(1)). Further, no 
other law requires that a notice of proposed rulemaking and an 
opportunity for public comment be given for this final rule. Because a 
notice of proposed rulemaking and an opportunity for public comment are 
not required to be given for this rule under 5 U.S.C. 553 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, Regulatory Policy Division, Bureau of Export Administration, 
Department of Commerce, P.O. Box 273, Washington, DC 20044.

List of Subjects

15 CFR Part 732

    Administrative practice and procedure, Advisory committees, 
Exports, Foreign trade, Reporting and recordkeeping requirements, 
Strategic and critical materials.

15 CFR Parts 740, 743, 748, 750, 752, 758, and 772

    Administrative practice and procedure, Exports, Foreign trade, 
Reporting and Recordkeeping requirements.

 

15 CFR Part 762

    Administrative practice and procedure, Business and industry, 
Confidential business information, Exports, Foreign trade, Reporting 
and recordkeeping requirements.

15 CFR Part 774

    Exports, Foreign trade.

    Accordingly, parts 732, 740, 743, 748, 750, 752, 758, 762, 772, and 
774 of the Export Administration Regulations (15 CFR Parts 730-799) are 
amended as follows:
    1. The authority citation for 15 CFR parts 758 and 762 continues to 
read as follows:

    Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; 
E.O. 12924, 59 FR 43437, 3 CFR, 1994 Comp., p. 917; Notice of August 
10, 1999, 3 CFR, 1999 Comp., p. 302.


    2. The authority citation for 15 CFR parts 732, 748, 752, and 772 
continues to read as follows:

    Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; 
E.O. 12924, 59 FR 43437, 3 CFR, 1994 Comp., p. 917; E.O. 13026, 61 
FR 58767, 3 CFR, 1996 Comp., p. 228; Notice of August 10, 1999, 3 
CFR, 1999 Comp., p. 302.


    3. The authority citation for 15 CFR part 740 continues to read as 
follows:

    Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; 
E.O. 12924, 59 FR 43437, 3 CFR, 1994 Comp., p. 917; E.O. 13026, 61 
FR 58767, 3 CFR, 1996 Comp., p. 228; Notice of August 10, 1999, 3 
CFR, 1999 Comp., p. 302.


    4. The authority citation for 15 CFR part 743 continues to read as 
follows:


[[Page 42568]]


    Authority: 50 U.S.C. app. 2401 et seq; 50 U.S.C. 1701 et seq; 
E.O. 12924, 59 FR 43437, 3 CFR, 1994 Comp., p. 917; Notice of August 
10, 1999, 3 CFR, 1999 Comp., p. 302.


    5. The authority citation for 15 CFR part 750 is revised to read as 
follows:

    Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; 
E.O. 12924, 59 FR 43437, 3 CFR, 1994 Comp., p. 917; E.O. 12981, 60 
FR 62980, 3 CFR, 1997 Comp., p. 60; E.O. 13026, 61 FR 58767, 3 CFR, 
1996 Comp., p. 228; Notice of August 10, 1999, 3 CFR, 1999 Comp., p. 
302.


    6. 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); 18 U.S.C. 2510 et seq.; 22 U.S.C. 
287c, 22 U.S.C. 3201 et seq., 22 U.S.C. 6004; 30 U.S.C. 185(s), 
185(u); 42 U.S.C. 2139a; 42 U.S.C. 6212; 43 U.S.C. 1354; 46 U.S.C. 
app. 466c; 50 U.S.C. app. 5; E.O. 12924, 59 FR 43437, 3 CFR, 1994 
Comp., p. 917; E.O. 13026, 61 FR 58767, 3 CFR, 1996 Comp., p. 228; 
Notice of August 10, 1999, 3 CFR, 1999 Comp., p. 302.


    7. Parts 740 through 772 are amended by revising the phrase ``U.S. 
exporter'' to read ``exporter'' in the following places:
    a. Sec. 740.9(a)(2)(iii) last sentence;
    b. Sec. 740.10(b)(3)(ii)(C);
    c. Sec. 743.1(b);
    d. Sec. 748.11(e)(4)(ii)(1);
    e. Supplement No. 3 to part 748, ``BXA-711, Statement By ultimate 
consignee and Purchaser Instructions'', Block 8; and
    f. Supplement No. 3 to part 752, ``Instructions on Completing Form 
BXA-752 `Statement by Consignee in Support of Special Comprehensive 
License'-A'', Block 5.

PART 732--[AMENDED]

    8. Section 732.5 is revised to read as follows:


Sec. 732.5  Steps regarding Shipper's Export Declaration, Destination 
Control Statements, and recordkeeping.

    (a) Step 27: Shipper's Export Declaration (SED) or Automated Export 
System (AES) record. Exporters or agents authorized to complete the 
Shipper's Export Declaration (SED), or to file SED information 
electronically using the Automated Export System (AES), should review 
Sec. 758.1 of the EAR to determine when an SED is required and what 
export control information should be entered on the SED or AES record. 
More detailed information about how to complete an SED or file the SED 
information electronically using AES may be found in the Bureau of 
Census Foreign Trade Statistics Regulations (FTSR) at 15 CFR part 30. 
Reexporters and firms exporting from abroad may skip Steps 27 through 
29 and proceed directly to Sec. 732.6.
    (1) Entering license authority. You must enter the correct license 
authority for your export on the SED or AES record (License number, 
License Exception symbol, or No License Required designator ``NLR'') as 
appropriate. See Sec. 758.1(g) of the EAR and 15 CFR 30.7(m) of the 
FTSR.
    (i) License number and expiration date. If you are exporting under 
the authority of a license, you must enter the license number on the 
SED or AES record. The expiration date must be entered on paper 
versions of the SED only.
    (ii) License Exception. If you are exporting under the authority of 
a License Exception, you must enter the correct License Exception 
symbol (e.g., LVS, GBS, CIV) on the SED or AES record. See Sec. 740.1 
and Sec. 740.2 of the EAR.
    (iii) NLR. If you are exporting items for which no license is 
required, you must enter the designator NLR. You should use the NLR 
designator in two circumstances: first, when the items to be exported 
are subject to the EAR but not listed on the Commerce Control List 
(CCL) (i.e., items that are classified as EAR99), and second, when the 
items to be exported are listed on the CCL but do not require a 
license. Use of the NLR designator is also a representation that no 
license is required under any of the General Prohibitions set forth in 
part 736 of the EAR.
    (2) Item description. You must enter an item description identical 
to the item description on the license when a license is required, or 
enter an item description sufficient in detail to permit review by the 
U.S. Government and verification of the Schedule B Number (or 
Harmonized Tariff Schedule number) for License Exception shipments or 
shipments for which No License is Required (NLR). See Sec. 758.1(g) of 
the EAR; and 15 CFR 30.7(l) of the FTSR.
    (3) Entering the ECCN. You must enter the correct Export Control 
Classification Number (ECCN) on the SED or AES record for all licensed 
and License Exception shipments, and ``No License Required'' (NLR) 
shipments of items having a reason for control other than anti-
terrorism (AT). The only exception to this requirement would be the 
return of unwanted foreign origin items, meeting the provisions of 
License Exception TMP, under Sec. 740.9(b)(3). See Sec. 758.1(g) of the 
EAR.
    (b) Step 28: Destination Control Statement. The Destination Control 
Statement (DCS) must be entered on the invoice and on the bill of 
lading, air waybill, or other export control document that accompanies 
the shipment from its point of origin in the United States to the 
ultimate consignee or end-user abroad. The person responsible for 
preparation of those documents is responsible for entry of the DCS. The 
DCS is required for all exports from the United States of items on the 
Commerce Control List and is not required for items classified as 
EAR99, unless the export may be made under License Exception BAG or GFT 
(see part 740 of the EAR). Reexporters should review Sec. 752.15 of the 
EAR for DCS requirements when using a Special Comprehensive License; 
otherwise, DCS requirements do not apply to reexports. See Sec. 758.6 
of the EAR.
    (c) Step 29: Recordkeeping. Records of transactions subject to the 
EAR must be maintained for five years in accordance with the 
recordkeeping provisions of part 762 of the EAR.


Sec. 732.6  [Amended]

    9. Section 732.6 is amended by:
    a. Revising the citation ``Sec. 758.2'' to read ``Sec. 758.4'' in 
paragraph (a); and
    b. Revising the citation ``Sec. 758.4'' to read ``Sec. 758.1'' in 
paragraph (b).

PART 740--[AMENDED]


Sec. 740.1  [Amended]

    10. Section 740.1 is amended by revising:
    a. The phrase ``requirements of Sec. 758.5 and Sec. 758.6 of the 
EAR.'' in paragraph (e) to read ``requirements of Sec. 758.6 of the 
EAR.''; and
    b. Paragraph (d) to read as follows:


Sec. 740.1  Introduction.

* * * * *
    (d) Shipper's Export Declaration or Automated Export System (AES) 
record. You must enter on any required Shipper's Export Declaration 
(SED) or Automated Export System (AES) record the correct License 
Exception symbol (e.g., LVS, GBS, CIV) and the correct Export Control 
Classification Number (ECCN) (e.g., 4A003, 5A002) for all shipments of 
items exported under a License Exception. Items temporarily in the 
United States meeting the provisions of License Exception TMP, under 
Sec. 740.9(b)(3), are excepted from this requirement. See Sec. 758.1 of 
the EAR for Shipper's Export Declaration requirements or Sec. 758.2 of 
the EAR for Automated Export System (AES) requirements.
* * * * *

[[Page 42569]]

Sec. 740.7  [Amended]

    11. Section 740.7 is amended by revising the citation 
``758.6(a)(ii)'' to read ``758.6'' in paragraph (e)(2).

PART 748--[AMENDED]

    12. Section 748.4 is amended by revising paragraphs (a) and (b) to 
read as follows:


Sec. 748.4  Basic guidance related to applying for a license.

    (a) License applicant. (1) Export transactions. Only a person in 
the United States may apply for a license to export items from the 
United States. The applicant must be the exporter, who is the U.S. 
principal party in interest with the authority to determine and control 
the sending of items out of the United States, except for Encryption 
License Arrangements (ELA) (see Sec. 750.7(d) of the EAR). See 
definition of ``exporter'' in part 772 of the EAR.
    (2) Routed export transactions. The U.S. principal party in 
interest or the duly authorized U.S. agent of the foreign principal 
party in interest may apply for a license to export items from the 
United States. Prior to submitting an application, the agent that 
applies for a license on behalf of the foreign principal party in 
interest must obtain a power of attorney or other written authorization 
from the foreign principal party in interest. See Sec. 758.3(b) and (d) 
of the EAR.
    (3) Reexport transactions. The U.S. or foreign principal party in 
interest, or the duly authorized U.S. agent of the foreign principal 
party in interest, may apply for a license to reexport controlled items 
from one country to another. Prior to submitting an application, an 
agent that applies for a license on behalf of a foreign principal party 
in interest must obtain a power-of-attorney or other written 
authorization from the foreign principal party in interest, unless 
there is a preexisting relationship by ownership, control, position of 
responsibility or affiliation. See power-of-attorney requirements in 
paragraph (b)(2) of this section.
    (b) Disclosure of parties on license applications and the power of 
attorney. (1) Disclosure of parties. License applicants must disclose 
the names and addresses of all parties to a transaction. When the 
applicant is the U.S. agent of the foreign principal party in interest, 
the applicant must disclose the fact of the agency relationship, and 
the name and address of the agent's principal. If there is any doubt 
about which persons should be named as parties to the transaction, the 
applicant should disclose the names of all such persons and the 
functions to be performed by each in Block 24 (Additional Information) 
of the BXA-748P Multipurpose Application form. Note that when the 
foreign principal party in interest is the ultimate consignee or end-
user, the name and address need not be repeated in Block 24. See 
``Parties to the transaction'' in Sec. 748.5.
    (2) Power of attorney or other written authorization. (i) 
Requirement. An agent must obtain a power of attorney or other written 
authorization from the principal party in interest, unless there is a 
preexisting relationship by ownership, control, position of 
responsibility or affiliation, prior to preparing or submitting an 
application for a license, when acting as either:
    (A) An agent, applicant, licensee and exporter for a foreign 
principal party in interest in a routed transaction; or
    (B) An agent who prepares an application for export on behalf of a 
U.S. principal party in interest who is the actual applicant, licensee 
and exporter in an export transaction.
    (ii) Application. When completing the BXA-748P Multipurpose 
Application Form, Block 7 (documents on file with applicant) must be 
marked ``other'' and Block 24 (Additional information) must be marked 
``748.4(b)(2)'' to indicate that the power of attorney or other written 
authorization is on file with the agent. See Sec. 758.3(d) for power of 
attorney requirement, and see also part 762 of the EAR for 
recordkeeping requirements.
* * * * *

    13. Section 748.5 is revised to read as follows:


Sec. 748.5  Parties to the transaction.

    The following parties may be entered on the BXA-748P Multipurpose 
Application Form or electronic equivalent. The definitions, which also 
appear in part 772 of the EAR, are set out here for your convenience to 
assist you in filling out your application correctly.
    (a) Applicant. The person who applies for an export or reexport 
license, and who has the authority of a principal party in interest to 
determine and control the export or reexport of items. See 
Sec. 748.4(a) and definition of ``exporter'' in part 772 of the EAR.
    (b) Other party authorized to receive license. The person 
authorized by the applicant to receive the license. If a person and 
address is listed in Block 15 of the BXA-748P Multipurpose Application 
Form or the electronic equivalent, the Bureau of Export Administration 
will send the license to that person instead of the applicant. 
Designation of another party to receive the license does not alter the 
responsibilities of the applicant, licensee or exporter.
    (c) Purchaser. The person abroad who has entered into the 
transaction to purchase an item for delivery to the ultimate consignee. 
In most cases, the purchaser is not a bank, forwarding agent, or 
intermediary. The purchaser and ultimate consignee may be the same 
entity.
    (d) Intermediate consignee. The person that acts as an agent for a 
principal party in interest and takes possession of the items for the 
purpose of effecting delivery of the items to the ultimate consignee. 
The intermediate consignee may be a bank, forwarding agent, or other 
person who acts as an agent for a principal party in interest.
    (e) Ultimate consignee. The principal party in interest located 
abroad who receives the exported or reexported items. The ultimate 
consignee is not a forwarding agent or other intermediary, but may be 
the end-user.
    (f) End-user. The person abroad that receives and ultimately uses 
the exported or reexported items. The end-user is not a forwarding 
agent or intermediary, but may be the purchaser or ultimate consignee.

PART 750--[AMENDED]

    14. Section 750.7 is amended by revising paragraph (d) to read as 
follows:


Sec. 750.7  Issuance of licenses.

* * * * *
    (d) Responsibility of the licensee. The person to whom a license is 
issued is the licensee. In export transactions, the exporter must be 
the licensee, and the exporter-licensee is responsible for the proper 
use of the license, and for all terms and conditions of the license, 
except to the extent that certain terms and conditions are directed 
toward some other party to the transaction. In the case of Encryption 
License Agreements (ELA), the licensee may not necessarily be the 
exporter or reexporter. In this case, the authorized user of the ELA is 
responsible for proper use of the license, and for all terms and 
conditions of the license, except to the extent that certain terms and 
conditions are directed toward some other party to the transaction. In 
reexport or routed export transactions, a U.S. agent acting on behalf 
of a foreign principal party in interest may be the licensee; in these 
cases, both the agent and the foreign principal party in interest, on 
whose behalf the agent has acted, are responsible for the use of the 
license, and for all terms and conditions of the

[[Page 42570]]

license, except to the extent that certain terms and conditions are 
directed toward some other party to the transaction. It is the 
licensee's responsibility to communicate the specific license 
conditions to the parties to whom those conditions apply. In addition, 
when required by the license, the licensee is responsible for obtaining 
written acknowledgment(s) of receipt of the conditions from the 
party(ies) to whom those conditions apply.
* * * * *

PART 752--[AMENDED]


Sec. 752.15  [Amended]

    15. Section 752.15 is amended by revising the citation 
``Sec. 758.3'' to read ``Sec. 758.1'' in paragraph (a) introductory 
text.

PART 758--[AMENDED]

    16. Part 758 is amended by revising sections 758.1 through 758.6, 
to read as follows:

PART 758--EXPORT CLEARANCE REQUIREMENTS


Sec. 758.1  The Shipper's Export Declaration (SED) or Automated Export 
System (AES) record.

    (a) The Shipper's Export Declaration (SED) or Automated Export 
System (AES) record. The SED (Form 7525-V, Form 7525-V-Alt, or 
Automated Export System record) is used by the Bureau of Census to 
collect trade statistics and by the Bureau of Export Administration for 
export control purposes. The SED or AES record collects basic 
information such as the names and addresses of the parties to a 
transaction; the Export Control Classification Number (ECCN) (when 
required), the Schedule B number or Harmonized Tariff Schedule number, 
the description, quantity and value of the items exported; and the 
license authority for the export. The SED or the AES electronic 
equivalent is a statement to the United States Government that the 
transaction occurred as described.
    (b) When an SED or AES record is required. Except when the export 
of items subject to the EAR is to take place electronically or in an 
otherwise intangible form, you must file an SED or AES record with the 
United States Government for items subject to the EAR, including 
exports by U.S. mail, in the following situations:
    (1) For all exports of items subject to the EAR that are destined 
to Cuba, Iran, Iraq, Libya, North Korea, Serbia (except Kosovo), Sudan, 
or Syria, regardless of value (see 15 CFR 30.55(h) of the FTSR); and
    (2) For all exports of items subject to the EAR that are authorized 
under a license, regardless of value, or destination;
    (3) For all exports of commodities and mass market software subject 
to the EAR that are authorized under a License Exception or under NLR, 
when the value of the commodities or mass market software classified 
under a single Schedule B Number (or Harmonized Tariff Schedule number) 
is over $2,500, except as exempted by the Foreign Trade Statistics 
Regulations (FTSR) in 15 CFR part 30 and referenced in paragraph (c) of 
this section;
    (4) For all exports of items subject to the EAR that will be 
transshipped through Canada to a third destination, where the export 
would require an SED or AES record or license if shipped directly to 
the final destination from the United States (see 15 CFR 30.58(c) of 
the FTSR).

    Note to paragraph (b): In addition to the Shipper's Export 
Declaration for exports, the Bureau of Census Foreign Trade 
Statistics Regulations provide for a specific Shipper's Export 
Declaration for In-Transit Goods (Form 7513). See 15 CFR 30.3 and 
30.8 of the FTSR.

    (c) Exemptions. A complete list of exemptions from the SED or AES 
filing requirement is set forth in the FTSR. Some of these FTSR 
exemptions have elements in common with certain EAR License Exceptions. 
An FTSR exemption may be narrower than a License Exception. The 
following references are provided in order to direct you to the FTSR 
exemptions that relate to EAR License Exceptions:
    (1) License Exception Baggage (BAG), as set forth in Sec. 740.14 of 
the EAR. See 15 CFR 30.56 of the FTSR;
    (2) License Exception Gift Parcels and Humanitarian Donations 
(GFT), as set forth in Sec. 740.12 of the EAR. See 15 CFR 30.55(g) of 
the FTSR;
    (3) License Exception Aircraft and Vessels (AVS), as set forth in 
Sec. 740.15 of the EAR. See 15 CFR 30.55(l) of the FTSR;
    (4) License Exception Governments and International Organizations 
(GOV), as set forth in Sec. 740.11 of the EAR. See 15 CFR 30.53 of the 
FTSR;
    (5) License Exception Technology and Software Under Restriction 
(TSR), as set forth in Sec. 740.6 of the EAR. See 15 CFR 30.55(n) of 
the FTSR; or
    (6) License Exception Temporary Imports, Exports, and Reexports 
(TMP) ``tools of trade'', as set forth in Sec. 740.9(a)(2)(i) of the 
EAR. See 15 CFR 30.56(b) of the FTSR.
    (d) Notation on export documents for exports exempt from SED or AES 
record requirements. When an exemption from filing the Shipper's Export 
Declaration or Automated Export System record applies, the export 
authority (License Exception or NLR) of all the items must be entered 
on the loading document (e.g., Cargo Declaration, manifest, bill of 
lading, (master) air waybill) by the person responsible for preparing 
the document. This requirement is intended to parallel the Bureau of 
Census requirement, so that notations as to the basis for the SED 
exemption and the license authority are entered in the same place and 
manner (see 15 CFR 30.21 of the FTSR for detailed requirements). The 
loading document must be available for inspection by government 
officials, along with the items, prior to lading on the carrier.
    (e) Signing the Shipper's Export Declaration or transmitting data 
via AES. The person who signs the SED must be in the United States at 
the time of signing. The person who transmits data via AES must be a 
certified AES participant in accordance with 15 CFR 30.60 of the FTSR. 
The person that signs the SED or transmits data via AES, whether 
exporter or agent, is responsible for the truth, accuracy, and 
completeness of the SED or AES record, except insofar as that person 
can demonstrate that he or she reasonably relied on information 
furnished by others.
    (f) The SED or AES record is an export control document. The SED or 
AES record is a statement to the U.S. Government. The SED or AES record 
is an export control document as defined in part 772 of the EAR. False 
statements made thereon may be a violation of Sec. 764.2(g) of the EAR. 
When an SED or AES record is presented to the U.S. Government, the 
signer or filer of the SED or AES record represents the following:
    (1) Export of the items described on the SED or AES record is 
authorized under the terms and conditions of a license issued by BXA; 
is in accordance with the terms and conditions of a License Exception; 
is authorized under ``NLR'' as no license is required for the shipment; 
or is not subject to the EAR;
    (2) Statements on the SED or AES record are in conformity with the 
contents of any license issued by BXA, with the possible exception of 
the exporter block in routed transactions; and
    (3) All information shown on the SED or AES record is true, 
accurate, and complete.
    (g) Export control information on the SED or AES record. For each 
item on the SED or AES record, you must show the license authority 
(License number, License Exception, or No License

[[Page 42571]]

Required (NLR)), the Export Control Classification Number (ECCN) (when 
required), and the item description in the designated blocks. The item 
description must be stated in Commerce Control List terms. If those 
terms are inadequate to meet Census Bureau requirements, the FTSR 
requires that you give enough additional detail to permit verification 
of the Schedule B Number (or Harmonized Tariff Schedule number). The 
FTSR also requires separate descriptions of items for each Schedule B 
classification (or Harmonized Tariff Schedule number). See 15 CFR 30.6 
(separate SED or AES records), Sec. 30.7(l) (description of items) and 
Sec. 30.9 (separation of items on the SED) of the FTSR.
    (1) Exports under a license. When exporting under the authority of 
a license, you must enter on the SED or AES record the license number 
and expiration date (the expiration date is only required on paper 
versions of the SED), the ECCN, and an item description identical to 
the item description on the license.
    (2) Exports under a License Exception. You must enter on any 
required SED or AES record the ECCN and the correct License Exception 
symbol (e.g., LVS, GBS, CIV) for the License Exception(s) under which 
you are exporting. Items temporarily in the United States meeting the 
provisions of License Exception TMP, under Sec. 740.9(b)(3), are 
excepted from this requirement. See also Sec. 740.1(d) of the EAR.
    (3) No License Required (NLR) exports. You must enter on any 
required SED or AES record the ``NLR'' designation when the items to be 
exported are subject to the EAR but not listed on the Commerce Control 
List (i.e., items are classified as EAR99), and when the items to be 
exported are listed on the CCL but do not require a license. In 
addition, you must enter the correct ECCN on any required SED or AES 
record for all items being exported under the NLR provisions that have 
a reason for control other than anti-terrorism (AT). The designator 
``TSPA'' may be used, but is not required, when the export consists of 
technology or software outside the scope of the EAR. See Sec. 734.7 
through Sec. 734.11 of the EAR for TSPA information.
    (h) Power of attorney or other written authorization. In a ``power 
of attorney'' or other written authorization, authority is conferred 
upon an agent to perform certain specified acts or kinds of acts on 
behalf of a principal.
    (1) An agent must obtain a power of attorney or other written 
authorization in the following circumstances:
    (i) An agent that represents a foreign principal party in interest 
in a routed transaction must obtain a power of attorney or other 
written authorization that sets forth his authority; and
    (ii) An agent that applies for a license on behalf of a principal 
party in interest must obtain a power of attorney or other written 
authorization that sets forth the agent's authority to apply for the 
license on behalf of the principal.

    Note to paragraph (h)(1): The Bureau of Census Foreign Trade 
Statistics Regulations impose additional requirements for a power of 
attorney or other written authorization. See 15 CFR 30.4(e) of the 
FTSR.

    (2) This requirement for a power of attorney or other written 
authorization is a legal requirement aimed at ensuring that the parties 
to a transaction negotiate and understand their responsibilities. The 
absence of a power of attorney or other written authorization does not 
prevent BXA from using other evidence to establish the existence of an 
agency relationship for purposes of imposing liability.
    (i) Submission of the SED or AES record. The SED or AES record must 
be submitted to the U.S. Government in the manner prescribed by the 
Bureau of Census Foreign Trade Statistics Regulations (15 CFR part 30).


Sec. 758.2  Automated Export System (AES).

    The Census Bureau's Foreign Trade Statistics Regulations (FTSR) (15 
CFR 30) contain provisions for filing Shipper's Export Declarations 
(SEDs) electronically using the Automated Export System (AES). In order 
to use AES, you must apply directly to the Census Bureau for 
certification and approval through a Letter of Intent (see 15 CFR 
30.60(b) and Appendix A to part 30 of the FTSR). Four AES filing 
options are available for transmitting shipper's export data. Option 1 
is the standard paper filing of the SED, while the other three options 
are electronic. Option 2 requires the electronic filing of all 
information required for export prior to export (15 CFR 30.61(a) and 
30.63 of the FTSR); Option 3 requires the electronic filing of only 
specified data elements prior to export, with complete information 
transmitted within 5 working days of exportation (15 CFR 30.61(b) and 
Appendix B of the FTSR); Option 4 is only available for approved filers 
(approval by Census Bureau, U.S. Customs Service, BXA and other 
agencies) and requires no information to be transmitted prior to 
export, with complete information transmitted within 10 working days of 
exportation (15 CFR 30.61(c) and 30.62(c) of the FTSR).
    (a) Census' Option 4 application process. Exporters, or agents 
applying on behalf of an exporter, may apply for Option 4 filing 
privileges by submitting a Letter of Intent to the Census Bureau in 
accordance with 15 CFR 30.60(b) and 30.62 of the FTSR. The Census 
Bureau will distribute the Letter of Intent to BXA and other agencies 
participating in the Option 4 approval process. Any agency may notify 
Census that an applicant has failed to meet its acceptance standards, 
and the Census Bureau will provide a denial letter to the applicant 
naming the denying agency. If no agency denies the application within 
30 days, nor requests an extension of time within 30 days, the Census 
Bureau will provide the applicant with an approval letter. See 15 CFR 
30.62(b) of the FTSR.
    (b) BXA Option 4 application process. When AES filers wish to use 
Option 4 for exports of items that require a BXA license, those filers 
must seek separate approval directly from BXA by completing a 
questionnaire and certification. (Separate BXA approval is not required 
for the use of Option 4 in connection with exports that do not require 
a BXA license.) The questionnaire and certification should be mailed 
to: U.S. Department of Commerce, Bureau of Export Administration, The 
Office of Enforcement Analysis, 14th & Pennsylvania Avenue, N.W., Room 
4065, Washington, D.C. 20230.
    (1) Questionnaire. The following questions must be answered based 
on your experiences over the past five years. If the answer to either 
of the questions is ``yes'', it must be followed with a full 
explanation. Answering ``yes'' to either of the questions will not 
automatically prevent your participation in Option 4. BXA will consider 
the facts of each case and any remedial action you have taken to 
determine whether your reliability is sufficient to participate in this 
program.
    (i) Have you been charged with, convicted of, or penalized for, any 
violation of the EAR or any statute described in Sec. 766.25 of the 
EAR?
    (ii) Have you been notified by any government official of competent 
authority that you are under investigation for any violation of the EAR 
or any statute described in Sec. 766.25 of the EAR?
    (2) Certification. Each applicant must submit a signed 
certification as set forth in this paragraph. The certification will be 
subject to verification by BXA.

    I (We) certify that I (we) have established adequate internal 
procedures and safeguards to comply with the requirements set forth 
in the U.S. Department of Commerce Export

[[Page 42572]]

Administration Regulations (EAR) and Foreign Trade Statistics 
Regulations (FTSR). These procedures and safeguards include means 
for:
    (i) Making a proper determination as to whether a license is 
required for a particular export;
    (ii) Receipt of notification of approval of the export license, 
if required, before the export is made;
    (iii) Compliance with all the terms and conditions of the 
license, License Exception, or NLR provisions of the EAR as 
applicable;
    (iv) Return of revoked or suspended licenses to BXA in 
accordance with Sec. 750.8(b) of the EAR, if requested;
    (v) Compliance with the destination control statement provisions 
of Sec. 758.6 of the EAR;
    (vi) Compliance with the prohibition against export transactions 
that involve persons who have been denied U.S. export privileges; 
and
    (vii) Compliance with the recordkeeping requirements of part 762 
of the EAR.
    I (we) agree that my (our) office records and physical space 
will be made available for inspection by the Bureau of the Census, 
BXA, or the U.S. Customs Service, upon request.

    (c) BXA Option 4 evaluation criteria. BXA will consider the grounds 
for denial of Option 4 filing status set forth in 15 CFR 30.62(b)(2) of 
the FTSR, as well as the additional grounds for denial set forth in 
this paragraph.
    (1) Applicants have not been approved for Option 4 filing 
privileges by the Census Bureau or other agency;
    (2) Applicants are denied persons (i.e., persons listed on the 
Denied Persons List in Supplement No. 2 to Part 764 of the EAR); or
    (3) Exports are destined to the countries designated by the 
Secretary of State as supporters of international terrorism under 
Section 6(j) of the Export Administration Act of 1979, as amended. 
These ``T-7'' countries currently include Iran, Iraq, Libya, North 
Korea, Cuba, Sudan, and Syria.
    (d) Contacts for assistance. (1) For additional information on the 
AES in general, please contact: Chief Foreign Trade Division, U.S. 
Census Bureau, (301) 457-2255, facsimile: (301) 457-2645.
    (2) For information about BXA's Option 4 approval process to use 
AES Option 4 for items subject to the EAR, contact: Director, Office of 
Enforcement Analysis, Bureau of Export Administration, (202) 482-4255, 
facsimile: (202) 482-0971.


Sec. 758.3  Responsibilities of parties to the transaction.

    All parties that participate in transactions subject to the EAR 
must comply with the EAR. Parties are free to structure transactions as 
they wish, and to delegate functions and tasks as they deem necessary, 
as long as the transaction complies with the EAR. However, acting 
through a forwarding or other agent, or delegating or redelegating 
authority, does not in and of itself relieve anyone of responsibility 
for compliance with the EAR.
    (a) Export transactions. The U.S. principal party in interest is 
the exporter, except in certain routed transactions. The exporter must 
determine licensing authority (License, License Exception, or NLR), and 
obtain the appropriate license or other authorization. The exporter may 
hire forwarding or other agents to perform various tasks, but doing so 
does not necessarily relieve the exporter of compliance 
responsibilities.
    (b) Routed export transactions. All provisions of the EAR, 
including the end-use and end-user controls found in part 744 of the 
EAR, and the General Prohibitions found in part 736 of the EAR, apply 
to routed export transactions. The U.S. principal party in interest is 
the exporter and must determine licensing authority (License, License 
Exception, or NLR), and obtain the appropriate license or other 
authorization, unless the U.S. principal party in interest obtains from 
the foreign principal party in interest a writing wherein the foreign 
principal party in interest expressly assumes responsibility for 
determining licensing requirements and obtaining license authority, 
making the U.S. agent of the foreign principal party in interest the 
exporter for EAR purposes. One writing may cover multiple transactions 
between the same principals. See Sec. 748.4(a)(3) of the EAR.

    Note to paragraph (b): For statistical purposes, the Foreign 
Trade Statistics Regulations (15 CFR part 30) have a different 
definition of ``exporter'' from the Export Administration 
Regulations. Under the FTSR the ``exporter'' will always be the U.S. 
principal party in interest. For purposes of licensing 
responsibility under the EAR, the U.S. agent of the foreign 
principal party in interest may be the ``exporter'' in a routed 
transaction.

    (c) Information sharing requirements. In routed export transactions 
where the foreign principal party in interest assumes responsibility 
for determining and obtaining licensing authority, the U.S. principal 
party in interest must, upon request, provide the foreign principal 
party in interest and its forwarding or other agent with the correct 
Export Control Classification Number (ECCN), or with sufficient 
technical information to determine classification. In addition, the 
U.S. principal party in interest must provide the foreign principal 
party in interest or the foreign principal's agent any information that 
it knows will affect the determination of license authority, see 
Sec. 758.1(g) of the EAR.
    (d) Power of attorney or other written authorization. In routed 
export transactions, a forwarding or other agent that represents the 
foreign principal party in interest, or who applies for a license on 
behalf of the foreign principal party in interest, must obtain a power 
of attorney or other written authorization from the foreign principal 
party in interest to act on its behalf. See Sec. 748.4(b)(2) and 
Sec. 758.1(h) of the EAR.


Sec. 758.4  Use of export license.

    (a) License valid for shipment from any port. An export license 
issued by BXA authorizes exports from any port of export in the United 
States unless the license states otherwise. Items that leave the United 
States at one port, cross adjacent foreign territory, and reenter the 
United States at another port before being exported to a foreign 
country, are treated as exports from the last U.S. port of export.
    (b) Shipments against expiring license. Any item requiring a 
license that has not departed from the final U.S. port of export by 
midnight of the expiration date on an export license may not be 
exported under that license unless the shipment meets the requirements 
of paragraphs (b)(1) or (2) of this section.
    (1) BXA grants an extension; or
    (2) Prior to midnight on the date of expiration on the license, the 
items:
    (i) Were laden aboard the vessel;
    (ii) Were located on a pier ready for loading and not for storage, 
and were booked for a vessel that was at the pier ready for loading; or
    (iii) The vessel was expected to be at the pier for loading before 
the license expired, but exceptional and unforseen circumstances 
delayed it, and BXA or the U.S. Customs Service makes a judgment that 
undue hardship would result if a license extension were required.
    (c) Reshipment of undelivered items. If the consignee does not 
receive an export made under a license because the carrier failed to 
deliver it, the exporter may reship the same or an identical item, 
subject to the same limitations as to quantity and value as described 
on the license, to the same consignee and destination under the same 
license. If an item is to be reshipped to any person other than the 
original consignee, the shipment is considered a new export and 
requires a new license. Before reshipping, satisfactory evidence of the 
original export and of the delivery failure, together with a 
satisfactory explanation of the delivery failure, must be submitted by 
the exporter to the

[[Page 42573]]

following address: Operations Division, Bureau of Export 
Administration, U.S. Department of Commerce, Room 2705, 14th Street & 
Pennsylvania Avenue, NW., Washington, DC 20230.


Sec. 758.5  Conformity of documents and unloading of items.

    (a) Purpose. The purpose of this section is to prevent items 
licensed for export from being diverted while in transit or thereafter. 
It also sets forth the duties of the parties when the items are 
unloaded in a country other than that of the ultimate consignee as 
stated on the export license.
    (b) Conformity of documents. When a license is issued by BXA, the 
information entered on related export control documents (e.g., the SED 
or AES record, bill of lading or air waybill) must be consistent with 
the license.
    (c) Issuance of the bill of lading or air waybill. (1) Ports in the 
country of the ultimate consignee. No person may issue a bill of lading 
or air waybill that provides for delivery of licensed items to any 
foreign port located outside the country of the intermediate or the 
ultimate consignee named on the BXA license and Shipper's Export 
Declaration (SED) or AES electronic equivalent.
    (2) Optional ports of unloading. (i) Licensed items. No person may 
issue a bill of lading or air waybill that provides for delivery of 
licensed items to optional ports of unloading unless all the optional 
ports are within the country of ultimate destination or are included on 
the BXA license and SED or AES electronic equivalent.
    (ii) Unlicensed items. For shipments of items that do not require a 
license, the exporter may designate optional ports of unloading on the 
SED or AES electronic equivalent and other export control documents, so 
long as the optional ports are in countries to which the items could 
also have been exported without a license. See also 15 CFR 30.7(h) of 
the FTSR.
    (d) Delivery of items. No person may deliver items to any country 
other than the country of the intermediate or ultimate consignee named 
on the BXA license and SED or AES record without prior written 
authorization from BXA, except for reasons beyond the control of the 
carrier (such as acts of God, perils of the sea, damage to the carrier, 
strikes, war, political disturbances or insurrection).
    (e) Procedures for unscheduled unloading. (1) Unloading in country 
where no license is required. When items are unloaded in a country to 
which the items could be exported without a license issued by BXA, no 
notification to BXA is required. However, any persons disposing of the 
items must continue to comply with the terms and conditions of any 
License Exception, and with any other relevant provisions of the EAR.
    (2) Unloading in a country where a license is required. (i) When 
items are unloaded in a country to which the items would require a BXA 
license, no person may effect delivery or entry of the items into the 
commerce of the country where unloaded without prior written approval 
from BXA. The carrier, in ensuring that the items do not enter the 
commerce of the country, may have to place the items in custody, or 
under bond or other guaranty. In addition, the carrier must inform the 
exporter and BXA of the unscheduled unloading in a time frame that will 
enable the exporter to submit its report within 10 days from the date 
of unscheduled unloading. The exporter must within 10 days of the 
unscheduled unloading report the facts to and request authorization for 
disposition from BXA using either: mail, fax, or E-mail. The report to 
BXA must include:
    (A) A copy of the manifest of the diverted cargo;
    (B) Identification of the place of unloading;
    (C) Statement that explains why the unloading was necessary; and
    (D) A proposal for disposition of the items and a request for 
authorization for such disposition from BXA.
    (ii) Contact information. U.S. Department of Commerce, Bureau of 
Export Administration, Office of Exporter Services, Room 1093, 14th and 
Pennsylvania Avenue, NW, Washington, DC 20230; phone number 202-482-
0436; facsimile number 202-482-3322; and E-Mail address: 
<a href="/cdn-cgi/l/email-protection#1b494b5f5b59435a355f5458355c544d"><span class="__cf_email__" data-cfemail="d88a889c989a8099f69c979bf69f978e">[email protected]</span></a>.


Sec. 758.6  Destination control statement.

    The Destination Control Statement (DCS) must be entered on the 
invoice and on the bill of lading, air waybill, or other export control 
document that accompanies the shipment from its point of origin in the 
United States to the ultimate consignee or end-user abroad. The person 
responsible for preparation of those documents is responsible for entry 
of the DCS. The DCS is required for all exports from the United States 
of items on the Commerce Control List that are not classified as EAR99, 
unless the export may be made under License Exception BAG or GFT (see 
part 740 of the EAR). At a minimum, the DCS must state: ``These 
commodities, technology or software were exported from the United 
States in accordance with the Export Administration Regulations. 
Diversion contrary to U.S. law is prohibited.''

PART 762--[AMENDED]

    17. Section 762.2 is amended by:
    a. Revising the citation ``Sec. 758.1(b)(3)'' to read 
``Sec. 758.1(h)'' in paragraph (b)(29);
    b. Revising paragraphs (b)(15), (b)(30), (b)(39), and (b)(40); and
    c. Adding a new paragraph (b)(41) to read as follows:


Sec. 762.2  Records to be retained.

* * * * *
    (b) * * *
    (15) Sec. 750.7, Issuance of license and acknowledgment of 
conditions;
* * * * *
    (30) Sec. 758.1 and Sec. 758.2, Shipper's Export Declaration or 
Automated Export System record;
* * * * *
    (39) Sec. 745.1, Annual reports;
    (40) Sec. 745.2, End-use certificates; and
    (41) Sec. 758.2(c), Assumption writing.


Sec. 762.7  [Amended]

    18. Section 762.7 is amended by revising the phrase in paragraph 
(a) ``subpoenas for books, records, and other writings.'' to read 
``subpoenas requiring persons to appear and testify, or produce books, 
records, and other writings.''.

PART 772--[AMENDED]

    19. Part 772 is amended by:
    a. Revising the definitions of ``Applicant'' , ``Exporter'', 
``Forwarding agent'', ``Intermediate consignee'', ``Purchaser'', and 
``Ultimate Consignee'';
    b. Revising the phrase ``Shipper's Export Declaration (SED)'' in 
the definition for ``Export control document'' to read ``Shipper's 
Export Declaration (SED) or Automated Export System (AES) record'';
    c. Removing the definition for ``U.S. exporter''; and
    d. Adding definitions for ``AES'', ``Automated Export System 
(AES)'', ``End-user'', ``Order Party'', ``Other party authorized to 
receive license'', ``Principal parties in interest'', and ``Routed 
export transaction'' in alphabetic order, to read as follows:

PART 772--DEFINITION OF TERMS

* * * * *
    AES. See ``Automated Export System.''
* * * * *
    Applicant. The person who applies for an export or reexport 
license, and who has the authority of a principal party in interest to 
determine and

[[Page 42574]]

control the export or reexport of items. See Sec. 748.4 of the EAR and 
definition for ``exporter'' in this part of the EAR.
* * * * *
    Automated Export System (AES). AES is a nationwide system 
operational at all ports and for all methods of transportation through 
which export shipment data required by multiple agencies is filed 
electronically to Customs, using the efficiencies of Electronic Data 
Interchange (EDI). AES provides an alternative to filing paper 
Shipper's Export Declarations (SEDs), so that export information is 
collected electronically and edited immediately. For more information 
about AES, visit the Bureau of Census website at: http://www.customs.ustreas.gov/impoexpo/abaesint.htm
* * * * *
    End-user. The person abroad that receives and ultimately uses the 
exported or reexported items. The end-user is not a forwarding agent or 
intermediary, but may be the purchaser or ultimate consignee.
* * * * *
    Exporter. The person in the United States who has the authority of 
a principal party in interest to determine and control the sending of 
items out of the United States. Note that the Foreign Trade Statistics 
Regulations have a different definition for the term ``exporter''. 
Under the FTSR, the ``exporter'' is the U.S. principal party in 
interest (see Foreign Trade Statistics Regulations title 15 part 30).
* * * * *
    Forwarding agent. The person in the United States who is authorized 
by a principal party in interest to perform the services required to 
facilitate the export of the items from the United States. This may 
include air couriers or carriers. In routed export transactions, the 
forwarding agent and the exporter may be the same for compliance 
purposes under the EAR.
* * * * *
    Intermediate consignee. The person that acts as an agent for a 
principal party in interest for the purpose of effecting delivery of 
items to the ultimate consignee. The intermediate consignee may be a 
bank, forwarding agent, or other person who acts as an agent for a 
principal party in interest.
* * * * *
    Order Party. The person in the United States who conducted the 
direct negotiations or correspondence with the foreign purchaser or 
ultimate consignee and who, as a result of these negotiations, received 
the order from the foreign purchaser or ultimate consignee.
* * * * *
    Other party authorized to receive license. The person authorized by 
the applicant to receive the license. If a person and address is listed 
in Block 15 of the BXA-748P Multipurpose Application Form, the Bureau 
of Export Administration will send the license to that person instead 
of the applicant. Designation of another party to receive the license 
does not alter the responsibilities of the applicant, licensee or 
exporter.
* * * * *
    Principal parties in interest. Those persons in a transaction that 
receive the primary benefit, monetary or otherwise, of the transaction. 
Generally, the principals in a transaction are the seller and the 
buyer. In most cases, the forwarding or other agent is not a principal 
party in interest.
* * * * *
    Purchaser. The person abroad who has entered into a transaction to 
purchase an item for delivery to the ultimate consignee. In most cases, 
the purchaser is not a bank, forwarding agent, or intermediary. The 
purchaser and ultimate consignee may be the same entity.
* * * * *
    Routed export transaction. A transaction where the foreign 
principal party in interest authorizes a U.S. forwarding or other agent 
to facilitate export of items from the United States.
* * * * *
    Ultimate consignee. The principal party in interest located abroad 
who receives the exported or reexported items. The ultimate consignee 
is not a forwarding agent or other intermediary, but may be the end-
user.
* * * * *

PART 774--[AMENDED]

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

    20. Supplement No. 1 to part 774 (the Commerce Control List), 
Category 1--Materials, Chemicals, ``Microorganisms,'' and ``Toxins'', 
is amended by revising the License Requirements section of ECCN 1C355, 
to read as follows:

1C355  Chemical Weapons Convention (CWC) Schedule 2 and 3 Chemicals 
and Families of Chemicals, Not Controlled by ECCN 1C350 or by the 
Department of State Under the ITAR

License Requirements

Reason for Control: CW

Control(s) 

    CW applies to entire entry. A license is required for CW reasons 
only to CWC non-States Parties (destinations not listed in Supplement 
No. 2 to part 745), unless an End-Use Certificate is obtained by the 
exporter (see Sec. 742.18 of the EAR). See Sec. 745.2 of the EAR for 
End-Use Certificate requirements, and the License Requirements Notes of 
this entry. The Commerce Country Chart is not designed to determine 
licensing requirements for items controlled for CW reasons.
    License Requirements Notes:
    1. Chemicals listed in this entry may be shipped NLR (No License 
Required) when destined to most CWC States Parties (countries listed in 
Supplement No. 2 to part 745). Also see License Requirement Note 3.
    2. Chemicals listed in this entry may be shipped NLR when destined 
to most non-States Parties (destinations not listed in Supplement No. 2 
to part 745) if supported by an End-Use Certificate described by 
Sec. 745.2 of the EAR and if the ECCN is indicated on the Shipper's 
Export Declaration in the appropriate space as provided in Sec. 758.1 
of the EAR. Chemicals listed in this entry require a license when 
exported to non-States Parties if the export is not supported by an 
End-Use Certificate described by Sec. 745.2 of the EAR.
    3. Chemicals listed in this entry may not be shipped NLR if 
restrictions of other sections of the EAR apply (e.g., see the end-use 
and end-user restrictions of part 744 of the EAR and the restrictions 
that apply to embargoed countries in part 746 of the EAR).
    4. MIXTURES: Mixtures controlled by this entry that contain certain 
concentrations of precursor and intermediate chemicals are subject to 
the following requirements:
    a. Mixtures are controlled under this entry when containing at 
least one of the chemicals controlled under 1C355.a when the chemical 
constitutes more than 10 percent of the weight of the mixture.
    b. Mixtures are controlled under this entry when containing at 
least one of the chemicals controlled under 1C355.b when the chemical 
constitutes more than 25 percent of the weight of the mixture.
    c. Mixtures containing chemicals identified in this entry are not 
controlled by ECCN 1C355 when the controlled chemical is a normal 
ingredient in consumer goods packaged for retail sale for personal use. 
Such consumer goods are classified as EAR99.

    Note to mixtures: Calculation of concentrations.


[[Page 42575]]


    a. Exclusion. No chemical may be added to the mixture (solution) 
for the sole purpose of circumventing the Export Administration 
Regulations;
    b. Absolute Weight Calculation. When calculating the percentage, by 
weight, of components in a chemical mixture, include all components of 
the mixture, including those that act as solvents;
    c. Example.

11% chemical listed in 1C355.a
39% chemical not listed in 1C355.a
50% Solvent
100% Mixture

11/100 = 11% chemical listed in 1C355.a

    In this example, the mixture is controlled under this entry because 
a chemical listed in 1C355.a. constitutes more than 10 percent of the 
weight of the mixture.
    5. COMPOUNDS. Compounds created with any chemicals identified in 
this ECCN 1C355 may be shipped NLR, unless those compounds are also 
identified in this entry.

    Technical Notes: For purposes of this entry, a ``mixture'' is 
defined as a solid, liquid or gaseous product made up of two or more 
components that do not react together under normal storage 
conditions.

* * * * *

    Dated: June 28, 2000.

R. Roger Majak,
Assistant Secretary for Export Administration.
[FR Doc. 00-16894 Filed 7-6-00; 8:45 am]
BILLING CODE 3510-33-P


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