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[Federal Register Volume 77, Number 85 (Wednesday, May 2, 2012)]
[Proposed Rules]
[Pages 25932-25944]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-10456]

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DEPARTMENT OF COMMERCE

Bureau of Industry and Security

15 CFR Parts 742 and 774

[Docket No. 120105018-2011-01]
RIN 0694-AF53

Revisions to the Export Administration Regulations (EAR): Control 
of Energetic Materials and Related Articles That the President 
Determines No Longer Warrant Control Under the United States Munitions 
List (USML)

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

ACTION: Proposed rule.

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SUMMARY: The Bureau of Industry and Security (BIS) publishes this 
proposed rule describing how energetic materials and related articles 
that the President determines no longer warrant control under Category 
V (Explosives and Energetic Materials, Propellants, Incendiary Agents 
and Their Constituents) of the United States Munitions List (USML) 
would be controlled under the Commerce Control List (CCL) in new Export 
Control Classification Numbers (ECCNs) 1B608, 1C608, 1D608, and 1E608. 
If implemented, this proposed rule would also control under ECCN 1C111 
some of the aluminum powder and hydrazine and derivatives thereof that 
are now controlled under Category V of the USML. This proposed rule 
also would control equipment for the ``production'' of explosives and 
solid propellants, currently controlled under ECCN 1B018.a, and related 
``software,'' currently controlled under ECCN 1D018, under new ECCNs 
1B608 and 1D608, respectively. In addition, this proposed rule would 
control commercial charges and devices containing energetic materials, 
which are currently controlled under ECCN 1C018, under new ECCN 1C608. 
This is one of a planned series of proposed rules describing 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 V.

DATES: Comments must be received by June 18, 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-2012-0008.
     By email directly to publiccomments@bis.doc.gov. Include 
RIN 0694-AF53 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-AF53.

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 articles, which the 
President determines in accordance with section 38(f) of the Arms 
Export Control Act (AECA) (22 U.S.C. 2778(f)) would no longer warrant 
control on the United States Munitions List (USML), would be controlled 
on the Commerce Control List (CCL) in Supplement No. 1 to Part 774 of 
the Export Administration Regulations (EAR). On November 7, 2011 (76 FR 
68675) (herein ``the November 7 proposed rule''), BIS published a rule 
proposing several changes to the framework initially proposed in the 
July 15 rule.
    Following the structure of the July 15 and November 7 proposed 
rules, this proposed rule describes BIS's proposal for controlling some 
energetic materials and related articles, which currently are 
controlled by USML Category V under the International Traffic in Arms 
Regulations (ITAR), under the EAR and its CCL in new Export Control 
Classification Numbers (ECCNs) 1B608, 1C608, 1D608 and 1E608, and 
current ECCN 1C111. The changes described in this proposed rule and the 
State Department's proposed companion rule on Category V of the USML 
are based on a review of this USML Category by the Defense Department, 
which worked with the Departments of State and Commerce in preparing 
the proposed

[[Page 25933]]

rules. That review focused on identifying the types of articles that 
are now controlled by USML Category V that are either: (i) Inherently 
military and otherwise warrant control on the USML; or (ii) common to 
civil applications, possessing parameters or characteristics that 
provide a critical military or intelligence advantage to the United 
States, and almost exclusively available from the United States. If an 
article satisfies either or both of these criteria, the article remains 
on the USML. If an article does not satisfy either criterion, but is 
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 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, licensing policies, and other EAR-specific 
controls for such items, as described in this proposed rule, 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 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).
    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 new 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 describes how some energetic materials and 
related articles currently in USML Category V would be controlled by 
the EAR and identified on the CCL, if the President determines that the 
articles no longer warrant control on the USML. Specifically, this 
proposed rule would create four new 600 series ECCNs in CCL Category 1 
(ECCNs 1B608, 1C608, 1D608, and 1E608). ECCN 1B608 would cover 
``equipment,'' not elsewhere specified on the CCL or the USML, that is 
``specially designed'' for commodities in ECCN 1C608 or articles in 
USML Category V. ECCN 1C608 would cover energetic materials and related 
commodities not listed elsewhere in USML Category V or the CCL. ECCN 
1D608 would cover ``software'' ``specially designed'' for commodities 
controlled by 1B608 or 1C608; and ECCN 1E608 would cover ``technology'' 
``required'' for ``equipment'' controlled in 1B608 or materials 
controlled by 1C608. Additionally, the rule would amend current ECCN 
1C111 to describe the EAR controls that would apply to aluminum powder 
and hydrazine and derivatives thereof the President determines no 
longer warrant control under USML Category V.
    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 four new 600 series ECCNs in CCL 
Category 1 (ECCNs 1B608, 1C608, 1D608, and 1E608) and amend current 
ECCN 1C111 to describe the EAR controls that would apply to energetic 
materials and related items the President determines no longer warrant 
control under USML Category V. In addition, consistent with the 
regulatory construct identified in the July 15 proposed rule (i.e., to 
move items from 018 ECCNs to the appropriate 600 series ECCNs in order 
to consolidate the WAML and former USML items into one series of 
ECCNs), this rule would move ``equipment'' for the ``production'' of 
explosives and solid propellants, currently classified under ECCN 
1B018.a, and related ``software,'' currently classified under ECCN 
1D018, to new ECCNs 1B608 and 1D608, respectively. Similarly, this rule 
would move commercial charges and devices containing energetic 
materials, which are currently classified under ECCN 1C018, to new ECCN 
1C608 (except for chlorine trifluoride, which is not on the WAML and 
would be controlled under ECCN 1C111.a.3.f). In a corresponding change, 
this rule would remove ECCN 1C238, which controls chlorine trifluoride, 
from the CCL as it would no longer be necessary.
    These proposed changes are discussed in more detail, below.

New ECCN 1B608 (``Equipment'' ``Specially Designed'' for Commodities in 
ECCN 1C608 or USML Category V) and ECCN 1B018 Amended

    Paragraph .a of ECCN 1B608 would control test, inspection, and 
production ``equipment'' not specified elsewhere on the CCL or the USML 
that is ``specially designed'' for the ``production'' of energetic 
materials and related commodities controlled by proposed new ECCN 1C608 
or USML Category V. This ``equipment'' would include items currently 
controlled under ECCN 1B018.a.2 or .a.3. Paragraph .b of ECCN 1B608 
would control complete installations not specified elsewhere on the CCL 
or the USML (including complete installations currently controlled 
under ECCN 1B018.a.1) that are ``specially designed'' for the 
``production'' of energetic materials and related commodities 
controlled by proposed new ECCN 1C608 or USML Category V. Paragraph .c 
of ECCN 1B608 would control environmental test facilities that are 
``specially designed'' for the certification, qualification, or

[[Page 25934]]

testing of items controlled by proposed new ECCN 1C608 or USML Category 
V. Paragraphs .d through .w would be reserved for possible future use. 
Paragraph .x would control ``parts,'' ``components,'' and ``accessories 
and attachments'' (including certain unfinished products that have 
reached a stage in manufacturing where they are clearly identifiable as 
commodities controlled by paragraph .x) that are ``specially designed'' 
for a commodity controlled under paragraph .a, .b, or .c of ECCN 1B608 
and not specified elsewhere on the CCL or the USML. These ``parts,'' 
``components,'' and ``accessories and attachments'' would include 
``specially designed'' ``parts'' and ``components'' currently 
controlled under ECCN 1B018.a.4. Incorporating ECCN 1B018.a items into 
new ECCN 1B608 is consistent with the regulatory construct identified 
in the July 15 proposed rule, under which WAML items in 018 ECCNs will 
be consolidated with former USML items into 600 series ECCNs--ECCN 
1B018, as amended, would cross reference ECCN 1B608, and ECCN 1B018.a 
would be removed and reserved. Paragraph .y of ECCN 1B608 would control 
specific test, inspection, and production ``equipment'' ``specially 
designed'' for the ``production'' or ``development'' of commodities 
controlled by ECCN 1B608 or a defense article in USML Category V, and 
``parts,'' ``components,'' and ``accessories and attachments'' 
``specially designed'' therefor. Because 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.

New ECCN 1C608 (Energetic Materials and Related Commodities Not Listed 
Elsewhere in USML Category V or the CCL) and ECCN 1C018 Amended

    ECCN 1C608.a would control single base, double base, and triple 
base propellants having nitrocellulose with a nitrogen content greater 
than 12.6 percent in the form of either: (i) Sheetstock or carpet rolls 
or (ii) grains with a diameter greater than 0.10 inches. Paragraphs .b 
through .m of ECCN 1C608 would control commercial charges and devices, 
containing energetic materials, that are now controlled under ECCN 
1C018.b through .m--as is currently the case with ECCN 1C018.i, ECCN 
1C608.i would be reserved. However, a Note following 1C608.m would 
indicate that chlorine trifluoride, which is currently controlled under 
ECCNs 1C018.m and 1C238, would be controlled under ECCN 1C111.a.3.f 
only, and not under new ECCN 1C608. Incorporating ECCN 1C018 items into 
new ECCN 1C608 is consistent with the regulatory construct identified 
in the July 15 proposed rule, under which WAML items in 018 ECCNs will 
be consolidated with former USML items into 600 series ECCNs. ECCN 
1C018, as amended, would cross-reference ECCN 1C608 and current ECCNs 
that control commercial charges and devices containing energetic 
materials. ECCN 1C608.n would control any explosives, propellants, 
oxidizers, pyrotechnics, fuels, binders, or additives that are 
``specially designed'' for military application and are not listed 
elsewhere in the CCL or the USML. Paragraphs .o through .y would be 
reserved for possible future use.

New ECCN 1D608 (``Software'' ``Specially Designed'' for Commodities 
Controlled by 1B608 or 1C608) and ECCN 1D018 Amended

    ECCN 1D608.a would control ``software'' ``specially designed'' for 
the ``development,'' ``production,'' operation, or maintenance of 
commodities controlled by proposed new ECCN 1B608 or 1C608. This 
``software'' would include ``software,'' currently controlled by ECCN 
1D018, for ``equipment'' described in ECCN 1B018.a. Incorporating ECCN 
1D018 ``software'' for ECCN 1B018.a items into new ECCN 1D608 is 
consistent with the regulatory construct identified in the July 15 
proposed rule, under which WAML items in 018 ECCNs will be consolidated 
with former USML items into 600 series ECCNs--ECCN 1D018, as amended, 
would cross-reference ECCN 1D608. Paragraphs .b through .x of ECCN 
1D608 would be reserved for possible future use. Paragraph .y of ECCN 
1D608 would control ``software'' ``specially designed'' for the 
``development,'' ``production,'' operation, or maintenance of 
commodities controlled by proposed ECCN 1B608.y. Because this proposed 
rule does not list specific ``software'' under paragraph .y, sub-
paragraphs .y.1 through .y.98 would be reserved for possible future 
use.

New ECCN 1E608 (``Technology'' ``Required'' for ``Equipment'' 
Controlled in 1B608 or Materials Controlled by 1C608)

    ECCN 1E608.a would control ``technology'' ``required'' for the 
``development,'' ``production,'' operation, installation, maintenance, 
repair, overhaul, or refurbishment of items controlled by ECCN 1B608 or 
1C608. This ``technology'' would include ``technology,'' currently 
controlled by ECCN 1E001, for ``equipment'' currently described in ECCN 
1B018.a--accordingly, ECCN 1E001 would be amended to exclude both 
``technology'' for current 1B018.a items that would be moved to ECCN 
1B608 and ``technology'' for 1C608 items and to cross reference ECCN 
1E608 (the proposed amendments to ECCN 1E001 are described in more 
detail, below). Paragraph .b of 1E608 would control ``technology'' for 
the ``development'' or ``production'' of nitrocellulose with a nitrogen 
content over 12.6 percent and at rates greater than 2000 pounds per 
hour. Paragraph .c of 1E608 would control ``technology'' for the 
``development'' or ``production'' of nitrate esters (e.g., 
nitroglycerine) at rates greater than 2000 pounds per hour. Paragraph 
.y of 1E608 would control specific ``technology'' ``required'' for the 
``development,'' ``production,'' operation, installation, maintenance, 
repair, overhaul or refurbishing of commodities controlled by ECCN 
1B608.y or ``software'' controlled by ECCN 1D608.y. Because this 
proposed rule does not list specific ``technology'' under paragraph .y, 
sub-paragraphs .y.1 through .y.98 would be reserved for possible future 
use.

Inclusion of ``.y.99'' Paragraphs in 600 Series ECCNs

    Proposed new ECCNs 1B608, 1D608, and 1E608 would also contain a 
paragraph ``.y.99'' that would control any item that meets all of 
following criteria: (i) The item is not listed on the CCL; (ii) the 
item was previously determined to be subject to the EAR in an 
applicable commodity jurisdiction determination issued by the U.S. 
Department of State; and (iii) the item would otherwise be controlled 
under one of these Category 1, 600 series, ECCNs because, for example, 
the item was ``specially designed'' for a military use. Items in these 
.y.99 paragraphs would be subject to antiterrorism (AT Column 1) 
controls only.

Applicable Controls for New 600 Series ECCNs

    ECCN 1B608, 1C608, 1D608, and 1E608 items (except for items in ECCN 
1B608.y, 1D608.y, or 1E608.y--1C608.y is reserved) would be subject to 
national security (NS Column 1), regional stability (RS Column 1), and 
antiterrorism (AT Column 1) controls.
    In addition, missile technology (MT Column 1) controls would apply 
to: equipment controlled by ECCN 1B608 that is ``specially designed'' 
for the ``production'' of rocket propellants; oxidizers or mixtures 
controlled under ECCN 1C608.m; ``software'' in ECCN 1D608 that is 
``specially designed'' for oxidizers or mixtures controlled under

[[Page 25935]]

ECCN 1C608.m; and ``technology'' in ECCN 1E608 that is ``required'' for 
oxidizers or mixtures controlled under ECCN 1C608.m.
    Under ECCN 1B018.a, ``equipment'' for the ``production'' of 
military explosives and solid propellants is controlled for national 
security, regional stability, antiterrorism and United Nations reasons. 
In addition, such ``equipment'' that is for the ``production'' of 
rocket propellants, is controlled for missile technology reasons. Under 
ECCN 1C018, commercial charges and devices containing energetic 
materials are controlled for national security, antiterrorism and 
United Nations reasons, and items classified under ECCN 1C018.m are 
also controlled for missile technology reasons. Items moving to 
proposed ECCN 1B608 and to proposed 1C608 would no longer be controlled 
for United Nations reasons, although they would retain their other 
current reasons for control. 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), published 
in the November 7 proposed rule.

ECCN 1C111 Amended and ECCN 1C238 Removed

    This proposed rule would amend ECCN 1C111 by adding under 1C111.a 
and 1C111.d, respectively, aluminum powder and hydrazine and 
derivatives thereof, which the President determines no longer warrant 
control under USML Category V. These items would be added to ECCN 1C111 
because they possess characteristics that are more similar to the 
propellants, and constituent chemicals therefor, that are controlled 
under ECCN 1C111 than the energetic materials that would be controlled 
under proposed ECCN 1C608. Like the items currently controlled under 
ECCN 1C111, these additional items would be subject to missile 
technology (MT Column 1) controls and anti-terrorism (AT Column 1) 
controls. In addition, this proposed rule would amend the Related 
Controls paragraph in ECCN 1C111 to indicate that ECCN 1C608 controls 
oxidizers that are composed of fluorine (and also other halogens, 
oxygen, or nitrogen), except for chlorine trifluoride, which would be 
controlled under ECCN 1C111.a.3.f.
    Chlorine trifluoride currently is controlled under both ECCNs 
1C018.m and 1C238--ECCN 1C018.m controls chlorine trifluoride for 
missile technology (MT Column 1), regional stability (RS Column 1), and 
anti-terrorism (AT Column 1) reasons, while ECCN 1C238 controls 
chlorine trifluoride for nuclear nonproliferation (NP Column 1) and 
anti-terrorism (AT Column 1) reasons. This proposed rule would remove 
chlorine trifluoride from ECCNs 1C018.m and 1C238 and control it under 
ECCN 1C111.a.3.f only, rather than also controlling it under ECCN 
1C608.m, because chlorine trifluoride is not on the WAML and, 
consequently, is not subject to national security (NS) controls. 
Accordingly, this proposed rule would amend ECCN 1C111 to control 
chlorine trifluoride under ECCN 1C111.a.3.f for nuclear 
nonproliferation (NP Column 1) reasons, in addition to the MT and AT 
reasons for control that currently apply under this ECCN. Regional 
stability (RS Column 1) controls would no longer apply to chlorine 
trifluoride, because such controls would be redundant in view of the 
fact that they apply to the same group of destinations as missile 
technology controls (i.e., both RS Column 1 and MT Column 1 apply to 
all destinations, except for Canada). Because ECCN 1C238 currently 
controls chlorine trifluoride only, this ECCN would be removed from the 
CCL.

ECCN 1E001 Amended

    This proposed rule would amend ECCN 1E001 by revising the ECCN 
heading to exclude ``technology'' for items that, with this proposed 
rule, would be controlled under proposed new ECCN 1B608 or 1C608 and by 
amending the Related Controls paragraph in the List of Items Controlled 
to include a reference to proposed new ECCN 1E608. In addition, this 
rule proposes to amend the nuclear nonproliferation (NP) controls 
paragraph in the License Requirements section of ECCN 1E001 to include 
``technology'' for ECCN 1C111 items controlled for NP reasons (i.e., 
chlorine trifluoride in ECCN 1C111.a.3.f). As a result of this change 
and the addition of chlorine trifluoride to ECCN 1C111, as described 
above, ``technology'' for the ``development'' or ``production'' of 
chlorine trifluoride (ClF3) would be controlled under ECCN 
1E001 for missile technology (MT Column 1), nuclear nonproliferation 
(NP Column 1), and anti-terrorism (AT Column 1) reasons.
    In addition, this proposed rule would amend the reference to ECCN 
1E002.g, in the Related Controls paragraph of ECCN 1E001, to address 
control libraries (parametric technical databases) specially designed 
or modified to enable equipment to perform the functions of equipment 
controlled under either 1A004.c (Nuclear, biological and chemical (NBC) 
detection systems) or 1A004.d (Equipment for detecting or identifying 
explosives residues)--currently, only 1A004.c equipment is referenced. 
Adding 1A004.d as a cross reference corrects an inadvertent but non-
substantive omission in the EAR as ECCN 1E002.g refers to both 1A004.c 
and 1A004.d.

ECCN 1E101 Amended

    This proposed rule would amend the License Requirements section of 
ECCN 1E101, consistent with the ``technology'' controls of the Nuclear 
Suppliers Group (NSG), to apply nuclear nonproliferation (NP Column 1) 
controls to ``use'' ``technology'' for ECCN 1C111 items controlled for 
NP reasons (i.e., chlorine trifluoride in ECCN 1C111.a.3.f). As a 
result of this change, ``use'' ``technology'' for chlorine trifluoride 
would be controlled for nuclear nonproliferation (NP Column 1), missile 
technology (MT Column 1), and anti-terrorism (AT Column 1) reasons 
under ECCN 1E101. This change is consistent with the proposal in this 
rule to remove chlorine trifluoride from ECCNs 1C018.m and 1C238 and 
control chlorine trifluoride exclusively under ECCN 1C111.a.3.f. 
Currently, ``use'' ``technology'' for chlorine trifluoride is 
controlled under ECCN 1E201 for nuclear nonproliferation (NP Column 1) 
and anti-terrorism (AT Column 1) reasons, only. As described below, 
this rule would amend ECCN 1E201 to remove ``use'' ``technology'' for 
chlorine trifluoride.

ECCN 1E201 Amended

    ECCN 1E201 currently controls ``use'' ``technology'' for chlorine 
trifluoride for nuclear nonproliferation (NP Column 1) and anti-
terrorism (AT Column 1) reasons. This proposed rule would amend ECCN 
1E201 by revising the ECCN heading to remove ``technology'' for ECCN 
1C238 items (i.e., chlorine trifluoride), consistent with the ECCN 
1C111 and 1E101 changes described above, whereby chlorine trifluoride 
would be controlled under ECCN 1C111.a.3.f, only, and ECCN 1E101 would 
be amended to control ``use'' ``technology'' for chlorine trifluoride.

Corresponding Amendments

    To implement the regional stability controls that apply to the four 
new 600 series ECCNs noted above, this proposed rule would revise Sec.  
742.6 of the EAR to apply the RS Column 1 licensing policy to 
commodities

[[Page 25936]]

classified under ECCN 1B608 (except 1B608.y) and 1C608 and to related 
``software'' and ``technology'' classified under ECCNs 1D608 and 1E608 
(except 1D608.y and 1E608.y), respectively.

Relationship to the July 15 and November 7 Proposed Rules

    As referenced above, the purpose of the July 15 proposed rule was 
to set up 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 proposed rule 
contained 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 any provision 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 aspects of the July 15 proposed 
rule and the November 7 proposed rule are among those that could affect 
this proposed 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;
     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 
licensing policy described in Sec.  742.6.

Effects of This Proposed Rule

    BIS believes that the principal effect of this rule, when 
considered in the context of the other similar proposed rules being 
published as part of the Export Control Reform Initiative, 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 would be in the form of: application of 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; 
availability of license exceptions, particularly License Exceptions 
``Servicing and Replacement of Parts and Equipment'' (RPL) and 
``Strategic Trade Authorization'' (STA); elimination of the 
requirements for manufacturing license agreements and technical 
assistance agreements in connection with exports of technology; and a 
reduction in, or elimination of, exporter and manufacturer registration 
requirements and associated registration fees. 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 1B608, 1C608, 1D608, and 1E608 
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., ECCNs 1B018.a, 
1C018, and 1D018) and that are moved to a new 600 series ECCN (e.g., 
ECCNs 1B608, 1C608, and 1D608, respectively) would be subject to the 
EAR if those foreign-made items contained more than 10 percent U.S.-
origin controlled content, regardless of the destination and regardless 
of 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 1B608 or 1C608. 
BIS also believes that, in practice, the movement of items from a 018 
ECCN to a new 600 series ECCN (e.g., ``equipment'' for the 
``production'' of military explosives and solid propellants from ECCN 
1B018.a to new ECCN 1B608 and commercial charges and devices containing 
energetic materials from ECCN 1C018.b through .m to new ECCN 1C608.b 
through .m, respectively) 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 
United States 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, ``production'' and test 
``equipment'' not subject to MT controls under ECCN 1B018.a and 
commercial charges and devices containing energetic materials 
classified under ECCN 1C018.b through .l may be exported under any 
provision of License Exception GOV to any

[[Page 25937]]

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 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 ``production'' and test ``equipment'' not subject to 
MT controls under ECCN 1B018.a and for commodities classified under 
ECCN 1C018.b through .l, but the latter restriction would apply to 
these items under new ECCNs 1B608 and 1C608, respectively. 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, ECCN 1B018.a ``production'' and test 
``equipment'' (which would be moved to ECCN 1B608 by this proposed 
rule) that is not MT-controlled and commodities classified under ECCN 
1C018.b through .l (which would be moved to ECCN 1C608.b through .l, 
respectively, 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 a license exception 
eligibility request would not have to be submitted for STA-eligible 
items controlled under new ECCN 1B608 or 1C608. As proposed in the July 
15 rule, the use of License Exception STA for ``end items'' in 600 
series ECCNs would be prohibited, unless a specific request for License 
Exception STA eligibility has been submitted to, and approved by, BIS.
    Items controlled under new ECCN 1B608 or 1C608 (except those 
controlled for MT reasons) 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 1B018 that would, under this proposal, 
be classified under ECCN 1B608, the threshold for LVS availability 
would drop from $3,000 to $1,500 with this proposed change (and 
increase from $0 to $1,500 for Rwanda). For items previously classified 
under ECCN 1C018 that would, under this proposal, be classified under 
ECCN 1C608, the threshold for LVS availability would drop from $3,000 
to $1,500 (and LVS would become available for Rwanda). Items controlled 
under new ECCN 1B608 (except those controlled for MT reasons) also 
would be eligible for License Exceptions TMP (temporary exports), and 
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 1B608, 1D608, and 1E608 implement, to the 
extent possible, 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, while proposed ECCN 1C608 
implements, to the extent possible and to the extent that such items 
would not be controlled on the USML, the controls in WAML Category 8.

Other Effects: National Security and Regional Stability Controls

    Pursuant to the framework identified in the July 15 proposed rule, 
energetic materials and related commodities classified under ECCN 1C608 
and related test, inspection and production equipment, software and 
technology classified under ECCN 1B608, 1D608 or 1E608, respectively 
(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 (NS) reasons, as described in Sec.  742.4(b)(1)--
specifically, NS Column 1 controls. In addition, all commodities in 
ECCN 1C608, along with related test, inspection and production 
equipment, software and technology classified under ECCN 1B608, 1D608 
or 1E608, respectively (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. 
Consistent with this policy, this proposed rule would revise Sec.  
742.6 of the EAR to apply the RS Column 1 licensing policy to 
commodities classified under ECCN 1B608 (except 1B608.y) and 1C608 and 
to related ``software'' and ``technology'' classified under ECCNs 1D608 
and 1E608 (except 1D608.y and 1E608.y).
    The July 15 proposed rule would amend 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 
aircraft rule).

Section-by-Section Description of the Proposed Changes

     Section 742.6--ECCNs 1B608, 1C608, 1D608, and 1E608 are 
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.
     Supplement No. 1 to part 774--ECCNs 1B608, 1C608, 1D608, 
and 1E608 are added to Supplement No. 1 to part 774. ECCN 1B018 is 
amended to remove and reserve 1B018.a and to cross reference 
``production'' and test ``equipment'' that would be moved from 1B018.a 
to proposed new ECCN 1B608. ECCN 1C018 is amended to remove all 
language except cross references to commercial charges and devices 
containing energetic materials that would be moved from ECCN 1C018 to 
proposed new ECCN 1C608 under paragraphs .b through .m, respectively. 
ECCN 1C111 is amended to add certain aluminum powder and hydrazine and 
derivatives thereof. ECCN 1D018 is amended to remove ``software'' for 
ECCN 1B018.a ``production'' and test ``equipment'' and to cross 
reference such equipment in proposed new ECCN 1D608. ECCN 1E001 is 
amended to remove ``technology'' for 1B018.a items that would be moved 
to proposed new

[[Page 25938]]

ECCN 1B608 and to cross reference such ``technology'' in proposed new 
ECCN 1E608.

Request for Comments

    BIS seeks comments on this proposed rule. BIS will consider all 
comments received on or before June 18, 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 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 
Export Administration Act, as appropriate and to the extent permitted 
by law, pursuant to Executive Order 13222.

Rulemaking Requirements

    1. Executive Orders 13563 and 12866 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, 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 to be 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 
paragraphs for 1B608 and 1C608, 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 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 energetic 
materials and related parts, components, production equipment, 
software, and technology. The largest impact of the proposed rule would 
be with respect to exporters of parts and components because, under the 
proposed rule, most U.S. and foreign energetic materials and associated 
equipment would continue to be subject to the ITAR. Because, with few 
exceptions, the ITAR allows exemptions from license requirements only 
for exports to Canada, most exports to integrators for U.S Government 
equipment and most exports of routine maintenance parts and components 
for NATO and other close allies require State Department authorization. 
In addition, the exports necessary to produce parts and components for 
defense articles in the inventories of the United States and its NATO 
and other close allies require State Department authorizations. Under 
the EAR, as proposed, a small number of low-level parts would not 
require a license to most destinations. Most other parts, components, 
accessories, and attachments would become eligible for export to NATO 
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. It is, however, 
the Administration's understanding 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 allied and, in some cases, U.S. forces with routine replacement 
parts and components.
    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 1E608 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, unless the agency 
certifies that the rule will not have a significant economic impact on 
a substantial number of small entities. Under section 605(b) of the 
RFA, however, if the head of an agency certifies that a rule will not 
have a significant impact on a substantial number of small entities, 
the 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,

[[Page 25939]]

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.

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 are determined to 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 CCL will move 
from existing ECCNs to the new 600 series ECCNs.
    This rule addresses certain energetic materials and related 
articles currently enumerated in USML Category V (Explosives and 
Energetic Materials, Propellants, Incendiary Agents and Their 
Constituents) and items currently controlled under ECCN 1B018.a 
(Equipment for the Production of Military Explosives and Solid 
Propellants), ECCN 1C018 (Commercial Charges and Devices Containing 
Energetic Materials on the Wassenaar Arrangement Munitions List), ECCN 
1D018 (``Software'' for Equipment Controlled by ECCN 1B018.a), and ECCN 
1E001 (``Technology'' for the ``Development'' or ``Production'' of 
Items Controlled by ECCN 1B018.a). Most energetic materials and 
associated equipment would remain on the USML. However, parts and 
components, which are more likely to be produced by small businesses 
than are energetic materials and related production equipment, would in 
many cases become subject to the EAR. In addition, officials of the 
Department of State have informed BIS that license applications for 
such parts and components are a high percentage of the license 
applications for USML articles reviewed by that department. Changing 
the jurisdictional status of certain Category V items would reduce the 
burden on small entities (and other entities as well) through: (i) 
elimination of some license requirements; (ii) greater availability of 
license exceptions; (iii) simpler license application procedures; and 
(iv) reduced or eliminated registration fees.
    In addition, parts and components that are 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 under the EAR, for those items 
that would no longer be controlled under the ITAR, may reduce the 
disincentive for foreign manufacturers to purchase U.S.-origin parts 
and components.
    Many exports and reexports of the Category V articles that would be 
placed on the CCL by this rule, particularly parts and components, 
would become eligible for license exceptions that apply to shipments to 
U.S. Government agencies, parts and components being exported for use 
as replacement parts, temporary exports, and License Exception 
Strategic Trade Authorization (STA), reducing the number of licenses 
that exporters of these items would need. License Exceptions under the 
EAR would allow suppliers to send routine replacement parts and low 
level parts to NATO 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 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 create 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, the process would be simpler and less costly under the EAR. 
When a USML Category V 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 that 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 proposes to 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 $2,500 per 
year, increase to $2,750 for organizations applying for one to ten 
licenses per year and further increases 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 V 
items that are the subject to this rulemaking are removed from the USML 
and added to the CCL, entities currently applying for licenses from the 
Department of State would find their registration fees reduced if the 
number

[[Page 25940]]

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 would be eliminated.
    De minimis treatment under the EAR would become available for all 
items that this rule proposes to transfer from the USML to the CCL. 
Items subject to the ITAR will 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 the moving of 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 enumerated in USML Category V.

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 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 774

    Exports, Reporting and recordkeeping requirements.

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

15 CFR 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; 0A601 (except 0A601.y); 0A602 (except 0A602.y); 0A606 (except 
0A606.b and .y); 0B521; 0B601; 0B602; 0B606 (except 0B606.y); 0C521; 
0C606 (except 0C606.y); 0D521; 0D602; 0D606 (except 0D606.y); 0E521; 
0E601; 0E602; 0E606 (except 0E606.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); 8A620 (except 8A620.y); 8B609 
(except 8B609.y); 8B620 (except 8B620.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); 
8D620 (except software for the ``development,'' ``production,'' 
operation, or maintenance of commodities controlled by 8A620.y or 
8B620.y); 8E609 (except ``technology'' for the ``development,'' 
``production,'' operation, installation, maintenance, repair, overhaul, 
or refurbishment of commodities controlled by 8A609.y, 8B609.y, or 
8C609.y); 8E620 (except ``technology'' for the ``development,'' 
``production,'' operation, installation, maintenance, repair, overhaul, 
or refurbishment of commodities controlled by 8A620.y or 8B620.y); 
9A610 (except 9A610.y); 9A619 (except 9A619.y); 9B610 (except 9B610.y); 
9B619 (except 9B619.y);

[[Page 25941]]

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, overhaul, or refurbishment of commodities controlled by ECCN 
9A610.y, 9B610.y, or 9C610.y); and 9E619 (except ``technology'' for the 
``development,'' ``production'' operation, installation, maintenance, 
repair, overhaul, or refurbishment of commodities controlled by ECCN 
9A619.y, 9B619.y, or 9C619.y).
* * * * *

PART 774--[AMENDED]

    3. 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).

    4. In Supplement No. 1 to part 774 (the Commerce Control List), 
Category 1--Special Materials and Related Equipment, Chemicals, 
``Microorganisms,'' and ``Toxins,'' ECCN 1B018 is amended in the List 
of Items Controlled by revising the ``Related Controls'' paragraph and 
by removing and reserving paragraph .a to read as follows:

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

* * * * *
1B018 Equipment on the Wassenaar Arrangement Munitions List.
* * * * *

List of Items Controlled

Unit: * * *
Related Controls: See ECCN 1B608.a, .b, and .x for items that, 
immediately prior to [effective date of final rule], were classified 
under 1B018.a.
Related Definitions: * * *
Items:
    a. [RESERVED]
    b. * * *

    5. In Supplement No. 1 to part 774 (the Commerce Control List), 
Category 1--Special Materials and Related Equipment, Chemicals, 
``Microorganisms,'' and ``Toxins,'' add a new ECCN 1B608 between ECCNs 
1B233 and 1B999 to read as follows:

1B608 Test, Inspection, and Production ``Equipment'' and Related 
Commodities ``Specially Designed'' for the ``Development'' or 
``Production'' of Commodities Enumerated in ECCN 1C608 or USML 
Category V.

License Requirements

Reason for Control: NS, RS, MT, AT

 
                Control(s)                          Country chart
 
NS applies to entire entry, except 1B608.y  NS Column 1
RS applies to entire entry, except 1B608.y  RS Column 1
MT applies to equipment ``specially         MT Column 1
 designed'' for the ``production'' of
 rocket propellants.
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 1B608. (2) 
Paragraph (c)(1) of License Exception STA (Sec.  740.20(c)(1)) may 
be used for items in 1B608 without the need for a determination 
described in Sec.  740.20(g). (3) STA is not available for 
``equipment'' for the ``production'' of MT-controlled rocket 
propellants.

List of Items Controlled

Unit: End items in number; parts, component, accessories and 
attachments in $ value.
Related Controls: Defense articles that are enumerated in USML 
Category V, and technical data (including software) directly related 
thereto, are subject to the ITAR.
Related Definitions: N/A
Items:

    a. ``Equipment'' not elsewhere specified in the CCL or the USML 
``specially designed'' for the ``production'' of items controlled by 
ECCN 1C608 or USML Category V.

    Note:  ECCN 1C608.a. includes: (1) Continuous nitrators; (2) 
dehydration presses; (3) cutting machines for the sizing of extruded 
propellants; (4) sweetie barrels (tumblers) 6 feet or more in 
diameter and having over 500 pounds product capacity; (5) convection 
current converters for the conversion of materials listed in USML 
Category V(c)(2); and (6) extrusion presses for the extrusion of 
small arms, cannon and rocket propellants.

    b. Complete installations not elsewhere specified in the CCL or 
the USML ``specially designed'' for the ``production'' of items 
controlled by ECCN 1C608 or USML Category V.
    c. Environmental test facilities ``specially designed'' for the 
certification, qualification, or testing of items controlled by ECCN 
1C608 or USML Category V.
    d. through w. [RESERVED]
    x. ``Parts,'' ``components,'' ``accessories and attachments'' 
that are ``specially designed'' for a commodity subject to control 
in this ECCN or a defense article in USML Category V and not 
elsewhere specified on the USML or the CCL.

    Note 1: Forgings, castings, and other unfinished products, such 
as extrusions and machined bodies, that have reached a stage in 
manufacturing where they are clearly identifiable by material 
composition, geometry, or function as commodities controlled by ECCN 
1B608.x are controlled by ECCN 1B608.x.

    y. Specific test, inspection, and production ``equipment'' 
``specially designed'' for the ``production'' or ``development'' of 
commodities controlled by this ECCN 1B608 or a defense article in 
USML Category V, and ``parts,'' ``components,'' ``accessories and 
attachments'' ``specially designed'' therefor, as follows:
    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 1B608.

    6. In Supplement No. 1 to part 774 (the Commerce Control List), 
Category 1--Special Materials and Related Equipment, Chemicals, 
``Microorganisms,'' and ``Toxins,'' ECCN 1C018 is amended to read as 
follows:

1C018 Commercial Charges and Devices Containing Energetic Materials 
on the Wassenaar Arrangement Munitions List and Certain Chemicals.
    No items currently are in this ECCN. (1) See ECCN 1C608.b. 
through .m for items that, immediately prior to [effective date of 
final rule], were classified under 1C018.b through .m. (2) See ECCNs 
1C011, 1C111, and 1C239 for additional controlled energetic 
materials, including chlorine trifluoride (ClF3), which 
is controlled under ECCN 1C111.a.3.f. (3) See ECCN 1A008 for shaped 
charges, detonating cord, and cutters and severing tools.

    7. In Supplement No. 1 to part 774 (the Commerce Control List), 
Category 1--Special Materials and Related Equipment, Chemicals, 
``Microorganisms,'' and ``Toxins,'' revise ECCN 1C111 to read as 
follows:

1C111 Propellants and constituent chemicals for propellants, other 
than those specified in 1C011, as follows (see List of Items 
Controlled).

License Requirements

Reason for Control: MT, NP, AT

[[Page 25942]]

 
                Control(s)                          Country chart
 
MT applies to entire entry................  MT Column 1
NP applies to 1C111.a.3.f only............  NP Column 1
AT applies to entire entry................  AT Column 1
 

License Exceptions

LVS: N/A
GBS: N/A
CIV: N/A

List of Items Controlled

Unit: Kilograms
Related Controls: (1) See USML Category V(e)(7) for controls on HTPB 
(hydroxyl terminated polybutadiene) with a hydroxyl functionality 
equal to or greater than 2.2 and less than or equal to 2.4, a 
hydroxyl value of less than 0.77 meq/g, and a viscosity at 30 [deg]C 
of less than 47 poise (CAS  69102-90-5). (2) See USML 
Category V(f)(3) for controls on ferrocene derivatives, including 
butacene. (3) See ECCN 1C608 for controls on oxidizers that are 
composed of fluorine and also other halogens, oxygen, or nitrogen, 
except for chlorine trifluoride, which is controlled under this ECCN 
1C111.a.3.f. (4) See ECCN 1C011.b for controls on boron and boron 
alloys.
Related Definitions: Particle size is the mean particle diameter on 
a weight basis. Particle size must be determined through the use of 
best industrial practices and the controls may not be undermined by 
the addition of larger or smaller sized material to shift the mean 
diameter.
Items:
    a. Propulsive substances:
    a.1. Aluminum powder as follows:
    a.1.a. Spherical aluminium powder not controlled by 1C111.a.1.b. 
with particles of uniform diameter of less than 200 micrometer and 
an aluminum content of 97% by weight or more, if at least 10 percent 
of the total weight is made up of particles of less than 63 
micrometer, according to ISO 2591:1988 or national equivalents such 
as JIS Z8820.
    a.1.b. Aluminum powder with all of the following:
    a.1.b.1. Greater than 99% purity;
    a.1.b.2. Greater than 50% of the particles being spheroidal, or 
produced by a gas atomization process using an inert gas such as 
nitrogen; and
    a.1.b.3. Particle size less than 60 microns.

    Technical Note:  A particle size of 63 micrometer (ISO R-565) 
corresponds to 250 mesh (Tyler) or 230 mesh (ASTM standard E-11).

    a.2. Metal fuels, other than that controlled by the U.S. 
Munitions List, in particle sizes of less than 60 x 10-6 
m (60 micrometers), whether spherical, atomized, spheroidal, flaked 
or ground, as follows:
    a.2.a. Consisting of 97% by weight or more of any of the 
following:
    a.2.a.1. Zirconium;
    a.2.a.2. Beryllium;
    a.2.a.3. Magnesium; or
    a.2.a.4. Alloys of the metals specified by a.2.a.1 to a.2.a.3 
above.
    a.2.b. [RESERVED]

    Technical Note: The natural content of hafnium in the zirconium 
(typically 2% to 7%) is counted with the zirconium.

    a.3. Oxidizer substances usable in liquid propellant rocket 
engines, as follows:
    a.3.a. Dinitrogen trioxide;
    a.3.b. Nitrogendioxide/dinitrogen tetroxide;
    a.3.c. Dinitrogen pentoxide;
    a.3.d. Mixed oxides of nitrogen (MON);
    a.3.e. Inhibited red fuming nitric acid (IRFNA);
    a.3.f. Chlorine trifluoride (ClF3).

    Technical Note:  Mixed oxides of nitrogen (MON) are solutions of 
nitric oxide (NO) in dinitrogen tetroxide/nitrogen dioxide 
(N2O4/NO2) that can be used in 
missile systems. There are a range of compositions that can be 
denoted as MONi or MONij, where i and j are integers representing 
the percentage of nitric oxide in the mixture (e.g., MON3 contains 
3% nitric oxide, MON25 25% nitric oxide. An upper limit is MON40, 
40% by weight).

    b. Polymeric substances:
    b.1. Carboxy--terminated polybutadiene (including carboxyl--
terminated polybutadiene) (CTPB);
    b.2. Hydroxy--terminated polybutadiene (including hydroxyl--
terminated polybutadiene) (HTPB);
    b.3. Polybutadiene acrylic acid (PBAA);
    b.4. Polybutadiene acrylic acid acrylonitrile (PBAN);
    b.5. Polytetrahydrofuran polyethylene glycol (TPEG).

    Technical Note:  Polytetrahydrofuran polyethylene glycol (TPEG) 
is a block copolymer of poly 1,4 Butanediol and polyethylene glycol 
(PEG).

    c. Other propellant energetic materials, additives, or agents:
    c.1. [RESERVED]
    c.2. Triethylene glycol dinitrate (TEGDN);
    c.3. 2 Nitrodiphenylamine (2-NDPA);
    c.4. Trimethylolethane trinitrate (TMETN);
    c.5. Diethylene glycol dinitrate (DEGDN).
    d. Hydrazine and derivatives as follows:
    d.1. Hydrazine (C.A.S.  302-01-2) in concentrations of 
70% or more;
    d.2. Monomethyl hydrazine (MMH) (C.A.S.  60-34-4);
    d.3. Symmetrical dimethyl hydrazine (SDMH) (C.A.S.  
540-73-8);
    d.4. Unsymmetrical dimethyl hydrazine (UDMH) (C.A.S.  
57-14-7);
    d.5. Trimethylhydrazine (C.A.S.  1741-01-1);
    d.6. Tetramethylhydrazine (C.A.S.  6415-12-9);
    d.7. N,N diallylhydrazine;
    d.8. Allylhydrazine (C.A.S.  7422-78-8);
    d.9. Ethylene dihydrazine;
    d.10. Monomethylhydrazine dinitrate;
    d.11. Unsymmetrical dimethylhydrazine nitrate;
    d.12. Dimethylhydrazinium azide;
    d.13. Hydrazinium azide (C.A.S.  14546-44-2);
    d.14. Hydrazinium dinitrate;
    d.15. Diimido oxalic acid dihydrazine (C.A.S.  3457-37-
2);
    d.16. 2-hydroxyethylhydrazine nitrate (HEHN);
    d.17. Hydrazinium diperchlorate (C.A.S. 13812-39-0);
    d.18. Methylhydrazine nitrate (MHN);
    d.19. Diethylhydrazine nitrate (DEHN);
    d.20. 3,6-dihydrazino tetrazine nitrate (DHTN), also referred to 
as 1,4-dihydrazine nitrate.

Supplement No. 1 to part 774 [Amended]

    8. In Supplement No. 1 to part 774 (the Commerce Control List), 
Category 1--Special Materials and Related Equipment, Chemicals, 
``Microorganisms,'' and ``Toxins,'' ECCN 1C238 is removed.
    9. In Supplement No. 1 to part 774 (the Commerce Control List), 
Category 1--Special Materials and Related Equipment, Chemicals, 
``Microorganisms,'' and ``Toxins,'' add a new ECCN 1C608 between ECCNs 
1C395 and 1C980 to read as follows:

1C608 Energetic materials and related commodities.

License Requirements

Reason for Control: NS, RS, MT, AT

 
                Control(s)                          Country chart
 
NS applies to entire entry................  NS Column 1
RS applies to entire entry................  RS Column 1
MT applies to 1C608.m.....................  MT 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 1C608. (2) 
Paragraph (c)(1) of License Exception STA (Sec.  740.20(c)(1)) may 
be used for items in 1C608 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: (1) The EAR does not control devices or charges 
containing materials controlled by USML subparagraphs V(c)(6), V(h), 
or V(i). The USML controls devices containing such materials. (2) 
The USML in Categories III, IV, or V controls devices and charges in 
this entry if they contain materials controlled by Category V (other 
than slurries) and such materials can be easily extracted without 
destroying the device or charge. (3) See also explosives and other 
items enumerated in ECCNs 1A006, 1A007, 1A008, 1C011, 1C111, 1C239, 
and 1C992.
Related Definitions: For purposes of this entry, the term 
``controlled materials'' means controlled energetic materials 
enumerated in ECCNs 1C011, 1C111, 1C239, 1C608, or USML Category V.

[[Page 25943]]

Items:

    a. Single base, double base, and triple base propellants having 
nitrocellulose with nitrogen content greater than 12.6% in the form 
of either:
    a.1. Sheetstock or carpet rolls; or
    a.2. Grains with diameter greater than 0.10 inches.

    Note:  This entry does not control propellant grains used in 
shotgun shells, small arms cartridges, or rifle cartridges.

    Note:  Sheetstock is propellant that has been manufactured in 
the form of a sheet suitable for further processing. A carpet roll 
is propellant that has been manufactured as a sheet, often cut to a 
desired width, and subsequently rolled up (like a carpet).

    Note:  Single base is propellant which consists mostly of 
nitrocellulose. Double base propellants consist mostly of 
nitrocellulose and nitroglycerine. Triple base consists mostly of 
nitrocellulose, nitroglycerine, and nitroguanidine. Such propellants 
contain other materials, such as resins or stabilizers, that could 
include carbon, salts, burn rate modifiers, nitrodiphenylamine, wax, 
polyethylene glycol (PEG), polyglycol adipate (PGA).

    b. Shock tubes containing greater than 0.064 kg per meter (300 
grains per foot), but not more than 0.1 kg per meter (470 grains per 
foot) of controlled materials.
    c. Cartridge power devices containing greater than 0.70 kg, but 
not more than 1.0 kg of controlled materials.
    d. Detonators (electric or nonelectric) and ``specially 
designed'' assemblies therefor containing greater than 0.01 kg, but 
not more than 0.1 kg of controlled materials.
    e. Igniters not controlled by USML Categories III or IV that 
contain greater than 0.01 kg, but not more than 0.1 kg of controlled 
materials.
    f. Oil well cartridges containing greater than 0.015 kg, but not 
more than 0.1 kg of controlled materials.
    g. Commercial cast or pressed boosters containing greater than 
1.0 kg, but not more than 5.0 kg of controlled materials.
    h. Commercial prefabricated slurries and emulsions containing 
greater than 10 kg and less than or equal to thirty-five percent by 
weight of USML controlled materials.
    i. [RESERVED]
    j. Pyrotechnic devices ``specially designed'' for commercial 
purposes (e.g., theatrical stages, motion picture special effects, 
and fireworks displays), and containing greater than 3.0 kg, but not 
more than 5.0 kg of controlled materials.
    k. Other commercial explosive devices or charges ``specially 
designed'' for commercial applications, not controlled by 1C608.c 
through .g above, containing greater than 1.0 kg, but not more than 
5.0 kg of controlled materials.
    l. Propyleneimine (2 methylaziridine) (C.A.S.  75-55-
8).
    m. Any oxidizer or mixture thereof that is a compound composed 
of fluorine and one or more of the following: Other halogens, 
oxygen, or nitrogen.

    Note 1 to 1C111.m:  Nitrogen trifluoride (NF3) in a 
gaseous state is controlled by ECCN 1C992 and not by 1C608.

    Note 2 to 1C111.m:  Chlorine trifluoride (ClF3) is 
controlled under ECCN 1C111.a.3.f and not under ECCN 1C608.

    Note 3 to 1C111.m:  Oxygen difluoride (OF2) is 
controlled under USML Category V.d.10 (see 22 CFR 121.1) and not 
under ECCN 1C608.

    Note to 1C111.l and .m:  If a chemical in paragraphs .l or .m of 
1C608 is incorporated into a commercial charge or device described 
in paragraphs .c through .k of ECCN 1C608 or in 1C992, the 
classification of the commercial charge or device applies to the 
item.

    n. Any explosive, propellants, oxidizers, pyrotechnics, fuels, 
binders, or additives, ``specially designed'' for military 
application not listed elsewhere in USML Category V or the CCL.
    o. through y. [RESERVED]

    10. In Supplement No. 1 to part 774 (the Commerce Control List), 
Category 1--Special Materials and Related Equipment, Chemicals, 
``Microorganisms,'' and ``Toxins,'' ECCN 1D018 is amended by revising 
the ECCN heading and by revising the ``Related Controls'' paragraph in 
the List of Items Controlled to read as follows:

1D018 ``Software'' specially designed or modified for the 
``development,'' ``production,'' or ``use'' of items controlled by 
1B018.b.
* * * * *

List of Items Controlled

Unit: * * *
Related Controls: (1) See Sec.  746.8(b)(1) for additional BIS 
licensing requirements for Rwanda concerning this entry. (2) See 
ECCN 1D608 for ``software'' for items classified under ECCN 1B608 
that, immediately prior to [Insert effective date of final rule], 
were classified under 1B018.a.
Related Definitions: * * *
Items: * * *

    11. In Supplement No. 1 to part 774 (the Commerce Control List), 
Category 1--Special Materials and Related Equipment, Chemicals, 
``Microorganisms,'' and ``Toxins,'' add a new ECCN 1D608 between ECCNs 
1D390 and 1D993 to read as follows:

1D608 ``Software'' ``specially designed'' for the ``development,'' 
``production,'' operation, or maintenance of commodities controlled 
by 1B608 or 1C608.

License Requirements

Reason for Control: NS, RS, MT, AT

 
 
                Control(s)                          Country chart
 
NS applies to entire entry, except 1D608.y  NS Column 1
RS applies to entire entry, except 1D608.y  RS Column 1
MT applies to software ``specially          MT Column 1
 designed'' for 1C608.m.
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 item in 1D608.

List of Items Controlled

Unit: N/A
Related Controls: (1) Software directly related to articles 
enumerated in USML Categories III, IV or V are subject to the 
controls of those USML Categories, respectively. (2) See ECCN 0A919 
for foreign-made ``military commodities'' that incorporate more than 
10% U.S.-origin ``600 series'' items.
Related Definitions: N/A
Items:
    a. ``Software'' ``specially designed'' for the ``development,'' 
``production,'' operation, or maintenance of commodities controlled 
by ECCN 1B608 or 1C608.
    b. through x. [RESERVED]
    y. Specific ``software'' ``specially designed'' for the 
``development,'' ``production,'' operation, or maintenance of 
commodities controlled by ECCN 1B608.y, as follows:
    y.1 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 1D608.

    12. In Supplement No. 1 to part 774 (the Commerce Control List), 
Category 1--Special Materials and Related Equipment, Chemicals, 
``Microorganisms,'' and ``Toxins,'' ECCN 1E001 is amended by revising 
the ECCN heading, by revising the NP controls paragraph in the License 
Requirements section, and by revising the ``Related Controls'' 
paragraph in the List of Items Controlled to read as follows:
1E001 ``Technology'' According to the General Technology Note for 
the ``Development'' or ``Production'' of Items Controlled by 
1A001.b, 1A001.c, 1A002, 1A003, 1A004, 1A005, 1A006.b, 1A007, 1A008, 
1A101, 1B (except 1B608 or 1B999), or 1C (except 1C355, 1C608, 1C980 
to 1C984, 1C988, 1C990, 1C991, 1C995 to 1C999).

License Requirements

Reason for Control: * * *

 
                Control(s)                          Country chart
 
 

[[Page 25944]]

 
                                * * * * *
NP applies to ``technology'' for items      NP Column 1
 controlled by 1A002, 1A007, 1B001, 1B101,
 1B201, 1B225 to 1B233, 1C002, 1C010,
 1C111, 1C116, 1C202, 1C210, 1C216, 1C225
 to 1C237, 1C239, or 1C240 for NP reasons.
 
                                * * * * *
 

License Requirements Note: * * *

License Exceptions

* * * * *

List of Items Controlled

Unit: * * *
Related Controls: (1) Also see ECCNs 1E101, 1E201, and 1E202. (2) 
See ECCN 1E608 for ``technology'' for items classified under ECCN 
1B608 or 1C608 that, immediately prior to [effective date of final 
rule], were classified under 1B018.a or 1C018.b through .m (note 
that ECCN 1E001 controls ``development'' and ``production'' 
``technology'' for chlorine trifluoride controlled by ECCN 
1C111.a.3.f--see ECCN 1E101 for controls on ``use'' ``technology'' 
for chlorine trifluoride). (3) See ECCN 1E002.g for control 
libraries (parametric technical databases) specially designed or 
modified to enable equipment to perform the functions of equipment 
controlled under 1A004.c (Nuclear, biological and chemical (NBC) 
detection systems) or 1A004.d (Equipment for detecting or 
identifying explosives residues). (4) ``Technology'' for lithium 
isotope separation (see related ECCN 1B233) and ``technology'' for 
items described in ECCN 1C012 are subject to the export licensing 
authority of the Nuclear Regulatory Commission (see 10 CFR part 
110). (5) ``Technology'' for items described in ECCN 1A102 is 
subject to the export licensing authority of the U.S. Department of 
State, Directorate of Defense Trade Controls (see 22 CFR part 121).
Related Definitions: * * *
Items: * * *

    13. In Supplement No. 1 to part 774 (the Commerce Control List), 
Category 1--Special Materials and Related Equipment, Chemicals, 
``Microorganisms,'' and ``Toxins,'' ECCN 1E101 is amended by revising 
the ECCN heading and by revising the License Requirements section to 
read as follows:

1E101 ``Technology'', in accordance with the General Technology 
Note, for the ``use'' of commodities and software controlled by 
1A101, 1A102, 1B001, 1B101, 1B102, 1B115 to 1B119, 1C001, 1C007, 
1C011, 1C101, 1C107, 1C111, 1C116, 1C117, 1C118, 1D001, 1D101, or 
1D103.

License Requirements

Reason for Control: MT, NP, AT

 
                Control(s)                          Country chart
 
MT applies to entire entry................  MT Column 1
NP applies to ``technology'' for items      NP Column 1
 controlled by 1B001, 1B101, 1C111, 1C116,
 1D001, or 1D101 for NP reasons.
AT applies to entire entry................  AT Column 1
 

* * * * *
    14. In Supplement No. 1 to part 774 (the Commerce Control List), 
Category 1--Special Materials and Related Equipment, Chemicals, 
``Microorganisms,'' and ``Toxins,'' ECCN 1E201 is amended by revising 
the ECCN heading to read as follows:

1E201 ``Technology'' according to the General Technology Note for 
the ``use'' of items controlled by 1A002, 1A007, 1A202, 1A225 to 
1A227, 1B201, 1B225 to 1B232, 1B233.b, 1C002.b.3 and b.4, 1C010.a, 
1C010.b, 1C010.e.1, 1C202, 1C210, 1C216, 1C225 to 1C237, 1C239, 
1C240 or 1D201.
* * * * *
    15. In Supplement No. 1 to part 774 (the Commerce Control List), 
Category 1--Special Materials and Related Equipment, Chemicals, 
``Microorganisms,'' and ``Toxins,'' add a new ECCN 1E608 between ECCNs 
1E355 and 1E994 to read as follows:

1E608 ``Technology'' ``required'' for the ``development,'' 
``production,'' operation, installation, maintenance, repair, 
overhaul or refurbishing of equipment controlled in 1B608 or 
materials controlled by 1C608.

License Requirements

Reason for Control: NS, RS, MT, AT

 
                Control(s)                          Country chart
 
NS applies to entire entry, except 1E608.y  NS Column 1
RS applies to entire entry, except 1E608.y  RS Column 1
MT applies to technology ``required'' for   MT Column 1
 1C608.m.
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 item in 1E608.

List of Items Controlled

Unit: $ value
Related Controls: (1) Technical data directly related to articles 
enumerated in USML Categories III, IV, or V are subject to the 
controls of those USML Categories, respectively. (2) ``Technology'' 
for chlorine trifluoride is controlled under ECCNs 1E001 
(``development'' and ``production'') and 1E101 (``use'').
Related Definitions: N/A
Items:

    a. ``Technology'' ``required'' for the ``development,'' 
``production,'' operation, installation, maintenance, repair, 
overhaul, or refurbishing of material controlled by ECCN 1B608 or 
1C608.
    b. ``Technology'' for the ``development'' or ``production'' of 
nitrocellulose with nitrogen content over 12.6% and at rates greater 
than 2000 pounds per hour.
    c. ``Technology'' for the ``development'' or ``production'' of 
nitrate esters (e.g., nitroglycerine) at rates greater than 2000 
pounds per hour.
    d. through x. [RESERVED]
    y. Specific ``technology'' ``required'' for the ``development,'' 
``production,'' operation, installation, maintenance, repair, 
overhaul or refurbishing of commodities controlled by ECCN 1B608.y 
or ``software'' controlled by ECCN 1D608.y, as follows:
    y.1 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 1E608.

    Dated: April 13, 2012.
Kevin J. Wolf,
Assistant Secretary for Export Administration.
[FR Doc. 2012-10456 Filed 5-1-12; 8:45 am]
BILLING CODE 3510-33-P
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