Vol. 77 Thursday, 

No. 120 June 21, 2012 

Part III 

Department of Commerce 

Bureau of Industry and Security 

15 CFR Parts 734, 736, 740, et al. 

Proposed Revisions to the Export Administration Regulations: 

Implementation of Export Control Reform; Revisions to License Exceptions 

After Retrospective Regulatory Review; Proposed Rule 


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37524 Federal Register / Vol. 77, No. 120 / Thursday, June 21, 2012 / Proposed Rules 

DEPARTMENT OF COMMERCE 

Bureau of Industry and Security 

15 CFR Parts 734, 736, 740, 742, 743, 

744, 750, 758, 762, 764, 774 

[Docket No. 120501427–2427–01] 

RIN 0694–AF65 

Proposed Revisions to the Export 

Administration Regulations: 

Implementation of Export Control 

Reform; Revisions to License 

Exceptions After Retrospective 

Regulatory Review 

AGENCY: Bureau of Industry and 

Security, Commerce. 

ACTION: Proposed rule. 

SUMMARY: President Obama directed the 

Administration in August 2009 to 

conduct a broad-based review of the 

U.S. export control system in order to 

identify additional ways to enhance 

national security. Then-Secretary of 

Defense Gates described in April 2010 

the initial results of that effort and why 

fundamental reform of the U.S. export 

control system is necessary to enhance 

national security. Since then, the 

Bureau of Industry and Security (BIS), 

Department of Commerce, and the 

Directorate of Defense Trade Controls 

(DDTC), Department of State, have 

published multiple proposed 

amendments to the Export 

Administration Regulations (EAR) and 

the International Traffic in Arms 

Regulations (ITAR), respectively, that 

would implement various aspects of 

what has become known as the Export 

Control Reform Initiative. One aspect of 

the reform effort would result in the 

transfer of control to the EAR of items 

the President determines no longer 

warrant control under ITAR, once 

congressional notification requirements 

and corresponding amendments to the 

ITAR and the EAR are completed. This 

proposed rule addresses issues 

pertaining to transition of control over 

such items. It complements the Export 

Control Transition Plan, a proposed 

policy statement and request for 

comments issued by DDTC. 

This rule proposes to amend the EAR 

by, inter alia, establishing a General 

Order regarding continued use of State 

authorizations for a specified period, by 

broadening license exceptions in the 

EAR to make them consistent with ITAR 

exemptions, and by extending the 

validity period of Commerce licenses. 

Any modifications to License 

Exceptions specific to particular types 

of items, such as firearms, will be 

addressed in the proposed rules 

pertaining specifically to those items. 

This rule also addresses specific 

concerns raised in public comments on 

recent rules by proposing a revised de 

minimis rule for ‘‘600 series’’ items, i.e., 

the items the President determines no 

longer warrant control on the USML and 

that would thus be controlled in the 

‘‘600 series’’ of the EAR’s Commerce 

Control List (CCL). Finally, this rule 

proposes additional conforming changes 

that are necessary to implement the 

Export Control Reform Initiative, but 

also would affect items currently subject 

to the EAR, such as changes to reporting 

thresholds for the Automated Export 

System. 

In addition, this proposed rule 

addresses issues raised by the public in 

response to a notice requesting 

comments on the streamlining of BIS’s 

regulations published on August 5, 2011 

(76 FR 47527). On January 18, 2011, 

President Barack Obama issued 

Executive Order 13563, affirming 

general principles of regulation and 

directing government agencies to 

conduct retrospective reviews of 

existing regulations. Although the 

Export Control Reform Initiative did not 

originate with Executive Order 13563, it 

is entirely consistent in spirit and 

substance. BIS issued a notice soliciting 

public comment on streamlining its 

regulations pursuant to the President’s 

Executive Order. In response to the 

public comments received on the notice, 

and consistent with BIS’s internal 

analysis, this rule proposes revisions to 

license exceptions for government uses 

and temporary exports that streamline 

and update unduly complex or 

outmoded provisions in addition to 

broadening certain provisions to 

implement Export Control Reform. 

Other proposed changes to the EAR 

warranted by the Executive Order will 

be addressed in separate Federal 

Register notices. Commerce’s full plan 

can be accessed at: http:// 

open.commerce.gov/news/2011/08/23/ 

commerce-plan-retrospective-analysisexisting-rules. 

DATES: Comments must be received by 

BIS no later than August 6, 2012. 

ADDRESSES: Comments may be 

submitted to the Federal rulemaking 

portal (http://www.regulations.gov). The 

regulations.gov ID for this notice of 

inquiry is: BIS–2012–0024. Comments 

may also be submitted via email to 

publiccomments@bis.doc.gov or on 

paper to Regulatory Policy Division, 

Bureau of Industry and Security, Room 

2099B, U.S. Department of Commerce, 

Washington, DC 20230. Please refer to 

RIN 0694–AF65 in all comments and in 

the subject line of email comments. All 

comments must be in writing. All 

comments (including any personal 

identifiable information) will be 

available for public inspection and 

copying. Those wishing to comment 

anonymously may do so by submitting 

their comment via regulations.gov and 

leaving the fields for identifying 

information blank. 

FOR FURTHER INFORMATION CONTACT: 

Hillary Hess or Timothy Mooney, 

Regulatory Policy Division, Office of 

Exporter Services, Bureau of Industry 

and Security at 202–482–2440 or 

rpd2@bis.doc.gov. 

SUPPLEMENTARY INFORMATION: 

Background 

The Export Control Reform Initiative 

The objective of the Export Control 

Reform Initiative is to protect and 

enhance U.S. national security interests. 

On July 15, 2011 (76 FR 41958), BIS 

published a proposed rule, Proposed 

Revisions to the Export Administration 

Regulations (EAR): Control of Items the 

President Determines No Longer 

Warrant Control Under the United 

States Munitions List (USML). The July 

15 rule proposed a regulatory 

framework to control items on the 

USML that, in accordance with section 

38(f) of the Arms Export Control Act 

(AECA) (22 U.S.C. 2778(f)(1)), the 

President determines no longer warrant 

control under the AECA. These items 

would be controlled under the Export 

Administration Regulations (EAR) once 

the congressional notification 

requirements of section 38(f) and 

corresponding amendments to the 

International Traffic in Arms 

Regulations (ITAR) (22 CFR parts 120– 

130) and its USML and the EAR and its 

Commerce Control List (CCL) are 

completed. After the July 15 rule 

established this regulatory framework, 

subsequent rules, including the 

November 7, 2011 (76 FR 68675) 

proposed rule, proposed specific 

changes to the USML and the CCL. 

Once the ITAR and its USML are 

amended so that they control only the 

items that provide the United States 

with a critical military or intelligence 

advantage or otherwise warrant the 

controls of the ITAR, and the EAR is 

amended to control military items that 

do not warrant USML controls, the U.S. 

export control system will enhance 

national security by (i) improving 

interoperability of U.S. military forces 

with allied countries, (ii) strengthening 

the U.S. industrial base by, among other 

things, reducing incentives for foreign 

manufacturers to design out and avoid 

U.S.-origin content and services, and 

(iii) allowing export control officials to 


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focus government resources on 

transactions of more concern. 

All references to the United States 

Munitions List (‘‘USML’’) in this rule 

are to the list of defense articles that are 

controlled for purposes of export or 

temporary import pursuant to the 

International Traffic in Arms 

Regulations (‘‘ITAR’’), 22 CFR Parts 120 

et seq., and not to the list of defense 

articles on the USML that are controlled 

by the Bureau of Alcohol, Tobacco, 

Firearms and Explosives (ATF) for 

purpose of permanent import under its 

regulations at 27 CFR part 447. Pursuant 

to section 38(a)(1) of the Arms Export 

Control Act (AECA), all defense articles 

controlled for export or import are part 

of the ‘‘USML’’ under the AECA. For the 

sake of clarity, the list of defense articles 

controlled by ATF for purposes of 

permanent import are on the United 

States Munitions Import List (USMIL). 

The transfer of defense articles from the 

ITAR’s USML to the EAR’s CCL for 

purposes of export controls does not 

affect the list of defense articles 

controlled on the USMIL under the 

AECA for purposes of permanent import 

controls. 

Public Comments on the July 15 and 

November 7 Proposed Rules 

BIS received 43 comments in 

response to the July 15 proposed rule. 

Those who submitted comments 

generally supported the proposed 

amendments to the EAR and the Export 

Control Reform Initiative objectives. 

However, they also expressed both 

general concerns about the process of 

transition from State to Commerce 

jurisdiction and specific concerns 

regarding certain proposed provisions. 

With respect to general concerns 

regarding the transition, nine 

commenters addressed perceived 

burdens caused by implementation of 

Export Control Reform, specifically 

expressing concern over shorter validity 

periods for licenses under the EAR than 

the ITAR and difficulty complying with 

two sets of regulations in the same 

transaction. They urged incremental 

implementation, including 

grandfathering of ITAR licenses and 

continuing opportunities for public 

participation in the rulemaking process. 

Ten commenters found that certain 

ITAR exemptions were broader than 

EAR license exceptions. While these 

comments on implementation concerns 

were outside the scope of the July 15 

rule, they did anticipate issues that BIS 

planned to address in this proposed 

rule. One commenter requested 

adoption of a single licensing form, 

which is outside the scope of this rule 

but nonetheless something the 

Administration has announced it is 

developing. 

With respect to specific proposed 

provisions, fourteen commenters found 

the July 15 proposal regarding a revised 

de minimis rule for ‘‘600 series’’ items 

too complex and unworkable. 

Commenters stated that having a 10 

percent de minimis rule for ‘‘600 series’’ 

items and a 25 percent de minimis rule 

for all other items subject to the EAR 

would be extremely burdensome, if not 

impossible, for the commenters to 

calculate. 

Three commenters on the July 15 rule 

requested clarification regarding 

application of the China military enduse restriction to ‘‘600 series’’ items. 

Similar to the July 15 rule, BIS 

received public comments regarding 

implementation concerns in response to 

the November 7 rule. Implementation 

concerns were generally outside the 

scope of the November 7 rule, which 

proposed CCL entries for aircraft and 

related items the President determines 

do not warrant control on the USML; 

however, five commenters raised the 

issue that certain ITAR exemptions were 

broader than comparable EAR license 

exceptions. 

BIS plans to address comments 

received in response to the July 15 and 

November 7 proposed rules, to the 

extent that they are germane to this 

proposed rule, when this rule is 

published in final form. 

The ‘‘600 Series’’ and U.S. Arms 

Embargoed Countries 

As noted in the preamble to the July 

15 rule, items determined to no longer 

warrant control under the ITAR would 

be controlled by a new series of ECCNs 

identified by the ‘‘6’’ at the third 

character of each ECCN and collectively 

referred to as ‘‘600 series’’ items. While 

these items no longer would be subject 

to the ITAR, they still would be military 

items or items ‘‘specially designed’’ for 

military uses. BIS is not suggesting by 

their inclusion on the CCL that they are 

‘‘dual-use’’ items. The CCL controls 

‘‘dual use’’ (e.g., items designed for both 

military and civil applications), 

exclusively military, and other types of 

items warranting control. The 

amendments at issue in this part of the 

Export Control Reform Initiative would 

merely add significantly more military 

items to controls of the EAR. 

Applications to export such items to 

countries subject to U.S. arms 

embargoes as described in § 126.1 of the 

ITAR and subsequently in proposed 

§ 740.2 (a)(12) of the EAR in the July 15 

rule would be subject to the general 

policy of denial proposed in the 

November 7 rule. (An exception to this 

would be those items contained in the 

.y paragraph of each ‘‘600 series’’ ECCN; 

while they are military items, they are 

so militarily insignificant that licenses 

would not be required except for export 

to terrorist supporting countries or for a 

military end use in China.) Another 

general principle underlying the 

incorporation of the ‘‘600 series’’ into 

the EAR is that because items subject to 

the EAR are less militarily significant 

than those subject to the ITAR, EAR 

exceptions should not be more 

restrictive than comparable ITAR 

exemptions. Similarly, EAR procedures 

should not be more restrictive than 

comparable ITAR procedures. As one 

public comment in response to the July 

15 rule stated, ‘‘[r]egulatory changes that 

have the unintended result of being 

more onerous than current requirements 

are not beneficial for U.S. national 

security or economic interests and will 

not further the stated objectives of 

comprehensive Export Control Reform.’’ 

BIS agrees. 

Revisions Addressed in This Proposed 

Rule 

This rule proposes certain measures 

to ease the transition for those items 

moving from State to Commerce 

jurisdiction, including establishing a 

General Order regarding continued use 

of State authorizations for a specified 

period, broadening license exceptions 

consistent with ITAR exemptions, and 

extending the two-year validity period 

of Commerce licenses to match State’s 

four-year period. In the course of 

broadening certain license exceptions, 

this rule streamlines and updates 

existing text to reduce undue 

complexity. This rule also addresses 

concerns regarding the de minimis rule 

by proposing alternative provisions. 

Specifically, this rule responds to public 

comments by proposing a uniform 25 

percent de minimis rule for reexports of 

‘‘600 series’’ items to all countries, 

except for countries subject to U.S. arms 

embargoes, which would be subject to a 

zero percent de minimis rule. 

Moreover, this rule augments the 

framework constructed by the July 15 

rule (and modified by the November 7 

rule) by proposing additional changes to 

the EAR necessary to implement Export 

Control Reform. Note that in addition to 

applying to items transitioning from the 

ITAR, many revisions also would apply 

to items currently subject to the EAR, 

such as changes to validity periods and 

reporting thresholds for the Automated 

Export System. 

Finally, in response to Executive 

Order 13563, this rule proposes 

revisions to license exceptions for 

government uses and temporary exports 


TKELLEY on DSK3SPTVN1PROD with PROPOSALS3
37526 Federal Register / Vol. 77, No. 120 / Thursday, June 21, 2012 / Proposed Rules 

that streamline and update unduly 

complex or outmoded provisions in 

addition to broadening certain 

provisions to implement Export Control 

Reform. On August 5, 2011, BIS issued 

a notice soliciting public comments on 

all of its existing and proposed rules, 

with the exception of those rules related 

to the Export Control Reform Initiative, 

which solicit public comment 

separately. The comment period for the 

notice closed on February 1, 2012. BIS 

received 22 comments. Three issues 

raised in these comments involve issues 

related to transition issues and are 

addressed in this proposed rule. The 

comments relevant to this rule 

suggested various amendments to make 

the EAR more consistent with the ITAR 

and State Department policy. License 

Exception GOV should be broadened to 

include those acting on behalf of the 

U.S. Government. License Exception 

TSU should be broadened to allow 

release of technology in the United 

States by U.S. universities to their 

employees. License validity periods 

should be lengthened. These comments 

dovetailed with comments submitted in 

response to the July 15 and November 

7 rules, and with BIS’s own analysis. 

These proposed changes are discussed 

in the License Exception and License 

Issuance sections. Other comments on 

the August 5 notice will be summarized 

in future proposed rules as those issues 

are addressed. Commerce’s full plan can 

be accessed at: http:// 

open.commerce.gov/news/2011/08/23/ 

commerce-plan-retrospective-analysisexisting-rules. 

Transition 

This proposed rule details, and 

solicits public comment on, the 

amendments to the EAR that would be 

necessary to effect the transition of 

items from the ITAR. In addition to 

protecting and enhancing U.S. national 

security, Export Control Reform is 

expected to generate significant longterm benefits for U.S. exporters in the 

form of more efficient and flexible 

export controls that are more tailored to 

the significance of the item. In contrast, 

the ITAR, as a result of the Arms Export 

Control Act, is a less flexible regulatory 

structure. The least significant part or 

component is generally controlled the 

same way as the most significant part or 

component and the end item itself. In 

the short term, however, both 

government and industry will need to 

adjust licensing and compliance 

procedures. 

BIS anticipates that the Department of 

State, Directorate of Defense Trade 

Controls (DDTC) will set forth 

approximately a two-year period during 

which, under certain circumstances, 

holders of DDTC authorizations that 

include items transitioning to the EAR 

may continue to use those 

authorizations. This proposed rule 

should be read in conjunction with 

DDTC’s proposed policy statement 

regarding its Export Control Reform 

Transition Plan (INSERT FR CITE). 

Consistent with DDTC’s policy 

statement, all provisos, conditions, or 

other requirements placed on ITAR 

authorizations will continue to apply as 

long as such authorizations are in use. 

General Order 

This rule proposes to add a new 

General Order No. 5 (Supplement No. 1 

to part 736 of the EAR). In the proposed 

General Order No. 5, holders of State 

licenses for items that transition to 

Commerce jurisdiction who wish to 

begin using BIS authorizations may do 

so as early as the effective date of the 

rule that transfers jurisdiction of their 

items by returning their DDTC licenses 

in accordance with § 123.22 of the ITAR 

and complying with the EAR. 

On the effective date of each rule that 

adds an item to the CCL that was 

previously subject to the ITAR, that item 

will be subject to the EAR. 

Authorizations issued by DDTC before 

the transition date for those items may 

continue in effect as specified by DDTC 

in the Department of State’s Export 

Control Reform Transition Plan. Foreign 

consignees or end users with items that 

have transitioned from State to 

Commerce jurisdiction must comply 

with the EAR for subsequent reexports 

or transfers. 

Exporters, temporary importers, 

manufacturers, and brokers are 

cautioned to closely monitor ITAR and 

EAR compliance concerning 

Department of State licenses and 

agreements for items transitioning from 

USML to CCL. Parties who discover that 

they may have violated the ITAR, the 

EAR, or any license or authorization 

issued thereunder, are strongly 

encouraged to consult with BIS or DDTC 

and avail themselves of the appropriate 

department’s current, established 

procedures for submitting voluntary 

disclosures and for requesting specific 

authorization to take any further actions 

in connection with that item. 

License Exceptions 

License Exceptions are published 

authorizations set forth in part 740 of 

the EAR that allow exports, reexports, 

and in-country transfers that would 

otherwise require a license to proceed 

without one if certain conditions are 

met. The same principle underlies ITAR 

exemptions. As part of the general effort 

under the Export Control Reform 

Initiative to begin harmonizing the 

definitions, structure, and licensing 

aspects of the EAR and the ITAR, BIS 

undertook a comprehensive review of 

both EAR license exceptions and ITAR 

exemptions. While the EAR are 

generally believed to offer more 

flexibility than the ITAR, the BIS review 

of its regulations and public comments 

on the July 15 rule identified certain 

specific instances where the EAR would 

inadvertently be more restrictive. 

According to public comments received 

in response to the July 15 and November 

7 proposed rules, exporters found that 

exemptions under the ITAR for some of 

their items were broader than license 

exceptions under the EAR. These 

comments stemmed from concerns over 

implementing Export Control Reform for 

transactions of interest to those 

commenters rather than from any 

specific BIS proposals to revise license 

exceptions. 

This rule proposes to harmonize the 

provisions of several EAR license 

exceptions with several ITAR 

exemptions, as set out in detail below, 

but only insofar as they are permitted by 

law and otherwise relevant to ‘‘600 

series’’ items and other items subject to 

the EAR. In particular, BIS has no 

authority to change the scope of license 

exceptions available for items controlled 

for Missile Technology reasons because 

of statutory restrictions. See section 

(6)(l) of the Export Administration Act 

of 1979, as amended, 50 U.S.C. appx. 

2405(l). 

BIS welcomes comments on the 

differences between license exceptions 

under the EAR and exemptions under 

the ITAR and the issues they raise for 

those attempting to comply with both 

bodies of regulation or to transition from 

ITAR compliance to EAR compliance. 

Given the differences between the two 

systems, BIS is interested in comments 

regarding where deviations in the scope 

of control under the EAR versus the 

ITAR may be appropriate, especially 

with respect to treatment of reexports 

and in-country transfers. Note that 

license exceptions closely linked to 

specific items, such as firearms, that 

have not yet been proposed for control 

under the EAR will likely be addressed 

in rules related to those items. 

Descriptions of specific scenarios make 

particularly helpful examples. 

Restrictions on All License Exceptions 

Proposed new paragraphs (a)(15) and 

(a)(16) to § 740.2 describe restrictions on 

all license exceptions. This rule 

proposes restrictions on certain exports 

for which prior notification to Congress 

will be made, as explained below in the 


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Federal Register / Vol. 77, No. 120 / Thursday, June 21, 2012 / Proposed Rules 37527 

discussion of major defense equipment. 

In addition, this rule proposes to revise 

a restriction originally proposed in the 

July 15 rule regarding the use of license 

exceptions for ‘‘600 series’’ items to U.S. 

arms embargoed countries, which was 

subsequently proposed to be amended 

in Revisions to the Export 

Administration Regulations (EAR): 

Control of Personal Protective 

Equipment, Shelters, and Related Items 

the President Determines No Longer 

Warrant Control Under the United 

States Munitions List (USML) published 

on June 7, 2012 (77 FR 33688). The text 

set forth in this rule uses as a baseline 

the proposed provision published on 

June 7, 2012. This rule proposes 

restricting most license exception 

eligibility for ‘‘600 series’’ items not 

only destined to U.S. arms embargoed 

countries, but also for ‘‘600 series’’ 

items manufactured in or shipped from 

those countries as well, consistent with 

the ITAR (§ 126.1(a)). 

License Exception TMP 

This rule proposes a complete 

revision of § 740.9, License Exception 

Temporary Imports, Exports and 

Reexports (TMP) paragraphs (a) 

(Temporary exports and reexports) and 

(b) (Exports of items temporarily in the 

United States) to streamline the existing 

exception, which successive 

amendments over the years have 

rendered increasingly difficult to read. 

This streamlining is consistent with the 

retrospective review and regulatory 

improvement directed in E.O. 13563 

and is not intended to substantively 

change the scope of TMP beyond adding 

explicit authority for in-country 

transfers and broadening to match the 

scope of the ITAR exemptions. Proposed 

amendments to streamline other EAR 

License Exceptions and other EAR 

provisions will be addressed in separate 

Federal Register notices. Changes in 

country scope of certain provisions 

reflect the limitations set forth in part 

746 of the EAR (Embargoes and Special 

Controls) unless otherwise noted. 

References to exports of items 

controlled for missile technology 

reasons were deleted because such 

exports are restricted by § 740.2(a)(5). 

Temporary exports under License 

Exception TMP to a U.S. subsidiary, 

affiliate, or facility abroad would no 

longer be limited to exports to Country 

Group B countries in order to make 

TMP consistent with § 123.16(b)(9) of 

the ITAR. 

This rule would add notes to the 

temporary imports paragraph of License 

Exception TMP that incorporate 

concepts explicit in §§ 123.19 and 

123.13 of the ITAR. In this paragraph, 

notes are added stating that a shipment 

originating in Canada or Mexico that 

incidentally transits the United States 

en route to a delivery point in the same 

country does not require a license, and 

that a shipment by air or vessel from 

one location in the United States to 

another location in the United States via 

a foreign country does not require a 

license. This rule proposes to add a note 

to TMP referencing the USMIL and a 

conforming change to part 734 noting 

that defense articles on the USMIL are 

controlled by the Bureau of Alcohol, 

Tobacco, Firearms and Explosives (ATF) 

for purpose of permanent import under 

its regulations at 27 CFR part 447. This 

rule also proposes to delete references to 

outdated forms in this paragraph. 

Finally, this rule proposes to remove the 

term ‘‘unwanted’’ from § 740.9(b)(3), 

because the term, which was undefined, 

was confusing to the public. 

BIS welcomes comments on both 

substantive and structural aspects of the 

proposed clarifying changes to TMP. 

License Exception RPL 

This rule proposes to revise RPL to 

allow export or reexport of spares up to 

$500 in total value. RPL would also be 

revised to remove the requirement that 

the ability to return serviced 

commodities and software or replace 

defective or unacceptable U.S.-origin 

equipment be limited to the original 

exporters. These revisions would 

correspond to § 123.16(b)(2) of the 

ITAR, the availability of which is not 

limited to original exporters. The July 

15 rule proposed to revise § 740.10, 

License Exception Repair and 

Replacement (RPL) to reflect the 

proposed new definitions of certain 

terms, such as ‘‘part’’ or ‘‘component,’’ 

and to allow replacement parts for 

defense articles to be exported under 

RPL. This rule does not modify the 

proposed July 15 RPL revisions. 

License Exception GOV 

Consistent with the retrospective 

review and regulatory improvement 

directed in Executive Order 13563, this 

rule proposes a complete revision of 

§ 740.11, License Exception GOV 

(Governments; International 

Organizations; International Inspections 

under the Chemical Weapons 

Convention; and the International Space 

Station). Because existing GOV contains 

many provisions that exclude items on 

the Wassenaar Arrangement’s Sensitive 

and Very Sensitive Lists, and those 

provisions were always intended to 

match the Wassenaar Arrangement’s 

Sensitive and Very Sensitive Lists, this 

rule proposes to add those lists to the 

EAR as supplements to the Commerce 

Control List and revise GOV to refer to 

the new supplements. This revision 

would shorten and simplify GOV, 

allowing its current supplement to 

§ 740.11 text to be consolidated in the 

main section. The supplements 

containing the Sensitive and Very 

Sensitive Lists would be new 

Supplement Nos. 6 and 7 to part 774 of 

the EAR, as discussed below. 

The July 15 proposed rule restricted 

‘‘600 series’’ items’ eligibility for GOV to 

governments of those 36 countries listed 

in § 740.20(c)(1) (License Exception 

STA) and the United States. The 

November 7 rule proposed certain 

changes to License Exception GOV with 

respect to restricting certain aircraftrelated software and technology. This 

rule modifies those proposed provisions 

by excluding ‘‘software’’ prohibited by 

proposed Supplement No. 4 to part 740 

from eligibility for GOV. However, 

proposed Supplement No. 4 to part 740 

is not republished in this rule; nor does 

BIS seek comment on its content. 

The July 15 rule proposed, and the 

November 7 rule proposed a 

modification to a provision in License 

Exception STA to allow exports, 

reexports, or transfers (in-country) of 

‘‘600 series’’ items to non-governmental 

end users as long as the items were for 

ultimate government end use. This rule 

similarly proposes expanding GOV to 

authorize items consigned to nongovernmental end users, such as U.S. 

Government contractors, acting on 

behalf of the U.S. Government in certain 

situations, subject to written 

authorization from the appropriate 

agency and additional export clearance 

requirements. This rule also adds 

provisions for exports made under the 

direction of the U.S. Department of 

Defense consistent with §§ 125.4(b)(1), 

125.4(b)(3) and 126.6(a) of the ITAR. 

This rule also proposes a note clarifying 

the authority for foreign military sales 

consistent with § 126.6(c) of the ITAR. 

Generally, this rule does not propose 

expansion of License Exception GOV 

beyond the broadening necessary to 

create equivalent EAR authorizations to 

correspond to existing ITAR 

authorizations. This rule does propose, 

however, an expansion to the scope of 

countries eligible to receive items on the 

Sensitive List under the proposed 

revised § 740.11(a) (International 

Safeguards) and (c) (Cooperating 

Governments). The revised country 

scope for governments eligible to 

receive items on the Sensitive List 

under the proposed revised § 740.11(c) 

would be the same governments of those 

36 countries listed in § 740.20(c)(1) 

(License Exception STA). 


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37528 Federal Register / Vol. 77, No. 120 / Thursday, June 21, 2012 / Proposed Rules 

BIS welcomes comments on both 

substantive and structural aspects of the 

proposed clarifying changes to License 

Exception GOV. 

License Exception TSU 

This rule would revise § 740.13 

License Exception Technology and 

Software—Unrestricted (TSU) to 

include explicitly training information 

in the operation technology authorized, 

as it is in § 125.4(b)(5) of the ITAR. This 

rule also proposes adding TSU 

authorization for the release of software 

and technology in the United States by 

U.S. universities to their bona fide and 

full-time regular foreign national 

employees and other foreign nationals 

to correspond with a similar 

authorization in § 125.4(b)(10) of the 

ITAR and an authorization at 

§ 125.4(b)(4) of the ITAR for copies of 

technology previously authorized for 

export to same recipient. This 

authorization would, however, be 

subject to the end-use and end-user 

restrictions in part 744 of the EAR, 

would not be available for encryptionrelated software controlled for ‘‘EI’’ and 

other software and technology 

controlled for ‘‘MT’’ (Missile 

Technology) reasons, and would not be 

eligible for nationals of countries subject 

to U.S. arms embargoes for ‘‘600 series’’ 

items. 

Such changes are part of the broader, 

long-term Export Control Reform 

Initiative effort to harmonize the EAR’s 

and the ITAR’s definitions, terms, and, 

to the extent warranted, license 

exceptions. Efforts to harmonize other 

EAR and ITAR terms will be addressed 

in future Federal Register notices. BIS 

nonetheless encourages comments on 

all ITAR and EAR terms, phrases, and 

provisions that warrant harmonization. 

License Exception STA 

This rule proposes an additional 

limitation on use of License Exception 

Strategic Trade Authorization (STA) in 

§ 740.20. This proposed revision would 

limit use of License Exception STA for 

‘‘600 series’’ items to foreign parties that 

have received U.S. items under a license 

issued either by BIS or DDTC. This 

ensures that such parties will have been 

vetted by a U.S. Government licensing 

process. For purchasers, intermediate 

consignees, ultimate consignees, and 

end users that have not been so vetted, 

a license would be required even for 

STA-eligible items. Once that license 

has been issued, subsequent eligible 

exports may be made under STA. 

This rule also proposes that for ‘‘600 

series’’ items, the prior consignee 

statement set forth in § 740.20(d)(2) 

contain the consignee’s confirmation 

that the items are for ultimate 

government end use and agreement to 

permit the U.S. Government to conduct 

end-use checks. These revisions provide 

a structure for verifying that ‘‘600 

series’’ items are used as intended and 

an assurance that end-use checks can be 

performed expeditiously. 

License Issuance 

Current ITAR licenses are generally 

valid for four years compared to two 

years under the EAR. Agreements under 

the ITAR may be valid as long as ten 

years. In order to harmonize the EAR 

with the ITAR, this rule proposes to 

revise § 750.7(g) to extend the validity 

period of BIS licenses from two years to 

four years, with some exceptions, unless 

otherwise specified on the license at the 

time that it is issued. Exporters may 

request an extended validity period 

pursuant to § 750.7(g)(1) beyond four 

years. Such requests will be reviewed 

on a case-by-case basis. Grounds for 

requesting extension would include 

having agreements previously approved 

by the Department of State for a longer 

period of time. BIS licenses generally 

designate one ultimate consignee and 

may have many designated end users. 

DDTC authorizations may designate 

multiple foreign end users. This rule 

proposes to revise § 750.7(c) explicitly 

to allow direct shipments to approved 

end users. 

License Review Policy 

License applications made to BIS 

receive interagency review. For ‘‘600 

series’’ items, this rule proposes to 

modify the section describing regional 

stability controls by adding to 

§ 742.6(b)(1) a policy of case-by-case 

review to determine whether the 

transaction is contrary to the national 

security or foreign policy interests of the 

United States. This proposed policy is 

consistent with the policy for State and 

Defense review of ITAR licenses. The 

July 15 and November 7 rules proposed 

certain changes to the license review 

policy in § 742.6(b)(1). The July 15 

proposal was adopted without change 

and published in final form on April 13, 

2012 (77 FR 22199). This rule does not 

modify the proposed provisions from 

the November 7 rule, but the proposed 

provision is restated here for the 

public’s convenience and to facilitate a 

complete understanding of BIS’s license 

review policy proposal. As such, BIS is 

not seeking additional public comments 

on that provision in this rule. 

Reporting and Notifications 

The current EAR require reporting for 

exports of items on the Wassenaar 

Arrangement’s Sensitive List under 

license exception, and those provisions 

were always intended to match the 

Wassenaar Arrangement’s Sensitive List. 

This rule would shorten the Wassenaar 

Arrangement reporting requirements 

section, found at § 743.1, and would 

include a cross reference to the 

Sensitive List rather than setting forth 

ECCN paragraphs, much as was done in 

this rule’s proposed License Exception 

GOV. 

As set forth in § 123.15 of the ITAR, 

Section 36(c) of the Arms Export 

Control Act requires that a certification 

be provided to the Congress prior to 

approval of certain high-value exports of 

major defense equipment, other defense 

articles, or firearms. Major defense 

equipment (MDE), for purposes of 

§§ 743.5 and 750.4 of the EAR, means 

any item of significant military 

equipment having a nonrecurring 

research and development cost of more 

than $50,000,000 or a total production 

cost of more than $200,000,000. 

Approvals may not be granted when the 

Congress has enacted a joint resolution 

prohibiting the export. While this 

process is not required for items subject 

to the EAR, BIS would institute these 

procedures in the EAR for such MDE 

items subject to the EAR. This rule 

proposes the creation of a new § 743.5, 

which would require exporters to notify 

BIS of such transactions for all exports 

except those made under License 

Exception GOV. When a license 

application is submitted, BIS would be 

able to, and will, draw the necessary 

information from the application to 

make the congressional notification. 

Section 740.2, restrictions on license 

exceptions, discussed above, would be 

revised to preclude use of license 

exceptions for such transactions. 

To reflect the proposed changes to 

part 743, this rule proposes amending 

the title of this part to read, ‘‘Special 

Reporting and Notification.’’ 

De Minimis U.S. Content in ForeignMade Items and Foreign-Produced 

Direct Products of U.S. Technology 

Section 734.4 of the EAR sets forth the 

de minimis provisions, which provide 

that foreign-made items incorporating 

below de minimis levels of U.S. content 

are not subject to the EAR. The July 15 

rule proposed a 10% de minimis level 

for ‘‘600 series’’ content. Many 

commenters found these proposed 

provisions confusing and anticipated 

difficulty implementing them, primarily 

due to having different de minimis 

levels for different items going to the 

same country. Several of the public 

comments in response to the July 15 

rule suggested simplifying the proposed 

de minimis provisions by allowing a 


TKELLEY on DSK3SPTVN1PROD with PROPOSALS3
Federal Register / Vol. 77, No. 120 / Thursday, June 21, 2012 / Proposed Rules 37529 

25% level for those countries eligible for 

paragraph (c)(1) of License Exception 

Strategic Trade Authorization (STA) 

(see § 740.20). Two commenters to the 

November 7 proposed rule suggested 

that BIS adopt the existing 25% de 

minimis rule described in the Export 

Administration Act for all countries 

except those subject to U.S. arms 

embargoes, which would be subject to a 

zero percent de minimis rule. Based on 

a review of those comments and further 

interagency deliberation, this rule 

proposes a rule suggested by 

commenters to the November 7 rule, i.e., 

an exclusion of ‘‘600 series’’ U.S. 

content from eligibility for de minimis 

when the foreign-made items are 

destined to U.S. arms embargoed 

countries and, consistent with current 

EAR provisions, a 25% de minimis for 

all other destinations. This proposal, in 

addition to its relative simplicity, 

retains the status quo for ‘‘600 series’’ 

content destined to U.S. embargoed 

countries in that the ITAR effectively 

has a zero percent de minimis rule. 

BIS believes that this proposal 

simultaneously addresses the 

calculation concerns of the commenters 

while tightening reexport controls over 

foreign-made items that contain any 

‘‘600 series’’ content destined for 

countries subject to U.S. arms 

embargoes. This approach would 

advance the cause of the reform effort by 

reducing the negative impact of the 

‘‘see-through’’ rule in place under the 

ITAR with respect to trade with most of 

the world; would be simpler to 

calculate; would maintain the EAR’s 25 

percent de minimis rule for reexports to 

most countries; and would carry 

forward the ITAR’s zero percent de 

minimis rule with respect to reexports 

of military items to countries subject to 

U.S. arms embargoes. The latter aspect 

of the proposal furthers U.S. national 

security and foreign policy interests by 

discouraging, indeed prohibiting, the 

reexport of foreign-made items 

containing ‘‘600 series’’ content to 

countries subject to U.S. arms 

embargoes while removing the incentive 

the ITAR creates for foreign buyers to 

avoid U.S.-origin content with respect to 

trade by and between other countries. 

This rule also proposes changes to the 

regulations that address foreignproduced direct products of U.S. 

technology, which was a subject that 

was not addressed in the July 15 rule. 

Currently, certain foreign-produced 

direct products of U.S. technology are 

subject to the EAR: National security 

controlled items that are direct products 

of U.S. national security-controlled 

technology, when those products are 

destined to countries of concern for 

national security reasons (Country 

Group D:1) or terrorist-supporting 

countries (Country Group E:1). This 

proposed rule would expand these 

provisions by adding an additional 

country and product scope. Foreignproduced direct products of U.S.-origin 

‘‘600 series’’ technology, or of a plant 

that is a direct product of U.S.-origin 

‘‘600 series’’ technology, that are ‘‘600 

series’’ items would be subject to the 

EAR when reexported to countries of 

concern for national security, chemical 

and biological weapons, missile 

technology or anti-terrorism reasons 

(Country Groups D:1, D:3, D:4 or E:1 in 

Supplement No 1 to part 740) or to a 

U.S. arms embargoed country (see 

§ 740.2(a)(12)). Foreign-made items 

subject to the EAR because of this rule 

would be subject to the same license 

requirements to the new country of 

destination as if of U.S. origin. 

Because of the expansion of the 

provisions at § 736.2(b)(3) to include 

‘‘600 series’’ items, this rule proposes to 

remove the penultimate paragraph in 

Supplement No. 1 to part 764 that states 

that the standard denial order ‘‘does not 

prohibit any export, reexport, or other 

transaction subject to the EAR where the 

only items involved that are subject to 

the EAR are the foreign-produced direct 

product of U.S.-origin technology.’’ 

China Military End Use 

Section 744.21 of the EAR imposes a 

restriction on certain items destined for 

the People’s Republic of China for a 

‘‘military end use,’’ defined as for 

incorporation into military items or for 

the use, development or production of 

military items. The July 15 rule 

proposed: (1) Expanding the description 

of military items in the § 744.21(f) 

definition of ‘‘military end use’’ to 

include ‘‘600 series’’ items; and (2) 

adding items controlled by the .y 

paragraphs in the ‘‘600 series’’ ECCNs to 

the list of items subject to this 

restriction (those listed in Supplement 

No. 2 to part 744 (List of Items Subject 

to the Military End-Use License 

Requirement of § 744.21)). Three 

commenters requested clarification of 

whether 600 series and subparagraph .y 

items being exported to China would be 

subject to a policy of denial under the 

military end use controls. One 

commenter suggested that because such 

items have little or no military 

significance, they should be excluded 

from China military end use controls. 

Based on the comments’ request for 

clarification and BIS’s internal analysis, 

this rule proposes to expand § 744.21 to 

state explicitly that all ‘‘600 series’’ 

items are subject to this restriction. The 

basis for this revision is that items 

‘‘specially designed’’ for a defense 

article or other military end item are 

presumptively for a military end use. If 

an item were ‘‘specially designed’’ for a 

civil or a dual-use application, it would 

not be controlled by the .y lists within 

some of the 600 series ECCNs. 

Therefore, the effect of this proposed 

change would be to impose a license 

requirement for all ‘‘600 series’’ items, 

including .y items, destined to China, 

which would be reviewed pursuant to 

§ 744.21. This proposal replaces the July 

15 proposed amendment to Supplement 

No. 2 to part 744; the July 15 proposed 

amendment to § 744.21(f) is unchanged. 

Export Clearance 

Exporters enter information for both 

State- and Commerce-controlled 

transactions into the Automated Export 

System (AES). Many exports worth less 

than $2500 are exempted from the 

requirement to enter information on the 

transaction into AES. This rule proposes 

to revise § 758.1 to remove the lowvalue exemption for ‘‘600 series’’ items 

for all destinations, including Canada, 

and require AES filing for all ‘‘600 

series’’ items. Requiring entry of ‘‘600 

series’’ information regardless of value 

or destination will provide the U.S. 

Government with the same information 

on exports of these items under 

Commerce control as is now available 

for such items when they are subject to 

the ITAR. This rule also proposes to 

revise § 758.1 to require AES filing for 

all exports under License Exception 

Strategic Trade Authorization (STA), 

regardless of value, to enable the U.S. 

Government to obtain information about 

low-value shipments of these items. 

This rule proposes to preclude the 

option of post-departure filing for 

exports of ‘‘600 series’’ items because 

this option is not permitted for ITARcontrolled exports now. This rule also 

proposes removing the option of postdeparture filing for License Exception 

STA and Authorization VEU because 

the nature of these authorizations 

requires pre-departure filing of this 

information to ensure compliance with 

their terms and conditions. 

The provisions of § 758.6 require 

exports to be accompanied by a 

Destination Control Statement (DCS) 

identifying the items as subject to the 

EAR. Given the nature of the ‘‘600 

series’’ items and requirements related 

to them, this rule proposes a more 

specific DCS for ‘‘600 series’’ items that 

would require exporters to identify the 

ECCNs of all ‘‘600 series’’ items being 

exported in the text to ensure that 

consignees are aware that they have 

such items. 


TKELLEY on DSK3SPTVN1PROD with PROPOSALS3
37530 Federal Register / Vol. 77, No. 120 / Thursday, June 21, 2012 / Proposed Rules 

ECCN 0A919 and Supplement Nos. 6 

and 7 to the Commerce Control List 

This rule proposes to revise ECCN 

0A919, which controls certain military 

commodities produced outside the 

United States, to conform to the 

proposed revisions of the de minimis 

and foreign-produced direct product 

rules set forth in this rule. 

As described above, this rule proposes 

creating two new supplements to part 

774, the Commerce Control List. New 

Supplement Nos. 6 and 7 would append 

to the Commerce Control List the 

Wassenaar Arrangement’s Sensitive and 

Very Sensitive Lists. These lists would 

be referenced by proposed revised 

provisions in License Exception GOV 

and Wassenaar Arrangement reporting 

requirements in part 743. While the 

items on the lists would be identified by 

ECCN rather than by Wassenaar 

Arrangement numbering, the item 

descriptions would be drawn directly 

from the Wassenaar Arrangement. 

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 from the USML to the CCL. To 

facilitate that goal, the July 15 proposed 

rule contained concepts that were meant 

to be applied across the EAR. 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 

concepts. The comment period for the 

July 15 proposed rule closed on 

September 13, 2011. 

The November 7 proposed rule 

proposed modifications to that 

framework. The comment period for the 

November 7 rule closed on December 

22, 2011. 

To the extent that this rule’s proposals 

affect any provision in the July 15 or 

November 7 proposed rules or any 

provision in those proposed rules affects 

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 and November 7 proposed 

rules are among those that could affect 

or be affected by this proposed rule: 

• De minimis provisions in § 734.4; 

• Restrictions on use of license 

exceptions in §§ 740.2, 740.10, 740.11, 

and 740.20; 

• Licensing policy under 

§ 742.6(b)(1); 

• Reporting requirements under part 

743; 

• Addition of ‘‘600’’ series items to 

Supplement No. 2 to Part 744—List of 

Items Subject to the Military End-Use 

Requirement of § 744.21; and 

• Records to be retained under 

§ 762.2. 

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. 

Regulatory 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 the following 

approved collections: Simplified 

Network Application Processing System 

(control number 0694–0088), which 

includes, among other things, license 

applications; license exceptions (0694– 

0137); voluntary self-disclosure of 

violations (0694–0058); recordkeeping 

(0694–0096); export clearance (0694– 

0122); and the Automated Export 

System (0607–0152). 

As stated in the proposed rule 

published at 76 FR 41958 (July 15, 

2011), BIS believed 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. As the 

review of the USML has progressed, the 

interagency group has gained more 

specific information about the number 

of items that would come under BIS 

jurisdiction whether those items would 

be eligible for export under license 

exception. As of June 21, 2012, BIS 

believes the increase in license 

applications may be 30,000 annually, 

resulting in an increase in burden hours 

of 8,500 (30,000 transactions at 17 

minutes each) under control number 

0694–0088. 

3. This rule does not contain policies 

with Federalism implications as that 

term is defined under E.O. 13132. 

4. The Regulatory Flexibility Act 

(RFA), as amended by the Small 

Business Regulatory Enforcement 

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

601 et seq., generally requires an agency 

to prepare a regulatory flexibility 

analysis of any rule subject to the notice 

and comment rulemaking requirements 

under the Administrative Procedure Act 

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

unless the agency certifies that the rule 

will not have a significant economic 

impact on a substantial number of small 

entities. Under 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 statute 

does not require the agency to prepare 

a regulatory flexibility analysis. 

Pursuant to section 605(b), the Chief 

Counsel for Regulations, Department of 

Commerce, certified to the Chief 

Counsel for Advocacy, Small Business 

Administration that this proposed rule, 

if promulgated, will not have a 

significant impact on a substantial 

number of small entities for the reasons 

explained below. Consequently, BIS has 

not prepared a regulatory flexibility 

analysis. A summary of the factual basis 

for the certification is provided below. 

Number of Small Entities 

The Bureau of Industry and Security 

(BIS) does not collect data on the size 

of entities that apply for and are issued 

export licenses. Although BIS is unable 

to estimate the exact number of small 

entities that would be affected by this 

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 

USML would be revised to be a 


TKELLEY on DSK3SPTVN1PROD with PROPOSALS3
Federal Register / Vol. 77, No. 120 / Thursday, June 21, 2012 / Proposed Rules 37531 

‘‘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 

would become controlled on the CCL. 

Such items, along with certain military 

items that currently are on the CCL, will 

be identified in specific Export Control 

Classification Numbers (ECCNs) known 

as the ‘‘600 series’’ ECCNs. In addition, 

some items currently on the Commerce 

Control List would move from existing 

ECCNs to the new 600 series ECCNs. 

In particular, this rule proposes 

certain measures to ease the transition 

for those items moving from State to 

Commerce jurisdiction. The changes 

include establishing a General Order 

regarding continued use of State 

authorizations for a specified period, 

broadening license exceptions 

consistent with ITAR exemptions, and 

extending the two-year validity period 

of Commerce licenses to match State’s 

four-year period. In the course of 

broadening certain license exceptions, 

this rule streamlines and updates 

existing text to reduce undue 

complexity. This rule also addresses 

specific concerns raised in public 

comments on recent rules by proposing 

a revised de minimis rule for ‘‘600 

series’’ items. Moreover, this rule 

proposes additional conforming changes 

that are necessary to implement the 

Export Control Reform Initiative, but 

also would affect items currently subject 

to the EAR, such as changes to reporting 

thresholds for the Automated Export 

System. Finally, in response to the 

President’s directive in Executive Order 

13563, which directed agencies to 

conduct retrospective reviews of 

existing regulations, this rule proposes 

revisions to license exceptions for 

government uses and temporary exports 

that streamline and update unduly 

complex or outmoded provisions in 

addition to broadening certain 

provisions to implement Export Control 

Reform. 

In practice, the greatest impact of this 

rule on small entities would likely be 

reduced administrative costs and 

reduced delay for exports of items that 

are now on the USML but would 

become subject to the EAR. By 

streamlining provisions of the EAR, BIS 

would make it easier to understand and 

comply with certain license exceptions, 

which in turn would allow exporters to 

avail themselves of these exceptions and 

reduce their licensing and compliance 

burdens. This rule also proposes 

broadening license exceptions and 

extending license validity periods to 

correspond to those available under the 

ITAR to avoid imposing burdens on 

exporters as a result of their items’ 

changing jurisdictional status. These 

proposed changes may also reduce the 

burden small companies (and all other 

entities) who export non-‘‘600 series’’ 

items on the CCL. 

In addition, parts and components 

controlled under the ITAR remain under 

ITAR control when incorporated into 

foreign-made items, regardless of the 

significance or insignificance of the 

item, discouraging foreign buyers from 

incorporating such U.S. content. The 

availability of a de minimis rule under 

the EAR may reduce the incentive for 

foreign manufacturers to design out or 

avoid purchasing U.S.-origin parts and 

components. In response to comments 

on the July 15 rule, this rule proposes 

a simpler method of calculating de 

minimis value for ‘‘600 series’’ content. 

A simpler method of calculating de 

minimis reduces the likelihood of 

foreign manufacturers’ designing out 

U.S.-origin parts and components, thus 

increasing the ability of U.S. firms to 

compete in the global marketplace and 

to strengthen the U.S. defense industrial 

base. 

In spite of the benefits detailed above, 

the need for exporters to change 

established licensing and compliance 

procedures as their items change 

jurisdiction will likely incur short-term 

costs (e.g., for database changes). This 

rule proposes an implementation plan 

to mitigate these short-term costs by 

allowing affected entities to continue 

operating under their existing 

authorizations and procedures over a 

two-year transition period should they 

choose to do so, while allowing the 

option to transition as of the effective 

date of the final rule. 

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 

Regulations 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 734 

Administrative practice and 

procedure, Exports, Inventions and 

patents, Research, Science and 

technology. 

15 CFR Part 736 

Exports. 

15 CFR Parts 740, 750 and 758 

Administrative practice and 

procedure, Exports, Reporting and 

recordkeeping requirements. 

15 CFR Part 742 

Exports, Terrorism. 

15 CFR Part 743 

Administrative practice and 

procedure, Reporting and recordkeeping 

requirements. 

15 CFR Part 744 

Exports, Reporting and recordkeeping 

requirements, Terrorism. 

15 CFR Part 762 

Administrative practice and 

procedure, Business and industry, 

Confidential business information, 

Exports, Reporting and recordkeeping 

requirements. 

15 CFR Part 764 

Administrative practice and 

procedure, Exports, Law enforcement, 

Penalties. 

15 CFR Part 774 

Exports, Reporting and recordkeeping 

requirements. 

For the reasons stated in the 

preamble, the Export Administration 

Regulations (15 CFR parts 730 through 

774) are proposed to be amended as 

follows: 

PART 734—[AMENDED] 

1. The authority citations paragraph 

for part 734 continues to read as 

follows: 

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

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

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

FR 54079, 3 CFR, 1996 Comp., p. 219; E.O. 

13026, 61 FR 58767, 3 CFR, 1996 Comp., p. 

228; E.O. 13222, 66 FR 44025, 3 CFR, 2001 


TKELLEY on DSK3SPTVN1PROD with PROPOSALS3
37532 Federal Register / Vol. 77, No. 120 / Thursday, June 21, 2012 / Proposed Rules 

Comp., p. 783; Notice of August 12, 2011, 76 

FR 50661 (August 16, 2011); Notice of 

November 9, 2011, 76 FR 70319 (November 

10, 2011). 

2. Section 734.3 is amended by 

adding a new paragraph (b)(1)(vi) to 

read as follows: 

§ 734.3 Items subject to the EAR. 

* * * * * 

(b) * * * 

(vi) Bureau of Alcohol, Tobacco, 

Firearms and Explosives. Unless 

otherwise noted, all references to the 

United States Munitions List (‘‘USML’’) 

are to the list of defense articles that are 

controlled for purposes of export and 

temporary import pursuant to the 

International Traffic in Arms 

Regulations (‘‘ITAR’’), 22 CFR Parts 120 

et seq., and not to the list of defense 

articles on the USML that are controlled 

by the Bureau of Alcohol, Tobacco, 

Firearms and Explosives (ATF) for 

purpose of permanent import under its 

regulations at 27 CFR Part 447. Pursuant 

to section 38(a)(1) of the Arms Export 

Control Act (AECA), 22 U.S.C. § 2779, 

all defense articles controlled for export 

or import are part of the ‘‘USML’’ under 

the AECA. For the sake of clarity, the 

list of defense articles controlled by 

ATF for purposes of permanent import 

are on the United States Munitions 

Import List (USMIL). The transfer of 

defense articles from the ITAR’s USML 

to the EAR’s CCL for purposes of export 

controls does not affect the list of 

defense articles controlled on the 

USMIL under the AECA for purposes of 

permanent import controls. 

* * * * * 

3. Section 734.4 is amended by 

redesignating paragraph (a)(6) as 

paragraph (a)(7), and by adding a new 

paragraph (a)(6) to read as follows: 

§ 734.4 De minimis U.S. content. 

(a) Items for which there is no de 

minimis level. 

* * * * * 

(6) There is no de minimis level for 

foreign-made items that incorporate 

U.S.-origin ‘‘600 series’’ items when 

destined for a country subject to a U. S. 

arms embargo (see § 740.2(a)(12) of the 

EAR). 

* * * * * 

PART 736—[AMENDED] 

4. The authority citations paragraph 

for part 736 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. 2151 note; E.O. 

12938, 59 FR 59099, 3 CFR, 1994 Comp., p. 

950; E.O. 13020, 61 FR 54079, 3 CFR, 1996 

Comp., p. 219; E.O. 13026, 61 FR 58767, 3 

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

44025, 3 CFR, 2001 Comp., p. 783; E.O. 

13338, 69 FR 26751, 3 CFR, 2004 Comp., p. 

168; Notice of August 12, 2011, 76 FR 50661 

(August 16, 2011); Notice of November 9, 

2011, 76 FR 70319 (November 10, 2011). 

5. Section 736.2 is amended by 

revising paragraph (b)(3) to read as 

follows: 

§ 736.2 General prohibitions and 

determination of applicability. 

* * * * * 

(3) General Prohibition Three— 

Reexport and Export From Abroad of 

the Foreign-Produced Direct Product of 

U.S. Technology and Software (ForeignProduced Direct Product Reexports) 

* * * * * 

(iv) Additional country scope of 

prohibition for ‘‘600 series’’ items. You 

may not, except as provided in 

paragraphs (b)(3)(vi) or (vii) of this 

section, reexport any ‘‘600 series’’ item 

subject to the scope of this General 

Prohibition 3 to a destination in Country 

Groups D:1, D:3, D:4, or E:1 (See 

Supplement No.1 to part 740 of the 

EAR) or to a U. S. arms embargoed 

country (see § 740.2(a)(12) of the EAR). 

(v) Product scope of foreign-made 

items in the ‘‘600 series’’ subject to 

prohibition. This General Prohibition 3 

applies if a ‘‘600 series’’ item meets 

either the conditions defining the direct 

product of technology or the conditions 

defining the direct product of a plant in 

paragraph (b)(3)(v)(A) or (B) of this 

section: 

(A) Conditions defining direct product 

of technology for ‘‘600 series’’ items. 

Foreign-made ‘‘600 series’’ items are 

subject to this General Prohibition 3 if 

the foreign-made items meet both of the 

following conditions: 

(1) They are the direct product of 

technology or software that is in the 

‘‘600 series’’ as designated on the 

applicable ECCN of the Commerce 

Control List at part 774 of the EAR, and 

(2) They are in the ‘‘600 series’’ as 

designated on the applicable ECCN of 

the Commerce Control List at part 774 

of the EAR. 

(B) Conditions defining direct product 

of a plant for ‘‘600 series’’ items. 

Foreign-made ‘‘600 series’’ items are 

also subject to this General Prohibition 

3 if they are the direct product of a 

complete plant or any major component 

of a plant if both of the following 

conditions are met: 

(1) Such plant or component is the 

direct product of technology that is in 

the ‘‘600 series’’ as designated on the 

applicable ECCN of the Commerce 

Control List at part 774 of the EAR, and 

(2) Such foreign-made direct products 

of the plant or component are in the 

‘‘600 series’’ as designated on the 

applicable ECCN of the Commerce 

Control List at part 774 of the EAR. 

(vi) License Exceptions. Each license 

exception described in part 740 of the 

EAR supersedes this General 

Prohibition 3 if all terms and conditions 

of a given exception are met and the 

restrictions in § 740.2 do not apply. 

(vii) ‘‘600 series’’ foreign-produced 

direct products of U.S. technology 

subject to this General Prohibition 3 do 

not require a license for reexport to the 

new destination unless the same item, if 

exported from the U.S. to the new 

destination, would have been prohibited 

or made subject to a license requirement 

by part 742, 744, 746, or 764 of the EAR. 

6. Supplement No. 1 to part 736 is 

amended by adding General Order No. 

5, to read as follows: 

Supplement No. 1 to Part 736 General 

Orders 

* * * * * 

General Order No. 5 

General Order No. 5 of [INSERT DATE OF 

PUBLICATION OF FINAL RULE]; 

Authorization for Items the President 

Determines No Longer Warrant Control 

Under the United States Munitions List 

(USML) 

(a) Continued use of DDTC authorizations 

for items that become subject to the EAR. 

Items the President has determined no longer 

warrant control under the USML will become 

subject to the EAR as rules that effect this 

transition are published and effective. 

Authorizations issued by the Directorate of 

Defense Trade Controls (DDTC) of the 

Department of State for transactions 

involving these items may continue in effect 

as specified by DDTC in [INSERT CITE TO 

STATE’S FINAL EXPORT CONTROL 

REFORM TRANSITION PLAN]. To use BIS 

authorizations for these items, exporters, 

reexporters, and transferors of such items 

may return DDTC licenses in accordance 

with § 123.22 of the ITAR or terminate 

Technical Assistance Agreements, 

Manufacturing License Agreements, or 

Distribution and Warehousing Agreements in 

accordance with § 124.6 of the ITAR and 

thereafter export, reexport, or transfer (incountry) such items under applicable 

provisions of the EAR. No transfer (incountry) may be made of an item exported 

under a DDTC authorization containing 

provisos or other limitations without a 

license issued by BIS unless (i) the transfer 

(in-country) is authorized by an EAR License 

Exception and the terms and conditions of 

the License Exception have been satisfied or 

(ii), no license would otherwise be required 

under the EAR to export or reexport the item 

to the new end user. 

(b) Voluntary Self-Disclosure. Parties to 

transactions involving transitioning items are 

cautioned to monitor closely their 

compliance with the EAR and the ITAR. 

Should a possible or actual violation of the 

EAR or ITAR, or of any license or 

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discovered, the person or persons involved 

are strongly encouraged to submit a 

Voluntary Self-Disclosure to the Office of 

Export Enforcement, in accordance with 

§ 764.5 of the EAR, or to DDTC, in 

accordance with § 127.12 of the ITAR, as 

appropriate. Permission from the Office of 

Exporter Services, in accordance with 

§ 764.5(f) of the EAR, to engage in further 

activities in connection with that item may 

also be necessary. 

(c) Method of disclosure. For violations 

involving items the President has determined 

no longer warrant control under the USML 

that occur or are discovered in the period 

during which DDTC allows continued use of 

State authorization for these items, 

disclosures and requests for permission to 

engage in further activities should be 

submitted to DDTC or BIS as appropriate. 

PART 740—[AMENDED] 

7. The authority citations paragraph 

for part 740 continues to read as 

follows: 

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

U.S.C. 1701 et seq.; 22 U.S.C. 7201 et seq.; 

E.O. 13026, 61 FR 58767, 3 CFR, 1996 Comp., 

p. 228; E.O. 13222, 66 FR 44025, 3 CFR, 2001 

Comp., p. 783; Notice of August 12, 2011, 76 

FR 50661 (August 16, 2011). 

8. Section 740.2 is amended by 

adding new paragraphs (a)(12), (a)(15) 

and (a)(16) to read as follows: 

§ 740.2 Restrictions on all license 

exceptions. 

(a) * * * 

(12) Items classified under the ‘‘600 

series’’ that are destined to, or were 

shipped from or manufactured in a 

country subject to a United States arms 

embargo (Afghanistan, Belarus, Burma, 

China, Cote d’Ivoire, Cuba, Cyprus, 

Democratic Republic of Congo, Eritrea, 

Fiji, Haiti, Iraq, Iran, Lebanon, Liberia, 

Libya, North Korea, Somalia, Sri Lanka, 

Sudan, Syria, Venezuela, Vietnam, 

Yemen, and Zimbabwe) may not be 

authorized under any license exception 

except by License Exception TMP under 

§ 740.9(a)(12) or License Exception BAG 

under § 740.14(h)(2) for exports to 

Afghanistan and Iraq, and License 

Exception GOV under § 740.11(b)(2)(ii). 

Note to paragraph (a)(12): Countries 

subject to U.S. arms embargoes are identified 

by the State Department through notices 

published in the Federal Register. The list of 

arms embargoed destinations in this 

paragraph is drawn from 22 CFR § 126.1 and 

State Department Federal Register notices 

related to arms embargoes (compiled at 

http://www.pmddtc.state.gov/ 

embargoed_countries/index.html) and will be 

amended when the State Department 

publishes subsequent notices. If there are any 

discrepancies between the list of countries in 

this paragraph and the countries identified 

by the State Department as subject to a U.S. 

arms embargo (in the Federal Register), the 

State Department’s list of countries subject to 

U.S. arms embargoes shall be controlling. 

* * * * * 

(15) Items classified under the ‘‘600 

series’’ are not eligible for any license 

exception, except to U.S. government 

end users under License Exception GOV 

(§ 740.11(b)), when they are destined to 

a country outside the countries listed in 

§ 740.20(c)(1) (License Exception STA) 

and are: 

(i) Major defense equipment sold 

under a contract in the amount of 

$14,000,000 or more; 

(ii) Other ‘‘600 series’’ items sold 

under a contract in the amount of 

$50,000,000 or more; or 

(iii) Firearms controlled under ECCN 

0A601 under a contract in the amount 

of $1,000,000 or more. 

(16) Items classified under the ‘‘600 

series’’ are not eligible for any license 

exception, except to U.S. government 

end users under License Exception GOV 

(§ 740.11(b)), when they are destined to 

a country listed in § 740.20(c)(1) 

(License Exception STA) and are: 

(i) Major defense equipment sold 

under a contract in the amount of 

$25,000,000; 

(ii) Other ‘‘600 series’’ items sold 

under a contract in the amount of 

$100,000,000 or more; or 

(iii) Firearms controlled under ECCN 

0A601 under a contract in the amount 

of $1,000,000 or more. 

9. Section 740.9 is amended by 

revising paragraphs (a) and (b) to read 

as follows: 

§ 740.9 Temporary imports, exports, and 

reexports (TMP). 

(a) Temporary exports, reexports, and 

transfers (in-country). License Exception 

TMP authorizes exports, reexports, and 

transfers (in-country) of items for 

temporary use abroad (including use in 

or above international waters) subject to 

the conditions specified in this 

paragraph (a). No item may be exported 

or reexported under this paragraph (a) if 

an order to acquire the item has been 

received before shipment; with prior 

knowledge that the item will stay 

abroad beyond the terms of this License 

Exception; or when the item is for 

subsequent lease or rental abroad. 

(1) Tools of trade. Exports, reexports, 

or transfers (in-country) of commodities 

and software as tools of trade for use by 

the exporter or employees of the 

exporter may be made only to 

destinations other than Country Group 

E:2, Sudan or Syria; for Sudan, see 

paragraph (a)(2) of this section. The 

tools of trade must remain under the 

‘‘effective control’’ of the exporter or the 

exporter’s employee. Eligible items are 

usual and reasonable kinds and 

quantities of tools of trade for use in a 

lawful enterprise or undertaking of the 

exporter. Tools of trade include, but are 

not limited to, equipment and software 

as is necessary to commission or service 

items, provided that the equipment or 

software is appropriate for this purpose 

and that all items to be commissioned 

or serviced are of foreign origin, or if 

subject to the EAR, have been lawfully 

exported or reexported. Tools of trade 

may accompany the individual 

departing from the United States or may 

be shipped unaccompanied within one 

month before the individual’s departure 

from the United States, or at any time 

after departure. Software used as a tool 

of trade must be protected against 

unauthorized access. Examples of 

security precautions to help prevent 

unauthorized access include the 

following: 

(A) Use of secure connections, such as 

Virtual Private Network connections, 

when accessing IT networks for 

activities that involve the transmission 

and use of the software authorized 

under this license exception; 

(B) Use of password systems on 

electronic devices that store the 

software authorized under this license 

exception; and 

(C) Use of personal firewalls on 

electronic devices that store the 

software authorized under this license 

exception. 

(2) Sudan: Tools of Trade. (i) 

Permissible users. A non-governmental 

organization or an individual staff 

member, employee or contractor of such 

organization traveling to Sudan at the 

direction or with the knowledge of such 

organization may export, reexport, or 

transfer (in-country) under this 

paragraph (a)(2). 

(ii) Authorized purposes. Any tools of 

trade exported, reexported, or 

transferred (in-country) under this 

paragraph must be used to support 

activities to implement the Doha 

Document for Peace in Darfur; to 

provide humanitarian or development 

assistance in Sudan, to support 

activities to relieve human suffering in 

Sudan, or to support the actions in 

Sudan for humanitarian or development 

purposes; by an organization authorized 

by the Department of the Treasury, 

Office of Foreign Assets Control (OFAC) 

pursuant to 31 CFR 538.521 in support 

of its OFAC-authorized activities; or to 

support the activities to relieve human 

suffering in Sudan in areas that are 

exempt from the Sudanese Sanctions 

Regulations by virtue of the Darfur 

Peace and Accountability Act and 

Executive Order 13412. 

(iii) Method of export and 

maintenance of control. The tools of 


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37534 Federal Register / Vol. 77, No. 120 / Thursday, June 21, 2012 / Proposed Rules 

trade must accompany (either hand 

carried or as checked baggage) a traveler 

who is a permissible user of this 

provision or be shipped or transmitted 

to such user by a method reasonably 

calculated to assure delivery to the 

permissible user of this provision. The 

permissible user of this provision must 

maintain ‘‘effective control’’ of the tools 

of trade while in Sudan. 

(iv) Eligible items. The only tools of 

trade that may be exported to Sudan 

under this paragraph (a)(2) are: 

(A) Commodities controlled under 

ECCNs 4A994.b (not exceeding an 

adjusted peak performance of 0.008 

weighted teraFLOPS), 4A994.d, 4A994.e 

(other than industrial controllers for 

chemical processing), 4A994.g and 

4A994.h and ‘‘software’’ controlled 

under ECCNs 4D994 or 5D992 to be 

used on such commodities. Software 

must be loaded onto such commodities 

prior to export or reexport or be 

exported or reexported solely for 

servicing or in-kind replacement of 

legally exported or reexported software. 

All such software must remain loaded 

on such commodities while in Sudan; 

(B) Telecommunications equipment 

controlled under ECCN 5A991 and 

‘‘software’’ controlled under ECCN 

5D992 to be used in the operation of 

such equipment. Software must be 

loaded onto such equipment prior to 

export or be exported or reexported 

solely for servicing or in-kind 

replacement of legally exported or 

reexported software. All such software 

must remain loaded on such equipment 

while in Sudan; 

(C) Global positioning systems (GPS) 

or similar satellite receivers controlled 

under ECCN 7A994; and 

(D) Parts and components that are 

controlled under ECCN 5A992, that are 

installed with, or contained in, 

commodities in paragraphs (a)(2)(iv)(A) 

and (B) of this section and that remain 

installed with or contained in such 

commodities while in Sudan. 

(3) Tools of trade: temporary exports 

and reexports of technology by U.S. 

persons. (i) This paragraph authorizes 

usual and reasonable kinds and 

quantities of technology for use in a 

lawful enterprise or undertaking of a 

U.S. person to destinations other than 

Country Group E:2, Sudan or Syria. 

Only U.S. persons or their employees 

traveling or on temporary assignment 

abroad may export, reexport, transfer 

(in-country) or receive technology under 

the provisions of this paragraph (a)(3). 

(A) Because this paragraph (a)(3) does 

not authorize any new release of 

technology, employees traveling or on 

temporary assignment abroad who are 

not U.S. persons may only receive under 

TMP such technology abroad that they 

are already eligible to receive through a 

current license, a license exception 

other than TMP, or because no license 

is required; 

(B) A U.S. employer of individuals 

who are not U.S. persons must 

demonstrate and document for 

recordkeeping purposes the reason that 

the technology is needed by such 

employees in their temporary business 

activities abroad on behalf of the U.S. 

person employer, prior to using this 

paragraph (a)(3). This documentation 

must be created and maintained in 

accordance with the recordkeeping 

requirements of part 762 of the EAR; 

and 

(C) The U.S. person must retain 

supervision over the technology that has 

been authorized for export or reexport 

under these or other provisions. 

(ii) The exporting, reexporting, or 

transferring party and the recipient of 

the technology must take security 

precautions to protect against 

unauthorized release of the technology 

while the technology is being shipped 

or transmitted and used overseas. 

Examples of security precautions to 

help prevent unauthorized access 

include the following: 

(A) Use of secure connections, such as 

Virtual Private Network connections, 

when accessing IT networks for email 

and other business activities that 

involve the transmission and use of the 

technology authorized under this 

license exception; 

(B) Use of password systems on 

electronic devices that will store the 

technology authorized under this 

license exception; and 

(C) Use of personal firewalls on 

electronic devices that will store the 

technology authorized under this 

license exception. 

(iii) Technology authorized under 

these provisions may not be used for 

foreign production purposes or for 

technical assistance unless authorized 

by BIS. 

(iv) Encryption technology controlled 

by ECCN 5E002 is ineligible for this 

license exception. 

(4) Kits consisting of replacement 

parts. Kits consisting of replacement 

parts may be exported, reexported, or 

transferred (in-country) to all 

destinations except Country Group E:2 

(see Supplement No. 1 to part 740), 

provided that: 

(i) The parts would qualify for 

shipment under paragraph (a)(4)(iii) of 

this section if exported as one-for-one 

replacements; 

(ii) The kits remain under effective 

control of the exporter or an employee 

of the exporter; and 

(iii) All parts in the kit are returned, 

except that one-for-one replacements 

may be made in accordance with the 

requirements of License Exception RPL 

and the defective parts returned (see 

‘‘parts’’, § 740.10(a) of this part). 

(5) Exhibition and demonstration. 

This paragraph (a)(5) authorizes exports, 

reexports, and transfers (in-country) of 

commodities and software for exhibition 

or demonstration in all destinations 

except Country Group E:1 (see 

Supplement No. 1 to this part) provided 

that the exporter maintains ownership 

of the commodities and software while 

they are abroad and provided that the 

exporter, an employee of the exporter, 

or the exporter’s designated sales 

representative retains ‘‘effective 

control’’ over the commodities and 

software while they are abroad. The 

commodities and software may not be 

used when abroad for more than the 

minimum extent required for effective 

demonstration. The commodities and 

software may not be exhibited or 

demonstrated at any one site more than 

120 days after installation and 

debugging, unless authorized by BIS. 

However, before or after an exhibition or 

demonstration, pending movement to 

another site, return to the United States 

or the foreign reexporter, or BIS 

approval for other disposition, the 

commodities and software may be 

placed in a bonded warehouse or a 

storage facility provided that the 

exporter retains ‘‘effective control’’ over 

their disposition. The export 

documentation for this type of 

transaction must show the exporter as 

ultimate consignee, in care of the person 

who will have control over the 

commodities and software abroad. 

(6) Inspection and calibration. 

Commodities to be inspected, tested, 

calibrated, or repaired abroad may be 

exported and reexported under this 

paragraph (a)(6) to all destinations 

except Country Group E:1. 

(7) Containers. Containers for which 

another license exception is not 

available and that are necessary for 

shipment of commodities may be 

exported, reexported, and transferred 

(in-country) under this paragraph (a)(7). 

However, this paragraph does not 

authorize the export of the container’s 

contents, which, if not exempt from 

licensing, must be separately authorized 

for export under either a license 

exception or a license. 

(8) Assembly in Mexico. Commodities 

may be exported to Mexico under 

Customs entries that require return to 

the United States after processing, 

assembly, or incorporation into end 

products by companies, factories, or 

facilities participating in Mexico’s inVerDate Mar<15>2010 19:13 Jun 20, 2012 Jkt 226001 PO 00000 Frm 00012 Fmt 4701 Sfmt 4702 E:\FR\FM\21JNP3.SGM 21JNP3

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bond industrialization program 

(Maquiladora) under this paragraph 

(a)(8), provided that all resulting endproducts (or the commodities 

themselves) are returned to the United 

States. 

(9) News media. (i) Commodities 

necessary for news-gathering purposes 

(and software necessary to use such 

commodities) may be temporarily 

exported or reexported for accredited 

news media personnel (i.e., persons 

with credentials from a news gathering 

or reporting firm) to Cuba, North Korea, 

Sudan, or Syria (see Supplement No. 1 

to part 740) if the commodities: 

(A) Are retained under ‘‘effective 

control’’ of the exporting news gathering 

firm in the country of destination; 

(B) Remain in the physical possession 

of the news media personnel in the 

country of destination. The term 

physical possession for purposes of this 

paragraph (a)(9) means maintaining 

effective measures to prevent 

unauthorized access (e.g., securing 

equipment in locked facilities or hiring 

security guards to protect the 

equipment); and 

(C) Are removed with the news media 

personnel at the end of the trip. 

(ii) When exporting under this 

paragraph (a)(9) from the United States, 

the exporter must email a copy of the 

packing list or similar identification of 

the exported commodities, to 

bis.compliance@bis.doc.gov specifying 

the destination and estimated dates of 

departure and return. The Office of 

Export Enforcement (OEE) may spot 

check returns to assure that the 

provisions of this paragraph (a)(9) are 

being used properly. 

(iii) Commodities or software 

necessary for news-gathering purposes 

that accompany news media personnel 

to all other destinations shall be 

exported or reexported under paragraph 

(a)(1), tools of trade, of this section if 

owned by the news gathering firm, or if 

they are personal property of the 

individual news media personnel. Note 

that paragraphs (a)(1), tools of trade and 

(a)(9), news media, of this section do not 

preclude independent accredited 

contract personnel, who are under 

control of news gathering firms while on 

assignment, from using these 

provisions, provided that the news 

gathering firm designates an employee 

of the contract firm to be responsible for 

the equipment. 

(10) Temporary exports to a U.S. 

person’s foreign subsidiary, affiliate, or 

facility abroad. Components, parts, 

tools, accessories, or test equipment 

exported by a U.S. person to a 

subsidiary, affiliate, or facility owned or 

controlled by the U.S. person, if the 

components, parts, tools, accessories, or 

test equipment are to be used to 

manufacture, assemble, test, produce, or 

modify items, provided that such 

components, parts, tools, accessories or 

test equipment are not transferred (incountry) or reexported from such 

subsidiary, affiliate, or facility, alone or 

incorporated into another item, without 

prior authorization by BIS. 

(11) U.S. persons. For purposes of this 

section 740.9, a U.S. person is defined 

as follows: an individual who is a 

citizen of the United States, an 

individual who is a lawful permanent 

resident as defined by 8 U.S.C. 

1101(a)(2) or an individual who is a 

protected individual as defined by 8 

U.S.C. 1324b(a)(3). U.S. person also 

means any juridical person organized 

under the laws of the United States, or 

any jurisdiction within the United 

States (e.g., corporation, business 

association, partnership, society, trust, 

or any other entity, organization or 

group that is incorporated to do 

business in the United States). 

(12) Body armor. (i) Exports to 

countries not identified in 

§ 740.2(a)(12). U.S. persons may 

temporarily export one set of body 

armor classified under ECCN 1A613.d to 

countries not identified in 

§ 740.2(a)(12), provided that: 

(A) A declaration by the U.S. person 

and an inspection by a customs officer 

are made; 

(B) The body armor is with the U.S. 

person’s baggage or effects, whether 

accompanied or unaccompanied (but 

not mailed); and 

(C) The body armor is for that 

person’s exclusive use and not for 

reexport or other transfer of ownership. 

(ii) Exports to Afghanistan or Iraq. 

U.S. persons may temporarily export 

one set of body armor classified under 

ECCN 1A613.d to Afghanistan or Iraq, 

provided that: 

(A) A declaration by the U.S. person 

and an inspection by a customs officer 

are made; 

(B) The body armor is with the U.S. 

person’s baggage or effects, whether 

accompanied or unaccompanied (but 

not mailed); 

(C) The body armor is for that 

person’s exclusive use and not for 

reexport or other transfer of ownership; 

and 

(D) For temporary exports to Iraq, the 

U.S. person utilizing the license 

exception is either a person affiliated 

with the U.S. Government traveling on 

official business or is a person not 

affiliated with the U.S. Government but 

traveling to Iraq under a direct 

authorization by the Government of Iraq 

and engaging in humanitarian activities 

for, on behalf of, or at the request of the 

Government of Iraq. 

(iii) Body armor controlled under 

ECCN 1A005 is eligible for this license 

exception under paragraph (a)(1) of this 

section. 

(13) Destinations. Destination 

restrictions apply to temporary exports 

to and for use on any vessel, aircraft or 

territory under ownership, control, 

lease, or charter by any country 

specified in any authorizing paragraph 

of this section, or any national thereof. 

(14) Return or disposal of items. All 

items exported, reexported, or 

transferred (in-country) under these 

provisions must, if not consumed or 

destroyed in the normal course of 

authorized temporary use abroad, be 

returned as soon as practicable but no 

later than one year after the date of 

export, reexport, or transfer to the 

United States or other country from 

which the items were so transferred. 

Items not returned shall be disposed of 

or retained in one of the following ways: 

(i) Permanent export or reexport. An 

exporter or reexporter who wants to sell 

or otherwise dispose of the items 

abroad, except as permitted by this or 

other applicable provision of the EAR, 

must apply for a license in accordance 

with §§ 748.1, 748.4 and 748.6 of the 

EAR. (Part 748 of the EAR contains for 

more information about license 

applications.) The application must be 

supported by any documents that would 

be required in support of an application 

for export license for shipment of the 

same items directly from the United 

States to the proposed destination. 

(ii) Use of a license. An outstanding 

license may also be used to dispose of 

items covered by the provisions of this 

paragraph (a), provided that the 

outstanding license authorizes direct 

shipment of the same items to the same 

new ultimate consignee in the new 

country of destination. 

(iii) Authorization to retain item 

abroad beyond one year. An exporter 

who wants to retain an item abroad 

beyond one year must apply for a 

license in accordance with §§ 748.1, 

748.4 and 748.6 of the EAR to BIS 90 

days prior to the expiration of the oneyear period. The application must 

include the name and address of the 

exporter, the date the items were 

exported, a brief product description, 

and the justification for the extension. If 

BIS approves the extension, the exporter 

will receive authorization for a one-time 

extension not to exceed six months. BIS 

normally will not allow an extension for 

items that have been abroad more than 

one year, nor will a second six-month 

extension be authorized. Any request for 

retaining the items abroad for a period 


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exceeding 18 months must be made in 

accordance with the requirements of 

paragraph (a)(14)(i) of this section. 

(b) Exports of items temporarily in the 

United States. 

Note 1 to paragraph (b): A commodity 

withdrawn from a bonded warehouse in the 

United States under a ‘withdrawal for export’ 

customs entry is considered as ‘moving in 

transit’. It is not considered as ‘moving in 

transit’ if it is withdrawn from a bonded 

warehouse under any other type of customs 

entry or if its transit has been broken for a 

processing operation, regardless of the type 

of customs entry. 

Note 2 to paragraph (b): Items shipped on 

board a vessel or aircraft and passing 

through the United States from one foreign 

country to another may be exported without 

a license provided that (a) while passing in 

transit through the United States, they have 

not been unladen from the vessel or aircraft 

on which they entered, and (b) they are not 

originally manifested to the United States. 

Note 3 to paragraph (b): A shipment 

originating in Canada or Mexico that 

incidentally transits the United States en 

route to a delivery point in the same country 

does not require a license. 

Note 4 to paragraph (b): A shipment by air 

or vessel from one location in the United 

States to another location in the United 

States via a foreign country does not require 

a license. 

Note 5 to paragraph (b): All references to 

the United States Munitions List (‘‘USML’’) in 

this rule are to the list of defense articles that 

are controlled for purposes of export or 

temporary import pursuant to the 

International Traffic in Arms Regulations 

(‘‘ITAR’’), 22 CFR Parts 120 et seq., and not 

to the list of defense articles on the USML 

that are controlled by the Bureau of Alcohol, 

Tobacco, Firearms and Explosives (ATF) for 

purpose of permanent import under its 

regulations at 27 CFR Part 447. Pursuant to 

section 38(a)(1) of the Arms Export Control 

Act (AECA), 22 U.S.C. § 2779, all defense 

articles controlled for export or import are 

part of the ‘‘USML’’ under the AECA. For the 

sake of clarity, the list of defense articles 

controlled by ATF for purposes of permanent 

import are on the United States Munitions 

Import List (USMIL). The transfer of defense 

articles from the ITAR’s USML to the EAR’s 

CCL for purposes of export controls does not 

affect the list of defense articles controlled on 

the USMIL under the AECA for purposes of 

permanent import controls. 

(1) Items moving in transit through 

the United States. Subject to the 

following conditions, the provisions of 

paragraph (b)(1) authorize export of 

items moving in transit through the 

United States under a Transportation 

and Exportation (T.&E.) customs entry 

or an Immediate Exportation (I.E.) 

customs entry made at a U.S. Customs 

and Border Protection Office. 

(i) Items controlled for national 

security (NS) reasons, nuclear 

proliferation (NP) reasons, or chemical 

and biological weapons (CB) reasons 

may not be exported to Country Group 

D:1, 2, or 3 (see Supplement No. 1 to 

part 740), respectively, under this 

paragraph (b)(1). 

(ii) Items may not be exported to 

Country Group E:1 under this section. 

(iii) The following may not be 

exported from the United States under 

this paragraph (b)(1): 

(A) Commodities shipped to the 

United States under an International 

Import Certificate, Form BIS–645P; 

(B) Chemicals controlled under ECCN 

1C350; or 

(C) Horses for export by sea (refer to 

short supply controls in part 754 of the 

EAR). 

(iv) The authorization to export in 

paragraph (b)(1) shall apply to all 

shipments from Canada moving in 

transit through the United States to any 

foreign destination, regardless of the 

nature of the commodities or software or 

their origin, notwithstanding any other 

provision of paragraph (b)(1). 

(2) Items imported for marketing, or 

for display at U.S. exhibitions or trade 

fairs. Subject to the following 

conditions, the provisions of this 

paragraph (b)(2) authorize the export of 

items that were imported into the 

United States for marketing, or for 

display at an exhibition or trade fair and 

were either entered under bond or 

permitted temporary free import under 

bond providing for their export and are 

being exported in accordance with the 

terms of that bond. 

(i) Items may be exported to the 

country from which imported into the 

United States. However, items originally 

imported from Cuba may not be 

exported unless the U.S. Government 

had licensed the import from that 

country. 

(ii) Items may be exported to any 

destination other than the country from 

which imported except: 

(A) Items imported into the United 

States under an International Import 

Certificate; 

(B) Exports to Country Group E:1 (see 

Supplement No. 1 to part 740); or 

(C) Exports to Country Group D:1, 2, 

or 3 (see Supplement No. 1 to part 740) 

of items controlled for national security 

(NS) reasons, nuclear nonproliferation 

(NP) reasons, or chemical and biological 

weapons (CB) reasons, respectively. 

(3) Return of foreign-origin items. A 

foreign-origin item may be returned 

under this license exception to the 

country from which it was imported if 

its characteristics and capabilities have 

not been enhanced while in the United 

States, except that no foreign-origin 

items may be returned to Cuba. 

(4) Return of shipments refused entry. 

Shipments of items refused entry by the 

U.S. Customs and Border Protection, the 

Food and Drug Administration, or other 

U.S. Government agency may be 

returned to the country of origin, except 

to: 

(i) A destination in Cuba; or 

(ii) A destination from which the 

shipment has been refused entry 

because of the Foreign Assets Control 

Regulations of the Treasury Department, 

unless such return is licensed or 

otherwise authorized by the Treasury 

Department, Office of Foreign Assets 

Control (31 CFR parts 500–599). 

10. Section 740.10 is amended: 

a. By removing and reserving 

paragraph (b)(2)(iii); 

b. By removing and reserving 

paragraph (b)(3)(ii); and 

c. By revising paragraph (a)(3)(ii), to 

read as follows: 

§ 740.10 License Exception Servicing and 

replacement of parts and equipment (RPL). 

(a) * * * 

(3) * * * 

(ii) No ‘‘parts,’’ ‘‘components,’’ 

‘‘accessories,’’ or ‘‘attachments’’ may be 

exported to be held abroad as spares for 

future use, unless the value of the 

‘‘parts,’’ ‘‘components,’’ ‘‘accessories,’’ 

or ‘‘attachments’’ is less than $500 per 

shipment and no more than 24 

shipments per year are made to each 

approved end user. Replacements may 

be exported to replace spares that were 

authorized to accompany the export of 

equipment or other end items, as those 

spares are used in the repair of the 

equipment or other end item. This 

allows maintenance of the stock of 

spares at a consistent level as the parts, 

components, accessories, or attachments 

are used. 

* * * * * 

11. Section 740.11 is revised to read 

as follows: 

§ 740.11 Governments, International 

Organizations, International Inspections 

under the Chemical Weapons Convention, 

and the International Space Station (GOV). 

This License Exception authorizes 

exports and reexports for international 

nuclear safeguards; U.S. government 

agencies or personnel; agencies of 

cooperating governments; international 

inspections under the Chemical 

Weapons Convention; and the 

International Space Station. 

(a) International Safeguards. (1) 

Scope. The International Atomic Energy 

Agency (IAEA) is an international 

organization that establishes and 

administers safeguards, including 

Additional Protocols, designed to 

ensure that special nuclear materials 


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and other related nuclear facilities, 

equipment, and material are not 

diverted from peaceful purposes to nonpeaceful purposes. 

Euratom is an international 

organization of European countries with 

headquarters in Luxembourg. Euratom 

establishes and administers safeguards 

designed to ensure that special nuclear 

materials and other related nuclear 

facilities, equipment, and material are 

not diverted from peaceful purposes to 

non-peaceful purposes. This paragraph 

(a) authorizes exports and reexports of 

commodities or software to the IAEA 

and Euratom, and reexports by IAEA 

and Euratom for official international 

safeguard use, as follows: 

(i) Commodities or software 

consigned to the IAEA at its 

headquarters in Vienna, Austria or its 

field offices in Toronto, Ontario, Canada 

or in Tokyo, Japan for official 

international safeguards use. 

(ii) Commodities or software 

consigned to the Euratom Safeguards 

Directorate in Luxembourg, Luxembourg 

for official international safeguards use. 

(iii) Commodities or software 

consigned to IAEA or Euratom may be 

reexported to any country for IAEA or 

Euratom international safeguards use 

provided that IAEA or Euratom 

maintains control of or otherwise 

safeguards the commodities or software 

and returns the commodities or software 

to the locations described in paragraphs 

(a)(1)(i) and (a)(1)(ii) of this section 

when they become obsolete, are no 

longer required, or are replaced. 

(iv) Commodity or software shipments 

may be made by persons under direct 

contract with IAEA or Euratom, or by 

Department of Energy National 

Laboratories as directed by the 

Department of State or the Department 

of Energy. 

(v) The monitoring functions of IAEA 

and Euratom are not subject to the 

restrictions on prohibited safeguarded 

nuclear activities described in 

§ 744.2(a)(3) of the EAR. 

(vi) When commodities or software 

originally consigned to IAEA or 

Euratom are no longer in IAEA or 

Euratom official safeguards use, such 

commodities may be disposed of by 

destruction or by reexport or transfer in 

accordance with the EAR. 

(2) Restrictions. (i) Items on the 

Sensitive List (see Supplement No. 6 to 

part 774) may not be exported or 

reexported under this paragraph (a), 

except to the countries listed in 

§ 740.20(c)(1) (License Exception STA). 

(ii) Items on the Very Sensitive List 

(see Supplement No. 7 to part 774) may 

not be exported or reexported under this 

paragraph (a). 

(iii) Encryption items controlled for EI 

reasons under ECCNs 5A002, 5D002, or 

5E002 may not be exported or 

reexported under this paragraph (a). 

(iv) Without prior authorization from 

the Bureau of Industry and Security, 

nationals of countries in Country Group 

E:1 may not physically or 

computationally access computers that 

have been enhanced by ‘‘electronic 

assemblies,’’ which have been exported 

or reexported under License Exception 

GOV and have been used to enhance 

such computers by aggregation of 

processors so that the APP of the 

aggregation exceeds the APP parameter 

set forth in ECCN 4A003.b. of the 

Commerce Control List in Supplement 

No. 1 to part 774 of the EAR. 

(v) ‘‘600 series’’ items may not be 

exported or reexported under this 

paragraph (a), except to the countries 

listed in § 740.20(c)(1) (License 

Exception STA). 

(iv) Technology or software 

prohibited by Supplement No. 4 to this 

part may not be exported or reexported 

under this paragraph (a). 

(b) United States Government. (1) 

Scope. The provisions of paragraph (b) 

authorize exports and reexports to 

personnel and agencies of the U.S. 

Government and certain exports by the 

Department of Defense. ‘‘Agency of the 

U.S. Government’’ includes all civilian 

and military departments, branches, 

missions, government-owned 

corporations, and other agencies of the 

U.S. Government, but does not include 

such national agencies as the American 

Red Cross or international organizations 

in which the United States participates 

such as the Organization of American 

States. Therefore, shipments may not be 

made to these non-government national 

or international agencies, except as 

provided in paragraph (b)(2)(i) of this 

section for U.S. representatives to these 

organizations. 

(2) Eligibility. (i) Items for personal 

use by personnel and agencies of the 

U.S. Government. This provision is 

available for items in quantities 

sufficient only for the personal use of 

members of the U.S. Armed Forces or 

civilian personnel of the U.S. 

Government (including U.S. 

representatives to public international 

organizations), and their immediate 

families and household employees. 

Items for personal use include 

household effects, food, beverages, and 

other daily necessities. 

(ii) Exports, reexports, and transfers 

made by or consigned to a department 

or agency of the U.S. Government. This 

paragraph authorizes exports, reexports, 

and transfers of items when made by or 

consigned to a department or agency of 

the U.S. Government solely for its 

official use or for carrying out any U.S. 

Government program with foreign 

governments or international 

organizations that is authorized by law 

and subject to control by the President 

by other means. This paragraph does not 

authorize a department or agency of the 

U.S. Government to make any export, 

reexport, or transfer that is otherwise 

prohibited by other administrative 

provisions or by statute. Contractor 

Support Personnel of a department or 

agency of the U.S. Government are 

eligible for this authorization when in 

the performance of their duties pursuant 

to the applicable contract or other 

official duties. ‘‘Contractor Support 

Personnel’’ for the purpose of this 

provision means those persons who 

provide administrative, managerial, 

scientific or technical support under 

contract to a U.S. Government 

department or agency (e.g., contractor 

employees of Federally Funded 

Research Facilities or Systems 

Engineering and Technical Assistance 

contractors). This authorization is not 

available when a department or agency 

of the U.S. Government acts as a 

transmittal agent on behalf of a non-U.S. 

Government person, either as a 

convenience or in satisfaction of 

security requirements. 

(iii) Exports, reexports and transfers 

made for or on behalf of a department 

or agency of the U.S. Government. 

(A) This paragraph authorizes exports, 

reexports and transfers of items solely 

for use by a department or agency of the 

U.S. Government, when: 

(1) The items are destined to a U.S. 

person; and 

(2) The item is exported, reexported, 

or transferred pursuant to a contract 

between the exporter and a department 

or agency of the U.S. Government; 

(B) This paragraph authorizes exports, 

reexports, and transfers of items to 

implement or support any U.S. 

Government cooperative program, 

project, agreement, or arrangement with 

a foreign government or international 

organization or agency that is 

authorized by law and subject to control 

by the President by other means, when: 

(1) The agreement is in force and in 

effect, or the arrangement is in 

operation; 

(2) The exporter, reexporter, or 

transferor obtains a written 

authorization from the Secretary or 

agency head of the U.S. Government 

department or agency responsible for 

the program, agreement, or arrangement, 

or his or her designee, authorizing the 

exporter, reexporter, or transferor to use 

this license exception. The written 

authorization must include the scope of 


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items to be shipped under this license 

exception; the end users and consignees 

of the items; and any restrictions on the 

export, reexport, or transfer (including 

any restrictions on the foreign release of 

technology); 

(3) The exporter, reexporter, or 

transferor has a contract with a 

department or agency of the U.S. 

Government for the provision of the 

items in furtherance of the agreement, or 

arrangement; and 

(4) The items being exported, 

reexported, or transferred are not 

controlled for CW or CB reasons; 

(C) This paragraph authorizes the 

temporary export, reexport, or transfer 

of an item in support of any foreign 

assistance or sales program authorized 

by law and subject to the control of the 

President by other means, when: 

(1) The item is provided pursuant to 

a contract between the exporter and a 

department or agency of the U.S. 

Government; and 

(2) The exporter, reexporter, or 

transferor obtains a written 

authorization from the Secretary or 

agency head of the U.S. Government 

department or agency responsible for 

the program, or his or her designee, 

authorizing the exporter, reexporter, or 

transferor to use this license exception. 

The written authorization must include 

the scope of items to be shipped under 

this license exception; the end users and 

consignees of the items; and any 

restrictions on the export, reexport, or 

transfer (including any restrictions on 

the foreign release of technology); 

(D) This paragraph authorizes the 

export of commodities or software at the 

direction of the U.S. Department of 

Defense for an end use in support of an 

Acquisition and Cross Servicing 

Agreement (ACSA), when: 

(1) The ACSA is between the U.S. 

Government and a foreign government 

or an international organization and is 

in force and in effect; 

(2) The exporter, reexporter, or 

transferor has a contract with the 

department or agency of the U.S. 

government in furtherance of the ACSA; 

and 

(3) The exporter, reexporter, or 

transferor obtains a written 

authorization from the Secretary or 

agency head of the U.S. Government 

department or agency responsible for 

the ACSA, or his or her designee, 

authorizing the exporter, reexporter, or 

transferor to use this license exception. 

The written authorization must include 

the scope of items to be shipped under 

this license exception; the end-users 

and consignees of the items; and any 

restrictions on the export, reexport, or 

transfer; 

(E) This paragraph authorizes the 

export, reexport, or transfer of an item 

to implement or support a program 

directed by the Secretary of Defense, 

with the concurrence of the Secretary of 

State, to build the capacity of: A foreign 

government’s national military forces in 

order for that country to conduct 

counterterrorist operations or 

participate in or support military and 

stability operations in which the U.S. 

Armed Forces are a participant; or a 

foreign country’s maritime security 

forces to conduct counterterrorism 

operations, when: 

(1) The program is in operation; 

(2) The exporter, reexporter, or 

transferor has a contract with a 

department or agency of the U.S. 

Government in furtherance of the 

program; and 

(3) The exporter, reexporter, or 

transferor obtains a written 

authorization from the Secretary or 

agency head of the U.S. Government 

department or agency authorized to 

implement the program, or his or her 

designee, authorizing the exporter, 

reexporter, or transferor to use this 

license exception. The written 

authorization must also include the 

scope of items to be shipped under this 

license exception; the end users and 

consignees of the items; and any 

restrictions on the export, reexport, or 

transfer (including any restrictions on 

the foreign release of technology); 

(F) This paragraph authorizes the 

export, reexport, or transfer of 

Government Furnished Equipment 

(GFE) made by a U.S. Government 

contractor, when: 

(1) The GFE will not be provided to 

any foreign person; and 

(2) The export, reexport, or transfer is 

pursuant to a contract with a 

department or agency of the U.S. 

Government. 

(G) Electronic Export Information. 

(1) Electronic Export Information (EEI) 

must be filed in the Automated Export 

System (AES) for any export made 

pursuant to paragraph (b)(iii) of this 

section. The EEI must identify License 

Exception GOV as the authority for the 

export and indicate that the applicant 

has received the relevant documentation 

from the contracting U.S. Government 

department, agency, or service. The 

Internal Transaction Number must be 

properly annotated on shipping 

documents (bill of lading, airway bill, 

other transportation documents, or 

commercial invoice) and shipment 

documents must include the following 

statement, ‘‘Property of [insert U.S. 

Government department, agency, or 

service]. Property may not enter the 

trade of the country to which it is 

shipped. Authorized under License 

Exception GOV. U.S. Government point 

of contact: [Insert name and telephone 

number].’’ 

(H) The exporter, reexporter, or 

transferor must obtain an authorization, 

if required, before any item previously 

exported, reexported, or transferred 

under this paragraph is resold, 

transferred, reexported, transshipped, or 

disposed of to an end user for any end 

use, or to any destination other than as 

authorized by this paragraph (e.g., 

property disposal of surplus defense 

articles outside of the United States), 

unless: 

(1) The transfer is pursuant to a grant, 

sale, lease, loan, or cooperative project 

under the Arms Export Control Act or 

the Foreign Assistance Act of 1961, as 

amended; or 

(2) The item has been destroyed or 

rendered useless beyond the possibility 

of restoration. 

(iv) Items exported at the direction of 

the U.S. Department of Defense. This 

paragraph authorizes technology to be 

released pursuant to an official written 

request or directive from the U.S. 

Department of Defense. 

(v) This paragraph authorizes items 

sold, leased, or loaned by the U.S. 

Department of Defense to a foreign 

country or international organization 

pursuant to the Arms Export Control 

Act or the Foreign Assistance Act of 

1961 when the items are delivered to 

representatives of such a country or 

organization in the United States and 

exported on a military aircraft or naval 

vessel of that government or 

organization or via the Defense 

Transportation Service. 

(vi) This paragraph authorizes transfer 

of technology in furtherance of a 

contract between the exporter and an 

agency of the U.S. government, if the 

contract provides for such technology 

and the technology is not 

‘‘development’’ or ‘‘production’’ 

technology for ‘‘600 series’’ items. 

Note to paragraph (b)(2) to this section: 

Foreign Military Sales (FMS). The export of 

items subject to the EAR that are sold, 

leased, or loaned by the Department of 

Defense to a foreign country or international 

organization must be made in accordance 

with the FMS Program carried out under the 

Arms Export Control Act. 

(c) Cooperating Governments. (1) 

Scope. The provisions of paragraph (c) 

authorize exports and reexports of the 

items listed in paragraph (c)(2) of this 

section to agencies of cooperating 

governments. ‘‘Agency of a cooperating 

government’’ includes all civilian and 

military departments, branches, 

missions, and other governmental 

agencies of a cooperating national 


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government. Cooperating governments 

are the national governments of 

countries listed in Country Group A:1 

(see Supplement No. 1 to part 740) and 

the national governments of Argentina, 

Austria, Finland, Hong Kong, Ireland, 

Korea (Republic of), New Zealand, 

Singapore, Sweden, Switzerland and 

Taiwan. 

(2) Eligibility. (i) Items for official use 

within national territory by agencies of 

cooperating governments. This license 

exception is available for all items 

consigned to and for the official use of 

any agency of a cooperating government 

within the territory of any cooperating 

government, except items excluded by 

paragraph (c)(3) of this section. 

(ii) Diplomatic and consular missions 

of a cooperating government. This 

license exception is available for all 

items consigned to and for the official 

use of a diplomatic or consular mission 

of a cooperating government located in 

any country in Country Group B (see 

Supplement No. 1 to part 740), except 

items excluded by paragraph (c)(3) of 

this section. 

(3) Exclusions. The following items 

may not be exported or reexported 

under this paragraph (c): 

(i) Items on the Sensitive List (see 

Supplement No. 6 to part 774), except 

to the countries listed in § 740.20(c)(1) 

(License Exception STA); 

(ii) Items on the Very Sensitive List 

(see Supplement No. 7 to part 774); 

(iii) Encryption items controlled for EI 

reasons under ECCNs 5A002, 5D002, or 

5E002; 

(iv) Regional stability items controlled 

under Export Control Classification 

Numbers (ECCNs) 6A002.a.1.c, 6E001 

‘‘technology’’ according to the General 

Technology Note for the ‘‘development’’ 

of equipment in 6A002.a.1.c, and 6E002 

‘‘technology’’ according to the General 

Technology Note for the ‘‘production’’ 

of equipment in 6A002.a.1.c.; 

(v) ‘‘600 series’’ items, except to the 

countries listed in § 740.20(c)(1) 

(License Exception STA); 

(vi) Items controlled for nuclear 

nonproliferation (NP) reasons; 

(vii) Technology or software 

prohibited by Supplement No. 4 to this 

part; 

(viii) Items listed as not eligible for 

STA in § 740.20(b)(2)(ii). 

(4) Reporting requirements. See 

§ 743.1 of the EAR for reporting 

requirements for exports of certain items 

under this paragraph (c)(2). 

(d) International inspections under 

the Chemical Weapons Convention 

(CWC or Convention). 

(1) The Organization for the 

Prohibition of Chemical Weapons 

(OPCW) is an international organization 

that establishes and administers an 

inspection and verification regime 

under the Convention designed to 

ensure that certain chemicals and 

related facilities are not diverted from 

peaceful purposes to non-peaceful 

purposes. This paragraph (d) authorizes 

exports and reexports to the OPCW and 

exports and reexports by the OPCW for 

official international inspection and 

verification use under the terms of the 

Convention as follows: 

(i) Commodities and software 

consigned to the OPCW at its 

headquarters in The Hague for official 

international OPCW use for the 

monitoring and inspection functions set 

forth in the Convention, and technology 

relating to the maintenance, repair, and 

operation of such commodities and 

software. The OPCW must maintain 

effective control of such commodities, 

software and technology. 

(ii) Controlled technology relating to 

the training of the OPCW inspectorate. 

(iii) Controlled technology relating to 

a CWC inspection site, including 

technology released as a result of: 

(A) Visual inspection of U.S.-origin 

equipment or facilities by foreign 

nationals of the inspection team; 

(B) Oral communication of controlled 

technology to foreign nationals of the 

inspection team in the U.S. or abroad; 

and 

(C) The application to situations 

abroad of personal knowledge or 

technical experience acquired in the 

U.S. 

(2) Exclusions. The following items 

may not be exported or reexported 

under the provisions of this paragraph 

(d): 

(i) Inspection samples collected in the 

U.S. pursuant to the Convention; 

(ii) Commodities and software that are 

no longer in OPCW official use. Such 

items must be transferred in accordance 

with the EAR. 

(iii) ‘‘600 series’’ items, except to the 

countries listed in § 740.20(c)(1) 

(License Exception STA). 

(iv) Technology or software 

prohibited by Supplement No. 4 to this 

part. 

(3) Confidentiality. The application of 

the provisions of this paragraph (d) is 

subject to the condition that the 

confidentiality of business information 

is strictly protected in accordance with 

applicable provisions of the EAR and 

other U.S. laws regarding the use and 

transfer of U.S. goods and services. 

(4) Restrictions. Without prior 

authorization from the Bureau of 

Industry and Security, nationals of 

countries in Country Group E:1 may not 

physically or computationally access 

computers that have been enhanced by 

‘‘electronic assemblies,’’ which have 

been exported or reexported under 

License Exception GOV and have been 

used to enhance such computers by 

aggregation of processors so that the 

APP of the aggregation exceeds the APP 

parameter set forth in ECCN 4A003.b. of 

the Commerce Control List in 

Supplement No. 1 to part 774 of the 

EAR. 

(e) International Space Station (ISS). 

(1) Scope. The ISS is a research facility 

in a low-Earth orbit approximately 190 

miles (350 km) above the surface of the 

Earth. The ISS is a joint project among 

the space agencies of the United States, 

Russia, Japan, Canada, Europe and Italy. 

This paragraph (e) authorizes exports 

and reexports required on short notice 

of certain commodities subject to the 

EAR that are classified under ECCN 

9A004 to launch sites for supply 

missions to the ISS. 

(2) Eligible commodities. Any 

commodity subject to the EAR that is 

classified under ECCN 9A004 and that 

is required for use on the ISS on short 

notice. 

Note 1 to paragraph (e)(2): This license 

exception is not available for the export or 

reexport of parts and components to overseas 

manufacturers for the purpose of 

incorporation into other items destined for 

the ISS. 

Note 2 to paragraph (e)(2): For purposes 

of this paragraph (e), ‘short notice’ means the 

exporter is required to have a commodity 

manifested and at the scheduled launch site 

for hatch-closure (final stowage) no more 

than forty-five (45) days from the time the 

exporter or reexporter received complete 

documentation. ‘Complete documentation’ 

means the exporter or reexporter received the 

technical description of the commodity and 

purpose for use of the commodity on the ISS. 

‘Hatch-closure (final stowage)’ means the 

final date specified by a launch provider by 

which items must be at a specified location 

in a launch country in order to be included 

on a mission to the ISS. The exporter or 

reexporter must receive the notification to 

supply the commodity for use on the ISS in 

writing. That notification must be kept in 

accordance with paragraph (e)(8) of this 

section and the Recordkeeping requirements 

in part 762 of the EAR. 

(3) Eligible destinations. Eligible 

destinations are France, Japan, 

Kazakhstan, and Russia. To be eligible, 

a destination needs to have a launch for 

a supply mission to the ISS scheduled 

by a country participating in the ISS. 

(4) Requirement for commodities to be 

launched on an eligible space launch 

vehicle (SLV). Only commodities that 

will be delivered to the ISS using 

United States, Russian, ESA (French), or 

Japanese space launch vehicles (SLVs) 

are eligible under this authorization. 

Commodities to be delivered to the ISS 


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37540 Federal Register / Vol. 77, No. 120 / Thursday, June 21, 2012 / Proposed Rules 

using SLVs from any other countries are 

excluded from this authorization. 

(5) Authorizations. (i) Authorization 

to retain commodity at or near launch 

site for up to six months. If there are 

unexpected delays in a launch schedule 

for reasons such as mechanical failures 

in a launch vehicle or weather, 

commodities exported or reexported 

under this paragraph (e) may be retained 

at or near the launch site for a period 

of six (6) months from the time of initial 

export or reexport before the 

commodities must be destroyed, 

returned to the exporter or reexporter, or 

be the subject of an individually 

validated license request submitted to 

BIS to authorize further disposition of 

the commodities. 

(ii) Authorization to retain commodity 

abroad at launch country beyond six 

months. If, after the commodity is 

exported or reexported under this 

authorization, a delay occurs in the 

launch schedule that would exceed the 

6-month deadline in paragraph (e)(5)(i) 

of this section, the exporter or 

reexporter or the person in control of 

the commodities in the launch country 

may request a one-time 6-month 

extension by submitting written 

notification to BIS requesting a 6-month 

extension and noting the reason for the 

delay. If the requestor is not contacted 

by BIS within 30 days from the date of 

the postmark of the written notification 

and if the notification meets the 

requirements of this subparagraph, the 

request is deemed granted. The request 

must be sent to BIS at the address listed 

in part 748 of the EAR and should 

include the name and address of the 

exporter or reexporter, the name and 

address of the person who has control 

of the commodity, the date the 

commodities were exported or 

reexported, a brief product description, 

and the justification for the extension. 

To retain a commodity abroad beyond 

the 6-month extension period, the 

exporter, reexporter or person in control 

of the commodity must request 

authorization by submitting a license 

application in accordance with §§ 748.1, 

748.4 and 748.6 of the EAR to BIS 90 

days prior to the expiration of the 6- 

month extension period. 

(iii) Items not delivered to the ISS 

because of a failed launch. If the 

commodities exported or reexported 

under this paragraph (e) of this section 

are not delivered to the ISS because a 

failed launch causes the destruction of 

the commodity prior to its being 

delivered, exporters and reexporters 

must make note of the destruction of the 

commodities in accordance with the 

recordkeeping requirements under 

paragraph (e)(8)(ii) of this section and 

part 762 of the EAR. 

(6) Reexports to an alternate launch 

country. If a mechanical or weather 

related issue causes a change from the 

scheduled launch country to another 

foreign country after a commodity was 

exported or reexported, then that 

commodity may be subsequently 

reexported to the new scheduled launch 

country, provided all of the terms and 

conditions of paragraph (e) of this 

section are met, along with any other 

applicable EAR provisions. In such 

instances, the 6-month time limitation 

described in paragraph (e)(5)(i) of this 

section would start over again at the 

time of the subsequent reexport 

transaction. Note that if the subsequent 

reexport may be made under the 

designation No License Required (NLR) 

or some other authorization under the 

EAR, a reexporter does not need to rely 

on the provisions contained in this 

paragraph (e). 

(7) Eligible recipients. Only persons 

involved in the launch of commodities 

to the ISS may receive and have access 

to commodities exported or reexported 

pursuant to this paragraph (e), except 

that: 

(i) No commodities may be exported, 

reexported, or transferred (in-country) 

under paragraph (e) to any national of 

an E:1 country listed in Supplement No. 

1 to part 740 of the EAR, and 

(ii) No person may receive 

commodities authorized under 

paragraph (e) of this section who is 

subject to an end-user or end-use 

control described in part 744 of the 

EAR, including the entity list in 

Supplement No. 4 to part 744. 

(8) Recordkeeping requirements. 

Exporters and reexporters must 

maintain records regarding exports or 

reexports made using this paragraph (e) 

of this section as well as any other 

applicable recordkeeping requirements 

under part 762 of the EAR. 

(i) Exporters and reexporters must 

retain a record of the initial written 

notification they received requesting 

these commodities be supplied on short 

notice for a supply mission to the ISS, 

including the date the exporter or 

reexporter received complete 

documentation (i.e., the day on which 

the 45-day clock begins). 

(ii) Exporters and reexporters must 

maintain records of the date of any 

exports or reexports made using this 

paragraph (e) and the date on which the 

commodities were launched into space 

for delivery to the ISS. If the 

commodities are not delivered to the 

ISS because of a failed launch whereby 

the item is destroyed prior to being 

delivered to the ISS, this must be noted 

for recordkeeping purposes. 

(iii) The return or destruction of 

defective or worn out parts or 

components is not required. However, if 

defective or worn out parts or 

components originally exported or 

reexported pursuant to this paragraph 

(e) are returned from the ISS, then those 

parts and components may be either: 

Returned to the original country of 

export or reexport; destroyed; or 

reexported or transferred (in-country) to 

a destination that has been designated 

by NASA for conducting a review and 

analysis of the defective or worn part or 

component. Documentation for this 

activity must be kept for recordkeeping 

purposes. No commodities that are 

subject to the EAR may be returned, 

under the provisions of this paragraph, 

to a country listed in Country Group E:1 

in Supplement No. 1 to part 740 or to 

any person if that person is subject to an 

end-user or end-use control described in 

part 744 of the EAR. For purposes of 

paragraph (e) of this section, a ‘defective 

or worn out’ part or component is a part 

or component that no longer performs 

its intended function. 

12. Section 740.13 is amended by 

adding a sentence to paragraph (a)(1), 

redesignating paragraph (f) as paragraph 

(h), and by adding new paragraphs (f) 

and (g) to read as follows: 

§ 740.13 Technology and Software— 

Unrestricted (TSU). 

(a) * * * This paragraph (a) 

authorizes training, provided the 

training is limited to the operation, 

maintenance and repair technology 

identified in this paragraph. 

* * * * * 

(f) Release of technology and source 

code in the U.S. by U.S. universities to 

their bona fide and full time regular 

employees. 

(1) Scope. This paragraph authorizes 

the release in the United States of 

‘‘technology’’ and source code that is 

subject to the EAR by U.S. universities 

to foreign persons who are their bona 

fide and full time regular employees. 

(2) Eligible ‘‘technology’’and source 

code. Any ‘‘technology’’ or source code 

that is subject to the EAR may be 

released, except for ‘‘technology’’ or 

source code that is subject to a missile 

technology or EI reason for control or 

otherwise restricted from the use of 

license exceptions under § 740.2 of the 

EAR. 

(3) Eligible foreign nationals (i.e., 

bona fide and full time regular 

employees of U.S. universities). This 

exception is only available if: 


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Federal Register / Vol. 77, No. 120 / Thursday, June 21, 2012 / Proposed Rules 37541 

(i) The employee’s permanent abode 

throughout the period of employment is 

in the U.S.; 

(ii) The employee is not a national of 

a country subject to a U.S. arms embargo 

(see § 740.2(a)(12)); and 

(iii) The university informs the 

individual in writing that the 

‘‘technology’’ or source code may not be 

transferred to other foreign persons 

without prior U.S. Government 

authorization. 

(4) Exclusions. (i) No ‘‘technology’’ or 

source code may be released to a foreign 

national for purposes of establishing or 

producing items subject to the EAR; 

(ii) No ‘‘technology’’ or source code 

may be released to a foreign person 

subject to a part 744 end-use or end-user 

control or where the release would 

otherwise be inconsistent with part 744; 

and 

(iii) No ‘‘technology’’ or source code 

controlled for ‘‘EI’’ (encryption) or 

‘‘MT’’ (Missile Technology) reasons may 

be released under this paragraph (f). 

(g) Copies of technology previously 

authorized for export to same recipient. 

This paragraph authorizes the export, 

reexport, or transfer (in-country) of 

copies of technology previously 

authorized for export, reexport, or incountry transfer to the same recipient. 

This paragraph also authorizes the 

export, reexport, or transfer (in-country) 

of revised copies of such technology 

provided the following four conditions 

are met: 

(1) The item that the technology 

pertains to is the identical item; 

(2) The revisions to the technology are 

solely editorial and do not add to the 

content of technology previously 

exported, reexported, or transferred (incountry) or authorized for export, 

reexport, or transfer (in-country) to the 

same recipient; 

(3) The same recipient is not currently 

subject to an end-use control under the 

EAR (e.g., being subject to a Denial 

Order or Listed on the Entity List in 

Supplement No. 4 to part 744); and 

(4) The exporter, reexporter, or 

transferor has reason to believe the same 

recipient has used the technology in 

accordance with the original 

authorization. 

13. Section 740.20 is revised to read 

as follows: 

§ 740.20 License Exception Strategic 

Trade Authorization (STA). 

* * * * * 

(c) * * * 

Note 2 to paragraph (c). License Exception 

STA under § 740.20(c)(1) may be used to 

authorize the export, reexport, or transfer (incountry) of ‘‘600 series’’ items only if the 

purchaser, intermediate consignee, ultimate 

consignee, and end user have previously 

been approved on a license issued by BIS or 

the Directorate of Defense Trade Controls 

(DDTC), U.S. Department of State. 

* * * * * 

(d) * * * 

(1) * * * 

(2) Prior consignee statement. 

* * * * * 

(vi) For ‘‘600 series items,’’ confirms 

that the items are for ultimate end use 

by a government of a country listed in 

§ 740.20(c)(1), the United States 

Government, or a person in the United 

States, and agrees to permit an end-use 

check. 

PART 742—[AMENDED] 

14. The authority citations paragraph 

for part 742 continues to read as 

follows: 

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

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

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

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

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

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

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

FR 59099, 3 CFR, 1994 Comp., p. 950; E.O. 

13026, 61 FR 58767, 3 CFR, 1996 Comp., 

p. 228; E.O. 13222, 66 FR 44025, 3 CFR, 2001 

Comp., p. 783; Presidential Determination 

2003–23 of May 7, 2003, 68 FR 26459, May 

16, 2003; Notice of August 12, 2011, 76 FR 

50661 (August 16, 2011); Notice of November 

9, 2011, 76 FR 70319 (November 10, 2011). 

15. Section 742.6 is revised to read as 

follows: 

§ 742.6 Regional stability. 

(a) * * * 

* * * * * 

(b) Licensing policy. Applications for 

exports and reexports of ‘‘600 series’’ 

items will be reviewed on a case-by-case 

basis to determine whether the 

transaction is contrary to the national 

security or foreign policy interests of the 

United States. Other applications for 

exports and reexports described in 

paragraph (a)(1), (a)(2), (a)(6) or (a)(7) of 

this section will be reviewed on a caseby-case basis to determine whether the 

export or reexport could contribute 

directly or indirectly to any country’s 

military capabilities in a manner that 

would alter or destabilize a region’s 

military balance contrary to the foreign 

policy interests of the United States. 

Applications for reexports of items 

described in paragraph (a)(3) of this 

section will be reviewed applying the 

policies for similar commodities that are 

subject to the ITAR. Applications for 

export or reexport of items classified 

under any ‘‘600 series’’ ECCN listed in 

paragraph (a)(1) of this section will also 

be reviewed in accordance with U.S. 

arms embargo policies and generally 

will be denied if destined for a 

destination set forth in § 740.2(a)(12) of 

the EAR. Applications for export or 

reexport of ‘‘parts,’’ ‘‘components,’’ 

‘‘accessories,’’ ‘‘attachments,’’ software, 

or technology ‘‘specially designed’’ or 

otherwise required for the F–14 aircraft 

will generally be denied. 

PART 743—[AMENDED] 

16. The authority citations paragraph 

for part 743 continues to read as 

follows: 

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

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

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

12, 2011, 76 FR 50661 (August 16, 2011). 

17. Part 743 is amended by revising 

its title to read: 

PART 743—SPECIAL REPORTING AND 

NOTIFICATION 

18. Section 743.1 is amended by 

revising paragraph (c) to read as follows: 

§ 743.1 Wassenaar Arrangement. 

* * * * * 

(c) Items for which reports are 

required. You must submit reports to 

BIS under the provisions of this section 

only for exports controlled on the 

Sensitive List (see Supplement No. 6 to 

part 774). 

* * * * * 

19. New Section 743.5 is added to 

read as follows: 

§ 743.5 Prior notifications to Congress of 

Exports of Major Defense Equipment and 

other transactions. 

(a) General requirement. Applications 

to export items on the Commerce 

Control List that are Major Defense 

Equipment (MDE) and certain other 

controlled transactions will be notified 

to Congress as provided in this section 

before licenses for such items are 

issued. ‘Major Defense Equipment’ 

means any item having a nonrecurring 

research and development cost of more 

than $50,000,000 or a total production 

cost of more than $200,000,000. Exports 

to U.S. government end users under 

License Exception GOV (§ 740.11(b)) do 

not require such notification. 

(b) BIS will notify Congress prior to 

issuing a license authorizing the export 

of items controlled to a country outside 

the countries listed in § 740.20(c)(1) 

(License Exception STA) that are: 

(1) Major Defense Equipment sold 

under a contract in the amount of 

$14,000,000 or more; 

(2) Other ‘‘600 series’’ items sold 

under a contract in the amount of 

$50,000,000 or more; or 


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(3) Firearms controlled under ECCN 

0A601 under a contract in the amount 

of $1,000,000 or more. 

(c) BIS will notify Congress prior to 

issuing a license authorizing the export 

of items controlled to a country listed in 

§ 740.20(c)(1) (License Exception STA) 

that are: 

(1) Major Defense Equipment sold 

under a contract in the amount of 

$25,000,000 or more; 

(2) Other ‘‘600 series’’ items sold 

under a contract in the amount of 

$100,000,000 or more; or 

(3) Firearms controlled under ECCN 

0A601 under a contract in the amount 

of $1,000,000 or more. 

(d) In addition to information 

required on the application, the exporter 

must include a copy of the signed 

contract (including a statement of the 

contract’s value) for any proposed 

export described in paragraphs (b) or (c). 

(e) Address. Munitions Control 

Division at bis.compliance@bis.doc.gov. 

(f) BIS will hold the case without 

action (HWA) until the notification 

period has expired. 

PART 744—[AMENDED] 

20. The authority citations paragraph 

for part 744 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; 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. 

12947, 60 FR 5079, 3 CFR, 1995 Comp., p. 

356; E.O. 13026, 61 FR 58767, 3 CFR, 1996 

Comp., p. 228; E.O. 13099, 63 FR 45167, 3 

CFR, 1998 Comp., p. 208; E.O. 13222, 66 FR 

44025, 3 CFR, 2001 Comp., p. 783; E.O. 

13224, 66 FR 49079, 3 CFR, 2001 Comp., p. 

786; Notice of August 12, 2011, 76 FR 50661 

(August 16, 2011); Notice of September 21, 

2011, 76 FR 59001 (September, 22, 2011); 

Notice of November 9, 2011, 76 FR 70319 

(November 10, 2011); Notice of January 19, 

2012, 77 FR 3067 (January 20, 2012). 

21. Section 744.21 is amended by 

redesignating paragraphs (a), (a)(1) and 

(a)(2) as paragraphs (a)(1), (a)(1)(i) and 

(a)(1)(ii) and by adding a new paragraph 

(a)(2) to read as follows: 

§ 744.21 Restrictions on Certain Military 

End-Uses in the People’s Republic of China 

(PRC). 

(a)(1) * * * 

(a)(2) General prohibition. In addition 

to the license requirements for ‘‘600 

series’’ items specified on the 

Commerce Control List (CCL), you may 

not export, reexport, or transfer any 

‘‘600 series’’ item, including .y items 

described in a ‘‘600 series’’ ECCN, to the 

PRC without a license. 

PART 750—[AMENDED] 

22. The authority citations paragraph 

for part 750 continues to read as 

follows: 

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

U.S.C. 1701 et seq.; Sec 1503, Public Law 

108–11, 117 Stat. 559; E.O. 13026, 61 FR 

58767, 3 CFR, 1996 Comp., p. 228; E.O. 

13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 

783; Presidential Determination 2003–23 of 

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

Notice of August 12, 2011, 76 FR 50661 

(August 16, 2011). 

23. Section 750.4 is amended by 

adding paragraph (b)(7) to read as 

follows: 

§ 750.4 Procedures for processing license 

applications. 

* * * * * 

(b) Actions not included in processing 

time calculations. * * * 

(7) Major Defense Equipment. 

Congressional notification, including 

consultations prior to notification, prior 

to the issuance of an authorization to 

export Major Defense Equipment (as 

defined in§ 743.5 of the EAR). 

24. Section 750.7 is amended: 

(a) By adding a new paragraph 

(c)(1)(ix); and 

(b) By revising both the introductory 

text in paragraphs (g) and paragraph 

(g)(1) to read as follows: 

§ 750.7 Issuance of licenses. 

(c) Changes to the license. * * * 

* * * * * 

(ix) Direct exports or reexports to 

approved end users on an export or 

reexport license, provided those end 

users are listed by name and location on 

such export or reexport license and the 

license does not contain any conditions 

that are specific to the ultimate 

consignee that cannot be complied with 

by the end user, such as a reporting 

requirement that must be made by the 

ultimate consignee. 

(A) Restriction. Export and reexport 

licenses where a class of authorized end 

users is identified (e.g., by industry or 

by location), but specific end users are 

not identified by name on the export or 

reexport license are specifically 

excluded from this paragraph (c)(1)(ix). 

Direct exports or reexports to these 

types of end users are a material change 

to the export or reexport license. If 

exporters or reexporters wish to make 

such direct exports, they will need to 

submit an application for a new license 

in accordance with the instructions 

contained in Supplement No. 1 to part 

748 of the EAR. 

(B) [RESERVED]. 

* * * * * 

(g) License validity period. Licenses 

involving the export or reexport of items 

will generally have a four-year validity 

period, unless a different validity period 

has been requested and specifically 

approved by BIS or is otherwise 

specified on the license at the time that 

it is issued. Exceptions from the fouryear validity period include license 

applications reviewed and approved as 

an ‘‘emergency’’ (see § 748.4(h) of the 

EAR) and license applications for items 

controlled for short supply reasons, 

which will be limited to a 12-month 

validity period. Emergency licenses will 

expire no later than the last day of the 

calendar month following the month in 

which the emergency license is issued. 

The expiration date will be clearly 

stated on the face of the license. If the 

expiration date falls on a legal holiday 

(Federal or State), the validity period is 

automatically extended to midnight of 

the first day of business following the 

expiration date. 

(1) Extended validity period. BIS will 

consider granting a validity period 

exceeding 4 years on a case-by-case 

basis when extenuating circumstances 

warrant such an extension. Requests for 

such extensions may be made at the 

time of application or after the license 

has been issued and it is still valid. BIS 

will not approve changes regarding 

other aspects of the license, such as the 

parties to the transaction and the 

countries of ultimate destination. An 

extended validity period will generally 

be granted where, for example, the 

transaction is related to a multi-year 

project; when the period corresponds to 

the duration of a manufacturing license 

agreement, technical assistance 

agreement, warehouse and distribution 

agreement, or license issued under the 

International Traffic in Arms 

Regulations; when production lead time 

will not permit an export or reexport 

during the original validity period of the 

license; when an unforeseen emergency 

prevents shipment within the 4-year 

validity of the license; or for other 

similar circumstances. 

* * * 

* * * * * 

PART 758—[AMENDED] 

25. The authority citations paragraph 

for part 758 continues to read as 

follows: 

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

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

44025, 3 CFR, 2001 Comp., p. 783; Notice of 

August 12, 2011, 76 FR 50661 (August 16, 

2011). 

26. Section 758.1 is amended by 

revising the section heading, 

redesignating paragraphs (b)(3) through 

(b)(5) as (b)(5) through (b)(7) and by 


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adding new paragraphs (b)(3) and (b)(4), 

to read as follows: 

§ 758.1 The Automated Export System 

(AES) record. 

* * * * * 

(b) * * * 

(1) * * * 

(2) * * * 

(3) For all exports of ‘‘600 series’’ 

items, regardless of value or destination, 

including exports to Canada; 

(4) For all exports under License 

Exceptions Strategic Trade 

Authorization (STA); 

* * * * * 

27. Section 758.2(c) is revised by 

adding paragraph (c)(4) to read as 

follows: 

§ 758.2 Automated Export System (AES). 

* * * * * 

(a) * * * 

(b) * * * 

(4) Exports are made under Strategic 

Trade Authorization; are made under 

Authorization Validated End User 

(VEU); or are of ‘‘600 series’’ items. 

28. Section 758.6 is revised to read as 

follows: 

§ 758.6 Destination control statement. 

(a) General requirement. The 

Destination Control Statement (DCS) 

must be entered on the invoice and on 

the bill of lading, air waybill, or other 

export control document that 

accompanies the shipment from its 

point of origin in the United States to 

the ultimate consignee or end-user 

abroad. The person responsible for 

preparation of those documents is 

responsible for entry of the DCS. The 

DCS is required for all exports from the 

United States of items on the Commerce 

Control List that are not classified as 

EAR99, unless the export may be made 

under License Exception BAG or GFT 

(see part 740 of the EAR). At a 

minimum, and except as provided in 

paragraph (b), the DCS must state: 

‘‘These commodities, technology, or 

software were exported from the United 

States in accordance with the Export 

Administration Regulations. Diversion 

contrary to U.S. law is prohibited.’’ 

(b) ‘‘600 series’’ items. For exports of 

‘‘600 series’’ items, at a minimum, the 

DCS must state: 

‘‘These commodities, technology, or 

software controlled under [INSERT 

ECCN(s)] were exported from the United 

States in accordance with the Export 

Administration Regulations. Diversion 

contrary to U.S. law is prohibited.’’ 

PART 762—[AMENDED] 

29. The authority citations paragraph 

for part 762 continues to read as 

follows: 

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

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

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

12, 2011, 76 FR 50661 (August 16, 2011). 

30. Section 762.2 is amended by 

adding paragraph (b)(48) to read as 

follows: 

§ 762.2 Records to be retained. 

(a) * * * 

(b) * * * 

(48) § 740.11(b)(2)(iii) and (iv), 

License Exception GOV. 

PART 764—[AMENDED] 

31. The authority citations paragraph 

for part 764 continues to read as 

follows: 

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

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

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

12, 2011, 76 FR 50661 (August 16, 2011). 

32. Supplement No. 1 to part 764 is 

amended by removing the penultimate 

paragraph: ‘‘Fourth, that this order does 

not prohibit any export, reexport, or 

other transaction subject to the EAR 

where the only items involved that are 

subject to the EAR are the foreignproduced direct product of U.S.-origin 

technology.’’ 

PART 774—[AMENDED] 

33. The authority citations paragraph 

for part 774 continues to read as 

follows: 

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

U.S.C. 1701 et seq.; 10 U.S.C. 7420; 10 U.S.C. 

7430(e); 22 U.S.C. 287c, 22 U.S.C. 3201 et 

seq., 22 U.S.C. 6004; 30 U.S.C. 185(s), 185(u); 

42 U.S.C. 2139a; 42 U.S.C. 6212; 43 U.S.C. 

1354; 15 U.S.C. 1824a; 50 U.S.C. app. 5; 22 

U.S.C. 7201 et seq.; 22 U.S.C. 7210; E.O. 

13026, 61 FR 58767, 3 CFR, 1996 Comp., 

p. 228; E.O. 13222, 66 FR 44025, 3 CFR, 2001 

Comp., p. 783; Notice of August 12, 2011, 76 

FR 50661 (August 16, 2011). 

34. In Supplement No. 1 to part 774 

(the Commerce Control List), 

Category 0—Nuclear Materials, 

Facilities, and Equipment (and 

Miscellaneous Items), ECCN 0A919 is 

amended by revising the ‘‘Items’’ 

paragraph to read as follows: 

0A919 ‘‘Military commodities’’ as follows 

(see list of items controlled). 

* * * * * 

Items: ‘‘Military commodities’’ with all of the 

following characteristics: 

a. Described on either the United States 

Munitions List (22 CFR Part 121) or the 

Munitions List that is published by the 

Wassenaar Arrangement on Export Controls 

for Conventional Arms and Dual-Use Goods 

and Technologies (as set out on its Web site 

at http://www.wassenaar.org), but not any 

item listed in any Export Control 

Classification Number for which the last 

three characters are 018 or any item in the 

‘‘600 series’’; 

b. Produced outside the United States; 

c. Not subject to the International Traffic in 

Arms Regulations (22 CFR Parts 120–130) for 

a reason other than presence in the United 

States; and 

d. One or more of the following 

characteristics: 

d.1. Incorporate one or more cameras 

classified under ECCN 6A003.b.4.b; 

d.2. Incorporate more than a de minimis 

amount of ‘‘600 series’’ controlled content 

(see § 734.4 of the EAR); or 

d.3. Are direct products of U.S.-origin ‘‘600 

series’’ technology (see § 736.2(b)(3) of the 

EAR). 

35. Part 774 is amended by adding 

new Supplement Nos. 6 and 7 to read 

as follows: 

Supplement No. 6 to Part 774—Sensitive List 

(Note to Supplement No. 6: If text 

accompanies an ECCN below, then the 

Sensitive List is limited to a subset of items 

classified under the ECCN.) 

(1) Category 1 

(i) 1A002 (entire entry). 

(ii) 1C001 (entire entry). 

(iii) 1C007.c and .d. 

(iv) 1C010.c and .d. 

(v) 1C012 (entire entry). 

(vi) 1D002—‘‘software’’ for the 

‘‘development’’ of organic ‘‘matrix’’, metal 

‘‘matrix’’, or carbon ‘‘matrix’’ laminates or 

composites controlled under 1A002, 1C007.c, 

1C007.d, 1C010.c or 1C010.d. 

(vii) 1E001—‘‘Technology’’ according to 

the General Technology Note for the 

‘‘development’’ or ‘‘production’’ of 

equipment and materials controlled under 

1A002, 1C001, 1C007.c, 1C007.d, 1C010.c, 

1C010.d, or 1C012. 

(viii) 1E002.e and .f. 

(2) Category 2 

(i) 2D001—‘‘software’’, other than that 

controlled by 2D002, specially designed for 

the ‘‘development’’ or ‘‘production’’ of 

equipment as follows: 

(A) Machine tools for turning (ECCN 

2B001.a) having all of the following: 

(1) Positioning accuracy with ‘‘all 

compensations available’’ equal to or less 

(better) than 3.6 mm according to ISO 230/2 

(2006) or national equivalents along any 

linear axis; and 

(2) Two or more axes which can be 

coordinated simultaneously for ‘‘contouring 

control’’; 

(B) Machine tools for milling (ECCN 

2B001.b) having any of the following: 

(1) Positioning accuracy with ‘‘all 

compensations available’’ equal to or less 

(better) than 3.6 mm according to ISO 230/2 

(2006) or national equivalents along any 

linear axis, and three linear axes plus one 

rotary axis which can be coordinated 

simultaneously for ‘‘contouring control’’; 

(2) Five or more axes which can be 

coordinated simultaneously for ‘‘contouring 

control’’ and have a positioning accuracy 

with ‘‘all compensations available’’ equal to 

or less (better) than 3.6 mm according to ISO 

230/2 (2006) or national equivalents along 

any linear axis; or 


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(3) A positioning accuracy for jig boring 

machines, with ‘‘all compensations 

available’’, equal to or less (better) than 3 mm 

according to ISO 230/2 (2006) or national 

equivalents along any linear axis; 

(C) Electrical discharge machines (EDM) 

controlled under 2B001.d; 

(D) Deep-hole-drilling machines controlled 

under 2B001.f; 

(E) ‘‘Numerically controlled’’ or manual 

machine tools controlled under 2B003. 

(ii) 2E001—‘‘technology’’ according to the 

General Technology Note for the 

‘‘development’’ of ‘‘software’’ controlled 

within the specific provisions of 2D001 

described in this Supplement or for the 

‘‘development’’ of equipment as follows: 

(A) Machine tools for turning (ECCN 

2B001.a) having all of the following: 

(1) Positioning accuracy with ‘‘all 

compensations available’’ equal to or less 

(better) than 3.6 mm according to ISO 230/2 

(2006) or national equivalents along any 

linear axis; and 

(2) Two or more axes which can be 

coordinated simultaneously for ‘‘contouring 

control’’; 

(B) Machine tools for milling (ECCN 

2B001.b) having any of the following: 

(1) Positioning accuracy with ‘‘all 

compensations available’’ equal to or less 

(better) than 3.6 mm according to ISO 230/2 

(2006) or national equivalents along any 

linear axis, and three linear axes plus one 

rotary axis which can be coordinated 

simultaneously for ‘‘contouring control’’; 

(2) Five or more axes which can be 

coordinated simultaneously for ‘‘contouring 

control’’ and have a positioning accuracy 

with ‘‘all compensations available’’ equal to 

or less (better) than 3.6 mm according to ISO 

230/2 (2006) or national equivalents along 

any linear axis; or 

(3) A positioning accuracy for jig boring 

machines, with ‘‘all compensations 

available’’, equal to or less (better) than 3 mm 

according to ISO 230/2 (2006) or national 

equivalents along any linear axis; 

(C) Electrical discharge machines (EDM) 

controlled under 2B001.d; 

(D) Deep-hole-drilling machines controlled 

under 2B001.f; 

(E) ‘‘Numerically controlled’’ or manual 

machine tools controlled under 2B003. 

(iii) 2E002—‘‘technology’’ according to the 

General Technology Note for the 

‘‘production’’ of equipment as follows: 

(A) Machine tools for turning (ECCN 

2B001.a) having all of the following: 

(1) Positioning accuracy with ‘‘all 

compensations available’’ equal to or less 

(better) than 3.6 mm according to ISO 230/2 

(2006) or national equivalents along any 

linear axis; and 

(2) Two or more axes which can be 

coordinated simultaneously for ‘‘contouring 

control’’; 

(B) Machine tools for milling (ECCN 

2B001.b) having any of the following: 

(1) Positioning accuracy with ‘‘all 

compensations available’’ equal to or less 

(better) than 3.6 mm according to ISO 230/2 

(2006) or national equivalents along any 

linear axis, and three linear axes plus one 

rotary axis which can be coordinated 

simultaneously for ‘‘contouring control’’; 

(2) Five or more axes which can be 

coordinated simultaneously for ‘‘contouring 

control’’ and have a positioning accuracy 

with ‘‘all compensations available’’ equal to 

or less (better) than 3.6 mm according to ISO 

230/2 (2006) or national equivalents along 

any linear axis; or 

(3) A positioning accuracy for jig boring 

machines, with ‘‘all compensations 

available’’, equal to or less (better) than 3 mm 

according to ISO 230/2 (2006) or national 

equivalents along any linear axis; 

(C) Electrical discharge machines (EDM) 

controlled under 2B001.d; 

(D) Deep-hole-drilling machines controlled 

under 2B001.f; 

(E) ‘‘Numerically controlled’’ or manual 

machine tools controlled under 2B003. 

(3) Category 3 

(i) 3A002.g.1. 

(ii) 3D001—‘‘software’’ specially designed 

for the ‘‘development’’ or ‘‘production’’ of 

equipment controlled under 3A002.g.1. 

(iii) 3E001—‘‘technology’’ according to the 

General Technology Note for the 

‘‘development’’ or ‘‘production’’ of 

equipment controlled under 3A002.g.1. 

(4) Category 4 

(i) 4A001.a.2. 

(ii) 4D001—‘‘software’’ specially designed 

for the ‘‘development’’ or ‘‘production’’ of 

equipment controlled under ECCN 4A001.a.2 

or for the ‘‘development’’ or ‘‘production’’ of 

‘‘digital computers’’ having an ‘Adjusted 

Peak Performance’ (‘APP’) exceeding 0.5 

Weighted TeraFLOPS (WT). 

(iii) 4E001—‘‘technology’’ according to the 

General Technology Note for the 

‘‘development’’ or ‘‘production’’ of any of the 

following equipment or ‘‘software’’: 

equipment controlled under ECCN 

4A001.a.2, ‘‘digital computers’’ having an 

‘Adjusted Peak Performance’ (‘APP’) 

exceeding 0.5 Weighted TeraFLOPS (WT), or 

‘‘software’’ controlled under the specific 

provisions of 4D001 described in this 

Supplement. 

(5) Category 5—Part 1 

(i) 5A001.b.3, .b.5, and .h. 

(ii) 5B001.a—equipment and specially 

designed components or accessories therefor, 

specially designed for the ‘‘development’’, 

‘‘production’’ or ‘‘use’’ of equipment, 

functions or features controlled under 

5A001.b.3, b.5, or .h. 

(iii) 5D001.a—‘‘software’’ specially 

designed for the ‘‘development’’ or 

‘‘production’’ of equipment, functions or 

features controlled under 5A001.b.3, b.5, or 

.h. 

(iv) 5D001.b—‘‘software’’ specially 

designed or modified to support 

‘‘technology’’ controlled by this 

Supplement’s description of 5E001.a. 

(v) 5E001.a—‘‘technology’’ according to the 

General Technology Note for the 

‘‘development’’ or ‘‘production’’ of 

equipment, functions or features controlled 

under 5A001.b.3, b.5, or .h or ‘‘software’’ 

described in this Supplement’s description of 

5D001.a. 

(6) Category 6 

(i) 6A001.a.1.b—systems or transmitting 

and receiving arrays, designed for object 

detection or location, having any of the 

following: 

(A) A transmitting frequency below 5 kHz 

or a sound pressure level exceeding 224 dB 

(reference 1 mPa at 1 m) for equipment with 

an operating frequency in the band from 5 

kHz to 10 kHz inclusive; 

(B) Sound pressure level exceeding 224 dB 

(reference 1 mPa at 1 m) for equipment with 

an operating frequency in the band from 10 

kHz to 24 kHz inclusive; 

(C) Sound pressure level exceeding 235 dB 

(reference 1 mPa at 1 m) for equipment with 

an operating frequency in the band between 

24 kHz and 30 kHz; 

(D) Forming beams of less than 1° on any 

axis and having an operating frequency of 

less than 100 kHz; 

(E) Designed to operate with an 

unambiguous display range exceeding 5,120 

m; or 

(F) Designed to withstand pressure during 

normal operation at depths exceeding 1,000 

m and having transducers with any of the 

following: 

(1) Dynamic compensation for pressure; or 

(2) Incorporating other than lead zirconate 

titanate as the transduction element; 

(ii) 6A001.a.1.e. 

(iii) 6A001.a.2.a.1, a.2.a.2, a.2.a.3, a.2.a.5, 

and a.2.a.6. 

(iv) 6A001.a.2.b. 

(v) 6A001.a.2.c—processing equipment, 

specially designed for real time application 

with towed acoustic hydrophone arrays, 

having ‘‘user accessible programmability’’ 

and time or frequency domain processing 

and correlation, including spectral analysis, 

digital filtering and beamforming using Fast 

Fourier or other transforms or processes. 

(vi) 6A001.a.2.d. 

(vii) 6A001.a.2.e. 

(viii) 6A001.a.2.f—processing equipment, 

specially designed for real time application 

with bottom or bay cable systems, having 

‘‘user accessible programmability’’ and time 

or frequency domain processing and 

correlation, including spectral analysis, 

digital filtering and beamforming using Fast 

Fourier or other transforms or processes. 

(ix) 6A002.a.1.a, a.1.b, and a.1.c. 

(x) 6A002.a.1.d. 

(xi) 6A002.a.2.a—image intensifier tubes 

having all of the following: 

(A) A peak response in the wavelength 

range exceeding 400 nm but not exceeding 

1,050 nm; 

(B) Electron image amplification using any 

of the following: 

(1) A microchannel plate for electron image 

amplification with a hole pitch (center-tocenter spacing) of 12 mm or less; or 

(2) An electron sensing device with a nonbinned pixel pitch of 500 mm or less, 

specially designed or modified to achieve 

‘charge multiplication’ other than by a 

microchannel plate; and 

(C) Any of the following photocathodes: 

(1) Multialkali photocathodes (e.g., S–20 

and S–25) having a luminous sensitivity 

exceeding 700 mA/lm; 

(2) GaAs or GaInAs photocathodes; or 

(3) Other ‘‘III–V compound’’ 

semiconductor photocathodes having a 


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maximum ‘‘radiant sensitivity’’ exceeding 10 

mA/W. 

(xii) 6A002.a.2.b. 

(xiii) 6A002.a.3—subject to the following 

additional notes: 

Note 1: 6A002.a.3 does not apply to the 

following ‘‘focal plane arrays’’ in this 

Supplement: 

a. Platinum Silicide (PtSi) ‘‘focal plane 

arrays’’ having less than 10,000 elements; 

b. Iridium Silicide (IrSi) ‘‘focal plane 

arrays’’. 

Note 2: 6A002.a.3 does not apply to the 

following ‘‘focal plane arrays’’ in this 

Supplement: 

a. Indium Antimonide (InSb) or Lead 

Selenide (PbSe) ‘‘focal plane arrays’’ having 

less than 256 elements; 

b. Indium Arsenide (InAs) ‘‘focal plane 

arrays’’; 

c. Lead Sulphide (PbS) ‘‘focal plane 

arrays’’; 

d. Indium Gallium Arsenide (InGaAs) 

‘‘focal plane arrays’’. 

Note 3: 6A002.a.3 does not apply to 

Mercury Cadmium Telluride (HgCdTe) ‘‘focal 

plane arrays’’ as follows in this Supplement: 

a. ‘Scanning Arrays’ having any of the 

following: 

1. 30 elements or less; or 

2. Incorporating time delay-and-integration 

within the element and having 2 elements or 

less; 

b. ‘Staring Arrays’ having less than 256 

elements. 

Technical Notes: a. ‘Scanning Arrays’ are 

defined as ‘‘focal plane arrays’’ designed for 

use with a scanning optical system that 

images a scene in a sequential manner to 

produce an image; 

b. ‘Staring Arrays’ are defined as ‘‘focal 

plane arrays’’ designed for use with a nonscanning optical system that images a scene. 

Note 6: 6A002.a.3 does not apply to the 

following ‘‘focal plane arrays’’ in this List: 

a. Gallium Arsenide (GaAs) or Gallium 

Aluminum Arsenide (GaAlAs) quantum well 

‘‘focal plane arrays’’ having less than 256 

elements; 

b. Microbolometer ‘‘focal plane arrays’’ 

having less than 8,000 elements. 

Note 7: 6A002.a.3.g does not apply to the 

linear (1-dimensional) ‘‘focal plane arrays’’ 

specially designed or modified to achieve 

‘charge multiplication’ having 4,096 elements 

or less. 

Note 8: 6A002.a.3.g. does not apply to the 

non-linear (2-dimensional) ‘‘focal plane 

arrays’’ specially designed or modified to 

achieve ‘charge multiplication’ having a 

maximum linear dimension of 4,096 

elements and a total of 250,000 elements or 

less. 

(xiv) 6A002.b. 

(xv) 6A002.c—‘direct view’ imaging 

equipment incorporating any of the 

following: 

(A) Image intensifier tubes having the 

characteristics listed in this Supplement’s 

description of 6A002.a.2.a or 6A002.a.2.b; 

(B) ‘‘Focal plane arrays’’ having the 

characteristics listed in this Supplement’s 

description of 6A002.a.3; or 

(C) Solid-state detectors having the 

characteristics listed in 6A002.a.1. 

(xvi) 6A003.b.3—imaging cameras 

incorporating image intensifier tubes having 

the characteristics listed in this Supplement’s 

description of 6A002.a.2.a or 6A002.a.2.b. 

Note: 6A003.b.3 does not apply to imaging 

cameras specially designed or modified for 

underwater use. 

(xvii) 6A003.b.4—imaging cameras 

incorporating ‘‘focal plane arrays’’ having 

any of the following: 

(A) Incorporating ‘‘focal plane arrays’’ 

specified by this Supplement’s description of 

6A002.a.3.a to 6A002.a.3.e; 

(B) Incorporating ‘‘focal plane arrays’’ 

specified by this Supplement’s description of 

6A002.a.3.f; or 

(C) Incorporating ‘‘focal plane arrays’’ 

specified by this Supplement’s description of 

6A002.a.3.g. 

Note 1: ‘Imaging cameras’ described in 

6A003.b.4 include ‘‘focal plane arrays’’ 

combined with sufficient ‘‘signal processing’’ 

electronics, beyond the read out integrated 

circuit, to enable as a minimum the output 

of an analog or digital signal once power is 

supplied. 

Note 2: 6A003.b.4.a does not control 

imaging cameras incorporating linear ‘‘focal 

plane arrays’’ with 12 elements or fewer, not 

employing time-delay-and-integration within 

the element, and designed for any of the 

following: 

a. Industrial or civilian intrusion alarm, 

traffic or industrial movement control or 

counting systems; 

b. Industrial equipment used for inspection 

or monitoring of heat flows in buildings, 

equipment or industrial processes; 

c. Industrial equipment used for 

inspection, sorting or analysis of the 

properties of materials; 

d. Equipment specially designed for 

laboratory use; or 

e. Medical equipment. 

Note 3: 6A003.b.4.b does not control 

imaging cameras having any of the following 

characteristics: 

a. A maximum frame rate equal to or less 

than 9 Hz; 

b. Having all of the following: 

1. Having a minimum horizontal or vertical 

‘Instantaneous-Field-of-View (IFOV)’ of at 

least 10 mrad/pixel (milliradians/pixel); 

2. Incorporating a fixed focal-length lens 

that is not designed to be removed; 

3. Not incorporating a ‘direct view’ display; 

and 

Technical Note: ‘Direct view’ refers to an 

imaging camera operating in the infrared 

spectrum that presents a visual image to a 

human observer using a near-to-eye micro 

display incorporating any light-security 

mechanism. 

4. Having any of the following: 

a. No facility to obtain a viewable image of 

the detected field-of-view; or 

b. The camera is designed for a single kind 

of application and designed not to be user 

modified; or 

Technical Note: ‘Instantaneous Field of 

View (IFOV)’ specified in Note 3.b is the 

lesser figure of the ‘Horizontal FOV’ or the 

‘Vertical FOV’. 

‘Horizontal IFOV’ = horizontal Field of 

View (FOV)/number of horizontal detector 

elements 

‘Vertical IFOV’= vertical Field of View 

(FOV)/number of vertical detector elements. 

c. Where the camera is specially designed 

for installation into a civilian passenger land 

vehicle of less than 3 tonnes three tons (gross 

vehicle weight) and having all of the 

following: 

1. Is operable only when installed in any 

of the following: 

a. The civilian passenger land vehicle for 

which it was intended; or 

b. A specially designed, authorized 

maintenance test facility; and 

2. Incorporates an active mechanism that 

forces the camera not to function when it is 

removed from the vehicle for which it was 

intended. 

Note: When necessary, details of the items 

will be provided, upon request, to the Bureau 

of Industry and Security in order to ascertain 

compliance with the conditions described in 

Note 3.b.4 and Note 3.c in this Note to 

6A003.b.4.b. 

Note 4: 6A003.b.4.c does not apply to 

‘imaging cameras’ having any of the 

following characteristics: 

a. Having all of the following: 

1. Where the camera is specially designed 

for installation as an integrated component 

into indoor and wall-plug-operated systems 

or equipment, limited by design for a single 

kind of application, as follows: 

a. Industrial process monitoring, quality 

control, or analysis of the properties of 

materials; 

b. Laboratory equipment specially 

designed for scientific research; 

c. Medical equipment; 

d. Financial fraud detection equipment; 

and 

2. Is only operable when installed in any 

of the following: 

a. The system(s) or equipment for which it 

was intended; or 

b. A specially designed, authorized 

maintenance facility; and 

3. Incorporates an active mechanism that 

forces the camera not to function when it is 

removed from the system(s) or equipment for 

which it was intended; 

b. Where the camera is specially designed 

for installation into a civilian passenger land 

vehicle of less than 3 tonnes (gross vehicle 

weight), or passenger and vehicle ferries 

having a length overall (LOA) 65 m or 

greater, and having all of the following: 

1. Is only operable when installed in any 

of the following: 

a. The civilian passenger land vehicle or 

passenger and vehicle ferry for which it was 

intended; or 

b. A specially designed, authorized 

maintenance test facility; and 

2. Incorporates an active mechanism that 

forces the camera not to function when it is 

removed from the vehicle for which it was 

intended; 

c. Limited by design to have a maximum 

‘‘radiant sensitivity’’ of 10 mA/W or less for 

wavelengths exceeding 760 nm, having all of 

the following: 


TKELLEY on DSK3SPTVN1PROD with PROPOSALS3
37546 Federal Register / Vol. 77, No. 120 / Thursday, June 21, 2012 / Proposed Rules 

1. Incorporating a response limiting 

mechanism designed not to be removed or 

modified; and 

2. Incorporates an active mechanism that 

forces the camera not to function when the 

response limiting mechanism is removed; 

and 

3. Not specially designed or modified for 

underwater use; or 

d. Having all of the following: 

1. Not incorporating a ‘direct view’ or 

electronic image display; 

2. Has no facility to output a viewable 

image of the detected field of view; 

3. The ‘‘focal plane array’’ is only operable 

when installed in the camera for which it 

was intended; and 

4. The ‘‘focal plane array’’ incorporates an 

active mechanism that forces it to be 

permanently inoperable when removed from 

the camera for which it was intended. 

Note: When necessary, details of the item 

will be provided, upon request, to the Bureau 

of Industry and Security in order to ascertain 

compliance with the conditions described in 

Note 4 above. 

Note 5: 6A003.b.4.c does not apply to 

imaging cameras specially designed or 

modified for underwater use. 

(xviii) 6A003.b.5. 

(xix) 6A004.c. 

(xx) 6A004.d. 

(xxi) 6A006.a.1. 

(xxii) 6A006.a.2—‘‘magnetometers’’ using 

optically pumped or nuclear precession 

(proton/Overhauser) ‘‘technology’’ having a 

‘sensitivity’ lower (better) than 2 pT (rms) per 

square root Hz. 

(xxiii) 6A006.c.1—‘‘magnetic 

gradiometers’’ using multiple 

‘‘magnetometers’’ specified by 6A006.a.1 or 

this Supplement’s description of 6A006.a.2. 

(xxiv) 6A006.d—‘‘compensation systems’’ 

for the following: 

(A) Magnetic sensors specified by 

6A006.a.2 and using optically pumped or 

nuclear precession (proton/Overhauser) 

‘‘technology’’ that will permit these sensors 

to realize a ’sensitivity’ lower (better) than 

2 pT rms per square root Hz. 

(B) Underwater electric field sensors 

specified by 6A006.b. 

(C) Magnetic gradiometers specified by 

6A006.c. that will permit these sensors to 

realize a ‘sensitivity’ lower (better) than 

3 pT/m rms per square root Hz. 

(xxv) 6A006.e—underwater 

electromagnetic receivers incorporating 

magnetometers specified by 6A006.a.1 or this 

Supplement’s description of 6A006.a.2. 

(xxvi) 6A008.d, .h, and .k. 

(xxvii) 6B008. 

(xxviii) 6D001—‘‘software’’ specially 

designed for the ‘‘development’’ or 

‘‘production’’ of equipment specified by 

6A004.c, 6A004.d, 6A008.d, 6A008.h, 

6A008.k, or 6B008. 

(xxix) 6D003.a. 

(xxx) 6E001. 

(xxxi) 6E002—‘‘technology’’ according to 

the General Technology Note for the 

‘‘production’’ of equipment specified by the 

6A or 6B provisions described in this 

Supplement. 

(7) Category 7 

(i) 7D002. 

(ii) 7D003.a. 

(iii) 7D003.b. 

(iv) 7D003.c. 

(v) 7D003.d.1 to d.4, d.7. 

(vi) 7E001. 

(vii) 7E002. 

(8) Category 8 

(i) 8A001.b to .d. 

(ii) 8A002.b—systems specially designed 

or modified for the automated control of the 

motion of submersible vehicles specified by 

8A001.b through .d using navigation data 

having closed loop servo-controls and having 

any of the following: 

(A) Enabling a vehicle to move within 

10 m of a predetermined point in the water 

column; 

(B) Maintaining the position of the vehicle 

within 10 m of a predetermined point in the 

water column; or 

(C) Maintaining the position of the vehicle 

within 10 m while following a cable on or 

under the seabed. 

(iii) 8A002.h and .j. 

(iv) 8A002.o.3. 

(v) 8A002.p. 

(vi) 8D001—‘‘software’’ specially designed 

for the ‘‘development’’ or ‘‘production’’ of 

equipment in 8A001.b to .d, 8A002.b (as 

described in this Supplement), 8A002.h, 

8A002.j, 8A002.o.3, or 8A002.p. 

(vii) 8D002. 

(viii) 8E001—‘‘technology’’ according to 

the General Technology Note for the 

‘‘development’’ or ‘‘production’’ of 

equipment specified by 8A001.b to .d, 

8A002.b (as described in this Supplement), 

8A002.h, 8A002.j, 8A002.o.3, or 8A002.p. 

(ix) 8E002.a. 

(9) Category 9 

(i) 9A011. 

(ii) 9B001.b. 

(iii) 9D001—‘‘software’’ specially designed 

or modified for the ‘‘development’’ of 

equipment or ‘‘technology’’, specified by 

9A011, 9B001.b. 9E003.a.1, 9E003.a.2 to a.5 

or 9E003.a.8 or 9E003.h. 

(iv) 9D002—‘‘software’’ specially designed 

or modified for the ‘‘production’’ of 

equipment specified by 9A011 or 9B001.b. 

(v) 9D004.a and .c. 

(vi) 9E001. 

(vii) 9E002. 

(viii) 9E003.a.1. 

(ix) 9E003.a.2 to a.5, a.8, .h. 

Supplement No. 7 to Part 774—Very 

Sensitive List 

(Note to Supplement No. 7: If text 

accompanies an ECCN below, then the Very 

Sensitive List is limited to a subset of items 

classified under the ECCN). 

(1) Category 1 

(i) 1A002.a. 

(ii) 1C001 (entire entry). 

(iii) 1C012 (entire entry). 

(iv) 1E001—‘‘technology’’ according to the 

General Technology Note for the 

‘‘development’’ or ‘‘production’’ of 

equipment and materials specified by 

1A002.a, 1C001, or 1C012. 

(2) Category 5—Part 1 

(i) 5A001.b.5. 

(ii) 5A001.h. 

(iii) 5D001.a—‘‘software’’ specially 

designed for the ‘‘development’’ or 

‘‘production’’ of equipment, functions or 

features specified by 5A001.b.5 or 5A001.h. 

(iv) 5E001.a—‘‘technology’’ according to 

the General Technology Note for the 

‘‘development’’ or ‘‘production’’ of 

equipment, functions, features or ‘‘software’’ 

specified by 5A001.b.5, 5A001.h, or 5D001.a. 

(3) Category 6 

(i) 6A001.a.1.b.1—systems or transmitting 

and receiving arrays, designed for object 

detection or location, having a sound 

pressure level exceeding 210 dB (reference 1 

mPa at 1 m) and an operating frequency in the 

band from 30 Hz to 2 kHz. 

(ii) 6A001.a.2.a.1 to a.2.a.3, a.2.a.5, or 

a.2.a.6. 

(iii) 6A001.a.2.b. 

(iv) 6A001.a.2.c—processing equipment, 

specially designed for real time application 

with towed acoustic hydrophone arrays, 

having ‘‘user accessible programmability’’ 

and time or frequency domain processing 

and correlation, including spectral analysis, 

digital filtering and beamforming using Fast 

Fourier or other transforms or processes. 

(v) 6A001.a.2.e. 

(vi) 6A001.a.2.f—processing equipment, 

specially designed for real time application 

with bottom or bay cable systems, having 

‘‘user accessible programmability’’ and time 

or frequency domain processing and 

correlation, including spectral analysis, 

digital filtering and beamforming using Fast 

Fourier or other transforms or processes. 

(vii) 6A002.a.1.c. 

(viii) 6B008. 

(ix) 6D001—‘‘software’’ specially designed 

for the ‘‘development’’ or ‘‘production’’ of 

equipment specified by 6B008. 

(x) 6D003.a. 

(xi) 6E001—‘‘technology’’ according to the 

General Technology Note for the 

‘‘development’’ of equipment or ‘‘software’’ 

specified by the 6A, 6B, or 6D provisions 

described in this Supplement. 

(xii) 6E002—‘‘technology’’ according to the 

General Technology Note for the 

‘‘production’’ of equipment specified by the 

6A or 6B provisions described in this 

Supplement. 

(4) Category 7 

(i) 7D003.a. 

(ii) 7D003.b. 

(5) Category 8 

(i) 8A001.b. 

(ii) 8A001.d. 

(iii) 8A002.o.3.b. 

(iv) 8D001—‘‘software’’ specially designed 

for the ‘‘development’’ or ‘‘production’’ of 

equipment specified by 8A001.b, 8A001.d, or 

8A002.o.3.b. 

(v) 8E001—‘‘technology’’ according to the 

General Technology Note for the 

‘‘development’’ or ‘‘production’’ of 

equipment specified by 8A001.b, 8A001.d, or 

8A002.o.3.b. 

(6) Category 9 

(i) 9A011. 


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Federal Register / Vol. 77, No. 120 / Thursday, June 21, 2012 / Proposed Rules 37547 

(ii) 9D001—‘‘software’’ specially designed 

or modified for the ‘‘development’’ of 

equipment or ‘‘technology’’ specified by 

9A011, 9E003.a.1, or 9E003.a.3.a. 

(iii) 9D002—‘‘software’’ specially designed 

or modified for the ‘‘production’’ of 

equipment specified by 9A011. 

(iv) 9E001—‘‘technology’’ according to the 

General Technology note for the 

‘‘development’’ of equipment or ‘‘software’’ 

specified by 9A011 or this Supplement’s 

description of 9D001 or 9D002. 

(v) 9E002—‘‘technology’’ according to the 

General Technology Note for the 

‘‘production’’ of equipment specified by 

9A011. 

(vi) 9E003.a.1. 

(vii) 9E003.a.3.a. 

Dated: June 15, 2012. 

Kevin J. Wolf, 

Assistant Secretary of Commerce for Export 

Administration. 

[FR Doc. 2012–15074 Filed 6–20–12; 8:45 am] 

BILLING CODE 3510–33–P 


TKELLEY on DSK3SPTVN1PROD with PROPOSALS3