This section of the FEDERAL REGISTER

contains notices to the public of the proposed

issuance of rules and regulations. The

purpose of these notices is to give interested

persons an opportunity to participate in the

rule making prior to the adoption of the final

rules.

Proposed Rules Federal Register

57554 

Vol. 73, No. 193 

Friday, October 3, 2008 

DEPARTMENT OF COMMERCE 

Bureau of Industry and Security 

15 CFR Parts 740 and 772 

[Docket No. 071213838–81132–01] 

RIN 0694–AE21 

Export Administration Regulations: 

Establishment of License Exception 

Intra-Company Transfer (ICT) 

AGENCY: Bureau of Industry and 

Security, Commerce. 

ACTION: Proposed rule. 

SUMMARY: This proposed rule would 

amend the Export Administration 

Regulations (EAR) to establish a new 

license exception entitled ‘‘IntraCompany Transfer (ICT).’’ This license 

exception would allow an approved 

parent company and its approved 

wholly-owned or controlled in fact 

entities to export, reexport, or transfer 

(in-country) many items on the 

Commerce Control List (CCL) among 

themselves for internal company use. 

Prior authorization from the Bureau of 

Industry and Security (BIS) would be 

required to use this license exception. 

This rule describes the criteria pursuant 

to which entities would be eligible to 

use License Exception ICT and the 

procedure by which they must apply for 

such authorization. This proposed rule 

is one of the initiatives in the export 

control directive announced by the 

President on January 22, 2008. 

DATES: Comments must be received by 

November 17, 2008. 

ADDRESSES: You may submit comments, 

identified by RIN 0694–AE21, by any of 

the following methods: 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

• E-mail: rpd2@bis.doc.gov. Include 

‘‘RIN 0694–AE21’’ in the subject line of 

the message. 

• Fax: 202–482–3355 

• Mail/Hand Delivery: Steven Emme, 

U.S. Department of Commerce, Bureau 

of Industry and Security, Regulatory 

Policy Division, 14th & Pennsylvania 

Avenue, NW., Room 2705, Washington, 

DC 20230, ATTN: RIN 0694–AE21. 

FOR FURTHER INFORMATION CONTACT: 

Steven Emme, Regulatory Policy 

Division; Telephone: 202–482–2440; Email: semme@bis.doc.gov. 

SUPPLEMENTARY INFORMATION: 

Background 

Presidential Directives on U.S. Export 

Control Reform and Deemed Export 

Advisory Committee 

On January 22, 2008, the President 

announced a package of directives to 

ensure that the export control policies 

and practices of the United States 

support the National Security Strategy 

of 2006, while facilitating the United 

States’ continued international 

economic and technological leadership. 

These directives focus the export 

control system to meet the 

unprecedented security challenges as 

well as the economic challenges faced 

by the United States, due to the 

increasing worldwide diffusion of high 

technology and impact of global 

markets. 

The directives recognize that the 

economic and technological 

competitiveness of the United States is 

essential to meet long-term national 

security interests. Export controls must, 

therefore, cover the export and reexport 

of sensitive items without unduly 

burdening U.S. economic 

competitiveness and innovation. This is 

particularly critical in light of the 

current and increasing globalization of 

research, development, and production, 

as well as the rise of new economic 

competitors and the diffusion of global 

supply networks that challenge U.S. 

economic and technological 

competitiveness. 

Shortly before the President 

announced the package of directives on 

U.S. export control reforms, the Deemed 

Export Advisory Committee (DEAC) 

presented its findings to the Secretary of 

Commerce on deemed export controls. 

The DEAC, a federal advisory committee 

established by the Secretary, undertook 

a comprehensive examination of the 

national security, technology, and 

competitiveness aspects of the deemed 

export rule. A deemed export is the 

release of technology and source code 

subject to the EAR to foreign nationals 

in the United States that is ‘‘deemed’’ to 

be an export to the home country or 

countries of the foreign national. In its 

final report, which was issued in 

December 2007, the DEAC concluded 

that the deemed export rule ‘‘no longer 

effectively serves its intended purpose 

and should be replaced with an 

approach that better reflects the realities 

of today’s national security needs and 

global economy.’’ In order to address 

this concern, the DEAC made several 

recommendations, including creating a 

category of ‘‘Trusted Entities’’ that 

voluntarily elect to qualify for 

streamlined treatment after meeting 

certain criteria. Further, the DEAC 

recommended that these ‘‘Trusted 

Entities’’ include subsidiaries abroad so 

that individuals and ideas could move 

within the company structure without 

the need for separate deemed export 

licenses. 

It is in the context of the President’s 

directives on U.S. export control 

reforms and with respect to the DEAC’s 

recommendations on deemed export 

controls that BIS is proposing this rule 

creating a license exception for intracompany transfers. 

The Impact of U.S. Export Controls on 

Intra-Company Transfers 

As global markets and manufacturing 

continue to evolve, many parent 

companies have numerous operations in 

multiple countries for distribution, 

service and repair, manufacturing and 

development, product testing, and other 

uses. In this environment, parent 

companies increasingly export 

commodities, software, and technology 

to their foreign branches, subsidiaries, 

and/or ultimate foreign parent 

companies around the world. 

Consequently, many companies may 

need multiple export licenses from BIS 

under a variety of scenarios for their 

own internal operations. For example, 

to conduct day-to-day operations, many 

companies in the United States must 

export commodities, software, and 

technology to their foreign branches and 

subsidiaries, resulting in the need for 

export licenses. In addition, companies 

may also require reexport licenses to 

transfer items among their foreign 

branches, foreign subsidiaries, and/or 

their ultimate foreign parent companies, 

located in multiple countries. On 

occasion, a company will have several 

branches or subsidiaries within the 

same foreign country and must then 

seek authorization to make in-country 


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transfers of technology and other items 

between those entities. Finally, 

releasing technology and source code 

subject to the EAR to foreign national 

employees at locations of the company 

in the United States or at the location of 

another foreign branch or subsidiary 

could generate the need for deemed 

export or deemed reexport licenses. 

Generally, obtaining these licenses for 

intra-company transfers can negatively 

impact transactions due to the delay 

involved in waiting for a licensing 

decision. Moreover, obtaining licenses 

for intra-company transfers can hinder 

more than just individual transactions; 

they can also hinder product 

development and the ability to be first 

to market—activities key to the 

competitiveness of U.S. companies. For 

many companies, product development 

entails large capital investments, 

compressed product cycles, and 

intensive coordination of research and 

development. With the current licensing 

requirements in place, however, many 

companies with U.S. operations may be 

forced to segregate their research and 

development activities. For instance, 

while waiting for the approval of a 

deemed export license, U.S. employees 

and certain foreign national employees 

would be precluded from collaborating 

together on projects. Furthermore, once 

the license is approved, companies may 

still need to segregate their research and 

development activities in the future 

because product breakthroughs could 

exceed the licensing parameters and 

require a new round of export licensing. 

Establishment of License Exception ICT 

In order to facilitate secure exports, 

reexports, and in-country transfers to, 

from, and among a parent company and 

its wholly-owned or controlled in fact 

entities, the Bureau of Industry and 

Security is proposing to amend the 

Export Administration Regulations 

(EAR) to create License Exception IntraCompany Transfer (ICT). License 

Exception ICT, which would be set forth 

in new § 740.19 of the EAR, would 

provide companies a process for intracompany exports, reexports, and incountry transfers without individual 

licenses. This license exception would 

allow parent companies and the entities 

that the parent company wholly owns or 

controls in fact to export, reexport, and 

transfer (in-country) many items on the 

Commerce Control List (CCL) among 

themselves for internal company use. 

The grant of ICT would be restricted to 

those approved companies and those 

Export Control Classification Numbers 

(ECCNs) that are authorized by BIS. 

Companies authorized to use License 

Exception ICT would benefit because it 

would relieve them of some of the 

administrative requirements of 

obtaining, tracking, and reporting on 

individual licenses and would reduce 

the lag time, expense, and uncertainty 

in the licensing process. This license 

exception would also improve research 

and development and other internal 

company activities, thus leading to 

improved competitiveness and 

innovation for companies with 

operations in the United States. 

In proposing this license exception for 

intra-company exports, reexports, and 

in-country transfers, BIS recognizes that 

industry and government share the goal 

of protecting controlled commodities, 

software, and technology, since these 

often represent proprietary information 

and property. Moreover, BIS also 

recognizes that many companies devote 

considerable financial and workforce 

resources to ensuring compliance with 

export controls. BIS would authorize 

License Exception ICT for those 

companies that demonstrate effective 

internal control plans, submit annual 

reports on their use of ICT, and agree to 

audits by BIS officials as requested. 

By authorizing this license exception 

for companies that have effective 

internal control plans and have agreed 

to audits, BIS can focus its resources on 

evaluating transactions involving lesserknown items and entities to better 

prevent exports to persons who may act 

contrary to U.S. national security and 

foreign policy interests. Greater focus on 

such transactions would increase the 

national security value of the remaining 

reviews of individual license 

applications. 

Definitions 

For purposes of this rule, BIS is 

defining multiple terms used with 

respect to License Exception ICT. These 

terms are ‘‘controlled in fact,’’ 

‘‘employee,’’ and ‘‘parent company.’’ 

This rule would amend § 772.1 of the 

EAR to include these new definitions as 

described below. 

First, BIS is amending the definition 

of ‘‘controlled in fact’’ in § 772.1 by 

applying aspects of the definition of the 

same term set forth in § 760.1(c) of the 

EAR to specify the circumstances in 

which one entity will be presumed to 

have control over another entity for 

purposes of License Exception ICT. In 

order to include any entity in its 

application to use License Exception 

ICT, the parent company must either 

wholly own or control in fact that 

individual entity. 

Next, BIS is amending § 772.1 to add 

the term ‘‘employee,’’ for purposes of 

License Exception ICT, to refer to 

persons who work, with or without 

compensation, in the interest of an 

entity that is an approved eligible user 

or an approved eligible recipient of ICT. 

Such persons must work at the 

approved eligible entity’s locations, 

including overseas locations, or at 

locations assigned by the approved 

eligible entity, such as at remote sites or 

on business trips. This definition may 

include permanent employees, 

contractors, and interns. 

Finally, BIS is amending § 772.1 to 

add the term ‘‘parent company,’’ which 

will be defined for purposes of License 

Exception ICT, to mean any entity that 

wholly owns or controls in fact a 

different entity, such as a subsidiary or 

branch. The parent company does not 

have to be an ultimate parent company, 

as that term is referred to in the 

definition of parent company; it may be 

wholly-owned or controlled by another 

entity or other entities. Also, the parent 

company does not need to be 

incorporated in or have its principal 

place of business in the United States. 

However, in order to be eligible for and 

use License Exception ICT, the parent 

company must be incorporated in or 

have its principal place of business in 

a country listed in Supplement No. 4 to 

part 740 (see new § 740.19(b)(1)). This 

definition does not include colleges and 

universities. Thus, the research 

conducted by colleges and universities 

that is not fundamental research (see 

§ 734.8(a) of the EAR) and that requires 

a license would not qualify for License 

Exception ICT. However, a university 

professor who enters into a contractual 

relationship with a company to conduct 

proprietary research could qualify as an 

‘‘employee’’ if all conditions in that 

definition are met. 

Information Required for Submission to 

BIS for Review to Use License Exception 

ICT 

In order to avail themselves of License 

Exception ICT, a ‘‘parent company’’ and 

the entities that it wholly owns or 

‘‘controls in fact’’ must maintain an 

internal control plan, hereinafter 

referred to as an ICT control plan. Upon 

implementation of the ICT control plan, 

the parent company, as the eligible 

applicant under new § 740.19(b)(1), 

must submit the plan to BIS for review 

pursuant to new § 740.19(e). 

Additionally, the eligible applicant 

must submit documentation showing 

that the ICT control plan has been 

implemented. Such documentation 

should include a representative sample 

of records showing effective compliance 

with the screening, training, and selfevaluation elements of the ICT control 

plan, as described below in further 

detail. 


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Along with the ICT control plan and 

supporting documentation, the eligible 

applicant parent company must list the 

wholly-owned entities and controlled in 

fact entities that the applicant parent 

company intends to be eligible users 

(see new § 740.19(b)(2)) or eligible 

recipients (see new § 740.19(b)(3)(i)) of 

this license exception. It is possible for 

an entity to be both an eligible user and 

an eligible recipient. For itself, and for 

each eligible user and eligible recipient 

entity, the eligible applicant parent 

company must list any individual or 

group that has at least a 10% ownership 

interest. Finally, the eligible applicant 

parent company must list the ECCNs of 

the items it plans to export, reexport, or 

transfer (in-country) under ICT; provide 

a narrative describing the purpose for 

which the requested ECCNs will be used 

and the anticipated resulting 

commodities, if applicable; disclose its 

relationship with each entity that is 

intended to be an eligible user and/or 

eligible recipient; and provide a signed 

statement by a company officer of the 

eligible applicant parent company 

stating that each entity will allow BIS to 

conduct audits on the use of License 

Exception ICT. 

ICT Control Plan 

An ICT control plan seeks to ensure 

that items on the Commerce Control List 

will not be exported, reexported, or 

transferred in violation of this license 

exception. As this license exception 

may be used for commodities, software, 

and technology, the ICT control plan 

must address how the parent company 

and the entities that it wholly owns or 

controls in fact, as eligible users and 

eligible recipients, will maintain items 

authorized for export, reexport, or 

transfer by this license exception within 

the company structure, as authorized by 

BIS. 

Within the ICT control plan, eligible 

applicants must describe how certain 

mandatory elements will be met. These 

mandatory elements, which are listed in 

new § 740.19(d)(1), include corporate 

commitment to export compliance, a 

physical security plan, an information 

security plan, personnel screening 

procedures, a training and awareness 

program, a self-evaluation program, a 

letter of assurance for software and 

technology, non-disclosure agreements, 

and end-user list reviews. All of these 

elements are aspects of export control 

compliance programs that establish 

effective internal control plans. In turn, 

these internal control plans generate an 

increased level of awareness of export 

control compliance issues among 

employees and help secure a company’s 

proprietary information. 

For the required ICT control plan 

elements in paragraphs (d)(1)(i) through 

(d)(1)(vi) of new § 740.19, BIS is not 

specifying how each company must 

achieve them due to the varying 

characteristics of companies. However, 

paragraphs (d)(1)(i) through (d)(1)(vi) do 

contain illustrative examples of 

evidence that a company may use in its 

descriptions detailing how it will 

implement those mandatory elements. 

While companies may include 

additional elements in their ICT control 

plan, they must, at a minimum, describe 

how the minimum mandatory elements 

set forth in § 740.19(d)(1) will be met. 

One mandatory element—the selfevaluation program in paragraph 

(d)(1)(vi)—requires the creation and 

performance of regular internal selfaudits, creation of a checklist of critical 

areas and items to review, and 

development of corrective procedures or 

measures implemented to correct 

identified deficiencies. If any identified 

deficiencies rise to the level of a 

violation of the EAR, the company 

should make a voluntary self-disclosure 

pursuant to § 764.5. 

If a company plans to use this license 

exception for commodities only, then 

the company may state in the ICT 

control plan that the mandatory 

elements of the ICT control plan set 

forth in paragraphs (d)(1)(iii) 

(information security plan), (d)(1)(iv) 

(personnel screening procedures), 

(d)(1)(vii) (letter of assurance for 

software and technology), (d)(1)(viii) 

(signing of non-disclosure agreements), 

and (d)(1)(ix) (review of end-user lists) 

are not applicable because the license 

exception will be used for commodities 

only and not used for software or 

technology. Similarly, if a company 

plans to use this license exception for 

software (excluding source code) only, 

or if a company plans to use this license 

exception for commodities and software 

(excluding source code) only, then the 

company may state in the ICT control 

plan that the mandatory elements found 

in paragraphs (d)(1)(iv) (personnel 

screening procedures), (d)(1)(viii) 

(signing of non-disclosure agreements), 

and (d)(1)(ix) (review of end-user lists) 

are not applicable because the license 

exception will be used for software 

(excluding source code) only, or, if 

appropriate, for software (excluding 

source code) and commodities only, and 

not used for technology or source code. 

Mandatory Requirements for 

Technology and Source Code Under an 

ICT Control Plan 

Entities that seek to be approved 

eligible users and/or eligible recipients 

of this license exception must ensure 

that non-U.S. national employees, 

wherever located, sign non-disclosure 

agreements before receiving technology 

or source code under this license 

exception. Such non-disclosure 

agreements must state that the employee 

agrees not to release any technology or 

source code in violation of the EAR, and 

such agreements must be binding as 

long as the technology or source code 

remains subject to export controls, 

regardless of the signatory’s 

employment relationship with the 

employer. In other words, even if the 

signatory’s employment relationship 

with the employer were severed, the 

signatory would remain prohibited from 

releasing any technology or source code 

received under License Exception ICT 

while employed. The non-disclosure 

agreement must also specify that the 

prohibition would remain in effect until 

the technology or source code no longer 

required a license to any destination 

under the EAR. 

In addition, entities that seek to be 

approved eligible users and/or eligible 

recipients of ICT must screen non-U.S. 

national employees who are also foreign 

national employees in the country in 

which they are working against lists of 

end-user concern. This screening 

requirement applies if such individuals 

are to receive technology or source code 

under ICT. The lists of end-users of 

concern are compiled by the U.S. 

government and may be accessed at the 

BIS Web site at http://www.bis.doc.gov. 

Upon publication of a final rule, BIS 

plans to provide guidance on its website 

with respect to screening such 

employees for purposes of ICT. 

Non-U.S. national employees are 

those employees who are not U.S. 

citizens, U.S. permanent residents, or 

protected individuals under the 

Immigration and Naturalization Act (8 

U.S.C. 1324b(a)(3)). Foreign national 

employees are those non-U.S. national 

employees, wherever located, who are 

not citizens or legal permanent residents 

of the country in which they work. For 

instance, a German national working in 

the United States and a German national 

working in France are both considered 

foreign national employees for purposes 

of this rule (and more generally for 

purposes of the EAR). However, a 

French national working in France is 

not a foreign national employee from 

the perspective of BIS. Therefore, all 

foreign national employees are non-U.S. 

national employees, but not all non-U.S. 

national employees are foreign national 

employees. This distinction is important 

because the non-disclosure agreement 

element in an ICT control plan applies 

to the German national working in 

France as well as to the French national 


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working in France. Thus, it applies to 

non-U.S. national employees who 

would otherwise be permitted to receive 

technology or source code subject to the 

EAR, if not for the grant of ICT, under 

a deemed export license, deemed 

reexport license, license to a facility 

where the employee works, or other 

license exception. 

Unlike the non-disclosure agreement 

requirement, the screening element 

applies only to foreign national 

employees. Hence, it would apply to a 

German national working in France but 

not to a French national working in 

France. The release of technology or 

source code subject to the EAR to a 

foreign national employee may occur 

under a deemed export or deemed 

reexport license or by operation of a 

license exception, but it may also occur 

under a license that has been issued to 

a facility. For example, a technology 

license approved for a French facility 

may have a condition allowing all EU 

nationals to receive the technology as 

well as the French employees. The 

screening requirement is intended to 

apply to all foreign national employees 

receiving technology or source code 

under ICT that would otherwise require 

a license, whether it be through a 

license for a deemed export or deemed 

reexport, a license issued to a facility, or 

other license exception. 

Additionally, foreign national 

employees of companies located in the 

United States must comply with U.S. 

immigration laws and maintain current 

and valid visa authorization. 

Authorization From BIS to Use License 

Exception ICT 

Following receipt of the ICT control 

plan and all information required under 

new § 740.19(e)(1), BIS will review and 

refer the submission to the reviewing 

agencies consistent with §§ 750.3 and 

750.4 of the EAR and Executive Order 

12981, as amended by Executive Orders 

13020, 13026, and 13117. In order to 

determine ICT eligibility, BIS will 

consider prior licensing history of the 

eligible applicant parent company and 

its wholly-owned or controlled in fact 

entities that are part of the authorization 

request, demonstration of an effective 

ICT control plan, need for this license 

exception within the company structure 

as articulated by the applicant parent 

company, and relationship of the 

wholly-owned or controlled in fact 

entities to the eligible applicant parent 

company. 

Upon reaching a decision, BIS will 

inform the eligible applicant parent 

company in writing if it may use this 

license exception pursuant to new 

§ 740.19(f). BIS will specify the terms of 

the ICT authorization, including 

identifying the wholly-owned or 

controlled in fact entities of the eligible 

applicant parent company that may use 

ICT and the ECCNs of the items that 

may be exported, reexported, or 

transferred (in-country) for internal 

company use under ICT. After receiving 

authorization, approved parent 

companies and their approved whollyowned or controlled in fact entities, if 

covered under the ICT control plan, may 

use this license exception to export, 

reexport, or transfer (in-country) 

approved commodities, software, and/or 

technology among themselves for 

internal company use only. Any entity 

that seeks to become an eligible user 

and/or eligible recipient, as described in 

new §§ 740.19(b)(2) and 740.19(b)(3)(i), 

must be specifically covered by the ICT 

control plan submitted to BIS and 

maintain the ICT control plan of the 

eligible applicant parent company. 

Exports, reexports, and in-country 

transfers for any purpose other than 

internal company use are not authorized 

under License Exception ICT. With 

respect to an item that has been 

exported, reexported, or transferred (incountry) pursuant to License Exception 

ICT, the entity must submit a license 

application if required under the EAR 

before using the item for a purpose other 

than that covered by this license 

exception. Also, should control of the 

approved eligible applicant parent 

company change, then use of License 

Exception ICT is no longer valid. The 

newly-controlled eligible applicant 

parent company must re-submit the 

information required for ICT 

authorization, as described in new 

§ 740.19(g)(3). 

Annual Reporting Requirements 

After submitting a request for 

authorization to use License Exception 

ICT pursuant to new § 740.19(e) and 

after receiving approval from BIS, 

approved eligible applicant parent 

companies must submit an annual 

report to BIS on the use of this license 

exception by itself and by its approved 

wholly-owned or controlled in fact 

entities. Specifically, approved eligible 

applicant parent companies must list 

the name, nationality, and date of birth 

of each foreign national employee, as 

described in note 2 to new 

§ 740.19(b)(3)(ii), who has received 

technology or source code under this 

license exception. The requirement is 

limited to those employees, who would 

have required a license to receive 

technology or source code if not for ICT, 

and who are not citizens or legal 

permanent residents of the country in 

which they are employed. Therefore, it 

applies to foreign national employees 

working in the United States and to 

foreign national employees working 

outside of the United States. 

Also, approved eligible applicant 

parent companies must submit the 

names of those foreign national 

employees, as described in note 2 to 

new § 740.19(b)(3)(ii), who previously 

received technology or source code 

under this license exception and have 

ended their employment. This 

requirement does not apply to those 

who have merely switched positions 

within the company structure of the 

parent company, so long as the new 

employer is an approved eligible entity 

under the same parent company. BIS is 

requesting this information in order to 

examine the use of License Exception 

ICT and measure its effectiveness. 

Further, a company officer must certify 

to BIS that the approved eligible 

applicant parent company and its 

approved eligible users and eligible 

recipient entities are in compliance with 

the terms and conditions of ICT. This 

certification should include the results 

of the self-evaluation described in 

paragraph (d)(1)(vi) of this section. 

Auditing Use of License Exception ICT 

BIS will conduct audits of approved 

eligible applicant parent companies and 

their approved wholly-owned or 

controlled in fact entities to ensure 

proper compliance with License 

Exception ICT. These reviews will take 

place approximately once every two 

years. Generally, BIS will give notice to 

the relevant parties before conducting 

an audit. However, if BIS has reason to 

believe that an entity is improperly 

using ICT, BIS may conduct an 

unannounced audit at its discretion that 

is separate from the biennial audit. 

Restrictions on the Use of License 

Exception ICT and the Direct Product 

Rule 

Consistent with other license 

exceptions, License Exception ICT is 

subject to the restrictions on the use of 

all license exceptions, which are set 

forth in § 740.2 of the EAR. Therefore, 

ICT cannot be used for certain items, 

such as items controlled for missile 

technology reasons or certain items that 

are ‘‘space qualified.’’ Moreover, ICT is 

subject to revision, suspension, or 

revocation, in whole or in part, without 

notice. 

Also, new § 740.19(c) lists restrictions 

on using ICT. For instance, items 

controlled for Encryption Items (EI) 

reasons and items controlled for 

Significant Items (SI) reasons are 

ineligible for export, reexport, or 

transfer (in-country) under ICT. At this 


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time, License Exception ENC will 

remain the primary resource for 

providing the authorization necessary 

for many intra-company transfers of 

encryption items. Further, no items 

exported, reexported, or transferred 

within country under this license 

exception may be subsequently 

exported, reexported, or transferred for 

purposes other than internal company 

use, unless done so in accordance with 

the EAR. However, items that have been 

exported, reexported, or transferred (incountry) under License Exception ICT 

may not be subsequently exported, 

reexported, or transferred (in-country) 

under License Exception APR (see 

§ 740.16). 

Finally, note that whether the foreign 

direct product of U.S. software or 

technology exported from abroad, 

reexported, or transferred under License 

Exception ICT is subject to the EAR is 

determined under § 736.2(b)(3) of the 

EAR, when the foreign direct product is 

exported from abroad, reexported, or 

transferred (in-country) for other than 

internal use within a Country Group D:1 

country or Cuba. 

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 July 23, 2008, 73 FR 43603 

(July 25, 2008), has continued the 

Export Administration Regulations in 

effect under the International 

Emergency Economic Powers Act. 

Rulemaking Requirements 

1. This proposed rule has been 

determined to be significant for 

purposes of Executive Order 12866. 

2. Notwithstanding any other 

provision of law, no person is required 

to respond to nor be subject to a penalty 

for failure to comply with a collection 

of information, subject to the 

requirements of the Paperwork 

Reduction Act of 1995 (44 U.S.C. 3501 

et seq.) (PRA), unless that collection of 

information displays a currently valid 

Office of Management and Budget 

(OMB) Control Number. This proposed 

rule contains a collection previously 

approved by the OMB under control 

numbers 0694–0088, ‘‘Multi-Purpose 

Application,’’ which carries a burden 

hour estimate of 58 minutes to prepare 

and submit form BIS–748. 

Miscellaneous and recordkeeping 

activities account for 12 minutes per 

submission. In addition, this proposed 

rule contains a new collection for 

reporting, recordkeeping, and auditing 

requirements, which would be 

submitted for approval to use License 

Exception ICT, carries an estimated 

burden of 19.6 hours for companies 

having an existing internal control plan 

and 265.6 hours for companies not 

having an existing internal control plan 

in place. A request for new collection 

authority will be submitted to OMB for 

approval. Public comment will be 

sought regarding the burden of the 

collection of information associated 

with preparation and submission of 

these proposed voluntary requirements. 

BIS estimates that this rule will reduce 

the number of multi-purpose 

application forms that must be filed by 

582 annually. Send comments regarding 

this burden estimate or any other aspect 

of this collection information, including 

suggestions for reducing the burden, to 

Jasmeet K. Seehra, Office of 

Management and Budget (OMB), and to 

the Regulatory Policy Division, Bureau 

of Industry and Security, Department of 

Commerce, as indicated in the 

ADDRESSES section of this proposed rule. 

3. This rule does not contain policies 

with Federalism implications as that 

term is defined in Executive Order 

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 economic 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 economic impact on a 

substantial number of small entities for 

the reasons explained below. 

Consequently, BIS has not prepared a 

regulatory flexibility analysis. 

The EAR applies to all entities that 

export, reexport, or transfer 

commodities, software, and technology 

that are subject to the EAR. The EAR 

potentially affects any entity in any 

sector that chooses to export, reexport, 

or transfer items subject to the EAR. 

Thus, while this proposed rule could 

potentially have a significant economic 

impact on small entities, BIS believes 

that this proposed rule will not impact 

a substantial number of small entities. 

BIS does not have data on the total 

number of small entities that are 

potentially impacted by the 

requirements of the EAR, but BIS does 

maintain data on actual licenses applied 

for by entities of all sizes. In order to 

examine the number of small entities 

that would be impacted by this 

proposed rule, BIS examined the 

licensing data to find approved licenses 

that would potentially qualify as an 

intra-company transfer. Using this data 

as well as using estimated burden hours 

in gaining ICT authorization, BIS 

conducted a cost-benefit analysis to see 

which entities would likely choose to 

apply for authorization. BIS also 

examined all approved licenses that 

could qualify as intra-company transfers 

to determine whether any entities were 

small entities. 

Upon initial examination of licensing 

data from 2004 to 2006, BIS found that 

approximately 200 companies had 

licenses approved that could potentially 

qualify as an intra-company transfer. Of 

those companies, the vast majority 

consisted of large parent companies, 

medium-sized companies, or companies 

that were owned by larger domestic or 

foreign companies. This result supports 

the premise that entities that would 

avail themselves of ICT must be large 

enough to have subsidiaries or branches 

located in different countries that the 

entities control in fact. 

To look at which of those 

approximately 200 companies would 

most likely choose to apply for ICT 

authorization, BIS conducted a costbenefit analysis by estimating the 

burden hours involved in gaining ICT 

authorization as well as with complying 

with recordkeeping and reporting 

requirements under ICT. BIS 

determined that over a three-year period 

it would take 280.8 hours (or 16,848 

minutes) for a company without an 

internal control program to seek ICT 

authorization and 34.8 hours (or 2088 

minutes) for a company with an existing 

internal control program to seek ICT 

authorization. The threshold by which 

companies would likely be inclined to 

apply for authorization to use ICT is the 

point at which the burden of applying 

for licenses over a three-year period (at 

70 minutes per license) exceeds the total 

ICT burden hours over three years (at 

16,848 minutes for companies without 

an existing internal control program or 

at 2088 minutes for companies with an 

internal control program). In order to 

meet that threshold, companies without 

an internal control program would have 

to apply for about 241 licenses over a 

three-year period, and companies with 


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an existing internal control program 

would have to apply for about 30 

licenses per year over a three-year 

period. Only two companies meet the 

241 license threshold, and those 

companies are not small entities under 

the North American Industry 

Classification System (NAICS) 

standards. Sixteen companies meet the 

30 license threshold or come close 

(within five licenses) of meeting the 

threshold, and none of those companies 

is a small entity under the NAICS 

standards. In addition to burden hours, 

companies without an existing internal 

compliance program may be less likely 

to choose to seek ICT authorization 

because additional investments would 

likely need to be made to implement an 

internal control program. While these 

upfront investments could greatly vary 

depending on company size as well as 

the type and number of items in the 

company portfolio, it is likely that 

companies would need to invest in 

physical and information security as 

well as incur travel expenses to visit 

overseas facilities to ensure that the 

internal compliance program is 

operating effectively. All of these 

additional costs would likely increase 

the burden in any cost-benefit analysis 

and would likely make an entity of any 

size that does not have an internal 

compliance program less likely to seek 

ICT authorization and thus not be 

impacted by this proposed rule. 

Even if an entity without an internal 

compliance program utilizes a different 

cost-benefit analysis and decides to 

apply for ICT authorization, BIS 

licensing data shows that the potential 

ICT candidate would not be a small 

entity. Only four companies, for which 

public information was available, were 

found to qualify as small entities under 

the NAICS. However, the potential 

intra-company licenses approved for 

these four entities would all be 

ineligible under License Exception ICT. 

The items approved for export were all 

items listed under § 740.2 that are 

restricted for export, reexport, or incountry transfer under all license 

exceptions. Therefore, no small entity 

was found to have licenses that were 

approved by BIS over a three-year 

period that would qualify under ICT. 

Consequently, this proposed rule would 

not affect a significant number of small 

entities. 

This proposed rule was mandated by 

the President in National Security 

Presidential Directive (NSPD) 55. While 

this proposed rule will increase burden 

hours for those entities choosing to seek 

authorization for License Exception ICT, 

BIS licensing data and publicly 

available information show that no 

small entities in the period of review 

received approved licenses for intracompany transfers that would be 

eligible for License Exception ICT. 

Thus, a substantial number of small 

entities will not be impacted by this 

proposed rule. 

List of Subjects 

15 CFR Part 740 

Administrative practice and 

procedure, Exports, Reporting and 

recordkeeping requirements. 

15 CFR Part 772 

Exports. 

For the reasons set forth in the 

preamble, parts 740 and 772 of the 

Export Administration Regulations (15 

CFR 730–774) are amended as follows: 

PART 740—[AMENDED] 

1. The authority citation for 15 CFR 

part 740 is revised 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 July 23, 2008, 73 FR 

43603 (July 25, 2008). 

2. Section 740.19 is added to read as 

follows: 

§ 740.19 Intra-Company Transfer (ICT). 

(a) Scope. This license exception 

authorizes exports, reexports, and incountry transfers of items on the 

Commerce Control List for internal 

company use among approved eligible 

applicants, eligible users, and eligible 

recipients, as described in paragraphs 

(b)(1), (b)(2), and (b)(3) respectively, of 

this section. Use of License Exception 

ICT is limited to those entities and those 

ECCNs that are authorized by BIS, 

pursuant to paragraph (f) of this section. 

(b) Eligibility. 

(1) Eligible applicant. The eligible 

applicant is the ‘‘parent company,’’ as 

that term is defined in section 772.1, 

that institutes an ICT control plan, as 

described in paragraph (d) of this 

section, and that applies for 

authorization from BIS to use this 

license exception. The eligible applicant 

must be incorporated in or have its 

principal place of business in any 

country listed in Supplement No. 4 to 

part 740. In addition, the eligible 

applicant may be, but is not required to 

be, the ultimate parent company, as that 

term is referred to in the definition of 

‘‘parent company’’ set forth in section 

772.1; hence the eligible applicant may 

be owned or controlled by other entities. 

However, the ultimate parent company 

cannot be an eligible user under this 

license exception unless it is also the 

eligible applicant. Application 

requirements are set forth in paragraph 

(e) of this section. 

(2) Eligible users. Eligible users may 

be eligible applicants, as described in 

paragraph (b)(1) of this section, and 

their wholly-owned or ‘‘controlled in 

fact’’ entities that implement and 

maintain the ICT control plan of the 

eligible applicant and that are included 

in the applications submitted by eligible 

applicants pursuant to paragraph (e) of 

this section. Eligible applicants must 

ensure that each eligible user 

implements the eligible applicant’s ICT 

control plan, including the use of nondisclosure agreements as described in 

paragraph (d)(1)(viii) of this section. 

(3) Eligible recipients. 

(i) Entities. Eligible recipients of items 

under this license exception may be 

eligible applicants as described in 

paragraph (b)(1) of this section, eligible 

users as described in paragraph (b)(2) of 

this section, and eligible applicants’ 

other wholly-owned or controlled in 

fact companies that implement and 

maintain the ICT control plan of the 

eligible applicant and that are named in 

the applications submitted by the 

eligible applicant pursuant to paragraph 

(e) of this section. Eligible applicants 

must ensure that each eligible recipient, 

as described in this paragraph, 

implements the eligible applicant’s ICT 

control plan, including the use of nondisclosure agreements as described in 

paragraph (d)(1)(viii) of this section. 

(ii) Non-U.S. national employees 

receiving technology or source code. 

Non-U.S. national employees (wherever 

located) of entities that are eligible 

applicants, eligible users, and/or eligible 

recipients of this license exception may 

be eligible recipients of technology and 

source code under this license 

exception provided the non-U.S. 

national employees sign non-disclosure 

agreements with their employer in 

which the non-U.S. national employees 

agree not to release any technology or 

source code in violation of the EAR. 

Additionally, if non-U.S. national 

employees are also foreign national 

employees in their country of 

employment, then such non-U.S. 

national employees must also be 

screened by the appropriate eligible user 

against end-user lists compiled by the 

U.S. government. For further 

information on employees, nondisclosure agreements, and screening 

requirements, see §§ 772.1, 

740.19(d)(1)(viii), and 740.19(d)(1)(ix) 

respectively. 

Note 1 to Paragraph (B)(3)(II) of this 

Section: Non-U.S. national employees are 

those employees who are not U.S. citizens, 

lawful permanent residents of the United 


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States, or individuals protected under the 

Immigration and Naturalization Act (8 U.S.C. 

1324b(a)(3)). Non-U.S. national employees 

include those working in the United States 

and outside of the United States. 

Furthermore, non-U.S. national employees 

include those employees who would 

otherwise be permitted to receive technology 

or source code only under: (1) A deemed 

export or deemed reexport license; (2) a 

license issued to a facility, and the employee 

is a citizen or legal permanent resident of the 

same country where the facility is located; 

and (3) a license issued to a facility, but the 

employee is not a citizen or legal permanent 

resident of the country where the facility is 

located; (4) another authorization such as a 

license exception other than ICT. 

Note 2 to Paragraph (B)(3)(II) of this 

Section: Foreign national employees are 

those non-U.S. national employees who are 

not citizens or legal permanent residents of 

the country in which they are employed. 

Foreign national employees include those 

employees who would otherwise receive 

technology or source code under: (1) A 

deemed export or deemed reexport license; 

or (2) a license to a facility, but the employee 

is not a citizen or legal permanent resident 

of the country where the facility is located; 

or (3) another authorization such as a license 

exception other than ICT. 

(4) Eligible uses. Items exported, 

reexported, or transferred within 

country under this license exception 

may be exported, reexported, or 

transferred only for purposes of the 

internal company use by approved 

eligible applicants and approved 

eligible users of this license exception, 

as described in paragraphs (b)(1) and 

(b)(2) respectively, of this section. 

(c) Restrictions. 

(1) No item may be exported, 

reexported, or transferred within 

country under this license exception to 

destinations in or nationals of Country 

Group E or North Korea. 

(2) No item exported, reexported, or 

transferred within country under this 

license exception may be subsequently 

exported, reexported, or transferred for 

purposes other than the internal 

company use of approved eligible 

applicants, eligible users, and eligible 

recipients, as described in paragraphs 

(b)(1), (b)(2), and (b)(3)(i) respectively, 

of this section, unless done so in 

accordance with the EAR. See paragraph 

(c)(3) of this section for further 

restrictions. 

(3) No items that have been exported, 

reexported, or transferred (in-country) 

under License Exception ICT may be 

subsequently exported, reexported, or 

transferred (in-country) under License 

Exception APR (see § 740.16). 

(4) No release of technology or source 

code is authorized under this license 

exception to foreign national employees 

whose visa or authority to work has 

been revoked, denied, or is otherwise 

not valid. It is the responsibility of the 

exporter to ensure that foreign national 

employees working in the United States 

maintain a valid U.S. visa if they are 

required to hold a visa from the United 

States. 

(5) No release of technology or source 

code is authorized under this license 

exception to a foreign national 

employee, as described in note 2 to 

paragraph (b)(3)(ii), if that employee or 

a prior employer of that employee is 

listed on any of the end-user lists of 

concern compiled by the U.S. 

government. In such instances, eligible 

applicants (or eligible users, as 

appropriate) should obtain the 

appropriate authorization required 

under the EAR. 

(6) No items controlled for Encryption 

Items (EI) reasons under ECCNs 5A002, 

5D002, or 5E002 may be exported, 

reexported, or transferred (in-country) 

under this license exception. 

(7) No items controlled for Significant 

Items (SI) reasons may be exported, 

reexported, or transferred (in-country) 

under this license exception. 

(d) ICT control plan. Prior to 

submitting an application to BIS under 

paragraph (e) of this section, and before 

making any exports, reexports, or incountry transfers under this license 

exception, eligible applicants must 

implement an ICT control plan that is 

designed to ensure compliance with this 

license exception and the EAR. In 

addition, eligible users and eligible 

recipient entities must implement the 

ICT control plan of the eligible 

applicant. Under an ICT control plan, 

which may be a component of a more 

comprehensive export compliance 

program, all entities that seek to use this 

license exception must ensure that 

commodities, software, and technology, 

where applicable, will not be exported, 

reexported, or transferred in violation of 

this license exception. With their 

application for authorization (as 

described in paragraph (e) of this 

section) to use this license exception, 

eligible applicants must submit a copy 

of the ICT control plan and must 

specifically note which of their whollyowned or controlled in fact entities are 

covered by the plan. BIS may require 

the eligible applicant to modify the ICT 

control plan before authorizing use of 

this license exception. Paragraph (d)(1) 

of this section lists the mandatory 

elements of an ICT control plan. 

Paragraph (d)(2) of this section lists 

exceptions to addressing certain 

mandatory elements in paragraph (d)(1) 

in the ICT control plan. 

(1) Mandatory elements of an ICT 

control plan. The following elements are 

mandatory, subject to the exceptions in 

paragraph (d)(2) of this section. The ICT 

control plan must describe how each 

mandatory element will be 

implemented. In order to provide 

guidance, the mandatory elements 

described in paragraphs (d)(1)(i) through 

(d)(1)(v) include illustrative examples of 

evidence demonstrating how the 

element may be addressed. Note that 

these illustrative examples are 

guidelines only; satisfying the five 

required elements in paragraphs (d)(1)(i) 

through (d)(1)(v) of this section is 

dependent upon the nature and 

complexity of company activities, the 

type of items that will be exported, 

reexported, or transferred under this 

license exception (i.e., commodities, 

software, and/or technology), the 

countries involved, and the relationship 

between the eligible users and eligible 

recipients of this license exception, as 

described in paragraphs (b)(2) and 

(b)(3)(i) respectively of this section. 

With respect to the other four elements 

of the ICT control plan, eligible 

applicants must fulfill certain specified 

requirements. For paragraphs (d)(1)(vi), 

(d)(1)(vii), (d)(1)(viii), and (d)(1)(ix) of 

this section, no illustrative examples are 

included. Note, however, that to satisfy 

the self-evaluation element in paragraph 

(d)(1)(vi) of this section, establishing 

self-audits, creating a checklist, and 

developing corrective measures are 

required, but the self-audits may be 

structured in a manner that works best 

for the eligible applicant and its whollyowned or controlled in fact entities. In 

order to use this license exception for 

technology or software, a letter of 

assurance, consistent with §§ 740.19(c) 

and 740.6, must be provided by a 

company officer of the eligible 

applicant. Additionally, in order to use 

this license exception for non-U.S. 

national employees, wherever located, 

to receive technology or source code 

under this license exception, submitting 

a template or sample of the nondisclosure agreement to be used is a 

mandatory element. Also, in order to 

use this license exception for non-U.S. 

national employees who are also foreign 

national employees, reviewing lists of 

end-users of concern compiled by the 

U.S. government is a mandatory 

element. 

(i) Corporate commitment to export 

compliance. Evidence of a corporate 

commitment to export compliance may 

include: An organizational chain of 

command for export controls 

compliance issues and related issues of 

concern; senior management member(s) 

responsible for export controls 

compliance, who are able to 


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demonstrate how compliance issues are 

resolved; internal recordkeeping 

requirements in accordance with the 

EAR; maintenance of a sound 

commodity classification methodology; 

and commitment of resources to 

implement and maintain an ICT control 

plan. 

(ii) Physical security plan. Evidence of 

a physical security plan may include: 

Methods of physical security that 

prevent the transfer of commodities, 

software, and technology on the 

Commerce Control List outside of the 

internal company structure; and 

organization and maintenance of up-todate building layouts, including a 

description of physical security 

measures, such as secured doors and 

badges as well as biometric, guard, and 

perimeter controls. 

(iii) Information security plan. 

Evidence of an information security 

plan may include: Organization and 

maintenance of up-to-date virtual 

security layouts and descriptions of 

what information security methods are 

in place, such as password protection, 

firewalls, segregated servers, nonnetwork computers, and intranet 

security. 

(iv) Personnel screening procedures. 

Evidence of personnel screening 

procedures may include: Thorough prescreening analysis of new foreign 

national employees, as described in note 

2 to paragraph (b)(3)(ii), which includes, 

but is not limited to, criminal 

background, driver’s license, and credit 

history, before allowing them to receive 

technology or source code through a 

license or license exception. 

(v) Training and awareness program. 

Evidence of a training and awareness 

program may include: Creation, 

scheduling, and performance of regular 

training programs (for all employees 

working in areas relevant to export 

controls) to inform employees about 

export controls and limits on their 

access to technology or source code. 

(vi) Self-evaluation program. 

Evidence of a self-evaluation program 

must include the following three 

components: Creation and performance 

of regular internal self-audits, which 

may be conducted through the use of 

internal and/or external resources 

depending upon the needs and demands 

of the organization; creation of a 

checklist of critical areas and items to 

review, including identification of any 

deficiencies; and development of 

corrective procedures or measures 

implemented to correct identified 

deficiencies. Note: Disclosure of 

identified deficiencies and corrective 

actions will be considered when 

evaluating effective ICT control plans 

under paragraph (f)(2). Failure to 

disclose this information could result in 

revocation, as noted in paragraph (j). 

Any violations of the EAR that are 

uncovered in the process of conducting 

this self-evaluation should be disclosed 

to BIS in accordance with the voluntary 

self-disclosure procedures found in 

section 764.5. 

(vii) Letter of assurance for software 

and technology. A company officer of 

the eligible applicant must submit a 

signed statement on company letterhead 

stating that under this license exception, 

the eligible applicant and each eligible 

user and/or eligible recipient entity will 

not export, reexport, or transfer (incountry) software (including the source 

code for the software) and technology, 

consistent with paragraph (c)(1) of this 

section and consistent with paragraphs 

(a)(1) and (a)(2) of § 740.6. 

(viii) Signing of non-disclosure 

agreements. Non-disclosure agreements 

not to release any technology or source 

code must be binding with respect to 

any technology or source code that has 

been released or otherwise provided to 

any non-U.S. national employee, 

wherever located, on the basis of this 

license exception, until such technology 

or source code no longer requires a 

license to any destination under the 

EAR, regardless of whether the non-U.S. 

national’s employment relationship 

with the company remains in effect. 

Non-disclosure agreements should be 

completed in both English and the nonU.S. national employee’s native 

language. 

(ix) Review of end-user lists. Foreign 

national employees, as described in note 

2 to paragraph (b)(3)(ii), who are eligible 

to receive technology or source code 

under this license exception, must be 

screened against all lists of end-users of 

concern compiled by the U.S. 

government. In addition, prior 

employers of the foreign national 

employees must also be screened. These 

lists can be accessed at http:// 

www.bis.doc.gov. See paragraph (c)(5) of 

this section for specific restrictions. 

(2) Exceptions to certain mandatory 

elements of an ICT control plan. 

(i) If this license exception will be 

used only for commodities, then the ICT 

control plan elements described in 

paragraphs (d)(1)(iii), (d)(1)(iv), 

(d)(1)(vii), (d)(1)(viii), and (d)(1)(ix) are 

not mandatory. In this situation, the ICT 

control plan must state that this license 

exception will be used for commodities 

only and not used for software or 

technology. 

(ii) If this license exception will be 

used only for software (excluding source 

code), or if this license exception will be 

used only for commodities and software 

(excluding source code), then the ICT 

control plan elements described in 

paragraphs (d)(1)(iv), (d)(1)(viii), and 

(d)(1)(ix) are not mandatory. In this 

situation, the ICT control plan must 

state that this license exception will be 

used for software (excluding source 

code) only, or will be used for 

commodities and software (excluding 

source code) only, and not used for 

technology or source code. 

(e) Information required for grant of 

ICT authorization. 

(1) Prior to the export, reexport, or incountry transfer of items on the 

Commerce Control List under this 

license exception, an eligible applicant, 

as described in paragraph (b)(1) of this 

section, must submit the following 

information to BIS: 

(i) For the eligible applicant: Full 

name of company; location of company 

headquarters; location of principal place 

of business; complete physical 

addresses (listing a post office box is 

insufficient) of company’s headquarters 

and principal place of business; post 

office box if used as an alternate 

address; location of registration or 

incorporation; ownership of company, 

including listing all individuals or 

groups that have at least a 10% 

ownership interest; and need for 

License Exception ICT, including listing 

the ECCNs of the items that will be 

exported, reexported, or transferred (incountry) under this license exception 

and a detailed narrative describing the 

intended use of the items covered by the 

listed ECCNs and the anticipated 

resulting commodities, where relevant; 

(ii) For each company, separate from 

the eligible applicant, that is intended to 

be an eligible user or eligible recipient 

that will export, reexport, transfer (incountry), or receive items under this 

license exception: Full name of entity; 

location of entity’s principal place of 

business; complete physical address 

(listing a post office box is insufficient) 

of entity’s principal place of business; 

post office box if used as an alternate 

address; location of entity’s registration 

or incorporation; relationship of the 

entity to the eligible applicant; and 

ownership of company, including 

listing all individuals or groups that 

have at least a 10% ownership interest, 

where relevant; 

(iii) Name and contact information of 

the employee(s) responsible for 

implementing the ICT control plan of 

the eligible applicant and its whollyowned or controlled in fact entities that 

are eligible users and/or eligible 

recipients; 

(iv) A full copy of the ICT control 

plan, as described in paragraph (d) of 

this section, covering the eligible 


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applicant and its wholly-owned or 

controlled in fact entities that are 

eligible users and/or eligible recipients; 

(v) Documentation showing 

implementation of screening, training, 

and self-evaluation elements in the ICT 

control plan, as described in paragraphs 

(d)(1)(iv), (d)(1)(v), (d)(1)(vi), and 

(d)(1)(ix), where applicable; and 

(vi) A signed statement, on company 

letterhead, by a company officer of the 

eligible applicant that states each 

eligible user and/or eligible recipient 

entity will allow BIS, at the agency’s 

discretion, to conduct audits to ensure 

compliance with this license exception. 

(2) Submit all required information to: 

Bureau of Industry and Security, Attn: 

License Exception ICT, HCHB Room 

2705, 14th Street & Pennsylvania Ave., 

NW., Washington, DC 20230. 

(f) Review of License Exception ICT 

submissions. Upon receipt of completed 

information required under paragraph 

(e)(1) of this section, BIS will conduct 

a review described in paragraph (f)(1) of 

this section. During the review, BIS will 

use the factors described in paragraph 

(f)(2) of this section to determine 

authorization. In addition to informing 

the eligible applicant whether it may 

use this license exception, BIS will 

provide the terms of the ICT 

authorization including which whollyowned or controlled in fact entities may 

use this license exception and the 

ECCNs of the items that may be 

exported, reexported, or transferred 

under this license exception. BIS will 

respond in writing to the eligible 

applicant once a decision is reached. 

(1) Processing procedures. For 

purposes of review only, License 

Exception ICT submissions will be 

reviewed in the manner that license 

applications are reviewed pursuant to 

§§ 750.3 and 750.4 of the EAR and 

Executive Order 12981, as amended by 

Executive Orders 13020, 13026, and 

13117. 

(2) Review factors. The following 

factors will be considered in 

determining License Exception ICT 

authorization: Prior licensing history; 

demonstration of an effective ICT 

control plan; and need for the license 

exception, as expressed in the 

submission for ICT authorization, 

including the requested ECCNs and the 

relationship of the wholly-owned or 

controlled in fact entities to the parent 

company or other entities of national 

security or foreign policy concern. BIS 

will also consider any deficiencies, 

including violations of the EAR, that are 

uncovered as part of the self-evaluation 

element of the eligible applicant’s ICT 

control plan described in (d)(vi) of this 

part, and, if appropriate, disclosed to 

BIS in accordance with section 764.5, as 

well as any corrective action that was 

subsequently taken. 

(g) Changes to Submitted Information 

Following Receipt of Authorization. 

(1) Before an entity not previously 

identified in an approved eligible 

applicant’s initial submission under 

paragraph (e) of this section may use 

this license exception, the approved 

eligible applicant must submit the 

information regarding the new entity in 

accordance with paragraph (e)(1)(ii) of 

this section to BIS at the address listed 

in paragraph (e)(2) of this section. This 

submission will undergo the same 

process of review as the initial 

submission, which is described in 

paragraph (f)(1) of this section. 

(2) After obtaining authorization to 

use this license exception, an approved 

eligible applicant may request License 

Exception ICT eligibility for additional 

ECCNs that were not previously 

identified in its initial submission. To 

make such a request, the approved 

eligible applicant must submit the 

necessary information required under 

paragraph (e)(1)(i) regarding the 

additional ECCNs to BIS at the address 

listed in paragraph (e)(2) of this section. 

This submission will undergo the same 

process of review as the initial 

submission, which is described in 

paragraph (f)(1) of this section. 

(3) If control of an approved eligible 

applicant changes after obtaining prior 

authorization to use this license 

exception (e.g., through change of 

ownership, acquisition, or merger), 

authorization to use this license 

exception will no longer be valid. Under 

such circumstances, the new eligible 

applicant must submit all information 

required under paragraph (e)(1) of this 

section to obtain new authorization to 

use this license exception. This 

submission will undergo the same 

process of review described in 

paragraph (f)(1) of this section. The new 

eligible applicant and its wholly-owned 

or controlled in fact entities may export, 

reexport, or transfer within country 

items under this license exception only 

upon receipt of written authorization 

from BIS. See the definition of 

‘‘controlled in fact’’ in § 772.1 for 

further information regarding changes in 

ownership. 

(4) If an approved eligible applicant’s 

control of an approved eligible user or 

eligible recipient entity changes after 

obtaining prior authorization to use this 

license exception (e.g., through a 

different organization’s acquisition or 

merger of the approved eligible user or 

eligible recipient entity), the newlycontrolled eligible user or eligible 

recipient entity must immediately 

terminate use of this license exception. 

In addition, the approved eligible 

applicant must notify BIS in writing of 

the removal of the newly-controlled 

entity from use of this license exception 

within fifteen (15) days after the change 

in control. Notification letters should be 

submitted to the address in paragraph 

(g)(5) of this section. Subject to 

paragraph (g)(3) of this section, the 

approved eligible applicant and its other 

approved eligible users and/or eligible 

recipient entities may continue to use 

this license exception. See the 

definition of ‘‘controlled in fact’’ in 

§ 772.1 for further information. 

(5) After obtaining authorization to 

use this license exception, if the legal 

name of an approved eligible applicant, 

eligible user, or eligible recipient entity 

of this license exception, as described in 

paragraphs (b)(1), (b)(2), and (b)(3)(i) of 

this section respectively, changes, the 

approved eligible applicant must notify 

BIS of the name change within fifteen 

(15) days after the name change. Subject 

to paragraph (g)(3) of this section, the 

approved eligible applicant may 

continue to use this license exception 

after the name change but must submit 

a letter informing BIS of the name 

change to the Director of the Office of 

Exporter Services at: Office of Exporter 

Services, HCHB Room 2705, 14th Street 

& Pennsylvania Ave., NW., Washington, 

DC 20230. 

(h) Annual reporting requirement. 

(1) After receiving authorization to 

use License Exception ICT pursuant to 

paragraph (e) of this section, approved 

eligible applicants must submit the 

following information to BIS on an 

annual basis: 

(i) The name, nationality, and date of 

birth of foreign national employees, as 

described in note 2 to paragraph 

(b)(3)(ii) of this section, who have 

received technology or source code 

under License Exception ICT during the 

prior reporting year. 

(ii) The name, nationality, and date of 

birth of foreign national employees, as 

described in note 2 to paragraph 

(b)(3)(ii), who are subject to the 

reporting requirement in paragraph 

(h)(1)(i) of this section and who have 

terminated their employment with the 

approved eligible applicant, eligible 

user, or eligible recipient entity. This 

requirement does not apply to 

employees subject to the reporting 

requirement in paragraphs (h)(1)(i) and 

(h)(1)(ii) of this section who have 

changed positions within the parent 

company’s structure (i.e., among the 

approved eligible applicant parent 

company’s wholly-owned or controlled 

in fact entities that are approved eligible 


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Federal Register / Vol. 73, No. 193 / Friday, October 3, 2008 / Proposed Rules 57563 

users and/or eligible recipients of this 

license exception). 

(iii) A certification signed by a 

company officer stating that the 

approved eligible applicant and its 

approved eligible users and eligible 

recipient entities are in compliance with 

the terms and conditions of License 

Exception ICT. This certification should 

include the results of the selfevaluations described in paragraph 

(d)(1)(vi) of this section. 

(2) Annual reports must be submitted 

to and received by BIS no later than 

February 15 of each year, and must 

cover the period of January 1 through 

December 31 of the prior year. Reports 

must be submitted to the address listed 

in paragraph (e)(2) of this section. 

(i) Auditing use of License Exception 

ICT. 

(1) Biennial audit. BIS will review the 

use of License Exception ICT by the 

approved eligible applicant and its 

approved eligible users and/or eligible 

recipients approximately once every 

two years. Generally, BIS will give 

reasonable notice to approved eligible 

applicants in advance of an audit of 

their use of License Exception ICT. As 

part of the biennial audit, BIS may 

request that an approved eligible 

applicant and its approved eligible users 

and/or eligible recipient entities submit 

all or part of their records described in 

paragraph (h) of this section. 

(2) Discretionary audit. BIS may 

conduct special unannounced system 

reviews if BIS has reason to believe an 

approved eligible applicant or one of its 

approved eligible users and/or eligible 

recipients has improperly used or failed 

to comply with the terms and 

conditions of License Exception ICT. 

(j) Revision, Suspension, and 

Revocation of License Exception ICT. 

Consistent with § 740.2(b), BIS may 

revise, suspend, or revoke authorization 

to use License Exception ICT in whole 

or in part, without notice. Factors that 

might warrant such action may include, 

but are not limited to, the following: use 

of ICT for other than internal company 

use, release of controlled items to 

unauthorized entities or destinations, 

failure to maintain the ICT control plan 

initially submitted to BIS as part of the 

application, and failure to comply with 

reporting and recordkeeping 

requirements. 

(k) Recordkeeping requirements. In 

addition to the recordkeeping 

requirements set forth in part 762 of the 

EAR, entities that are approved eligible 

applicants, eligible users, and/or eligible 

recipients of this license exception, as 

described in paragraphs (b)(1), (b)(2), 

and (b)(3)(i) of this section respectively, 

must retain copies of their ICT control 

plan and associated materials, including 

signed non-disclosure agreements. 

Entities that are approved eligible 

applicants, eligible users, and/or eligible 

recipients must also maintain records, 

by ECCN, of the items on the Commerce 

Control List that have been exported, 

reexported, or transferred within 

country under the authority of this 

license exception. For foreign national 

employees receiving technology or 

source code under ICT, approved 

eligible applicants, eligible users, and 

eligible recipient entities are required to 

record only the initial release of such 

technology or source code to a given 

foreign national employee; subsequent 

release of the same technology or source 

code to that same foreign national 

employee does not require additional 

recordkeeping. However, if a foreign 

national receives technology or source 

code under ICT that is controlled under 

a different ECCN, then the initial receipt 

of the different technology or source 

code must also be recorded. Such 

records must be made available to BIS 

on request. 

3. Supplement No. 4 to part 740 is 

added to read as follows: 

Supplement No. 4 to Part 740— 

Countries in Which Eligible Applicants 

Must Be Incorporated In or Have Their 

Principal Place of Business in For 

License Exception Intra-Company 

Transfer (ICT) Eligibility 

Argentina 

Australia 

Austria 

Belgium 

Bulgaria 

Canada 

Cyprus 

Czech Republic 

Denmark 

Estonia 

Finland 

France 

Germany 

Greece 

Hungary 

Iceland 

Ireland 

Italy 

Japan 

Korea, South 

Latvia 

Lithuania 

Luxembourg 

Malta 

Netherlands 

New Zealand 

Norway 

Poland 

Portugal 

Romania 

Slovakia 

Slovenia 

Spain 

Sweden 

Switzerland 

Turkey 

United Kingdom 

United States 

PART 772—[AMENDED] 

4. The authority citation for part 772 

is revised 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 July 23, 

2008, 73 FR 43603 (July 25, 2008). 

5. Section 772.1 is amended: 

a. By amending the definition of 

‘‘Controlled in fact’’ as set forth below; 

and 

b. By adding, in alphabetical order, 

the definitions of ‘‘Employee’’ and 

‘‘Parent company’’, as follows: 

§ 772.1 Definitions of Terms as Used in the 

Export Administration Regulations (EAR). 

* * * * * 

Controlled in fact. For purposes of 

License Exception ICT only (see 

§ 740.19 of the EAR), the term 

‘‘controlled in fact’’ means the authority 

or ability of an entity, which has been 

routinely exercised in the past, to 

establish the general policies or day-today operations of a different 

organization, such as a subsidiary, 

branch, or office. An entity will be 

presumed to have control over a 

different organization when: 

(a) The entity beneficially owns or 

controls (whether directly or indirectly) 

more than 50 percent of the outstanding 

voting securities of the different 

organization; 

(b) The entity operates the different 

organization pursuant to the provisions 

of an exclusive management contract; or 

(c) Members of the entity’s governing 

body (i.e., board of directors) comprise 

a majority of the comparable governing 

body of the different organization. 

For purposes of the Special 

Comprehensive License (part 752 of the 

EAR), controlled in fact is defined as it 

is under the Restrictive Trade Practices 

or Boycotts (§ 760.1(c) of the EAR). 

* * * * * 

Employee. For purposes of License 

Exception ICT only (see § 740.19 of the 

EAR), ‘‘employee’’ means any person 

who works, with or without 

compensation, in the interest of an 

entity that is an approved eligible user 

(see § 740.19(b)(2)) or an entity that is an 

approved eligible recipient (see 

§ 740.19(b)(3)(i)). The person must work 

at the approved eligible entity’s 

locations or at locations assigned by the 

approved eligible entity, such as at 

remote sites or on business trips. This 

definition may include permanent 

employees, contractors, and interns. 

* * * * * 


jlentini on PROD1PC65 with PROPOSALS
57564 Federal Register / Vol. 73, No. 193 / Friday, October 3, 2008 / Proposed Rules 

Parent company. For purposes of 

License Exception ICT only (see 

§ 740.19 of the EAR), ‘‘parent company’’ 

means any entity that wholly-owns or 

controls in fact a different entity, such 

as a subsidiary or branch. The parent 

company may be incorporated in and 

conduct its principal place of business 

inside the United States or outside of 

the United States, but certain location 

restrictions apply (see § 740.19(b)(1) and 

Supplement No. 4 to part 740). The 

parent company itself may also have an 

ultimate parent company, meaning the 

parent company is wholly-owned or 

controlled in fact by another entity or 

other entities. See also the definition of 

‘‘controlled in fact’’ in this section for 

further information. 

* * * * * 

Dated: September 29, 2008. 

Christopher R. Wall, 

Assistant Secretary for Export 

Administration. 

[FR Doc. E8–23506 Filed 10–2–08; 8:45 am] 

BILLING CODE 3510–33–P 

DEPARTMENT OF THE INTERIOR 

Bureau of Land Management 

43 CFR Part 8360 

[WO–250–1220–PM–24 1A] 

RIN 1004–AD96 

Visitor Services 

AGENCY: Bureau of Land Management, 

Interior. 

ACTION: Proposed rule. 

SUMMARY: The Bureau of Land 

Management (BLM) proposes to amend 

its regulations to remove the Land and 

Water Conservation Fund Act (LWCFA) 

as one of the authorities of our 

Recreation regulations, in accordance 

with the Federal Lands Recreation 

Enhancement Act of 2004 (REA). The 

rule will also amend and reorder the 

prohibitions to separate those that apply 

specifically to campgrounds and picnic 

areas from those with more general 

applications. The reordering is 

necessary to broaden the scope to 

include all areas where standard 

amenity, expanded amenity, and special 

recreation permit fees are charged under 

REA. The proposed rule would remove 

an unnecessary provision that has been 

interpreted to require the BLM to 

publish supplementary rules concerning 

failure to pay fees established by the 

recreation regulations, thus relieving the 

BLM from publishing such separate 

specific supplementary rules for each 

area. Finally, it will make technical 

changes to maintain consistency with 

other BLM regulations. 

DATES: We will accept comments and 

suggestions on the proposed rule until 

December 2, 2008. The BLM will not 

necessarily consider any comments 

received after the above date in making 

its decision on the final rule. 

ADDRESSES: You may submit comments 

by any of the following methods listed 

below: 

Mail: U.S. Department of the Interior, 

Director (630), Bureau of Land 

Management, Mail Stop 401 LS, 1849 C 

St., NW., Attention: [RIN: 1004–AD96] 

Washington, DC 20240. 

Personal or messenger delivery: 1620 

L Street, NW., Room 401, Washington, 

DC 20036. 

Federal eRulemaking Portal: 

www.regulations.gov. 

FOR FURTHER INFORMATION CONTACT: For 

information on the substance of the 

proposed rule, please contact Hal 

Hallett at (202) 452–7794 or Anthony 

Bobo Jr. at (202) 452–0333. For 

information on procedural matters, 

please contact Chandra Little at (202) 

452–5030. Persons who use a 

telecommunications device for the deaf 

(TDD) may call the Federal Information 

Relay Service (FIRS) at 1–800–877–8339 

to contact the above individuals during 

normal business hours. FIRS is available 

twenty-four hours a day, seven days a 

week, to leave a message or question 

with the above individuals. You will 

receive a reply during normal business 

hours. 

SUPPLEMENTARY INFORMATION: 

I. Public Comment Procedures 

II. Background 

III. Discussion of Proposed Rule 

IV. Procedural Matters 

I. Public Comment Procedures 

Electronic Access and Filing Address 

You may view an electronic version of 

this proposed rule at the BLM’s Internet 

home page at www.blm.gov or at 

http://www.regulations.gov. You may 

comment via the Internet to: http:// 

www.regulations.gov. If you submit your 

comments electronically, please include 

your name and return address in your 

Internet message. 

Written Comments 

Confine written comments on the 

proposed rule to issues pertinent to the 

proposed rule and explain the reason for 

any recommended changes. Where 

possible, reference the specific section 

or paragraph of the proposal which you 

are addressing. The BLM need not 

consider or include in the 

Administrative Record for the final rule 

comments which it receives after the 

comment period close (see DATES), or 

comments delivered to an address other 

than those listed above (see ADDRESSES). 

Before including your address, phone 

number, e-mail address, or other 

personal identifying information in your 

comment, you should be aware that 

your entire comment, including your 

personal identifying information, may 

be made publicly available at any time. 

While you can ask us in your comment 

to withhold your personal identifying 

information from public review, we 

cannot guarantee that we will be able to 

do so. 

Reviewing Comments Submitted by 

Others 

Comments, including the names and 

street addresses, and other contact 

information, will be available for public 

review at the address listed under 

ADDRESSES during regular business 

hours (7:45 am to 4:15 pm), Monday 

through Friday, except holidays. 

II. Background 

The passage of the REA, 16 U.S.C. 

6801 et seq., required the BLM to 

change its fee management regulations, 

policies, and procedures to bring them 

into compliance with this law. The BLM 

has already accomplished this by 

including in part 2930 all recreation fee 

management regulations including the 

requirement that visitors pay fees before 

occupying a campground or picnic area. 

The BLM is now amending part 8360 to 

complete the regulatory changes made 

necessary by the law, including removal 

of any language pertaining to recreation 

fees. In addition, the section dealing 

with the collection of fossils was 

modified to include common plant 

fossils, reflecting long established BLM 

policies. Other changes were made to 

group related regulations in the same 

section to simplify language and clarify 

the intent, and to resolve 

inconsistencies between existing 

provisions. 

III. Discussion of Proposed Rule 

Section 8360.0–3 Authority 

The proposed rule removes the Land 

and Water Conservation Fund Act 

(LWCFA) (16 U.S.C. 460l–6a) as an 

authority for the regulations. The 

enactment of the REA changed the 

BLM’s authority to collect recreation 

fees. Recreation fees that were 

previously authorized under the 

LWCFA are now included under REA. 

The BLM’s policies and procedures 

have also been revised to reflect this 

new and revised authority. 


jlentini on PROD1PC65 with PROPOSALS