[Federal Register Volume 79, Number 246 (Tuesday, December 23, 2014)]
[Rules and Regulations]
[Pages 76867-76874]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-29686]


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DEPARTMENT OF COMMERCE

Bureau of Industry and Security

15 CFR Parts 738, 740, 742, and 774

[Docket No. 141107937-4937-01]
RIN 0694-AG33


Revision to the Export Administration Regulations: Controls on 
Electronic Commodities; Exports and Reexports to Hong Kong

AGENCY: Bureau of Industry and Security, Commerce.

ACTION: Final rule.

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SUMMARY: This rule amends the Export Administration Regulations (EAR) 
to expand controls for national security reasons and responds to public 
comments solicited by a Bureau of Industry and Security (BIS) notice of 
inquiry regarding the proper export control classification of certain 
electronic commodities and a type of radar. Specifically, in this rule, 
BIS amends the EAR to expand national security controls on certain 
electronic commodities controlled on the Commerce Control List (CCL) 
and to limit license exceptions for these items. This rule also expands 
license requirements for exports and reexports to Hong Kong of items 
controlled for national security reasons.

DATES: Effective date: This rule is effective December 23, 2014, except 
that the revision of the Related Controls paragraph under the List of 
Items Controlled section in ECCN 3E001, Supplement No. 1 to part 774, 
is effective December 30, 2014.

FOR FURTHER INFORMATION CONTACT: With respect to electronic components, 
contact Brian Baker, Office of National Security and Technology 
Transfer Controls, Electronics and Materials Division, at 202-482-5534. 
With respect to the U.S. government's export control policy for Hong 
Kong, contact Steven Schrader, Office of Nonproliferation and Treaty 
Compliance, Foreign Policy Division, at 202-482-1338.

SUPPLEMENTARY INFORMATION: 

Background

    This rule amends the Export Administration Regulations (EAR) to 
expand controls for national security reasons and responds to public 
comments solicited by a Bureau of

[[Page 76868]]

Industry and Security (BIS) notice of inquiry regarding the proper 
export control classification of certain electronic commodities and a 
type of radar. Specifically, in this rule, BIS amends the EAR to expand 
national security controls on certain electronic commodities controlled 
on the Commerce Control List (CCL) and to limit license exceptions for 
these items. This rule also expands license requirements for exports 
and reexports to Hong Kong of items controlled for national security 
reasons.

Electronic Components

Notice of Inquiry: Comment Summary and BIS Response

    On July 1, 2014, BIS and the Department of State published final 
rules related to military electronics to take effect on December 30, 
2014 (see 79 FR 37551 and 79 FR 37536) (herein the ``BIS July 1 
Military Electronics Rule'' and the ``Department of State July 1 
Military Electronics Rule''). On the same day, BIS published a notice 
of inquiry (79 FR 37547) seeking additional comments on the proper 
export control classification of microwave monolithic integrated 
circuit (MMIC) power amplifiers, discrete microwave transistors, and 
bi-static and multi-static radar that exploits greater than 125 kHz 
bandwidth and is lower than 2 GHz center frequency to passively detect 
or track using radio frequency (RF) transmissions (e.g., commercial 
radio or television stations).
    The notice of inquiry set forth the parameters adopted by the 
Wassenaar Arrangement 2013 plenary meeting for including MMIC power 
amplifiers and discrete microwave transistors on its Dual-Use List. 
Those parameters are found in Export Control Classification Number 
(ECCN) 3A001 paragraphs .b.2 and .b.3. The BIS July 1 Military 
Electronics Rule adopted additional parameters that, if met, would move 
the MMIC power amplifier or discrete microwave transistor from ECCN 
3A001 to the ``600 series'' ECCN 3A611, and corresponding technology 
controls to 3E611. The notice sought comments on the appropriateness of 
the factors used to distinguish devices to be controlled under ECCN 
3A611 from those controlled under ECCN 3A001.
    The Department of State July 1 Military Electronics Rule placed bi-
static and multi-static radar that exploits greater than 125 kHz 
bandwidth and is lower than 2 GHz center frequency to passively detect 
or track using radio frequency (RF) transmissions (e.g., commercial 
radio or television stations) in USML Category XI(a)(3)(xxvii). The 
notice of inquiry sought comments on whether such radars are in fact in 
use in civil air traffic control, collision avoidance or weather radar 
in sufficient quantities to justify moving such radar to the CCL.
    BIS received comments from eight parties. Six addressed MMIC power 
amplifiers or discrete microwave transistors or both. One commenter 
addressed passive radar and one commenter addressed the impact that 
regulations not administered by BIS have on his business.
Comments Related to Use of MMIC Power Amplifiers and/or Discrete 
Microwave Transistors in Civil Applications and Impact of 3A611 Control 
on U.S. Manufacturers
    The commenters generally opined that classifications in the BIS 
July 1 Military Electronics Rule would increase costs and impose delays 
in shipping for U.S. manufacturers. The commenters cited a number of 
civil uses for MMIC power amplifiers and discrete microwave transistors 
that would be controlled in ECCN 3A611 under the BIS July 1 Military 
Electronics Rule to become effective on December 30, 2014. The civil 
uses that they cited are:
    <bullet> Cellular communications applications including
    [cir] Point to point radios
    [cir] Cellular backhaul
    [cir] LTE infrastructure
    <bullet> WiMax
    <bullet> Ground to satellite communications
    [cir] Block up converters and solid state power amplifiers
    [cir] Direct internet access via satellite for individual customers
    [cir] Satellite access for WiFi aboard commercial airliners
    [cir] Very small aperture terminals (VSAT) mainly for business data 
networks
    <bullet> Test equipment for telecommunications networks
    <bullet> Civilian radar (maritime, air traffic and weather).
    Two commenters noted that civil applications are making greater use 
of two sets of frequency ranges than in the past. The commenters stated 
that cellular base stations are expanding into the 3.5 GHz band and 
that block up-converters and solid state amplifiers used in satellite 
based civil communications are expanding into the Ka band.
    Four manufacturers of MMIC power amplifiers and/or discrete 
microwave transistors provided a list of specific amplifiers and 
transistors by model number that are sold for use in commercial 
products and that would become controlled in ECCN 3A611 by the BIS July 
1 Military Electronics Rule on December 30, 2014.
    One manufacturer of commercial telecommunications equipment 
confirmed that it has suppliers in the United States, Japan and 
Singapore for some of the MMIC power amplifiers and discrete microwave 
transistors that would be made subject to ECCN 3A611 by the BIS July 1 
Military Electronics Rule.
Exacerbates an Existing Disadvantage
    One commenter asserted that manufacturers located outside the 
United States have advantages over their U.S. counterparts even without 
the latter's being subjected to the 3A611 classification because the 
European Union has not revised its control lists to implement any 
Wassenaar Arrangement approved changes for three years. The expansion 
of MMIC power amplifier and discrete microwave transistor coverage 
adopted by the Wassenaar Arrangement December 2013 plenary meeting may 
not be implemented by the EU for months or years. (On August 4, 2014, 
the EAR was amended to include the expanded MMIC power amplifier and 
discrete microwave transistor coverage adopted by the December 2013 
plenary meeting. See 79 FR 45287).
    This commenter further asserted that manufacturers located outside 
the United States also have an advantage because other countries make 
decisions on license applications more quickly than the United States.
Increases the Number of Licenses Required
    One manufacturer estimated that ECCN 3A611 would impose license 
requirements on exports that currently do not require a license for 39 
products that it has been selling to commercial customers, in some 
cases for more than a decade. The customers for these products are 
largely global telecommunications equipment manufacturers. The 
manufacturer noted that manufacturers in other countries can supply 
MMIC power amplifiers and discrete microwave transistors that would 
meet the parameters of 3A611 but that are not subject to the EAR. This 
manufacturer stated that the license requirements of 3A611 would ``stop 
exports of these 39 products hindering its participation in three of 
our core commercial markets: Point to-point radio, satellite ground 
terminal (also called VSAT, for Very Small Aperture Terminal), and 
cellular base stations above 2.7 GHz.'' Because its customers for two 
of these products, point-to-point radio and the emerging 3.5 GHz 
cellular infrastructure (base stations), are largely

[[Page 76869]]

outside the United States, this manufacturer stated that without 
ability to export it ``would likely terminate current investments'' to 
develop MMIC power amplifiers and discrete microwave transistors for 
such products.
    Another manufacturer reported that about 75% of its MMIC products 
that can currently be exported without a license would require a 
license to all destinations other than Canada under ECCN 3A611. It has 
obtained seven export licenses for these products in 18 months. With 
the new requirements, it estimates that it would need about 71 export 
licenses. Also, there will be a strong ``presumption of denial'' for 
all export license applications for exports of MMICs to China (PRC)--a 
factor that would make it impossible to use U.S. origin MMIC power 
amplifiers and discrete microwave transistors for telecommunications 
equipment made in China.
    One telecommunications equipment manufacturer pointed out that its 
products, if made outside the United States, but incorporating even one 
U.S. origin 3A611 commodity, may not be exported to China because of 
the zero de minimis threshold and license application denial policy for 
600 series items that apply to that country. The same piece of 
equipment manufactured outside the United States, if made with MMIC 
power amplifiers or discrete microwave transistors that also were made 
outside the United States, would not be subject to those restrictions. 
This same manufacturer also noted that if the same piece of equipment 
were manufactured in the United States, it would be classified under 
the ECCN that controls the piece of equipment even if that piece of 
equipment contained 600 series commodities. BIS notes that although a 
foreign made item containing a 600 series MMIC power amplifier or 
discrete microwave transistor would be subject to the EAR if being 
exported to China, its ECCN (and thus CCL based license requirements) 
would be based on the ECCN of the commodity, not that of its 
incorporated parts or components.
Criteria for Distinguishing Civil From Military MMIC Power Amplifiers 
and Discrete Microwave Transistors
    Several commenters stated that power added efficiency (PAE) is not 
an appropriate criterion for identifying which MMIC power amplifiers 
and discrete microwave transistors are predominately used in military 
applications. In the words of one commenter: ``Employing PAE for 
distinguishing military from civil products seems based on an implicit 
assumption that military systems uniformly require higher efficiency 
than commercial operations. That assumption is not true.'' The 
commenters offered the following reasons for asserting that power added 
efficiency is not an appropriate metric for distinguishing military 
from civil MMIC power amplifiers and discrete microwave transistors.
    <bullet> The PAE thresholds in ECCN 3A611 are too low. They would 
cover most Gallium Nitride (GaN) MMICs and transistors.
    <bullet> PAE is not a precise measure. PAE of a single product can 
vary widely depending on a number of factors at the time of testing: 
bias condition, RF drive level, temperature, pulse width, duty cycle, 
and time period of operation.
    <bullet> In industry practice, there is no standard consistent way 
to measure PAE. It can be measured at the optimal output load, at a 
single point of frequency, at a peak power level, or at an average 
point of normal operation.
    <bullet> Many products are not rated for PAE because they will be 
used in applications where other measures make more sense. For example, 
in communications, a more relevant measure is saturated peak power 
(which needs to be very high to achieve the average level of operation 
that the customer needs).
    <bullet> The PAE metric creates the same problems as ``average 
output power'' that was removed from ECCN 3A001 in accordance with the 
Wassenaar Arrangement 2013 plenary meeting changes to the Wassenaar 
Dual-Use List. It is not a metric that lends itself to clear or 
consistent definition in the RF industry, and as such should not be the 
basis for regulating RF products.
    <bullet> Producers of commercial systems are demanding ever-higher 
efficiency to reduce system power consumption (which reduces operating 
costs), size, and weight.
    <bullet> For power-intensive applications such as cellular base 
stations, equipment manufacturers goals typically exceed present 
capabilities of MMIC power amplifier and discrete microwave transistor 
technology and power amplifier topology.
    <bullet> For the device, efficiency is determined by the device 
technology and frequency of operation. For the amplifier that uses the 
device, efficiency is determined by the topology and class of 
operation, load tuning, and bandwidth.
    One commenter noted that a major base station manufacturer is 
asking for GaN drain efficiency at saturated output power to be greater 
than 70%.
Comments and Responses
    Commenters offered several possible changes to the criteria for 
including MMIC power amplifiers or discrete microwave transistors in 
ECCN 3A611. BIS and the Departments of Defense and State reviewed the 
public comments and reassessed the appropriate level of control over 
those devices.
    Comment 1: Two commenters recommended eliminating the power added 
efficiency values with respect to MMIC power amplifiers and increasing 
the threshold values for peak saturated power output in all frequency 
ranges to values that would be substantially higher than those 
specified in the BIS July 1 Military Electronics Rule. Another 
commenter recommended increasing the threshold values for fractional 
bandwidth, peak saturated power output and power added efficiency in 
all frequency ranges to values that would be substantially higher than 
the values in the BIS July 1 Military Electronics Rule. Two commenters 
recommended increasing the fractional bandwidth threshold values for 
all or some of the frequency ranges to levels that that would be 
substantially higher than those specified in the BIS July 1 Military 
Electronics Rule, but did not recommend changes to the other 
parameters.
    Response 1: BIS did not adopt changes to the control based on 
fractional bandwidth, peak saturated power output, and/or power added 
efficiency because the agency found that attempting to designate some 
MMIC power amplifiers and discrete microwave transistors as civil and 
others as military based on those characteristics is impractical, and 
any resulting classification would not accurately reflect real world 
applications for those devices. Accordingly, this rule does not adopt 
any performance parameters for distinguishing military MMIC power 
amplifiers and discrete microwave transistors from their civil 
counterparts.
    Nevertheless, MMIC power amplifiers and discrete microwave 
transistors, regardless of whether they meet the performance levels of 
ECCN 3A001 or the published, but not yet effective ECCN 3A611, are able 
to enhance the performance of certain military electronic systems in 
ways that can confer a military advantage and thus, the U.S. government 
needs to review not only proposed exports and reexports for use in 
military applications, but also those that are for use in applications 
that pose significant risk of diversion to a military application or 
enhancement of a potential adversary's military

[[Page 76870]]

capability. After consultation with the Departments of Defense and 
State, BIS has concluded that export and reexport of MMIC power 
amplifiers and discrete microwave transistors for civil 
telecommunication end uses do not impose such risks to an extent that 
would justify license requirements beyond those currently imposed on 
MMIC power amplifiers and discrete microwave transistors by ECCN 3A001. 
However, for other end uses, the risks involved necessitate prior U.S. 
Government review of transactions to guard against possible diversion 
to a military application or enhancement of a potential adversary's 
military capability. Accordingly, BIS has decided to require licenses 
for the export and reexport of all MMIC power amplifiers and discrete 
microwave transistors currently on the CCL for civil telecommunications 
uses to the same extent as license are required for exports and 
reexports of MMIC power transistors and discrete microwave transistors 
currently controlled in ECCN 3A001. For all other uses, BIS will impose 
a license requirement for all destinations other than Canada and will 
eliminate eligibility for most license exceptions.
    Comment 2: One commenter recommended adding the phrase ``specially 
designed for a military application,'' which appears in ECCN 3A611.a, 
to paragraphs .b and .c of that ECCN (which control MMIC power 
amplifiers and discrete microwave transistors, respectively) as well.
    Response 2: BIS also considered adding the phrase ``specially 
designed for a military application,'' which appears in ECCN 3A611.a, 
to paragraphs .b and .c of that ECCN as suggested by one commenter. 
Although the idea has merit, its application would not trigger a 
license requirement for all transactions into which the U.S. Government 
needs visibility to determine whether the transaction negatively 
affects United States security interests. Upon review, the agencies 
concluded that the manufacture and distribution of devices that support 
civil telecommunications networks and systems pose a very low risk. 
However, incorporation into military hardware is not the only activity 
into which the U.S. Government needs visibility. Some civil uses may 
also have heightened potential for diversion to military application.
    Comment 3: Two commenters recommended adding a de-control note to 
ECCN 3A611 excluding products specifically designed for radio 
communications in a frequency band allocated by the ITU.
    Response 3: BIS considered and decided not to adopt the proposal to 
exclude products specifically designed for radio communications in a 
frequency band allocated by the ITU. Frequency bands allocated by ITU 
may overlap the frequencies used by military devices.
Comments Regarding Bi-Static/Multistatic Passive Radar That Exploits 
Greater Than 125 kHz Bandwidth Is Lower Than 2 GHz Center Frequency To 
Passively Detect or Track Using Radio Frequency (RF) Transmissions 
(e.g., Commercial Radio or Television Stations)
    One commenter stated that it has an internal development project to 
evaluate the feasibility of applying bi-static radar to civil air 
traffic management applications. The bi-static radar approach could be 
used as an airborne collision avoidance system for civil unmanned 
aerial vehicles and could apply to general aviation aircraft. The radar 
described in the USML Category XI(a)(3)(xxvii) control could be 
installed at ground based locations to provide air traffic information 
about aircraft not equipped with transponders to aircraft operating 
around uncontrolled airports.
    In the past, this commenter has classified its passive radar 
efforts under ECCN 5A001.g and the related technology under ECCN 5E001. 
Pursuant to the Department of State July 1 Military Electronics Rule, 
it will now have to classify the system under USML Category 
XI(a)(3)(xxvii). The commenter cited an on-going study to test the 
feasibility of using passive radar that relies on radio and television 
broadcast signals for air traffic control being conducted in the United 
Kingdom (UK) under the auspices of the United Kingdom Technology 
Strategy Board. The commenter stated that it did not know how this 
technology is classified in the United Kingdom, but indicated that if 
the UK does not classify it as a munition, the U.S. company could face 
an un-level playing field.
    BIS has decided not to recommend to the Department of State that 
the revised USML Category XI scheduled to take effect on December 30 be 
further revised as a result of this comment. As described by the 
commenter, the technology is not ready for commercial application and 
thus need not be removed from the USML and added to the CCL.
Comment Unrelated to Regulations Administered by BIS
    One commenter commented on the effect that rules governing the 
operation of unmanned aerial vehicles in the United States had on his 
business.
    The operation of unmanned aerial vehicles in the United States is 
outside the scope of regulations administered by BIS. Therefore, BIS is 
taking no action in response to this comment.
Specific Changes Related to ECCN 3A001 Made by This Final Rule
    For the reasons discussed above, this rule imposes a national 
security (NS column 1) control on certain MMIC power amplifiers and 
certain discrete microwave transistors, except those that are being 
exported or reexported for use in civil telecommunications 
applications, because the U.S. Government has determined that these 
commodities are at an increased risk of diversion to military 
applications or to activities that would enhance the military 
capabilities of potential adversaries, end users and end uses contrary 
to national security objectives. This rule also limits the availability 
of License Exceptions Limited Value Shipments (LVS), Shipments to Group 
B Countries (GBS), Additional Permissive Reexports (APR), and Strategic 
Trade Authorization (STA) for those commodities, and makes parallel 
changes to the technology related to these commodities for the same 
reason.
    Specifically, this rule revises the controls paragraph in ECCN 
3A001 to add a national security (NS column 1) control and a regional 
stability (RS column 1) control to these commodities, which prior to 
publication of this rule were controlled under NS column 2. (The anti-
terrorism (AT column 1) control remains unchanged by this rule.) This 
rule revises the List Based License Exceptions paragraph in ECCN 3A001 
to remove LVS and GBS eligibility, and to exclude these commodities 
from License Exception STA eligibility under the Special Conditions for 
STA paragraph. This rule also revises eligibility paragraphs in License 
Exceptions APR (Sec.  740.16(a) and (b)) and STA (Sec.  740.20(b)(2)) 
to exclude these commodities.
    Technology for the development and production of these commodities 
is controlled by ECCN 3E001. This rule revises the List Based License 
Exceptions paragraph in ECCN 3E001 to remove eligibility for License 
Exception Technology and Software Under Restriction (TSR), and to 
exclude technology for these commodities from License Exception STA 
eligibility under the Special Conditions for STA paragraph. This rule 
does not remove license exception eligibility for technology controlled 
by ECCN 5E001.d. The fact that an item, such as

[[Page 76871]]

a MMIC, is used for telecommunications does not make that item a 
telecommunications item controlled in Category 5 of the CCL. There are 
additional special design modifications, frequency band limiters, and 
interfaces that are specific for telecommunications and that constitute 
the required technology controlled in 5E001.d MMIC power amplifiers for 
telecommunications. The design technology for the MMIC is controlled by 
ECCN 3E001. The additional technology required for telecommunications 
is controlled by ECCN 5E001. This rule adds notes to the Related 
Controls paragraphs in both ECCNs 3E001 and 5E001 to clarify the 
classifications of these technologies.
    These actions will allow the U.S. Government to examine in advance 
the exports and reexports of MMIC power amplifiers and discrete 
microwave transistors that pose the greatest risk of diversion or 
enhancement of potential adversaries' military capabilities without 
imposing unnecessary licensing requirements on low risk transactions. 
Consistent with past practice, this rule provides a saving clause for 
items already en route to proceed and allows sufficient time to obtain 
a ``deemed'' export license for technology transfer to a foreign 
national employed in the United States (see ``Saving Clause'' below).
    BIS intends to publish, in a future rulemaking, a corrections 
notice removing paragraphs .c and .d from ECCN 3A611 and paragraphs b.3 
and b.4 from 3E611 as published in the BIS July 1 Military Electronics 
Rule.

Exports and Reexports to Hong Kong

    Notwithstanding Hong Kong's comprehensive export control system, 
analysis of trade information indicates Wassenaar Arrangement 
controlled items exported from the United States to Hong Kong or 
reexported from abroad to Hong Kong are imported into Hong Kong and 
reexported from Hong Kong contrary to the requirements of Hong Kong's 
export control system (which requires import and export authorization 
from the Hong Kong Government) and the EAR.
    Prior to publication of this rule, certain national security-
controlled items (i.e., controlled for NS column 2 on the CCL) did not 
have a destination-based license requirement for Hong Kong. This rule 
imposes such a requirement by placing an ``X'' in the box in the entry 
in the Commerce Country Chart for Hong Kong for NS column 2, and by 
removing text in Sec.  742.4 (national security) that excepted Hong 
Kong from NS column 2 license requirements. A corresponding import 
license will be required from the Hong Kong government for these items, 
and this action will facilitate Hong Kong's ability to track their 
shipment and prevent diversion of these items. This rule is imposing 
this new license requirement to support the objectives of both the U.S. 
Government and the Hong Kong Government to prevent diversion of 
sensitive items. This rule also aligns the treatment of Hong Kong under 
the EAR with other Wassenaar Arrangement members' treatment of Hong 
Kong for items under Wassenaar controls.

Saving Clause

    Shipments of items removed from eligibility for export or reexport 
under a license exception or without a license (i.e., under the 
designator ``NLR'') as a result of this regulatory action that were on 
dock for loading, on lighter, laden aboard an exporting carrier, or en 
route aboard a carrier to a port of export, on December 23, 2014, 
pursuant to actual orders for export or reexport to a foreign 
destination, may proceed to that destination under the previously 
applicable license exception or without a license (NLR) so long as they 
are exported or reexported before January 22, 2015. Any such items not 
actually exported or reexported before midnight, on January 22, 2015, 
require a license in accordance with this regulation.
    ``Deemed'' exports of ``technology'' and ``source code'' removed 
from eligibility for export under a license exception or without a 
license (under the designator ``NLR'') as a result of this regulatory 
action may continue to be made under the previously available license 
exception or without a license (NLR) before February 23, 2015. 
Beginning at midnight on February 23, 2015, such ``technology'' and 
``source code'' may no longer be released, without a license, to a 
foreign national subject to the ``deemed'' export controls in the EAR 
when a license would be required to the home country of the foreign 
national in accordance with this regulation.

Export Administration Act

    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 amended by Executive Order 13637 of March 
8, 2013, 78 FR 16129 (March 13, 2013) and as extended by the Notice of 
August 7, 2014, 79 FR 46959 (August 11, 2014), 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 as amended by Executive Order 
13637.

Rulemaking Requirements

    1. Executive Orders 13563 and 12866 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive 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 determined to be not a significant rule 
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 regulation involves 
collections previously approved by OMB under control number 0694-0088, 
Simplified Network Application Processing System, which includes, among 
other things, license applications and carries a burden estimate of 
43.8 minutes for a manual or electronic submission.
    Total burden hours associated with the PRA and OMB control number 
0694-0088 are expected to increase by approximately 22 hours as a 
result of this rule (an estimated thirty additional license per year). 
You may send comments regarding the collection of information 
associated with this rule, including suggestions for reducing the 
burden, to Office of Management and Budget (OMB) by email to 
<a href="/cdn-cgi/l/email-protection#db9492899a8488aeb9b6b2a8a8b2b4b59bb4b6b9f5beb4abf5bcb4ad"><span class="__cf_email__" data-cfemail="5a1513081b05092f38373329293335341a353738743f352a743d352c">[email protected]</span></a>, or by fax to (202) 395-7285.
    3. This rule does not contain policies with Federalism implications 
as that term is defined in Executive Order 13132.
    4. The provisions of the Administrative Procedure Act (5 U.S.C. 
553) requiring notice of proposed rulemaking, the opportunity for 
public comment and a delay in effective date are inapplicable because 
this regulation involves a military or foreign affairs function of the 
United States. (See 5 U.S.C. 553(a)(1)).

[[Page 76872]]

    BIS is implementing this rule to protect U.S. national security or 
foreign policy interests. This rule imposes an export and reexport 
license requirement on certain items controlled for national security 
reasons destined to Hong Kong. This rule is imposing this new license 
requirement to support the objectives of both the U.S. Government and 
the Hong Kong Government to prevent diversion of sensitive items. This 
rule also removes certain license exception availability for some 
electronic components, such as MMIC power amplifiers and certain 
discrete microwave transistors, except those that are being exported or 
reexported for use in civil telecommunications applications, that BIS 
has determined are at risk for diversion or enhancement of potential 
adversaries' military capabilities. By requiring a license for end uses 
where that possibility of diversion or enhancement of potential 
adversaries' military capabilities is higher, the U.S. Government has 
the opportunity to evaluate the risk in advance of export or reexport. 
Immediate implementation will allow BIS to prevent exports of these 
items to users and for uses that pose a security threat to the United 
States or its allies. If BIS published a proposed rule soliciting 
notice and comment, the resulting delay in implementation would afford 
an opportunity to divert these items to users and uses that pose such a 
security threat, thereby undermining the purpose of the rule.
    Further, no other law requires that a notice of proposed rulemaking 
and an opportunity for public comment be given for this rule. Because a 
notice of proposed rulemaking and an opportunity for public comment are 
not required to be given for this rule by 5 U.S.C. 553, or by any other 
law, the analytical requirements of the Regulatory Flexibility Act, 5 
U.S.C. 601 et seq., are not applicable. Accordingly, no regulatory 
flexibility analysis is required and none has been prepared.

List of Subjects

15 CFR Part 738

    Exports.

15 CFR Part 740

    Administrative practice and procedure, Exports, Reporting and 
recordkeeping requirements.

15 CFR Part 742

    Exports, Terrorism.

15 CFR Part 774

    Exports, Reporting and recordkeeping requirements.
    Accordingly, parts 738, 740, 742, and 774 of the Export 
Administration Regulations (15 CFR parts 730-774) are amended as 
follows:

PART 738--[AMENDED]

0
1. The authority citation for 15 CFR part 738 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 7, 2014, 79 FR 46959 (August 11, 2014).

Supplement No. 1 to Part 738 [Amended]

0
2. Supplement No. 1 to part 738 is amended by revising the entry for 
Hong Kong to read as follows:

                                                                      Supplement No. 1 to Part 738--Commerce Country Chart
                                                                                      [Reason for control]
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                    Chemical & biological           Nuclear        National security   Missile  Regional stability   Firearms           Crime control           Anti- terrorism
                                           weapons             nonproliferation  --------------------   tech   -------------------- convention -------------------------------------------------
           Countries           --------------------------------------------------                    ----------                    ------------
                                  CB  1     CB  2     CB  3     NP  1     NP  2     NS  1     NS  2     MT  1     RS  1     RS  2      FC  1      CC  1     CC  2     CC  3     AT  1     AT  2
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
 
                                                                                          * * * * * * *
rrrrrrrrrrrrrrrrrrrrrrrrrrrrrrr-----------------------------------------------------------------------------------------------------------------------------------------------------------------
Hong Kong.....................        X         X   ........        X   ........        X         X         X         X         X   ..........        X   ........        X   ........  ........
rrrrrrrrrrrrrrrrrrrrrrrrrrrrrrr-----------------------------------------------------------------------------------------------------------------------------------------------------------------
 
                                                                                          * * * * * * *
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

* * * * *

PART 740--[AMENDED]

0
3. 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 August 7, 2014, 79 FR 46959 (August 11, 2014).


0
4. Section 740.16 is amended by revising paragraphs (a)(2) and (b)(1) 
to read as follows:


Sec.  740.16  Additional permissive reexports (APR).

* * * * *
    (a) * * *
    (2) The commodities being reexported are not controlled for NP, CB, 
MT, SI or CC reasons and are not military commodities described in ECCN 
0A919 or cameras described in ECCN 6A003.b.3 (having the 
characteristics listed in 6A002.a.2.a or a.2.b), 6A003.b.4.b, 
6A003.b.4.c, or commodities described in 3A001.b.2 or b.3 (except those 
that are being reexported for use in civil telecommunications 
applications), 6A002.a.2.a, a.2.b, a.2.c, a.3.b.2.b, or a.3.g; and
* * * * *
    (b) * * *
    (1) Commodities that are not controlled for nuclear 
nonproliferation or missile technology reasons, described in 3A001.b.2 
or b.3 (except those that are being reexported for use in civil 
telecommunications applications), nor listed in paragraph (b)(2) or 
(b)(3) of this section may be reexported to and among Country Group A:1 
and cooperating countries, provided that eligible commodities are for 
use or consumption within a Country Group A:1 (see Supplement No. 1 to 
part 740) or cooperating country, or for reexport from such country in 
accordance with other provisions of the EAR.
* * * * *

0
5. Section 740.20 is amended by adding paragraph (b)(2)(xi) to read as 
follows:


Sec.  740.20  License exception strategic trade authorization (STA).

* * * * *
    (b) * * *
    (2) * * *
    (xi) License Exception STA may not be used for any commodity 
controlled by ECCN 3A001.b.2 or b.3 (except those

[[Page 76873]]

that are being exported or reexported for use in civil 
telecommunications applications), or any ``technology'' controlled by 
3E001 for the ``production'' or ``development'' of commodities 
controlled by 3A001.b.2 or b.3.
* * * * *

PART 742--[AMENDED]

0
6. The authority citation for 15 CFR part 742 continues to read as 
follows:

    Authority:  50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; 
22 U.S.C. 3201 et seq.; 42 U.S.C. 2139a; 22 U.S.C. 7201 et seq.; 22 
U.S.C. 7210; Sec. 1503, Pub. L. 108-11, 117 Stat. 559; E.O. 12058, 
43 FR 20947, 3 CFR, 1978 Comp., p. 179; E.O. 12851, 58 FR 33181, 3 
CFR, 1993 Comp., p. 608; E.O. 12938, 59 FR 59099, 3 CFR, 1994 Comp., 
p. 950; E.O. 13026, 61 FR 58767, 3 CFR, 1996 Comp., p. 228; E.O. 
13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 783; Presidential 
Determination 2003-23 of May 7, 2003, 68 FR 26459, May 16, 2003; 
Notice of August 7, 2014, 79 FR 46959 (August 11, 2014); Notice of 
November 7, 2014, 79 FR 67035 (November 12, 2014).

0
7. Section 742.4 is amended by revising the third sentence of paragraph 
(a) to read as follows:


Sec.  742.4  National security.

    (a) License requirements. * * * A license is required to all 
destinations except Country Group A:5 (not including Argentina) (see 
Supplement No. 1 to part 740) and Mexico, for all items in ECCNs on the 
CCL that include NS column 2 in the Commerce Country Chart column of 
the ``License Requirements'' section except those cameras in ECCN 
6A003.b.4.b that have a focal plane array with 111,000 or fewer 
elements and a frame rate of 60 Hz or less. * * *
* * * * *

PART 774--[AMENDED]

0
8. The authority citation for 15 CFR part 774 continues to read as 
follows:

    Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; 
10 U.S.C. 7420; 10 U.S.C. 7430(e); 22 U.S.C. 287c, 22 U.S.C. 3201 et 
seq.; 22 U.S.C. 6004; 30 U.S.C. 185(s), 185(u); 42 U.S.C. 2139a; 42 
U.S.C. 6212; 43 U.S.C. 1354; 15 U.S.C. 1824a; 50 U.S.C. app. 5; 22 
U.S.C. 7201 et seq.; 22 U.S.C. 7210; E.O. 13026, 61 FR 58767, 3 CFR, 
1996 Comp., p. 228; E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 
783; Notice of August 7, 2014, 79 FR 46959 (August 11, 2014).


0
9. In Supplement No. 1 to part 774 (the Commerce Control List), 
Category 3, ECCN 3A001 is amended by revising the Reasons for Control 
and the Control Table in the License Requirements section and the List 
Based License Exceptions section, and adding a Special Conditions for 
STA section before the List of Items Controlled section to read as 
follows:

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

* * * * *
3A001 Electronic components and ``specially designed'' 
``components'' therefor, as follows (see List of Items Controlled).

License Requirements

Reason for Control: NS, RS, MT, NP, AT

 
                                            Country chart (see Supp. No.
                Control(s)                         1 to part 738)
 
NS applies to Microwave ``Monolithic        NS Column 1
 Integrated Circuits'' (MMIC) power
 amplifiers in 3A001.b.2 and discrete
 microwave transistors in 3A001.b.3,
 except those 3A001.b.2 and b.3 items
 being exported or reexported for use in
 civil telecommunications applications.
NS applies to entire entry................  NS Column 2
RS applies to Microwave ``Monolithic        RS Column 1
 Integrated Circuits'' (MMIC) power
 amplifiers in 3A001.b.2 and discrete
 microwave transistors in 3A001.b.3,
 except those 3A001.b.2 and b.3 items
 being exported or reexported for use in
 civil telecommunications applications.
MT applies to 3A001.a.1.a when usable in    MT Column 1
 ``missiles''; and to 3A001.a.5.a when
 ``designed or modified'' for military
 use, hermetically sealed and rated for
 operation in the temperature range from
 below -54[deg]C to above +125[deg]C.
NP applies to pulse discharge capacitors    NP Column 1
 in in 3A001.e.2 and superconducting
 solenoidal electromagnets in 3A001.e.3
 that meet or exceed the technical
 parameters in 3A201.a and 3A201.b,
 respectively.
AT applies to entire entry................  AT Column 1
 

* * * * *

List Based License Exceptions (See Part 740 for a description of all 
license exceptions)

LVS: N/A for MT or NP; N/A for Microwave ``Monolithic Integrated 
Circuits'' (MMIC) power amplifiers in 3A001.b.2 and discrete 
microwave transistors in 3A001.b.3, except those that are being 
exported or reexported for use in civil telecommunications 
applications
    Yes for:

$1500: 3A001.c
$3000: 3A001.b.1, b.2 (exported or reexported for use in civil 
telecommunications applications), b.3 (exported or reexported for 
use in civil telecommunications applications), b.9, .d, .e, .f, and 
.g.
$5000: 3A001.a (except a.1.a and a.5.a when controlled for MT), and 
.b.4 to b.7.
GBS: Yes for 3A001.a.1.b, a.2 to a.13 (except .a.5.a when controlled 
for MT), b.2 (exported or reexported for use in civil 
telecommunications applications), b.8 (except for TWTAs exceeding 18 
GHz), b.9., b.10, .g, and .h.
CIV: Yes for 3A001.a.3, a.7, and a.11.

Special Conditions for STA

STA: License Exception STA may not be used to ship any item in 
3A001.b.2 or b.3, except those that are being exported or reexported 
for use in civil telecommunications applications, to any of the 
destinations listed in Country Group A:5 or A:6 (See Supplement No.1 
to part 740 of the EAR).
* * * * *

0
10. In Supplement No. 1 to part 774 (the Commerce Control List), 
Category 3, ECCN 3E001 is amended by revising the List Based License 
Exceptions section, the Special Conditions for STA, and the Related 
Controls paragraph under the List of Items Controlled section to read 
as follows:

3E001 ``Technology'' according to the General Technology Note for 
the ``development'' or ``production'' of equipment or materials 
controlled by 3A (except 3A292, 3A980, 3A981, 3A991 3A992, or 
3A999), 3B (except 3B991 or 3B992) or 3C (except 3C992).
* * * * *

[[Page 76874]]

List Based License Exceptions (See Part 740 for a description of all 
license exceptions)

CIV: N/A
TSR: Yes, except N/A for MT, and ``technology'' for the 
``development'' or ``production'' of: (a) Traveling Wave Tube 
Amplifiers described in 3A001.b.8, having operating frequencies 
exceeding 19 GHz; (b) solar cells, coverglass-interconnect-cells or 
covered-interconnect-cells (CIC) ``assemblies,'' solar arrays and/or 
solar panels described in 3A001.e.4; (c) Microwave ``Monolithic 
Integrated Circuits'' (MMIC) power amplifiers in 3A001.b.2; and (d) 
discrete microwave transistors in 3A001.b.3.

Special Conditions for STA

STA: License Exception STA may not be used to ship or transmit 
``technology'' according to the General Technology Note for the 
``development'' or ``production'' of equipment specified by ECCNs 
3A002.g.1 or 3B001.a.2 to any of the destinations listed in Country 
Group A:6 (See Supplement No.1 to part 740 of the EAR). License 
Exception STA may not be used to ship or transmit ``technology'' 
according to the General Technology Note for the ``development'' or 
``production'' of components specified by ECCN 3A001.b.2 or b.3 to 
any of the destinations listed in Country Group A:5 or A:6 (See 
Supplement No.1 to part 740 of the EAR).

List of Items Controlled

Related Controls: (1) ``Technology'' according to the General 
Technology Note for the ``development'' or ``production'' of certain 
``space-qualified'' atomic frequency standards described in Category 
XV(e)(9), MMICs described in Category XV(e)(14), and oscillators 
described in Category XV(e)(15) of the USML are ``subject to the 
ITAR'' (see 22 CFR parts 120 through 130). See also 3E101, 3E201 and 
9E515. (2) ``Technology'' for ``development'' or ``production'' of 
Microwave ``Monolithic Integrated Circuits'' (MMIC) power amplifiers 
in 3A001.b.2 is controlled in this ECCN 3E001; 5E001.d refers only 
to that additional ``technology'' ``required'' for 
telecommunications.
* * * * *

0
11. In Supplement No. 1 to part 774 (the Commerce Control List), 
Category 5, ECCN 5E001 is amended by revising the Related Controls 
paragraph under the List of Items Controlled section to read as 
follows:

5E001 ``Technology'' as follows (see List of Items Controlled).
* * * * *

List of Items Controlled

Related Controls: (1) See also 5E101, 5E980 and 5E991. (2) 
``Technology'' for ``development'' or ``production'' of Microwave 
``Monolithic Integrated Circuits'' (MMIC) power amplifiers that meet 
the control criteria given at 3A001.b.2 is controlled in 3E001; 
5E001.d refers only to that additional ``technology'' ``required'' 
for telecommunications.
* * * * *

    Dated: December 12, 2014.
Kevin J. Wolf,
Assistant Secretary for Export Administration.
[FR Doc. 2014-29686 Filed 12-22-14; 8:45 am]
BILLING CODE 3510-33-P


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