Document ID: BIS-2008-0008-0001
Agency: bis
Document Type: Proposed Rule
Title: Conforming Changes to Certain End-User/End-Use Based Controls in the EAR; Clarification of the Term ``Transfer and Related Terms as Used in the EAR
Posted Date: 2008-04-18T04:00Z

[Federal Register: April 18, 2008 (Volume 73, Number 76)]
[Proposed Rules]               
[Page 21076-21083]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr18ap08-15]                         

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DEPARTMENT OF COMMERCE

Bureau of Industry and Security

15 CFR Parts 736, 740, 742, 744, 748, 752, 760, and 772

[Docket No. 080220216-8518-01]
RIN 0694-AD59

 
Conforming Changes to Certain End-User/End-Use Based Controls in 
the EAR; Clarification of the Term ``Transfer'' and Related Terms as 
Used in the EAR

AGENCY: Bureau of Industry and Security, Commerce.

ACTION: Proposed rule.

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SUMMARY: The Bureau of Industry and Security (BIS) proposes to amend 
the Export Administration Regulations (EAR) by making conforming 
changes in certain end-user/end-use controls in the EAR to ensure that 
the terminology used to describe each type of end-user/end-use control 
is consistent, to the fullest extent possible, with the terminology in 
other such controls in the EAR. The proposed amendments would clarify 
that a party cannot proceed with an export, reexport, or transfer (in-
country) that is in transit at the time the party is informed by BIS 
that a license is required (in accordance with certain end-user/end-use 
controls in the EAR), unless that party first obtains a license from 
BIS authorizing the completion of the transaction. These proposed 
changes to part 744 are intended to enhance the ability of BIS to stop 
items subject to the EAR, including items not on the Commerce Control 
List, from being exported, reexported or transferred (in-country) when 
there is an unacceptable risk that such items will be used in, or 
diverted to, any of the proliferation activities specified in 
Sec. Sec.  744.2, 744.3, 744.4 and 744.6 of the EAR. This rule also 
proposes to amend the EAR by revising the definition of the term 
``transfer'' and certain related terms, to provide greater clarity 
regarding these provisions.

DATES: Comments must be received by June 17, 2008.

ADDRESSES: Written comments on this rule may be sent to the Federal 
Register eRulemaking Portal: http://www.regulations.gov, or by e-mail 
to publiccomments@bis.doc.gov. Include RIN 0694-AD59 in the subject 
line of the message. Comments may be submitted by mail or hand delivery 
to Timothy Mooney, Office of Exporter Services, Regulatory Policy 
Division, Bureau of Industry and Security, U.S. Department of Commerce, 
14th St. &

[[Page 21077]]

Pennsylvania Avenue, NW., Room H2705, Washington, DC 20230, ATTN: RIN 
0694-AD59; or by fax to (202) 482-3355.
    Send comments regarding the collection of information to David 
Rostker, Office of Management and Budget (OMB), by e-mail to David--
Rostker@omb.eop.gov, or by fax to (202) 395-7285; and to the Regulatory 
Policy Division, Bureau of Industry and Security, U.S. Department of 
Commerce, 14th St. & Pennsylvania Avenue, NW., Room H2705, Washington, 
DC 20230.

FOR FURTHER INFORMATION CONTACT: Timothy Mooney, Office of Exporter 
Services, Bureau of Industry and Security, U.S. Department of Commerce; 
by telephone: (202) 482-2440; or by fax: 202-482-3355.

SUPPLEMENTARY INFORMATION:

Background

Conforming Changes to Certain End-User/End-Use Based Controls in the 
EAR

    Part 744 of the EAR deals with the end-user and end-use based 
control policy under the EAR. Section 744.3 prohibits exports, 
reexports and transfers (in-country) of items subject to the EAR to 
certain missile-related end-uses. Section 744.4 prohibits exports, 
reexports and transfers (in-country) of items subject to the EAR to 
certain chemical and biological proliferation activities. Section 744.6 
prohibits certain activities by U.S. persons in support of certain 
nuclear, missile, chemical, or biological end-uses. Section 744.2 
presently prohibits exports and reexports of items subject to the EAR 
to certain nuclear proliferation activities. This rule proposes to add 
transfer (in-country) to the scope of the prohibition set forth in 
Sec.  744.2 to ensure that the language in that section conforms with 
the language in Sec. Sec.  744.3, 744.4 and 744.6.
    Within each of these sections of part 744, there is a paragraph b 
that includes ``is informed'' provisions that set out the requirements 
of what persons need to do once they are informed by BIS that their 
transactions would be subject to the prohibitions set forth in 
Sec. Sec.  744.2, 744.3, 744.4 or 744.6. Under the current EAR, there 
are minor differences in the terminology used to describe the end-user/
end-use controls in each of these sections. This rule proposes to amend 
the end-user/end-use controls in these sections of part 744 to ensure 
that the terminology used in any one of these sections conforms, to the 
fullest extent possible, with the terminology used in the other 
sections. These proposed changes are intended to make the end-user/end-
use controls in part 744 of the EAR more consistent as well as 
transparent, so that members of the public can more clearly understand 
their obligations under the EAR.
    In addition, this rule proposes to add new provisions to Sec.  
744.1 to clarify that a party cannot proceed with an export, reexport, 
or transfer (in-country) that is in transit at the time the party is 
informed by BIS that a license is required (in accordance with the end-
user/end-use controls in Sec. Sec.  744.2, 744.3, 744.4 or 744.6 of the 
EAR), unless that party first obtains a license from BIS authorizing 
the completion of the transaction. This rule proposes that once a 
person ``is informed'' by BIS that a transaction is subject to one of 
the prohibitions in Sec. Sec.  744.2, 744.3, 744.4 or 744.6, a person 
would be required to apply for authorization from BIS before proceeding 
with the transaction. This rule further proposes to amend the EAR to 
clearly explain the steps a person must take if an item included in 
such a transaction is already in transit when a person ``is informed'' 
by BIS.
    These proposed changes to part 744 are intended to enhance the 
ability of BIS to stop items subject to the EAR, including items not on 
the Commerce Control List, from being exported, reexported or 
transferred (in-country) when there is an unacceptable risk that such 
items will be used in, or diverted to, any of the proliferation 
activities specified in Sec. Sec.  744.2, 744.3, 744.4 and 744.6 of the 
EAR.
    This clarification is consistent with UN Security Council 
Resolution 1540 (2004), which includes binding obligations on all UN 
Member States to prevent the proliferation of nuclear, chemical, or 
biological weapons and their means of delivery, including by 
establishing appropriate controls over related materials. UNSCR 1540 
stipulates that States are to establish, develop, review and maintain 
appropriate effective national export and transshipment controls over 
such items, including appropriate laws and regulations to control 
export, transit, transshipment and re-export; and to establish and 
enforce appropriate criminal or civil penalties for violations of such 
export control laws and regulations.
    Through this clarification, the United States is continuing to 
carry out its commitment to the Proliferation Security Initiative (PSI) 
Statement of Interdiction Principles, which states that PSI partners 
will work to strengthen their relevant national legal authorities where 
necessary and not to allow any persons subject to their jurisdiction to 
transport or assist in the transport of any cargoes of weapons of mass 
destruction (WMD), their delivery systems, or related materials to or 
from states or non-state actors of proliferation concern. The PSI is a 
global effort that aims to stop shipments of WMD, their delivery 
systems, and related materials flowing to or from states or non-state 
actors of proliferation concern. Announced by President Bush on May 31, 
2003, the PSI stems from the National Strategy to Combat Weapons of 
Mass Destruction issued in December 2002. That strategy recognizes the 
need for more robust tools to defeat the proliferation of WMD around 
the world, and specifically identifies interdiction as an area where 
greater focus will be placed. The PSI is a set of activities, not a 
formal treaty-based organization, that focuses on establishing greater 
coordination among its partner states when a particular action is 
needed.
    This rule makes the following specific revisions to the EAR:
    1. In Sec.  744.1 (General Provisions), this rule proposes to amend 
paragraph (a)(1) (Introduction), by adding ``transfer (in-country)'' to 
specify clearly that the prohibitions in Sec. Sec.  744.2, 744.3, 744.4 
and 744.6 also apply to such scenarios. This rule also proposes to 
amend paragraph (b)(2) (Determine Applicability), by adding a sentence 
at the end of that paragraph that states ``For exports, reexports or 
transfers (in-country) that are in transit at the time you are informed 
by BIS that a license is required in accordance with Sec. Sec.  
744.2(b), 744.3(b), 744.4(b) or 744.6(b) of the EAR, you may not 
proceed any further with the transaction, unless you first obtain a 
license from BIS (see part 748 of the EAR for instructions on how to 
apply for a license).'' This rule also proposes to amend paragraph 
(a)(1) by adding ``transfer (in-country)'' to specify clearly that the 
prohibition specified in Sec.  744.5 also applies to such scenarios.
    2. In Sec.  744.2 (Restrictions on Certain Nuclear End-Uses), this 
rule proposes to amend paragraph (a) (General Prohibition) by 
clarifying that this prohibition in Sec.  744.2 also applies to 
transfers (in-country) to conform with the language used in Sec. Sec.  
744.3, 744.4 and 744.6. In paragraph (b) (Additional Prohibition), this 
rule proposes to amend the heading to clarify that this paragraph 
applies an additional prohibition ``on persons informed by BIS''. Also 
in paragraph (b), this rule proposes to amend the ``is informed'' 
provisions to conform with the ``is informed'' provisions in Sec. Sec.  
744.3, 744.4 and 744.6. Specifically, the proposed rule would remove 
the phrase ``exporters or reexporters'', replace it

[[Page 21078]]

with the term ``persons'' in three locations, and add the phrase 
``transfer (in-country)'' to clarify that this prohibition also applies 
to transfers (in-country). Also in paragraph (b), this rule proposes to 
add the phrase ``or for the export, reexport, or transfer (in-
country)'' before the phrase ``of specified items'' in the first 
sentence, among other minor changes, to conform with Sec. Sec.  744.3, 
744.4 and 744.6.
    3. In Sec.  744.3 (Restrictions on Certain Rocket Systems 
(Including Ballistic Missile Systems and Space Launch Vehicles and 
Sounding Rockets) and Unmanned Air Vehicles (Including Cruise Missile 
Systems, Target Drones and Reconnaissance Drones) End-Uses), this rule 
proposes to amend paragraph (a) (General Prohibition) by inserting the 
word ``that'' after the phrase, ``* * * or transfer you know'' and by 
deleting the word ``the'' in the phrase ``at the time of export'' to 
conform with Sec. Sec.  744.2, 744.4 and 744.6. In paragraph (b) 
(Additional Prohibition), this rule proposes to amend the heading to 
clarify that this paragraph applies an additional prohibition ``on 
persons informed by BIS''. Also in paragraph (b), this rule proposes to 
amend the ``is informed'' provisions by adding the word ``persons'' in 
two locations, by adding the phrase ``(in-country)'' after the word 
transfer and by adding the phrase ``or for the export, reexport, or 
transfer (in-country)'' before the phrase ``of specified items'' in the 
first sentence, among other minor changes, to conform with Sec. Sec.  
744.2, 744.4 and 744.6.
    4. In Sec.  744.6 (Restrictions on Certain Activities of U.S. 
Persons), this rule proposes to amend paragraph (a) (General 
Prohibition) to conform with Sec. Sec.  744.2, 744.3 and 744.4 by 
adding the phrase ``(in-country)'' after the word ``transfer'' in 
paragraphs (a)(1)(i) and (a)(1)(ii) and in paragraph (a)(3) to clarify 
that this prohibition in Sec.  744.6 also applies to transfers (in-
country). In paragraph (b) (Additional Prohibitions on U.S. persons 
informed by BIS) this rule proposes to update the ``is informed'' 
provisions to conform with Sec. Sec.  744.2, 744.3 and 744.4; 
specifically by adding the phrase ``by specific notice'' after the word 
``individually'' in the first sentence and by removing the term 
``exporter'' and replacing it with the term ``U.S. persons'' in the 
last sentence.
    5. In Sec.  744.5 (Restrictions on Certain Maritime Nuclear 
Propulsion End-Uses), this rule proposes to amend paragraph (a) 
(General Prohibition) by clarifying that this prohibition in Sec.  
744.5 also applies to transfers (in-country). With this proposed rule, 
this paragraph (a) would prohibit the exports, reexports, and transfers 
(in-country) of items subject to the EAR to defined nuclear maritime 
end-uses in Sec.  744.5.

Revisions to Definitions of Transfer and Related Terms

    In Sec.  772.1 (Definitions of Terms as Used in the Export 
Administration Regulations), this rule proposes to revise the term 
``transfer'' to clarify that the term merely refers to a conveyance of 
items. This rule proposes to further clarify the definition by 
including the definition of ``in-country transfer/transfer (in-
country)'' as an ancillary definition to the term ``transfer'', 
referring to the conveyance of items within a single foreign country. 
These proposed revisions will provide greater clarity regarding the 
meaning of these defined terms under the EAR. In a note at the end of 
these definitions, this rule adds cross references to Sec. Sec.  
750.7(c) (Changes to a license) and 764.2(e) (Acting with knowledge of 
a violation). The term ``transfer'' may also be included on licenses 
issued by BIS. In that regard, these cross references are a reminder to 
persons involved with items authorized by a BIS license that changes 
that can be made to a BIS license are the non-material changes 
described in Sec.  750.7(c). In addition, persons should be aware that 
any person that knowingly makes a material change to a BIS license 
without proper authorization would violate Sec.  764.2(e) of the EAR.
    This rule also proposes to correct several places in the EAR where 
the term ``transfer'' is used, but the intended meaning is ``transfer 
(in-country)'' or ``in-country transfer''. Specifically, references to 
the term ``transfer'' in Sec.  736.2, General Order No. 2 to Supp. No. 
1 to part 736, Sec. Sec.  740.5, 740.7, 740.9, 740.11, 740.17, 742.15, 
744.3, 744.4, 744.6, Supp. No. 2 to part 748, Sec. Sec.  752.5, 752.8, 
752.16, and Supplement No. 3 to part 752 are proposed to be clarified 
with this rule. This rule also proposes to clarify that the term 
``retransfer'' means ``in-country transfer'' by replacing the term 
``retransfer'' with the term ``transfer (in-country)'' in Sec. Sec.  
740.11, 740.17, 742.15, 752.5, and Supp. No. 3 to part 752. This rule 
also proposes to clarify that the terms ``transferred'' and 
``transfer'', in the context of Sec. Sec.  760.1 and 760.3, mean 
``assigned to'' and ``assignment'', respectively.
    Although the Export Administration Act expired on August 20, 2001, 
the President, through Executive Order 13222 of August 17, 2001, 3 CFR, 
2001 Comp., p. 783 (2002), as extended by the Notice of August 15, 
2007, 72 FR 46137 (August 16, 2007), 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 not significant for 
purposes of E.O. 12866.
    2. Notwithstanding any other provision of law, no person is 
required to respond to, nor shall any person be subject to a penalty 
for failure to comply with a collection of information, subject to the 
requirements of the Paperwork Reduction Act, unless that collection of 
information displays a currently valid Office of Management and Budget 
Control Number. This proposed rule involves a collection of information 
subject to the Paperwork Reduction Act of 1980 (44 U.S.C. 3501 et 
seq.). This collection has been approved by the Office of Management 
and Budget under control number 0694-0088, ``Multi-Purpose 
Application,'' which carries a burden hour estimate of 58 minutes for a 
manual or electronic submission. This proposed rule is expected to have 
a minimal increase on the total number of license applications 
submitted to BIS. Send comments regarding these burden estimates or any 
other aspect of these collections of information, including suggestions 
for reducing the burden, to David Rostker, Office of Management and 
Budget (OMB), and to the Regulatory Policy Division, Bureau of Industry 
and Security as indicated in the ADDRESSES section of this rule.
    3. This rule does not contain policies with Federalism implications 
as that term is defined under E.O. 13132.
    4. The provisions of the Administrative Procedure Act (5 U.S.C. 
553) requiring notice of proposed rulemaking, the opportunity for 
public participation, and a delay in effective date, are inapplicable 
because this regulation involves a military and foreign affairs 
function of the United States (5 U.S.C. 553(a)(1)). Further, no other 
law requires that a notice of proposed rulemaking and an opportunity 
for public comment be given for this rule. Because a notice of proposed 
rulemaking and an opportunity for public comment are not required to be 
given for this rule under the Administrative Procedure Act or by any 
other law, the analytical requirements of the Regulatory Flexibility 
Act (5 U.S.C. 601 et seq.) are not applicable. However, in order to 
obtain the benefit of a variety of viewpoints before publishing any 
final rule, BIS is issuing this proposed rule with request for 
comments. Comments must be received by BIS no later than

[[Page 21079]]

June 17, 2008. In developing a final rule, BIS will consider all 
comments received on or before that date. Comments received after the 
end of the comment period will be considered if possible, but their 
consideration cannot be assured. BIS will not accept public comments 
accompanied by a request that a part or all of the material be treated 
confidentially because of its business proprietary nature or for any 
other reason. BIS will return such comments and materials to the 
persons submitting the comments and will not consider them in the 
development of the final rule. All public comments on this proposed 
rule must be in writing (including fax or e-mail) and will be a matter 
of public record, available for public inspection and copying at the 
Federal eRulemaking Portal at http://www.regulations.gov and on the BIS 
Freedom of Information Act (FOIA) Web site at http://www.bis.doc.gov/
foia. BIS does not maintain a separate public inspection facility. If 
you have technical difficulties accessing this Web site, please call 
BIS's Office of Administration at (202) 482-0500 for assistance.

List of Subjects

15 CFR Part 736 and 772

    Exports.

15 CFR Part 740, 748, and 752

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

15 CFR Part 742

    Exports, Terrorism.

15 CFR Part 744

    Exports, Reporting and recordkeeping requirements, Terrorism.

15 CFR Part 760

    Boycotts, Exports, Reporting and recordkeeping requirements.
    Accordingly, parts 736, 740, 742, 744, 748, 752, 760, and 772 of 
the Export Administration Regulations (15 CFR parts 730-774) are 
proposed to be amended as follows:

PART 736--[AMENDED]

    1. The authority citation for 15 CFR part 736 continues to read as 
follows:

    Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; 
22 U.S.C. 2151 (note), Pub. L. 108-175; E.O. 12938, 59 FR 59099, 3 
CFR, 1994 Comp., p. 950; E.O. 13020, 61 FR 54079, 3 CFR, 1996 Comp. 
p. 219; E.O. 13026, 61 FR 58767, 3 CFR, 1996 Comp., p. 228; E.O. 
13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 783; E.O. 13338, 69 FR 
26751, May 13, 2004; Notice of August 3, 2006, 71 FR 44551 (August 
7, 2006); Notice of October 27, 2006, 71 FR 64109 (October 31, 
2006); Notice of August 15, 2007, 72 FR 46137 (August 16, 2007).

    2. Section 736.2 is amended by revising the first sentence of 
paragraph (b)(10) to read as follows:

Sec.  736.2  General prohibitions and determination of applicability.

* * * * *
    (b) * * *
    (10) * * * You may not sell, transfer, export, reexport, finance, 
order, buy, remove, conceal, store, use, loan, dispose of, transport, 
forward, or otherwise service, in whole or in part, any item subject to 
the EAR and exported or to be exported with knowledge that a violation 
of the Export Administration Regulations, the Export Administration Act 
or any order, license, License Exception, or other authorization issued 
thereunder has occurred, is about to occur, or is intended to occur in 
connection with the item. * * *
    3. General Order No. 2 to Supplement No. 1 to part 736, is amended 
by revising the last sentence of paragraph (b) to read as follows:

Supplement No. 1 to Part 736--General Orders

* * * * *

General Order No. 2

* * * * *
    (b) * * * License conditions requiring written U.S. Government 
authorization for the reexport, transfer (in-country), or resale of 
items already exported or reexported remain in effect, and requests 
for BIS authorization to reexport, transfer (in-country), or sell 
such items will require interagency approval.
* * * * *

PART 740--[AMENDED]

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

    Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; 
Sec. 901-911, Pub. L. 106-387; 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 3, 2006, 71 FR 44551 (August 7, 2006); Notice of 
August 15, 2007, 72 FR 46137 (August 16, 2007).

    5. Section 740.5 is amended by revising paragraph (b)(1) to read as 
follows:

Sec.  740.5  Civil end-users (CIV).

* * * * *
    (b) Restrictions.--(1) Restricted end-users and end-uses. You may 
not use CIV if you ``know'' the item will be or is intended to be 
exported, reexported, or transferred (in-country) to military uses or 
military end-users. Such exports, reexports, and transfers (in-country) 
will continue to require a license. In addition to conventional 
military activities, military uses include any proliferation activities 
described and prohibited by part 744 of the EAR.
* * * * *
    6. Section 740.7 is amended:
    a. By revising the first sentence of paragraph (b)(3); and
    b. By revising paragraph (b)(5) to read as follows:

Sec.  740.7  Computers (APP).

* * * * *
    (b) * * *
    (3) Computers and software eligible for License Exception APP may 
not be reexported or transferred (in-country) without prior 
authorization from BIS, i.e., a license, a permissive reexport, another 
License Exception, or ``No License Required''. * * *
    (4) * * *
    (5) License Exception APP does not authorize exports, reexports and 
transfers (in-country) for nuclear, chemical, biological, or missile 
end-users and end-uses subject to license requirements under Sec.  
744.2, Sec.  744.3, Sec.  744.4, and Sec.  744.5 of the EAR. Such 
exports, reexports and transfers (in-country) will continue to require 
a license and will be considered on a case-by-case basis. Reexports and 
transfers (in-country) to these end-users and end-uses in eligible 
countries are strictly prohibited without prior authorization.
* * * * *
    7. Section 740.9 is amended by revising paragraph (a)(2)(ix)(A) to 
read as follows:

Sec.  740.9  Temporary imports, exports, and reexports (TMP).

* * * * *
    (a) * * *
    (2) * * *
    (ix) Temporary exports to a U.S. subsidiary, affiliate or facility 
in Country Group B.
    (A) Components, parts, tools or test equipment exported by a U.S. 
person to its subsidiary, affiliate or facility in a country listed in 
Country Group B (see Supplement No. 1 to this part) that is owned or 
controlled by the U.S. person, if the components, part, tool or test 
equipment is to be used for manufacture, assembly, testing, production 
or modification, provided that no components, parts, tools or test 
equipment or the direct product of such components, parts, tools or 
test equipment are transferred (in-country) or reexported from such 
subsidiary, affiliate or facility without prior authorization by BIS.
* * * * *

[[Page 21080]]

    8. Section 740.11 is amended by revising paragraph (c)(3) to read 
as follows:

Sec.  740.11  Governments, international organizations, and 
international inspections under the Chemical Weapons Convention (GOV).

* * * * *
    (c) * * *
    (3) Confidentiality. The application of the provisions of this 
paragraph (c) is subject to the condition that the confidentiality of 
business information is strictly protected in accordance with 
applicable provisions of the EAR and other U.S. laws regarding the use 
and transfer of U.S. goods and services.
* * * * *
    9. Section 740.17 is amended by revising the second sentence of the 
introductory text of paragraph (a)(1) to read as follows:

Sec.  740.17  Encryption commodities and software (ENC).

* * * * *
    (a) * * *
    (1) * * * Any encryption item produced or developed with an item 
exported or reexported under this paragraph (a)(1) is subject to the 
EAR and requires review and authorization before any sale or transfer 
outside of the private sector end-user that developed it. * * *
* * * * *

PART 742--[AMENDED]

    10. 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; Sec. 901-911, Pub. L. 106-
387; Sec. 221, Pub. L. 107-56; 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 3, 2006, 71 FR 44551 (August 7, 2006); 
Notice of October 27, 2006, 71 FR 64109 (October 31, 2006); Notice 
of August 15, 2007, 72 FR 46137 (August 16, 2007).

    11. Section 742.15 is amended by revising the second sentence of 
paragraph (b)(3)(i) to read as follows:

Sec.  742.15  Encryption items.

* * * * *
    (b) * * *
    (3) * * *
    (i) * * *
    All items produced or developed by U.S. subsidiaries with 
encryption commodities, software and technology exported under this 
paragraph are subject to the EAR and require review and authorization 
before any sale or transfer outside of the U.S. company.
* * * * *

PART 744--[AMENDED]

    12. The authority citation for 15 CFR part 744 continues to read as 
follows:

    Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; 
22 U.S.C. 3201 et seq.; 42 U.S.C. 2139a; Sec. 901-911, Pub. L. 106-
387; Sec. 221, Pub. L. 107-56; E.O. 12058, 43 FR 20947, 3 CFR, 1978 
Comp., p. 179; E.O. 12851, 58 FR 33181, 3 CFR, 1993 Comp., p. 608; 
E.O. 12938, 59 FR 59099, 3 CFR, 1994 Comp., p. 950; E.O. 12947, 60 
FR 5079, 3 CFR, 1995 Comp., p. 356; E.O. 13026, 61 FR 58767, 3 CFR, 
1996 Comp., p. 228; E.O. 13099, 63 FR 45167, 3 CFR, 1998 Comp., p. 
208; E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 783; E.O. 13224, 
66 FR 49079, 3 CFR, 2001 Comp., p. 786; Notice of August 3, 2006, 71 
FR 44551 (August 7, 2006); Notice of October 27, 2006, 71 FR 64109 
(October 31, 2006); Notice of August 15, 2007, 72 FR 46137 (August 
16, 2007).

    13. Section 744.1 is amended by revising paragraphs (a)(1) and 
(b)(2) to read as follows:

Sec.  744.1  General provisions.

    (a)(1) Introduction. In this part, references to the EAR are 
references to 15 CFR chapter VII, subchapter C. This part contains 
prohibitions against exports, reexports, and selected transfers to 
certain end-users and end-uses as introduced under General Prohibition 
Five (End-use/End-users) and Nine (Orders, Terms, and Conditions), 
unless authorized by BIS. Sections 744.2, 744.3, 744.4 prohibit 
exports, reexports and transfers (in-country) of items subject to the 
EAR to defined nuclear, missile, and chemical and biological 
proliferation activities. Section 744.5 prohibits exports, reexports 
and transfers (in-country) of items subject to the EAR to defined 
nuclear maritime end-uses. Section 744.6 prohibits certain activities 
by U.S. persons in support of certain nuclear, missile, chemical, or 
biological end-uses. Section 744.7 prohibits exports and reexports of 
certain items for certain aircraft and vessels. Section 744.9 prohibits 
U.S. persons from providing technical assistance to certain foreign 
persons seeking to develop or manufacture certain encryption 
commodities or software. Section 744.10 prohibits exports and reexports 
of any item subject to the EAR to Russian entities, included in 
Supplement No. 4 of this part. Sections 744.12, 744.13 and 744.14 
prohibit exports and reexports of any item subject to the EAR to 
persons designated as Specially Designated Global Terrorists, Specially 
Designated Terrorists, or Foreign Terrorist Organizations, 
respectively. Section 744.19 sets forth BIS's licensing policy for 
applications for exports or reexports when a party to the transaction 
is an entity that has been sanctioned pursuant to any of three 
specified statutes that require certain license applications to be 
denied. Section 744.20 requires a license, to the extent specified in 
Supplement No. 4 to this part, for exports and reexports of items 
subject to the EAR destined to certain sanctioned entities listed in 
Supplement No. 4 to this part. Section 744.15 describes restrictions on 
exports and reexports to persons named in general orders. In addition, 
these sections include license review standards for export license 
applications submitted as required by these sections. It should also be 
noted that part 764 of the EAR prohibits exports, reexports and certain 
transfers of items subject to the EAR to denied parties.
* * * * *
    (b) * * *
    (2) Determine applicability. Second, determine whether any of the 
end-use and end-user prohibitions described in this part are applicable 
to your planned export, reexport, transfer (in-country) or other 
activity. See Supplement No. 1 to part 732 for guidance. For exports, 
reexports or transfers (in-country) that are in transit at the time you 
are informed by BIS that a license is required in accordance with 
Sec. Sec.  744.2(b), 744.3(b), 744.4(b) or 744.6(b) of the EAR, you may 
not proceed any further with the transaction unless you first obtain a 
license from BIS (see part 748 of the EAR for instructions on how to 
apply for a license). The provisions of Sec.  748.4(d)(2) shall not 
apply to license applications submitted pursuant to a notification from 
BIS that occurs while an export, reexport, or transfer (in-country) is 
in transit.
* * * * *
    14. Section 744.2 is amended by revising paragraph (a) introductory 
text and paragraph (b) to read as follows:

Sec.  744.2  Restrictions on certain nuclear end-uses.

    (a) General prohibition. In addition to the license requirements 
for items specified on the CCL, you may not export, reexport, or 
transfer (in-country) to any destination, other than countries in 
Supplement No. 3 to this part, an item subject to the EAR without a 
license if, at the time of export, reexport, or transfer (in-country) 
you know \1\ that

[[Page 21081]]

the item will be used directly or indirectly in any one or more of the 
following activities described in paragraphs (a)(1), (a)(2), and (a)(3) 
of this section:
---------------------------------------------------------------------------

    \1\ Part 772 of the EAR defines ``knowledge'' for all of the EAR 
except part 760, Restrictive Trade Practices and Boycotts. The 
definition, which includes variants such as ``know'' and ``reason to 
know'', encompasses more than positive knowledge. Thus, the use of 
``know'' in this section in place of the former wording ``know or 
have reason to know'' does not lessen or otherwise change the 
responsibilities of persons subject to the EAR.
---------------------------------------------------------------------------

* * * * *
    (b) Additional prohibition on persons informed by BIS. BIS may 
inform persons, either individually by specific notice or through 
amendment to the EAR, that a license is required for a specific export, 
reexport, or transfer (in-country), or for the export, reexport, or 
transfer (in-country) of specified items to a certain end-user, because 
there is an unacceptable risk of use in, or diversion to, the 
activities specified in paragraph (a) of this section. Specific notice 
is to be given only by, or at the direction of, the Deputy Assistant 
Secretary for Export Administration. When such notice is provided 
orally, it will be followed by a written notice within two working days 
signed by the Deputy Assistant Secretary for Export Administration. 
However, the absence of any such notification does not excuse persons 
from compliance with the license requirements of paragraph (a) of this 
section.
* * * * *
    15. Section 744.3 is amended:
    a. By revising paragraph (a) introductory text;
    b. By revising paragraph (b); and
    c. By revising paragraph (d)(1) to read as follows:

Sec.  744.3  Restrictions on certain rocket systems (including 
ballistic missile systems and space launch vehicles and sounding 
rockets) and unmanned air vehicles (including cruise missile systems, 
target drones and reconnaissance drones) end-uses.

    (a) General prohibition. In addition to the license requirements 
for items specified on the CCL, you may not export, reexport, or 
transfer (in-country) an item subject to the EAR without a license if, 
at the time of export, reexport or transfer (in-country) you know that 
the item:
* * * * *
    (b) Additional prohibition on persons informed by BIS. BIS may 
inform persons, either individually by specific notice or through 
amendment to the EAR, that a license is required for a specific export, 
reexport or transfer (in-country) or for the export, reexport, or 
transfer (in-country) of specified items to a certain end-user, because 
there is an unacceptable risk of use in, or diversion to, the 
activities specified in paragraphs (a)(1) or (a)(2) of this section. 
Specific notice is to be given only by, or at the direction of, the 
Deputy Assistant Secretary for Export Administration. When such notice 
is provided orally, it will be followed by a written notice within two 
working days signed by the Deputy Assistant Secretary for Export 
Administration. However, the absence of any such notification does not 
excuse persons from compliance with the license requirements of 
paragraphs (a)(1), (a)(2), or (a)(3) of this section.
* * * * *
    (d) License review standards.
    (1) Applications to export, reexport or transfer (in-country) the 
items subject to this section will be considered on a case-by-case 
basis to determine whether the export, reexport or transfer (in-
country) would make a material contribution to the proliferation of 
certain rocket systems, or unmanned air vehicles. When an export, 
reexport or transfer (in-country) is deemed to make a material 
contribution, the license will be denied.
* * * * *
    16. Section 744.4 is amended:
    a. By revising paragraph (a); and
    b. By revising paragraph (d)(1) to read as follows:

Sec.  744.4  Restrictions on certain chemical and biological weapons 
end-uses.

    (a) General prohibition.
    In addition to the license requirements for items specified on the 
CCL, you may not export, reexport, or transfer (in-country) an item 
subject to the EAR without a license if, at the time of export, 
reexport, or transfer (in-country) you know that the item will be used 
in the design, development, production, stockpiling, or use of chemical 
or biological weapons in or by any country or destination, worldwide.
* * * * *
    (d) License review standards.
    (1) Applications to export, reexport, or transfer (in-country) 
items subject to this section will be considered on a case-by-case 
basis to determine whether the export, reexport, or transfer (in-
country) would make a material contribution to the design, development, 
production, stockpiling, or use of chemical or biological weapons. When 
an export, reexport, or transfer (in-country) is deemed to make such a 
contribution, the license will be denied.
* * * * *
    17. Section 744.5 is amended by revising the first sentence of 
paragraph (a) to read as follows:

Sec.  744.5  Restrictions on certain maritime nuclear end-uses.

    (a) In addition to the license requirements for items specified on 
the CCL, you may not export, reexport, or transfer (in-country) certain 
technology subject to the EAR without a license if at the time of the 
export, reexport, or transfer (in-country) you know the item is for use 
in connection with a foreign maritime nuclear propulsion project. * * *
* * * * *
    18. Section 744.6 is amended:
    a. By revising paragraph (a)(1)(i) introductory text;
    b. By revising paragraph (a)(1)(ii);
    c. By revising paragraph (a)(3); and
    d. By revising paragraph (b) to read as follows:

Sec.  744.6  Restrictions on certain activities of U.S. persons.

    (a) * * *
    (1) * * *
    (i) No U.S. person as defined in paragraph (c) of this section may, 
without a license from BIS, export, reexport, or transfer (in-country) 
an item where that person knows that such item:
    (ii) No U.S. person shall, without a license from BIS, knowingly 
support an export, reexport, or transfer (in-country) that does not 
have a license as required by this section. Support means any action, 
including financing, transportation, and freight forwarding, by which a 
person facilitates an export, reexport, or transfer (in-country).
    (2) * * *
    (3) Whole plant requirement. No U.S. person shall, without a 
license from BIS, participate in the design, construction, export, 
reexport, or transfer (in-country) of a whole plant to make chemical 
weapons precursors identified in ECCN 1C350, in countries other than 
those listed in Country Group A:3 (Australia Group) (See Supplement No. 
1 to part 740 of the EAR).
    (b) Additional prohibitions on U.S. persons informed by BIS. BIS 
may inform U.S. persons, either individually by specific notice or 
through amendment to the EAR, that a license is required because an 
activity could involve the types of participation and support described 
in paragraph (a) of this section. Specific notice is to be given only 
by, or at the direction of, the Deputy Assistant Secretary for Export 
Administration. When such notice is provided orally, it will be 
followed by a written notice within two working days signed by the 
Deputy Assistant

[[Page 21082]]

Secretary for Export Administration. However, the absence of any such 
notification does not excuse the U.S. person from compliance with the 
license requirements of paragraph (a) of this section.
* * * * *

PART 748--[AMENDED]

    19. The authority citation for 15 CFR part 748 continues to read as 
follows:

    Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 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 3, 2006, 71 FR 
44551 (August 7, 2006); Notice of August 15, 2007, 72 FR 46137 
(August 16, 2007).

    20. Supplement No. 2 to part 748 is amended by revising paragraph 
(c)(2) to read as follows:

Supplement No. 2 to Part 748--Unique Application and Submission 
Requirements

* * * * *
    (c) * * *
    (2) Security Safeguard Plan requirement. The United States 
requires security safeguards for exports, reexports, and transfers 
(in-country) of High Performance Computers (HPCs) to ensure that 
they are used for peaceful purposes. If you are submitting a license 
application for an export, reexport, or in-country transfer of a 
high performance computer to or within a destination in Computer 
Tier 3 (see Sec.  740.7(c)(1) of the EAR) or to Cuba, Iran, North 
Korea, Sudan, or Syria you must include with your license 
application a security safeguard plan signed by the end-user, who 
may also be the ultimate consignee. This requirement also applies to 
exports, reexports, and transfers (in-country) of components or 
electronic assemblies to upgrade existing ``computer'' installations 
in those countries. A sample security safeguard plan is posted on 
BIS's Web page at http://www.bis.doc.gov/hpcs/
SecuritySafeguardPlans.html.
* * * * *

PART 752--[AMENDED]

    21. The authority citation for 15 CFR part 752 continues to read as 
follows:

    Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; 
E.O. 13020, 61 FR 54079, 3 CFR, 1996 Comp., p. 219; E.O. 13222, 66 
FR 44025, 3 CFR, 2001 Comp., p. 783; Notice of August 3, 2006, 71 FR 
44551 (August 7, 2006); Notice of August 15, 2007, 72 FR 46137 
(August 16, 2007).

    22. Section 752.5 is amended by revising the undesignated paragraph 
at the end of (c)(8)(ii) to read as follows:

Sec.  752.5  Steps you must follow to apply for an SCL.

* * * * *
    (c) * * *
    (8) * * *
    (ii) * * *
    No chemicals or chemical equipment received under this Special 
Comprehensive License will be transferred, resold, or reexported to a 
destination or end-user that requires a license, unless the new end-
user has been approved by the Bureau of Industry and Security, and in 
no case will the items be transferred, resold, or reexported to a party 
who is not the end-user.
* * * * *
    23. Section 752.8 is amended by revising the last sentence of 
paragraph (a) to read as follows:

Sec.  752.8  SCL application review process.

    (a) * * * In reviewing and approving a specific SCL request, BIS 
retains the right to limit the eligibility of items or to prohibit the 
export, reexport, or transfer (in-country) of items under the SCL to 
specific firms, individuals, or countries.
* * * * *
    24. Section 752.16 is amended by revising paragraph (a)(1)(v) to 
read as follows:

Sec.  752.16  Administrative actions.

    (a)(1) * * *
    (v) Require that certain exports, reexports, or transfers (in-
country) be individually authorized by BIS;
* * * * *
    25. Supplement No. 3 to part 752 is amended by revising Block (8) 
paragraph (iv) to read as follows:

Supplement No. 3 to Part 752--Instructions on Completing Form BIS-752 
``Statement by Consignee in Support of Special Comprehensive License''

* * * * *

Block 8: Disposition or Use of Items.

* * * * *
    (iv) Item (d): Complete this Block if your company plans to 
transfer or resell within the country of import. State the end-use 
of your customers. If you plan to transfer to end-users that require 
prior approval by BIS, complete and attach Form BIS-748P-B, End-User 
Appendix.
* * * * *

PART 760--[AMENDED]

    26. The authority citation for 15 CFR part 760 continues to read as 
follows:

    Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; 
E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 783; Notice of August 
3, 2006, 71 FR 44551 (August 7, 2006); Notice of August 15, 2007, 72 
FR 46137 (August 16, 2007).

    27. Section 760.1 is amended by revising the first and second 
sentences of paragraph (b)(4)(viii) to read as follows:

Sec.  760.1  Definitions.

* * * * *
    (b) * * *
    (4) * * *
    (viii) At the request of country Y, A, an individual employed by 
U.S. company B, is assigned to company C as an employee. C is a foreign 
company owned and controlled by country Y. A, a U.S. national who will 
reside in Y, has agreed to the assignment provided he is able to retain 
his insurance, pension, and other benefits. * * *
* * * * *
    28. Section 760.3 is amended by revising the first sentence of 
paragraph (f)(4)(i) to read as follows:

Sec.  760.3  Exceptions to prohibitions.

* * * * *
    (f) * * *
    (4) * * *
    (i) A, a U.S. individual employed by B, a U.S. manufacturer of 
sporting goods with a plant in boycotting country Y, wishes to obtain a 
work visa so that he may be assigned to the plant in Y. * * *
* * * * *

PART 772--[AMENDED]

    29. The authority citation for 15 CFR part 772 continues to read as 
follows:

    Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; 
E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 783; Notice of August 
3, 2006, 71 FR 44551 (August 7, 2006); Notice of August 15, 2007, 72 
FR 46137 (August 16, 2007).

    30. Section 772.1 is amended by revising the definition of 
``transfer.''

Sec.  772.1  Definitions of terms as used in the Export Administration 
Regulations (EAR).

* * * * *
    Transfer. A shipment, transmission, or release to any person of 
items subject to the EAR either within the United States or outside the 
United States.
    (a) In-country transfer/transfer (in-country). The shipment, 
transmission, or release of items subject to the EAR from one person to 
another person that occurs outside the United States within a single 
foreign country.
    (b) Reserved.

    Note to the definition of transfer:
    This definition of transfer does not apply to Sec.  750.10 or 
Supplement No. 8 to part 760 of the EAR. The term ``transfer'' may 
also be included on licenses issued by BIS. In that regard, the 
changes that can be made to a BIS license are the non-material 
changes described in Sec.  750.7(c). Any other change to a BIS 
license without authorization is a

[[Page 21083]]

violation of the EAR. See Sec. Sec.  750.7(c) and 764.2(e).

* * * * *

    Dated: April 9, 2008.
Matthew S. Borman,
Acting Assistant Secretary for Export Administration.
 [FR Doc. E8-8197 Filed 4-17-08; 8:45 am]

BILLING CODE 3510-33-P