Document ID: BIS-2010-0020-0001
Agency: bis
Document Type: Rule
Title: Export Administration Regulations; Technical Corrections
Posted Date: 2010-06-04T04:00Z

[Federal Register: June 4, 2010 (Volume 75, Number 107)]
[Rules and Regulations]               
[Page 31678-31682]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr04jn10-6]                         

=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF COMMERCE

Bureau of Industry and Security

15 CFR Parts 734, 740, 744, 748, 750, 766 and 774

[Docket No. 0907271167-91198-01]
RIN 0694-AE69

 
Export Administration Regulations: Technical Corrections

AGENCY: Bureau of Industry and Security, Commerce.

ACTION: Final Rule.

-----------------------------------------------------------------------

SUMMARY: This rule clarifies language concerning the de minimis 
provisions of the Export Administration Regulations and certain 
performance criteria of turning machines. It also removes obsolete 
cross references, removes and reserves two regulatory provisions, 
corrects a typographical error, and removes an unnecessary reporting 
requirement.

DATES: This rule is effective June 4, 2010.

[[Page 31679]]

FOR FURTHER INFORMATION CONTACT: William H. Arvin, Regulatory Policy 
Division, e-mail warvin@bis.doc.gov, telephone 202 482 2440.

SUPPLEMENTARY INFORMATION: 

Background

Removal of Potentially Confusing Language Regarding De Minimis Content 
of Foreign Made Items

    The Export Administration Regulations (EAR) generally do not apply 
to items that were made and are located outside the United States, and 
that contain only the ``de minimis'' level of U.S. origin content as 
defined in Sec.  734.4. The procedures and standards for calculating 
whether an item exceeds the de minimis threshold are contained in 
Supplement No. 2 to Part 734 of the EAR. Section 732.2(d), which 
directs readers to that supplement, notes that ``[t]his step [de 
minimis calculation] is appropriate only for items that are made 
outside the United States and are not currently in the United States.'' 
Pursuant to Sec.  734.3(a)(1), all items, regardless of level of 
foreign content, are subject to the EAR if they are physically located 
in the United States. This rule removes Sec.  734.3(b)(4), which 
delineates a category of items not subject to the EAR (``foreign made 
items that have less than the de minimis percentage of controlled U.S. 
content based on the principles described in Sec.  734.3 of this 
part''), because the provision could be erroneously read as applying 
the de minimis exclusion to foreign made items that are located in the 
United States. BIS attempted to remove Sec.  734.3(b)(4) in a previous 
rule. (See 73 FR 75942, December 15, 2008). However, the drafting 
instruction in that rule erroneously read, ``In Sec.  734.4, remove 
paragraph (b)(4).'' (Id.) Because Sec.  734.4 does not contain a 
paragraph (b)(4), that instruction had no effect. This rule includes 
the correct drafting instruction to remove Sec.  734.3(b)(4).

Correction of Incorrect Paragraph Designation

    This rule redesignates Sec.  740.11(d)(3)(C) of the EAR as Sec.  
740.11(d)(3)(iii), to conform to standard Code of Federal Regulations 
paragraph structure. The incorrect designation was created in a rule 
published at 75 FR 6301, February 9, 2010.

Transition to Web-Based System for Information About the Status of 
Certain Matters Pending With BIS

    Since the mid-1980s, BIS has operated a telephone-based automated 
system for parties to obtain information on the status of license 
applications and certain other matters that are under review by BIS. 
This system is known as the ``System for Tracking Export License 
Applications'' or ``STELA.'' In 2008, BIS began offering the same 
automated service via a Web site (https://snapr.bis.doc.gov/stela/). 
BIS plans to phase out the telephone version of STELA because it now 
has few users, and maintaining such an old system is increasingly 
difficult. Accordingly, this rule updates references to STELA in 
Sec. Sec.  740.5(d)(2), 740.7(d)(4)(ii) and 740.18(c)(5) to the Web 
address, removes references to the telephone system from all three 
provisions, and removes the telephone number currently listed in Sec.  
740.18(c)(5). This rule also removes and reserves Sec.  750.5, which 
provided detailed instructions on how to use the telephone version of 
STELA, as well as references to Sec.  750.5 from Sec. Sec.  740.5(d)(2) 
and 740.7(d)(4)(ii).

Removal of Obsolete Provision Regarding Restrictions on Exports and 
Reexports Involving Persons Named in General Orders

    From June 2006 until September 2008, Supplement No. 1 to part 736 
of the EAR contained ``General Order Number 3,'' which imposed license 
requirements on exports and reexports of items subject to the EAR to 
certain listed persons. That general order was subsequently removed, 
and most of the persons listed therein were added to the Entity List in 
Supplement No. 4 to part 744 (73 FR 54503, Sept. 22, 2008). This rule 
removes and reserves Sec.  744.15, which covered restrictions on 
exports and reexports involving persons named in general orders. With 
the removal of General Order Number 3, no such general orders exist; 
hence, Sec.  744.15 no longer serves a purpose. This rule also removes 
the sentence in Sec.  744.1(a)(1) that referred to Sec.  744.15.

Removal of Reference to Telephonic Notification Regarding Personal 
Identification Numbers (PIN)

    In Sec.  748.7(a)(2)(i), this rule removes the word 
``telephonically'' from the sentence describing BIS's notification to 
individual users of the electronic filing system of their PINs because 
BIS now uses a variety of methods for providing such notifications.

Removal of Cross References to EAR paragraph That No Longer Exists

    The rule replaces references to Sec.  748.2(c) of the EAR, which 
formerly contained BIS address information but no longer exists, with 
references to a current provision that contains appropriate current 
address information. Specifically, this rule replaces the reference to 
Sec.  748.2(c) that appears in Sec. Sec.  748.7(a)(1), 
748.7(a)(2)(iv)(A) and 748.9(i)(1) with a reference to Sec.  
748.1(d)(2), which provides BIS's general mailing address. The rule 
also replaces the reference to Sec.  748.2(c) in Sec.  748.13(c)(2) 
with the full address of the specific BIS office currently handling the 
relevant documentation.

Removal of Unnecessary Notification Requirement

    Under certain circumstances, BIS may request a delivery 
verification of items licensed for export. Such verifications are 
conducted by the government of the importing country. Generally, BIS 
would require, as a license condition, that the exporter obtain the 
foreign government-issued certificate of delivery verification and send 
the certificate to BIS. Amended Sec.  748.13(b) provides that if the 
national security export control is removed from the item that is the 
subject of a license that is issued, the requirement to obtain the 
delivery verification is removed as well. Prior to publication of this 
rule, Sec.  748.13(b) required the licensee to inform BIS in writing 
that it would not obtain the delivery verification certificate in 
situations where the national security license requirement had been 
removed. Because the national security license requirements referred to 
are those imposed by the EAR, BIS would be aware of their removal 
regardless, and therefore would not need written notice from the 
licensee on this subject.

Replacement of Obsolete Terminology

    This rule replaces the term ``Export Management System Guidelines'' 
that appears in Supplement No.1 to Part 766 with the term ``Export 
Management Compliance Program Guidelines,'' and replaces the term ``EMS 
Guidelines'' with ``EMCP Guidelines'' to reflect the terminology that 
BIS currently uses to describe its compliance guidance.

Clarifying Language Regarding Certain Machine Tools Subject to Nuclear 
Proliferation Export Controls

    Export Control Classification Number (ECCN) 2B001 applies, inter 
alia, to numerically controlled machine tools for turning that have 
both a positioning accuracy better than 6 [mu]m along any linear axis, 
and two or more axes that can be controlled simultaneously for 
contouring control. Consistent with the Nuclear Suppliers Group's 
guidelines, the EAR's ECCN entry reflects the fact that the United 
States does not apply nuclear proliferation export license

[[Page 31680]]

requirements and licensing policy to machines meeting those parameters 
if the machine is not capable of machining diameters exceeding 35 mm. 
Prior to publication of this rule, ECCN 2B001 stated that the nuclear 
proliferation reason for control (NP) does not apply to ``turning 
machines under 2B001.a with a capacity equal to or less than 35 mm 
diameter.'' BIS believes that this language was consistent with the 
meaning of the term ``capacity'' that is widely used in the machine 
tool industry, i.e., indicating a limit or a maximum amount with no 
extension of this capability. In addition, because the difficulty of 
maintaining a given positioning accuracy increases as the maximum 
diameter that the tool is capable of machining increases, it would make 
sense for BIS to apply a more stringent control to machines capable of 
maintaining the 6 [mu]m positioning accuracy when machining larger 
parts than it would apply to machines that were capable of maintaining 
that level of accuracy only when machining smaller parts. Nevertheless, 
some parties have indicated that they find the language set forth in 
ECCN 2B001 confusing. Therefore, BIS is revising the entry to state 
that the NP reason for control does not apply to ``turning machines 
under 2B001.a with a capacity no greater than 35 mm diameter.''

Correcting a Typographical Error Regarding Calculating the ``Adjusted 
Peak Performance'' of Digital Computers

    The EAR employ a concept called ``adjusted peak performance'' (APP) 
for setting performance benchmarks that determine the classification of 
a digital computer on the Commerce Control List (CCL). A note entitled 
``Technical Note on `Adjusted Peak Performance' (`APP')'' at the end of 
Category 4 on the CCL explains how to calculate APP. BIS's intent is 
that this note match the note of the same name that appears at the end 
of Category 4 of the List of Dual-Use Goods and Technology published by 
the Wassenaar Arrangement on Export Controls for Conventional Arms and 
Dual Use Goods and Technologies (WA list note). However, prior to the 
publication of this rule, in describing how APP is expressed, the CCL's 
Category 4 note erroneously used the number ``1012'' instead 
of the correct number, ``1012,'' that appears in the WA List 
note. This rule corrects that error.

Rulemaking Requirements

    1. This rule is 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 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 rule involves a collection of information that has 
been approved by the OMB under control number 0694-0088, which carries 
a burden hour estimate of 58 minutes to prepare and submit form BIS-
748. Miscellaneous and recordkeeping activities account for 12 minutes 
per submission. BIS believes that this rule will make no change to the 
number of submissions or to the burden imposed by this collection.
    3. This rule does not contain policies with Federalism implications 
as that term is defined in Executive Order 13132.
    4. BIS finds that there is good cause under 5 U.S.C. 553(b)(3)(B) 
to waive the provisions of the Administrative Procedure Act requiring 
prior notice and the opportunity for public comment because these 
revisions are administrative in nature and do not affect the rights and 
obligations of the public; therefore allowing prior notice and comment 
on these rules is unnecessary. In addition, the 30-day delay in 
effectiveness required by 5 U.S.C. 553(d) is not applicable here 
because this rule is not a substantive rule, but merely makes technical 
changes to the regulations. No other law requires that notice of 
proposed rulemaking and an opportunity for public comment be given for 
this rule; therefore, the analytical requirements of the Regulatory 
Flexibility Act (5 U.S.C. 601 et seq.) are not applicable.

List of Subjects

15 CFR Part 734

    Administrative practice and procedure, Exports, Inventions and 
patents, Research.

15 CFR Parts 740, 748 and 750

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

15 CFR Part 744

    Exports, Reporting and recordkeeping requirements, Terrorism.

15 CFR Part 766

    Administrative practice and procedure, Confidential business 
information, Exports, Law enforcement, Penalties.

15 CFR Part 774

    Exports, Reporting and recordkeeping requirements.

0
Accordingly, the Export Administration Regulations (15 CFR Parts 730-
774) are amended as follows:

PART 734--[AMENDED]

0
1. The authority citation for part 734 continues to read as follows:

    Authority:  50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; 
E.O. 12938, 59 FR 59099, 3 CFR, 1994 Comp., p. 950; E.O. 13020, 61 
FR 54079, 3 CFR, 1996 Comp., p. 219; E.O. 13026, 61 FR 58767, 3 CFR, 
1996 Comp., p. 228; E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 
783; Notice of August 13, 2009, 74 FR 41325 (August 14, 2009); 
Notice of November 6, 2009, 74 FR 58187 (November 10, 2009).

Sec.  734.3  [Amended]

0
2. Section 734.3 is amended by removing paragraph (b)(4).

PART 740--[AMENDED]

0
3. The authority citation for part 740 continues to read as follows:

    Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; 
22 U.S.C. 7201 et seq.; E.O. 13026, 61 FR 58767, 3 CFR, 1996 Comp., 
p. 228; E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 783; Notice 
of August 13, 2009, 74 FR 41325 (August 14, 2009).

0
4. Section 740.5 is amended by revising paragraph (d)(2) to read as 
follows:

Sec.  740.5  Civil end-users (CIV).

* * * * *
    (d) * * *
    (2) Confirmation of eligibility. You may not use License Exception 
CIV for a deemed export until you have obtained confirmation of 
eligibility by checking the System for Tracking Export License 
Applications (https://snapr.bis.doc.gov/stela) or through the 
Simplified Network Application Procedure (https://snapr.bis.doc.gov).
* * * * *

0
5. Section 740.7 is amended by revising paragraph (d)(4)(ii) to read as 
follows:

Sec.  740.7  Computers (APP).

* * * * *
    (d) * * *
    (4) * * *
    (ii) Confirmation of eligibility. You may not use License Exception 
APP, until you have obtained confirmation of eligibility via either 
BIS's System for Tracking Export License Applications (STELA) (https://
snapr.bis.doc.gov/stela) from BIS's Simplified Network Application 
Procedure (SNAP). See

[[Page 31681]]

http://www.bis.doc.gov/SNAP/index.htm for more information about SNAP.
* * * * *

Sec.  740.11 [Amended]  

0
6. Section 740.11 is amended by redesignating paragraph (d)(3)(C) as 
paragraph (d)(3)(iii).

0
7. Section 740.18 is amended by revising paragraph (c)(5) to read as 
follows:

Sec.  740.18  Agricultural commodities (AGR).

* * * * *
    (c) * * *
    (5) Status of pending AGR notification requests. You must contact 
BIS's System for Tracking Export License Applications (STELA) (https://
snapr.bis.doc.gov/stela) for status of your pending AGR notification or 
verify the status in BIS's Simplified Network Applications Processing 
Redesign (SNAP-R) System. STELA will provide the date of registration 
of the AGR notification. If no department or agency objection is raised 
within 11 business days, STELA will, on the twelfth business day 
following the date of registration, provide you with confirmation of 
that fact. You may not proceed with your shipment unless you confirm 
with either STELA or SNAP-R that no objection has been raised. If an 
objection is raised, STELA and SNAP-R will indicate that a license is 
required. The AGR notification will then be processed as a license 
application. In addition, BIS may provide notice of an objection by 
telephone, fax, courier service, or other means.
* * * * *

PART 744--[AMENDED]

0
8. The authority citation for part 744 continues to read as follows:

    Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; 
22 U.S.C. 3201 et seq.; 42 U.S.C. 2139a; 22 U.S.C. 7201 et seq.; 22 
U.S.C. 7210; E.O. 12058, 43 FR 20947, 3 CFR, 1978 Comp., p. 179; 
E.O. 12851, 58 FR 33181, 3 CFR, 1993 Comp., p. 608; E.O. 12938, 59 
FR 59099, 3 CFR, 1994 Comp., p. 950; E.O. 12947, 60 FR 5079, 3 CFR, 
1995 Comp., p. 356; E.O. 13026, 61 FR 58767, 3 CFR, 1996 Comp., p. 
228; E.O. 13099, 63 FR 45167, 3 CFR, 1998 Comp., p. 208; E.O. 13222, 
66 FR 44025, 3 CFR, 2001 Comp., p. 783; E.O. 13224, 66 FR 49079, 3 
CFR, 2001 Comp., p. 786; Notice of August 13, 2009, 74 FR 41325 
(August 14, 2009); Notice of November 6, 2009, 74 FR 58187 (November 
10, 2009).

Sec.  744.1 [Amended]  

0
9. Section 744.1 is amended by removing the fourteenth sentence from 
paragraph (a)(1).

Sec.  744.15 [Removed]  

0
10. Section 744.15 is removed and reserved.

PART 748--[AMENDED]

0
11. The authority citation for 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 13, 2009, 74 
FR 41325 (August 14, 2009).

0
12. Section 748.7 is amended by revising the second sentence of 
paragraph (a)(1), the second sentence of paragraph (a)(2)(i) and the 
second sentence of paragraph (a)(2)(iv)(A) to read as follows:

Sec.  748.7  Applying electronically for a license or classification 
request.

    (a) * * *
    (1) * * * Written requests may be faxed to (202) 219-9179 or (202) 
219-9182 (Washington, DC), faxed to (949) 660-9347 (Newport Beach, CA), 
or submitted to the address identified in Sec.  748.1(d)(2) of this 
part. Both the envelope and letter must be marked ``Attn: Electronic 
Submission Request.'' * * *
    (2) * * *
    (i) * * * Each person approved by BIS to submit applications 
electronically for the company will be assigned a personal 
identification number (``PIN'') by BIS. * * *
* * * * *
    (iv) * * *
    (A) * * * You must confirm this notification in writing within two 
business days to BIS at the address provided in Sec.  748.1(d)(2) of 
this part.
* * * * *

0
13. Section 748.9 is amended by revising paragraph (i)(1) to read as 
follows:

Sec.  748.9  Support documents for license applications.

* * * * *
    (i) * * *
    (1) The applicant must send a letter request for return of an 
Import or End-User Certificate to the address stated in Sec.  
748.1(d)(2) of this part, ``Attn: Import/End-User Certificate 
Request''.
* * * * *

0
14. Section 748.13 is amended by revising paragraph (b) and the last 
sentence of paragraph (c)(2) to read as follows:

Sec.  748.13  Delivery verification (DV).

* * * * *
    (b) Exception to obtaining Delivery Verification. The DV 
requirement for a particular transaction does not apply if the item is 
no longer controlled for national security reasons following the 
issuance of a license.
    (c) * * *
    (2) * * * Once all shipments against the license have been made (or 
the licensee has determined that none will be), the licensee must 
forward, in one package, all applicable DVs to Office of Exporter 
Services, Export Management and Compliance Division, Room 2705, U.S. 
Department of Commerce, 14th Street and Pennsylvania Avenue, NW., 
Washington, DC 20230.
* * * * *

PART 750--[AMENDED]

0
15. The authority citation for part 750 continues to read as follows:

    Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; 
Sec 1503, Pub. L. 108-11, 117 Stat. 559; E.O. 13026, 61 FR 58767, 3 
CFR, 1996 Comp., p. 228; E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., 
p. 783; Presidential Determination 2003-23 of May 7, 2003, 68 FR 
26459, May 16, 2003; Notice of August 13, 2009, 74 FR 41325 (August 
14, 2009).

Sec.  750.5 [Removed]  

0
16. Section 750.5 is removed and reserved.

PART 766--[AMENDED]

0
17. The authority citation for part 766 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 
13, 2009, 74 FR 41325 (August 14, 2009).

0
18. Supplement No. 1 to Part 766 is amended by revising the second and 
third sentences of paragraph number ``2'' that appears under the 
unnumbered italicized header ``Mitigating Factors'' that appears under 
the header ``III How BIS Determines What Sanctions Are Appropriate in a 
Settlement'' to read as follows:

Supplement No. 1 to Part 766--Guidance on Charging and Penalty 
Determinations in Settlement of Administrative Enforcement Cases

* * * * *

III. How BIS Determines What Sanctions Are Appropriate in a Settlement

* * * * *

Mitigating Factors

* * * * *
    (2) * * * In determining the presence of this factor, BIS will 
take account of the extent to which a party complies with the 
principles set forth in BIS's Export Management Compliance Program 
(EMCP) Guidelines. Information about the EMCP Guidelines can

[[Page 31682]]

be accessed through the BIS Web site at www.bis.doc.gov.
* * * * *

PART 774--[AMENDED]

0
19. The authority citation for part 774 continues to read as follows:

    Authority:  50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; 
10 U.S.C. 7420; 10 U.S.C. 7430(e); 22 U.S.C. 287c, 22 U.S.C. 3201 et 
seq., 22 U.S.C. 6004; 30 U.S.C. 185(s), 185(u); 42 U.S.C. 2139a; 42 
U.S.C. 6212; 43 U.S.C. 1354; 46 U.S.C. app. 466c; 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 13, 2009 (74 Fed. Reg. 41,325 (August 14, 
2009)).

0
20. In Supplement No. 1 to part 774, Category 2, Export Control 
Classification Number 2B001, revise the ``Controls'' paragraph of the 
``License Requirements'' section to read as follows:

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

* * * * *
2B001 Machine tools and any combination thereof, for removing (or 
cutting) metals, ceramics or ``composites'', which, according to the 
manufacturer's technical specifications, can be equipped with 
electronic devices for ``numerical control''; and specially designed 
components as follows (see List of Items Controlled).
License Requirements
Reason for Control: NS, NP, AT

------------------------------------------------------------------------
                  Control(s)                         Country chart
------------------------------------------------------------------------
NS applies to entire entry...................  NS Column 1.
NP applies to 2B001.a, .b, .c, and .d,         NP Column 1.
 EXCEPT: (1) turning machines under 2B001.a
 with a capacity no greater than 35 mm
 diameter; (2) bar machines (Swissturn),
 limited to machining only bar feed through,
 if maximum bar diameter is equal to or less
 than 42 mm and there is no capability of
 mounting chucks. (Machines may have drilling
 and/or milling capabilities for machining
 parts with diameters less than 42 mm); or
 (3) milling machines under 2B001.b.with x-
 axis travel greater than two meters and
 overall ``positioning accuracy'' on the x-
 axis more (worse) than 0.030 mm..
AT applies to entire entry...................  AT Column 1.
------------------------------------------------------------------------

* * * * *

0
21. In Supplement No. 1 to part 774, Category 4, the Technical Note on 
``Adjusted Peak Performance'' (``APP'') that appears at the end of 
Category 4, revise the definition of ``APP'' that appears under the 
heading ``Abbreviations Used in This Technical Note'' to read as 
follows:

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

* * * * *

Category 4--Computers

* * * * *

Technical Note on ``Adjusted Peak Performance'' (``APP'')

* * * * *

Abbreviations Used in This Technical Note

* * * * *
    APP is expressed in Weighted TeraFLOPS (WT) in units of 10\12\ 
adjusted floating point operations per second.
* * * * *

    Dated: May 24, 2010.
Kevin J. Wolf,
Assistant Secretary for Export Administration.
[FR Doc. 2010-13243 Filed 6-3-10; 8:45 am]
BILLING CODE 3510-33-P