Document ID: BIS-2007-0002-0001
Agency: bis
Document Type: Proposed Rule
Title: Mandatory Electronic Filing of Export and Reexport License Applications, Classification Requests, Encryption Review Requests, and License Exception AGR Notifications
Posted Date: 2007-10-19T04:00Z

[Federal Register: October 19, 2007 (Volume 72, Number 202)]
[Proposed Rules]               
[Page 59231-59238]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr19oc07-21]                         

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DEPARTMENT OF COMMERCE

Bureau of Industry and Security

15 CFR Parts 740, 742, 744, 748, 754, 764 and 772

[Docket No. 0612242559-7061-01]
RIN 0694-AD94

 
Mandatory Electronic Filing of Export and Reexport License 
Applications, Classification Requests, Encryption Review Requests, and 
License Exception AGR Notifications

AGENCY: Bureau of Industry and Security, Commerce.

ACTION: Proposed rule.

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SUMMARY: This proposed rule would require that export and reexport 
license applications, classification requests, encryption review 
requests, License Exception AGR notifications and related documents be 
submitted to the Bureau of Industry and Security (BIS) via its 
Simplified Network Application Process (SNAP-R) system. This 
requirement would not apply to applications for Special Comprehensive 
Licenses or in certain situations in which BIS would authorize paper 
submissions.

DATES: Comments must be received by December 18, 2007.

ADDRESSES: Comments on this proposed rule may be submitted via http://www.regulations.gov.
 Scroll down to the heading ``Search Documents.'' 

At Step 1, select ``Documents Accepting Comments'' then, at Optional 
Step 2, select from the pull down menu ``Bureau of Industry and 
Security'' and click on the ``Submit'' button. On the resulting screen, 
select docket number BIS-2007-0002. Click on the yellow comment icon. 
You may either type your comments directly on the on-line comment form 
or ``attach'' a file containing your comments. Regulations.gov accepts 
most popular document file formats. Comments may also be e-mailed to 
BIS at publiccomments@bis.doc.gov (please refer to regulatory 
identification number (RIN) 0694-AD94 in the subject line) or submitted 
on paper to Regulatory Policy Division, Office of Exporter Services, 
Bureau of Industry and Security, Room H2705, U.S. Department of 
Commerce, 14th Street and Pennsylvania Avenue, NW., Washington, DC 
20230. Please refer to RIN 0694-AD94 in all paper comments.

FOR FURTHER INFORMATION CONTACT: William Arvin e-mail 
warvin@bis.doc.gov or tel. 202 482 2440.

SUPPLEMENTARY INFORMATION: 

Background

    BIS administers a system of export and reexport controls in 
accordance with the Export Administration Regulations (EAR). In doing 
so, BIS requires that parties wishing to engage in certain transactions 
apply for licenses, submit encryption review requests, or submit 
certain notifications to BIS. BIS also reviews, upon request, 
specifications of various items and determines their proper 
classification under the EAR. Currently members of the public submit 
these applications, requests and notifications to BIS in one of three 
ways: via SNAP-R, via BIS's Electronic License Application Information 
Network (ELAIN), or via the paper BIS Multipurpose Application Form BIS 
748-P and its two appendices, the BIS 748-P A (item appendix) and the 
BIS 748-P B (end user appendix). In many instances, BIS needs 
additional documents to act on the submission. For documents that 
relate to paper submissions, the documents can be mailed or delivered 
to BIS with the BIS 748-P form. For submissions made electronically via 
ELAIN, the documents must be sent to BIS separately and matched up with 
the application when they arrive.
    In 2006, BIS made a number of improvements its then existing 
Simplified Network Application Processing system (SNAP), and designated 
this improved version as ``SNAP-R''. The improvements include the 
ability to include documents related to a submission in the form of PDF 
(portable document format) files as ``attachments'' to the submission. 
Other improvements include a feature that allows BIS personnel to 
request additional information from the submitting party and for the 
party to submit that information in a manner that ties the chain of 
communication to the submission.
    BIS believes that use of SNAP-R will reduce processing times and 
simplify compliance with and administration of export controls. SNAP-R 
provides not only improved efficiency in submission and processing, but 
improved end-user security through rights management and an updated 
application and security infrastructure.
    Therefore, BIS proposes to require that all export and reexport 
license applications (other than Special Comprehensive License 
applications), classification requests, encryption review requests, 
License Exception AGR notifications, and ``attached'' related documents 
be submitted to BIS via its Simplified Network Application Process 
(SNAP-R) system unless BIS authorizes paper submissions. This proposed 
rule would also set the criteria by which BIS would authorize paper 
submissions and would terminate use of ELAIN. This proposed rule would 
make no changes to the procedures by which the public requests advisory 
opinions because such requests are not processed via either the paper 
form 748-P or either of BIS's existing electronic systems.

Changes Proposed To Be Made by This Rule

    The changes that this proposed rule would make center on part 748 
of the EAR, which sets forth the principal procedures governing the 
submission of the applications, review requests and notifications that 
would be affected by this proposed rule. The changes would appear in 
Sec.  748.1--``General provisions,'' Sec.  748.3--``Classification 
requests, advisory opinions, and

[[Page 59232]]

encryption review requests,'' and in Sec.  748.6--``General 
instructions for license applications.'' The rule would also make 
conforming changes to a number of EAR provisions that currently employ 
language related to the paper forms.

Substantive Changes

    Section 748.1 would be revised to emphasize electronic filing over 
paper and to set forth the basic requirement that license applications 
(other than Special Comprehensive License applications), encryption 
review requests, License Exception AGR notifications, and 
classification requests and any accompanying documents must be 
submitted via SNAP-R unless BIS authorizes submission via paper. 
Revised section 748.1 would continue to specify that for paper 
submissions, only original BIS paper forms may be used and that 
reproductions or facsimiles are not acceptable.
    Section 748.1 would also set forth the criteria under which BIS 
would authorize paper submissions. Those criteria are: (1) BIS has 
received no more than one submission from the party in the twelve 
months immediately preceding the current submission, i.e., the combined 
total of the party's license applications (other than Special 
Comprehensive Licenses), encryption review requests, License Exception 
AGR notifications, and classification requests could not exceed one; 
(2) the party does not have access to the Internet; (3) BIS has 
rejected the party's electronic filing registration or revoked its 
eligibility to file electronically; (4) BIS has requested that the 
party submit on paper for a particular transaction; or (5) BIS has 
determined that urgency, a need to implement government policy or a 
circumstance outside the submitting party's control justify allowing 
paper submissions on a particular instance.
    Parties who wished to submit on paper would submit the BIS Form 
748-P. In addition to the information relevant to the substance of the 
submission itself, the submitter would be required to include, either 
on the form or as an attachment, a statement explaining which of the 
five foregoing criteria justify a paper submission and supporting 
information. If BIS agreed that at least one of the criteria were met, 
it would process the submission in accordance with its regular 
procedures. If BIS found that none of the criteria provided by the 
submitter was met, it would return the form without action and inform 
the submitter of the reason for rejecting the request to file on paper. 
A decision by BIS to reject the request to file on paper is subject to 
appeal under part 756 of the EAR. This proposed rule also would move 
the address for paper submissions from Sec.  748.2 to Sec.  748.1.
    Section 748.3 would be revised to replace instructions about where 
and how to submit classification requests, with a reference to the 
procedures in Sec.  748.1. Section 748.3 would continue to state 
requirements about the kinds of information that must be included in 
classification requests.
    Section 748.6 would be revised to require that any documents 
submitted in support of any license application submitted via SNAP-R be 
submitted via the SNAP-R system as PDF (portable document format) 
files. Section 748.6 also would be revised to remove the statement that 
application control numbers are preprinted on the paper forms. The 
paper forms will continue to bear a preprinted application control 
number, but for electronic submissions, application control numbers are 
communicated to the submitter electronically once BIS accepts the 
submission.

Conforming Changes

    A number of EAR provisions currently state that a particular 
submission must be made on the BIS 748-P paper form or state that it 
must be either on the 748-P or its electronic equivalent. If such a 
provision refers to a classification request or encryption review 
request, this proposed rule would revise that provision to state that 
the submission must be made in accordance with Sec. Sec.  748.1 and 
748.3. If such a provision refers to a license application (other than 
a Special Comprehensive License application), this proposed rule also 
would revise that provision to state that the submission must be in 
accordance with Sec. Sec.  748.1, 748.4 and 748.6. The changes 
described in this paragraph would be made in:
     Sec.  740.8(b)(2), relating to classification requests 
pursuant to License Exception ``Key Management Infrastructure (KMI)'';
     Sec.  740.9(a)(4)(i) and (iii), relating to authorizations 
to sell or dispose of or to retain abroad more than one year items 
exported under License Exception ``Temporary imports, exports and 
reexports (TMP)'';
     Sec.  740.12(a)(2)(iii)(C), relating to applications to 
exceed the frequency limits for individual gift parcels under license 
exception ``Gift parcels and humanitarian donations (GFT)'';
     Sec.  740.17(d)(1), relating to the submission of 
encryption review requests under License Exception ``Encryption 
commodities and software'' (ENC);
     Sec.  742.15(b)(2)(i), relating to submission of review 
requests for certain encryption items; Supplement No. 6 to part 742, 
relating to submission of review requests for certain ``mass market'' 
encryption commodities and software;
     Sec.  754.2(g)(1), relating applications for export of 
certain California crude oil;
     Sec.  754.4(d)(1), relating to applications to export 
unprocessed Western Red Cedar; and
     Sec.  764.7(b)(2)(i), relating to applications to take 
certain actions with respect to certain items in Libya.
    This proposed rule would replace the requirement to use the form 
BIS 748-P in Sec.  740.18(c)(2) when submitting notice to the 
government in advance of shipments under License Exception 
``Agricultural Commodities (AGR)'' with a requirement to submit such 
notices in accordance with Sec.  748.1 of the EAR.
    This proposed rule also would replace references to the BIS 748-P 
Multipurpose Application Form with the word ``application'' in 
provisions that describe certain information that must be submitted 
with particular types of license applications. This change emphasizes 
that the same information is required regardless of whether an 
application is submitted on paper or electronically. The change 
described in this paragraph would be made in:
     Sec.  744.21(d), relating to applications to export or 
reexport certain items to known military end-uses in the People's 
Republic of China;
     Sec.  748.4(b)(2)(ii), relating to written authority of 
certain agents to submit on a principal's behalf;
     Sec.  754.4(d)(2) and (d)(3), relating to applications for 
export of unprocessed western red cedar;
     Sec.  754.5(b)(2), relating to applications to export 
horses by sea; and
     Sec.  772.1, definition of ``Other party authorized to 
receive license.''
    This proposed rule also would remove the reference to date time 
stamping in Sec.  754.2(g)(5)(i) by BIS of applications to export crude 
oil because that process occurs only with paper applications. However, 
the proposed rule would retain the policy in Sec.  754.2(g)(5)(i) of 
issuing licenses for approved applications in the order in which the 
applications are received.
    This proposed rule would also change the reference currently found 
in Sec.  748.3 to the section containing the address for submitting 
advisory opinion requests from 748.2 to 748.1.

[[Page 59233]]

Public Comments

    BIS will consider all comments received on or before December 18, 
2007. BIS will consider comments received after that date if possible 
but cannot assure such consideration. All public comments on this 
proposed rule must be in writing (writing includes electronic 
submission of comments via http://www.regulations.gov or e-mail directly to 

BIS) and will be a matter of public record, available for public 
inspection and copying on the http://www.regulations.gov Web site under docket 

number BIS-2007-0002.

Rulemaking Requirements

    1. This rule has been determined to be significant for purposes of 
Executive Order 12866.
    2. Notwithstanding any other provision of law, no person is 
required to respond to nor be subject to a penalty for failure to 
comply with a collection of information, subject to the requirements of 
the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.) (PRA), 
unless that collection of information displays a currently valid Office 
of Management and Budget (OMB) Control Number. This regulation involves 
collections previously approved by the OMB under control number 0694-
0088, ``Multi-Purpose Application,'' which carries a burden hour 
estimate of 58 minutes to prepare and submit form BIS-748. 
Miscellaneous and recordkeeping activities account for 12 minutes per 
submission. This proposed rule would require persons seeking 
authorization to submit paper filings to state, either in the 
additional information block on the paper form or an attachment, which 
of the criteria for paper submissions they meet and the reasons 
therefore. BIS believes that requests seeking authorization to submit 
paper filings would impose a minimal burden on applicants as the 
information requirements are small and the number of requests is 
expected to be low. Applicants making a request would identify one or 
more of the 5 criteria under which BIS would authorize a paper 
submission, and provide the factual basis for the authorization to 
submit on paper. BIS estimates that only a small number of submissions 
will seek authorization to file on paper. Based on current information 
on submissions, more than 85% of all submissions affected by this rule 
are currently transmitted to BIS via SNAP-R. Therefore, BIS estimates 
that this requirement will make no material change of the estimated 
time of 58 minutes needed to prepare and submit a BIS-748. Send 
comments regarding these burden estimates or any other aspect of these 
collections of information, including suggestions for reducing the 
burden, to David Rostker, OMB Desk Officer, by e-mail at 
david_rostker@omb.eop.gov or by fax to (202) 395-7285; and to the Regulatory 

Policy Division, Bureau of Industry and Security, Department of 
Commerce, P.O. Box 273, Washington, DC 20044.
    3. This rule does not contain policies with Federalism implications 
as that term is defined in Executive Order 13132.
    4. The Chief Counsel for Regulation of the Department of Commerce 
has certified to the Counsel for Advocacy of the Small Business 
Administration that this proposed rule would not have a significant 
economic impact on a substantial number of small entities.

Number of Small Entities Affected

    BIS does not collect data on the size of entities that file these 
submissions. However, based on the information that it does possess, 
BIS believes that fewer than 1340 small entities are likely to be 
affected by this rule. BIS arrived at this conclusion by identifying 
all of the entities that filed two or more submissions during the 
period from January 1, 2006 through December 31, 2006. A total of 1592 
such entities were identified. BIS determined that 252 of these are not 
small entities because they could be identified through open public 
sources as having more than $100 million in annual sales or more than 
5,000 employees or because they are United States Government agencies.
    Because many industries may be involved in exporting, BIS could not 
directly relate its data to the ``Small Business Size Standards Matched 
to North American Industry Classification System'' (the Standards 
Table) published by the Small Business Administration (SBA). However, 
BIS notes that the Standards Table designates business as small based 
on either sales or number of employees, depending on the industry. The 
maximum annual sales and maximum number of employees listed in that 
document are $31 million and 1,500, respectively. Both numbers are far 
below the threshold selected by BIS in arriving at the number of 1340 
as the maximum number of small entities likely to be affected by this 
rule. Quite likely many of the 1340 remaining entities would be larger 
than the largest business listed in the Standards Table.
    In addition, most of the categories in the Standards Table for 
which the sales limit is more than $6.5 million are unlikely to be 
impacted by this rule because they are unlikely to engage in export or 
reexport transactions that require specific authorization from BIS. 
Examples of small entities at the higher end of the range of the 
Standards Table include, Forest Fire Suppression--$16.5 million, New 
Single-Family Housing Construction Contractors--$31.0 million and 
Gasoline Stations with Convenience Stores--$25.0 million.

Burden Incurred

    Some entities might incur no additional burden because of this 
rule. These are the entities whose submissions require no accompanying 
documents, those who are already creating the documents in PDF and 
those who are already creating the documents using software that is 
capable of producing the same documents in PDF. BIS does not have data 
on the number of entities that would incur no burden, but based on a 
sample of submissions of the type to which this proposed rule would 
apply for the period October 15, 2006 through March 9, 2007, BIS 
estimates that about 48 percent of the submissions would not require 
any accompanying documents.
    Some entities might incur only a software acquisition burden 
because of this rule. These are the entities whose accompanying 
documents are already created using software that cannot produce PDF 
files directly, but that can produce such files with additional 
software that the entity can purchase. BIS estimates that such an 
entity with a small operation would incur an initial expense of 
approximately $325 to acquire that software necessary to comply with 
this rule. This estimate is based on the price of Adobe Acrobat[reg] 
Standard Edition ($299) as posted on the Adobe Corporation Web site on 
December 27, 2006, plus any taxes or shipping charges.
    Some entities might need to scan paper documents and convert them 
to PDF files. Such entities would have three alternatives: Pay someone 
else to scan and convert the documents; acquire a scanner with built-in 
PDF capability; or acquire hardware and software to scan in and convert 
the documents.
    An entity with a small number of documents to scan probably would 
find it most economical to pay someone else to scan the paper documents 
and convert them to PDF files. After reviewing some prices charged in 
the Washington area, BIS estimates that the costs would range from 
about $19 to about $31 to convert eight pages of paper documents to PDF 
format.
    In some instances, the entity could utilize software that comes 
bundled

[[Page 59234]]

with a scanner to comply with this requirement. In such instances, BIS 
estimates that the entity would incur an initial cost of approximately 
$500 (to purchase the scanner) to comply with this rule.
    In some cases, particularly if the entity has to scan numerous 
complex paper documents, the costs could be higher. BIS estimates that 
the initial costs for an entity facing such a situation would be 
approximately $900. This estimate is based on a price of $300 for Adobe 
Acrobat[reg] Standard Edition software, $500 for a scanner, and $100 
for taxes and shipping charges.
    Entities that have to scan paper documents may incur labor costs to 
scan and convert the documents to PDF. BIS estimates that scanning and 
converting a document page would take from 2 minutes to 10 minutes per 
page depending on the scanner and computer performance. BIS recently 
sampled the submissions that had accompanying documents for the months 
of February and March 2006. A total of 703 submissions had accompanying 
documents. Some submissions had only one accompanying page. The average 
number of accompanying pages for these 703 submissions was 8.5 and the 
largest number of accompanying pages for any one submission was 284. 
However, BIS has no way of determining which attachments could be 
generated electronically and which would require scanning. Assuming an 
average of 8.5 pages per document and labor costs for documents at $15 
per hour, this cost could range from about $0.50 for one accompanying 
page that took two minutes to scan to $720 for a 284-page document that 
took 10 minutes per page to scan. Assuming an average scanning time of 
5 minutes per page and an 8.5 as the average number of pages scanned, 
the average estimated labor cost for scanning would be $10.63.

Cost Reductions To Offset the Burdens

    A party not using the electronic ``attachment'' feature of SNAP-R 
would have to submit any required documents by paper. In many 
instances, such a party would incur labor costs to copy the documents 
that are comparable to those incurred when scanning a document to 
produce a PDF file. For such parties, any increased scanning costs 
incurred by using SNAP-R would be offset by decreased copying costs.
    Electronic filing can reduce costs in other ways as well. 
Currently, in many instances, attachments are submitted to BIS by 
overnight courier. Electronic filing would eliminate these courier 
costs. Collectively, the 1592 entities that made two or more 
submissions in 2006 provided 22,223 submissions. The largest number 
from any one submitter was 911, the smallest number from any one 
submitter was 2, and the average number per submitter was 14. Assuming 
an average cost of $20.00 to submit documents by courier, and further 
assuming that about 52 percent of the submissions required accompanying 
documents, the aggregate savings provided by electronic submission of 
accompanying documents would be $231,119 for the largest submitter, 
$146 for a submitter of the average number of submissions and $20 for a 
submitter of 2 submissions. In addition SNAP-R will provide the 
submitter with automatic confirmation of receipt of the documents by 
BIS. In many instances, couriers charge extra for delivery 
confirmation.
    Further savings would be achieved if a particular set of documents 
applied to more than one submission. A party using SNAP-R would need to 
submit the documents only once and could reference them in subsequent 
submissions to which they apply whereas a party submitting via paper 
would have to submit new paper copies each time. Applicants for 
successive export licenses to ship the same items repeatedly could 
experience substantial savings from this feature of SNAP-R.
    The SNAP-R system groups all communications between exporter and 
BIS for each electronic application, including supporting documents so 
that they can be viewed from within the SNAP-R application by all 
authorized personnel of the submitter. This feature allows for easier 
reassignment of work when necessary due, for example, to employee 
absences, resignations, or retirements, than a system in which users 
have to manage their own documentation and transcribe their 
communications with the licensing officers and correlate those 
communications with paper submissions of supporting documents.
    Electronic filing can reduce costs to the submitters and to the 
government by reducing paper handling and delays incurred when moving 
paper through the system. Currently, BIS uses an electronic system to 
process all submissions that are subject to this proposed rule, whether 
it receives the submission on paper or electronically. However, if the 
attachments are on paper, delays ensue as paper documents are moved to 
the technical personnel in BIS and in other government agencies whereas 
electronic attachments can be transmitted to the appropriate personnel 
almost instantly. Electronic attachments are likely to reduce the total 
time from submission to final decision by several days. Although the 
benefit of faster processing times is difficult to quantify, the 
information that BIS possesses indicates that, in the aggregate, the 
potential benefit is quite large. In calendar year 2006, BIS processed 
18,941 license applications with an aggregate value of $36 billion. 
Assuming a six percent annual rate of return for alternative 
investments, the opportunity cost of holding $36 billion worth of 
merchandise in inventory while waiting for a government decision on 
whether the transaction may proceed would be $2.16 billion annually or 
$5.9 million per day. Dividing $5.9 million by the number of 
applications, 18,941, provides an inferred average opportunity cost of 
$311 for each day that processing of an application is delayed.

Conclusion

    BIS is unable to determine whether or not the number of small 
entities likely to be affected by this is rule is substantial. However, 
for any small entities that are affected, the savings from re-use of 
documents for multiple submissions, reduced courier fees and faster 
processing times are likely to fully or partially compensate for the 
cost of compliance with this rule. Thus the economic impact of this 
rule on such entities is not significant.

List of Subjects

15 CFR Parts 740 and 748

    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 754

    Agricultural commodities, Exports, Forests and forest products, 
Horses, Petroleum, Reporting and recordkeeping requirements.

15 CFR Part 764

    Administrative practice and procedure, Exports, Law enforcement, 
Penalties.

15 CFR Part 772

    Exports.

    Accordingly, parts 740, 742, 748, 754, 764 and 772 of the Export 
Administration Regulations (15 CFR 730-774) are proposed to be amended 
as follows:

[[Page 59235]]

PART 740--[AMENDED]

    1. 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).

    2. In Sec.  740.8 revise paragraph (b)(2) to read as follows:

Sec.  740.8  Key management infrastructure (KMI).

* * * * *
    (b) Eligible commodities and software. * * *
    (2) For such classification requests, indicate ``License Exception 
KMI'' in Block 9 on the application. Submit the request to BIS in 
accordance with Sec. Sec.  748.1 and 748.3 of the EAR and send a copy 
of the request to: Attn: ENC Encryption Request Coordinator, 9800 
Savage Road, Suite 6940, Fort Meade, MD 20755-6000
* * * * *
    3. In Sec.  740.9 revise the first sentences of paragraphs 
(a)(4)(i) and (a)(4)(iii) to read as follows:

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

* * * * *
    (a) * * *
    (4) * * *
    (i) Permanent export or reexport. If the exporter or the reexporter 
wishes to sell or otherwise dispose of the commodities or software 
abroad, except as permitted by this or other applicable License 
Exception, the exporter or reexporter must request authorization by 
submitting a license application to BIS in accordance with Sec. Sec.  
748.1, 748.4 and 748.6 of the EAR. * * *
* * * * *
    (iii) Authorization to retain abroad beyond one year. If the 
exporter wishes to retain a commodity or software abroad beyond the 12 
months authorized by paragraph (a) of this section, the exporter must 
request authorization by submitting a license application in accordance 
with Sec. Sec.  748.1, 748.4 and 748.6 of the EAR to BIS 90 days prior 
to the expiration of the 12 month period. * * *
* * * * *
    4. In Sec.  740.12, revise paragraph (a)(2)(iii)(C) to read as 
follows:

Sec.  740.12  Gift parcels and humanitarian donations (GFT).

    (a) * * *
    (2) * * *
    (iii)* * *
    (C) Parties seeking authorization to exceed these frequency limits 
due to compelling humanitarian concerns (e.g., for certain gifts of 
medicine) should submit a license application in accordance with 
Sec. Sec.  748.1, 748.4 and 748.6 of the EAR to BIS with complete 
justification.
* * * * *
    5. In Sec.  740.17 revise the paragraph (d)(1) to read as follows:

Sec.  740.17  Encryption commodities and software (ENC).

* * * * *
    (d) * * *
    (1) Instructions for requesting review. Review requests submitted 
to BIS must be submitted as described in Sec. Sec.  748.1 and 748.3 of 
the EAR. See paragraph (e)(5)(ii) of this section for the mailing 
address for the ENC Encryption Request Coordinator. To ensure that your 
review request is properly routed, insert the phrase ``License 
Exception ENC'' in Block 9 (Special Purpose) of the application. Also, 
place an ``X'' in the box marked ``Classification Request'' in Block 5 
(Type of Application) of Form BIS-748P or select ``Commodity 
Classification'' if filing electronically. Neither the electronic nor 
paper forms provide a separate block to check for the submission of 
encryption review requests. Failure to properly complete these items 
may delay consideration of your review request.
* * * * *
    6. In Sec.  740.18 revise paragraph (c)(2) to read as follows:

Sec.  740.18  Agricultural commodities (AGR).

* * * * *
    (c) Prior notification. * * *
    (2) Procedures. You must provide prior notification of exports and 
reexports under License Exception AGR by submitting a completed 
application in accordance with Sec.  748.1 of the EAR. The following 
blocks must be completed, as appropriate: Blocks 1, 2, 3, 4, 5 (by 
marking box 5 ``Other''), 14, 16, 17, 18, 19, 21, 22 (a), (e), (f), 
(g), (h), (i), (j), 23, and 25 according to the instructions described 
in Supplement No. 1 to part 748 of the EAR. If your commodity is 
fertilizer, western red cedar or live horses, you must confirm that BIS 
has previously classified your commodity as EAR99 by placing the 
Commodity Classification Automatic Tracking System (CCATS) number in 
Block 22(d). BIS will not initiate the registration of an AGR 
notification unless the application is complete.
* * * * *

PART 742--[AMENDED]

    7. 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).

    8. In Sec.  742.5, revise paragraph (b)(2)(i) to read as follows:

Sec.  742.15  Encryption items.

* * * * *
    (b) Notification and review requirements for encryption items 
controlled under ECCN 5A992, 5D992 or 5E992. * * *
    (2) Review requirement for mass market encryption commodities and 
software exceeding 64 bits: * * *
    (i) Procedures for requesting review. To request review of your 
mass market encryption products, you must submit to BIS and the ENC 
Encryption Request Coordinator the information described in paragraphs 
(a) through (e) of Supplement No. 6 to this part 742, and you must 
include specific information describing how your products qualify for 
mass market treatment under the criteria in the Cryptography Note (Note 
3) of Category 5, Part 2 (``Information Security''), of the Commerce 
Control List (Supplement No. 1 to part 774 of the EAR). Submit review 
requests to BIS in accordance with Sec. Sec.  748.1 and 748.3 of the 
EAR. To ensure that your review request is properly routed, insert the 
phrase ``Mass market encryption'' in Block 9 (Special Purpose) and 
place an ``X'' in the box marked ``Classification Request'' in Block 5 
(Type of Application)--Block 5 does not provide a separate item to 
check for the submission of encryption review requests. Failure to 
properly complete these items may delay consideration of your review 
request. Submissions to the ENC Encryption Request Coordinator should 
be directed to the mailing address indicated in Sec.  740.17(e)(5)(ii) 
of the EAR. BIS will notify you if there are any questions concerning 
your request for review (e.g., because of missing or incomplete support 
documentation).
* * * * *

[[Page 59236]]

    9. In Supplement No. 6 to Part 742 revise the first sentence to 
read as follows:

Supplement No. 6 to Part 742--Guidelines for Submitting Review Requests 
for Encryption Items

    Review requests for encryption items must include all of the 
documentation described in this supplement and submitted to BIS in 
accordance with Sec. Sec.  748.1 and 748.3 of the EAR. * * *
* * * * *

PART 744--[AMENDED]

    10. 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; 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).

    11. Revise Sec.  744.21(d) to read as follows:

Sec.  744.21  Restrictions on certain military end-uses in the People's 
Republic of China.

* * * * *
    (d) License application procedure. When submitting a license 
application pursuant to this section, you must state in the 
``additional information'' block of the application that ``this 
application is submitted because of the license requirement in Sec.  
744.21 of the EAR (Restrictions on Certain Military End-uses in the 
People's Republic of China).'' In addition, either in the additional 
information block or in an attachment to the application, you must 
include all known information concerning the military end-use of the 
item(s). If you submit an attachment with your license application, you 
must reference the attachment in the ``additional information'' block 
of the application.
* * * * *

PART 748--[AMENDED]

    12. 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).

    13. In Sec.  748.1, revise paragraph (a) and add a paragraph (d) to 
read as follows:

Sec.  748.1  General provisions.

    (a) Scope. In this part, references to the Export Administration 
Regulations or EAR are references to 15 CFR chapter VII, subchapter C. 
The provisions of this part involve requests for classifications and 
advisory opinions, export license applications, encryption review 
requests, reexport license applications, and certain license exception 
notices subject to the EAR. All terms, conditions, provisions, and 
instructions, including the applicant and consignee certifications, 
contained in such form(s) are incorporated as part of the EAR. For the 
purposes of this part, the term ``application'' refers to both 
electronic applications and the Form BIS-748P: Multipurpose 
Application.
* * * * *
    (d) Electronic Filing Required. All export and reexport license 
applications (other than Special Comprehensive License Applications), 
encryption review requests, license exception AGR notifications, and 
classification requests and their accompanying documents must be filed 
via BIS's Simplified Network Application Processing system (SNAP-R), 
unless BIS authorizes submitting such applications via the paper forms 
BIS 748-P (Multipurpose Application Form), BIS-748P-A (Item Appendix) 
and BIS-748P-B, (End-User Appendix). Only original paper forms may be 
used. Facsimiles or reproductions are not acceptable.
    (1) Reasons for authorizing paper submissions. BIS will process 
paper applications notices or requests if the submitting party meets 
one or more of the following criteria:
    (i) BIS has received no more than one submission (i.e. the total 
number of export license applications, reexport license applications, 
encryption review requests, license exception AGR notifications, and 
classification requests) from that party in the twelve months 
immediately preceding its receipt of the current submission;
    (ii) The party does not have access to the Internet;
    (iii) BIS has rejected the party's electronic filing registration 
or revoked its eligibility to file electronically;
    (iv) BIS has requested that the party submit a paper copy for a 
particular transaction; or
    (v) BIS has determined that urgency, a need to implement U.S. 
government policy or a circumstance outside the submitting party's 
control justify allowing paper submissions in a particular instance.
    (2) Procedure for requesting authorization to file paper 
applications, notifications, or requests. The applicant must state in 
Block 24 or as an attachment to the paper application (Form BIS 748-P) 
which of the criteria in paragraph (d)(1) of this section it meets and 
the facts that support such statement. Submit the completed 
application, notification or request to Bureau of Industry and 
Security, U.S. Department of Commerce, P.O. Box 273, Washington, DC 
20044 (U.S. Mail deliveries only) or to Bureau of Industry and 
Security, U.S. Department of Commerce, 14th Street and Pennsylvania, 
NW., Room H2705, Washington, DC 20230.
    (3) BIS decision. If BIS authorizes or requires paper filing 
pursuant to this section, it will process the application, notification 
or request in accordance with Part 750 of the EAR. If BIS rejects a 
request to file using paper, it will return the Form BIS-748P and all 
attachments to the submitting party without action and will state the 
reason for the rejection.

Sec.  748.2  [Amended]

    14. In Sec.  748.2, remove paragraph (c).
    15. In Sec.  748.3, revise paragraph (b) introductory text, 
paragraph (b)(2), and the first sentence of paragraph (c) to read as 
follows:

Sec.  748.3  Classification requests, advisory opinions, and encryption 
review requests.

* * * * *
    (b) Classification requests. Submit classification requests in 
accordance with the procedures in Sec.  748.1.
* * * * *
    (2) When submitting a classification request, you must complete 
Blocks 1 through 5, 14, 22(a), (b), (c), (d), and (i), 24, and 25 on 
the application. You must provide a recommended classification in Block 
22(a) and explain the basis for your recommendation based on the 
technical parameters specified in the appropriate ECCN in Block 24. If 
you are unable to determine a recommended classification for your item, 
include an explanation in Block 24, identifying the ambiguities or 
deficiencies that precluded you from making a recommended 
classification. See Supplement No. 1 to this part for information to be 
included in blocks other than Block 24.
    (c) Advisory Opinions. Advisory opinion requests must be in writing 
and be submitted to the address listed in Sec.  748.1(d)(2). * * *
* * * * *

[[Page 59237]]

    16. In Sec.  748.4(b)(2)(ii) revise the first sentence to read as 
follows:

Sec.  748.4  Basic guidance related to applying for a license.

* * * * *
    (b) * * *
    (2) * * *
    (ii) Application. Block 7 of the application (documents on file 
with applicant) must be marked ``other'' and Block 24 (Additional 
information) must be marked ``748.4(b)(2)'' to indicate that the power 
of attorney or other written authorization is on file with the agent. * 
* *
* * * * *
    17. In Sec.  748.6, revise paragraph (a), the first sentence of 
paragraph (b) and paragraph (e) to read as follows:

Sec.  748.6  General instructions for license applications.

    (a) Instructions. General instructions for filling out license 
applications are in Supp. No. 1 to this part. Special instructions for 
applications involving certain transactions are listed in Sec.  748.8 
and described fully in Supp. No. 2 to this part.
    (b) Application Control Number. Each application has an application 
control number. * * *
* * * * *
    (e) Attachments to applications. Documents required to be submitted 
with applications filed via SNAP-R must be submitted as PDF files using 
the procedures described in SNAP-R. Documents required to be submitted 
with paper applications must bear the application control number to 
which they relate and, if applicable, be stapled to the paper form. 
Where necessary, BIS may require you to submit additional information 
beyond that stated in the EAR confirming or amplifying information 
contained in your license application.
* * * * *

PART 754--[AMENDED]

    18. The authority citation for 15 CFR part 754 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); 30 U.S.C. 185(s), 185(u); 42 
U.S.C. 6212; 43 U.S.C. 1354; 46 U.S.C. app. 466c; E.O. 11912, 41 FR 
15825, 3 CFR, 1976 Comp., p. 114; 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).

    19. In Sec.  754.2, revise paragraphs (g)(1) and (g)(5)(i) to read 
as follows:

Sec.  754.2  Crude oil.

* * * * *
    (g) Exports of certain California crude oil. * * *
    (1) Applicants must submit their applications in accordance with 
Sec. Sec.  748.1, 748.4 and 748.6 of the EAR.
* * * * *
    (5) * * *
    (i) BIS will issue licenses for approved applications in the order 
in which the applications are received, with the total quantity 
authorized for any one license not to exceed 25 percent of the annual 
authorized volume of California heavy crude oil.
* * * * *
    20. In Sec.  754.4, revise paragraphs (d)(1), (d)(2), and the 
introductory text of paragraph (d)(3) to read as follows:

Sec.  754.4  Unprocessed Western Red Cedar.

* * * * *
    (d) * * *
    (1) Applicants requesting to export unprocessed western red cedar 
must apply for a license in accordance Sec.  748.1, 748.4 and 748.6 of 
the EAR, submit any other documents as may be required by BIS, and 
submit a statement from an authorized representative of the exporter, 
reading as follows:

    I, (Name) (Title) of (Exporter) HEREBY CERTIFY that to the best 
of my knowledge and belief the (Quantity) (cubic meters or board 
feed scribner) of unprocessed western red cedar timber that 
(Exporter) proposes to export was not harvested from State or 
Federal lands under contracts entered into after October 1, 1979.

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

Signature

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Date

    (2) In Blocks 16 and 18 of the application, ``Various'' may be 
entered when there is more than one purchaser or ultimate consignee.
    (3) For each application submitted, and for each export shipment 
made under a license, the exporter must assemble and retain for the 
period described in part 762 of the EAR, and produce or make available 
for inspection, the following:
* * * * *
    21. In Sec.  754.5 revise the second sentence of paragraph (b)(2) 
to read as follows:

Sec.  754.5  Horses for export by sea.

* * * * *
    (b) * * *
    (2) * * * You must provide a statement in the additional 
information section of the application certifying that no horse under 
consignment is being exported for the purpose of slaughter.
* * * * *
    22. In Supplement No. 2 to Part 754, revise the text to footnote 
number 2 in the table to read as follows:

Supplement No. 2 to Part 754--Western Red Cedar

* * * * *
    \2\ Report commodities on license applications in the units of 
quantity indicated.

PART 764--[AMENDED]

    23. The authority citation for 15 CFR part 764 continues to read as 
follows:

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

    24. In Sec.  764.7, revise the second sentence of paragraph 
(b)(2)(i) to read as follows:

Sec.  764.7  Activities involving items that may have been illegally 
exported or reexported to Libya.

* * * * *
    (b) * * *
    (2) * * *
    (i) * * * License applications should be submitted in accordance 
with Sec. Sec.  748.1, 748.4 and 748.6 of the EAR, and should fully 
describe the relevant activity within the scope of Sec.  764.2(e) of 
this part which is the basis of the application. * * *
* * * * *

PART 772--[AMENDED]

    25. 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).

    26. In Sec.  772.1 revise the second sentence of the definition of 
the term ``Other party authorized to receive license.''

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

* * * * *
    Other party authorized to receive license. * * * If a person and 
address is listed in Block 15 of the application, the Bureau of 
Industry and Security will send the license to that person instead of 
the applicant.
* * * * *

[[Page 59238]]

    Dated: October 15, 2007.
Matthew S. Borman,
Deputy Assistant Secretary for Export Administration.
[FR Doc. E7-20655 Filed 10-18-07; 8:45 am]

BILLING CODE 3510-33-P