Document ID: BIS-2008-0030-0001
Agency: bis
Document Type: 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: 2008-11-18T05:00Z

[Federal Register: November 18, 2008 (Volume 73, Number 223)]
[Rules and Regulations]               
[Page 68321-68328]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr18no08-9]                         

[[Page 68321]]

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

DEPARTMENT OF COMMERCE

Bureau of Industry and Security

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

[Docket No. 080220216-81424-03]
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: Final rule.

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

SUMMARY: In this final rule, the Bureau of Industry and Security (BIS) 
is amending 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 amendments in this 
rule 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 
changes 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 certain sections 
of the EAR. This rule also amends the EAR by revising the definition of 
the term ``transfer'' and certain related terms, to provide greater 
clarity regarding these provisions. BIS published these amendments in 
proposed form in the Federal Register with a request for comments.

DATES: This rule is effective: November 18, 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. & 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 Jasmeet 
Seehra, Office of Management and Budget (OMB), by e-mail to 
jseehra@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 
prohibits exports and reexports of items subject to the EAR to certain 
nuclear proliferation activities. This rule adds 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. Prior to publication of this 
rule, there were minor differences in the terminology used to describe 
the end-user/end-use controls in each of these sections. This rule 
amends 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 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 adds 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 clarifies 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 amends 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 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 reexport; 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

[[Page 68322]]

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 amends 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 amends 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 amends paragraph (a)(1) by adding ``transfer (in-country)'' 
to specify clearly that the prohibition specified in Sec.  744.5 
(Restrictions on Certain Maritime Nuclear Propulsion End-Uses) also 
applies to such scenarios.
    2. In Sec.  744.2 (Restrictions on Certain Nuclear End-Uses), this 
rule amends 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 amends the heading to 
clarify that this paragraph applies an additional prohibition ``on 
persons informed by BIS''. Also in paragraph (b), this rule amends the 
``is informed'' provisions to conform with the ``is informed'' 
provisions in Sec. Sec.  744.3, 744.4 and 744.6. Specifically, the rule 
removes the phrase ``exporters or reexporters'', replaces it with the 
term ``persons'' in three locations, and adds the phrase ``transfer 
(in-country)'' to clarify that this prohibition also applies to 
transfers (in-country). Also in paragraph (b), this rule adds 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 
amends 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 amends the heading to clarify that 
this paragraph applies an additional prohibition ``on persons informed 
by BIS''. Also in paragraph (b), this rule amends 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 amends 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 
updates 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 amends paragraph (a) (General 
Prohibition) by clarifying that this prohibition in Sec.  744.5 also 
applies to transfers (in-country). With this final rule, this paragraph 
(a) prohibits 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 revises the term ``transfer'' to 
clarify that the term merely refers to a conveyance of items. This rule 
further clarifies 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 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 corrects 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, 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 clarified with this rule. This rule 
also clarifies 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 removes one outdated 
reference to ``re-transfer'' in Supp. No. 5 to part 742 because it is 
not needed. This rule also clarifies that the terms ``transferred'' and 
``transfer'', in the context of Sec. Sec.  760.1 and 760.3, mean 
``assigned to'' and ``assignment'', respectively.

Comments and Responses

    BIS received one public comment, which addressed four aspects of 
the proposed rule. A summary of this public comment and BIS responses 
appear below.

[[Page 68323]]

Comment 1: Transfer Provisions Under the Ear Should Be Removed or at 
Least Limited to ``U.S. Person'' Activities Under Sec.  744.6

    The proposed changes to part 744 were intended to make certain 
conforming changes to certain end-user and end/use based controls under 
the EAR. The public comment to make Sec.  744.2 conform with Sec. Sec.  
744.3 and 744.4 by removing the transfer (in-country) prohibition from 
these other end-use controls would be contrary to U.S. export control 
interests. Adopting this public comment for making the end-use controls 
under part 744 conform in this way would make it be permissible under 
the EAR for foreign nationals to ``knowingly'' transfer (in-country) 
items that are subject to the EAR to prohibited end-users that are 
involved in prohibited missile technology or chemical and biological 
end-uses.
    BIS tries as much as possible to narrow controls under the EAR, 
especially those that have extraterritorial reach, to those controls 
that are most critical to protecting U.S. export control interests. The 
end-use controls in part 744, especially those under Sec. Sec.  744.2, 
744.3, 744.4 and 744.6 are critical to protecting U.S. non-
proliferation control interests. By making this conforming change to 
Sec.  744.2, along with the other conforming changes to certain end-use 
controls in part 744, BIS is taking a positive step to enhance U.S. 
national security by helping to better ensure that items subject to the 
EAR are not being ``knowingly'' supplied to persons involved in certain 
prohibited nuclear end-uses.

Comment 2: Transfer Provisions Under the EAR Are Extraterritorial

    Given that the EAR controls ``items'' that are subject to the EAR 
no matter where they are located in the world, by its inherent nature 
the EAR is extraterritorial in its reach. In some cases, EAR 
restrictions extend to ``items'' that are subject to the EAR that are 
located within a foreign country, such as the provisions dealing with 
transfers (in-country). Another example of the extraterritorial reach 
of the EAR would be when an ``item'' that is subject to the EAR is 
located in a foreign country, but was illegally exported to that 
foreign country. Under Sec.  764.2(e) a person that had ``knowledge'' 
of that violation would be prohibited from being involved with that 
``item'' that was subject to the EAR that was involved with a violation 
of the EAR. This would extend to certain activities, such as servicing 
that ``item'' that was subject to the EAR that was involved in a 
violation of the EAR.
    The jurisdiction of the EAR follows the ``item'' that is subject to 
the EAR. In certain limited cases, the jurisdictional reach of the EAR 
extends even further, such as the end-use control under Sec.  744.6. 
However, because these end-use controls extend beyond ``items'' that 
are subject to the EAR (e.g., applying to certain foreign origin items 
and certain activities), these end-use controls are only applicable to 
``U.S. persons''. In these cases the EAR jurisdiction is being asserted 
over the ``U.S. person'' which allows for a broader EAR jurisdiction to 
apply. Any other extraterritorial application of the EAR will always be 
tied to an ``item'' that is subject to the EAR. The end-use controls in 
part 744, especially those end-use controls under Sec. Sec.  744.2, 
744.3, 744.4 and 744.6 are broad in scope given that they apply to all 
items that are subject to the EAR. However, each of these end-use 
controls is targeted by including a required ``knowledge'' element to 
trigger the end-use control. For the end-use control in Sec.  744.2, 
this control is further targeted by carving out countries that are 
listed in Supplement No. 3 to Part 744 and by specifying the types of 
nuclear end-uses that are of concern to the U.S. Government under Sec.  
744.2.
    Lastly, BIS would note that no foreign governments submitted public 
comments regarding this proposed rule. Also when the transfer (in-
country) provisions were added to Sec. Sec.  744.3 and 744.4, other 
governments around the world did not voice complaints to BIS. In 
contrast, since that time, various countries around the world have 
increasingly worked with the USG in various international forums, such 
as the Proliferation Security Initiative (PSI) to help stem the flow of 
WMDs and many countries have adopted additional restrictions within 
their own export control systems to help stem the proliferation of 
WMDs.

Comment 3: Transfer Provisions Under the EAR Are Not Enforceable

    BIS actively works with other countries to help enforce the EAR, 
including transfer provisions under the EAR. For example, as part of 
BIS's international efforts to achieve its enforcement mission, BIS 
sends experienced Department of Commerce Special Agents overseas as 
Export Control Officers (ECOs) at key U.S. embassies in Beijing, China; 
Hong Kong; Abu Dhabi, UAE; New Delhi, India; and Moscow, Russia. The 
principal mission of the ECOs is to ensure that U.S. dual-use goods 
entering their region are used in accordance with U.S. export control 
laws and regulations. Compliance verification is accomplished through 
targeted end-use checks and by working with host governments and local 
businesses to ensure that they understand and comply with U.S. export 
laws and regulations, including any applicable transfer provisions 
under the EAR. ECOs also work with host governments and local 
businesses to provide information and appropriate training to 
facilitate better understanding of the EAR.

Comment 4: Guidance on Not Proceeding With an In-Transit Transaction at 
the Time You Are Informed by BIS Is Not Needed

    The public comment noted that the proposed addition to Sec.  
744.1(b)(2) on not proceeding with an in-transit transaction at the 
time you are informed by BIS that a license is required is unnecessary 
and undesirable because the point is already covered more clearly in 
Sec.  758.8(b).
    BIS believes that this provision will provide a mechanism by which 
a party can apply for authorization to continue a transaction once they 
have been informed by BIS of such risk, as described in the license 
requirements in Sec. Sec.  744.2, 744.3, 744.4 or 744.6, after the 
``export'' has taken place (i.e., left the territory). This provision 
is needed given the restrictions in Sec.  748.4(d)(2). Section 758.8(b) 
does not provide clear guidance regarding whether a party could apply 
for a license once they are informed under the provisions of Sec. Sec.  
744.2, 744.3, 744.4 and 744.6.

Changes From the Proposed Rule

    After considering the one public comment received, BIS is 
implementing the proposed rule as was proposed without making any 
additional changes.

Savings Clause

    Shipments of items removed from eligibility for a License Exception 
or export or reexport without a license (NLR) as a result of this 
regulatory action that were on dock for loading, on lighter, laden 
aboard an exporting or reexporting carrier, or en route aboard a 
carrier to a port of export or reexport, on November 18, 2008 pursuant 
to actual orders for export or reexport to a foreign destination, may 
proceed to that destination under the previous eligibility for a 
License Exception or export or reexport without a license (NLR) so long 
as they are exported or reexported before December 18, 2008. Any such 
items not actually exported or reexported before midnight, on December 
18, 2008, require a license in accordance with this rule.

[[Page 68324]]

    Although the Export Administration Act expired on August 20, 2001, 
the President, through Executive Order 13222 of August 17, 2001, 3 CFR, 
2001 Comp., p. 783 (2002), as extended by the Notice of July 23, 2008, 
73 FR 43603 (July 25, 2008), has continued the Export Administration 
Regulations in effect under the International Emergency Economic Powers 
Act.

Rulemaking Requirements

    1. This final 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 final 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 final 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 Jasmeet Seehra, 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 final 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. Therefore, 
this regulation is issued in final form. Although the formal comment 
period closed on June 17, 2008, public comments on this regulation are 
welcome on a continuing basis. Comments should be submitted to one of 
the addresses listed in the ADDRESSES section of the preamble of this 
final rule.

List of Subjects

15 CFR Parts 736 and 772

    Exports.

15 CFR Parts 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.

0
Accordingly, parts 736, 740, 742, 744, 748, 752, 760, and 772 of the 
Export Administration Regulations (15 CFR parts 730-774) are amended as 
follows:

PART 736--[AMENDED]

0
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; 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 July 23, 2008, 73 FR 43603 (July 25, 2008); Notice of 
November 8, 2007, 72 FR 63963 (November 13, 2007).

0
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. * * *

0
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]

0
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.; 
22 U.S.C. 7201 et seq.; E.O. 13026, 61 FR 58767, 3 CFR, 1996 Comp., 
p. 228; E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 783; Notice 
of July 23, 2008, 73 FR 43603 (July 25, 2008).

0
5. Section 740.5 is amended by revising the first and second sentences 
of paragraph (b)(1) to read as follows:

Sec.  740.5  Civil end-users (CIV).

* * * * *
    (b) Restrictions. 
    (1) * * * 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. * * *
* * * * *
0
6. Section 740.7 is amended by revising paragraph (b)(5) to read as 
follows:

Sec.  740.7  Computers (APP).

* * * * *
    (b) * * *
    (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

[[Page 68325]]

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.
* * * * *

0
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.
* * * * *

0
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.
* * * * *

PART 742--[AMENDED]

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

    Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; 
22 U.S.C. 3201 et seq.; 42 U.S.C. 2139a; 22 U.S.C. 7201 et seq.; 22 
U.S.C. 7210; Sec. 1503, Pub. L. 108-11, 117 Stat. 559; E.O. 12058, 
43 FR 20947, 3 CFR, 1978 Comp., p. 179; E.O. 12851, 58 FR 33181, 3 
CFR, 1993 Comp., p. 608; E.O. 12938, 59 FR 59099, 3 CFR, 1994 Comp., 
p. 950; E.O. 13026, 61 FR 58767, 3 CFR, 1996 Comp., p. 228; E.O. 
13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 783; Presidential 
Determination 2003-23 of May 7, 2003, 68 FR 26459, May 16, 2003; 
Notice of July 23, 2008, 73 FR 43603 (July 25, 2008); Notice of 
November 8, 2007, 72 FR 63963 (November 13, 2007).

0
10. In Supplement No. 5 to Part 742 is amended by revising paragraph 
(3) to read as follows:

Supplement No. 5 to Part 742--Checklist on Encryption and Other 
``Information Security'' Functions

* * * * *
    3. For products that contain an ``encryption component'', can this 
encryption component be easily used by another product, or accessed by 
the end-user for cryptographic use?

PART 744--[AMENDED]

0
11. 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; 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 July 23, 2008, 73 FR 43603 (July 
25, 2008); Notice of November 8, 2007, 72 FR 63963 (November 13, 
2007).

0
12. 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. Section 744.11 imposes license 
requirements, to the extent specified in Supplement No. 4 to this part 
on entities listed in Supplement No. 4 to this part for activities 
contrary to the national security or foreign policy interests of the 
United States. 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 
744.16 sets forth the right of a party listed in Supplement No. 4 to 
this part to request that its listing be removed or modified. 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

[[Page 68326]]

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.
* * * * *

0
13. 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 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.
* * * * *

0
14. Section 744.3 is amended:
0
a. By revising paragraph (a) introductory text;
0
b. By revising paragraph (b); and
0
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.
* * * * *

0
15. Section 744.4 is amended:
0
a. By revising paragraph (a); and
0
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.
* * * * *

0
16. 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. * * *
* * * * *

0
17. Section 744.6 is amended:
0
a. By revising paragraph (a)(1)(i) introductory text;
0
b. By revising paragraph (a)(1)(ii);
0
c. By revising paragraph (a)(3); and
0
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).
* * * * *
    (3) Whole plant requirement. No U.S. person shall, without a 
license from BIS,

[[Page 68327]]

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 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]

0
18. 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 July 23, 2008, 73 FR 
43603 (July 25, 2008).

0
19. 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]

0
20. The authority citation for 15 CFR part 752 is revised 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 July 23, 2008, 73 FR 
43603 (July 25, 2008).

0
21. 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.''
* * * * *

0
22. 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.
* * * * *

0
23. 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;
* * * * *

0
24. 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]

0
25. The authority citation for 15 CFR part 760 is revised to read as 
follows:

    Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; 
E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 783; Notice of July 
23, 2008, 73 FR 43603 (July 25, 2008).

0
26. 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. * * *
* * * * *

0
27. 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]

0
28. 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 July 
23, 2008, 73 FR 43603 (July 25, 2008).

[[Page 68328]]

0
29. Section 772.1 is amended by revising the definition of ``transfer'' 
to read as follows:

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. 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.

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

* * * * *

    Dated: November 10, 2008.
Christopher R. Wall,
Assistant Secretary for Export Administration.
 [FR Doc. E8-27226 Filed 11-17-08; 8:45 am]

BILLING CODE 3510-33-P