Document ID: BIS-2008-0010-0001
Agency: bis
Document Type: Notice
Title: Request for Public Comments on Deemed Export Advisory Committee Recommendations: Narrowing the Scope of Technologies on the Commerce Control List Subject to Deemed Export Licensing Requirements and Implementing a More Comprehensive Set of Criteria for Assessing Probable Country Affiliation for Foreign Nationals
Posted Date: 2008-05-19T04:00Z

[Federal Register: May 19, 2008 (Volume 73, Number 97)]
[Notices]               
[Page 28795-28797]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr19my08-24]                         

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DEPARTMENT OF COMMERCE

Bureau of Industry and Security

[Docket No. 080512652-8653-01]

 
Request for Public Comments on Deemed Export Advisory Committee 
Recommendations: Narrowing the Scope of Technologies on the Commerce 
Control List Subject to Deemed Export Licensing Requirements and 
Implementing a More Comprehensive Set of Criteria for Assessing 
Probable Country Affiliation for Foreign Nationals

AGENCY: Bureau of Industry and Security, Commerce.

ACTION: Notice of Inquiry.

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SUMMARY: The Bureau of Industry and Security (BIS) is publishing a 
notice of inquiry in order to elicit comments regarding two specific 
recommendations made by the Deemed Export Advisory Committee (DEAC) 
with respect to BIS's deemed export licensing policy. BIS is requesting 
comments on whether the scope of technologies on the Commerce Control 
List that are subject to deemed export licensing requirements should be 
narrowed, and if so, which technologies should be subject to deemed 
export licensing requirements. Additionally, BIS is seeking comments on 
whether a more comprehensive set of criteria should be used to assess 
country affiliation for foreign nationals with respect to deemed 
exports.

DATES: Comments must be received no later August 18, 2008.

FOR FURTHER INFORMATION CONTACT: Alex Lopes, Director, Deemed Exports 
and Electronics Division, 202-482-4875, alopes@bis.doc.gov. Ilona 
Shtrom, Senior Export Policy Analyst, Deemed Exports and Electronics 
Division, 202-482-3235, ishtrom@bis.doc.gov. The DEAC report may be 
accessed at http://tac.bis.doc.gov/2007/deacreport.pdf.

ADDRESSES: You may submit comments, identified by ``DEAC Report 
comments,'' by any of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     E-mail: rpd2@bis.doc.gov. Include ``DEAC Report comments'' 
in the subject line of the message.

[[Page 28796]]

     Fax: 202-482-3355
     Hand Delivery/Courier: Steven Emme, U.S. Department of 
Commerce, Bureau of Industry and Security, Regulatory Policy Division, 
14th & Pennsylvania Avenue, NW., Room 2705, Washington, DC 20230, ATTN: 
DEAC Report comments.

SUPPLEMENTARY INFORMATION:

Background

    Under the Export Administration Regulations (EAR), 15 CFR parts 
730-774 (2008), which implement the Export Administration Act of 1979, 
as amended, 50 U.S.C. app. 2401-2420 (2000), and the International 
Emergency Economic Powers Act (50 U.S.C. 1701-1706 (2000)), the Bureau 
of Industry and Security (BIS) administers licensing for deemed 
exports, which are the ``release of technology or source code subject 
to the EAR to a foreign national'' (Sec.  734.2(b)(ii) of the EAR). 
When technology or source code is released to a foreign national, it is 
deemed to be an export to the home country or home countries of the 
foreign national. For purposes of the EAR's deemed export rule, foreign 
nationals do not include U.S. citizens, U.S. permanent residents, and 
protected individuals under the Immigration and Naturalization Act ((8 
U.S.C. 1324b(a)(3)).
    To determine a foreign national's home country for purposes of 
deemed export licensing, BIS uses a foreign national's most recently 
established legal permanent residency or most recently established 
citizenship. For example, in the deemed exports context, an Iranian 
foreign national who establishes legal permanent residency in Canada 
and subsequently immigrates to the United States would be treated as a 
Canadian. Similarly, an Iranian foreign national who establishes 
citizenship in the United Kingdom (U.K.) and subsequently immigrates to 
the United States would be treated as a U.K. citizen for deemed export 
licensing purposes. In implementing this policy, BIS relies on 
exporters to self-determine a foreign national's home country with 
additional guidance provided on the BIS Web site at http://
www.bis.doc.gov.
    The existing guidance provided on the BIS Web site emphasizes that 
there will be deemed export licensing scenarios where an exporter will 
have difficulty determining where a foreign national's ties lie. Some 
of these difficulties may include the following scenarios: prior or 
current employment at a prohibited end-user (such as employment at an 
entity on the Entity List in Supplement No. 4 to part 744), expiration 
of the foreign national's permanent residency status while that foreign 
national continues to receive technology or source code subject to 
deemed export licensing requirements, and the possibility of a foreign 
national not being able to comply with a country's permanent residency 
requirements. In these instances, exporters are advised to submit a 
license application or to seek guidance from BIS before proceeding with 
the release of controlled technology or source code subject to the EAR 
to the foreign national.
    The issue of home country determinations was highlighted in a 
report issued by the Office of the Inspector General (OIG) of the 
Department of Commerce in March of 2004. The OIG report concluded that 
BIS policies could enable foreign nationals from countries and entities 
of concern to access controlled technology and source code without a 
license. Among its findings, the OIG recommended that the foreign 
national's country of birth should be used to determine deemed export 
license requirements rather than the foreign national's most recent 
citizenship or legal permanent residency.
    In response to this and other recommendations made by the OIG, BIS 
published an advance notice of proposed rulemaking on March 28, 2005 
(70 FR 15607), seeking comments on how the OIG's recommendations would 
affect industry, the academic community, and government agencies 
involved in research. On May 22, 2006, BIS published a notice (71 FR 
29301) that announced the creation of the Deemed Export Advisory 
Committee (DEAC), a federal advisory committee established under the 
terms of the Federal Advisory Committee Act (FACA), 5 U.S.C., app. 2 
(2005), the EAA, and IEEPA to provide recommendations to the Secretary 
on BIS's deemed export policy. The DEAC was formed to help ensure that 
the deemed export licensing policy most effectively protects U.S. 
national security while ensuring U.S. technological innovation.
    After reviewing comments submitted in response to the advance 
notice of proposed rulemaking, BIS published a withdrawal of advance 
notice of proposed rulemaking on May 31, 2006 (71 FR 30840). In that 
notice, BIS stated that it would maintain the current policy of using a 
foreign national's most recent country of citizenship or legal 
permanent residency when determining licensing requirements. BIS 
reasoned that a declarative assertion of affiliation was more 
significant than the geographical circumstances of birth when 
determining the home country of the foreign national.
    Comments submitted in response to the advanced notice of proposed 
rulemaking were reviewed by the DEAC. Following six public meetings 
held in Washington, DC and in cities around the country at which the 
committee heard from interested stakeholders in academia, industry, and 
government, the DEAC submitted its final report, ``The Deemed Export 
Rule in the Era of Globalization,'' to the Secretary of Commerce on 
December 20, 2007. The report contained several recommendations to 
improve and streamline BIS's deemed export rule. This notice of inquiry 
focuses on two of those recommendations.

DEAC Recommendations

Narrowing the Scope of Technologies on the Commerce Control List 
Subject to Deemed Export Licensing Requirements and Conducting an 
Outside Review of Technologies

    Among its recommendations, the DEAC urged that BIS narrow the scope 
of technologies on the Commerce Control List (CCL) and involve an 
outside panel of experts to conduct an annual ``zero-based'' review of 
which technologies should be on the CCL, with an eye toward determining 
which technologies should be subject to deemed export licensing 
requirements. In its report, the DEAC recommended narrowing the scope 
of technologies on the CCL because it believed that BIS should 
concentrate on those technologies having the greatest national security 
concerns and should eliminate from the CCL those technologies having 
little national security concerns. By building higher walls around 
fewer technologies, the DEAC believed that BIS could more effectively 
protect U.S. national security interests while maintaining U.S. 
innovation.
    Partly in response to the DEAC's recommendation regarding the scope 
of technologies on the CCL, BIS announced the formation of the Emerging 
Technologies and Research Advisory Committee (ETRAC), a technical 
advisory committee that will be established under the terms of the EAA, 
IEEPA, and FACA, and will comprise representatives from research 
universities, government research labs, and industry. The ETRAC will 
make recommendations to BIS regarding emerging technologies on a 
regular basis as well as advise BIS on the conduct of a ``zero-based'' 
technology review envisioned by the DEAC. A zero-based review means 
determining what should

[[Page 28797]]

be controlled without reference to what is currently controlled, rather 
than reviewing current controls and identifying what should be 
decontrolled. While BIS is already conducting a systematic review of 
the CCL to assess what controls should be retained or revised, many 
technologies on the CCL are subject to multilateral controls and thus 
cannot be changed unilaterally by the United States. However, deemed 
export licensing requirements are not multilateral and thus may be 
changed by the United States without agreement by other countries. 
Therefore, BIS is focusing this recommendation for a zero-based review 
only on those technologies that should be subject to deemed export 
licensing requirements.
    With this notice of inquiry, BIS is seeking comments from the 
public on the DEAC's recommendation to narrow the scope of technologies 
on the CCL in the specific context of BIS's deemed export licensing 
requirements.

Comprehensive Assessment of Foreign National Affiliation

    Within the recommended environment of narrowing technologies 
subject to deemed export licensing requirements, the DEAC also 
recommended that BIS expand its analysis of determining the home 
country of the foreign national, for deemed export licensing purposes, 
in favor of a more comprehensive assessment of a foreign national's 
country of affiliation. Specifically, the DEAC recommended expanding 
the determination of national affiliation to include country of birth, 
prior countries of residence, current citizenship, and character of 
individual's prior and present activities to provide an increased level 
of assurance that technology subject to deemed export licensing 
requirements would not be diverted to unauthorized end-users or 
activities. The DEAC reasoned that using the most recent citizenship or 
legal permanent residency may not take into account the actual risk of 
diversion of export-controlled technology by the foreign national. For 
instance, the DEAC noted that most criminal cases of export control 
violations of which it had been made aware involve U.S. citizens and 
U.S. legal permanent residents, who are not even subject to deemed 
export licensing requirements under current BIS policy. Further, the 
DEAC stated that an adequate distinction has not been made for a 
foreign national residing in a specific country for the majority of his 
or her lifetime. For example, the risk of diversion posed by an 
individual recently attaining U.K. citizenship who was born and raised 
in Iran may be different from that of a native Iranian who became a 
citizen of the U.K. shortly after birth.
    BIS intends to consider the DEAC's recommendation of an expanded 
set of criteria in determining home country/national affiliation in the 
context of the DEAC's other recommendation that BIS narrow the scope of 
technologies on the CCL, in the context of deemed exports, to a few 
critical technologies. With this notice of inquiry, BIS is seeking 
comments on the DEAC's recommendation to expand the criteria for 
determining national affiliation of foreign nationals for deemed export 
licensing purposes.

Requests for Comments

    To assist in developing a response to these two recommendations 
made by the DEAC, BIS is interested in comments from the public. BIS 
encourages all interested parties to submit comments in response to 
this notice of inquiry.
    With respect to the first recommendation for an outside, zero-based 
review of technologies, BIS is seeking comments on whether technologies 
on the CCL that are subject to deemed export licensing requirements 
should be narrowed to a few critical technologies (i.e., a narrower set 
of technologies than those on the current CCL). If so, BIS would like 
comments to address which technologies the commenter believes should be 
subject to deemed export licensing requirements and what criteria 
should be used to make that determination. Comments providing a 
description of the technology as well as the use of the technology 
would be particularly helpful. Moreover, comments identifying the 
Export Control Classification Number (ECCN) of the technology would aid 
BIS in assessing whether the technology would rise to a level 
warranting deemed export control under the ``higher walls, fewer 
fences'' construct outlined by the DEAC. Comments made in response to 
this first DEAC recommendation will also be shared with the ETRAC for 
its analysis.
    Additionally, BIS is seeking comments with respect to the DEAC 
recommendation that a more comprehensive assessment of foreign national 
affiliation should be used in the context of making home country 
determinations in the deemed export licensing process. BIS is 
interested in public comments addressing the issue of making foreign 
national affiliation determinations in situations where a foreign 
national's ties may be easily established and in situations where it 
may be difficult to determine where a foreign national's ties lie (such 
as for a foreign national employed at a prohibited entity). Comments 
submitted in favor of a more comprehensive assessment will be 
particularly helpful if they address what information should be taken 
into account for such a comprehensive assessment. Comments submitted in 
opposition to a more comprehensive assessment will be particularly 
helpful if they suggest what parameter(s) should be used in determining 
the home country for foreign nationals.
    Parties submitting comments are asked to be as specific as 
possible. Comments including detailed statements of support will likely 
be more useful than comments that state a position without providing 
any support. BIS encourages interested persons who wish to comment to 
do so at the earliest possible date. The period for submission of 
comments will close August 18, 2008. BIS will consider all comments 
received before the close of the comment period in responding to the 
DEAC recommendations. Comments received after the end of the comment 
period will be considered if possible, but their consideration cannot 
be assured. BIS will not accept public comments accompanied by a 
request that a part or all of the material be treated confidentially 
because of its business proprietary nature or for any other reason. BIS 
will return such comments and materials to the persons submitting the 
comments and will not consider them in the development of a response. 
All public comments on this notice of inquiry must be in writing 
(including fax or e-mail) and will be a matter of public record, 
available for public inspection and copying. The Office of 
Administration, Bureau of Industry and Security, U.S. Department of 
Commerce, displays these public comments on BIS's Freedom of 
Information Act (FOIA) Web site at http://www.bis.doc.gov/foia. This 
office does not maintain a separate public inspection facility. If you 
have technical difficulties accessing this Web site, please call BIS's 
Office of Administration at (202) 482-0953 for assistance.

    Dated: May 14, 2008.
Matthew S. Borman,
Acting Assistant Secretary for Export Administration.
[FR Doc. E8-11169 Filed 5-16-08; 8:45 am]

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