[Title 15 CFR ]
[Code of Federal Regulations (annual edition) - January 1, 1997 Edition]
[From the U.S. Government Printing Office]
15
Commerce and Foreign Trade
[[Page i]]
PARTS 300 TO 799
Revised as of January 1, 1997
CONTAINING
A CODIFICATION OF DOCUMENTS
OF GENERAL APPLICABILITY
AND FUTURE EFFECT
AS OF JANUARY 1, 1997
With Ancillaries
Published by
the Office of the Federal Register
National Archives and Records
Administration
as a Special Edition of
the Federal Register
[[Page ii]]
U.S. GOVERNMENT PRINTING OFFICE
WASHINGTON : 1997
For sale by U.S. Government Printing Office
Superintendent of Documents, Mail Stop: SSOP, Washington, DC 20402-9328
[[Page iii]]
Table of Contents
Page
Explanation................................................... v
Title 15:
Subtitle B--Regulations Relating to Commerce and Foreign Trade (Continued):
Chapter III--International Trade Administration,
Department of Commerce................................
Chapter IV--Foreign-Trade Zones Board, Department of
Commerce..............................................
Chapter VII--Bureau of Export Administration, Department
of Commerce...........................................
Finding Aids:
Table of CFR Titles and Chapters..........................
Alphabetical List of Agencies Appearing in the CFR........
Redesignation Table.......................................
List of CFR Sections Affected.............................
[[Page iv]]
----------------------------------------------------------
Cite this Code: CFR
To cite the regulations in this volume use title, part
and section number. Thus, 15 CFR 301.1 refers to title
15, part 301, section 1.
----------------------------------------------------------
[[Page v]]
EXPLANATION
The Code of Federal Regulations is a codification of the general and
permanent rules published in the Federal Register by the Executive
departments and agencies of the Federal Government. The Code is divided
into 50 titles which represent broad areas subject to Federal
regulation. Each title is divided into chapters which usually bear the
name of the issuing agency. Each chapter is further subdivided into
parts covering specific regulatory areas.
Each volume of the Code is revised at least once each calendar year
and issued on a quarterly basis approximately as follows:
Title 1 through Title 16.................................as of January 1
Title 17 through Title 27..................................as of April 1
Title 28 through Title 41...................................as of July 1
Title 42 through Title 50................................as of October 1
The appropriate revision date is printed on the cover of each
volume.
LEGAL STATUS
The contents of the Federal Register are required to be judicially
noticed (44 U.S.C. 1507). The Code of Federal Regulations is prima facie
evidence of the text of the original documents (44 U.S.C. 1510).
HOW TO USE THE CODE OF FEDERAL REGULATIONS
The Code of Federal Regulations is kept up to date by the individual
issues of the Federal Register. These two publications must be used
together to determine the latest version of any given rule.
To determine whether a Code volume has been amended since its
revision date (in this case, January 1, 1997), consult the ``List of CFR
Sections Affected (LSA),'' which is issued monthly, and the ``Cumulative
List of Parts Affected,'' which appears in the Reader Aids section of
the daily Federal Register. These two lists will identify the Federal
Register page number of the latest amendment of any given rule.
EFFECTIVE AND EXPIRATION DATES
Each volume of the Code contains amendments published in the Federal
Register since the last revision of that volume of the Code. Source
citations for the regulations are referred to by volume number and page
number of the Federal Register and date of publication. Publication
dates and effective dates are usually not the same and care must be
exercised by the user in determining the actual effective date. In
instances where the effective date is beyond the cut-off date for the
Code a note has been inserted to reflect the future effective date. In
those instances where a regulation published in the Federal Register
states a date certain for expiration, an appropriate note will be
inserted following the text.
OMB CONTROL NUMBERS
The Paperwork Reduction Act of 1980 (Pub. L. 96-511) requires
Federal agencies to display an OMB control number with their information
collection request.
[[Page vi]]
Many agencies have begun publishing numerous OMB control numbers as
amendments to existing regulations in the CFR. These OMB numbers are
placed as close as possible to the applicable recordkeeping or reporting
requirements.
OBSOLETE PROVISIONS
Provisions that become obsolete before the revision date stated on
the cover of each volume are not carried. Code users may find the text
of provisions in effect on a given date in the past by using the
appropriate numerical list of sections affected. For the period before
January 1, 1986, consult either the List of CFR Sections Affected, 1949-
1963, 1964-1972, or 1973-1985, published in seven separate volumes. For
the period beginning January 1, 1986, a ``List of CFR Sections
Affected'' is published at the end of each CFR volume.
CFR INDEXES AND TABULAR GUIDES
A subject index to the Code of Federal Regulations is contained in a
separate volume, revised annually as of January 1, entitled CFR Index
and Finding Aids. This volume contains the Parallel Table of Statutory
Authorities and Agency Rules (Table I), and Acts Requiring Publication
in the Federal Register (Table II). A list of CFR titles, chapters, and
parts and an alphabetical list of agencies publishing in the CFR are
also included in this volume.
An index to the text of ``Title 3--The President'' is carried within
that volume.
The Federal Register Index is issued monthly in cumulative form.
This index is based on a consolidation of the ``Contents'' entries in
the daily Federal Register.
A List of CFR Sections Affected (LSA) is published monthly, keyed to
the revision dates of the 50 CFR titles.
REPUBLICATION OF MATERIAL
There are no restrictions on the republication of material appearing
in the Code of Federal Regulations.
INQUIRIES
For a legal interpretation or explanation of any regulation in this
volume, contact the issuing agency. The issuing agency's name appears at
the top of odd-numbered pages.
For inquiries concerning CFR reference assistance, call 202-523-5227
or write to the Director, Office of the Federal Register, National
Archives and Records Administration, Washington, DC 20408.
SALES
The Government Printing Office (GPO) processes all sales and
distribution of the CFR. For payment by credit card, call 202-512-1800,
M-F 8 a.m. to 4 p.m. e.s.t. or fax your order to 202-512-2233, 24 hours
a day. For payment by check, write to the Superintendent of Documents,
Attn: New Orders, P.O. Box 371954, Pittsburgh, PA 15250-7954. For GPO
Customer Service call 202-512-1803.
Richard L. Claypoole,
Director,
Office of the Federal Register.
January 1, 1997.
[[Page vii]]
THIS TITLE
Title 15--Commerce and Foreign Trade is composed of three volumes.
The parts in these volumes are arranged in the following order: parts 0-
299, 300-799, and part 800-End. The first volume containing parts 0-299
is comprised of Subtitle A--Office of the Secretary of Commerce, chapter
I--Bureau of the Census, Department of Commerce, and chapter II--
National Institute of Standards and Technology, Department of Commerce.
The second volume containing parts 300-799 is comprised of chapter III--
International Trade Administration, Department of Commerce, chapter IV--
Foreign-Trade Zones Board, and chapter VII--Bureau of Export
Administration, Department of Commerce. The third volume containing part
800-End is comprised of chapter VIII--Bureau of Economic Analysis,
Department of Commerce, chapter IX--National Oceanic and Atmospheric
Administration, Department of Commerce, chapter XI--Technology
Administration, Department of Commerce, chapter XIII--East-West Foreign
Trade Board, chapter XIV--Minority Business Development Agency, chapter
XX--Office of the United States Trade Representative, and chapter
XXIII--National Telecommunications and Information Administration,
Department of Commerce. The contents of these volumes represent all
current regulations codified under this title of the CFR as of January
1, 1997.
A redesignation table appears in the Finding Aids section of the
volume containing Parts 300-799
For this volume, Kenneth R. Payne was Chief Editor. The Code of
Federal Regulations publication program is under the direction of
Frances D. McDonald, assisted by Alomha S. Morris.
[[Page viii]]
[[Page 1]]
TITLE 15--COMMERCE AND FOREIGN TRADE
(This book contains parts 300-799)
--------------------------------------------------------------------
Part
SUBTITLE B--Regulations Relating to Commerce and Foreign Trade
(Continued):
Chapter iii--International Trade Administration, Department
of Commerce............................................... 301
Chapter iv--Foreign-Trade Zones Board, Department of
Commerce.................................................. 400
Chapter vii--Bureau of Export Administration, Department of
Commerce.................................................. 700
[[Page 3]]
Subtitle B--Regulations Relating to Commerce and Foreign Trade (Continued)
[[Page 5]]
CHAPTER III--INTERNATIONAL TRADE ADMINISTRATION, DEPARTMENT OF COMMERCE
--------------------------------------------------------------------
Editorial Note: Nomenclature changes to Chapter III appear at 51 FR
34586, Sept. 30, 1986.
SUBCHAPTER A--MISCELLANEOUS REGULATIONS
Part Page
301 Instruments and apparatus for educational
and scientific institutions.............
302 [Reserved]
303 Watches and watch movements.................
310 Official U.S. Government recognition of and
participation in international
expositions held in the United States...
315 Determination of bona fide motor-vehicle
manufacturer............................
325 Export trade certificates of review.........
[[Page 7]]
SUBCHAPTER A--MISCELLANEOUS REGULATIONS
PART 301--INSTRUMENTS AND APPARATUS FOR EDUCATIONAL AND SCIENTIFIC INSTITUTIONS--Table of Contents
Sec.
301.1 General provisions.
301.2 Definitions.
301.3 Application for duty-free entry of scientific instruments.
301.4 Processing of applications by the Department of the Treasury
(U.S. Customs Service).
301.5 Processing of applications by the Department of Commerce.
301.6 Appeals.
301.7 Final disposition of an application.
301.8 Instructions for entering instruments through U.S. Customs under
tariff item 851.60.
301.9 Uses and disposition of instruments entered under item 851.60,
TSUS.
301.10 Importation of repair components under item 851.65 for article
previously entered under item 851.60.
Authority: Sec. 6(c), Pub. L. 89-651, 80 Stat. 897 (19 U.S.C. 1202).
Source: 47 FR 32517, July 28, 1982, unless otherwise noted.
Sec. 301.1 General provisions.
(a) Purpose. This part sets forth the regulations of the Department
of Commerce and the Department of the Treasury applicable to the duty-
free importation of scientific instruments and apparatus by public or
private nonprofit institutions.
(b) Background. (1) The Agreement on the importation of Educational,
Scientific and Cultural Materials (Florence Agreement; ``the
Agreement'') is a multinational treaty, contracted to by approximately
89 countries, which seeks to further the cause of peace through the
freer exchange of ideas and knowledge across national boundaries,
primarily by eliminating tariffs on certain educational, scientific and
cultural materials.
(2) Annex D of the Agreement provides that scientific instruments
and apparatus intended exclusively for educational purposes or pure
scientific research use by qualified nonprofit institutions shall enjoy
duty-free entry if instruments or apparatus of equivalent scientific
value are not being manufactured in the country of importation.
(3) Pub. L. 89-651, the Educational, Scientific, and Cultural
Materials Importation Act of 1966 (19 U.S.C. 1202; ``the Act''),
implements the Agreement in the United States. Section 6(c) of the Act
gives effect to Annex D of the Agreement. This section added tariff item
851.60 to the Tariff Schedules of the United States (TSUS) to provide
for the duty-free importation of instruments and apparatus ``entered for
the use of any nonprofit institution, whether public or private,
established for educational or scientific purposes * * * if no
instrument or apparatus of equivalent scientific value for the purposes
for which the instrument or apparatus is intended to be used is being
manufactured in the United States.'' Headnote 1 to Schedule 8, part 4,
TSUS, was amended by Pub. L. 89-651 and provides for the use,
disposition and transfer of articles and their repair components
accorded duty-free entry under tariff items 851.60 and 851.65,
respectively, and Headnote 6, added by Pub. L. 89-651, sets forth the
duty-free procedures and responsibilities.
(c) Summary of statutory procedures and requirements. (1) Headnote 1
provides, among other things, that articles covered by tariff items
851.60 (scientific instruments and apparatus) and 851.65 (repair
components therefor) must be exclusively for the use of the institutions
involved and not for distribution, sale or other commercial use within
five years after being entered. These articles may be transferred by a
qualified nonprofit institution to another such institution without duty
liability being incurred. However, if such article is transferred other
than as provided by the preceding sentence, or is used for commercial
purposes within five years after having been entered, duty shall be
assessed in accordance with the procedures established in Headnote 1.
(2) Pursuant to Headnote 6 an institution desiring to enter an
instrument or apparatus under tariff item 851.60 TSUS must file an
application with the
[[Page 8]]
Secretary of the Treasury (U.S. Customs Service) in accordance with
these regulations. If the application is made in accordance with the
regulations, notice of the application is published in the Federal
Register to provide an opportunity for interested persons and government
agencies to present views. The application is reviewed by the Secretary
of Commerce (Director, Statutory Import Programs Staff) whose decision
as to whether or not duty-free entry may be accorded the instrument is
published in the Federal Register. An appeal of the final decision may
be filed with the United States Court of Customs and Patent Appeals, on
questions of law only, within 20 days after publication of the decision
in the Federal Register.
(3) Repair components for instruments or apparatus admitted duty-
free under tariff item 851.60 require no application and may be entered
duty-free in accordance with the procedures prescribed in Sec. 301.10.
(d) Authority and delegations. The Act authorizes the Secretaries of
Commerce and the Treasury to prescribe joint regulations to carry out
their functions under Headnote 6, TSUS. The Secretary of the Treasury
has delegated authority to the Assistant Secretary for Enforcement and
Operations, who has retained rulemaking authority and further delegated
administration of the regulations to the Commissioner of the U.S.
Customs Service. The authority of the Secretary of Commerce has been
delegated to the Deputy Assistant Secretary for Import Administration
who has retained rulemaking authority and further delegated
administration of the regulations to the Director of the Statutory
Import Programs Staff.
[47 FR 32517, July 28, 1982; 47 FR 34368, Aug. 9, 1982]
Sec. 301.2 Definitions.
For the purposes of these regulations and the forms used to
implement them:
(a) Director means the Director of the Statutory Import Programs
Staff, International Trade Administration, U.S. Department of Commerce.
(b) Customs means the U.S. Customs Service and the ``The
Commissioner'' means Commissioner of the U.S. Customs Service, or the
official(s) designated to act on the Commissioner's behalf.
(c) Customs Port or the Port means the port where a particular claim
has been or will be made for duty-free entry of a scientific instrument
or apparatus under tariff item 851.60.
(d) Entry means entry of an instrument into the Customs territory of
the United States for consumption or withdrawal of an instrument from a
Customs bonded warehouse for consumption.
(e) United States includes only the several States, the District of
Columbia and the Commonwealth of Puerto Rico.
(f) Instrument means only instruments and apparatus classifiable
under the tariff items specified in headnote 6(a) of part 4 of Schedule
8. A combination of basic instrument or apparatus and accompanying
accessories shall be treated as a single instrument provided that, under
normal commercial practice, such combination is considered to be a
single instrument and provided further that the applicant has ordered
or, upon favorable action on its application, firmly intends to order
the combination as a unit. Unless the context indicates otherwise,
instrument or apparatus shall mean a foreign ``instrument or apparatus''
for which duty-free entry is sought under tariff item 851.60. Spare
parts typically ordered and delivered with an instrument are also
considered part of an instrument for purposes of these regulations. The
term ``instruments'' shall not include:
(1) Materials or supplies used in the operation of instruments and
apparatus such as paper, cards, tapes, ink, recording materials,
expendable laboratory materials, apparatus that loses identity or is
consumed by usage or other materials or supplies.
(2) Ordinary equipment for use in building construction or
maintenance; or equipment for use in supporting activities of the
institution, such as its administrative offices, machine shops,
libraries, centralized computer facilities, eating facilities, or
religious facilities; or support equipment such as copying machines,
glass working apparatus and film processors.
[[Page 9]]
(3) General purpose equipment such as air conditioners, electric
typewriters, electric drills, refrigerators.
(4) General-purpose computers. Accessories to computers which are
not eligible for duty-free treatment are also ineligible. Scientific
instruments containing embedded computers which are to be used in a
dedicated process or in instrument control, as opposed to general data
processing or computation, are, however, eligible for duty-free
consideration.
(5) Instruments initially imported solely for testing or review
purposes which were entered under bond under tariff item 864.30, subject
to the provisions of Headnote 1(a) of subpart C, part 5, schedule 8 TSUS
and must be exported or destroyed within the time period specified in
that headnote.
(g) Domestic instrument means an instrument which is manufactured in
the United States. A domestic instrument need not be made exclusively of
domestic components or accessories.
(h) Accessory has the meaning which it has under normal commercial
usage. An accessory, whether part of an instrument or an attachment to
an instrument, adds to the capability of an instrument. An accessory for
which duty-free entry is sought under item 851.60 shall be the subject
of a separate application when it is not an accompanying accessory.
(i) Accompanying accessory means an accessory for an instrument that
is listed as an item in the same purchase order and that is necessary
for accomplishment of the purposes for which the instrument is intended
to be used.
(j) Ancillary equipment means an instrument which may be
functionally related to the foreign instrument but is not operationally
linked to it. Examples of ancillary equipment are vacuum evaporators or
ultramicrotomes, which can be used to prepare specimens for electron
microscopy. Further, equipment which is compatible with the foreign
instrument, but is also clearly compatible with similar domestic
instruments, such as automatic sampling equipment sold for use with a
variety of mass spectrometers, will be treated as ancillary equipment. A
separate application will be required for ancillary equipment even if
ordered with the basic instrument.
(k) Components of an instrument means parts or assemblies of parts
which are substantially less than the instrument to which they relate. A
component enables an instrument to function at a specified minimum
level, while an accessory adds to the capability of an instrument.
Applications shall not be accepted for components of instruments that
did not enter duty-free under tariff item 851.60 or for components of
instruments being manufactured or assembled by a commercial firm or
entity in the U.S. In determining whether an item is a component
ineligible for duty-free consideration or an accessory eligible for such
consideration, Customs shall take into account such factors as the
item's complexity, novelty, degree of integration and pertinency to the
research purposes to be performed by the instrument as a whole.
(l) Produced for stock means an instrument which is manufactured, on
sale and available from a stock.
(m) Produced on order means an instrument which a manufacturer lists
in current catalog literature and is able and willing to produce and
have available without unreasonable delay to the applicant.
(n) Custom-made means an instrument which a manufacturer is willing
and able to make to purchaser's specifications. Instruments resulting
from a development effort are treated as custom-made for the purposes of
these regulations. Also, a special-order variant of a produced on order
instrument, with significant modifications specified by the applicant,
may be treated as custom-made.
(o) Same general category means the category in which an instrument
is customarily classified in trade directories and product-source lists,
e.g., scanning electron microscope, mass spectrometer, light microscope,
x-ray spectrometer.
(p) Comparable domestic instrument means a domestic instrument
capable or potentially capable of fulfilling the applicant's technical
requirements or intended uses, whether or not in the same general
category as the foreign instrument.
[[Page 10]]
(q) Specifications means the particulars of the structural,
operational and performance characteristics or capabilities of a
scientific instrument.
(r) Guaranteed specifications are those specifications which are an
explicit part of the contractual agreement between the buyer and the
seller (or which would become part of the agreement if the buyer
accepted the seller's offer), and refer only to the minimum and
routinely achievable performance levels of the instrument under
specified conditions. If a capability is listed or quoted as a range
(e.g., ``5 to 10 angstroms'') or as a minimum that may be exceeded
(e.g., ``5 angstroms or better''), only the inferior capability may be
considered the guaranteed specification. Evidence that specifications
are ``guaranteed'' will normally consist of their being printed in a
brochure or other descriptive literature of the manufacturer; being
listed in a purchase agreement upon which the purchase is conditioned;
or appearing in a manufacturer's formal response to a request for quote.
If, however, no opportunity to submit a bid was afforded the domestic
manufacturer or if, for any other reason, comparable guaranteed
specifications of the foreign and domestic instruments do not appear on
the record, other evidence relating to a manufacturer's ability to
provide an instrument with comparable specifications may, at the
discretion of the Director, be considered in the comparison of the
foreign and domestic instruments' capabilities.
(s) Pertinent specifications are those specifications necessary for
the accomplishment of the specific scientific research and/or science-
related educational purposes described by the applicant. Specifications
of features (even if guaranteed) which afford greater convenience,
satisfy personal preferences, accommodate institutional commitments or
limitations, or assure lower costs of acquisition, installation,
operation, servicing or maintenance are not pertinent. For example, a
design feature, such as a small number of knobs or controls on an
instrument primarily designed for research purposes, would be a
convenience. The ability to fit an instrument into a small room, when
the required operations could be performed in a larger room, would be
either a cost consideration or a matter of convenience and not a
pertinent specification. In addition, mere difference in design (which
would, for example, broaden the educational experience of students but
not provide superior scientific capability) would not be pertinent.
Also, unless the applicant demonstrates it is necessary for the
accomplishment of its specific scientific purposes, the terms does not
extend to such characteristics as size, weight, appearance, durability,
reliability, complexity or (simplicity), ease of operation, ease of
maintenance, productivity, versatility, ``state of the art'' design,
specific design, or other such characteristics.
[47 FR 32517, July 28, 1982; 47 FR 34368, Aug. 9, 1982]
Sec. 301.3 Application for duty-free entry of scientific instruments.
(a) Who may apply. An applicant for duty-free entry of an instrument
under tariff item 851.60 must be a public or private nonprofit
institution which is established for educational or scientific purposes
and which has placed a bona fide order or has a firm intention to place
a bona fide order for a foreign instrument within 60 days following a
favorable decision on the institution's application.
(b) Application forms. Applications must be made on form ITA-338P
which may be obtained from the Statutory Import Programs Staff,
International Trade Administration, U.S. Department of Commerce,
Washington, DC 20230, or from the various District Offices of the U.S.
Department of Commerce. (Approved by the Office of Management and Budget
under control number 0625-0037.)
(c) Where to apply. Applications must be filed with the U.S. Customs
Service, Department of the Treasury, at the address specified on page 1
of the form.
(d) Five copies of the form, including relevant supporting
documents, must be submitted. One copy of the form shall be signed in
the original by the person in the applicant institution under whose
direction and control the foreign instrument will be used and who is
familiar with the intended uses
[[Page 11]]
of the instrument. The remaining four copies of the form may be copies
of the original. Attachments should be fully identified and referenced
to the question(s) on the form to which they relate.
(e) A single application (in the requisite number of copies) may be
submitted for any quantity of the same type or model of foreign
instrument provided that the entire quantity is intended to be used for
the same purposes and provided that all units are included on a single
purchase order. A separate application shall be submitted for each
different type or model or variation in the type or model of instrument
for which duty-free entry is sought even if covered by a single purchase
order. Orders calling for multiple deliveries of the same type or model
of instrument over a substantial period of time may, at the discretion
of the Director, require multiple applications.
(f) Failure to answer completely all questions on the form in
accordance with the instructions on the form or to supply the requisite
number of copies of the form and supporting documents may result in
delays in processing of the application while the deficiencies are
remedied, return of the application without processing, or denial of the
application without prejudice to resubmission. Any questions on these
regulations or the application form should be addressed to the Director.
[47 FR 32517, July 28, 1982, as amended at 50 FR 11501, Mar. 22, 1985]
Sec. 301.4 Processing of applications by the Department of the Treasury (U.S. Customs Service).
(a) Review and determination. The Commissioner shall date each
application when received by Customs. If the application appears to be
complete, the Commissioner shall determine:
(1) Whether the institution is a nonprofit private or public
institution established for research and educational purposes and
therefore authorized to import instruments into the U.S. under tariff
item 851.60. In making this determination the Commissioner will
generally review the application to determine if the applicant has
attached a copy of the letter from the Internal Revenue Service (IRS)
granting the institution nonprofit status (exemption from Federal income
tax) under section 501(c)(3) of the IRS Code or will determine if the
institution is listed in a current edition of ``Cumulative List of
Exempt Organizations'';
(2) Whether the instrument falls within the classes of instruments
eligible for duty-free entry consideration under tariff item 851.60 (For
eligible classes see Headnote 6(a), part 4, Schedule 8, TSUS); and
(3) Whether the instrument which is the subject of the application
is intended for the exclusive use of the applicant institution and is
not intended to be used for commercial purposes. For the purposes of
this section, commercial uses would include, but not necessarily be
limited to: Distribution or sale of the instrument by the applicant
institution; any use by, or for the primary benefit of, a commercial
entity; or use of the instrument for demonstration purposes in return
for a fee or other valuable consideration. In making the above
determination, the Commissioner may consider, among other things,
whether the results of any research to be performed with the instrument
will be fully and timely made available to the public. For the purposes
of this section, use of an instrument for the treatment of patients is
considered noncommercial.
If any of the Commissioner's determinations is in the negative, the
application shall be found to be outside the scope of the Act and shall
be returned to the applicant with a statement of the reason(s) for such
findings.
(b) Forwarding of applications to the Department of Commerce. If the
Commissioner finds the application to be within the scope of the Act and
these regulations, the Commissioner shall (1) assign a number to the
application and (2) forward one copy to the Secretary of the Department
of Health and Human Services (HHS), and two copies, including the one
that has been signed in the original, to the Director. The Commissioner
shall retain one copy and return the remaining copy to the applicant
stamped ``Accepted for Transmittal to the Department of Commerce.'' The
applicant shall file the stamped copy of the form with the Port when
formal entry of the article is made. If entry has already occurred
[[Page 12]]
under a claim of tariff item 851.60, the applicant (directly or through
his/her agent) shall at the earliest possible date supply the stamped
copy to the Port. Further instructions for entering instruments are
contained in Sec. 301.8 of the regulations.
[47 FR 32517, July 28, 1982; 47 FR 34368, Aug. 9, 1982, as amended at 50
FR 11501, Mar. 22, 1985]
Sec. 301.5 Processing of applications by the Department of Commerce.
(a) Public notice and opportunity to present views. (1) Within 10
days of receipt of an application from the Commissioner, the Director
shall make a copy available for public inspection during ordinary
business hours of the Department of Commerce. Unless the Director
determines that an application has deficiencies which preclude
consideration on its merits (e.g., insufficient description of intended
purposes to rule on the scientific equivalency of the foreign instrument
and potential domestic equivalents), he shall publish in the Federal
Register a notice of the receipt of the application to afford all
interested persons a reasonable opportunity to present their views with
respect to the question ``whether an instrument or apparatus of
equivalent scientific value for the purpose for which the article is
intended to be used is being manufactured in the United States.'' The
notice will include the application number, the name and address of the
applicant, a description of the instrument(s) for which duty-free entry
is requested, the name of the foreign manufacturer and a brief summary
of the applicant's intended purposes extracted from the applicant's
answer to question 7 of the application. In addition, the notice shall
specify the date the application was accepted by the Commissioner for
transmittal to the Department of Commerce.
(2) If the Director determines that an application is incomplete or
is otherwise deficient, he may request the applicant to supplement the
application, as appropriate, prior to publishing the notice of
application in the Federal Register. Supplemental information/material
requested under this provision shall be supplied to the Director in two
copies within 20 days of the date of the request and shall be subject to
the certification contained in Question 11 of the form. Failure to
provide the requested information on time shall result in a denial of
the application without prejudice to resubmission.
(3) Requirement for presentation of views (comments) by interested
persons. Any interested person or government agency may make written
comments to the Director with respect to the question whether an
instrument of equivalent scientific value, for the purposes for which
the foreign instrument is intended to be used, is being manufactured in
the United States. Except for comments specified in paragraph (a)(4) of
this section, comments should be in the form of supplementary answers to
the applicable questions on the application form. Comments must be
postmarked no later than 20 days from the date on which the notice of
application is published in the Federal Register. In order to be
considered, comments and related attachments must be submitted to the
Director in duplicate; shall state the name, affiliation and address of
the person submitting the comment; and shall specify the application to
which the comment applies. In order to preserve the right to appeal the
Director's decision on a particular application pursuant to Sec. 301.6
of these regulations, a domestic manufacturer or other interested person
must make timely comments on the application. Separate comments should
be supplied on each application in which a person has an interest.
However, brochures, pamphlets, printed specifications and the like,
included with previous comments, if properly identified, may be
incorporated by reference in subsequent comments. If the Director knows
of the availability of a domestic instrument which may be comparable to
the foreign instrument, he may: (i) Require the applicant to compare the
domestic instrument with the foreign instrument; or (ii) compare the two
instruments whether or not comments are received from a domestic
manufacturer on the specific application.
(4) Comments by domestic manufacturers. Comments of domestic
manufacturers opposing the granting of an application should:
[[Page 13]]
(i) Specify the domestic instrument considered to be scientifically
equivalent to the foreign article for the applicant's specific intended
purposes and include documentation of the domestic instrument's
guaranteed specifications and date of availability.
(ii) Show that the specifications claimed by the applicant in
response to question 8 to be pertinent to the intended purpose can be
equaled or exceeded by those of the listed domestic instrument(s)
whether or not it has the same design as the foreign instrument; that
the applicant's alleged pertinent specifications should not be
considered pertinent within the meaning of Sec. 301.2(s) of the
regulations for the intended purposes of the instrument described in
response to question 7 of the application; or that the intended purposes
for which the instrument is to be used do not qualify the instrument for
duty-free consideration under the Act.
(iii) Where the comments regarding paragraphs (a)(4)(i) and
(a)(4)(ii) of this section relate to a particular accessory or optional
device offered by a domestic manufacturer, cite the type, model or other
catalog designation of the accessory device and include the
specification therefor in the comments.
(iv) Where the justification for duty-free entry is based on
excessive delivery time, show whether:
(A) The domestic instrument is as a general rule either produced for
stock, produced on order, or custom-made and;
(B) An instrument or apparatus of equivalent scientific value to the
article, for the purposes described in response to question 7, could
have been produced and delivered to the applicant within a reasonable
time following the receipt of the order.
(v) Indicate whether the applicant afforded the domestic
manufacturer an opportunity to furnish an instrument or apparatus of
equivalent scientific value to the article for the purposes described in
response to question 7 and, if such be the case, whether the applicant
submitted a formal invitation to bid that included the technical
requirements of the applicant.
(5) Untimely comments. Comments must be made on a timely basis to
ensure their consideration by the Director and the technical
consultants, and to preserve the commenting person's right to appeal the
Director's decision on an application. The Director, in his discretion,
may entertain comments filed untimely to the extent that they contain
factual information, as opposed to arguments, explanations or
recommendations.
(6) Provision of general comments. A domestic manufacturer who does
not wish to oppose duty-free entry of a particular application, but who
desires to apprise the Director of the availability and capabilities of
its instrument(s), may at any time supply documentation to the Director
without reference to a particular application. Such documentation shall
be routinely taken into account by the Director when applications
involving comparable foreign instruments are received. The provision of
general comments does not preserve the commentor's right to appeal the
Director's decision on a particular application.
(7) Provision of application to domestic manufacturers. To
facilitate timely comments, the Director may furnish copies of certain
applications to domestic manufacturers who intend to comment on
applications, provided:
(i) The manufacturer requests the service in writing;
(ii) The manufacturer provides copies of current company literature
regarding the domestic instrument and its guaranteed capabilities; and
(iii) The manufacturer identifies the specific models or types of
comparable foreign instrument(s) that it proposes to comment on. The
Director may furnish for comment copies of the appropriate applications
to the domestic manufacturer until the firm requests that the service be
discontinued, provided the firm utilizes the service to supply written
comments on applications. If the recipient of the service fails to avail
itself of the opportunity to comment on appropriate applications for a
period of one year, the Director may at his discretion discontinue the
service. For reasons of cost and administrative burden, the service may
be discontinued at the discretion of the Director. In such case the
Director shall notify all recipients
[[Page 14]]
of the service in writing of such discontinuance.
(b) Additions to the record. The Director may solicit from the
applicant or from foreign or domestic manufacturers, and agents thereof,
or any other person or Government agency considered by the Director to
have competence on any issue pertaining to an application, any
additional information the Director deems necessary to the rendering of
a decision. The Director may attach such conditions and time limitations
deemed appropriate upon the provision of such information and may draw
appropriate inferences from a person's failure to provide the requested
information.
(c) Advice from technical consultants. (1) The Director shall
consider any written advice from the Secretary of HHS, or his delegate,
on the question whether a domestic instrument of equivalent scientific
value to the foreign instrument, for the purposes for which the
instrument is intended to be used, is being manufactured in the United
States.
(2) After the comment period has ended (Sec. 301.5(a)(3)), the
complete application and any comments received and related information
are forwarded to the appropriate technical consultants for their written
advice.
(3) The technical consultants are requested to provide their written
recommendation within 30 days of the date of transmittal. The technical
consultants relied upon for advice may include, but are not limited to,
the National Institutes of Health (delegated the function by the
Secretary of HHS), the National Bureau of Standards and the National
Oceanographic and Atmospheric Administration.
(d) Criteria for the determinations of the Department of Commerce--
(1) Scientific equivalency. (i) The determination of scientific
equivalency shall be based on a comparison of the pertinent
specifications of the foreign instrument with similar pertinent
specifications of comparable domestic instruments (see Sec. 301.2(s) for
the definition of pertinent specification). Ordinarily, the Director
will consider only those performance characteristics which are
``guaranteed specifications'' within the meaning of Sec. 301.2(r) of
this part. In no event, however, shall the Director consider performance
capabilities superior to the manufacturer's guaranteed specifications or
their equivalent. In making the comparison the Director may consider a
reasonable combination of domestic instruments that combines two or more
functions into an integrated unit if the combination of domestic
instruments is capable of accomplishing the purposes for which the
foreign instrument is intended to be used. If the Director finds that a
domestic instrument possesses all of the pertinent specifications of the
foreign instrument, he shall find that there is being manufactured in
the United States an instrument of equivalent scientific value for such
purposes as the foreign instrument is intended to be used. If the
Director finds that the foreign instrument possesses one or more
pertinent specifications not possessed by the comparable domestic
instrument(s), the Director shall find that there is not being
manufactured in the United States an instrument of equivalent scientific
value to the foreign instrument for such purposes as the foreign
instrument is intended to be used.
(ii) Programs that may be undertaken at some unspecified future date
shall not be considered in the Director's comparison. In making the
comparison, the Director shall consider only the instrument and
accompanying accessories described in the application and determined
eligible by the U.S. Customs Service. The Director shall not consider
the planned purchase of additional accessories or the planned conversion
of the article at some unspecified future time for such programs.
(iii) In order for the Director to make a determination with respect
to the ``scientific equivalency'' of the foreign and domestic
instruments, the applicant's intended purposes must include either
scientific research or science-related educational programs. Instruments
used exclusively for nonscientific purposes have no scientific value,
thereby precluding the requisite finding by the Director with respect to
``whether an instrument or apparatus of equivalent scientific value to
such article, for the purposes for which the article is intended to be
used, is being
[[Page 15]]
manufactured in the United States.'' In such cases the Director shall
deny the application for the reason that the instrument has no
scientific value for the purposes for which it is intended to be used.
Examples of nonscientific purposes would be the use of an instrument in
routine diagnosis or patient care and therapy (as opposed to clinical
research); in teaching a nonscientific trade (e.g., printing,
shoemaking, metalworking or other types of vocational training); in
teaching nonscientific courses (e.g., music, home economics, journalism,
drama); in presenting a variety of subjects or merely for presenting
coursework, whether or not science related (e.g., video tape editors,
tape recorders, projectors); and in conveying cultural information to
the public (e.g., a planetarium in the Smithsonian Institution).
(2) Manufactured in the United States. An instrument shall be
considered as being manufactured in the United States if it is
customarily ``produced for stock,'' ``produced on order'' or ``custom-
made'' within the United States. In determining whether a U.S.
manufacturer is able and willing to produce an instrument, and have it
available without unreasonable delay, the normal commercial practices
applicable to the production and delivery of instruments of the same
general category shall be taken into account, as well as other factors
which in the Director's judgment are reasonable to take into account
under the circumstances of a particular case. For example, in
determining whether a domestic manufacturer is able to produce a custom-
made instrument, the Director may take into account the production
experience of the domestic manufacturer including (i) the types,
complexity and capabilities of instruments the manufacturer has
produced, (ii) the extent of the technological gap between the
instrument to which the application relates and the manufacturer's
customary products, (iii) the manufacturer's technical skills, (iv) the
degree of saturation of the manufacturer's production capability, and
(v) the time required by the domestic manufacturer to produce the
instrument to the purchaser's specification. Whether or not the domestic
manufacturer has field tested or demonstrated the instrument will not,
in itself, enter into the decision regarding the manufacturer's ability
to manufacture an instrument. Similarly, in determining whether a
domestic manufacturer is willing to produce an instrument, the Director
may take into account the nature of the bid process, the manufacturer's
policy toward manufacture of the product(s) in question, the minimum
size of the manufacturer's production runs, whether the manufacturer has
bid similar instruments in the past, etc. Also, if a domestic
manufacturer was formally requested to bid an instrument, without
reference to cost limitations and within a leadtime considered
reasonable for the category of instrument involved, and the domestic
manufacturer failed formally to respond to the request, for the purposes
of this section the domestic manufacturer would not be considered
willing to have supplied the instrument.
(3) Burden of proof. The burden of proof shall be on the applicant
to demonstrate that no instrument of equivalent scientific value for the
purposes for which the foreign instrument is to be used is being
manufactured in the United States. Evidence of applicant favoritism
towards the foreign manufacturer (advantages not extended to domestic
firms, such as additional lead time, know-how, methods, data on
pertinent specifications or intended uses, results of research or
development, tools, jigs, fixtures, parts, materials or test equipment)
may be, at the Director's discretion, grounds for rejecting the
application.
(4) Excessive delivery time. Duty-free entry of the instrument shall
be considered justified without regard to whether there is being
manufactured in the United States an instrument of equivalent scientific
value for the intended purposes if excessive delivery time for the
domestic instrument would seriously impair the accomplishment of the
applicant's intended purposes. For purposes of this section, (i) except
when objective and convincing evidence is presented that, at the time of
order, the actual delivery time
[[Page 16]]
would significantly exceed quoted delivery time, no claim of excessive
delivery time may be made unless the applicant has afforded the domestic
manufacturer an opportunity to quote and the delivery time for the
domestic instrument exceeds that for the foreign instrument; and (ii)
failure by the domestic manufacturer to quote a specific delivery time
shall be considered a non-responsive bid (see Sec. 301.5(d)(2)). In
determining whether the difference in delivery times cited by the
applicant justifies duty-free entry on the basis of excessive delivery
time, the Director shall take into account (A) the normal commercial
practice applicable to the production of the general category of
instrument involved; (B) the efforts made by the applicant to secure
delivery of the instruments (both foreign and domestic) in the shortest
possible time; and (C) such other factors as the Director finds relevant
under the circumstances of a particular case.
(e) Denial without prejudice to resubmission (DWOP). The Director
may, at any stage in the processing of an application by the Department
of Commerce, DWOP an application if the application contains any
deficiency which, in the Director's judgment, prevents a determination
on its merits. The Director shall state the deficiences of the
application in a letter to the applicant in making the provisional
denial.
(1) The applicant has 60 days from the date of the DWOP to correct
the cited deficiencies in the application unless a request for an
extension of time for submission of the supplemental information has
been received by the Director prior to the expiration of the 60-day
period and is approved.
(2) The written request (letter or telegram) for an extension should
indicate the reasons for the request and the amount of additional time
needed. If granted, extensions of time will generally be limited to 30
days.
(3) Resubmissions must reference the application number of the
earlier application. The resubmission shall be made by letter and filed
in quadruplicate with the Director. The record of a resubmitted
application shall include the original submission on file with the
Department. Any new material or information contained in a resubmission,
which should address the specific deficiencies cited in the DWOP letter,
should be clearly labeled and referenced to the applicable question(s)
on the application form. The resubmission should be signed and dated by
the individual in the applicant institution who signed the original
application or, in his/her absence, the individual in the applicant
institution under whose direction and control the foreign instrument
will be used and who is familiar with the intended uses of the
instrument. The resubmission must be for the instrument covered by the
original application unless the DWOP letter specifies to the contrary.
The resubmission shall be subject to the certification contained in
question 11 on the original application.
(4) If the applicant fails to resubmit within the applicable time
period, the prior DWOP shall, irrespective of the merits of the case,
result in a denial of the application.
(5) The Director shall use the postmark date of the fully completed
resubmission in determining whether the resubmission was made within the
allowable time period. Certified or registered mail, or some other means
which can unequivocally establish the date of mailing, is recommended.
(6) The applicant may, at any time prior to the end of the
resubmission period, notify the Director in writing that it does not
intend to resubmit the application. Upon such notification, the
application will be deemed to have been withdrawn. (See Sec. 301.5(g).)
(7) Information provided in a resubmission that, in the judgment of
the Director, contradicts or conflicts with information provided in a
prior submission, or is not a reasonable extension of the information
contained in the prior submission, shall not be considered in making the
decision on an application that has been resubmitted. Accordingly, an
applicant may elect to reinforce an orginal submission by elaborating in
the resubmission on the description of the purposes contained in a prior
submission and may supply additional examples, documentation and/or
other clarifying detail, but the applicant shall not introduce new
purposes
[[Page 17]]
or other material changes in the nature of the original application. The
resubmission should address the specific deficiencies cited in the DWOP.
The Director may draw appropriate inferences from the failure of an
applicant to attempt to provide the information requested in the DWOP.
(8) In the event an applicant fails to address the noted
deficiencies in the response to the DWOP, the Director may deny the
application.
(9) Upon receipt of a responsive resubmission the Director shall
publish a notice in the Federal Register citing the number of the
earlier application, the name and address of the applicant institution,
the instrument(s) involved, and any other information the Director deems
relevant. The notice will also include the Federal Register citation for
the original notice of application. Procedures applicable to comments on
the processing of original applications shall thereafter apply.
(f) Decisions on applications. The Director shall prepare a written
decision granting or denying each application. However, when he deems
appropriate, the Director may issue a consolidated decision on two or
more applications. The Director shall promptly forward a copy of the
decision to each applicant institution and to the Federal Register for
publication.
(g) Withdrawal of applications. The Director shall discontinue
processing an application withdrawn by the applicant and shall publish
notice of such withdrawal in the Federal Register. If at any time while
its application is pending before the Director, either during the
intital application or resubmission stage, an applicant cancels an order
for the instrument to which the application relates or ceases to have a
firm intention to order such instrument or apparatus, the institution
shall promptly notify the Director. Such notification shall constitute a
withdrawal. Withdrawals shall be considered as having been finally
denied for purposes of Sec. 301.7(c) below.
(h) Nothing in this subsection shall be construed as limiting the
Director's discretion at any stage of processing to insert into the
record and consider in making his decision any information in the public
domain which he deems relevant.
[47 FR 32517, July 28, 1982; 47 FR 34368, Aug. 9, 1982, as amended at 50
FR 11501, Mar. 22, 1985]
Sec. 301.6 Appeals.
(a) An appeal from any decision made pursuant to Sec. 301.5(f) may
be taken, in accordance with headnote 6(e) to part 4 of Schedule 8, only
to the U.S. Court of Customs and Patent Appeals and only on questions of
law, within 20 days after publication of the decision in the Federal
Register. If at any time while its application is under consideration by
the Court of Customs and Patent Appeals on an appeal from a finding by
the Director an institution cancels an order for the instrument to which
the application relates or ceases to have a firm intention to order such
instrument, the institution shall promptly notify the court.
(b) An appeal may be taken by: (1) The institution which makes the
application;
(2) A person who, in the proceeding which led to the decision,
timely represented to the Secretary of Commerce in writing that he/she
manufactures in the United States an instrument of equivalent scientific
value for the purposes for which the instrument to which the application
relates is intended to be used;
(3) The importer of the instrument, if the instrument to which the
application relates has been entered at the time the appeal is taken; or
(4) An agent of any of the foregoing.
(c) Questions regarding appeal procedures should be addressed
directly to the U.S. Court of Customs and Patent Appeals, Clerks'
Office, Washington, DC 20439.
Sec. 301.7 Final disposition of an application.
(a) Disposition of an application shall be final when 20 days have
elapsed after publication of the Director's final decision in the
Federal Register (see Sec. 301.6(a)) and no appeal has been taken
pursuant to Sec. 301.6 of these regulations, of if such appeal has been
taken, when final judgment is made and entered by the Court.
[[Page 18]]
(b) The Director shall notify the Customs Port when disposition of
an application becomes final. If the Director has not been advised of
the port of entry of the instrument, or if entry has not been made when
the decision on the application becomes final, the Director shall notify
the Commissioner of final disposition of the application.
(c) An instrument, the duty-free entry of which has been finally
denied, may not be the subject of a new application from the same
institution.
Sec. 301.8 Instructions for entering instruments through U.S. Customs under tariff item 851.60.
Failure to follow the procedures in this section may disqualify an
instrument for duty-free entry notwithstanding an approval of an
application on its merits by the Department of Commerce.
(a) Entry procedures. (1) An applicant desiring duty-free entry of
an instrument may make a claim at the time of entry of the instrument
into the Customs territory of the United States that the instrument is
entitled to duty-free classification under tariff item 851.60.
(2) If no such claim is made the instrument shall be immediately
classified without regard to tariff item 851.60, duty will be assessed,
and the entry liquidated in the ordinary course.
(3) If a claim is made for duty-free entry under tariff item 851.60,
the entry shall be accepted without requiring a deposit of estimated
duties provided that a copy of the form, stamped by Customs as accepted
for transmittal to the Department of Commerce in accordance with
Sec. 301.4(b), is filed simultaneously with the entry.
(4) If a claim for duty-free entry under tariff item 851.60 is made
but is not accompanied by a copy of the properly stamped form, a deposit
of the estimated duty is required. Liquidation of the entry shall be
suspended for a period of 180 days from the date of entry. On or before
the end of this suspension period the applicant must file with the
Customs Port a properly stamped copy of the form. In the event that the
Customs Port does not receive a copy of the properly stamped form within
180 days the instrument shall be classified and liquidated in the
ordinary course, without regard to tariff item 851.60.
(5) Entry of an instrument after the Director's approval of an
application. Whenever an institution defers entry until after it
receives a favorable final determination on the application for duty-
free entry of the instrument, the importer shall file with the entry of
the instrument (i) the stamped copy of the form, (ii) the institution's
copy of the favorable final determination and (iii) proof that a bona
fide order for the merchandise was placed on or before the 60th day
after the favorable decision became final pursuant to Sec. 301.7 of
these regulations. Liquidation in such case shall be made under tariff
item 851.60.
(b) Normal Customs entry requirements. In addition to the above
entry requirements mentioned in paragraph (a) of this section, the
normal Customs entry requirements must be met. In most of the cases, the
value of the merchandise will be such that the formal Customs entry
requirements, which generally include the filing of a Customs entry
bond, must be complied with. (For further information, see 19 CFR 142.3
and 142.4 (TD-221).)
(c) Late filing. Notwithstanding the preceding provisions of
Sec. 301.8 any document, form, or statement required by regulations in
this section to be filed in connection with the entry may be filed at
any time before liquidation of the entry becomes final, provided that
failure to file at the time of entry or within the period for which a
bond was filed for its production was not due to willful negligence or
fraudulent intent. Liquidation of any entry becomes conclusive upon all
persons if the liquidation is not protested in writing in accordance
with 19 CFR part 174, or the necessary document substantiating duty-free
entry is not produced in accordance with 19 CFR 10.112, within 90 days
after notice of liquidation. Upon notice of such final and conclusive
liquidation, the Department of Commerce will cease the processing of any
pending application for duty-free entry of the subject article. In all
other respects, the provisions of this section do not apply to
Department of Commerce
[[Page 19]]
responsibilities and procedures for processing applications pursuant to
other sections of these regulations.
(d) Payment of duties. The applicant will be billed for payment of
duties when Customs determines that such payment is due.
Sec. 301.9 Uses and disposition of instruments entered under item 851.60, TSUS.
(a) An instrument granted duty-free entry may be transferred from
the applicant institution to another eligible institution provided the
latter institution agrees not to use the instrument for commercial
purposes within 5 years of the date of entry of the instrument. In such
cases title to the instrument must be transferred directly between the
institutions involved. An institution transferring a foreign instrument
entered under item 851.60 within 5 years of its entry shall so inform
the Customs Port in writing and shall include the following information:
(1) The name and address of the transferring institution.
(2) The name and address of the transferee.
(3) The date of transfer.
(4) A detailed description of the instrument.
(5) The serial number of the instrument and any accompanying
accessories.
(6) The entry number, date of entry, and port of entry of the
instrument.
(b) Whenever the circumstances warrant, and occasionally in any
event, the fact of continued use for 5 years for noncommercial purposes
by the applicant institution shall be verified by Customs.
(c) If an instrument is transferred in a manner other than specified
above or is used for commercial purposes within 5 years of entry, the
institution for which such instrument was entered shall promptly notify
the Customs officials at the Port and shall be liable for the payment of
duty in an amount determined on the basis of its condition as imported
and the rate applicable to it.
Sec. 301.10 Importation of repair components under item 851.65 for article previously entered under item 851.60.
(a) An institution which owns an instrument entered under tariff
item 851.60 and desires to enter repair components for such instrument
under tariff item 851.65 may do so without regard to the application
procedures applicable to entries under item 851.60 provided the
institution certifies to the customs official at the port of entry upon
entry of such components that they are needed repair components for an
instrument owned by that institution and previously entered and
classified under tariff item 851.60.
(b) Instruments entered under item 851.60 and subsequently returned
to the foreign manufacturer for repair, replacement or modification are
not covered by tariff item 851.65, although they may, in certain
circumstances, be considered non-dutiable under other Customs provisions
(e.g., drawback within the specified period pursuant to 19 U.S.C.
1313(c)). Such instruments, if classified as dutiable by Customs, may
nevertheless be made the subject of a new application under tariff item
851.60.
[47 FR 32517, July 28, 1982; 47 FR 34368, Aug. 9, 1982]
PART 302 [RESERVED]
PART 303--WATCHES AND WATCH MOVEMENTS--Table of Contents
Sec.
303.1 Purpose.
303.2 Definitions and forms.
303.3 Determination of the total annual duty-exemption.
303.4 Determination of territorial distribution.
303.5 Application for annual allocations of duty-exemptions.
303.6 Allocation and reallocation of exemptions among producers.
303.7 Issuance of licenses and shipment permits.
303.8 Maintenance of duty-exemption entitlements.
303.9 Restrictions on the transfer of duty-exemptions.
303.10-303.11 [Reserved]
[[Page 20]]
303.12 Issuance and use of production incentive certificates.
303.13 Appeals.
303.14 Allocation factors and miscellaneous provisions.
Authority: Pub. L. 94-241, 90 Stat. 263 (48 U.S.C. 1681, note); Pub.
L. 97-446, 96 Stat. 2331 (19 U.S.C. 1202, note); Pub. L. 103-465, 108
Stat. 4991.
Source: 49 FR 17740, Apr. 25, 1984, unless otherwise noted.
Sec. 303.1 Purpose.
(a) This part implements the responsibilities of the Secretaries of
Commerce and the Interior (``the Secretaries'') under Pub. L. 97-446,
enacted on 12 January 1983, which substantially amended Pub. L. 89-805,
enacted 10 November 1966, amended by Pub. L. 94-88, enacted 8 August
1975, and amended by Pub. L. 94-241, enacted 24 March 1976, and amended
by Pub. L. 103-465, enacted 8 December 1994. The law provides for
exemption from duty of territorial watches and watch movements without
regard to the value of the foreign materials they contain, if they
conform with the provisions of U.S. Legal Note 5 to Chapter 91 of the
Harmonized Tariff Schedule of the United States (``91/5''). 91/5 denies
this benefit to articles containing any material which is the product of
any country with respect to which Column 2 rates of duty apply;
authorizes the Secretaries to establish the total quantity of such
articles, provided that the quantity so established does not exceed
10,000,000 units or one-ninth of apparent domestic consumption,
whichever is greater, and provided also that the quantity is not
decreased by more than ten percent nor increased by more than twenty
percent (or to more than 7,000,000 units, whichever is greater) of the
quantity established in the previous year.
(b) The law directs the International Trade Commission to determine
apparent domestic consumption for the preceding calendar year in the
first year U.S. insular imports of watches and watch movements exceed
9,000,000 units. 91/5 authorizes the Secretaries to establish
territorial shares of the overall duty-exemption within specified
limits; and provides for the annual allocation of the duty-exemption
among insular watch producers equitably and on the basis of allocation
criteria, including minimum assembly requirements, that will reasonably
maximize the net amount of direct economic benefits to the insular
possessions.
(c) The amended law also provides for the issuance to producers of
certificates entitling the holder (or any transferee) to obtain duty
refunds on watches and watch movements and parts (except discrete
watchcases) imported into the customs territory of the United States.
The amounts of these certificates may not exceed specified percentages
of the producers' verified creditable wages in the insular possessions
(90% of wages paid for the production of the first 300,000 units and
declining percentages, established by the Secretaries, of wages paid for
incremental production up to 750,000 units by each producer) nor an
aggregate annual amount for all certificates exceeding $5,000,000
adjusted for growth by the ratio of the previous year's gross national
product to the gross national product in 1982. Refund requests are
governed by regulations issued by the Department of the Treasury. The
Secretaries are authorized to issue regulations necessary to carry out
their duties under Headnote 6 and may cancel or restrict the license or
certificate of any insular manufacturer found violating the regulations.
[49 FR 17740, Apr. 25, 1984, as amended at 50 FR 43568, Oct. 28, 1985;
53 FR 52994, Dec. 30, 1988; 61 FR 55884, Oct. 30, 1996]
Sec. 303.2 Definitions and forms.
(a) Definitions. Unless the context indicates otherwise:
(1) Act means Pub. L. 97-446, enacted January 12, 1983 (19 U.S.C.
1202), 96 Stat. 2329, as amended by Pub. L. 103-465, enacted on December
8, 1994, 108 Stat. 4991.
(2) Secretaries means the Secretary of Commerce and the Secretary of
Interior or their delegates, acting jointly.
(3) Director means the Director of the Statutory Import Programs
Staff, International Trade Administration, U.S. Department of Commerce.
(4) Sale or tranfer of a business means the sale or transfer of
control, whether temporary or permanent, over a firm to which a duty-
exemption has been allocated, to any other firm, corporation,
[[Page 21]]
partnership, person or other legal entity by any means whatsoever,
including, but not limited to, merger and transfer of stock, assets or
voting trusts.
(5) New firm means an entity which is completely separate from and
unassociated with (by way of ownership or control) any duty-exempt
recipient in any territory. A new entrant is a new firm which has
received an allocation.
(6) Producer means a duty-exemption holder which has maintained its
eligibility for further allocations by complying with these regulations.
(7) Established industry means all producers, including new
entrants, that have maintained their eligibility for further
allocations.
(8) Territories, territorial, and insular possessions refer to the
insular possessions of the United States (i.e., the U.S. Virgin Islands,
Guam, and American Samoa) and the Northern Mariana Islands.
(9) Duty-exemption refers to the authorization of duty-free entry of
a specified number of watches and watch movements into the Customs
Territory of the United States.
(10) Total annual duty-exemption refers to the entire quantity of
watches or watch components which may enter duty-free into the customs
territory of the United States from the territories under 91/5 in a
calendar year, as determined by the Secretaries or by the International
Trade Commission in accordance with the Act.
(11) Territorial distribution refers to the apportionment by the
Secretaries of the total annual duty-exemption among the separate
territories; territorial share means the portion consigned to each
territory by this apportionment.
(12) Allocation refers to the distribution of all parts of a
territorial share, or a portion thereof, among the several producers in
a territory.
(13) Creditable wages means all wages--up to the amount per person
shown in Sec. 303.14(a)(1)(i)--paid to permanent residents of the
territories employed in a firm's 91/5 watch and watch movement assembly
operations, plus any wages paid for the repair of non-91/5 watches up to
an amount equal to 50 percent of the firm's total creditable wages.
Excluded, however, are wages paid for special services rendered to the
firm by accountants, lawyers, or other professional personnel and for
the repair of non-91/5 watches and movements to the extent that such
wages exceed the foregoing ratio. Wages paid to persons engaged in both
creditable and non-creditable assembly and repair activities may be
credited proportionately provided the firm maintains production and
payroll records adequate for the Departments' verification of the
creditable portion.
(14) Non-91/5 watches and watch movements include, but are not
limited to, watches and movements which are liquidated as dutiable by
the U.S. Customs Service; contain any material which is the product of
any country with respect to which Column 2 rates of duty apply; are
ineligible for duty-free treatment pursuant to law or regulation; or are
units the assembly of which the Department has determined not to involve
substantial and meaningful work in the territory (as elsewhere defined
in these regulations).
(15) Discrete movements and components means screws, parts,
components and subassemblies not assembled together with another part,
component or subassembly at the time of importation into the territory.
(A mainplate containing set jewels or shock devices, together with other
parts, would be considered a single discrete component, as would a
barrel bridge subassembly.)
(b) Forms--(1) ITA-334P ``Application for License to Enter Watches
and Watch Movements into the Customs Territory of the United States.''
This form must be completed annually by all producers desiring to
receive an annual allocation. It is also used, with appropriate special
instructions for its completion, by new firms applying for duty-
exemptions.
(2) ITA-333 ``License to Enter Watches and Watch Movements into the
Customs Territory of the United States.'' This form is issued by the
Director to producers who have received an allocation and constitutes
authorization for issuing specific shipment permits by the territorial
governments. It is also used to record the balance of a producer's
[[Page 22]]
remaining duty-exemptions after each shipment permit is issued.
(3) ITA-340 ``Permit to Enter Watches and Watch Movements into the
Customs Territory of the United States.'' This form may be obtained, by
producers holding a valid license, from the territorial government or
may be produced by the licensee in an approved computerized format or
any other medium or format approved by the Departments of Commerce and
the Interior. The completed form authorizes duty-free entry of a
specified amount of watches or watch movements at a specified U.S.
Customs port.
(4) ITA-360P ``Certificate of Entitlement to Secure the Refund of
Duties on Watches and Watch Movements.'' This document authorizes an
insular producer to request the refund of duties on imports of watches,
watch movements and parts therefor, with certain exceptions, up to a
specified value. Certificates may be used to obtain duty refunds only
when presented with a properly executed Form ITA-361P.
(5) ITA-361P ``Request for Refund of Duties on Watches and Watch
Movements.'' This form must be completed to obtain the refund of duties
authorized by the Director through Form ITA-360P. After authentication
by the Department of Commerce, it may be used for the refund of duties
on items which were entered into the customs territory of the United
States during a specified time period. Copies of the appropriate Customs
entries must be provided with this form to establish a basis for issuing
the claimed amounts. The forms may also be used to transfer all or part
of the producer's entitlement to another party. (See Sec. 303.12.)
(The information collection requirements in paragraph (b)(1) were
approved by the Office of Management and Budget under control number
0625-0040. The information collection requirements in paragraphs (b)(4)
through (6) were approved under control number 0625-0134)
[49 FR 17740, Apr. 25, 1984, as amended at 50 FR 43568, Oct. 28, 1985;
53 FR 52994, Dec. 30, 1988; 56 FR 9621, Mar. 7, 1991; 61 FR 55884, Oct.
30, 1996]
Sec. 303.3 Determination of the total annual duty-exemption.
(a) Procedure for determination. If, after considering the
productive capacity of the territorial watch industry and the economic
interests of the territories, the Secretaries determine that the amount
of the total annual duty-exemption, or the territorial shares of the
total amount, should be changed, they shall publish in the Federal
Register a proposed limit on the quantity of watch units which may enter
duty-free into the customs territory of the United States and proposed
territorial shares thereof and, after considering comments, establish
the limit and shares by Federal Register notice. If the Secretaries take
no action under this section, they shall make the allocations in
accordance with the limit and shares last established by this procedure.
(b) Standards for determination. (1) Notwithstanding paragraph
(b)(2) of this section, the limit established for any year may be
7,000,000 units if the limit established for the preceding year was a
smaller amount.
(2) Subject to paragraph (c) of this section, the total annual duty-
exemption shall not be decreased by more than 10% of the quantity
established for the preceding calendar year, or increased, if the
resultant total is larger than 7,000,000, by more than 20% of the
quantity established for the calendar year immediately preceding.
(3) The Secretaries shall determine the limit after considering the
interests of the territories; the domestic or international trade policy
objectives of the United States; the need to maintain the competitive
nature of the territorial industry; the total contribution of the
industry to the economic well-being of the territories; and the
territorial industry's utilization of the total duty-exemption
established in the preceding year.
(c) Determinations based on consumption. (1) The Secretaries shall
notify the International Trade Commission whenever they have reason to
believe duty-free watch imports from the territories will exceed
9,000,000 units, or
[[Page 23]]
whenever they make a preliminary determination that the total annual
duty-exemption should exceed 10,000,000 units.
(2) In addition to the limitations in paragraph (b) of this section,
the Secretaries shall not establish a limit exceeding one-ninth of
apparent domestic consumption if such consumption, as determined by
International Trade Commission, exceeds 90 million units.
[49 FR 17740, Apr. 25, 1984, as amended at 50 FR 7170, Feb. 21, 1985; 50
FR 43568, Oct. 28, 1985; 53 FR 52994, Dec. 30, 1988]
Sec. 303.4 Determination of territorial distribution.
(a) Procedure for determination. The Secretaries shall determine the
territorial shares concurrently with their determination of the total
annual duty exemption, and in the same manner (see Sec. 303.3, above).
(b) Standards for determination--(1) Limitations. A territorial
share may not be reduced by more than 500,000 units in any calendar
year. No territorial share shall be less than 500,000 units.
(2) Criteria for setting precise quantities. The Secretaries shall
determine the precise quantities after considering, inter alia, the
territorial capacity to produce and ship watch units. The Secretaries
shall further bear in mind the aggregate benefits to the territories,
such as creditable wages paid, creditable wages per unit exported, and
corporate income tax payments.
(3) Limitations on reduction of share. The Secretaries shall not
reduce a territory's share if its producers use 85% or more of the
quantity distributed to that territory in the immediately preceding
year, except in the case of a major increase or decrease in the number
of producers in a territory or if they believe that a territorial
industry will decrease production by more than 15% from the total of the
preceding year.
(4) Standby redistribution authority. The Secretaries may
redistribute territorial shares if such action is warranted by
circumstances unforeseen at the time of the initial distributions, such
as that a territory will use less than 80% of its total by the end of a
calendar year, or if a redistribution is necessary to maintain the
competitive nature of the territorial industries.
[49 FR 17740, Apr. 25, 1984, as amended at 50 FR 7170, Feb. 21, 1985]
Sec. 303.5 Application for annual allocations of duty-exemptions.
(a) Application forms (ITA-334P) shall be furnished to producers by
January 1, and must be completed and returned to the Director no later
than January 31, of each calendar year.
(b) All data supplied are subject to verification by the Secretaries
and no allocation shall be made to producer until the Secretaries are
satisfied that the data are accurate. To verify the data,
representatives of the Secretaries shall have access to relevant company
records including:
(1) Work sheets used to answer all questions on the application
form;
(2) Original records from which such data are derived;
(3) Records pertaining to ownership and control of the company and
to the satisfaction of eligibility requirements of duty-free treatment
of its product by the U.S. Customs Service;
(4) Records pertaining to corporate income taxes, gross receipts
taxes and excise taxes paid by each producer in the territories on the
basis of which a portion of each producer's annual allocation is or may
be predicated;
(5) Customs, bank, payroll, and production records;
(6) Records on purchases of components and sales of movements,
including proof of payment; and
(7) Any other records in the possession of the parent or affiliated
companies outside the territory pertaining to any aspect of the
producer's 91/5 watch assembly operation.
(c) Data verification shall be performed in the territories, unless
other arrangements satisfactory to the Departments are made in advance,
by the Secretaries' representatives by the end of February of each
calendar year. In the event a company cannot substantiate the data in
its application before allocations must be calculated, the Secretaries
shall determine which data will be used.
(d) Records subject to the requirements of paragraph (b), above,
shall be
[[Page 24]]
retained for a period of two years following their creation.
[49 FR 17740, Apr. 25, 1984, as amended at 50 FR 43568, Oct. 28, 1985;
53 FR 52994, Dec. 30, 1988]
Sec. 303.6 Allocation and reallocation of exemptions among producers.
(a) Interim allocations. As soon as practicable after January 1 of
each year the Secretaries shall make an interim allocation to each
producer equaling 70% of the number of watch units it has entered duty-
free into the customs territory of the United States during the first
eight months of the preceding calendar year, or any lesser amount
requested in writing by the producer. The Secretaries may also issue a
lesser amount if, in their judgment, the producer might otherwise
receive an interim allocation in an amount greater than the producer's
probable annual allocation. In calculating the interim allocations, the
Director shall count only duty-free watches and watch movements verified
by the U.S. Customs Service as having been entered on or before August
31 of the preceding year. Interim allocations shall not be published.
(b) Annual allocations. (1) By March 1 of each year the Secretaries
shall make annual allocations to the producers in accordance with the
allocation formula based on data supplied in their annual application
(Form ITA-334P) and verified by the Secretaries.
(2) The excess of a producer's duty-exemption earned under the
allocation criteria over the amount formally requested by the producer
shall be considered to have been relinquished voluntarily (see paragraph
(f) below). A producer's request may be modified by written
communication received by the Secretaries by February 28, or, at the
discretion of the Secretaries, before the annual allocations are made.
An allocation notice shall be published in the Federal Register.
(c) Supplemental allocations. At the request of a producer, the
Secretaries may supplement a producer's interim allocation if the
Secretaries determine the producer's interim allocation will be used
before the Secretaries can issue the annual allocation. Allocations to
supplement a producer's annual allocation shall be made under the
reallocation provisions prescribed below.
(d) Allocations to new entrants. In making interim and annual
allocations to producers selected the preceding year as new entrants,
the Secretaries shall take into account that such producers will not
have had a full year's operation as a basis for computation of its duty-
exemption. The Secretaries may make an interim or annual allocation to a
new entrant even if the firm did not operate during the preceding
calendar year.
(e) Special allocations. A producer may request a special allocation
if unusual circumstances kept it from making duty-free shipments at a
level comparable with its past record. In considering such requests, the
Secretaries shall take into account the firm's proposed assembly
operations; its record in contributing to the territorial economy; and
its intentions and capacity to make meaningful contributions to the
territory. They shall also first determine that the amount of the
special allocation requested will not significantly affect the amounts
allocated to other producers pursuant to Sec. 303.6(b)(1).
(f) Reallocations. Duty-exemptions may become available for
reallocation as a result of cancellation or reduction for cause,
voluntary relinquishment or nonplacement of duty-exemption set aside for
new entrants. At the request of a producer, the Secretaries may
reallocate such duty-exemptions among the remaining producers who can
use additional quantities in a manner judged best for the economy of the
territories. The Secretaries shall consider such factors as the wage and
income tax contributions of the respective producers during the
preceding year and the nature of the producer's present assembly
operations. In addition, the Secretaries may consider other factors
which, in their judgment, are relevant to determining that applications
from new firms, in lieu of reallocations, should be considered for part
or all of unused portions of the total duty exemptions. Such factors may
include:
(1) The ability of the established industry to use the duty-
exemption;
[[Page 25]]
(2) Whether the duty-exemption is sufficient to support new entrant
operations;
(3) The impact upon the established industry if new entrants are
selected, particularly with respect to the effect on local employment,
tax contributions to the territorial government, and the ability of the
established industry to maintain satisfactory production levels; and
(4) Whether additional new entrants offer the best prospect for
adding economic benefits to the territory.
(g) Section 303.14 of this part contains the criteria and formulae
used by the Secretaries in calculating each watch producer's annual
watch duty-exemption allocation, and other special rules or provisions
the Secretaries may periodically adopt to carry out their
responsibilities in a timely manner while taking into account changing
circumstances. References to duty-exemptions, unless otherwise
indicated, are to the amount available for reallocation in the current
calendar year. Specifications of or references to data or bases used in
the calculation of current year allocations (e.g., economic
contributions and shipments) are, unless indicated otherwise, those
which were generated in the previous year.
(h) The Secretaries may propose changes to Sec. 303.14 at any time
they consider it necessary to fulfill their responsibilities. Normally,
such changes will be proposed towards the end of each calendar year.
Interested parties shall be given an opportunity to submit written
comments on proposed changes.
[49 FR 17740, Apr. 25, 1984, as amended at 50 FR 43568, Oct. 28, 1985;
61 FR 55885, Oct. 30, 1996]
Sec. 303.7 Issuance of licenses and shipment permits.
(a) Issuance of Licenses (ITA-333). (1) Concurrently with annual
allocations under Sec. 303.5 the Director shall issue a non-transferable
license (Form ITA-333) to each producer. The Director shall also issue a
replacement license if a producer's allocation is reduced pursuant to
Sec. 303.6.
(2) Annual duty-exemption licenses shall be for only that portion of
a producer's annual duty-exemption not previously licensed.
(3) If a producer's duty-exemption has been reduced, the Director
shall not issue a replacement license for the reduced amount until the
producer's previous license has been received for cancellation by the
Director.
(4) A producer's license shall be used in their entirety, except
when they expire or are cancelled, in order of their date of issuance,
i.e., an interim license must be completely used before shipment permits
can be issued against an interim supplemental license.
(5) Outstanding licenses issued by the Director automatically expire
at midnight, December 31, of each calendar year. No unused allocation of
duty-exemption may be carried over into the subsequent calendar year.
(6) The Director shall ensure that all licenses issued are
conspicuously marked to show the type of license issued, the identity of
the producer, and the year for which the license is valid. All licenses
shall bear the signature of the Director.
(7) Each producer is responsible for the security of its licenses.
The loss of a license shall be reported immediately to the Director.
Defacing, tampering with, and unauthorized use of a license are
forbidden.
(b) Shipment Permit Requirements (ITA-340). (1) Producers may obtain
shipment permits from the territorial government officials designated by
the Governor. Permits may also be produced in any computerized or other
format or medium approved by the Departments. The permit is for use
against a producer's valid duty-exemption license and a permit must be
completed for every duty-free shipment.
(2) Each permit must specify the license and permit number, the
number of watches and watch movements included in the shipment, the
unused balance remaining on the producer's license, pertinent shipping
information and must have the certification statement signed by an
official of the licensee's company. A copy of the completed permit must
be sent electronically or taken to the designated territorial government
officials, no later than the day of shipment, for confirmation that the
producer's duty-exemption license has
[[Page 26]]
not been exceeded and that the permit is properly completed.
(3) The permit (form ITA-340) shall be filed with Customs along with
the other required entry documents to receive duty-free treatment unless
the importer or its representative clears the documentation through
Customs' automated broker interface. Entries made electronically do not
require the submission of a permit to Customs, but the shipment data
must be maintained as part of a producer's recordkeeping
responsibilities for the period prescribed by Customs' recordkeeping
regulations. U.S. Customs Service Import Specialists may request the
documentation they deem appropriate to substantiate claims for duty-free
treatment, allowing a reasonable amount of time for the importer to
produce the permit.
[49 FR 17740, Apr. 25, 1984, as amended at 50 FR 43568, Oct. 28, 1985;
61 FR 55885, Oct. 30, 1996]
Sec. 303.8 Maintenance of duty-exemption entitlements.
(a) The Secretaries may order a producer to show cause within 30
days of receipt of the order why the duty-exemption to which the firm
would otherwise be entitled should not be cancelled, in whole or in
part, if:
(1) At any time after June 30 of the calendar year:
(i) A producer's assembly and shipment record provides a reasonable
basis to conclude that the producer will use less than 80 percent of its
total allocation by the end of the calendar year, and
(ii) The producer refuses a request from the Departments to
relinquish that portion of its allocation which they conclude will not
be used; or
(2) A producer fails to satisfy or fulfill any term, condition or
representation, whether undertaken by itself or prescribed by the
Departments, upon which receipt of allocation has been predicated or
upon which the Departments have relied in connection with the sale or
transfer of a business together with its allocation; or
(3) A producer, in the judgment of the Secretaries, has failed to
make a meaningful contribution to the territory for a period of two or
more consecutive calendar years, when compared with the performance of
the duty-free watch assembly industry in the territory as a whole. This
comparison shall include the producer's quantitative use of its
allocations, amount of direct labor employed in the assembly of watches
and watch movements, and the net amount of corporate income taxes paid
to the government of the territory. If the producer fails to satisfy the
Secretaries as to why such action should not be taken, the firm's
allocation shall be reduced or cancelled, whichever is appropriate under
the show-cause order. The eligibility of a firm whose allocation has
been cancelled to receive further allocations may also be terminated.
(b) The Secretaries may also issue a show-cause order to reduce or
cancel a producer's allocation or production incentive certificate (see
Sec. 303.12, below), as appropriate, or to declare the producer
ineligible to receive an allocation or certificate if it violates any
regulation in this part, uses a form, license, permit, or certificate in
an unauthorized manner, or fails to provide information or data required
by these regulations or requested by the Secretaries or their delegates
in the performance of their responsibilities.
(c) If a firm's allocation is reduced or cancelled, or if a firm
voluntarily relinquishes a part of its allocation, the Secretaries may:
(1) Reallocate the allocation involved among the remaining producers
in a manner best suited to contribute to the economy of the territory;
(2) Reallocate the allocation or part thereof to a new entrant
applicant; or
(3) Do neither of the above if deemed in the best interest of the
territories and the established industry.
[49 FR 17740, Apr. 25, 1984, as amended at 61 FR 55885, Oct. 31, 1996]
Sec. 303.9 Restrictions on the transfer of duty-exemptions.
(a) The sale or transfer of a duty-exemption from one firm to
another shall not be permitted.
(b) The sale or transfer of a business together with its duty-
exemption shall
[[Page 27]]
be permitted with prior written notification to the Departments. Such
notification shall be accompanied by certifications and representations,
as appropriate, that:
(1) If the transferee is a subsidiary of or in any way affiliated
with any other company engaged in the production of watch movements
components being offered for sale to any territorial producer, the
related company or companies will continue to offer such watch and watch
movement components on equal terms and conditions to all willing buyers
and shall not engage in any practice, in regard to the sale of
components, that competitively disadvantages the non-affiliated
territorial producers vis-a-vis the territorial subsidiary;
(2) The sale or transfer price for the business together with its
duty-exemption does not include the capitalization of the duty-exemption
per se;
(3) The transferee is neither directly or indirectly affiliated with
any other territorial duty-exemption holder in any territory;
(4) The transferee will not modify the watch assembly operations of
the duty-exemption firm in a manner that will significantly diminish its
economic contributions to the territory.
(c) At the request of the Departments, the transferee shall permit
representatives of the Departments to inspect whatever records are
necessary to establish to their satisfaction that the certifications and
representations contained in paragraph (b) of this section have been or
are being met.
(d) Any transferee who is either unwilling or unable to make the
certifications and representations specified in paragraph (b) of this
section shall secure the Departments' approval in advance of the sale or
transfer of the business together with its duty-exemption. The request
for approval shall specify which of the certifications specified in
paragraph (b) of this section the firm is unable or unwilling to make,
and give reasons why such fact should not constitute a basis for the
Departments' disapproval of the sale or transfer.
[49 FR 17740, Apr. 25, 1984, as amended at 50 FR 43568, Oct. 28, 1985]
Secs. 303.10-303.11 [Reserved]
Sec. 303.12 Issuance and use of production incentive certificates.
(a) Issuance of certificates. (1) Certificates of Entitlement, Form
ITA-360, shall be issued before March 1 of the current year.
(2) Certificates shall not be issued to more than one company in the
territories owned or controlled by the same corporate entity.
(b) Securities and handling of certificates. (1) Certificate holders
are responsible for the security of the certificates. The certificates
shall be kept at the territorial address of the insular producer or at
another location having the advance approval of the Departments.
(2) All refund requests made pursuant to the certificates shall be
entered on the reverse side of the certificate.
(3) Certificates shall be returned by registered, certified or
express carrier mail to the Departments when:
(i) A refund is requested which exhausts the entitlement on the face
of the certificate,
(ii) The certificate expires, or
(iii) The Departments request their return with good cause.
(4) Certificate entitlements may be transferred according to the
procedures described in (c) of this section.
(c) The use and transfer of certificate entitlements. (1) Insular
producers issued a certificate may request a refund by executing a Form
ITA-361P (see Sec. 303.2(b)(5) and the instructions on the form). After
authentication by the Department of Commerce, the Form ITA-361P may be
used to obtain duty refunds on watch movements, watches, and parts
therefor. Duties on watchcases not containing a movement and on articles
containing any material which is the product of a country with respect
to which Column 2 rates of duty apply may not be refunded. Articles for
which duty refunds are claimed must have entered the customs territory
of the United States during the two-year period prior to the issue date
of the certificate or during the one-year period the certificate remains
valid. Copies of the appropriate Customs entries must be provided with
the refund request in order to establish a
[[Page 28]]
basis for issuing the claimed amounts. Certification regarding drawback
claims and liquidated refunds relating to the presented entries is
required from the claimant on the form.
(2) Regulations issued by the U.S. Customs Service, U.S. Department
of the Treasury, govern the refund of duties under Pub. L. 97-446, as
amended by Public Law 103-465. If the Departments receive information
from the Customs Service that a producer has made unauthorized use of
any official form, they shall cancel the affected certificate.
(3) The insular producer may transfer a portion of all of its
certificate entitlement to another party by entering in block C of Form
ITA-361P the name and address of the party.
(4) After a Form ITA-361P transferring a certificate entitlement to
a party other than the certificate holder has been authenticated by the
Department of Commerce, the form may be exchanged for any consideration
satisfactory to the two parties. In all cases, authenticated forms shall
be transmitted to the certificate holder or its authorized custodian for
disposition (see paragraph (b) above).
(5) All disputes concerning the use of an authenticated Form ITA-
361P shall be referred to the Departments for resolution. Any party
named on an authenticated Form ITA-361P shall be considered an
``interested party'' within the meaning of Sec. 303.13 of this part.
[49 FR 17740, Apr. 25, 1984, as amended at 50 FR 43568, Oct. 28, 1985;
56 FR 9621, Mar. 7, 1991; 61 FR 55885, Oct. 30, 1996]
Sec. 303.13 Appeals.
(a) Any official decision or action relating to the allocation of
duty-exemptions or to the issuance or use of production incentive
certificates may be appealed to the Secretaries by any interested party.
Such appeals must be received within 30 days of the date on which the
decision was made or the action taken in accordance with the procedures
set forth in paragraph (b) of this section. Interested parties may
petition for the issuance of a rule, or amendment or repeal of a rule
issued by the Secretaries. Interested parties may also petition for
relief from the application of any rule on the basis of hardship or
extraordinary circumstances resulting in the inability of the petitioner
to comply with the rule.
(b) Petitions shall bear the name and post office address of the
petitioner and the name and address of the principal attorney or
authorized representative (if any) for the party concerned. They shall
be addressed to the Secretaries and filed in one original and two copies
with the U.S. Department of Commerce, Import Administration,
International Trade Administration, Washington, D.C. 20230, Attention:
Statutory Import Programs Staff. Petitions shall contain the following:
(1) A reference to the decision, action or rule which is the subject
of the petition;
(2) A short statement of the interest of the petitioner;
(3) A statement of the facts as seen by the petitioner;
(4) The petitioner's argument as to the points of law, policy of
fact. In cases where policy error is contended, the alleged error
together with the policy the submitting party advocates as the correct
one should be described in full;
(5) A conclusion specifying the action that the petitioner believes
the Secretaries should take.
(c) The Secretaries may at their discretion schedule a hearing and
invite the participation of other interested parties.
(d) The Secretaries shall communicate their decision which shall be
final, to the petitioner by registered mail.
(e) If the outcome of any petition materially affects the amount of
the petitioner's allocation and if the Secretaries' consideration of the
petition continues during the calculation of the annual allocations, the
Secretaries shall set aside a portion of the affected territorial share
in an amount which, in their judgment, protects the petitioner's
interest and shall allocate the remainder among the other producers.
[49 FR 17740, Apr. 25, 1984, as amended at 56 FR 9622, Mar. 7, 1991]
[[Page 29]]
Sec. 303.14 Allocation factors and miscellaneous provisions.
(a) The allocation formula. (1) Except as provided in (a)(2) of this
section, the territorial shares (excluding any amount set aside for
possible new entrants) shall be allocated among the several producers in
each territory in accordance with the following formula:
(i) Fifty percent of the territorial share shall be allocated on the
basis of the net dollar amount of economic contributions to the
territory consisting of the dollar amount of creditable wages, up to a
maximum of $35,000 per person, paid by each producer to territorial
residents, plus the dollar amount of income taxes (excluding penalty and
interest payments and deducting any income tax refunds and subsidies
paid by the territorial government), and
(ii) Fifty percent of the territorial share shall be allocated on
the basis of the number of units of watches and watch movements
assembled in the territory and entered by each producer duty-free into
the customs territory of the United States.
(2) If there is only one producer in a territory, the entire
territorial share, excluding any amount set aside for possible new
entrants, may be allocated without recourse to any distributive formula.
(b) Minimum assembly requirements and prohibition of preferential
supply relationship. (1) No insular watch movement or watch may be
entered free of duty into the customs territory of the United States
unless the producer used 30 or more discrete parts and components to
assemble a mechanical watch movement and 33 or more discrete parts and
components to assemble a mechanical watch.
(2) Quartz analog watch movements must be assembled from parts
knocked down to the maximum degree possible for the technical
capabilities of the insular industry as a whole. The greatest degree of
disassembly specified, for each manufacturer's brand and model, by any
producer in any territory purchasing such brands and models shall
constitute the disassembly required as a minimum for the industry as a
whole.
(3) Watch movements and watches assembled from components with a
value of more than $35 for watch movements and $200 for watches shall
not be eligible for duty-exemption upon entry into the U.S. Customs
territory. Value means the value of the merchandise plus all charges and
costs incurred up to the last point of shipment (i.e., prior to entry of
the parts and components into the territory).
(4) No producer shall accept from any watch parts and components
supplier advantages and preferences which might result in a more
favorable competitive position for itself vis-a-vis other territorial
producers relying on the same supplier. Disputes under this paragraph
may be resolved under the appeals procedures contained in
Sec. 303.13(b).
(c) Calculation of the value of production incentive certificates.
(1) The value of each producer's certificate shall equal the producer's
average creditable wages per unit shipped (including non-91/5 units as
provided for in Sec. 303.2(a)(13)) multiplied by the sum of:
(i) The number of units shipped up to 300,000 units times a factor
of 90%; plus
(ii) Incremental units shipped up to 450,000 units times a factor of
85%; plus
(iii) Incremental units shipped up to 600,000 times a factor of 80%;
plus
(iv) Incremental shipments up to 750,000 units times a factor of
75%.
(2) The Departments may make adjustments for these data in the
manner set forth in Sec. 303.5(c).
(d) New entrant invitations. (1) Applications from new firms are
invited for the territorial shares of American Samoa and the Northern
Mariana Islands.
(2) Applications from new firms are invited for the unused portion
of the Virgin Islands and Guam territorial shares.
(e) Territorial shares. The shares of the total duty exemption are
3,100,000 for the Virgin Islands, 500,000 for Guam, 500,000 for American
Samoa, and 500,000 for the Northern Mariana Islands.
[49 FR 17740, Apr. 25, 1984, as amended at 50 FR 43568, Oct. 28, 1985;
53 FR 17825, May 19, 1988; 53 FR 52679, Dec. 29, 1988; 53 FR 52994, Dec.
30, 1988; 56 FR 9622, Mar. 7, 1991; 58 FR 21348, Apr. 21, 1993; 59 FR
8847, 8848, Feb. 24, 1994; 61 FR 55885, Oct. 31, 1996]
[[Page 30]]
PART 310--OFFICIAL U.S. GOVERNMENT RECOGNITION OF AND PARTICIPATION IN INTERNATIONAL EXPOSITIONS HELD IN THE UNITED STATES--Table of Contents
Sec.
310.1 Background and purpose.
310.2 Definitions.
310.3 Applications for Federal recognition.
310.4 Action on application.
310.5 Report of the Secretary on Federal recognition.
310.6 Recognition by the President.
310.7 Statement for Federal participation.
310.8 Proposed plan for Federal participation.
310.9 Report of the Secretary on Federal participation.
Authority: Pub. L. 91-269, 84 Stat. 271 (22 U.S.C. 2801 et seq.).
Source: 40 FR 34107, Aug. 14, 1975, unless otherwise noted.
Redesignated at 46 FR 57457, Nov. 24, 1981.
Editorial Note: Nomenclature changes to part 310 appear at 46 FR
57457, Nov. 24, 1981.
Sec. 310.1 Background and purpose.
The regulations in this part are issued under the authority of Pub.
L. 91-269 (84 Stat. 271, 22 U.S.C. 2801 et seq.) which establishes an
orderly procedure for Federal Government recognition of, and
participation in, international expositions to be held in the United
States. The Act provides, inter alia, that Federal recognition of an
exposition is to be granted upon a finding by the President that such
recognition will be in the national interest. In making this finding,
the President is directed to consider, among other factors, a report
from the Secretary of Commerce as to the purposes and reasons for an
exposition and the extent of financial and other support to be provided
by the State and local officials and business and community leaders
where the exposition is to be held, and a report by the Secretary of
State to determine whether the exposition is qualified for registration
under Bureau of International Expositions (BIE) rules. The BIE is an
international organization established by the Paris Convention of 1928
(T.I.A.S. 6548 as amended by T.I.A.S. 6549) to regulate the conduct and
scheduling of international expositions in which foreign nations are
officially invited to participate. The BIE divides international
expositions into different categories and types and requires each member
nation to observe specified minimum time intervals in scheduling each of
these categories and types of expositions.1 Under BIE rules,
member nations may not ordinarily participate in an international
exposition unless such exposition has been approved by the BIE. The
United States became a member of the BIE on April 30, 1968, upon
ratification of the Paris Convention by the U.S. Senate (114 Cong. Rec.
11012).
---------------------------------------------------------------------------
1 The BIE defines a General Exposition of the First
Category as an exposition dealing with progress achieved in a particular
field applying to several branches of human activity at which the
invited countries are obligated to construct national pavilions. A
General Exposition of the Secondary Category is a similar exposition at
which invited countries are not authorized to construct national
pavilions, but occupy space provided by the exposition sponsors. Special
Category Expositions are those dealing only with one particular
technique, raw material, or basic need.
The BIE frequency rules require that an interval of 15 years must
elapse between General Expositions of the First Category held in one
country. General Expositions of the Second Category require an interval
of 10 years. An interval of 5 years must ordinarily elapse between
Special Category Expositions of the same kind in one country or three
months between Special Category Expositions of different kinds. These
frequency intervals are computed from the date of the opening of the
exposition.
More detailed BIE classification criteria and regulations are
contained in the Paris Convention of 1928, as amended in 1948 and 1966.
Applicants not having a copy of the text of this convention may obtain
one by writing the Director. (The Convention may soon be amended by a
Protocol which has been approved by the BIE and ratified by the United
States. This amendment would increase authorized frequencies or
intervals for BIE approved expositions.)
Federal participation in a recognized international exposition requires
a specific authorization by the Congress, upon a finding by the
President that such participation would be in the national interest. The
Act provides for the transmission to Congress of a participation
proposal by the President. This proposal transmits to the Congress
information regarding the exposition, including a statement that it
[[Page 31]]
has been registered by the BIE and a plan for Federal participation
prepared by the Secretary of Commerce in cooperation with other
interested Federal departments and agencies.
Sec. 310.2 Definitions.
For the purpose of this part, except where the context requires
otherwise:
(a) Act means Pub. L. 91-269.
(b) Secretary means the Secretary of Commerce.
(c) Commissioner General means the person appointed to act as the
senior Federal official for the exposition as required by BIE rules and
regulations.
(d) Director means the Director of the International Expositions
Staff, Office of the Deputy Assistant Secretary for Export Development,
International Trade Administration, Department of Commerce.
(e) Applicant means a State, County, municipality, a political
subdivision of the foregoing, private non-profit or not-for-profit
organizations, or individuals filing an application with the Director
seeking Federal recognition of an international exposition to be held in
the United States.
(f) State means one of the several States of the United States, the
District of Columbia, the Commonwealth of Puerto Rico, the Virgin
Islands, Guam, American Samoa, and the Trust Territory of the Pacific
Islands.
(g) Exposition means an international exposition proposed to be held
in the United States for which an application has been filed with the
Director seeking Federal recognition under the Act; which proposes to
invite more than one foreign country to participate; and, which would
exceed three weeks in duration. Any event under three weeks in duration
is not considered an international exposition under BIE rules.
[40 FR 34107, Aug. 14, 1975. Redesignated and amended at 46 FR 57457,
Nov. 24, 1981]
Sec. 310.3 Applications for Federal recognition.
(a) Applications for Federal recognition of an exposition shall be
filed with, and all official communications in connection therewith
addressed to, the International Expositions Staff, International Trade
Administration, Department of Commerce, Washington, DC 20230.
(b) Every application, exhibit, or enclosure, except where
specifically waived by the Director, shall be in quadruplicate, duly
authenticated and referenced.
(c) Every application shall be in letter form and shall contain the
date, address, and official designation of the applicant and shall be
signed by an authorized officer or individual.
(d) Every application, except where specifically waived by the
Director, shall be accompanied by the following exhibits:
1. Exhibit No. 1. A study setting forth in detail the purpose for
the exposition, including any historical, geographic, or other
significant event of the host city, State, or region related to the
exposition.
2. Exhibit No. 2. An exposition plan setting forth in detail (i) the
theme of the exposition and the ``storyline'' around which the entire
exposition is to be developed; (ii) whatever preliminary architectural
and design plans are available on the physical layout of the site plus
existing and projected structures; (iii) the type of participation
proposed in the exposition (e.g., foreign and domestic exhibits); (iv)
cultural, sports, and special events planned; (v) the proposed BIE
category of the event and evidence of its conformity to the regulations
of the BIE (a copy of these regulations can be obtained from the
Director upon request); (vi) the proposed steps that will be taken to
protect foreign exhibitors under the BIE model rules and regulations and
(vii) in writing commit its organization to the completion of the
exposition.
3. Exhibit No. 3. Documentary evidence of State, regional and local
support (e.g., letters to the applicant from business and civic
leadership of the region, pledging assistance and/or financing; State
and/or municipal resolutions, acts, or appropriations; referendums on
bond issues, and others).
4. Exhibit No. 4. An organization chart of the exposition management
structure (actual or proposed) of the applicant, including description
of the functions, duties and responsibilities of each official position
along with bibliographic material, including any professional experience
in the fields of architecture, industrial design, engineering, labor
relations, concession management, interpretative theme planning, exhibit
development, etc., on principal officers, if available. (The principal
officials should also be prepared to submit subsequent individual
statements under oath of their respective financial holdings and other
interests.)
[[Page 32]]
5. Exhibit No. 5. A statement setting forth in detail (i) the
availability of visitor services in existence or projected to
accommodate tourists at the exposition (e.g., number of hotel and motel
units, number and type of restaurants, health facilities, etc.); (ii)
evidence of adequate transportation facilities and accessibility of the
host city to large groups of national and international visitors (e.g.,
number and schedule of airlines, bus lines, railroads, and truck lines
serving the host city); and (iii) plans to promote the exposition as a
major national and international tourist destination.
6. Exhibit No. 6. A statement setting forth in detail the
applicant's plans for acquiring title to, or the right to occupy and use
real property, other than that owned by the applicant or by the United
States, essential for implementing the project or projects covered by
the application. If the applicant, at the time of filing the
application, has acquired title to the real property, he should submit a
certified copy of the deed(s). If the applicant, at the time of filing
the application, has by easement, lease, franchise, or otherwise
acquired the right to occupy and use real property owned by others, he
should submit a certified copy of the appropriate legal instrument(s)
evidencing this right.
7. Exhibit No. 7. A statement of the latest prevailing hourly wage
rates for construction workers in the host city (e.g., carpenters,
cement masons, sheet metal workers, etc.).
8. Exhibit No. 8. Information on attitudes of labor leaders as to
``no strike'' agreements during the development and operation of the
exposition. Actual ``no strike'' pledges are desirable.
9. Exhibit No. 9. A detailed study conducted and certified by a
nationally recognized firm(s) in the field of economics, accounting,
management, etc., setting forth (i) proposed capital investment cost;
cash flow projections; and sources of financing available to meet these
costs, including but not limited to funds from State and municipal
financing, general obligation and/or general revenue bond issues, and
other public or private sources of front-end capital; (ii) assurances
that the ``guaranteed financing'' is or will be available in accordance
with Section 2(a)(1)(b) of Pub. L. 91-269; (iii) the projected expenses
for managing the exposition; (iv) projected operational revenues broken
down to include admissions, space rental, concessions, service fees and
miscellaneous income; and (v) cost-benefit projections. These should be
accompanied by a statement of the firm that the needed cash flow,
sources of funding, and revenue projections are realistic and
attainable.
10. Exhibit No. 10. A description of the exposition implementation
time schedule and the management control system to be utilized to
implement the time schedule (e.g., PERT, CPM, etc.).
11. Exhibit No. 11. A statement setting forth in detail the public
relations, publicity and other promotional plans of the applicant. For
example, the statement could include: (i) an outline of the public
relations/publicity program broken down by percentage allocations among
the various media; (ii) a public relations/publicity program budget with
the various calendar target dates for completion of phases prior to the
opening, the opening and post-opening of the exposition; and (iii)
protocol plans for U.S. and foreign dignitaries, as well as for special
ceremonies and events and how these plans are to be financed.
12. Exhibit No. 12. A study setting forth in detail the benefits to
be derived from the exposition and residual use plans. For example, the
study might include: (i) extent of immediate economic benefits for the
city/region/nation in proportion to total investment in the exposition;
(ii) extent of long range economic benefits for the city/region/nation
in proportion to total investment in the exposition; and (iii) extent of
intangible (social, psychological, ``good will'') benefits accruing to
the city/region/nation including the solution or amelioration of any
national/local problems.
13. Exhibit No. 13. A statement committing the applicant to develop
and complete an environmental impact statement which complies with
section 102(2)(c) of the National Environmental Policy Act of 1969 (83
Stat. 852; 42 U.S.C. 4331). Sample copies of environmental impact
statements may be obtained from the Director. Prior to the Director's
submitting a report to the Secretary containing his findings on the
application for Federal recognition pursuant to Sec. 310.4, the
applicant must have completed the required Environmental Impact
Statement (EIS), in a form acceptable to the Department of Commerce.
14. Exhibit No. 14. A detailed set of general and special rules and
regulations governing the exposition and participation in it, which, if
Federal recognition is obtained, can be used by the Federal Government
in seeking BIE registration.
15. Exhibit No. 15. A statement from the applicant agreeing to
accept a U.S. Commissioner General, appointed by the President. He will
be recognized as the senior Federal official and titular head of the
exposition, final arbiter in disputes with exhibitors, and the official
contact with foreign governments. The applicant should also agree to
furnish the Commissioner General and his staff with suitable facilities
in the host community during the development and operation of the
exposition.
[40 FR 34107, Aug. 14, 1975. Redesignated and amended at 46 FR 57457,
Nov. 24, 1981]
[[Page 33]]
Sec. 310.4 Action on application.
(a) Upon receipt of an application, the Director will analyze the
application and all accompanying exhibits to insure compliance with the
provisions of Sec. 310.3 and report his findings with respect thereto to
the Secretary.
(b) If more than one applicant applies for Federal recognition for
expositions to be held within three years or less of each other, the
applications will be reviewed concurrently by the Director. The
following standards will be considered in determining which if any of
the competing applicants will be recommended for Federal recognition:
(1) The order of receipt of the applications by the Director,
complete with all exhibits required by Sec. 310.3.
(2) The financial plans of the applications. Primary consideration
will be given to those applications which do not require Federal
financing for exposition development. This does not extend to funding
for a Federal pavilion, if one is desired.
(3) The relative merit of the applications in terms of their
qualifications as tourism destination sites, both with respect to
existing facilities and those facilities planned for the proposed
exposition. If necessary, to assist in making this determination, the
Director will appoint a panel of travel industry experts representing
tour developers, the transportation, entertainment and hotel/motel
industries for the purpose of studying the competing applications and
reporting to the Director its views as to which proposed site best meets
the above criteria. If such a panel is deemed necessary, the provisions
of the Federal Advisory Committee Act (86 Stat. 770, 5 U.S.C. App. I)
will be applicable.
(c) In analyzing the applications, the Director may hold public
hearings with the objective of clarifying issues that might be raised by
the application. If desired, the Director may utilize the services of an
examiner.
(d) If the Director, in his discretion, decides to hold a public
hearing, notice of such hearing shall be published in the Federal
Register, and a copy of the notice shall be furnished to local
newspapers. The notice shall state the subject to be considered and when
and where the hearing will be held, specifically designating the date,
hour, and place.
(e) The following general procedure shall govern the conduct of
public hearings: (1) Stenographic minutes of the proceedings shall be
made; (2) the names and addresses of all parties present or represented
at the hearing shall be recorded; and (3) the Director or Examiner shall
read aloud for the record and for the benefit of the public such parts
of the Act and of these regulations as bear on the application. He shall
also read aloud for the record and for the benefit of the public such
other important papers, or extracts therefrom, as may be necessary for a
full understanding of the issues which require clarification. The
Director or Examiner shall impress upon the parties in attendance at the
public hearing, and shall specifically state at the commencement of the
hearing, that the hearing is not adversary in nature and that the sole
objective thereof is to clarify issues that might have been raised by
the application.
(f) Statements of interested parties may be presented orally at the
hearing, or submitted in writing for the record.
(g) Within six months after receipt of a fully completed application
and/or the adjournment of the public hearing, the Director shall submit
his report containing his findings on the application to the Secretary.
Sec. 310.5 Report of the Secretary on Federal recognition.
If the Director's report recommends Federal recognition, the
Secretary, within a reasonable time, shall submit a report to the
President.
(a) The Secretary's report shall include: (1) An evaluation of the
purposes and reasons for the exposition; and (2) a determination as to
whether guaranteed financial and other support has been secured by the
exposition from affected State and local governments and from business
and civic leaders of the region and others in amounts sufficient to
assure the successful development and progress of the exposition.
(b) Based on information from, and coordination with the Department
of Commerce the Secretary of State shall also file a report with the
President
[[Page 34]]
that the exposition qualifies for recognition by the BIE.
Sec. 310.6 Recognition by the President.
If the President concurs in the favorable reports from the
Secretaries of State and Commerce, he may grant Federal recognition to
the exposition by indicating his concurrence to the two Secretaries and
authorizing them to seek BIE registration.
Sec. 310.7 Statement for Federal participation.
If Federal participation in the exposition, as well as Federal
recognition thereof is desired, the applicant shall in a statement to
the Director outline the nature of the Federal participation envisioned,
including whether construction of a Federal pavilion is contemplated.
(It should be noted, however, that before Federal participation can be
authorized by the Congress under the Act, the exposition must have (i)
met the criteria for Federal recognition and be so recognized, and (ii)
been registered by the BIE. Although applicants need not submit such a
statement until these prerequisites are satisfied, they are encouraged
to do so.) Where the desired Federal participation includes a request
for construction of a Federal pavilion, the statement shall be
accompanied by the following exhibits:
1. Exhibit No. 1. A survey drawing of the proposed Federal pavilion
site, showing its areas and boundaries, its grade elevations, and
surface and subsoil conditions.
2. Exhibit No. 2. Evidence of resolutions, statutes, opinions, etc.,
as to the applicant's ability to convey by deed the real property
comprising the proposed Federal pavilion site in fee-simple and free of
liens and encumbrances to the Federal Government. The only consideration
on the part of the Government for the conveyance of the property shall
be the Government's commitment to participate in the exposition.
3. Exhibit No. 3. A certified copy of the building code which would
be applicable should a pavilion be constructed.
4. Exhibit No. 4. An engineering drawing showing the accessibility
of the proposed pavilion site to utilities (e.g., sewerage, water, gas,
electricity, etc.).
5. Exhibit No. 5. A statement setting forth the security and
maintenance and arrangements which the applicant would undertake (and an
estimate of their cost) while a pavilion is under construction.
6. Exhibit No. 6. A study pursuant to Executive Order 11296 of
August 10, 1966, entitled ``Evaluation of flood hazard in locating
Federally owned or financed buildings, roads and other facilities and in
disposing of Federal land and properties.''
Sec. 310.8 Proposed plan for Federal participation.
(a) Upon receipt of the statement, and the exhibits referred to in
Sec. 310.7, the Director shall prepare a proposed plan in cooperation
with other interested departments and agencies of the Federal Government
for Federal participation in the exposition.
(b) In preparing the proposed plan for Federal participation in the
exposition, the Director shall conduct a feasibility study of Federal
participation including cost estimates by utilizing the services within
the Federal Government, professional consultants and private sources as
required and in accordance with applicable laws and regulations.
(c) The Director, in the proposed plan for Federal participation in
the exposition, shall determine whether or not a Federal pavilion should
be constructed and, if so, whether or not the Government would have need
for a permanent structure in the area of the exposition or whether a
temporary structure would be more appropriate.
(d) The Director shall seek the advice of the Administrator of the
General Services Administration to the extent necessary in carrying out
the proposed plan for Federal participation in the exposition.
(e) Upon completion of the proposed plan for Federal participation
in the exposition, the Director shall submit the plan to the Secretary.
Sec. 310.9 Report of the Secretary on Federal participation.
Upon receipt of the Director's proposed plan for Federal
participation, the Secretary, within a reasonable time, shall submit a
report to the President including: (a) Evidence that the exposition has
met the criteria for Federal recognition and has been so recognized; (b)
a statement that the exposition has been registered by the BIE; and (c)
a proposed plan for the
[[Page 35]]
Federal participation referred to in Sec. 310.8.
PART 315--DETERMINATION OF BONA FIDE MOTOR-VEHICLE MANUFACTURER--Table of Contents
Sec.
315.1 Scope and purpose.
315.2 Definitions.
315.3 Application.
315.4 Determination by the Under Secretary.
315.5 Maintenance and publication of a list of bona fide motor-vehicle
manufacturers.
Authority: Headnote 2, subpart B, part 6, schedule 6, Tariff
Schedules of the United States (19 U.S.C. 1202); sec. 501(2) of Title V,
Automotive Products Trade Act of 1965 (19 U.S.C. 2031).
Source: 45 FR 42214, June 23, 1980. Redesignated at 53 FR 52115,
Dec. 27, 1988, unless otherwise noted.
Sec. 315.1 Scope and purpose.
The purpose of this part is to set forth regulations implementing
headnote 2 to subpart B, part 6, schedule 6 of the Tariff Schedules of
the United States as proclaimed by Proclamation No. 3682 of October 21,
1965 (3 CFR 140-65 Comp.). issued pursuant to the Automotive Products
Trade Act of 1965 (19 U.S.C. 2031), by establishing a procedure under
which a person may apply to be determined a bona fide motor-vehicle
manufacturer. Under headnote 2 to subpart B, part 6, schedule 6 of the
Tariff Schedules of the United States, whenever the Secretary of
Commerce has determined a person to be a bona fide motor-vehicle
manufacturer, such person is eligible to obtain duty-free importation of
certain Canadian articles and to issue certain orders, contracts, or
letters of intent under or pursuant to which other persons, not
themselves bona fide motor-vehicle manufacturers, may obtain duty-free
treatment for such Canadian articles. The responsibilities of Secretary
of Commerce relating to the development, maintenance and publication of
a list of bona fide motor-vehicle manufacturers and the authority to
promulgate rules and regulations pertaining thereto have been delegated
to Under Secretary for International Trade, Department of Commerce
pursuant to Department of Commerce Organization Order 40-1, Amendment 9
of January 22, 1984 (49 FR 4538).
[45 FR 42214, June 23, 1980. Redesignated and amended at 53 FR 52115,
Dec. 27, 1988]
Sec. 315.2 Definitions.
For the purpose of the regulations in this part and the forms issued
to implement it:
(a) Act means the Automotive Products Trade Act of 1965 (79 Stat.
1016, 19 U.S.C. 2001 through 2033).
(b) Under Secretary means Under Secretary for International Trade of
the Department of Commerce, or such official as may be designated by the
Under Secretary to act in his or her behalf.
(c) Motor vehicle means a motor vehicle of a kind described in item
692.05 or 692.10 of subpart B, part 6, schedule 6, of the Tariff
Schedules of the United States (excluding an electric trolley bus and a
three-wheeled vehicle) or an automotive truck tractor.
(d) Bona fide motor-vehicle manufacturer means a person who upon
application to the Under Secretary is determined by the Under Secretary
to have produced no fewer than 15 complete motor vehicles in the United
States during the 12-month period preceding the date certified in the
application, and to have had as of such date installed capacity in the
United States to produce 10 or more complete motor vehicles per 40-hour
week. A person shall only be regarded as having had the capacity to
produce a complete motor vehicle if his operation included the assembly
of two or more major components (e.g., the attachment of a body to a
chassis) to create a new motor vehicle ready for use.
(e) Person includes any individual, corporation, partnership,
association, company, or any kind of organization.
(f) United States includes only the States, the District of Columbia
and Puerto Rico.
[45 FR 42214, June 23, 1980. Redesignated and amended at 53 FR 52115,
Dec. 27, 1988]
Sec. 315.3 Application.
Any person in the United States desiring to be determined a bona
fide motor vehicle manufacturer shall apply to the Under Secretary by
filing
[[Page 36]]
two copies of Form BIE-3 in accordance with the instructions set forth
on the form and this part. Application forms may be obtained from the
Under Secretary, District offices of the U.S. Department of Commerce, or
from U.S. Collectors of Customs, and should be mailed or delivered to
the:
U.S. Department of Commerce, International Trade Administration, Office
of Automotive Industry Affairs--APTA, 14th and Constitution Avenue, NW.,
Room 4036, Washington, DC 20230.
[45 FR 42214, June 23, 1980. Redesignated and amended at 53 FR 52115,
Dec. 27, 1988]
Sec. 315.4 Determination by the Under Secretary.
(a) As soon as practicable after receipt of the application, the
Under Secretary shall determine whether an applicant has produced no
fewer than 15 complete motor vehicles in the United States during the
12-month period preceding the date certified in the application and as
of such date, had installed capacity in the United States to produce 10
or more complete motor vehicles per 40 hour week. The Under Secretary
may request such additional data from an applicant as he may deem
appropriate to establish whether the applicant has satisfied the
requirements of this part.
(b) A determination by the Under Secretary under this part shall be
effective for a 12-month period to begin on the date as of which the
Under Secretary determines that the applicant qualified under this part.
Within 60 days prior to the termination of such period, a bona fide
motor vehicle manufacturer may apply for another determination under
this part.
(c) The Under Secretary will promptly notify each applicant in
writing of the final action taken on his application.
[45 FR 42214, June 23, 1980. Redesignated and amended at 53 FR 52115,
Dec. 27, 1988]
Sec. 315.5 Maintenance and publication of a list of bona fide motor-vehicle manufacturers.
The Under Secretary shall maintain and publish from time to time in
the Federal Register, a list of the names and addresses of bona fide
motor vehicle manufacturers, and the effective dates from each
determination.
[45 FR 42214, June 23, 1980. Redesignated and amended at 53 FR 52115,
Dec. 27, 1988]
PART 325--EXPORT TRADE CERTIFICATES OF REVIEW--Table of Contents
Sec.
325.1 Scope.
325.2 Definitions.
325.3 Applying for a certificate of review.
325.4 Calculating time periods.
325.5 Issuing the certificate.
325.6 Publishing notices in the Federal Register.
325.7 Amending the certificate.
325.8 Expediting the certification process.
325.9 Reconsidering an application that has been denied.
325.10 Modifying or revoking a certificate.
325.11 Judicial review.
325.12 Returning the applicant's documents.
325.13 Nonadmissibility in evidence.
325.14 Submitting reports.
325.15 Relinquishing a certificate.
325.16 Protecting confidentiality of information.
325.17 Waiver.
Authority: Title III of the Export Trading Company Act, Pub. L. 97-
290 (96 Stat. 1240-1245, 15 U.S.C. 4011-4021).
Source: 50 FR 1806, Jan. 11, 1985, unless otherwise noted.
Sec. 325.1 Scope.
This part contains regulations for issuing export trade certificates
of review under title III of the Export Trading Company Act, Pub. L. 97-
290. A holder of a certificate of review and the members named in the
certificate will have specific protections from private treble damage
actions and government criminal and civil suits under U.S. Federal and
State antitrust laws for the export conduct specified in the certificate
and carried out during its effective period in compliance with its terms
and conditions.
Sec. 325.2 Definitions.
As used in this part:
(a) Act means title III of Pub. L. 97-290, Export Trade Certificates
of Review.
(b) Antitrust laws means the antitrust laws, as the term is defined
in the first section of the Clayton Act (15 U.S.C.
[[Page 37]]
12), section 5 of the Federal Trade Commission Act (15 U.S.C. 45) (to
the extent that section 5 prohibits unfair methods of competition), and
any State antitrust or unfair competition law.
(c) Applicant means the person or persons who submit an application
for a certificate.
(d) Application means an application for a certificate to be issued
under the Act.
(e) Attorney General means the Attorney General of the United States
or his designee.
(f) Certificate means a certificate of review issued pursuant to the
Act.
(g) Control means either (1) holding 50 percent or more of the
outstanding voting securities of an issuer; or (2) having the
contractual power presently to designate a majority of the directors of
a corporation, or in the case of an unincorporated entity, a majority of
the individuals who exercise similar functions.
(h) Controlling entity means an entity which directly or indirectly
controls a member or applicant, and is not controlled by any other
entity.
(i) Export conduct means specified export trade activities and
methods of operation carried out in specified export trade and export
markets.
(j) Export trade means trade or commerce in goods, wares,
merchandise, or services that are exported, or are in the course of
being exported, from the United States or any territory of the United
States to any foreign nation.
(k) Export trade activities means activities or agreements in the
course of export trade.
(l) Member means an entity (U.S. or foreign) or a person which is
seeking protection under the certificate with the applicant. A member
may be a partner in a partnership or a joint venture; a shareholder of a
corporation; or a participant in an association, cooperative, or other
form of profit or nonprofit organization or relationship, by contract or
other arrangement.
(m) Method of operation means any method by which an applicant or
member conducts or proposes to conduct export trade.
(n) Person means an individual who is a resident of the United
States; a partnership that is created under and exists pursuant to the
laws of any State or of the United States; a State or local government
entity; a corporation, whether it is organized as a profit or nonprofit
corporation, that is created under and exists pursuant to the laws of
any State or of the United States; or any association or combination, by
contract or other arrangement, between or among such persons.
(o) Secretary means the Secretary of Commerce or his designee.
(p) Services means intangible economic output, including, but not
limited to--
(1) business, repair, and amusement services,
(2) management, legal, engineering, architectural, and other
professional services, and
(3) financial, insurance, transportation, informational and any
other data-based services, and communication services.
(q) United States means the fifty States of the United States, the
District of Columbia, the Commonwealth of Puerto Rico, the Virgin
Islands, American Samoa, Guam, the Commonwealth of the Northern Mariana
Islands, and the Trust Territory of the Pacific Islands.
Sec. 325.3 Applying for a certificate of review.
(a) Place of filing. The applicant shall submit an original and two
copies of a completed application form (ITA 4093-P, OMB control number
0625-0125) by personal delivery during normal business hours or by first
class mail to the Office of Export Trading Company Affairs, Room 5618,
International Trade Administration, Department of Commerce, Washington,
DC 20230. Although not required, the applicant should consider using
registered mail or some other delivery method that provides evidence of
receipt.
(b) Contents of application. Any person may submit an application
for certification. The application shall contain, where applicable, the
information listed below. Some information, in particular the
identification of goods or services that the applicant exports or
proposes to export, is requested in a
[[Page 38]]
certain form (Standard Industrial Classification [SIC] numbers) if
reasonably available. Where information does not exist in this form, the
applicant may satisfy the request for information by providing it in
some other convenient form. If the applicant is unable to provide any of
the information requested or if the applicant believes that any of the
information requested would be both burdensome to obtain and unnecessary
for a determination on the application, the applicant should state that
the information is not being provided or is being provided in lesser
detail, and explain why.
(1) Name and principal address of the applicant and of its
controlling entity, if any. Include the name, title, address, telephone
number, and relationship to the applicant of each individual to whom the
Secretary should address correspondence.
(2) The name and principal address of each member, and of each
member's controlling entity, if any.
(3) A copy of any legal instrument under which the applicant is
organized or will operate. Include copies, as applicable, of its
corporate charter, bylaws, partnership, joint venture, membership or
other agreements or contracts under which the applicant is organized.
(4) A copy of the applicant's most recent annual report, if any, and
that of its controlling entity, if any. To the extent the information is
not included in the annual report, or other documents submitted in
connection with the application, a description of the applicant's
domestic (including import) and export operations, including the nature
of its business, the types of products or services in which it deals,
and the places where it does business. This description may be
supplemented by a chart or table.
(5) A copy of each member's most recent annual report, if any, and
that of its controlling entity, if any. To the extent the information is
not included in the annual report, or other documents submitted in
connection with the application, a description of each member's domestic
(including import) and export operations, including the nature of its
business, the types of products or services in which it deals, and the
places where it does business. This description may be supplemented by a
chart or table.
(6) The names, titles, and responsibilities of the applicant's
directors, officers, partners and managing officials, and their business
affiliations with other members or other businesses that produce or sell
any of the types of goods or services described in paragraph (b)(7) of
this section.
(7)(i) A description of the goods or services which the applicant
exports or proposes to export under the certificate of review. This
description should reflect the industry's customary definitions of the
products and services.
(ii) If it is reasonably available, an identification of the goods
or services according to the Standard Industrial Classification (SIC)
number. Goods should normally be identified according to the 7-digit
level. Services should normally be identified at the most detailed SIC
level available.
(iii) The foreign geographic areas to which the applicant and each
member export or intend to export their goods and services.
(8) For each class of the goods, wares, merchandise or services
described in paragraph (b)(7) of this section:
(i) The principal geographic area or areas in the United States in
which the applicant and each member sell their goods and services.
(ii) For their previous two fiscal years, the dollar value of the
applicant's and each member's (A) total domestic sales, if any; and (B)
total export sales, if any. Include the value of the sales of any
controlling entities and all entities under their control.
(9) For each class of the goods, wares, merchandise or services
described in paragraph (b)(7) of this section, the best information or
estimate accessible to the applicant of the total value of sales in the
United States by all companies for the last two years. Identify the
source of the information or the basis of the estimate.
(10) A description of the specific export conduct which the
applicant seeks to have certified. Only the specific export conduct
described in the application will be eligible for certification. For
each item, the applicant should state the antitrust concern, if any,
[[Page 39]]
raised by that export conduct. (Examples of export conduct which
applicants may seek to have certified include the manner in which goods
and services will be obtained or provided; the manner in which prices or
quantities will be set; exclusive agreements with U.S. suppliers or
export intermediaries; territorial, quantity, or price agreements with
U.S. suppliers or export intermediaries; and restrictions on membership
or membership withdrawal. These examples are given only to illustrate
the type of export conduct which might be of concern. The specific
activities which the applicant may wish to have certified will depend on
its particular circumstances or business plans.).
(11) If the export trade, export trade activities, or methods of
operation for which certification is sought will involve any agreement
or any exchange of information among suppliers of the same or similar
products or services with respect to domestic prices, production, sales,
or other competitively sensitive business information, specify the
nature of the agreement or exchange of information. Such information
exchanges are not necessarily impermissible and may be eligible for
certification. Whether or not certification is sought for such
exchanges, this information is necessary to evaluate whether the conduct
for which certification is sought meets the standards of the Act.
(12) A statement of whether the applicant intends or reasonably
expects that any exported goods or services covered by the proposed
certificate will re-enter the United States, either in their original or
modified form. If so, identify the goods or services and the manner in
which they may re-enter the U.S.
(13) The names and addresses of the suppliers of the goods and
services to be exported (and the goods and services to be supplied by
each) unless the goods and services to be exported are to be supplied by
the applicant and/or its members.
(14) A proposed non-confidential summary of the export conduct for
which certification is sought. This summary may be used as the basis for
publication in the Federal Register.
(15) Any other information that the applicant believes will be
necessary or helpful to a determination of whether to issue a
certificate under the standards of the Act.
(16) (Optional) A draft proposed certificate.
(c) The applicant must sign the application and certify that (1)
each member has authorized the applicant to submit the application, and
(2) to the best of its belief the information in the application is
true, correct, and fully responsive.
(d) Conformity with regulations. No application shall be deemed
submitted unless it complies with these regulations. Applicants are
encouraged to seek guidance and assistance from the Department of
Commerce in preparing and documenting their applications.
(e) Review and acceptance. The Secretary will stamp the application
on the day that it is received in the Office of Export Trading Company
Affairs. From that date, the Secretary will have five working days to
decide whether the application is complete and can be deemed submitted
under the Act. On the date on which the application is deemed submitted,
the Secretary will stamp it with that date and notify the applicant that
the application has been accepted for review. If the application is not
accepted for review, the Secretary shall advise the applicant that it
may file the application again after correcting the deficiencies that
the Secretary has specified. If the Secretary does not take action on
the application within the five-day period, the application shall be
deemed submitted as of the sixth day.
(f) Withdrawal of application. The applicant may withdraw an
application by written request at any time before the Secretary has
determined whether to issue a certificate. An applicant who withdraws an
application may submit a new application at any time.
(g) Supplemental information. After an application has been deemed
submitted, if the Secretary or the Attorney General finds that
additional information is necessary to make a determination on the
application, the Secretary will ask the applicant in writing to supply
the supplemental information. The running of the time period for a
[[Page 40]]
determination on the application will be suspended from the date on
which the request is sent until the supplemental information is received
and is considered complete. The Secretary shall promptly decide whether
the supplemental information is complete, and shall notify the applicant
of his decision. If the information is being sought by the Attorney
General, the supplemental information may be deemed complete only if the
Attorney General concurs. If the applicant does not agree to provide the
additional information, or supplies information which the Secretary or
the Attorney General considers incomplete, the Secretary and the
Attorney General will decide whether the information in their possession
is sufficient to make a determination on the application. If either the
Secretary or the Attorney General considers the information in their
possession insufficient, the Secretary may make an additional request or
shall deny the application. If they consider the information in their
possession sufficient to make a determination on the application, the
Secretary shall notify the applicant that the time period for a
determination has resumed running.
(Information collection requirements in paragraph (a) approved by the
Office of Management and Budget under control number 0625-0125)
Sec. 325.4 Calculating time periods.
(a) When these regulations require action to be taken within a fixed
time period, and the last day of the time period falls on a non-working
day, the time period shall be extended to the next working day.
(b) The day after an application is deemed submitted shall be deemed
the first of the days within which the Secretary must make a
determination on the application.
Sec. 325.5 Issuing the certificate.
(a) Time period. The Secretary shall determine whether to issue a
certificate within ninety days after the application is deemed submitted
(excluding any suspension pursuant to Sec. 325.3(f) of the time period
for making a determination). If the Secretary or the Attorney General
considers it necessary, and the applicant agrees, the Secretary may take
up to an additional thirty days to determine whether to issue a
certificate.
(b) Determination. The Secretary shall issue a certificate to the
applicant if he determines, and the Attorney General concurs, that the
proposed export trade, export trade activities and methods of operation
will--
(1) Result in neither a substantial lessening of competition or
restraint of trade within the United States nor a substantial restraint
of the export trade of any competitor of the applicant;
(2) Not unreasonably enhance, stabilize, or depress prices within
the United States of the class of the goods, wares, merchandise or
services exported by the applicant;
(3) Not constitute unfair methods of competition against competitors
who are engaged in the export of goods, wares, merchandise or services
of the class exported by the applicant; and
(4) Not include any act that may reasonably be expected to result in
the sale for consumption or resale within the United States of the
goods, wares, merchandise, or services exported by the applicant.
(c) Concurrence of the Attorney General. (1) Not later than seven
days after an application is deemed submitted, the Secretary shall
deliver to the Attorney General a copy of the application, any
information submitted in connection with the application, and any other
relevant information in his possession. The Secretary and the Attorney
General shall make available to each other copies of other relevant
information that was obtained in connection with the application, unless
otherwise prohibited by law.
(2) Not later than thirty days before the day a determination on the
application is due, the Secretary shall deliver a proposed certificate
to the Attorney General for discussion and comment. If the Attorney
General does not agree that the proposed certificate may be issued, he
shall, not later than ten days before the day a determination on the
application is due, so advise the Secretary and state the reasons for
the disagreement. The Secretary with the concurrence of the Attorney
General,
[[Page 41]]
may modify or revise the proposed certificate to resolve the objections
and problems raised by the Attorney General, or deny the application.
(3) If the Attorney General receives the proposed certification by
the date specified in the preceding paragraph and does not respond
within the time period specified in that paragraph, he shall be deemed
to concur in the proposed certificate.
(d) Content of certificate. The certificate shall specify the export
conduct and all persons or entities which are protected from liability
under the antitrust laws. The Secretary may certify the proposed export
conduct contained in the application, in whole or in part, with such
changes, modifications, terms, or conditions as are appropriate. If the
Secretary intends to issue a certificate different from a draft
certificate submitted by the applicant, the Secretary shall first
consult with the applicant.
(e) Certificate obtained by fraud. A certificate shall be void ab
initio with respect to any export conduct for which a certificate was
obtained by fraud.
(f) Minimum thirty-day period. The Secretary may not issue a
certificate until thirty days after the summary of the application is
published in the Federal Register.
Sec. 325.6 Publishing notices in the Federal Register.
(a) Within ten days after an application is deemed submitted, the
Secretary shall deliver to the Federal Register a notice summarizing the
application. The notice shall identify the applicant and each member and
shall include a summary of the export conduct for which certification is
sought. If the Secretary does not intend to publish the summary proposed
by the applicant, he shall notify the applicant. Within twenty days
after the date the notice is published in the Federal Register,
interested parties may submit written comments to the Secretary on the
application. The Secretary shall provide a copy of such comments to the
Attorney General.
(b) If a certificate is issued, the Secretary shall publish a
summary of the certification in the Federal Register. If an application
is denied, the Secretary shall publish a notice of denial. Certificates
will be available for inspection and copying in the International Trade
Administration Freedom of Information Records Inspection Facility.
(c) If the Secretary initiates proceedings to revoke or modify a
certificate, he shall publish a notice of his final determination in the
Federal Register.
(d) If the applicant requests reconsideration of a determination to
deny an application, in whole or in part, the Secretary shall publish
notice of his final determination in the Federal Register.
Sec. 325.7 Amending the certificate.
An application for an amendment to a certificate shall be treated in
the same manner as an original application. The application for an
amendment shall set forth the proposed amendment(s) and the reasons for
them. It shall contain any information specified in Sec. 325.3(b) that
is relevant to the determination on the application for an amendment.
The effective date of an amendment will be the date on which the
application for the amendment was deemed submitted.
Sec. 325.8 Expediting the certification process.
(a) Request for expedited action. (1) An applicant may be granted
expedited action on its application in the discretion of the Secretary
and the Attorney General. The Secretary and the Attorney General will
consider such requests in light of an applicant's showing that it has a
special need for a prompt decision. A request for expedited action
should include an explanation of why expedited action is needed,
including a statement of all relevant facts and circumstances, such as
bidding deadlines or other circumstances beyond the control of the
applicant, that require the applicant to act in less than ninety days
and that have a significant impact on the applicant's export trade.
(2) The Secretary shall advise the applicant within ten days after
the application is deemed submitted whether it will receive expedited
action. The Secretary may grant the request in whole or in part and
process the remainder of the application through the normal
[[Page 42]]
procedures. Expedited action may be granted only if the Attorney General
concurs.
(b) Time period. The Secretary shall determine whether to issue a
certificate to the applicant within forty-five days after the Secretary
granted the request for expedited action, or within a longer period if
agreed to by the applicant (excluding any suspension pursuant to
Sec. 325.3(f) of the time period for making a determination). The
Secretary may not issue a certificate until thirty days after the
summary of the application is published in the Federal Register.
(c) Concurrence of the Attorney General. (1) Not later than ten
working days before the date on which a determination on the application
is due, the Secretary shall deliver a proposed certificate to the
Attorney General for discussion and comment. If the Attorney General
does not agree that the proposed certificate may be issued, he shall,
not later than five working days before the date on which a
determination on the application is due, so advise the Secretary and
state the reasons for the disagreement. The Secretary, with the
concurrence of the Attorney General, may revise the proposed certificate
to resolve the objections and problems raised by the Attorney General,
or deny the application.
(2) If the Attorney General receives the proposed certificate by the
date specified in the preceding paragraph and does not respond within
the time period specified in that paragraph, he shall be deemed to
concur in the proposed certificate.
(Information collection requirements in paragraph (a)(1) approved by the
Office of Management and Budget under control number 0625-0125)
Sec. 325.9 Reconsidering an application that has been denied.
(a) If the Secretary determines to deny an application in whole or
in part, he shall notify the applicant in writing of his decision and
the reasons for his determination.
(b) Within thirty days after receiving a notice of denial, the
applicant may request the Secretary to reconsider his determination.
(1) The request for reconsideration shall include a written
statement setting forth the reasons why the applicant believes the
decision should be reconsidered, and any additional information that the
applicant considers relevant.
(2) Upon the request of the applicant, the Secretary and the
Attorney General will meet informally with the applicant and/or his
representative to discuss the applicant's reasons why the determination
on the application should be changed.
(c) The Secretary shall consult with the Attorney General with
regard to reconsidering an application. The Secretary may modify his
original determination only if the Attorney General concurs.
(d) The Secretary shall notify the applicant in writing of his final
determination after reconsideration and of his reasons for the
determination within thirty days after the request for reconsideration
has been received.
Sec. 325.10 Modifying or revoking a certificate.
(a) Action subject to modification or revocation. The Secretary
shall revoke a certificate, in whole or in part, or modify it, as the
Secretary or the Attorney General considers necessary, if:
(1) The export conduct of a person or entity protected by the
certificate no longer complies with the requirements set forth in
Sec. 325.4(b);
(2) A person or entity protected by the certificate fails to comply
with a request for information under paragraph (b) of this section; or
(3) The certificate holder fails to file a complete annual report.
(b) Request for information. If the Secretary or the Attorney
General has reason to believe that the export trade, export trade
activities, or methods of operation of a person or entity protected by a
certificate no longer comply with the requirements set forth in
Sec. 325.4(b), the Secretary shall request any information that he or
the Attorney General considers to be necessary to resolve the matter.
(c) Proceedings for the revocation or modification of a
certificate--(1) Notification letter. If, after reviewing the relevant
information in their possession,
[[Page 43]]
it appears to the Secretary or the Attorney General that a certificate
should be revoked or modified for any of the reasons set forth in
paragraph (a) above, the Secretary shall so notify the certificate
holder in writing. The notification shall be sent by registered or
certified mail to the address specified in the certificate. The
notification shall include a detailed statement of the facts, conduct,
or circumstances which may warrant the revocation or modification of the
certificate.
(2) Answer. The certificate holder shall respond to the notification
letter within thirty days after receiving it, unless the Secretary, in
his discretion, grants a thirty day extension for good cause shown. The
certificate holder shall respond specifically to the statement included
with the notification letter and state in detail why the facts, conduct
or circumstances described in the notification letter are not true, or
if they are true, why they do not warrant the revoking or modifying of
the certificate. If the certificate holder does not respond within the
specified period, it will be considered an admission of the statements
contained in the notification letter.
(3) Resolution of factual disputes. Where material facts are in
dispute, the Secretary and the Attorney General shall, upon request,
meet informally with the certificate holder. The Secretary or the
Attorney General may require the certificate holder to provide any
documents or information that are necessary to support its contentions.
After reviewing the statements of the certificate holder and the
documents or information that the certificate holder has submitted, and
upon considering other relevant documents or information in his
possession, the Secretary shall make proposed findings of the factual
matters in dispute. The Attorney General is not bound by the proposed
findings.
(4) Final determination. The Secretary and the Attorney General
shall review the notification letter and the certificate holder's answer
to it, the proposed factual findings made under paragraph (c)(3) of this
section, and any other relevant documents or information in their
possession. If, after review, the Secretary or the Attorney General
determines that the export conduct of a person or entity protected by
the certificate no longer complies with the standards set forth in
Sec. 325.4(b), the Secretary shall revoke or modify the certificate as
appropriate. If the Secretary or the Attorney General determines that
the certificate holder has failed to comply with the request for
information under paragraph (b) of this section, or has failed to file a
complete annual report, and that the failure to comply or file should
result in revocation of modification, the Secretary shall revoke or
modify the certificate as appropriate. The determination will be final
and will be issued to the certificate holder in writing. The notice to
the certificate holder shall include a statement of the circumstances
underlying and the reasons in support of the determination. If the
Secretary determines to revoke or modify the certificate, the decision
shall specify the effective date of the revocation or modification; this
date must be at least thirty days but not more than ninety days after
the Secretary notifies the certificate holder of his determination. The
Secretary shall publish notice in the Federal Register of a revocation
or modification or a decision not to revoke or modify.
(d) Investigative information. In proceedings under this section,
the Attorney General shall make available to the Secretary any
information that has been obtained in response to Civil Investigative
Demands issued under section 304(b)(3) of the Act. Unless prohibited by
law, the Attorney General and the Secretary shall also make available to
each other any other information which each is relying upon under these
proceedings.
Sec. 325.11 Judicial review.
(a) Review of certain determinations. (1) Any person aggrieved by a
final determination of the Secretary under Sec. 325.5, Sec. 325.7,
Sec. 325.9, or Sec. 325.10 of these regulations may, within thirty days
of the determination, bring an action in an appropriate district court
of the United States to set aside the determination on the ground that
it is erroneous. If a certificate is denied, the applicant may bring
suit within thirty days after the notice of denial is published in the
[[Page 44]]
Federal Register, or, if the applicant seeks reconsideration, within
thirty days after the Secretary publishes in the Federal Register notice
of his determination after reconsideration.
(b) For purposes of judicial review, determinations of the Secretary
are final when notice is published in the Federal Register.
(c) Record for judicial review. For purposes of judicial review, the
record shall include all information presented to or obtained by the
Secretary which had a bearing on the determination, the determination
itself, the supporting statement setting forth the reasons for the
determination, and the Attorney General's response to the Secretary
indicating concurrence or nonconcurrence.
(d) Limitation of judicial review. Except as provided in paragraph
(a) of this section, no agency action taken under the Act shall be
subject to judicial review.
Sec. 325.12 Returning the applicant's documents.
(a) Upon the denial or withdrawal of an application for a
certificate in its entirety, the applicant may request the return of all
copies of the documents submitted by the applicant in connection with
the application to the Department of Commerce or the Department of
Justice. The applicant shall submit this request in writing to both the
Secretary and the Attorney General.
(b) The Secretary and the Attorney General shall return the
documents to the applicant within thirty days after they receive the
applicant's request.
Sec. 325.13 Nonadmissibility in evidence.
If the Secretary denies, in whole or in part, an application for a
certificate or for an amendment to a certificate, or revokes or amends a
certificate, neither the negative determination nor the statement of
reasons therefor shall be admissible in evidence in any administrative
or judicial proceeding in support of any claim under the antitrust laws.
Sec. 325.14 Submitting reports.
(a) Not later than each anniversary of a certificate's effective
date, the Secretary shall notify the certificate holder of the
information to be included in the annual report. This report shall
contain any changes relevant to the matters specified in the
certificate, an update of the information contained in the application
brought current to the anniversary date, and any other information the
Secretary considers appropriate, after consultation with the Attorney
General.
(b) Not later than forty-five days after each anniversary of a
certificate's effective date, a certificate holder shall submit its
annual report to the Secretary. The Secretary shall deliver a copy of
the annual report to the Attorney General.
(c) Failure to submit a complete annual report may be the basis for
modification or revocation of a certificate.
Sec. 325.15 Relinquishing a certificate.
A certificate holder may relinquish a certificate at any time
through written notice to the Secretary. The certificate will cease to
be effective on the day the Secretary receives the notice.
Sec. 325.16 Protecting confidentiality of information.
(a) Any information that is submitted by any person under the Act is
exempt from disclosure under the Freedom of Information Act (5 U.S.C.
552).
(b)(1) Except as authorized under paragraph (b)(3) of this section,
no officer or employee of the United States shall disclose commercial or
financial information submitted under this Act if the information is
privileged or confidential, and if disclosing the information would
cause harm to the person who submitted it.
(2) A person submitting information shall designate the documents or
information which it considers privileged or confidential and the
disclosure of which would cause harm to the person submitting it. The
Secretary shall endeavor to notify these persons of any requests or
demands before disclosing any of this information.
(3) An officer or employee of the United States may disclose
information covered under paragraph (b)(1) of this section only under
the following circumstances--
[[Page 45]]
(i) Upon a request made by either House of Congress or a Committee
of the Congress,
(ii) In a judicial or administrative proceeding subject to issuance
of an appropriate protective order,
(iii) With the written consent of the person who submitted the
information,
(iv) When the Secretary considers disclosure of the information to
be necessary for determining whether or not to issue, amend, or revoke a
certificate, if--
(A) The Secretary determines that a non-confidential summary of the
information is inadequate; and
(B) The person who submitted the information is informed of the
intent to disclose the information, and has an opportunity to advise the
Secretary of the potential harm which disclosure may cause,
(v) In accordance with any requirement imposed by a statute of the
United States.
(c) In any judicial or administrative proceeding in which disclosure
is sought from the Secretary or the Attorney General of any confidential
or privileged documents or information submitted under this Act, the
Secretary or Attorney General shall attempt to notify the party who
submitted the information of the request or demand for disclosure. In
appropriate circumstances the Secretary or Attorney General may seek or
support an appropriate protective order on behalf of the party who
submitted the documents or information.
Sec. 325.17 Waiver.
The Secretary may waive any of the provisions of this part in
writing for good cause shown, if the Attorney General concurs and if
permitted by law.
[[Page 47]]
CHAPTER IV--FOREIGN-TRADE ZONES BOARD, DEPARTMENT OF COMMERCE
--------------------------------------------------------------------
Part Page
400 Regulations of the Foreign-Trade Zones Board
[[Page 48]]
PART 400--REGULATIONS OF THE FOREIGN-TRADE ZONES BOARD--Table of Contents
Subpart A--Scope and Definitions
Sec.
400.1 Scope.
400.2 Definitions.
Subpart B--Foreign-Trade Zones Board
400.11 Authority of the Board.
400.12 Responsibilities and authority of the Executive Secretary.
400.13 Board headquarters.
Subpart C--Establishment and Modification of Zone Projects
400.21 Number and location of zones and subzones.
400.22 Eligible applicants.
400.23 Criteria for grants of authority for zones and subzones.
400.24 Application for zone.
400.25 Application for subzone.
400.26 Application for expansion or other modification to zone project.
400.27 Procedure for processing application.
400.28 Conditions, prohibitions and restrictions applicable to grants
of authority.
400.29 Application fees.
Subpart D--Manufacturing and Processing Activity--Reviews
400.31 Manufacturing and processing activity; criteria.
400.32 Procedure for review of request for approval of manufacturing or
processing.
400.33 Restrictions on manufacturing and processing activity.
Subpart E--Zone Operations and Administrative Requirements
400.41 Zone operations; general.
400.42 Requirements for commencement of operations in a zone project.
400.43 Restriction and prohibition of certain zone operations.
400.44 Zone-restricted merchandise.
400.45 Retail trade.
400.46 Accounts, records and reports.
400.47 Appeals to the Board from decisions of the Assistant Secretary
for Import Administration and the Executive Secretary.
Subpart F--Notice, Hearings, Record and Information
400.51 Notice and hearings.
400.52 Official record; public access.
400.53 Information.
Authority: Foreign-Trade Zones Act of June 18, 1934, as amended
(Pub. L. 397, 73rd Congress, 48 Stat. 998-1003 (19 U.S.C. 81a-81u)).
Source: 56 FR 50798, Oct. 8, 1991, unless otherwise noted.
Subpart A--Scope and Definitions
Sec. 400.1 Scope.
(a) This part sets forth the regulations, including the rules of
practice and procedure, of the Foreign-Trade Zones Board with regard to
foreign-trade zones in the United States pursuant to the Foreign-Trade
Zones Act of 1934, as amended (19 U.S.C. 81a-81u). It includes the
substantive and procedural rules for the authorization of zones and the
regulation of zone activity. The purpose of zones as stated in the Act
is to ``expedite and encourage foreign commerce, and other purposes.''
The regulations provide the legal framework for accomplishing this
purpose in the context of evolving U.S. economic and trade policy, and
economic factors relating to international competition.
(b) Part 146 of the regulations of the United States Customs Service
(19 CFR part 146) governs zone operations, including the admission of
merchandise into zones, zone activity involving such merchandise, and
the transfer of merchandise from zones.
(c) To the extent ``activated'' under Customs procedures in 19 CFR
part 146, and only for the purposes specified in the Act (19 U.S.C.
81c), zones are treated for purposes of the tariff laws and Customs
entry procedures as being outside the Customs territory of the United
States. Under zone procedures, foreign and domestic merchandise may be
admitted into zones for operations such as storage, exhibition,
assembly, manufacture and processing, without being subject to formal
Customs entry procedures and payment of duties, unless and until the
foreign merchandise enters Customs territory for domestic consumption.
At that time, the importer ordinarily has a choice of paying duties
either at the rate applicable to the foreign material in its condition
as admitted into a zone, or if used in manufacturing or processing, to
the emerging product. Quota restrictions do not
[[Page 49]]
normally apply to foreign goods in zones. The Board can deny or limit
the use of zone procedures in specific cases on public interest grounds.
Merchandise moved into zones for export (zone-restricted status) may be
considered exported for purposes such as federal excise tax rebates and
Customs drawback. Foreign merchandise (tangible personal property)
admitted to a zone and domestic merchandise held in a zone for
exportation are exempt from certain state and local ad valorem taxes (19
U.S.C. 81o(e)). Articles admitted into zones for purposes not specified
in the Act shall be subject to the tariff laws and regular entry
procedures, including the payment of applicable duties, taxes, and fees.
[56 FR 50798, Oct. 8, 1991; 56 FR 56544, Nov. 5, 1991]
Sec. 400.2 Definitions.
(a) Act means the Foreign-Trade Zones Act of 1934, as amended (19
U.S.C. 81a-81u).
(b) Board means the Foreign-Trade Zones Board, which consists of the
Secretary of the Department of Commerce (chairman), the Secretary of the
Treasury, and the Secretary of the Army, or their designated alternates.
(c) Customs Service means the United States Customs Service of the
Department of the Treasury.
(d) District Director is the director of Customs for the Customs
district in which a zone or proposed zone is located.
(e) District Engineer is the engineer of the Department of the Army
in whose district a zone or proposed zone is located.
(f) Executive Secretary is the Executive Secretary of the Foreign-
Trade Zones Board.
(g) Foreign-trade zone is a restricted-access site, in or adjacent
to a Customs port of entry, operated pursuant to public utility
principles under the sponsorship of a corporation granted authority by
the Board and under supervision of the Customs Service.
(h) Grant of authority is a document issued by the Board which
authorizes a zone grantee to establish, operate and maintain a zone
project or a subzone, subject to limitations and conditions specified in
this part and in 19 CFR part 146. The authority to establish a zone
includes the authority to operate and the responsibility to maintain it.
(i) Manufacturing, as used in this part, means activity involving
the substantial transformation of a foreign article resulting in a new
and different article having a different name, character, and use.
(j) Port of entry means a port of entry in the United States, as
defined by part 101 of the regulations of the Customs Service (19 CFR
part 101), or a user fee airport authorized under 19 U.S.C. 58b and
listed in part 122 of the regulations of the Customs Service (19 CFR
part 122).
(k) Private corporation means any corporation, other than a public
corporation, which is organized for the purpose of establishing a zone
project and which is chartered for this purpose under a law of the state
in which the zone is located.
(l) Processing, when referring to zone activity, means any activity
involving a change in condition of merchandise, other than
manufacturing, which results in a change in the Customs classification
of an article or in its eligibility for entry for consumption.
(m) Public corporation means a state, a political subdivision
(including a municipality) or public agency thereof, or a corporate
municipal instrumentality of one or more states.
(n) Regional Commissioner is the Regional Commissioner of Customs
for the Customs region in which the zone is located.
(o) State includes any state of the United States, the District of
Columbia, and Puerto Rico.
(p) Subzone means a special-purpose zone established as an adjunct
to a zone project for a limited purpose.
(q) Zone means a foreign-trade zone established under the provisions
of the Act and these regulations. Where used in this part, the term also
includes subzones, unless the context indicates otherwise.
(r) Zone grantee is the corporate recipient of a grant of authority
for a zone project. Where used in this part, the term grantee means zone
grantee unless otherwise indicated.
(s) Zone operator is a corporation, partnership, or person that
operates a
[[Page 50]]
zone or subzone under the terms of an agreement with the zone grantee or
an intermediary entity, with the concurrence of the District Director.
(t) Zone project means the zone plan, including all of the zone and
subzone sites that the Board authorizes a single grantee to establish.
(u) Zone site means the physical location of a zone or subzone.
(v) Zone user is a party using a zone under agreement with the zone
grantee or operator.
Subpart B--Foreign-Trade Zones Board
Sec. 400.11 Authority of the Board.
(a) In general. In accordance with the Act and procedures of this
part, the Board has authority to:
(1) Prescribe rules and regulations concerning zones;
(2) Issue grants of authority for zones and subzones, and approve
modifications to the original zone project;
(3) Approve manufacturing and processing activity in zones and
subzones as described in subpart D of this part;
(4) Make determinations on matters requiring Board decisions under
this part;
(5) Decide appeals in regard to certain decisions of the Commerce
Department's Assistant Secretary for Import Administration or the
Executive Secretary;
(6) Inspect the premises, operations and accounts of zone grantees
and operators;
(7) Require zone grantees to report on zone operations;
(8) Report annually to the Congress on zone operations;
(9) Restrict or prohibit zone operations;
(10) Impose fines for violations of the Act and this part;
(11) Revoke grants of authority for cause; and
(12) Determine, as appropriate, whether zone activity is or would be
in the public interest or detrimental to the public interest.
(b) Authority of the Chairman of the Board. The Chairman of the
Board (Secretary of the Department of Commerce) has the authority to:
(1) Appoint the Executive Secretary of the Board;
(2) Call meetings of the Board, with reasonable notice given to each
member; and
(3) Submit to the Congress the Board's annual report as prepared by
the Executive Secretary.
(c) Alternates. Each member of the Board will designate an alternate
with authority to act in an official capacity for that member.
(d) Determinations of the Board. (1) The determinations of the Board
will be based on the majority vote of the members (or alternate members)
of the Board, provided that a quorum, composed of the Secretaries of the
Departments of Commerce and Treasury (or their alternates), is voting.
(2) All votes will be recorded.
(3) The Board will issue its determination in proceedings under the
regulations in the form of a Board order.
Sec. 400.12 Responsibilities and authority of the Executive Secretary.
The Executive Secretary has the following responsibilities and
authority:
(a) Represent the Board in administrative, regulatory, operational,
and public affairs matters;
(b) Serve as director of the Commerce Department's Foreign-Trade
Zones staff;
(c) Execute and implement orders of the Board;
(d) Arrange meetings and direct circulation of action documents for
the Board;
(e) Arrange with other sections of the Department of Commerce, Board
agencies and other governmental agencies for studies and comments on
zone issues and proposals;
(f) Maintain custody of the seal, records, files and correspondence
of the Board, with disposition subject to the regulations of the
Department of Commerce;
(g) Issue notices on zone matters for publication in the Federal
Register;
(h) Determine subzone sponsorship questions as provided in
Sec. 400.22(d);
(i) Determine whether additional information is needed for
evaluation of applications and other requests for decisions under this
part, as provided for
[[Page 51]]
in various sections of this part, including Secs. 400.24, 400.25, and
400.26;
(j) Issue guidelines on information required for subzone
applications under Sec. 400.25(a)(6);
(k) Determine whether proposed modifications involve major changes
under Sec. 400.26(a)(2);
(l) Determine whether applications meet prefiling requirements under
Sec. 400.27(b);
(m) Direct processing of applications, including designation of
examiners and scheduling of hearings under Secs. 400.27 and 400.32;
(n) Authorize minor modifications to zone projects under
Sec. 400.27(f);
(o) Review changes in sourcing under Sec. 400.28(a)(3);
(p) Direct monitoring of zone activity under Sec. 400.31(d);
(q) Direct reviews and make recommendations on requests for
manufacturing/processing approvals under Sec. 400.32(b);
(r) Determine questions of scope under Sec. 400.32(c);
(s) Accept rate schedules and determine their sufficiency under
Sec. 400.42(b)(3);
(t) Review and decide zone rate complaints cases under
Sec. 400.42(b)(5);
(u) Make recommendations in cases involving questions as to whether
zone activity should be prohibited or restricted for public interest
reasons, including reviews under Sec. 400.43;
(v) Authorize under certain circumstances the return of ``zone-
restricted merchandise'' for entry into Customs territory under
Sec. 400.44;
(w) Authorize certain duty-paid retail trade under Sec. 400.45;
(x) Determine the format for the annual reports of zone grantees to
the Board and direct preparation of an annual report to Congress from
the Board under Sec. 400.46(d); and
(y) Designate an acting Executive Secretary.
Sec. 400.13 Board headquarters.
The headquarters of the Board is located within the U.S. Department
of Commerce (Herbert C. Hoover Building), Pennsylvania Avenue and 14th
Street, NW., Washington, DC 20230, as part of the office of the Foreign-
Trade Zones staff.
Subpart C--Establishment and Modification of Zone Projects
Sec. 400.21 Number and location of zones and subzones.
(a) Number of zone projects--port of entry entitlement. (1) Provided
that the other requirements of this subpart are met:
(i) Each port of entry is entitled to at least one zone project;
(ii) If a port of entry is located in more than one state, each of
the states in which the port of entry is located is entitled to a zone
project; and
(iii) If a port of entry is defined to include more than one city
separated by a navigable waterway, each of the cities is entitled to a
zone project.
(2) Zone projects in addition to those approved under the
entitlement provision of paragraph (a)(1) of this section may be
authorized by the Board if it determines that existing project(s) will
not adequately serve the public interest (convenience of commerce).
(b) Location of zones and subzones--port of entry adjacency
requirements. (1) The Act provides that the Board may approve ``zones in
or adjacent to ports of entry'' (19 U.S.C. 81b).
(2) The ``adjacency'' requirement is satisfied if:
(i) A general-purpose zone is located within 60 statute miles or 90
minutes' driving time from the outer limits of a port of entry;
(ii) A subzone meets the following requirements relating to Customs
supervision:
(A) Proper Customs oversight can be accomplished with physical and
electronic means; and
(B) All electronically produced records are maintained in a format
compatible with the requirements of the U.S. Customs Service for the
duration of the record period; and
(C) The grantee/operator agrees to present merchandise for
examination at a Customs site selected by Customs when requested, and
further agrees to present all necessary documents directly to the
Customs oversight office.
Sec. 400.22 Eligible applicants.
(a) In general. Subject to the other provisions of this section,
public or private corporations may apply for a
[[Page 52]]
grant of authority to establish a zone project. The board will give
preference to public corporations.
(b) Public and non-profit corporations. The eligibility of public
and non-profit corporations to apply for a grant of authority shall be
supported by a enabling legislation of the legislature of the state in
which the zone is to be located, indicating that the corporation,
individually or as part of a class, is authorized to so apply.
(c) Private for-profit corporations. The eligibility of private for-
profit corporations to apply for a grant of authority shall be supported
by a special act of the state legislature naming the applicant
corporation and by evidence indicating that the corporation is chartered
for the purpose of establishing a zone.
(d) Applicants for subzones--(1) Eligibility. The following entities
are eligible to apply for a grant of authority to establish a subzone:
(i) The zone grantee of the closest zone project in the same state;
(ii) The zone grantee of another zone in the same state, which is a
public corporation, if the Board, or the Executive Secretary, finds that
such sponsorship better serves the public interest; or
(iii) A state agency specifically authorized to submit such an
application by an act of the state legislature.
(2) Complaints. If an application is submitted under paragraph
(d)(1) (ii) or (iii) of this section, the Executive Secretary will:
(i) Notify, in writing, the grantee specified in paragraph (d)(1)(i)
of this section, who may, within 30 days, object to such sponsorship, in
writing, with supporting information as to why the public interest would
be better served by its acting as sponsor;
(ii) Review such objections prior to filing the application to
determine whether the proposed sponsorship is in the public interest,
taking into account:
(A) The complaining zone's structure and operation;
(B) The views of State and local public agencies; and
(C) The views of the proposed subzone operator;
(iii) Notify the applicant and complainants in writing of the
Executive Secretary's determination;
(iv) If the Executive Secretary determines that the proposed
sponsorship is in the public interest, file the application (see
Sec. 400.47 regarding appeals to decisions of the Executive Secretary).
Sec. 400.23 Criteria for grants of authority for zones and subzones.
(a) Zones. The Board will consider the following factors in
determining whether to issue a grant of authority for a zone project:
(1) The need for zone services in the port of entry area, taking
into account existing as well as projected international trade related
activities and employment impact;
(2) The adequacy of the operational and financial plans and the
suitability of the proposed sites and facilities, with justification for
duplicative sites;
(3) The extent of state and local government support, as indicated
by the compatibility of the zone project with the community's master
plan or stated goals for economic development and the views of State and
local public officials involved in economic development. Such officials
shall avoid commitments that anticipate outcome of Board decisions;
(4) The views of persons and firms likely to be affected by proposed
zone activity; and
(5) If the proposal involves manufacturing or processing activity,
the criteria in Sec. 400.31.
(b) Subzones. In reviewing proposals for subzones the Board will
also consider:
(1) Whether the operation could be located in or otherwise
accommodated by the multi-purpose facilities of the zone project serving
the area;
(2) The specific zone benefits sought and the significant public
benefit(s) involved supported by evidence to meet the requirement in
Sec. 400.31(c); and
(3) Whether the proposed activity is in the public interest, taking
into account the criteria in Sec. 400.31.
Sec. 400.24 Application for zone.
(a) In general. An application for a grant of authority to establish
a zone project shall consist of a transmittal
[[Page 53]]
letter, an executive summary and five exhibits.
(b) Letter of transmittal. The transmittal letter shall be currently
dated and signed by an authorized officer of the corporation and bear
the corporate seal.
(c) Executive summary. The executive summary shall describe:
(1) The corporation's legal authority to apply;
(2) The type of authority requested from the Board;
(3) The proposed zone site and facilities and the larger project of
which the zone is a part;
(4) The project background, including surveys and studies;
(5) The relationship of the project to the community's and state's
overall economic development plans and objectives;
(6) The plans for operating and financing the project; and
(7) Any additional pertinent information needed for a complete
summary description of the proposal.
(d) Exhibits. (1) Exhibit One (Legal Authority for the Application)
shall consist of:
(i) A certified copy of the state enabling legislation described in
Sec. 400.22;
(ii) A copy of pertinent sections of the applicant's charter or
organization papers; and
(iii) A certified copy of the resolution of the governing body of
the corporation authorizing the official signing the application.
(2) Exhibit Two (Site Description) shall consist of:
(i) A detailed description of the zone site, including size,
location, address, and a legal description of the area proposed for
approval; a table with site designations shall be included when more
than one site is involved;
(ii) A summary description of the larger project of which the zone
is a part, including type, size, location and address;
(iii) A statement as to whether the zone is within or adjacent to a
customs port of entry;
(iv) A description of zone facilities and services, including
dimensions and types of existing and proposed structures;
(v) A description of existing or proposed site qualifications
including: land-use zoning, relationship to flood-plain, infrastructure,
utilities, security, and access to transportation services;
(vi) A description of current activities carried on in or contiguous
to the project;
(vii) If part of a port facility, a summary of port and
transportation services and facilities; if not, a summary description of
transportation systems indicating connections from local and regional
points of arrival to the zone; and
(viii) A statement as to the possibilities and plans for zone
expansion.
(3) Exhibit Three (Operation and Financing) shall consist of:
(i) A statement as to site ownership (if not owned by the applicant
or proposed operator, evidence as to their legal right to use the site);
(ii) A discussion of the operational plan (if the zone or a portion
thereof is to be operated by other than the grantee, a summary of the
selection process used or to be used, the type of operation agreement
and, if available, the name and qualifications of the proposed
operator);
(iii) A brief explanation of the plans for providing facilities,
physical security, and for satisfying the requirements for Customs
automated systems;
(iv) A summary of the plans for financing capital and operating
costs, including a statement as to the source and use of funds; and
(v) The estimated time schedule for construction and activation.
(4) Exhibit Four (Economic Justification) shall include:
(i) A statement of the community's overall economic goals and
strategies in relation to those of the region and state;
(ii) A reference to the plan or plans on which the goals are based
and how they relate to the zone project;
(iii) An economic profile of the community including identification
and discussion of dominant sectors in terms of percentage of employment
or income, area resources and problems, economic imbalances,
unemployment rates, area foreign trade statistics, and
[[Page 54]]
area port facilities and transportation networks;
(iv) A statement as to the role and objective of the zone project,
and a justification for each of the proposed sites;
(v) A discussion of the anticipated economic impact, direct and
indirect, of the zone project, including references to public costs and
benefits, employment, U.S. international trade, and environmental
impact;
(vi) A statement as to the need for zone services in the community,
with information on surveys of business, and specific expressions of
interest from proposed zone users, with letters of intent from those
firms that are considered prime prospects; and
(vii) A description of proposed manufacturing and processing
operations, if applicable, with information covering the factors
described in Sec. 400.31(b), including the nature and scope of the
operation and production process, materials and components used, items
to be foreign sourced with relevant tariff information, zone benefits
anticipated and how they will affect the firm's plans, and the economic
impact of the operation on the community and on related domestic
industries.
(5) Exhibit Five (Maps) shall consist of:
(i) The following maps and drawings:
(A) State and county maps showing the general location of the zone
in terms of the area's transportation network;
(B) A U.S. Geodetic Survey map or the equivalent showing in red the
location of the proposed zone; and
(C) A detailed blueprint of the zone or subzone area showing zone
boundaries in red, with dimensions and metes and bounds, or other legal
description, and showing existing and proposed structures.
(ii) Proposals involving existing zones shall include a drawing
showing existing zone sites and the proposed changes.
(e) Additional information. The Board or the Executive Secretary may
require additional information needed to adequately evaluate a proposal.
(f) Amendment of application. The Board or the Executive Secretary
may allow amendment of the application.
(g) Drafts. Applicants may submit a draft application to the
Executive Secretary for review.
(h) Format and number of copies. Unless the Executive Secretary
alters the requirements of this paragraph, submit an original and 12
copies of the application on 8\1/2\'' x 11'' (216 x 279 mm) paper.
Exhibit Five of the original application shall contain full-sized maps,
and copies shall contain letter-sized reductions.
(i) Where to file. Address and mail the application to the Secretary
of Commerce, Attention: Executive Secretary, Foreign-Trade Zones Board,
U.S. Department of Commerce, Pennsylvania Avenue and 14th Street, NW.,
Washington, DC 20230.
(Approved by the Office of Management and Budget under control number
0625-0139)
Sec. 400.25 Application for subzone.
(a) In general. An application to establish a subzone as part of a
proposed or existing zone shall be submitted in accordance with the
format in Sec. 400.24, except that the focus of the information provided
in Exhibit Four shall be on the specific activity involved and its net
economic effect. The information submitted in Exhibit Four shall
include:
(1) A summary as to the reasons for the subzone and an explanation
of its anticipated economic effects;
(2) Identity of the subzone user and its corporate affiliation;
(3) Description of the proposed activity, including:
(i) Products;
(ii) Materials and Components;
(iii) Sourcing plans (domestic/foreign);
(iv) Tariff rates and other import requirements or restrictions;
(v) Information to assist the Board in making a determination under
Secs. 400.31(b)(1)(iii) and 400.31(b)(2);
(vi) Benefits to subzone user;
(vii) Information required in Sec. 400.24(d)(4)(vii);
(viii) Information as to whether alternative procedures have been
considered as a means of obtaining the benefits sought;
(ix) Information on the industry involved and extent of
international competition; and
[[Page 55]]
(x) Economic impact of the operation on the area;
(4) Reason operation cannot be conducted within a general-purpose
zone;
(5) Statement as to environmental impact; and
(6) Any additional information requested by the Board or the
Executive Secretary in order to conduct the review. The Executive
Secretary may issue guidelines as to the kind of detailed information
needed for various types of subzone cases.
(b) Burden of proof. An applicant for a subzone must demonstrate to
the Board that the proposed operation meets the criteria in
Sec. 400.23(b).
(Approved by the Office of Management and Budget under control number
0625-0139)
Sec. 400.26 Application for expansion or other modification to zone project.
(a) In general. (1) A grantee may apply to the Board for authority
to expand or otherwise modify its zone project.
(2) The Executive Secretary, in consultation with the District
Director, will determine whether the proposed modification involves a
major change in the zone plan and is thus subject to paragraph (b) of
this section, or is minor and subject to paragraph (c) of this section.
In making this determination the Executive Secretary will consider the
extent to which the proposed modification would:
(i) Substantially modify the plan originally approved by the Board;
or
(ii) Expand the physical dimensions of the approved zone area as
related to the scope of operations envisioned in the original plan.
(b) Major modification to zone project. An application for a major
modification to an approved zone project shall be submitted in
accordance with the format in Sec. 400.24, except that:
(1) Reference may be made to current information in an application
from the same applicant on file with the Board; and
(2) The content of Exhibit Four shall relate specifically to the
proposed change.
(c) Minor modification to zone project. Other applications or
requests under this subpart, including those for minor revisions of zone
boundaries, grant of authority transfers, or time extensions, shall be
submitted in letter form with information and documentation necessary
for analysis, as determined by the Executive Secretary, who shall
determine whether the proposed change is a minor one subject to this
paragraph (c) instead of paragraph (b) of this section (see,
Sec. 400.27(f)).
(d) Applications for other revisions to grants of authority.
Applications or requests for revisions to grants of authority, such as
restriction modifications, shall be submitted in letter form with
information and documentation necessary for analysis, as determined by
the Executive Secretary. If the change involves removal or significant
modification of a restriction included by the Board in a grant of
authority, the review procedures of Sec. 400.32 shall apply. If not, the
procedure set forth in Sec. 400.27(f) shall apply.
(Approved by the Office of Management and Budget under control number
0625-0139)
Sec. 400.27 Procedure for processing application.
(a) In general. This section outlines the procedure followed in
processing applications submitted under Secs. 400.24-400.26. In
addition, it sets forth the time schedules which will normally be
applied in processing applications. The schedules will provide guidance
to applicants with respect to the time frames for each of the procedural
steps involved in the Board's review. Under these schedules,
applications involving manufacturing or processing activity would be
processed within 1 year, and those not involving such activity, within
10 months. While the schedules set forth a standard time frame, the
Board may determine that it requires additional time based on special
circumstances, such as when the public comment period must be reopened
pursuant to paragraphs (d)(2)(v)(B) and (d)(3)(vi)(B) of this section.
(b) Prefiling review. Applications subject to Sec. 400.29 shall be
accompanied with a check in accordance with that section, and will be
dated upon receipt at the headquarters of the Board. The Executive
Secretary will determine whether the application satisfies the
requirements of Secs. 400.22-400.24, 400.25,
[[Page 56]]
400.26, 400.32, and other applicable provisions of this part.
(1) If the application is deficient, the Executive Secretary will
notify the applicant within 20 days of receipt of the application,
specifying the deficiencies. The applicant shall correct the
deficiencies and submit the correct application within 30 days of
notification. Otherwise, the application (original) will be returned.
(2) If the application is sufficient, the Executive Secretary will
within 45 days of receipt of the application:
(i) Formally file the application, thereby initiating the proceeding
or review;
(ii) Assign a case docket number in cases requiring a Board order;
and
(iii) Notify the applicant.
(c) Procedure--Executive Secretary responsibilities. After
initiating a proceeding based on an application under Secs. 400.24-
400.25, or 400.26(b), the Executive Secretary will:
(1) Designate an examiner to conduct a review and prepare a report
with recommendations for the Board;
(2) Publish in the Federal Register a notice of the formal filing of
the application and initiation of the review which includes the name of
the applicant, a description of the zone project, information as to any
hearing scheduled at the outset, and an invitation for public comment,
including a time period during which the public may submit evidence,
factual information, and written arguments. Normally, the comment period
will close 60 days after the date the notice appears, except that, if a
hearing is held (see, Sec. 400.51), the period will not close prior to
15 days after the date of the hearing. The closing date for general
comment will ordinarily be followed by an additional 15-day period for
rebuttal comments;
(3) Send copies of the filing and initiation notice and the
application to:
(i) The Commissioner of Customs and the Regional Commissioner, or a
designee; and
(ii) The Resident Member, Board of Engineers for Rivers and Harbors,
Department of the Army, and the District Engineer;
(4) Arrange for hearings, as appropriate;
(5) Transmit the reports and recommendations of the examiner and of
the officials identified in paragraph (c)(3) of this section to the
Board for appropriate action; and
(6) Notify the applicant in writing and publish notice in the
Federal Register of the Board's determination.
(d) Case reviews--procedure and time schedule--(1) Customs and army
engineer review. The Regional Commissioner (Customs), or a designee, and
the District Engineer (Army), in accordance with the regulations and
directives of their respective agencies, will submit their technical
reports to the Executive Secretary within 45 days of the conclusion of
the public comment period described in paragraph (c)(2) of this section.
(2) Examiners reviews--non-manufacturing/processing. Examiners
assigned to cases not involving manufacturing or processing activity
shall conduct a review taking into account the factors enumerated in
Sec. 400.23 and other appropriate sections of this part, which shall
include:
(i) Conducting or participating in necessary hearings scheduled by
the Executive Secretary;
(ii) Reviewing case records, including public comments;
(iii) Requesting information and evidence from parties of record;
(iv) Developing information and evidence necessary for evaluation
and analysis of the application in accordance with the criteria of the
Act and this part;
(v) Preparing a report with recommendations to the Board and
submitting it to the Executive Secretary within 120 days of the close of
the period for public comment (see, paragraph (c)(2) of this section).
(A) If the report is unfavorable to the applicant, it shall be
considered a preliminary report and the applicant shall be notified
within 5 days (in writing or by phone) and given 30 days from the date
of notification in which to respond to the report and submit additional
evidence.
(B) If the response contains new evidence on which there has not
been an opportunity for public comment, the Executive Secretary will
publish notice
[[Page 57]]
in the Federal Register after completion of the review of the response.
The new material will be made available for public inspection and the
Federal Register notice will invite further public comment for 30 days,
with an additional 15-day period for rebuttal comments.
(C) The Customs and District Engineer (Army) advisers shall be
notified when necessary for their further comments, which shall be
submitted within 45 days after their notification.
(D) The examiners report in a situation under paragraph (d)(2)(v)(A)
of this section shall be completed and submitted to the Executive
Secretary within 30 days after receipt of additional evidence or notice
from the applicant that there will be none; except that, if paragraph
(d)(2)(v)(B) of this section applies, the report will be submitted
within 30 days of the close of the period for public comment.
(3) Examiners reviews--cases involving manufacturing or processing
activity. Examiners shall conduct a review taking into account the
factors enumerated in Sec. 400.23, Sec. 400.31, and other appropriate
sections of this part, which shall include:
(i) Conducting or participating in hearings scheduled by the
Executive Secretary;
(ii) Reviewing case records, including public comments;
(iii) Requesting information and evidence from parties of record;
(iv) Developing information and evidence necessary for analysis of
the threshold factors and the economic factors enumerated in
Sec. 400.31;
(v) Conducting an analysis to include:
(A) An evaluation of policy considerations pursuant to
Secs. 400.31(b)(1)(i) and 400.31(b)(1)(ii);
(B) An evaluation of the economic factors enumerated in
Secs. 400.31(b)(1)(iii) and 400.31(b)(2), which shall include an
evaluation of the economic impact on domestic industry, considering both
producers of like products and producers of components/materials used in
the manufacture/processing or assembly of the products. The evaluation
will take into account such factors as market conditions, price
sensitivity, degree and nature of foreign competition, effect on exports
and imports, and the net effect on U.S. employment;
(vi) Conducting appropriate industry surveys when necessary; and
(vii) Preparing a report with recommendations to the Board and
submitting it to the Executive Secretary within 150 days of the close of
the period for public comment:
(A) If the report is unfavorable to the applicant, it shall be
considered a preliminary report and the applicant shall be notified (in
writing or by phone) and given 45 days from the date of notification in
which to respond to the report and submit additional evidence pertinent
to the factors considered in the report.
(B) If the response contains new evidence on which there has not
been an opportunity for public comment, the Executive Secretary will
publish notice in the Federal Register after completion of the review of
the response. The new material will be made available for public
inspection and the Federal Register notice will invite further public
comment for 30 days, with an additional 15-day period for rebuttal
comments.
(e) Procedure--Completion of review--(1) The Executive Secretary
will circulate the examiners report with recommendations to Board
members for their review and votes (by resolution).
(2) The Treasury and Army Board members will return their votes to
the Executive Secretary within 30 days, unless a formal meeting is
requested (see, Sec. 400.11(d)).
(3) The Commerce Department will complete the decision process
within 15 days of receiving the votes of both other Board members, and
the Executive Secretary will publish the Board decision.
(f) Procedure--Application for minor modification of zone project.
(1) The Executive Secretary, with the concurrence of the District
Director, will make a determination in cases under Sec. 400.26(c)
involving minor changes to zone projects that do not require a Board
order, such as boundary modifications, including certain relocations,
and will notify the applicant in writing of the decision within 30 days
[[Page 58]]
of the determination that the application or request can be processed
under Sec. 400.26(c).
(2) The District Director shall provide the decision as to
concurrence within 20 days after being notified of the request or
application.
Sec. 400.28 Conditions, prohibitions and restrictions applicable to grants of authority.
(a) In general. Grants of authority issued by the Board for the
establishment of zones or subzones, including those already issued, are
subject to the Act and this part and the following general conditions or
limitations:
(1) Approvals from the grantee and the District Director, pursuant
to 19 CFR part 146, are required prior to the activation of any portion
of an approved zone project; and
(2) Approval of the Board or the Commerce Department's Assistant
Secretary for Import Administration pursuant to subpart D of this part
is required prior to the commencement of manufacturing beyond the scope
of that approved as part of the application or pursuant to reviews under
this part (e.g., new end products, significant expansions of plant
production capacity), and of similar changes in processing activity
which involves foreign articles subject to quantitative import controls
(quotas) or results in articles subject to a lower (actual or effective)
duty rate (inverted tariff) than any of their foreign components.
(3) Sourcing changes--(i) Notification requirement. The grantee or
operator of a zone or subzone shall notify the Executive Secretary when
there is a change in sourcing for authorized manufacturing or processing
activity which involves the use of new foreign articles subject to
quotas or inverted tariffs, unless--
(A) Entries for consumption are not to be made at the lower duty
rate; or
(B) The product in which the foreign articles are to be incorporated
is being produced for exportation.
(ii) Notification procedure. Notification shall be given prior to
the commencement of the activity, when possible, otherwise at the time
the new foreign articles arrive in the zone or are withdrawn from
inventory for use in production. Requests may be made to the Executive
Secretary for authority to submit notification of sourcing changes on a
quarterly federal fiscal year basis covering changes in the previous
quarter.
(iii) Reviews. (A) Upon notification of a sourcing change under
paragraph (a)(3)(i) of this section, within 30 days, the Executive
Secretary will conduct a preliminary review of the changes in relation
to the approved activity to determine whether they could have
significant adverse effects, taking into account the factors enumerated
in Sec. 400.31(b), and will submit a report and recommendation to the
Commerce Department's Assistant Secretary for Import Administration, who
shall determine whether review is necessary. The procedures of
Sec. 400.32(b) shall be used in these situations when appropriate.
(B) The Board or the Commerce Department's Assistant Secretary for
Import Administration may, based on public interest grounds, prohibit or
restrict the use of zone procedures in regard to the change in sourcing,
including requiring that items be placed in privileged foreign status
(19 CFR 146.41) upon admission to a zone or subzone.
(C) The Executive Secretary shall direct reviews necessary to ensure
that activity involved in these situations continues to be in the public
interest.
(4) Prior to activation of a zone, the zone grantee or operator
shall obtain all necessary permits from federal, state and local
authorities, and except as otherwise specified in the Act or this part,
shall comply with the requirements of those authorities.
(5) A grant of authority for a zone or a subzone shall lapse unless
the zone project (in case of subzones, the subzone facility) is
activated, pursuant to 19 CFR part 146, and in operation not later than
five years from:
(i) A Board order (authorizing the zone or subzone) issued after
November 7, 1991; or
(ii) November 7, 1991.
(6) A grant of authority approved under this subpart includes
authority for the grantee to permit the erection of buildings necessary
to carry out the approved zone project subject to concurrence of the
District Director.
[[Page 59]]
(7) Zone grantees, operators, and users shall permit federal
government officials acting in an official capacity to have access to
the zone project and records during normal business hours and under
other reasonable circumstances.
(8) A grant of authority may not be sold, conveyed, transferred, set
over, or assigned (FTZ Act, section 17; 19 U.S.C. 81q). Private
ownership of zone land and facilities is permitted provided the zone
grantee retains the control necessary to implement the approved zone
project. Should title to land or facilities be transferred after a grant
of authority is issued, the zone grantee must retain, by agreement with
the new owner, a level of control which allows the grantee to carry out
its responsibilities as grantee. The sale of a zone site or facility for
more than its fair market value without zone status could, depending on
the circumstances, be subject to section 17 of the Act.
(9) A grant of authority will not be construed to make the zone
grantee automatically liable for violations by operators, users, or
other parties.
(b) Additional conditions, prohibitions and restrictions. Other
requirements, conditions or restrictions under Federal, State or local
law may apply to the zone or subzone authorized by the grant of
authority.
(c) Revocation of grants of authority.
(1) In general. As provided in this section, the Board can revoke in
whole or in part a grant of authority for a zone or subzone whenever it
determines that the zone grantee or, in the case of subzones, the
subzone operator, has violated, repeatedly and willfully, the provisions
of the Act.
(2) Procedure. When the Board has reason to believe that the
conditions for revocation, as described in paragraph (a) of this
section, are met, the Board will:
(i) Notify the zone or subzone grantee in writing stating the nature
of the alleged violations, and provide the grantee an opportunity to
request a hearing on the proposed revocation;
(ii) Conduct a hearing, if requested or otherwise if appropriate;
(iii) Make a determination on the record of the proceeding not
earlier than 4 months after providing notice to the zone grantee under
paragraph (b)(1) of this section; and
(iv) If the Board's determination is affirmative, publish notice of
revocation of the grant of authority in the Federal Register.
(3) As provided in section 18 of the Act (19 U.S.C. 81r(c)), the
zone or subzone grantee may appeal an order of the Board revoking the
grant of authority.
[56 FR 50798, Oct. 8, 1991; 56 FR 65833, Dec. 19, 1991]
Sec. 400.29 Application fees.
(a) In general. This section sets forth a uniform system of charges
in the form of fees to recover some costs incurred by the Foreign-Trade
Zones staff of the Department of Commerce in processing the applications
listed in paragraph (b) of this section. The legal authority for the
fees is 31 U.S.C. 9701, which provides for the collection of user fees
by agencies of the Federal Government.
(b) Uniform system of user fee charges. The following graduated fee
schedule establishes fees for certain types of applications and requests
for authority based on their average processing time. Applications
combining requests for more than one type of approval are subject to the
fee for each category.
(1) Additional general-purpose zones (Sec. 400.24; Sec.
400.21(a)(2))................................................. $3,200
(2) Special-purpose subzones (Sec. 400.25):
(i) Non-manufacturing/processing or less than three products. 4,000
(ii) Manufacturing/processing--three or more products........ 6,500
(3) Expansions (Sec. 400.26(b))............................... 1,600
(c) Applications submitted to the Board shall include a check drawn
on a national or state bank or trust company of the United States or
Puerto Rico in the amount called for in paragraph (b) of this section.
Uncertified checks must be acceptable for deposit by a Federal Reserve
bank or branch.
(d) Applicants shall make their checks payable to the U.S.
Department of Commerce ITA. The checks will be deposited by ITA into the
Treasury receipts account. If applications are found deficient under
Sec. 400.27(b)(1), or withdrawn by applicants prior to formal filing,
refunds will be made.
[[Page 60]]
Subpart D--Manufacturing and Processing Activity--Reviews
Sec. 400.31 Manufacturing and processing activity; criteria.
(a) In general. Pursuant to section 15(c) of the Act (19 U.S.C.
81o(c)), the Board has authority to restrict or prohibit zone activity
``that in its judgment is detrimental to the public interest.'' When
evaluating zone and subzone manufacturing and processing activity,
either as proposed in an application, in a request for manufacturing/
processing approval, or as part of a review of an ongoing operation, the
Board shall determine whether the activity is in the public interest by
reviewing it in relation to the evaluation criteria contained in
paragraph (b) of this section. With regard to processing activity, this
section shall apply only when the activity involves foreign articles
subject to quantitative import controls (quotas) or results in articles
subject to a lower duty rate (inverted tariff) than any of their foreign
components. Such a review involves consideration of whether the activity
is consistent with trade policy and programs, and whether its net
economic effect is positive.
(b) Evaluation criteria--(1) Threshold factors. It is the policy of
the Board to authorize zone activity only when it is consistent with
public policy and, in regard to activity involving foreign merchandise
subject to quotas or inverted tariffs, when zone procedures are not the
sole determining cause of imports. Thus, without undertaking a review of
the economic factors enumerated in Sec. 400.31(b)(2), the Board shall
deny or restrict authority for proposed or ongoing activity if it
determines that:
(i) The activity is inconsistent with U.S. trade and tariff law, or
policy which has been formally adopted by the Executive branch;
(ii) Board approval of the activity under review would seriously
prejudice U.S. tariff and trade negotiations or other initiatives; or
(iii) The activity involves items subject to quantitative import
controls or inverted tariffs, and the use of zone procedures would be
the direct and sole cause of imports that, but for such procedures,
would not likely otherwise have occurred, taking into account imports
both as individual items and as components of imported products.
(2) Economic factors. After its review of threshold factors, if
there is a basis for further consideration, the Board shall consider the
following factors in determiing the net economic effect of the activity
or proposed activity:
(i) Overall employment impact;
(ii) Exports and reexports;
(iii) Retention or creation of manufacturing or processing activity;
(iv) Extent of value-added activity;
(v) Overall effect on import levels of relevant products, including
import displacement;
(vi) Extent and nature of foreign competition in relevant products;
(vii) Impact on related domestic industry, taking into account
market conditions; and
(viii) Other relevant information relating to public interest and
net economic impact considerations, including technology transfers and
investment effects.
(c) Methodology and evidence--(1)(i) The first phase
(Sec. 400.31(b)) involves consideration of threshold factors. If an
examiner or reviewer makes a negative finding on any of the factors in
paragraph (b)(1) of this section in the course of a review, the
applicant shall be informed pursuant to Sec. 400.27(d)(3)(vii)(A). When
threshold factors are the basis for a negative recommendation in a
review of ongoing activity, the zone grantee and directly affected party
shall be notified and given an opportunity to submit evidence pursuant
to Sec. 400.27(d)(3)(vii)(A). If the Board determines in the negative
any of the factors in paragraph (b)(1) of this section, it shall deny or
restrict authority for the proposed or ongoing activity.
(ii) The process for paragraph (b)(2) of this section involves
consideration of the enumerated economic factors, taking into account
their relative weight and significance under the circumstances. Previous
evaluations in similar cases are considered. The net effect is arrived
at by balancing the positive and negative factors and arriving at a net
economic effect.
[[Page 61]]
(2) Contributory effect. In assessing the significance of the
economic effect of the zone activity as part of the consideration of
economic factors, and in consideration of whether there is a significant
public benefit, the Board may consider the contributory effect zone
savings have as an incremental part of cost effectiveness programs
adopted by companies to improve their international competitiveness.
(3) Burden of proof. Applicants for subzones shall have the burden
of submitting evidence establishing that the activity does or would
result in a significant public benefit, taking into account the factors
in paragraph (b) of this section. Applicants for approval of
manufacturing or processing in general-purpose zones shall submit
evidence regarding the positive economic effects that would result from
activity within the zone and may submit evidence and comments as to
policy considerations. Both types of applicants are expected to submit
information in response to evidence of adverse economic effects during
the public comment period. Parties should submit evidence that is
probative and substantial in addressing the matter in issue.
(d) Monitoring and post-approval reviews--(1) Ongoing zone activity
may be reviewed at anytime to determine whether it is in compliance with
the Act and regulations, as well as the authority granted by the Board.
Reviews may also be conducted to determine whether there are changed
circumstances that raise questions as to whether the activity is
detrimental to the public interest, taking into account the factors
enumerated in Sec. 400.31. The Board may prescribe special monitoring
requirements in its decisions when appropriate.
(2) Reviews may be initiated by the Board, the Commerce Department's
Assistant Secretary for Import Administration, or the Executive
Secretary; or, they may be undertaken in response to requests from
parties directly affected by the activity in question and showing good
cause.
(3) Upon review, if the Board finds that zone activity is no longer
in the public interest, taking into account the provisions of
Sec. 400.31, it may restrict the activity in question. The
appropriateness of a delayed effective date will be considered in such
cases.
[56 FR 50798, Oct. 8, 1991; 56 FR 56544, Nov. 5, 1991]
Sec. 400.32 Procedure for review of request for approval of manufacturing or processing.
(a) Request as part of application for grant of authority. A request
for approval of proposed manufacturing or processing activity may be
submitted as part of an application under Secs. 400.24-400.26(a). The
Board will review the request taking into account the criteria in
Sec. 400.31(b).
(b) Request for manufacturing/processing in approved zone or
subzone. Prior to the commencement of manufacturing in a zone or subzone
involving activity beyond the scope of that which has been previously
authorized at the facility (i.e., new end products, significant
expansions of plant production capacity), and of similar changes in
processing activity that involves foreign articles subject to quotas or
inverted tariffs, zone grantees or operators shall request the
determination referred to in Sec. 400.31(a) by submitting a request in
writing to the Executive Secretary (Sec. 400.28(a)(2)). Such requests
shall include the information required by Secs. 400.24(d)(4)(vii) and
400.25.
(1) The Commerce Department's Assistant Secretary for Import
Administration may make determinations in these cases based upon a
review by the FTZ staff and the recommendation of the Executive
Secretary, when:
(i) The proposed activity is the same, in terms of products
involved, to activity recently approved by the Board and similar in
circumstances; or
(ii) The activity is for export only; or
(iii) The zone benefits sought do not involve the election of non-
privileged foreign status (19 CFR 146.42) on items involving inverted
tariffs; or
(iv) The District Director determines that the activity could
otherwise be conducted under Customs bonded procedures.
(2) When the informal procedure in paragraph (b)(1) of this section
is not appropriate--
(i) The Executive Secretary will:
[[Page 62]]
(A) Assign a case docket number and give notice in the Federal
Register inviting public comment;
(B) Arrange a public hearing, if appropriate;
(C) Appoint an examiner, if appropriate, to conduct a review and
prepare a report with recommendations for the Board; and
(D) Prepare and transmit a report with recommendations, or transmit
the examiners report, to the Board for appropriate action; and
(ii) The Board will make a determination on the requests, and the
Executive Secretary will notify the grantee in writing of the Board's
determination, and will publish notice of the determination in the
Federal Register.
(c) Scope determinations. Determinations shall be made by the
Executive Secretary as to whether changes in activity are within the
scope of related activity already approved for the facility involved
under this part. When warranted, the procedures of paragraph (b)(2) of
this section will be followed.
Sec. 400.33 Restrictions on manufacturing and processing activity.
(a) In general. In approving manufacturing or processing activity
for a zone or subzone the Board may adopt restrictions to protect the
public interest, health, or safety. The Commerce Department's Assistant
Secretary for Import Administration may similarly adopt restrictions in
exercising authority under Sec. 400.32(b)(1).
(b) Restrictions on items subject to antidumping and countervailing
duty actions--(1) Board policy. Zone procedures shall not be used to
circumvent antidumping (AD) and countervailing duty (CVD) actions under
19 CFR parts 353 and 355.
(2) Admission of items subject to AD/CVD actions. Items subject to
AD/CVD orders or items which would be otherwise subject to suspension of
liquidation under AD/CVD procedures, if they entered U.S. Customs
territory, shall be placed in privileged foreign status (19 CFR 146.41)
upon admission to a zone or subzone. Upon entry for consumption, such
items shall be subject to duties under AD/CVD orders or to suspension of
liquidation, as appropriate, under 19 CFR parts 353 and 355.
Subpart E--Zone Operations and Administrative Requirements
Sec. 400.41 Zone operations; general.
Zones shall be operated by or under the contractual oversight of
zone grantees, subject to the requirements of the Act and this part, as
well as those of other federal, state and local agencies having
jurisdiction over the site and operation. Zone grantees shall ensure
that the reasonable zone needs of the business community are served by
their zone projects. The District Director represents the Board with
regard to the zone projects in the district and is responsible for
enforcement, including physical security and access requirements, as
provided in 19 CFR part 146.
Sec. 400.42 Requirements for commencement of operations in a zone project.
(a) In general. The following actions are required before operations
in a zone may commence:
(1) Approval by the District Director of an application for
activation is required as provided in 19 CFR part 146; and
(2) The Executive Secretary will review proposed manufacturing or
processing, pursuant to Sec. 400.32, and a zone schedule as provided in
this section.
(b) Zone schedule. (1) The zone grantee shall submit to the
Executive Secretary and to the District Director a zone schedule which
sets forth:
(i) Internal rules and regulations for the zone; and
(ii) A statement of the rates and charges (fees) applicable to zone
users.
(2) A zone schedule shall consist of typed, loose-leaf, numbered,
letter-sized pages, enclosed in covers, and shall contain:
(i) A title page, with information to include:
(A) The name of the zone grantee and operator(s);
(B) Schedule identification;
(C) Site description;
(D) Date of original schedule; and
(E) Name of the preparer;
(ii) A table of contents;
(iii) Administrative information;
(iv) A statement of zone operating policy, rules and regulations,
including
[[Page 63]]
uniform procedures regarding the construction of buildings and
facilities; and
(v) A section listing rates and charges for zones and subzones with
information sufficient for the Board or the Executive Secretary to
determine whether the rates and charges are reasonable based on other
like operations in the port of entry area, and whether there is uniform
treatment under like circumstances among zone users.
(3) The Executive Secretary will review the schedule to determine
whether it contains sufficient information for users concerning the
operation of the facility and a statement of rates and charges as
provided in paragraph (b)(2) of this section. If the Executive Secretary
determines that the schedule satisfies these requirements, the Executive
Secretary will notify the zone grantee, unless there is a basis for
review under paragraph (b)(5) of this section. A copy of the schedule
shall be available for public inspection at the offices of the zone
grantee and operator. The zone grantee shall send a copy to the District
Director, who may submit comments to the Executive Secretary.
(4) Amendments to the schedule shall be prepared and submitted in
the manner described in paragraphs (b)(1) through (b)(3) of this
section, and listed in the concluding section of the schedule, with
dates.
(5) A zone user or prospective user showing good cause may object to
the zone or subzone fee on the basis that it is not reasonable, fair and
uniform, by submitting to the Executive Secretary a complaint in writing
with supporting information. The Executive Secretary will review the
complaint and issue a report and decision, which will be final unless
appealed to the Board within 30 days. The Board or the Executive
Secretary may otherwise initiate a review for cause. The factors
considered in reviewing reasonableness and fairness, will include:
(i) The going-rates and charges for like operations in the area and
the extra costs of operating a zone, including return on investment; and
(ii) In the case of subzones, the value of actual services rendered
by the zone grantee or operator, and reasonable out-of-pocket expenses.
Sec. 400.43 Restriction and prohibition of certain zone operations.
(a) In general. After review, the Board may restrict or prohibit any
admission of merchandise into a zone project or operation in a zone
project when it determines that such activity is detrimental to the
public interest, health or safety.
(b) Initiation of review. The Board may conduct a proceeding, or the
Executive Secretary a review, to consider a restriction or prohibition
under paragraph (a) of this section either self-initiated, or in
response to a complaint made to the Board by a party directly affected
by the activity in question and showing good cause.
Sec. 400.44 Zone-restricted merchandise.
(a) In general. Merchandise which has been given export status by
Customs officials (``zone-restricted merchandise''--19 CFR 146.44) may
be returned to the Customs Territory of the United States only when the
Board determines that the return would be in the public interest. Such
returns are subject to the Customs laws and the payment of applicable
duties and excise taxes (19 U.S.C. 81c, 4th proviso).
(b) Criteria. In making the determination described in paragraph (a)
of this section, the Board will consider:
(1) The intent of the parties;
(2) Why the goods cannot be exported;
(3) The public benefit involved in allowing their return; and
(4) The recommendation of the District Director.
(c) Procedure. (1) A request for authority to return ``zone-
restricted'' merchandise into Customs territory shall be made to the
Executive Secretary in letter form by the zone grantee or operator of
the zone in which the merchandise is located, with supporting
information and documentation.
(2) The Executive Secretary will investigate the request and prepare
a report for the Board.
(3) The Executive Secretary may act for the Board under this section
in cases involving merchandise valued at 500,000 dollars or less,
provided requests
[[Page 64]]
are accompanied with a letter of concurrence from the District Director.
Sec. 400.45 Retail trade.
(a) In general. Retail trade is prohibited in zones, except that
sales or other commercial activity involving domestic, duty-paid, and
duty-free goods may be conducted within an activated zone project under
permits issued by the zone grantee and approved by the Board, with the
further exception that no permits shall be necessary for sales involving
domestic, duty-paid or duty-free food and non-alcoholic beverage
products sold within the zone or subzone for consumption on premises by
persons working therein. The District Director will determine whether an
activity is retail trade, subject to review by the Board when the zone
grantee requests such a review with a good cause.
(b) Procedure. Requests for Board approval under this section shall
be submitted in letter form, with supporting documentation, to the
District Director, who is authorized to act for the Board in these
cases, subject to the concurrence of the Executive Secretary.
(c) Criteria. In evaluating requests under this section, the
District Director and the Executive Secretary will consider:
(1) Whether any public benefits would result from approval; and
(2) The economic effect such activity would have on the retail trade
outside the zone in the port of entry area.
[56 FR 50798, Oct. 8, 1991; 57 FR 2319, Jan. 21, 1992]
Sec. 400.46 Accounts, records and reports.
(a) Zone accounts. Zone accounts shall be maintained in accordance
with generally accepted accounting principles, and in compliance with
the requirements of Federal, State or local agencies having jurisdiction
over the site or operation.
(b) Records and forms. Zone records and forms shall be prepared and
maintained in accordance with the requirements of the Customs Service
and the Board, and the zone grantee shall retain copies of applications
it submits to the Board.
(c) Maps and drawings. Zone grantees or operators, and District
Directors, shall keep current layout drawings of approved sites as
described in Sec. 400.24(d)(5), showing activated portions, and a file
showing required approvals. The zone grantee shall furnish necessary
maps to the District Director.
(d) Annual reports. (1) Zone grantees shall submit annual reports to
the Board at the time and in the format prescribed by the Executive
Secretary, for use by the Executive Secretary in the preparation of the
Board's annual report to the Congress.
(2) The Board shall submit an annual report to the Congress.
(Approved by the Office of Management and Budget under control number
(0625-0109)
Sec. 400.47 Appeals to the Board from decisions of the Assistant Secretary for Import Administration and the Executive Secretary.
(a) In general. Decisions of the Assistant Secretary for Import
Administration and the Executive Secretary made pursuant to
Secs. 400.22(d)(2)(ii), 400.32(b)(1), 400.44(c)(3), and 400.45(b)(2) may
be appealed to the Board by adversely affected parties showing good
cause.
(b) Procedures. Parties appealing a decision under paragraph (a) of
this section shall submit a request for review to the Board in writing,
stating the basis for the request, and attaching a copy of the decision
in question, as well as supporting information and documentation. After
a review, the Board will notify the complaining party of its decision in
writing.
Subpart F--Notice, Hearings, Record and Information
Sec. 400.51 Notice and hearings.
(a) In general. The Executive Secretary will publish notice in the
Federal Register inviting public comment on applications docketed for
Board action (see, Sec. 400.27(c)), and with regard to other reviews or
matters considered under this part when public comment is necessary.
Applicants shall give appropriate notice of their proposals in local
newspapers. The Board, the
[[Page 65]]
Secretary, the Commerce Department's Assistant Secretary for Import
Administration, or the Executive Secretary, as appropriate, may schedule
and/or hold hearings during any proceedings or reviews conducted under
this part whenever necessary or appropriate.
(b) Requests for hearings--(1) A directly affected party showing
good cause may request a hearing during a proceeding or review.
(2) The request must be made within 30 days of the beginning of the
period for public comment (see, Sec. 400.27) and must be accompanied by
information establishing the need for the hearing and the basis for the
requesting party's interest in the matter.
(3) A determination as to the need for the hearing will be made by
the Commerce Department's Assistant Secretary for Import Administration
within 15 days after the receipt of such a request.
(c) Procedure for public hearings. The Board will publish notice in
the Federal Register of the date, time and location of a hearing. All
participants shall have the opportunity to make a presentation.
Applicants and their witnesses shall ordinarily appear first. The
presiding officer may adopt time limits for individual presentations.
Sec. 400.52 Official record; public access.
(a) Content. The Executive Secretary will maintain at the location
stated in Sec. 400.53(d) an official record of each proceeding within
the Board's jurisdiction. The Executive Secretary will include in the
official record all factual information, written argument, and other
material developed by, presented to, or obtained by the Board in
connection with the proceeding. The official record will contain
material that is public, business proprietary, privileged, and
classified. While there is no requirement that a verbatim record shall
be kept of public hearings, the proceedings of such hearings shall
ordinarily be recorded and transcribed when significant opposition is
involved.
(b) Opening and closing of official record. The official record
opens on the date the Executive Secretary files an application or
receives a request that satisfies the applicable requirements of this
part and closes on the date of the final determination in the proceeding
or review, as applicable.
(c) Protection of the official record. Unless otherwise ordered in a
particular case by the Executive Secretary, the official record will not
be removed from the Department of Commerce. A certified copy of the
record will be made available to any court before which any aspect of a
proceeding is under review, with appropriate safeguards to prevent
disclosure of proprietary or privileged information.
Sec. 400.53 Information.
(a) Request for information. The Board may request submission of any
information, including business proprietary information, and written
argument necessary or appropriate to the proceeding.
(b) Public information. Except as provided in paragraph (c) of this
section, the Board will consider all information submitted in a
proceeding to be public information. If the person submitting the
information does not agree to its public disclosure, the Board will
return the information and not consider it in the proceeding.
(c) Business proprietary information. Persons submitting business
proprietary information and requesting protection from public disclosure
shall mark the cover page ``business proprietary,'' as well as the top
of each page on which such information appears.
(d) Disclosure of information. Disclosure of public information will
be governed by 15 CFR part 4. Public information in the official record
will be available for inspection and copying at the Office of the
Executive Secretary, Foreign-Trade Zones Board, U.S. Department of
Commerce Building, Pennsylvania Avenue and 14th Street, NW., Washington,
DC 20230.
[[Page 67]]
CHAPTER VII--BUREAU OF EXPORT ADMINISTRATION, DEPARTMENT OF COMMERCE
--------------------------------------------------------------------
SUBCHAPTER A--NATIONAL SECURITY INDUSTRIAL BASE REGULATIONS
Part Page
700 Defense priorities and allocations system... 69
701 Reporting of offsets agreements in sales of
weapon systems or defense-related items
to foreign countries or foreign firms... 118
702-704 [Reserved]
705 Effect of imported articles on the national
security................................ 121
706-709 [Reserved]
SUBCHAPTER B [RESERVED]
710-729 [Reserved]
SUBCHAPTER C--EXPORT ADMINISTRATION REGULATIONS
730 General information.........................
732 Steps for using the EAR.....................
734 Scope of the export administration
regulations.............................
736 General prohibitions........................
738 Commerce Control List overview and the
country chart...........................
740 License exceptions..........................
742 Control policy--CCL based controls..........
744 Control policy: end-user and end-use based..
746 Embargoes and other special controls........
748 Applications (classification, advisory, and
license) and documentation..............
750 Application processing, issuance or and
denial..................................
752 Special comprehensive license...............
754 Short supply controls.......................
756 Appeals.....................................
758 Export clearance requirements...............
760 Restrictive trade practices or boycotts.....
[[Page 68]]
762 Recordkeeping...............................
764 Enforcement and protective measures.........
766 Administrative enforcement proceedings......
768 Foreign availability determination
procedures and criteria.................
770 Interpretations.............................
772 Definitions of terms........................
774 The Commerce Control List...................
775-799 [Reserved]
[[Page 69]]
SUBCHAPTER A--NATIONAL SECURITY INDUSTRIAL BASE REGULATIONS
PART 700--DEFENSE PRIORITIES AND ALLOCATIONS SYSTEM--Table of Contents
Subpart A--Purpose
Sec.
700.1 Purpose of this regulation.
Subpart B--Overview
700.2 Introduction.
700.3 Priority ratings and rated orders.
700.4 Controlled materials.
700.5 Special priorities assistance.
700.6 Official actions.
700.7 Compliance.
Subpart C--Definitions
700.8 Definitions.
Subpart D--Industrial Priorities
700.10 Delegation of authority.
700.11 Priority ratings.
700.12 Elements of a rated order.
700.13 Acceptance and rejection of rated orders.
700.14 Preferential scheduling.
700.15 Extension of priority ratings.
700.16 Changes or cancellations of priority ratings and rated orders.
700.17 Use of rated orders.
700.18 Limitations on placing rated orders.
Subpart E--Industrial Priorities for Energy Programs
700.20 Use of priority ratings.
700.21 Application for priority rating authority.
Subpart F--The Controlled Materials
700.30 Management of the controlled materials.
700.31 Specific rules for controlled materials suppliers and users.
Subpart G--Critical Items
700.40 General provisions.
700.41 Metalworking machines.
Subpart H--Special Priorities Assistance
700.50 General provisions.
700.51 Requests for priority rating authority.
700.52 Examples of assistance.
700.53 Criteria for assistance.
700.54 Instances where assistance will not be provided.
700.55 Assistance programs with Canada and other nations.
Subpart I--Official Actions
700.60 General provisions.
700.61 Rating Authorizations.
700.62 Directives.
700.63 Letters of Understanding.
Subpart J--Compliance
700.70 General provisions.
700.71 Audits and investigations.
700.72 Compulsory process.
700.73 Notification of failure to comply.
700.74 Violations, penalties, and remedies.
700.75 Compliance conflicts.
Subpart K--Adjustments, Exceptions, and Appeals
700.80 Adjustments or exceptions.
700.81 Appeals.
Subpart L--Miscellaneous Provisions
700.90 Protection against claims.
700.91 Records and reports.
700.92 Applicability of this regulation and official actions.
700.93 Communications.
Schedule I to Part 700--Authorized Programs and Delegate Agencies
Schedule II to Part 700--Controlled Materials
Schedule III to Part 700--Technical Definitions of Controlled Materials
Products
Schedule IV to Part 700--Copper Controlled Materials Producers' Set-
aside Base and Percentages
Schedule V to Part 700--Nickel Alloys Controlled Materials Producers'
Set-aside Base and Percentages
Appendix I to Part 700--Delegations of Authority
Appendix II to Part 700--Interagency Memorandum of Understanding
Appendix III to Part 700--Form ITA-999; Request for Special Priorities
Assistance
Appendix IV to Part 700--Memorandum of Understanding on Priorities and
Allocations Support Between the U.S. Department of Commerce
and the Canadian Department of Supply and Services
Authority: Secs. 101-103, 701-707, 709, and 713, Defense Production
Act of 1950 (Pub. L. 81-774, 64 Stat. 798,) as amended (50 U.S.C.
[[Page 70]]
app. 2071-2073, 2151-2157, 2159, and 2163); E.O. 10480, 3 CFR 1949-53
Comp. p. 962, as amended; E.O. 12148, 3 CFR 1979 Comp. p. 412, as
amended; Defense Mobilization Order (DMO) 3, 44 CFR part 322; DMO-12, 44
CFR part 329; DMO-13, 44 CFR part 330, 50 U.S.C. 486, 10 U.S.C. 4501 and
9501, 50 U.S.C. 82, and Executive Order 12742 of January 8, 1991, 56 FR
1079.
Source: 49 FR 30414, July 30, 1984, unless otherwise noted.
Redesignated at 54 FR 601, Jan. 9, 1989.
Subpart A--Purpose
Sec. 700.1 Purpose of this regulation.
(a) Title I of the Defense Production Act of 1950, as amended (50
U.S.C. App. 2061, et seq.) (Defense Production Act), authorizes the
President: to require the priority performance of contracts and orders
necessary or appropriate to promote the national defense over other
contracts or orders; to allocate materials and facilities as necessary
or appropriate to promote the national defense; and to require the
allocation of, or the priority performance under contracts or orders
relating to, supplies of materials and equipment in order to assure
domestic energy supplies for national defense needs.
(b) This regulation consolidates, simplifies, and revises the
Defense Materials System and the Defense Priorities System regulations,
directions, and orders. The Defense Priorities and Allocations System
(DPAS) helps to keep current national defense programs on schedule and
provides an operating system that can be rapidly expanded in a national
emergency.
(c) To aid in understanding and using the DPAS, an overview of its
major provisions is incorporated into this regulation as subpart B--
Overview. The full text of the DPAS is found in subparts D through L.
Subpart B--Overview
Sec. 700.2 Introduction.
(a) The Federal Emergency Management Agency authorizes certain
national defense programs for priorities and allocations support. For
example, military aircraft production, ammunition, and certain programs
which maximize domestic energy supplies are ``authorized programs.'' A
complete list of currently authorized programs is provided at Schedule
I.
(b) To ensure the preferential treatment of certain contracts and
orders for authorized programs, the Department of Commerce administers
the DPAS.
(c) Commerce has delegated authority to place priority ratings on
contracts or orders necessary or appropriate to promote the national
defense to the government agencies that issue such contracts or orders.
Schedule I includes a list of agencies delegated this authority. Copies
of the Delegations of Authority are provided at Appendix I. They set
forth the authorities delegated and those retained by Commerce.
Sec. 700.3 Priority ratings and rated orders.
(a) Rated orders are identified by a priority rating consisting of
the rating--either DX or DO--and a program identification symbol. Rated
orders take preference over all unrated orders as necessary to meet
required delivery dates. Among rated orders, DX rated orders take
preference over DO rated orders. Program identification symbols indicate
which authorized program is involved with the rated order. For example,
A1 identifies defense aircraft programs and A7 signifies defense
electronic programs. The program identification symbols, in themselves,
do not connote any priority.
(b) Persons receiving rated orders must give them preferential
treatment as required by this regulation. This means a person must
accept and fill a rated order for items that the person normally
supplies. The existence of previously accepted unrated or lower rated
orders is not sufficient reason for rejecting a rated order. Persons are
required to reschedule unrated orders if they conflict with performance
against a rated order. Similarly, persons must reschedule DO rated
orders if they conflict with performance against a DX rated order.
(c) All rated orders must be scheduled to the extent possible to
ensure delivery by the required delivery date.
(d) Persons who receive rated orders must in turn place rated orders
with their suppliers for the items they need
[[Page 71]]
to fill the orders. This provision ensures that suppliers will give
priority treatment to rated orders from contractor to subcontractor to
suppliers throughout the procurement chain.
(e) Persons may place a priority rating on orders only when they are
in receipt of a rated order, have been explicitly authorized to do so by
the Department of Commerce or a Delegate Agency, or are otherwise
permitted to do so by this regulation.
Sec. 700.4 Controlled materials.
(a) Federal central management of certain key materials, designated
``controlled materials'', has been essential in the past to effective
industrial mobilizations. Accordingly, special rules are maintained in
peacetime to provide an operating mechanism that can be rapidly expanded
during a national emergency to meet increased defense and other
essential needs. Currently, the controlled materials are steel, copper,
aluminum, and nickel alloys.
(b) Under the controlled materials program, the Department of
Commerce requires suppliers of controlled materials to accept rated
orders up to a specified quantity of material during a given period of
time. This quantity is called a ``set-aside''. This provision ensures
that the material will be available when rated orders are placed. In
addition, the system ensures that controlled materials producers are
treated equitably, for after the set-aside quantity levels have been
reached, controlled materials producers may generally reject additional
rated orders. These orders would then be filled by other controlled
materials producers who had not exhausted their set-aside requirement.
(c) In time of national emergency, the level and scope of the
controlled materials program may be greatly expanded to ensure the
necessary allocation of materials and in order to direct general
industrial activity toward supporting the requirements of the emergency.
(d) Certain other items, in addition to the controlled materials,
have critical importance to national defense programs. From time-to-
time, special rules, similar to those for controlled materials, may be
needed to manage those materials.
(e) If items become scarce and critical and the requirements of the
national defense cannot be met without creating a significant
dislocation in the civilian market place so as to create appreciable
hardship, special rules may be established under section 101(b) of the
Defense Production Act to control the general distribution of such items
in the civilian market.
Sec. 700.5 Special priorities assistance.
(a) The DPAS is designed to be largely self-executing. However, from
time-to-time production or delivery problems will arise. In this event,
special priorities assistance is available from Commerce and from the
Delegate Agencies.
(b) Special priorities assistance is available for any reason
consistent with this regulation. Generally, special priorities
assistance is provided to expedite deliveries, resolve delivery
conflicts, place rated orders, locate suppliers, or to verify
information supplied by customers and vendors. Special priorities
assistance may also be used to request rating authority for items not
automatically ratable.
Sec. 700.6 Official actions.
When necessary, Commerce takes specific official actions to
implement or enforce the provisions of this regulation and to provide
special priorities assistance. Such actions may include the issuance of:
Rating Authorizations, Directives, Letters of Understanding, Set-asides,
and compliance documents (Administrative Subpoenas, Demands for
Information, and Inspection Authorizations).
Sec. 700.7 Compliance.
(a) Compliance with the provisions of this regulation and official
actions is required by the Defense Production Act. Violators are subject
to criminal penalties.
(b) Any person who places or receives a rated order should be
thoroughly familiar with, and must comply with, the provisions of this
regulation.
[[Page 72]]
Subpart C--Definitions
Sec. 700.8 Definitions.
The following definitions pertain to all sections of the regulation:
Authorized program. A program approved by the Federal Emergency
Management Agency for priorities and allocations support under the
Defense Production Act.
Construction. The erection, addition, extension, or alteration of
any building, structure, or project, using materials or products which
are to be an integral and permanent part of the building, structure, or
project. Construction does not include maintenance and repair.
Controlled materials. The various shapes and forms of steel, copper,
aluminum, and nickel alloys, whether new, remelted, rerolled or redrawn,
as specified in Schedule II, and as defined in Schedule III.
Controlled materials suppliers. All persons, including producers,
distributors, brokers, importers and exporters engaged in the sale or
resale of controlled materials.
Delegate Agency. A government agency authorized by delegation from
the Department of Commerce to place priority ratings on contracts or
orders needed to support authorized programs.
Defense Production Act. the Defense Production Act of 1950, as
amended (50 U.S.C. App. 2061, et seq.).
Distributors of controlled materials. Those persons (including
warehouse operators or jobbers, but not retailers) engaged in stocking
controlled materials at locations regularly maintained for their sale or
resale in the form or shape as received, or after performing such
operations as cutting to length or shape, slitting, shearing, or sorting
and grading.
Further conversion. The further processing of controlled materials
by a processor of such materials.
Item. Any raw, in process, or manufactured material, article,
commodity, supply, equipment, component, accessory, part, assembly, or
product of any kind, technical information, process, or service.
Lead time. The period of time specified in this regulation for the
receipt of orders for controlled materials by a supplier in advance of
the first day of the month in which shipment is required.
Maintenance and repair and operating supplies (MRO):
(a) Maintenance is the upkeep necessary to continue any plant,
facility, or equipment in working condition.
(b) Repair is the restoration of any plant, facility, or equipment
to working condition when it has been rendered unsafe or unfit for
service by wear and tear, damage, or failure of parts.
(c) Operating supplies are any items carried as operating supplies
according to a person's established accounting practice. Operating
supplies may include hand tools and expendable tools, jigs, dies,
fixtures used on production equipment, lubricants, cleaners, chemicals
and other expendable items.
(d) MRO does not include items produced or obtained for sale to
other persons or for installation upon or attachment to the property of
another person, or items required for the production of such items;
items needed for the replacement of any plant, facility, or equipment;
or items for the improvement of any plant, facility, or equipment by
replacing items which are still in working condition with items of a new
or different kind, quality, or design.
Minimum mill quantity. The minimum quantity of a controlled material
that may be obtained from a producer for shipment at any one time to any
one destination.
Official action. An action taken by Commerce under the authority of
the Defense Production Act and this regulation. Such actions include the
issuance of Set-asides, Rating Authorizations, Directives, Letters of
Understanding, Demands for Information, Inspection Authorizations, and
Administrative Subpoenas.
Person. Any individual, corporation, partnership, association, or
any other organized group of persons, and includes any agency of the
United States Government or any other government.
Production equipment. Any item of capital equipment used in
producing materials or furnishing services that has a unit acquisition
cost of $2,500 or
[[Page 73]]
more, an anticipated service life in excess of one year, and the
potential for maintaining its integrity as a capital item.
Rated order. A prime contract, a subcontract, or a purchase order in
support of an authorized program issued in accordance with the
provisions of this regulation.
Set-aside. The amount of an item for which a supplier must reserve
order book space in anticipation of the receipt of rated orders.
[49 FR 30414, July 30, 1984; 49 FR 50172, Dec. 27, 1984. Redesignated at
54 FR 601, Jan. 9, 1989]
Subpart D--Industrial Priorities
Sec. 700.10 Delegation of authority.
(a) The priorities and allocations authorities given to the
President in Title I of the Defense Production Act have been delegated
to the Director of the Federal Emergency Management Agency (FEMA), who,
in turn, has delegated these authorities with respect to industrial
resources to the Secretary of Commerce. FEMA retains the overall policy
and coordinating functions for this delegated authority.
(b) Within the Department of Commerce, these responsibilities have
been assigned to the Office of Industrial Resource Administration. The
Department of Commerce has authorized the Delegate Agencies to assign
priority ratings to orders for items needed for authorized programs.
Copies of these Delegations of Authority are provided at Appendix I.
They set forth the authorities delegated and those retained by Commerce.
Sec. 700.11 Priority ratings.
(a) Levels of priority. (1) There are two levels of priority
established by this regulation, identified by the rating symbols ``DO''
and ``DX''.
(2) All DO rated orders have equal priority with each other and take
preference over unrated orders. All DX rated orders have equal priority
with each other and take preference over DO rated orders and unrated
orders. (For resolution of conflicts among rated orders of equal
priority, see Sec. 700.14(c).)
(3) In addition, a Directive issued by Commerce takes preference
over any DX rated order, DO rated order, or unrated order, as stipulated
in the Directive. (For a full discussion of Directives, see
Sec. 700.62.)
(b) Program identification symbols. Program identification symbols
indicate which authorized program is being supported by a rated order.
The list of authorized programs and their identification symbols are
listed in Schedule I. For example, A1 identifies defense aircraft
programs and A7 signifies defense electronic programs. Program
identification symbols, in themselves, do not connote any priority.
(c) Priority ratings. A priority rating consists of the rating
symbol--DO and DX--and the program identification symbol, such as A1,
B2, or H6. Thus, a contract for the production of an aircraft will
contain a DO-A1 or DX-A1 priority rating. A contract for a radar set
will contain a DO-A7 or DX-A7 priority rating.
Sec. 700.12 Elements of a rated order.
Each rated order must include:
(a) The appropriate priority rating (e.g. DO-A1, DX-A4, DO-H1);
(b) A required delivery date or dates. The words ``immediately'' or
``as soon as possible'' do not constitute a delivery date. A
``requirements contract'' bearing a priority rating may contain no
specific delivery date or dates and may provide for the furnishing of
items from time-to-time or within a stated period against specific
purchase orders or ``calls''. Such ``calls'' must specify a required
delivery date or dates and are to be considered as rated as of the date
of their receipt by the supplier and not as of the date of the original
``requirements contract'';
(c) The signature of an individual authorized to sign rated orders
for the person placing the order. The signature certifies that the rated
order is authorized under this regulation and that the requirements of
this regulation are being followed; and
(d) A statement that reads in substance:
This is a rated order certified for national defense use, and you
are required to follow all the provisions of the Defense Priorities and
Allocations System regulation (15 CFR part 700).
[[Page 74]]
Sec. 700.13 Acceptance and rejection of rated orders.
(a) Mandatory acceptance. (1) Except as otherwise specified in this
section, a person shall accept every rated order received and must fill
such orders regardless of any other rated or unrated orders that have
been accepted.
(2) A person shall not discriminate against rated orders in any
manner such as by charging higher prices or by imposing different terms
and conditions than for comparable unrated orders.
(b) Mandatory rejection. Unless otherwise directed by Commerce:
(1) A person shall not accept a rated order for delivery on a
specific date if unable to fill the order by that date. However, the
person must inform the customer of the earliest date on which delivery
can be made and offer to accept the order on the basis of that date.
Scheduling conflicts with previously accepted lower rated or unrated
orders are not sufficient reason for rejection under this section.
(2) A person shall not accept a DO rated order for delivery on a
date which would interfere with delivery of any previously accepted DO
or DX rated orders. However, the person must offer to accept the order
based on the earliest delivery date otherwise possible.
(3) A person shall not accept a DX rated order for delivery on a
date which would interfere with delivery of any previously accepted DX
rated orders, but must offer to accept the order based on the earliest
delivery date otherwise possible.
(c) Optional rejection. Unless otherwise directed by Commerce, rated
orders may be rejected in any of the following cases as long as a
supplier does not discriminate among customers:
(1) If the person placing the order is unwilling or unable to meet
regularly established terms of sale or payment;
(2) If the order is for an item not supplied or for a service not
performed;
(3) If the order is for an item produced, acquired, or provided only
for the supplier's own use for which no orders have been filled for two
years prior to the date of receipt of the rated order. If, however, a
supplier has sold some of these items, the supplier is obligated to
accept rated orders up to that quantity or portion of production,
whichever is greater, sold within the past two years;
(4) If the person placing the rated order, other than the U.S.
Government, makes the item or performs the service being ordered;
(5) If the rated order is for a controlled material in an amount
below the minimum mill quantity established in Schedule II, and the
person placing the order is not willing to buy the minimum quantity;
(6) If the rated order is for a controlled material and is not
received by the controlled materials producer within the time frame
specified in Schedule I;
(7) If the applicable set-aside has been reached or would be
exceeded by acceptance, except that a DX order must be accepted without
regard for such set-aside;
(8) If acceptance of a rated order or performance against a rated
order would violate any other regulation, official action, or order of
the Department of Commerce issued under the authority of the Defense
Production Act [See Sec. 700.75].
(d) Customer notification requirements. (1) A person must accept or
reject a rated order in writing within ten working days after receipt of
a DO rated order and within five working days after receipt of a DX
rated order. The person must give reasons in writing for the rejection.
(2) If a person has accepted a rated order and later discovers that,
due to circumstances beyond the person's control, deliveries will be
delayed, the person must notify the customer immediately, give the
reasons for the delay, and advise of a new shipment date. If
notification is given verbally, written confirmation must be provided
within five working days.
Sec. 700.14 Preferential scheduling.
(a) A person must schedule operations, including the acquisition of
all needed production items, in a timely manner to satisfy the delivery
requirements of each rated order. Modifying production or delivery
schedules is necessary only when required delivery
[[Page 75]]
dates for rated orders cannot otherwise be met.
(b) DO rated orders must be given production preference over unrated
orders, if necessary to meet required delivery dates, even if this
requires the diversion of items being processed or ready for delivery
against unrated orders. Similarly, DX rated orders must be given
preference over DO rated orders and unrated orders.
Examples: If a person receives a DO rated order with a delivery date
of June 3 and if meeting that date would mean delaying production or
delivery of an item for an unrated order, the unrated order must be
delayed. If a DX rated order is received calling for delivery on July 15
and a person has a DO rated order requiring delivery on June 2 and
operations can be scheduled to meet both deliveries, there is no need to
alter production schedules to give any additional preference to the DX
rated order.
(c) If a person cannot fill all the rated orders of equal priority
status received on the same day, the person must accept those orders
which can be filled which have the earliest delivery dates. For example,
the person must accept order A requiring delivery on December 15 before
accepting order B requiring delivery on December 31. For those orders
which cannot be filled on time, the supplier must inform the customer
within the time limits set forth in Sec. 700.13(d), of the earliest date
on which delivery can be made and offer to accept the order on the basis
of that date.
(d) If a person is unable to purchase needed production items in
time to fill a rated order by its required delivery date, the person
must fill the rated order by using inventoried production items. A
person who uses inventoried items to fill a rated order may replace
those items with the use of a rated order as provided in Sec. 700.17(b).
Sec. 700.15 Extension of priority ratings.
(a) A person must use rated orders with suppliers to obtain items
needed to fill a rated order. The person must use the priority rating
indicated on the customer's rated order, except as otherwise provided in
this regulation or as directed by the Department of Commerce.
For example, if a person is in receipt of a DO-A3 rated order for a
navigation system and needs to purchase semiconductors for its
manufacture, that person must use a DO-A3 rated order to obtain the
needed semiconductors.
(b) The priority rating must be included on each successive order
placed to obtain items needed to fill a customer's rated order. This
continues from contractor to subcontractor to supplier throughout the
entire procurement chain.
Sec. 700.16 Changes or cancellations of priority ratings and rated orders.
(a) The priority rating on a rated order may be changed or cancelled
by:
(1) An official action of the Department of Commerce; or
(2) Written notification from the person who placed the rated order
(including a Delegate Agency).
(b) If an unrated order is amended so as to make it a rated order,
or a DO, rating is changed to a DX rating, the supplier must give the
appropriate preferential treatment to the order as of the date the
change is received by the supplier.
(c) An amendment to a rated order that significantly alters a
supplier's original production or delivery schedule shall constitute a
new rated order as of the date of its receipt. The supplier must accept
or reject the amended order according to the provisions of Sec. 700.13.
(d) The following amendments do not constitute a new rated order: a
change in shipping destination; a reduction in the total amount of the
order; an increase in the total amount of the order which has negligible
impact upon deliveries; a minor variation in size or design; or a change
which is agreed upon between the supplier and the customer.
(e) If a person no longer needs items to fill a rated order, any
rated orders placed with suppliers for the items, or the priority rating
on those orders, must be cancelled.
(f) When a priority rating is added to an unrated order, or is
changed or cancelled, all suppliers must be promptly notified in
writing.
[[Page 76]]
Sec. 700.17 Use of rated orders.
(a) A person must use rated orders to obtain:
(1) Items which will be physically incorporated into other items to
fill rated orders, including that portion of such items normally
consumed, or converted into scrap or by-products, in the course of
processing;
(2) Containers or other packaging materials required to make
delivery of the finished items against rated orders;
(3) Services, other than contracts of employment, needed to fill
rated orders; and
(4) MRO needed to produce the finished items to fill rated orders.
However, for MRO, the priority rating used must contain the program
identification symbol H7 along with the rating symbol contained on the
customer's rated order. For example, a person in receipt of a DO-A3
rated order, who needs MRO, would place a DO-H7 rated order with the
person's supplier.
(b) A person may use a rated order to replace inventoried items
(including finished items) if such items were used to fill rated orders,
as follows:
(1) The order must be placed within 90 days of the date of use of
the inventory.
(2) A DO rating symbol and the program identification symbol
indicated on the customer's rated order must be used on the order
(except as provided in Sec. 700.31(d)--Controlled materials program
identification symbols). A DX rating symbol may not be used even if the
inventory was used to fill a DX rated order.
(3) If the priority ratings on rated orders from one customer or
several customers contain different program identification symbols, the
rated orders may be combined. In this case, the program identification
symbol H1 must be used (i.e., DO-H1) (not applicable to controlled
materials producers).
(c) A person may combine DX and DO rated orders from one customer or
several customers if the items covered by each level of priority are
identified separately and clearly. If different program identification
symbols are indicated on those rated orders of equal priority, the
person must use the program identification symbol H1 (i.e., DO-H1 or DX-
H1), except as provided in Sec. 700.31(d) (Controlled materials program
identification symbols).
(d) Combining rated and unrated orders. (1) A person may combine
rated and unrated orders provided that the rated quantities are
identified separately and are also contained in a separate rated order
which conforms to the requirements of Sec. 700.12 (Elements of a rated
order). In addition to identifying clearly the rated quantities, the
combined purchase order must contain a statement that the rated
quantities are contained in a separate rated order placed in accordance
with this regulation. Wherever possible, the separate rated order must
be physically attached to the combined purchase order. A supplier must
give preferential treatment to the rated quanitities of the combined
order, if necessary. A supplier may not use the authorities of this
regulation to give preferential treatment to the unrated portion.
(2) Any supplier who believes that rated and unrated orders are
being combined in a manner contrary to the intent of this regulation or
in a fashion that causes undue or exceptional hardship may submit a
request for adjustment or exception under Sec. 700.80.
(e) A person may place a rated order for the minimum commercially
procurable quantity even if the quantity needed to fill a rated order is
less than that minimum. However, a person must combine rated orders as
provided in paragraph (c) of this section, if possible, to obtain
minimum procurable quantities.
(f) A person is not required to place a priority rating on an order
for less than $5,000 provided that delivery can be obtained in a timely
fashion without the use of the priority rating.
Sec. 700.18 Limitations on placing rated orders.
(a) General limitations. (1) A person may not place a DO or DX rated
order unless entitled to do so under this regulation.
(2) Rated orders may not be used to obtain:
(i) Delivery on a date earlier than needed;
(ii) A greater quantity of the item than needed, except to obtain a
minimum procurable quantity. Separate
[[Page 77]]
rated orders may not be placed solely for the purpose of obtaining
minimum procurable quantities on each order;
(iii) Items in advance of the receipt of a rated order, except as
specifically authorized by Commerce (see Sec. 700.51(c) for information
on obtaining authorization for a priority rating in advance of a rated
order); or
(iv) Any of the following items unless specific priority rating
authority has been obtained from a Delegate Agency or Commerce:
(A) Items for plant improvement, expansion or construction, unless
they will be physically incorporated into a construction project covered
by a rated order; and
(B) Production or construction equipment or items to be used for the
manufacture of production equipment. [For information on requesting
priority rating authority, see Sec. 700.53.]
(b) Jurisdictional limitations. (1) The priorities and allocations
authority for certain items has been delegated under Executive Order
10480, as amended, to other agencies, and, thus, the provisions of this
regulation are not applicable to them. These items include:
(i) Petroleum, gas, solid fuel, and electric power and all other
forms of energy (Department of Energy);
(ii) Food and the domestic distribution of farm equipment and
commercial fertilizer (Department of Agriculture);
(iii) Civil transportation and the movement of persons and property
by all modes (Department of Transportation);
(iv) Minerals (Department of the Interior);
(v) Water (Department of Defense--U.S. Army Corps of Engineers);
(vi) Housing facilities (Department of Housing and Urban
Development);
(vii) Health facilities (Department of Health and Human Services);
and
(viii) Radioisotopes, stable isotopes, source material, and special
nuclear material, produced in Government-owned plants or facilities
operated by or for Department of Energy (Department of Energy).
(2) The jurisdiction of the Department of Commerce and the
Departments of Energy, Agriculture, and the Interior over certain
specific items included in the categories listed above has been
clarified by Interagency Memoranda of Understanding. Copies of these
Memoranda are provided for information at Appendix II.
(3) The following items under the jurisdiction of Commerce are
currently excluded from the rating provisions of this regulation;
however, these items are subject to Commerce Directives. These excluded
items are:
Communication services
Copper raw materials (as defined in Schedule III)
Crushed stone
Gravel
Sand
Scrap
Slag
Steam heat, central
Waste paper
Subpart E--Industrial Priorities for Energy Programs
Sec. 700.20 Use of priority ratings.
(a) Section 101(c) of the Defense Production Act authorizes the use
of priority ratings for projects which maximize domestic energy
supplies.
(b) Projects which maximize domestic energy supplies include those
which maintain or further domestic energy exploration, production,
refining, and transportation; maintain or further the conservation of
energy; or are involved in the construction or maintenance of energy
facilities.
Sec. 700.21 Application for priority rating authority.
(a) For projects believed to maximize domestic energy supplies, a
person may request priority rating authority for scarce, critical and
essential supplies of materials and equipment by submitting DOE Form PR
437 to the Department of Energy. Blank applications and further
information may be obtained from the Technical Information Center,
Department of Energy, P.O. Box 62, Oak Ridge, Tennessee 37830, or from
the Procurement and Assistance Management Directorate, Department of
Energy, Attn: MA 932, Forrestal Building, 1000 Independence Avenue, SW.,
Washington, DC 20585.
(b) On receipt of the application, the Department of Energy will:
[[Page 78]]
(1) Determine if the project maximizes domestic energy supplies; and
(2) Find whether the materials or equipment involved in the
application are critical and essential to the project.
(c) If the Department of Energy notifies Commerce that the project
maximizes domestic energy supplies and that the materials or equipment
are critical and essential, Commerce must find whether the items in
question are scarce and whether there is a need to use the priorities
and allocations authorities.
(1) Scarcity implies an unusual difficulty in obtaining the material
or equipment in a timeframe consistent with the timely completion of the
energy project. Among the factors to be used in making the scarcity
finding will be the following:
(i) Value and volume of material or equipment shipments;
(ii) Consumption of material and equipment;
(iii) Volume and market trends of imports and exports;
(iv) Domestic and foreign sources of supply;
(v) Normal levels of inventories;
(vi) Rates of capacity utilization;
(vii) Volume of new orders; and
(viii) Lead times for new orders.
(2) In finding whether there is a need to use the priorities and
allocations authorities, Commerce will consider alternative supply
solutions and other measures.
(d) If Commerce does not find that the items of material or
equipment are scarce, it will not proceed to analyze the need to use the
priorities and allocations authorities.
(e) Commerce will inform the Department of Energy of the results of
its analysis. If Commerce has made the two required findings, it will
authorize the Department of Energy to grant the use of a priority rating
to the applicant.
(f) Schedule I includes a list of authorized programs to support the
maximization of domestic energy supplies. A Department of Energy
regulation setting forth the procedures and criteria used by the
Department of Energy in making its determination and findings is
published in 10 CFR part 216.
Subpart F--The Controlled Materials
Sec. 700.30 Management of the controlled materials.
(a) The controlled materials are steel, copper, aluminum, and nickel
alloys in the shapes and forms listed in Schedule II and defined in
Schedule III. These materials are basic industrial resources necessary
for both authorized defense programs and for general industrial
activity. Federal management of these four materials assures the timely
availability of the materials to meet current authorized program
requirements; assures the equitable distribution of requirements among
the suppliers of the materials; and provides a flexible and expandable
system capable of directing general economic and industrial activity
during times of emergency.
(b) Before controlled materials can be used for authorized programs,
the Delegate Agencies must obtain specific approval, known as an
allotment, from the Federal Emergency Management Agency (FEMA).
Accordingly, the Delegate Agencies submit to FEMA requirements for the
controlled materials necessary to support their authorized programs.
After reviewing the available supply of the materials and other national
security, economic and policy considerations, FEMA approves the use of
specific quantities of controlled materials by issuing allotments to
each Delegate Agency. (Special controlled materials provisions
applicable to the Delegate Agencies are found in the Delegations of
Authority and the U.S.-Canadian Memorandum of Understanding appended to
this regulation.)
(c) To assure the timely availability of controlled materials, the
Department of Commerce manages their supply and distribution by
requiring producers and distributors of controlled materials to set-
aside or reserve space in their order books for the receipt of rated
orders. This process is described in greater detail in the following
section.
Sec. 700.31 Specific rules for controlled materials suppliers and users.
(a) Rated orders. Rated orders are used to obtain controlled
materials
[[Page 79]]
needed for authorized programs. Such orders must comply with the
requirements of Sec. 700.12 (Elements of a rated order). In addition, a
rated order for controlled materials placed with a producer must be in
sufficient detail to permit entry on mill schedules.
(b) Set-asides. (1) Controlled materials suppliers are issued set-
asides by type and shape of controlled material as provided in the
following paragraphs. Each supplier is required to accept all rated
orders received up to the set-aside level. The supplier may reject DO
rated orders after the set-aside quantity has been filled except that
the supplier must accept all DX rated orders regardless of the set-aside
level.
(2) A person who has had a DO rated order rejected because a set-
aside has been filled, must attempt to place the rated order with other
controlled materials suppliers whose set-asides are not filled. If still
unable to place the rated order, the person should request special
priorities assistance (see Subpart H).
(3) Steel controlled materials. (i) A set-aside is applicable to
each steel controlled materials producer who receives a written set-
aside notification from Commerce.
(ii) Any steel controlled materials producer who has not received a
set-aside notification must accept, in accordance with the provisions of
this regulation, all rated orders received, but may receive a set-aside
by applying in writing to Commerce.
(iii) The set-aside is a specified monthly quantity based on average
monthly shipments during a specific base period.
(4) Copper controlled materials. (i) Set-asides are applicable to
all copper controlled materials producers.
(ii) The monthly set-aside for each copper controlled materials
producer is calculated by multiplying the producer's set-aside base by
the appropriate set-aside percentage for each product. The set-aside
percentage and set-aside base are contained in Schedule IV.
(5) Aluminum controlled materials. (i) A set-aside is applicable to
each aluminum controlled materials producer who receives a written set-
aside notification from Commerce.
(ii) Any aluminum controlled materials producer who has not received
a set-aside notification must, in accordance with the provisions of this
regulation, accept all rated orders received, but may receive a set-
aside in writing by applying in writing to Commerce.
(iii) The set-aside for aluminum ingot and aluminum molten metal is
calculated based on the average monthly production capacity during a
specific base period.
(iv) The set-aside for all other aluminum controlled materials is
calculated based on the average monthly shipments during a specific base
period.
(6) Nickel alloys controlled materials. (i) Set-asides are
applicable to all nickel alloys controlled materials producers.
(ii) The monthly set-aside for each nickel alloys controlled
materials producer is calculated by multiplying the producer's set-aside
base by the appropriate set-aside percentage for each product. The set-
aside percentage and set-aside base are contained in Schedule V.
(c) Order books and product lead times. (1) Each controlled
materials producer must open its order books for the acceptance of DO
rated orders at least 45 days prior to the commencement of the
applicable minimum lead times provided in Schedule II for the various
shapes and forms of controlled materials.
(2) When order books are open, a controlled materials producer must
accept all rated orders received until the minimum lead time shown in
Schedule II is reached or until the set-aside level is reached.
(3) Once the minimum lead time is reached, a controlled materials
producer may devote remaining capacity to unrated orders, even if the
set-aside has not been filled. However, the producer must accept all DX
rated orders without regard to lead time. If unable to make delivery by
the required date, the producer must offer to accept the order in
accordance with Sec. 700.13.
(d) Controlled materials program identification symbols. (1) A
controlled materials producer must use the program identification symbol
H2 on all rated orders to obtain production materials or to replace
inventories used to fill rated orders except for materials for further
conversion.
[[Page 80]]
(2) A controlled materials producer must use the program
identification symbol H3 on rated orders to obtain controlled materials
for further conversion needed for production or inventory replacement.
(3) A controlled materials distributor must use the program
identification symbol H4 on rated orders to obtain controlled materials
needed to fill rated orders, or to replace in inventory, controlled
materials used to fill rated orders.
(e) Controlled materials shipments and requirements data. (1)
Controlled materials producers and distributors are required to maintain
and submit to Commerce upon request, data on shipments against rated and
unrated orders and on related activities [OMB Nos. 0625-0107
(Recordkeeping), 0625-0011 (Copper), 0625-0016 (Aluminum), 0625-0017
(Steel), and 0625-0021 (Nickel Alloys)].
(2) Persons performing against rated orders must provide, upon
request of the appropriate Delegate Agency or the prime contractor, data
on requirements for controlled materials needed to fill rated contracts
for items manufactured to authorized program specifications or used in
construction for authorized programs [OMB Nos. 0625-0107 (Recordkeeping)
and 0625-0013 (Controlled Materials Requirements--Production,
Construction, or Research and Development)]. Prime contractors may
request this information from their subcontractors only when needed to
satisfy a request for requirements data from a Delegate Agency.
Subpart G--Critical Items
Sec. 700.40 General provisions.
(a) From time-to-time Commerce may determine that certain items have
a critical importance to industrial production with respect to the
national defense and authorized programs. Special rules for such items
are set forth in this subpart.
(b) Commerce may establish special rules as needed to ensure that
critical items are available to authorized programs in a timely fashion
and to provide for an equitable and orderly distribution of requirements
for such items among all suppliers of the items.
Sec. 700.41 Metalworking machines.
(a) ``Metalworking machines'' include power driven, manual or
automatic, metal cutting and metal forming machines and complete
machines not supported in the hands of an operator when in use. Basic
machines with a list price of $2,500 or less are not covered by this
section.
(b) Metalworking machines covered by this section include:
Bending and forming machines
Boring machines
Broaching machines
Drilling and tapping machines
Electrical discharge, ultrasonic and chemical erosion machines
Forging machinery and hammers
Gear cutting and finishing machines
Grinding machines
Hydraulic and pneumatic presses, power driven
Machining centers and way-type machines
Manual presses
Mechanical presses, power driven
Milling machines
Miscellaneous machine tools
Miscellaneous secondary metal forming and cutting machines
Planers and shapers
Polishing, lapping, boring, and finishing machines
Punching and shearing machines
Riveting machines
Saws and filing machines
Turning machines, lathes, including automatic
Wire and metal ribbon forming machines
(c) A metalworking machine producer is not required to accept DO
rated orders calling for delivery in any month of a total quantity of
any size of machine in excess of 60 percent of scheduled production of
that size of machine for that month, or any DO rated orders received
less than three months prior to the beginning of the month for which
delivery is requested. However, DX rated orders must be accepted without
regard to a set-aside or the lead time, if delivery can be made by the
required date.
Subpart H--Special Priorities Assistance
Sec. 700.50 General provisions.
(a) The DPAS is designed to be largely self-executing. However, it
is anticipated that from time-to-time problems will occur. In this
event, a person
[[Page 81]]
should immediately contact the appropriate contract administration
officer for guidance or assistance. If additional formal aid is needed,
special priorities assistance should be sought from the Delegate Agency
through the contract administration officer. If the Delegate Agency is
unable to resolve the problem or to authorize the use of a priority
rating and believes additional assistance is warranted, the Delegate
Agency may forward the request to the Department of Commerce for action.
Special priorities assistance is a service provided to alleviate
problems that do arise.
(b) Special priorities assistance can be provided for any reason in
support of this regulation, such as assisting in obtaining timely
deliveries of items needed to satisfy rated orders or authorizing the
use of priority ratings on orders to obtain items not automatically
ratable under this regulation.
(c) A request for special priorities assistance or priority rating
authority must be submitted on Form ITA-999 (OMB control number 0625-
0015) to the local contract administration representative. Form ITA-999
may be obtained from the Delegate Agency representative, any Commerce
District Office, or from the Department of Commerce. A sample Form ITA-
999 is attached at Appendix III.
[49 FR 30414, July 30, 1984; 49 FR 50171, Dec. 27, 1984. Redesignated at
54 FR 601, Jan. 9, 1989]
Sec. 700.51 Requests for priority rating authority.
(a) If a rated order is likely to be delayed because a person is
unable to obtain items not normally rated under this regulation, the
person may request the authority to use a priority rating in ordering
the needed items. Examples of items for which priority ratings can be
authorized include:
(1) Production or construction equipment;
(2) Computers when not used as production items; and
(3) Expansion, rebuilding or replacing plant facilities.
(b) Rating authority for production or construction equipment. (1) A
request for priority rating authority for production or construction
equipment must be submitted to the appropriate Delegate Agency. The
Delegate Agency may establish particular forms to be used for these
requests (e.g., Department of Defense Form DD 691.)
(2) When the use of a priority rating is authorized for the
procurement of production or construction equipment, a rated order may
be used either to purchase or to lease such equipment. However, in the
latter case, the equipment may be leased only from a person engaged in
the business of leasing such equipment or from a person willing to lease
rather than sell.
(c) Rating authority in advance of a rated prime contract. (1) In
certain cases and upon specific request, Commerce, in order to promote
the national defense, may authorize a person to place a priority rating
on an order to a supplier in advance of the issuance of a rated prime
contract. In these instances, the person requesting advance rating
authority must obtain sponsorship of the request from the appropriate
Delegate Agency. The person shall also assume any business risk
associated with the placing of rated orders if these orders have to be
cancelled in the event the rated prime contract is not issued.
(2) The person must state the following in the request:
It is understood that the authorization of a priority rating in
advance of our receiving a rated prime contract from a Delegate Agency
and our use of that priority rating with our suppliers in no way commits
the Delegate Agency, the Department of Commerce or any other government
agency to enter into a contract or order or to expend funds. Further, we
understand that the Federal Government shall not be liable for any
cancellation charges, termination costs, or other damages that may
accrue if a rated prime contract is not eventually placed and, as a
result, we must subsequently cancel orders placed with the use of the
priority rating authorized as a result of this request.
(3) In reviewing requests for rating authority in advance of a rated
prime contract, Commerce will consider, among other things, the
following criteria:
(i) The probability that the prime contract will be awarded;
(ii) The impact of the resulting rated orders on suppliers and on
other authorized programs;
[[Page 82]]
(iii) Whether the contractor is the sole source;
(iv) Whether the item being produced has a long lead time;
(v) The political sensitivity of the project; and
(vi) The time period for which the rating is being requested.
(4) Commerce may require periodic reports on the use of the rating
authority granted under paragraph (c) of this section.
(5) If a rated prime contract is not issued, the person shall
promptly notify all suppliers who have received rated orders pursuant to
the advanced rating authority that the priority rating on those orders
is cancelled.
Sec. 700.52 Examples of assistance.
(a) While special priorities assistance may be provided for any
reason in support of this regulation, it is usually provided in
situations where:
(1) A person is experiencing difficulty in obtaining delivery
against a rated order by the required delivery date; or
(2) A person cannot locate a supplier for an item needed to fill a
rated order.
(b) Other examples of special priorities assistance include:
(1) Ensuring that rated orders receive preferential treatment by
suppliers;
(2) Resolving production or delivery conflicts between various rated
orders;
(3) Assisting in placing rated orders with suppliers;
(4) Verifying the urgency of rated orders; and
(5) Determining the validity of rated orders.
Sec. 700.53 Criteria for assistance.
Requests for special priorities assistance should be timely, i.e.,
the request has been submitted promptly and enough time exists for the
Delegate Agency or Commerce to effect a meaningful resolution to the
problem, and must establish that:
(a) There is an urgent need for the item; and
(b) The applicant has made a reasonable effort to resolve the
problem.
Sec. 700.54 Instances where assistance will not be provided.
Special priorities assistance is provided at the discretion of the
Delegate Agencies and Commerce when it is determined that such
assistance is warranted to meet the objectives of this regulation.
Examples where assistance will not be provided include situations when a
person is attempting to:
(a) Secure a price advantage;
(b) Obtain delivery prior to the time required to fill a rated
order;
(c) Gain competitive advantage;
(d) Disrupt an industry apportionment program in a manner designed
to provide a person with an unwarranted share of scarce items; or
(e) Overcome a supplier's regularly established terms of sale or
conditions of doing business.
Sec. 700.55 Assistance programs with Canada and other nations.
(a) To promote military assistance to foreign nations, this section
provides for authorizing priority ratings to persons in Canada and in
other foreign nations to obtain items in the United States in support of
authorized programs. Although priority ratings have no legal authority
outside of the United States, this section also provides information on
how persons in the United States may obtain informal assistance in
Canada.
(b) Canada. (1) The joint U.S.-Canadian military arrangements for
the defense of North America and the integrated nature of their defense
industries as set forth in the U.S.-Canadian Statement of Principles for
Economic Cooperation (October 26, 1950) require close coordination and
the establishment of a means to provide mutual assistance to the defense
industries located in both countries.
(2) The Department of Commerce coordinates with the Canadian
Department of Supply and Services on all matters of mutual concern
relating to the administration of this regulation. A copy of the
Memorandum of Understanding between the two departments is provided at
appendix IV.
(3) Any person in the United States ordering defense items in Canada
should inform the Canadian supplier that the items being ordered are to
be used to fill a rated order. The Canadian supplier should be informed
that if production materials are needed from the United States by the
supplier or the
[[Page 83]]
supplier's vendor to fill the order, they should contact the Canadian
Department of Supply and Services for authority to place rated orders in
the United States.
(4) Any person in Canada producing defense items for the Canadian
government may also obtain priority rating authority for items to be
purchased in the United States by applying to the Canadian Department of
Supply and Services in accordance with procedures specified by that
Department.
(5) Persons in Canada needing special priorities assistance in
obtaining defense items in the United States may apply for such
assistance to the Canadian Department of Supply and Services. The
Department of Supply and Services will forward appropriate requests to
Commerce.
(6) Any person in the United States requiring assistance in
obtaining items in Canada must submit a request through the Delegate
Agency to Commerce on Form ITA-999. Commerce will forward appropriate
requests to the Canadian Department of Supply and Services.
(c) Foreign nations. (1) Any person in a foreign nation other than
Canada requiring assistance in obtaining defense items in the United
States or priority rating authority for defense items to be purchased in
the United States, should apply for such assistance or rating authority
to the U.S. Department of Defense. The request must be sponsored by the
government of the foreign nation prior to its submission.
(2) If the Department of Defense endorses the request, it will be
forwarded to Commerce for appropriate action.
Subpart I--Official Actions
Sec. 700.60 General provisions.
(a) Commerce may, from time-to-time, take specific official actions
to implement or enforce the provisions of this regulation.
(b) Several of these official actions (Rating Authorizations,
Directives, and Letters of Understanding) are discussed in this subpart.
Other official actions which pertain to compliance (Administrative
Subpoenas, Demands for Information, and Inspection Authorizations) are
discussed in Sec. 700.71(b).
Sec. 700.61 Rating Authorizations.
(a) A Rating Authorization is an official action granting specific
priority rating authority that:
(1) Permits a person to place a priority rating on an order for an
item not normally ratable under this regulation; or
(2) Authorizes a person to modify a priority rating on a specific
order or series of contracts or orders.
(b) To request priority rating authority, see Sec. 700.51.
Sec. 700.62 Directives.
(a) A Directive is an official action which requires a person to
take or refrain from taking certain actions in accordance with its
provisions.
(b) A person must comply with each Directive issued. However, a
person may not use or extend a Directive to obtain any items from a
supplier, unless expressly authorized to do so in the Directive.
(c) Directives take precedence over all DX rated orders, DO rated
orders, and unrated orders previously or subsequently received, unless a
contrary instruction appears in the Directive.
Sec. 700.63 Letters of Understanding.
(a) A Letter of Understanding is an official action which may be
issued in resolving special priorities assistance cases to reflect an
agreement reached by all parties (Commerce, the Delegate Agency, the
supplier, and the customer).
(b) A Letter of Understanding is not used to alter scheduling
between rated orders, to authorize the use of priority ratings, to
impose restrictions under this regulation, or to take other official
actions. Rather, Letters of Understanding are used to confirm production
or shipping schedules which do not require modifications to other rated
orders.
Subpart J--Compliance
Sec. 700.70 General provisions.
(a) Compliance actions may be taken for any reason necessary or
appropriate to the enforcement or the administration of the Defense
Production Act, this regulation, or an official action.
[[Page 84]]
Such actions include audits, investigations, or other inquiries.
(b) Any person who places or receives a rated order should be
thoroughly familiar with, and must comply with, the provisions of this
regulation.
(c) Willful violation of any of the provisions of Title I or section
705 of the Defense Production Act, this regulation, or an official
action of the Department of Commerce, is a criminal act, punishable as
provided in the Defense Production Act and as set forth in Sec. 700.74
of this regulation.
Sec. 700.71 Audits and investigations.
(a) Audits and investigations are official examinations of books,
records, documents, other writings and information to ensure that the
provisions of the Defense Production Act, this regulation, and official
actions have been properly followed. An audit or investigation may also
include interviews and a systems evaluation to detect problems or
failures in the implementation of this regulation.
(b) When undertaking an audit, investigation, or other inquiry, the
Department of Commerce shall:
(1) Define the scope and purpose in the official action given to the
person under investigation, and
(2) Have ascertained that the information sought or other adequate
and authoritative data are not available from any Federal or other
responsible agency.
(c) In administering this regulation, Commerce may issue the
following documents which constitute official actions:
(1) Administrative Subpoenas. An Administrative Subpoena requires a
person to appear as a witness before an official designated by the
Department of Commerce to testify under oath on matters of which that
person has knowledge relating to the enforcement or the administration
of the Defense Production Act, this regulation, or official actions. An
Administrative Subpoena may also require the production of books,
papers, records, documents and physical objects or property.
(2) Demand for Information. A Demand for Information requires a
person to furnish to a duly authorized representative of the Department
of Commerce any information necessary or appropriate to the enforcement
or the administration of the Defense Production Act, this regulation, or
official actions.
(3) Inspection Authorizations. An Inspection Authorization requires
a person to permit a duly authorized representative of Commerce to
interview the person's employees or agents, to inspect books, records,
documents, other writings and information in the person's possession or
control at the place where that person usually keeps them, and to
inspect a person's property when such interviews and inspections are
necessary or appropriate to the enforcement or the administration of the
Defense Production Act, this regulation, or official actions.
(d) The production of books, records, documents, other writings and
information will not be required at any place other than where they are
usually kept if, prior to the return date specified in the
Administrative Subpoena or Demand for Information, a duly authorized
official of Commerce is furnished with copies of such material that are
certified under oath to be true copies. As an alternative, a person may
enter into a stipulation with a duly authorized official of Commerce as
to the content of the material.
(e) An Administrative Subpoena, Demand for Information, or
Inspection Authorization, shall include the name, title or official
position of the person to be served, the evidence sought to be adduced,
and its general relevance to the scope and purpose of the audit,
investigation, or other inquiry. If employees or agents are to be
interviewed; if books, records, documents, other writings, or
information are to be produced; or if property is to be inspected; the
Administrative Subpoena, Demand for Information, or Inspection
Authorization will describe them with particularity.
(f) Service of documents shall be made in the following manner:
(1) Service of a Demand for Information or Inspection Authorization
shall be made personally, or by Certified Mail--Return Receipt Requested
at the person's last known address. Service of an Administrative
Subpoena shall be made personally. Personal service may also be made by
leaving a copy of the
[[Page 85]]
document with someone of suitable age and discretion at the person's
last known dwelling or place of business.
(2) Service upon other than an individual may be made by serving a
partner, corporate officer, or a managing or general agent authorized by
appointment or by law to accept service of process. If an agent is
served, a copy of the document shall be mailed to the person named in
the document.
(3) Any individual 18 years of age or over may serve an
Administrative Subpoena, Demand for Information, or Inspection
Authorization. When personal service is made, the individual making the
service shall prepare an affidavit as to the manner in which service was
made and the identity of the person served, and return the affidavit,
and in the case of subpoenas, the original document, to the issuing
officer. In case of failure to make service, the reasons for the failure
shall be stated on the original document.
Sec. 700.72 Compulsory process.
(a) If a person refuses to permit a duly authorized representative
of Commerce to have access to any premises or source of information
necessary to the administration or the enforcement of the Defense
Production Act, this regulation, or official actions, the Commerce
representative may seek compulsory process. Compulsory process means the
institution of appropriate legal action, including ex parte application
for an inspection warrant or its equivalent, in any forum of appropriate
jurisdiction.
(b) Compulsory process may be sought in advance of an audit,
investigation, or other inquiry, if, in the judgment of the Director of
the Office of Industrial Resource Administration, U.S. Department of
Commerce, in consultation with the Assistant General Counsel for
International Trade, U.S. Department of Commerce, there is reason to
believe that a person will refuse to permit an audit, investigation, or
other inquiry, or that other circumstances exist which make such process
desirable or necessary.
Sec. 700.73 Notification of failure to comply.
(a) At the conclusion of an audit, investigation, or other inquiry,
or at any other time, Commerce may inform the person in writing where
compliance with the requirements of the Defense Production Act, this
regulation, or an official action were not met.
(b) In cases where Commerce determines that failure to comply with
the provisions of the Defense Production Act, this regulation, or an
official action was inadvertent, the person may be informed in writing
of the particulars involved and the corrective action to be taken.
Failure to take corrective action may then be construed as a willfull
violation of the Defense Production Act, this regulation, or an official
action.
Sec. 700.74 Violations, penalties, and remedies.
(a) Willful violation of the provisions of Title I or sections 705
or 707 of the Defense Production Act, this regulation, or an official
action is a crime and upon conviction, a person may be punished by fine
or imprisonment, or both. Except as provided in (b) below, the maximum
penalties provided by the Defense Production Act are a $10,000 fine, or
one year in prison, or both.
(b) Willful refusal to furnish any information or reports required
by Commerce under section 705 of the Defense Production Act, this
regulation, or an official action, is a crime and upon conviction, a
person may be punished by fine or imprisonment, or both. Maximum
penalties provided by the Defense Production Act are a $1,000 fine, or
one year in prison, or both.
(c) The government may also seek an injunction from a court of
appropriate jurisdiction to prohibit the continuance of any violation
of, or to enforce compliance with, the Defense Production Act, this
regulation, or an official action.
(d) In order to secure the effective enforcement of the Defense
Production Act, this regulation, and official actions, the following are
prohibited (see section 704 of the Defense Production
[[Page 86]]
Act; see also, for example, sections 2 and 371 of Title 18, United
States Code):
(1) No person may solicit, influence or permit another person to
perform any act prohibited by, or to omit any act required by, the
Defense Production Act, this regulation, or an official action.
(2) No person may conspire or act in concert with any other person
to perform any act prohibited by, or to omit any act required by, the
Defense Production Act, this regulation, or an official action.
(3) No person shall deliver any item if the person knows or has
reason to believe that the item will be accepted, redelivered, held, or
used in violation of the Defense Production Act, this regulation, or an
official action. In such instances, the person must immediately notify
the Department of Commerce that, in accordance with this provision,
delivery has not been made.
Sec. 700.75 Compliance conflicts.
If compliance with any provision of the Defense Production Act, this
regulation, or an official action would prevent a person from filling a
rated order or from complying with another provision of the Defense
Production Act, this regulation, or an official action, the person must
immediately notify the Department of Commerce for resolution of the
conflict.
Subpart K--Adjustments, Exceptions, and Appeals
Sec. 700.80 Adjustments or exceptions.
(a) A person may submit a request to the Office of Industrial
Resource Administration, U.S. Department of Commerce, for an adjustment
or exception on the ground that:
(1) A provision of this regulation or an official action results in
an undue or exceptional hardship on that person not suffered generally
by others in similar situations and circumstances; or
(2) The consequence of following a provision of this regulation or
an official action is contrary to the intent of the Defense Production
Act or this regulation.
(b) Each request for adjustment or exception must be in writing and
contain a complete statement of all the facts and circumstances related
to the provision of this regulation or official action from which
adjustment is sought and a full and precise statement of the reasons why
relief should be provided.
(c) The submission of a request for adjustment or exception shall
not relieve any person from the obligation of complying with the
provision of this regulation or official action in question while the
request is being considered unless such interim relief is granted in
writing by the Office of Industrial Resource Administration.
(d) A decision of the Office of Industrial Resource Administration
under this section may be appealed to the Assistant Secretary for Trade
Administration, U.S. Department of Commerce. (For information on the
appeal procedure, see Sec. 700.81.)
Sec. 700.81 Appeals.
(a) Any person who has had a request for adjustment or exception
denied by the Office of Industrial Resource Administration under
Sec. 700.80, may appeal to the Assistant Secretary for Trade
Administration, U.S. Department of Commerce, who shall review and
reconsider the denial.
(b) An appeal must be received by the Office of the Assistant
Secretary for Trade Administration, International Trade Administration,
U.S. Department of Commerce, Washington, D. C. 20230, Ref: DPAS, no
later than 45 days after receipt of a written notice of denial from the
Office of Industrial Resource Administration. After this 45-day period,
an appeal may be accepted at the discretion of the Assistant Secretary
for Trade Administration for good cause shown.
(c) Each appeal must be in writing and contain a complete statement
of all the facts and circumstances related to the action appealed from
and a full and precise statement of the reasons the decision should be
modified or reversed.
(d) In addition to the written materials submitted in support of an
appeal, an appellant may request, in writing,
[[Page 87]]
an opportunity for an informal hearing. This request may be granted or
denied at the discretion of the Assistant Secretary for Trade
Administration.
(e) When a hearing is granted, the Assistant Secretary for Trade
Administration may designate an employee of the Department of Commerce
to conduct the hearing and to prepare a report. The hearing officer
shall determine all procedural questions and impose such time or other
limitations deemed reasonable. In the event that the hearing officer
decides that a printed transcript is necessary, all expenses shall be
borne by the appellant.
(f) When determining an appeal, the Assistant Secretary for Trade
Administration may consider all information submitted during the appeal
as well as any recommendations, reports, or other relevant information
and documents available to the Department of Commerce, or consult with
any other persons or groups.
(g) The submission of an appeal under this section shall not relieve
any person from the obligation of complying with the provision of this
regulation or official action in question while the appeal is being
considered unless such relief is granted in writing by the Assistant
Secretary for Trade Administration.
(h) The decision of the Assistant Secretary for Trade Administration
shall be made within a reasonable time after receipt of the appeal and
shall be the final administrative action. It shall be issued to the
appellant in writing with a statement of the reasons for the decision.
Subpart L--Miscellaneous Provisions
Sec. 700.90 Protection against claims.
A person shall not be held liable for damages or penalties for any
act or failure to act resulting directly or indirectly from compliance
with any provision of this regulation, or an official action,
notwithstanding that such provision or action shall subsequently be
declared invalid by judicial or other competent authority.
Sec. 700.91 Records and reports.
(a) Persons are required to make and preserve for at least three
years, accurate and complete records of any transaction covered by this
regulation (OMB control number 0625-0107) or an official action.
(b) Records must be maintained in sufficient detail to permit the
determination, upon examination, of whether each transaction complies
with the provisions of this regulation or any official action. However,
this regulation does not specify any particular method or system to be
used.
(c) Records required to be maintained by this regulation must be
made available for examination on demand by duly authorized
representatives of Commerce as provided in Sec. 700.71.
(d) In addition, persons must develop, maintain, and submit any
other records and reports to Commerce that may be required for the
administration of the Defense Production Act and this regulation.
(e) Section 705(e) of the Defense Production Act provides that
information obtained under this section which the President deems
confidential, or with reference to which a request for confidential
treatment is made by the person furnishing such information, shall not
be published or disclosed unless the President determines that the
withholding of this information is contrary to the interest of the
national defense. Information required to be submitted to Commerce in
connection with the enforcement or administration of the Act, this
regulation, or an official action, is deemed to be confidential under
section 705(e) of the Act and shall not be published or disclosed except
as required by law.
Sec. 700.92 Applicability of this regulation and official actions.
(a) This regulation and all official actions, unless specifically
stated otherwise, apply to transactions in any state, territory, or
possession of the United States and the District of Columbia.
(b) This regulation and all official actions apply not only to
deliveries to other persons but also include deliveries to affiliates
and subsidiaries of a person and deliveries from one branch,
[[Page 88]]
division, or section of a single entity to another branch, division, or
section under common ownership or control.
(c) This regulation and its schedules shall not be construed to
affect any administrative actions taken by Commerce, or any outstanding
contracts or orders placed pursuant to any of the regulations, orders,
schedules or delegations of authority under the Defense Materials System
and Defense Priorities System previously issued by Commerce. Such
actions, contracts, or orders shall continue in full force and effect
under this regulation unless modified or terminated by proper authority.
(d) The repeal of the regulations, orders, schedules and delegations
of authority of the Defense Materials System (DMS) and Defense
Priorities System (DPS) shall not have the effect to release or
extinguish any penalty or liability incurred under the DMS/DPS. The DMS/
DPS shall be treated as still remaining in force for the purpose of
sustaining any action for the enforcement of such penalty or liability.
Sec. 700.93 Communications.
All communications concerning this regulation, including requests
for copies of the regulation and explanatory information, requests for
guidance or clarification, and requests for adjustment or exception
shall be addressed to the Office of Industrial Resource Administration,
Room 3876, U.S. Department of Commerce, Washington, DC 20230, Ref: DPAS;
telephone: (202) 377-4506.
SCHEDULE I TO PART 700--AUTHORIZED PROGRAMS AND DELEGATE AGENCIES
The programs listed in this schedule have been authorized by the
Federal Emergency Management Agency for priorities and allocations
support under this regulation. They have equal preferential status.
The Department of Commerce has authorized the Delegate Agencies to
use this regulation in support of those programs assigned to them, as
indicated below.
----------------------------------------------------------------------------------------------------------------
Program Identification
Symbol Authorized Program Delegate Agency
----------------------------------------------------------------------------------------------------------------
Defense Programs
----------------------------------------------------------------------------------------------------------------
A1.......................... Aircraft........................................ Department of Defense and
Associated Agencies.\1\
A2.......................... Missiles........................................ Do.
A3.......................... Ships........................................... Do.
A4.......................... Tank--Automotive................................ Do.
A5.......................... Weapons......................................... Do.
A6.......................... Ammunition...................................... Do.
A7.......................... Electronic and communications equipment......... Do.
B1.......................... Military building supplies...................... Do.
B8.......................... Production equipment (for defense contractor's Do.
account).
B9.......................... Production equipment (Government owned)......... Do.
C1.......................... Food resources.................................. Do.
C2.......................... Department of Defense construction.............. Do.
C3.......................... Maintenance, repair and operating supplies (MRO) Do.
for Department of Defense facilities.
C8.......................... Controlled materials for Defense Industrial Do.
Supply Center (DISC).
C9.......................... Miscellaneous................................... Do.
----------------------------------------------------------------------------------------------------------------
International Defense Programs
----------------------------------------------------------------------------------------------------------------
Canada
D1.......................... Canadian military programs...................... Department of Commerce.
D2.......................... Canadian production and construction............ Do.
D3.......................... Canadian atomic energy program.................. Do.
Other Foreign Nations
G1.......................... Certain munitions items purchased by foreign Department of Commerce.
governments through domestic commercial
channels for export.
G2.......................... Certain direct defense needs of foreign Do.
governments other than Canada.
G3.......................... Foreign nations (other than Canada) production Do.
and construction.
[[Page 89]]
Co-Production
J1.......................... F-16 Co-Production Program...................... Departments of Commerce and
Defense.
----------------------------------------------------------------------------------------------------------------
Atomic Energy Programs
----------------------------------------------------------------------------------------------------------------
E1.......................... Construction.................................... Department of Energy.
E2.......................... Operations--including maintenance, repair and Do.
operating supplies (MRO).
E3.......................... Privately owned facilities...................... Do.
----------------------------------------------------------------------------------------------------------------
Other Energy Programs
----------------------------------------------------------------------------------------------------------------
F1.......................... Exploration, production, refining and Department of Energy.
transportation.
F2.......................... Conservation.................................... Do.
F3.......................... Construction and Maintenance.................... Do.
----------------------------------------------------------------------------------------------------------------
Other Defense, Energy and Related Programs
----------------------------------------------------------------------------------------------------------------
H1.......................... Certain combined orders (see Sec. 700.17(c))... Department of Commerce.
H2.......................... Controlled materials producers.................. Do.
H3.......................... Further converters (controlled materials)....... Do.
H4.......................... Distributors of controlled materials............ Do.
H5.......................... Private domestic production..................... Do.
H6.......................... Private domestic construction................... Do.
H7.......................... Maintenance, repair and operating supplies (MRO) Do.
K1.......................... Federal supply items............................ General Services Administration.
N1.......................... Approved civil defense programs................. Federal Emergency Management
Agency.
----------------------------------------------------------------------------------------------------------------
\1\ Department of Defense agencies are: Army, Navy (including Coast Guard), Air Force, Defense Logistics Agency,
and National Security Agency. Associated Agencies of the Department of Defense include Central Intelligence
Agency, Federal Aviation Administration, and National Aeronautics and Space Administration.
[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989,
and amended at 56 FR 8109, Feb. 27, 1991]
SCHEDULE II TO PART 700--CONTROLLED MATERIALS
Minimum quantity* Minimum number of days**
(net tons, except as -----------------------------------------
specified) High-
Controlled Materials \1\ ----------------------- strength
Carbon low- Stainless Alloy \3\
Carbon \2\ Alloy \2\ alloy
Steel
Bar, bar shapes (including light shapes):
Bar, hot-rolled stock for projectile and
shell bodies \4\............................ (\2\) (\2\) 45 75 ......... \5\ 75
Bar, hot-rolled, other (including light
shapes):
Round bars up to and including 3 inches,
and squares, hexagons, half rounds, ovals,
etc., of approximately equivalent section
area...................................... 5 (\2\) \5\ 45 \5\ 75 90 \5\ 75
Round and square bars over 3 inches, but
less than 8 inches........................ 15 (\2\) \5\ 45 \5\ 75 90 \5\ 75
Bar-size shapes (angles, tees, channels,
and zees under 3 inches).................. 5 (\2\) \5\ 45 \5\ 75 90 \5\ 75
Bar, reinforcing (straight lengths, as
rolled)..................................... 5 ......... 45 ........ ......... 75
Bar, cold finished........................... 5 (\2\) \5\ 75 \5\ 105 105 \5\ 105
[[Page 90]]
Sheet, strip (uncoated and coated):
Sheet, hot-rolled............................ 5 (\2\) 45 75 90 75
Sheet, cold-rolled........................... 5 (\2\) 45 75 105 90
Sheet, galvanized............................ (\2\) ......... 45 ........ ......... .........
Sheet, all other coated...................... 5 ......... 45 ........ ......... .........
Sheet, enameling............................. 5 ......... 45 ........ ......... .........
Roofing, galvanized, corrugated, V-crimped
channel drains.............................. (\2\) ......... 45 ........ ......... .........
Ridge roll, valley, and flashing............. (\2\) ......... 45 ........ ......... .........
Siding, corrugated and brick................. (\2\) ......... 45 ........ ......... .........
Strip, hot-rolled............................ (\2\) (\2\) 45 75 90 75
Strip, cold-rolled........................... (\2\) (\2\) 45 75 105 90
Strip, galvanized............................ (\2\) ......... \6\ 45 ........ ......... .........
Electrical sheet and strip................... 5 ......... \7\45 ........ ......... .........
Tin mill black plate (pounds)................ 12,000 ......... 45 ........ ......... .........
Tin plate, hot-dipped (pounds)............... 12,000 ......... 45 ........ ......... .........
Ternes, special coated manufacturing (pounds) 10,000 ......... 45 ........ ......... .........
Tin plate, electrolytic (pounds)............. 12,000 ......... ........ ........ ......... .........
Electrolytic chromium coated steel \8\....... (\2\) ......... ........ ........ ......... .........
Plate:
Rolled armor................................. (\2\) (\2\) \6\ 45 \5\ 75 90 \5\75
Continuous strip mill production............. 10 (\2\) \6\ 45 \5\ 75 90 \5\ 75
Sheared, universal, or bar mill production... 3 (\2\) \6\ 45 \5\ 75 90 \5\ 75
Structural shapes, piling...................... (\2\) (\2\) 45 \9\ 75 \9\ 150 90
Pipe, tubing:
Standard pipe (including couplings furnished
by mill).................................... (\10\) (\10\) 45 ........ 120 .........
Oil-country goods (casing, tubular goods,
couplings furnished by mill)................ (\10\) (\10\) 45 ........ ......... 60
Line pipe (including couplings furnished by
mill)....................................... (\10\) (\10\) 45 75 ......... .........
Pressure and mechanical tubing (seamless and
welded):
Seamless cold-drawn (pounds):
Under 20 pounds per foot................. 5,000 5,000 \6\ 60 ........ 120 120
20 pounds per foot and over.............. 5,000 10,000 \6\ 60 ........ 120 120
Seamless hot-rolled........................ (\2\) (\2\) \6\ 60 ........ 120 120
Welded..................................... (\2\) (\2\) \6\ 60 ........ 120 120
Wire, wire products:
Wire, drawn.................................. (\2\) (\2\) 45 75 90 75
Nails--bright steel wire, steel cut,
galvanized, cement-coated and painted....... \11\ 5 ......... 45 ........ ......... .........
Spikes and brads--steel wire, galvanized,
cement-coated............................... \11\ 5 ......... 45 ........ ......... .........
Staples, bright and galvanized (farm and
poultry).................................... \11\ 5 ......... 45 ........ ......... .........
Wire rope and strand......................... (\2\) ......... 45 ........ 105 .........
Welded wire mesh............................. (\2\) ......... 45 ........ ......... .........
Woven wire netting........................... \11\ 5 ......... 45 ........ ......... .........
Barbed and twisted wire...................... \11\ 5 ......... 45 ........ ......... .........
Wire fence, woven and welded (farm and
poultry).................................... \11\ 5 ......... 45 ........ ......... .........
Bale ties.................................... \11\ 5 ......... 45 ........ ......... .........
Coiled automatic baler wire.................. \11\ 5 ......... 45 ........ ......... .........
Tool steel (all forms including die blocks and
tool steel forgings) (pounds)................. 500 500 \12\ 60 ........ ......... \12\ 90
Other mill forms and products (excluding
castings and forgings):
Ingots....................................... \13\ 25 (\14\) 45 75 75 75
Billets, projectile and shell stock.......... (\2\) (\2\) 45 75 ......... 75
Blooms, slabs, other billets, tube rounds,
sheet bars.................................. \13\ 25 (\2\) 45 75 75 75
Skelp........................................ 25 ......... 45 ........ ......... .........
Wire rod..................................... (\2\) (\2\) 45 75 90 75
Rail and track accessories................... (\2\) (\2\) 45 ........ ......... 90
Wheels, rolled or forged (railroad).......... (\2\) (\2\) 45 ........ ......... 90
Axles (railroad)............................. (\2\) (\2\) 45 ........ ......... 90
[[Page 91]]
Minimum quantity*
Controlled materials\1\ (pounds) Minimum number of days**
Copper
Copper and copper-base alloy brass mill
products: \15\
Copper (unalloyed):
Bar................................... 2,000 45
Shapes, wire (except electrical wire). 500 45
Rod................................... 2,000 45
Sheet, plate (24 inches wide and over) 2,000 45
Rolls and strip (up to 24 inches wide) 2,000 45
Pipe, tube (seamless)................. 2,000 45
Copper-base alloy:
Bar................................... 2,000 \16\ 45
Wire, shapes.......................... 500 \16\ 45
Free cutting brass rod................ 2,000 \16\ 45
Other rod............................. 1,000 \16\ 45
Sheet, and plate (24 inches wide and
over)................................ 2,000 \16\ 45
Rolls and strip (up to 24 inches in
width)............................... 2,000 \16\ 45
Military ammunition cups and discs.... 2,000 \16\45
Circles............................... 1,000 \16\ 90
Pipe, tube (seamless)................. 2,000 \16\ 45
Copper wire mill products:
Copper wire and cable:
Bare and tinned....................... (\17\) (\18\) 35
Weatherproof.......................... (\17\) (\18\) 40
Magnet wire........................... (\17\) (\18\) 35
Insulated building wire............... (\17\) (\18\) 45
Paper and lead power cable............ (\17\) (\18\) 75
Paper and pulp telephone cable........ (\17\) (\18\) 45
Plastic insulated telephone cable..... (\17\) (\18\) 45
Asbestos cable........................ (\17\) (\18\) 60
Portable and flexible cord and cable.. (\17\) (\18\) 45
Communication wire and cable.......... (\17\) (\18\) 60
Shipboard cable....................... (\17\) (\18\) 75
Automotive and aircraft wire and cable (\17\) (\18\) 45
Insulated power cable................. (\17\) (\18\) 75
Signal and control cable.............. (\17\) (\18\) 75
Coaxial cable......................... (\17\) (\18\) 75
Copper-clad steel wire containing over
20 percent copper by weight regardless
of end use............................. (\17\) (\18\) 35
Copper-clad aluminium wire containing
over 20 percent copper by weight
regardless of end use.................. (\17\) (\18\) 45
Copper and copper-base alloy foundry
products and powder:
Copper, brass, and bronze castings...... ..................... \19\ \20\ 14
Copper, brass, and bronze powder
(including copper powder, granular and
flake, and copper-base alloy powder,
granular and flake).................... ..................... 30
Controlled materials\1\ Minimum quantity* Minimum number of days**
Aluminum
Ingot, granular or shot, and molten metal:
Extrusion ingot (billet)................ (\18\) 90
Other ingot and molten metal, primary... (\18\) 60
Other ingot and molten metal, secondary. (\18\) .............................................
Sheet and plate:
Sheet, non-heat treatable............... (\18\) 150
Sheet, heat treatable................... (\18\) 150
Plate, non-heat treatable............... (\18\) 150
Plate, heat treatable................... (\18\) 150
Welded tube............................. (\18\) .............................................
Foil...................................... (\18\) 90
Aluminum conductor:
ACSR and aluminium cable, bare.......... (\18\) 60
Wire and cable, insulated or covered.... (\18\) 60
[[Page 92]]
Rolled bar, rod and wire (continuous cast
or rolled):
Conductor redraw rod.................... (\18\) 60
Non-conductor redraw rod................ (\18\) 60
Other rod and bar....................... (\18\) 120
Wire, bare, conductor and non-conductor. (\18\) 120
Extruded bar, rod, shapes and drawn tube:
Extruded rod and bar--alloys other than
2000 and 7000 series................... (\18\) 60
Extruded rod and bar--alloys in 2000 and
7000 series............................ (\18\) 150
Extruded pipe and tube--alloys other
than 2000 and 7000 series.............. (\18\) 60
Extruded pipe and tube--alloys in 2000
and 7000 series........................ (\18\) 150
Extruded shapes--alloys other than 2000
and 7000 series........................ (\18\) 60
Extruded shapes--alloys in 2000 and 7000
series................................. (\18\) 150
Drawn tube--alloys other than 2000 and
7000 series............................ (\18\) 60
Drawn tube--alloys in 2000 and 7000
series................................. (\18\) 120
Powder, flake and paste................... (\18\) 60
----------------------------------------------------------------------------------------------------------------
Minimum number of days**
Minimum ----------------------------
Controlled materials\1\ quantity* Solid
solution Precipitation
-----------------------------------------------------------------------------------------------------hardened---
Nickel Alloys
Rods and bars (except anode bars):
Hot-rolled, including wire rod...................................... (\2\) 90 120
Forging quality..................................................... (\2\) 90 120
Cold-finished....................................................... (\2\) 120 165
Sheet and strip:
Hot-rolled.......................................................... (\2\) 90 120
Cold-rolled......................................................... (\2\) 120 165
Foil.................................................................. (\2\) 120 165
Plate................................................................. (\2\) 90 120
Pipe, tubing.......................................................... (\2\) 90 120
Wire.................................................................. (\2\) 120 165
Other mill forms:
Ingots.............................................................. (\2\) 90 120
Blooms, slabs, billets.............................................. (\2\) 90 120
Powder................................................................ (\2\) 90 120
Shapes and forms not listed above (including anode bars).............. (\2\) (\2\) (\2\)
Castings (less gates and risers, rough as cast)....................... (\2\) 90 120
----------------------------------------------------------------------------------------------------------------
(\1\) See technical definitions in Schedule III.
(\2\) All stainless steel products, certain other steel products and all nickel alloy products. By negotiation
between the mill and its customer. If no acceptable arrangements are worked out, the Office of Industrial
Resource Administration should be notified.
(\3\) For clad products, add 45 days to lead time indicated.
(\4\) Includes projectile body stock, sizes under 2\7/8\ inches.
(\5\) If annealed or heat-treated, add an additional 15 days.
(\6\) For welded tubing or high carbon spring steel strip, 75 days.
(\7\) 60 days for high grade (AISI M15 and oriented).
(\8\) Steel pipe or tubing exceeding 36 inches O.D. is not a controlled material.
(\9\) Applies to special rolled shapes including angles and channels.
(\10\) Published carload minimum (mixed sizes and grades).
(\11\) Quantity refers to any assortment of wire merchant trade products.
(\12\) If cold-finished, add an addtional 15 days.
(\13\) For forging quality, product of one heat.
(\14\) Product of one heat.
(\15\) Includes anodes--rolled, forged, or sheared from cathodes.
(\16\) For refractory alloys, 60 days, except for tube over 5 inches in diameter, which should be 120 days.
(\17\) Standard package quantities as published by each mill.
(\18\) Standard minimum quantities as established by each mill.
(\19\) Lead time applies to unmachined castings after approval of patterns for production.
(\20\) Small simple castings to fit 12 x 16 inch flask, 7 days.
*Minimum quantity for each size and grade of any items for mill shipment at any one time to any one destination.
**Minimum number of days in advance of first day of month in which shipment is required.
Note: Leaders in figure columns indicate not applicable.
[49 FR 30414, July 30, 1984; 49 FR 50172, Dec. 27, 1984. Redesignated at
54 FR 601, Jan. 9, 1989]
[[Page 93]]
Schedule III to Part 700--Technical Definitions of Controlled Materials
Products
Steel
Alloy steel--Steel containing 50 percent or more of iron or steel
and any one or more of the following elements in the following amounts:
manganese, maximum of range in excess of 1.65 percent; silicon, maximum
of range in excess of 0.60 percent (excepting electrical sheet and
strip); copper, maximum of range in excess of 0.60 percent; aluminum,
boron, chromium (less than 10 percent), cobalt, columbium, molybdenum,
nickel, tantalum, titanium, tungsten, vanadium, zirconium, or any other
alloying elements in any amount specified or known to have been added to
obtain a desired alloying effect. Clad steels which have an alloy steel
base or carbon steel base for which nickel and/or chromium is contained
in the coating or cladding material (e.g., nickel-copper alloy, nickel-
chrome-iron alloy or stainless) are alloy steels.
Alloy steel plate includes the following specifications:
--0.180 inch or thicker, over 48 inches wide
--0.230 inch or thicker, over 8 inches wide
--7.53 pounds per square foot or heavier, over 8 inches wide
Carbon steel--Any steel (including wrought iron) customarily so
classified and also includes: (a) ingot iron; (b) all grades of
electrical sheet and strip; (c) high-strength low-alloy steels; (d) clad
and coated carbon steels not included with alloy steels: e.g.,
galvanized, tin, terne, copper (excluding copper wire mill products) or
aluminum clad and/or coated carbon steels; and (e) leaded carbon steels.
Carbon steel plate includes the following specifications, plus floor
plates of any thickness:
--0.180 inch or thicker, over 48 inches wide
--0.230 inch or thicker, over 8 inches wide
--7.53 pounds per square foot or heavier, over 48 inches wide
--9.62 pounds per square foot or heavier, over 8 inches wide
High-strength low-alloy steels--Only the proprietary grade promoted
and sold for this purpose, and Navy high-tensile steel grade HT
Specification Mil-S-16113 (Ships).
Stainless steel--Heat and corrosion resisting steel containing 50
percent or more of iron or steel and 10 percent or more of chromium
whether with or without nickel, molybdenum, or other elements.
Stainless steel plate includes the following size specifications:
\3/16\ inch (0.1875) or thicker, over 10 inches wide.
Standard steel pipe includes the following:
Ammonia pipe
Bedstead tubing
Driven well pipe
Drive pipe
Dry kiln pipe
Dry pipe for locomotives
English gas and steam pipe
Fence pipe
Furniture pipe
Ice machine pipe
Mechanical service pipe
Nipple pipe
Pipe for piling
Pipe for plating and enameling
Pump pipe
Signal pipe
Standard pipe coupling
Structural pipe
Turbine pump pipe
Water main pipe
Water well casing
Water well reamed and drifted pipe
Structural steel shapes--Rolled flanged sections having at least one
dimension of their cross section 3 inches or greater, commonly referred
to as angles, channels, beams, and wide flange sections.
Copper
Brass-mill products--Copper and copper-base alloys in the following
forms: sheet, plate, and strip in flat lengths or coils; rod, bar,
shapes, and wire (except copper wire mill products); anodes, rolled,
forged, or sheared from cathodes; and seamless tube and pipe.
Straightening, threading, chamfering, cutting to width or length, or
reduction in gauge, do not constitute changes in form of brass mill
products. The following related products which have been produced by a
change in form of brass mill products are not included in the definition
of brass mill products:
Circles, discs (except brass military ammunition discs)
Cups (except brass military ammunition cups)
Blanks and segments
Forgings (except anodes)
Welding rod, 3 feet or less in length
Rotating bands
Tube and nipple--welded, brazed, or mechanically seamed
Formed flashings
Engravers' copper
Copper-base alloy--Any alloy of which the percentage of copper metal
equals or exceeds 40 percent by weight of the metallic content of the
alloy. It does not include alloyed gold produced in accordance with U.S.
Commercial Standard CS 67-38.
Copper foundry products--Cast copper and copper-based alloy shapes
or forms suitable for ultimate use without remelting, rolling, drawing,
extruding, or forging. The process of casting includes the removal of
gates, risers, and sprues, and sandblasting, tumbling,
[[Page 94]]
and dipping, but does not include any machining or further processing.
For centrifugal casting, the process includes the removal of the rough
cut in the inner or outer diameter, or both, before delivery to a
customer. Castings include anodes and shot cast in a foundry or by an
ingot maker.
Copper powder mill products--Copper or copper-base alloy in the form
of granular or flake powder.
Copper raw materials include:
(a) Refined copper--Copper metal which has been refined by any
process of electrolysis or fire-refined to a grade and in a form
suitable for fabrication;
(b) Blister copper--High-grade crude copper in any form produced
from converter operations and from which nearly all the oxidizable
impurities have been removed by slagging and volatilization;
(c) Copper and copper-base alloy scrap--Including fired and
demilitarized cartridge and artillery cases;
(d) Brass mill casting--From which brass mill or intermediate shapes
may be rolled, drawn, or extruded, without remelting;
(e) Copper-base alloy ingot--To be used in remelting, alloying, or
deoxidizing operations;
(f) Copper or copper-base alloy shot and waffle--To be used in
remelting, alloying, deoxidizing, or chemical operations; and
(g) Copper precipitates (or cement copper)--Precipitated from mine
water by contact with iron scrap, tin cans, or iron in other forms.
Copper wire mill products--Uninsulated or insulated wire and cable
made from copper or copper-base alloy, used for transmission of
electrical energy, whatever the outer protective coverings may be, and
also copper-clad steel or aluminum wire containing over 20 percent
copper by weight regardless of end use. Copper wire mill products shall
be measured in terms of pounds of copper content.
Aluminum
Foil--A flat rolled product, rectangular in cross section, of
thickness less than 0.006 inch.
Ingot includes:
(a) Extrusion ingot (billet)--A solid or hollow cast form, usually
cylindrical, suitable for extruding;
(b) Other ingot and molten metal, primary--A cast form other than
extrusion ingot (or molten metal), shipped by an integrated producer or
nonintegrated fabricator from a company-owned facility not exclusively
devoted to producing secondary ingot; and
(c) Other ingot and molten metal, secondary--A cast form other than
extrusion ingot (or molten metal), principally produced from aluminum
scrap to specification by secondary smelters (or others at a facility
exclusively devoted to producing ingot from scrap for sale); excludes
remelt scrap ingot (RSI) which is considered scrap until remelted and
cast into specification ingot.
Pipe and tube includes:
(a) Drawn tube--A hollow wrought product that is long in relation to
its cross section, which is round, square, rectangular, hexagonal,
octagonal, or elliptical in shape, sharp or rounded corners, with a
uniform wall thickness except as affected by corner radii, and brought
to final dimensions by cold drawing through a die (includes tube that is
sized);
(b) Extruded pipe and tube--A hollow wrought product formed by hot
extruding with a uniform wall thickness (except as affected by corner
radii) that is long in relation to its cross section, round, square,
rectangular, hexagonal, octagonal, or elliptical in shape (excludes tube
that is sized by cold drawing); and
(c) Welded tube--A hollow product that is long in relation to its
cross section, which is round, square, rectangular, hexagonal,
octagonal, or elliptical in shape, produced by forming and seam-welding
sheet longitudinally.
Plate includes:
(a) Plate, nonheat-treatable--A flat rolled product, rectangular in
cross section, 0.250 inch or greater in thickness, which can be
strengthened only by cold work; and
(b) Plate, heat-treatable--A flat rolled product, in 2000, 6000, or
7000 alloy series (except 7072), rectangular in cross section, 0.250
inch or greater in thickness, which can be strengthened by a suitable
thermal treatment.
Powder--An aggregate of discrete particles of aluminum,
substantially all of which are finer than 1,000 microns (minus 18 mesh);
and includes:
(a) Atomized powder--Powder produced by blowing or asperating molten
metal through an orifice;
(b) Flaked powder--Powder consisting of flat or scale-like particles
of a thickness small compared with other dimensions, produced by milling
in the presence of a lubricant; and
(c) Paste--A blend of powder or flake with a thinner or plasticizer.
Rod and bar includes:
(a) Conductor redraw rod (continuous-cast or rolled)--A solid round
product that is long in relation to cross section, 0.375 inch or greater
in diameter, produced by continuous casting followed by size-rolling or
by rolling from DC cast ingot, suitable for drawing into electrical
conductor wire;
(b) Nonconductor redraw rod (continuous-cast or rolled)--A solid
round product that is long in relation to cross section, 0.375 inch or
greater in diameter, produced by continuous casting followed by size-
rolling, or by rolling from D.C. cast ingot, suitable for drawing into
nonconductor wire;
[[Page 95]]
(c) Other rod and bar (continuous-cast or rolled)--A solid round,
square, rectangular, hexagon, or octagon-shaped product, produced by
continuous casting or rolling that is long in relation to cross section,
0.375 inch or greater in diameter or in at least one perpendicular
distance between parallel faces, other than the redraw rod and DC cast
ingot; and
(d) Extruded rod and bar--A solid product produced by extruding
(sometimes brought to final dimensions by drawing) that is long in
relation to cross section, which is round, square, rectangular,
hexagonal, or octagonal in shape and 0.375 inch or greater in diameter
or in at least one perpendicular distance between parallel faces.
Shapes includes:
(a) Extruded shapes--A product produced by extruding, that is long
in relation to its cross-sectional dimensions and has a cross section
other than that of rod and bar and pipe and tube; and
(b) Rolled structural shapes--A structural shape produced by hot
rolling.
Sheet includes:
(a) Sheet, nonheat-treatable--A rolled product, flat or coiled,
rectangular in cross section, of 0.006 inch thickness but under 0.250
inch thickness, which can be strengthened only by cold work; and
(b) Sheet, heat-treatable--A rolled product, in 2000, 6000, 7000
alloy series (except 7072), flat or coiled, rectangular in cross
section, of 0.006 inch thickness but under 0.250 inch thickness, which
can be strengthened by a suitable thermal treatment.
Wire and cable includes:
(a) Wire, bare, conductor and nonconductor--A solid wrought product
that is long in relation to its cross section, which is square, round,
rectangular, hexagonal, or octagonal in shape, whose diameter or
greatest perpendicular distance between parallel faces (except for
flattened wire) is less than 0.375 inch;
(b) ACSR and aluminum cable, bare--Aluminum stranded conductor
reinforced by a core of steel (ACSR), or aluminum (ACAR), or any other
bare stranded aluminum conductor; and
(c) Wire and cable, insulated or covered--Aluminum electrical
conductor wire or stranded conductors that are insulated or covered.
Nickel Alloys
Nickel alloys--Those alloys for which the specified nickel content
is 10 percent or more up to and including pure nickel, and which the
iron content is nominally less than 50 percent of iron, and which does
not contain as much as 40 percent of copper, nor as much as 50 percent
of aluminum, in the shapes and forms shown in Schedule II. It also
includes cast iron for which the specified nickel content is 5 percent
or more. It does not include primary nickel in the forms of electrolytic
cathodes, pigs, rondelles, cubes, pellets, shot, briquettes, oxide
(including sintered oxide), salts, or chemicals; nor does it include
primary nickel in the forms of ingots or powder for remelting.
Schedule IV to Part 700--Copper Controlled Materials Producers' Set-
aside Base and Percentages
Set-aside Base--Average monthly shipments for a producer's own
account during the previous calendar year.
------------------------------------------------------------------------
Set-aside
Product percentages\1\
------------------------------------------------------------------------
Brass mill products:
Unalloyed:
Plate, sheet, strip, and rolls.................. 3
Rod, bar, shapes, and wire...................... 3
Seamless tube and pipe.......................... 2
Alloyed:
Plate, sheet, strip, and rolls.................. 2
Rod, bar, shapes, and wire...................... 2
Seamless tube and pipe.......................... 7
Military ammunition cups and discs.............. 10
Copper wire mill products:
Bare and tinned................................. 2
Weatherproof.................................... 2
Magnet wire..................................... 2
Paper and lead power cable...................... 2
Paper and lead telephone cable.................. 2
Asbestos cable.................................. 2
Portable and flexible cord...................... 2
Communications wire and cable................... 2
Shipboard cable................................. 2
Automotive and aircraft wire and cable.......... 2
Insulated power cable........................... 2
Signal and control cable........................ 2
Coaxial cable................................... 2
Copper-clad steel wire containing over 20
percent copper by weight regardless of end use. 2
Copper foundry products................................. 2
Copper and copper-base alloy powder mill products....... (\2\)
------------------------------------------------------------------------
\1\ Applies to metal weight, except copper wire mill products, which are
by copper content.
\2\ No reserve space required. Producers of these products are
nevertheless required to accept rated orders for such products in
accordance with the provisions of this regulation.
Schedule V to Part 700--Nickel Alloys Controlled Materials Producers'
Set-aside Base and Percentages
Set-aside Base--Average monthly shipments, by each producer, during
the previous calendar year.
------------------------------------------------------------------------
Set-aside
Product percentages
------------------------------------------------------------------------
Rod and bars (except anode bars):
Hot-rolled, including wire rod......................... 10
Forging quality........................................ 10
Cold-finished.......................................... 10
[[Page 96]]
Sheet and strip:
Hot-rolled............................................. 10
Cold-rolled............................................ 10
Foil....................................................... 10
Plate...................................................... 10
Pipe, tubing............................................... 10
Wire....................................................... 10
Other mill forms:
Ingots................................................. 10
Blooms, slabs, billets................................. 10
Powder..................................................... 10
Shapes and forms not listed above (including anode bars)... 10
Castings (less gates and risers, rough as cast)............ 10
------------------------------------------------------------------------
Appendix I to Part 700--Delegations of Authority
DPAS DEL. 1--Delegation of Authority to the Secretary of Defense;
Defense Priorities and Allocations System (15 CFR part 700)
1. Authority.
Defense Production Act of 1950, as amended (50 U.S.C. App. 2061, et
seq.); Executive Order 10480, 18 FR 4939, 3 CFR 1949-1953 Comp., p. 962,
as amended; and Defense Mobilization Order (DMO) 3, 44 CFR 322.
2. Purpose.
(a) This document delegates certain authority to the Secretary of
Defense necessary to the effective implementation of the Defense
Priorities and Allocations System (DPAS) regulation (15 CFR part 700).
(b) Certain specifics concerning the implementation of this
delegated authority are contained in a Statement of Conditions to this
delegation issued by the Office of Industrial Resource Administration
(OIRA), Department of Commerce (DOC).
3. Rating Authority.
(a) The Secretary of Defense is delegated the authority to place
rated contracts and orders in support of Department of Defense (DOD)
programs authorized by the Director, Federal Emergency Management
Agency.
(b) The Secretary of Defense is delegated the authority to use the
DX rating symbol in placing rated orders for those authorized programs
determined by the President to be of the Highest National Priority as
described in the DOD Master Urgency List.
4. Co-production Programs.
(a) The Secretary of Defense may request priority rating authority
from DOC for specific co-production programs, and if granted, may
authorize only those foreign firms which have entered into a formal co-
production agreement with a U.S. producer to use priority ratings.
(b) DOC may authorize the use of priority ratings by other foreign
firms providing items necessary to the co-production activity on a case-
by-case basis.
5. Production and Construction Equipment.
(a) The Secretary of Defense may authorize persons to place rated
orders for delivery of production equipment required to support
authorized programs of DOD, when the equipment is necessary for the
timely performance of rated orders and timely delivery of the equipment
cannot be obtained otherwise.
(b) The Secretary of Defense may authorize persons to place rated
orders for delivery of construction equipment, when the equipment is to
be used for authorized construction projects and when timely delivery of
the equipment cannot be obtained otherwise.
6. Delivery Scheduling.
The Secretary of Defense is delegated the authority to reschedule
deliveries of materials which are required in support of DOD programs,
provided that such authority shall be used (1) only to reschedule
deliveries among contracts or orders assigned priority ratings by DOD,
and (2) only to the extent that such rescheduling of deliveries requires
no change in production schedules of other rated orders.
7. Special Priorities Assistance.
The Secretary of Defense may sponsor requests by persons for special
priorities assistance upon determining the defense urgency of the
requested assistance. DOD will: (1) serve as the initial point of
contact for persons needing assistance, (2) verify the accuracy of the
information provided and make reasonable efforts to resolve the issues,
and, when necessary, (3) expeditiously forward the request through
established DOD channels to DOC to facilitate timely resolution. Upon
receipt of the request for special priorities assistance, DOC will take
immediate action to effect resolution and will keep DOD advised of
progress.
8. Controlled Materials.
The Secretary of Defense is delegated the authority to make
allotments of controlled materials to other agencies in support of
authorized defense programs.
9. Compliance, Audits, and Training.
In exercising this delegation, the Secretary of Defense should
ensure that both DOD personnel and defense contractors are in full
compliance with the provisions of the DPAS regulation. Accordingly:
(a) The Secretary of Defense is delegated the authority to review
the implementation of the DPAS by all persons who are in receipt of
rated orders supporting DOD programs. However, this review shall not
include inquiries into any unrated activities of these persons.
(b) The Secretary of Defense shall notify DOC of any alleged
violations of the priorities and allocations provisions of the Defense
Production Act or the DPAS regulation.
[[Page 97]]
(c) The Secretary of Defense should conduct a continuing training
program to ensure that appropriate DOD and contractor personnel are
thoroughly familiar with the provisions of the DPAS and this delegation.
10. Limitations of Authority.
(a) This delegated authority shall not be used for (1) civilian
items for resale in Military Exchanges or the packaging for such items;
(2) material purchased from exclusively retail establishments; (3)
procurement of items to be used primarily for administrative purposes,
such as for personnel or financial management; or (4) direct procurement
by or for DOD of any items specifically set forth in the Statement of
Conditions to this delegation (not published).
(b) This delegation shall be implemented in accordance with the DPAS
regulation, the Statement of Conditions to this delegation (not
published), and any other regulations or official actions issued by DOC.
It does not limit the authority of the Secretary of Commerce under
Executive Order 10480 or other authority.
11. Redelegations of Authority.
The authority granted by this delegation may be redelegated within
DOD and to other agencies of the United States administering DOD
programs. Any redelegations of such authority shall be made in writing
with a copy furnished to DOC. No other redelegations of such authority
shall be made without the prior written approval of DOC.
12. Effective Date and Revocation of Previous Delegations.
This delegation of authority shall take effect August 29, 1984,
revoking all previous delegations issued by DOC to DOD relating to these
authorities.
Dated: June 21, 1984.
Walter J. Olson,
Deputy Assistant Secretary of Commerce for Export Administration.
DPAS DEL. 2--Delegation of Authority to the Secretary of Energy; Defense
Priorities and Allocations System (15 CFR part 700)
1. Authority.
Defense Production Act of 1950, as amended (50 U.S.C. app. 2061, et
seq.); Executive Order 10480, 18 FR 4939, 3 CFR 1949-1953 Comp., p. 962,
as amended; Executive Order 11912, 41 FR 15825, 3 CFR 1976 Comp., p.
114, as amended; Executive Order 12148, 44 FR 43239, 3 CFR 1979 Comp.,
p. 393, as amended; Defense Mobilization Order (DMO) 3, 44 CFR 322; and
DMO-13, 44 CFR 330.
2. Purpose.
(a) This document delegates certain authority to the Secretary of
Energy necessary to the effective implementation of the Defense
Priorities and Allocations System (DPAS) regulation (15 CFR part 700).
(b) Certain specifics concerning the implementation of this
delegated authority are contained in a Statement of Conditions to this
delegation issued by the Office of Industrial Resource Administration
(OIRA), Department of Commerce (DOC).
3. Rating Authority.
(a) The Secretary of Energy is delegated the authority to place
rated contracts and orders in support of Department of Energy (DOE)
programs for national defense authorized by the Director, Federal
Emergency Management Agency.
(b) The Secretary of Energy, in accordance with Executive Order
11912, is delegated the authority to make the findings required by
section 101(c) of the Defense Production Act of 1950, as amended, that
specified material or equipment is critical and essential:
(1) To maintain or further domestic exploration, production,
refining, or transportation;
(2) To conserve energy supplies; or
(3) To construct or maintain energy facilities.
(c) The Secretary of Energy is delegated the authority to use the DX
rating symbol in placing rated orders for those authorized programs
determined by the President to be of the Highest National Priority as
described in the DOD Master Urgency List.
4. Production and Construction Equipment.
(a) The Secretary of Energy may authorize persons to place rated
orders for delivery of production equipment required to support
authorized atomic energy programs, when the equipment is necessary for
the timely performance of rated orders and timely delivery of the
equipment cannot be obtained otherwise.
(b) The Secretary of Energy may authorize persons to place rated
orders for delivery of construction equipment, when the equipment is to
be used for authorized atomic energy construction projects and timely
delivery of the equipment cannot be obtained otherwise.
5. Delivery Scheduling.
The Secretary of Energy is delegated the authority to reschedule
deliveries of materials which are required in support of DOE programs,
provided that such authority shall be used (1) only to reschedule
deliveries among contracts or orders assigned priority ratings by DOE,
and (2) only to the extent that such rescheduling of deliveries requires
no change in production schedules of other rated orders.
6. Special Priorities Assistance.
The Secretary of Energy may sponsor requests by persons for special
priorities assistance upon determining the defense or energy-related
urgency of the requested assistance. DOE will: (1) serve as the initial
point of contact for persons needing assistance, (2) verify the accuracy
of the information provided and make reasonable efforts to resolve
[[Page 98]]
the issues, and when necessary, (3) expeditiously forward the request
through established DOE channels to DOC to facilitate timely resolution.
Upon receipt of the request for special priorities assistance, DOC will
take immediate action to effect resolution and will keep DOE advised of
progress.
7. Compliance, Audits, and Training.
In exercising this delegation, the Secretary of Energy should ensure
that both DOE personnel and defense contractors are in full compliance
with the provisions of the DPAS regulation. Accordingly:
(a) The Secretary of Energy is delegated the authority to review the
implementation of the DPAS by all persons who are in receipt of rated
orders supporting DOE programs. However, this review shall not include
inquiries into any unrated activities of these persons.
(b) The Secretary of Energy shall notify DOC of any alleged
violations of the priorities and allocations provisions of the Defense
Production Act or of the DPAS regulation.
(c) The Secretary of Energy should conduct a continuing training
program to ensure that appropriate DOE and contractor personnel are
thoroughly familiar with the provisions of the DPAS and this delegation.
8. Limitations of Authority.
(a) This delegated authority shall not be used for (1) material
purchased from exclusively retail establishments; (2) procurement of
items to be used primarily for administrative purposes, such as for
personnel or financial management; or (3) direct procurement by or for
DOE of any items specifically set forth in the Statement of Conditions
to this delegation (not published).
(b) Priority ratings to support the maximization of domestic energy
supplies provided by section 101(c) of the Defense Production Act of
1950, as amended, may only be used after the findings required by
section 101(c) have been made:
(1) The Secretary of Energy must determine that the energy program
involved maximizes domestic energy supplies; and find that the specific
material or equipment is critical and essential.
(2) The Secretary of Commerce must find that the specific material
or equipment is scarce; and that there is a reasonable need to use the
priorities and allocations authorities.
(c) This delegation shall be implemented in accordance with the DPAS
regulation, the Statement of Conditions to this delegation (not
published), and any other regulations and official actions issued by
DOC. It does not limit the authority of the Secretary of Commerce under
Executive Order 10480 or other authority.
9. Redelegations of Authority.
The authority granted by this delegation may be redelegated within
DOE and to other agencies of the United States administering DOE
programs. Any redelegations of such authority shall be made in writing
with a copy furnished to DOC. No other redelegations of such authority
shall be made without the prior written approval of DOC.
10. Effective Date and Revocation of Previous Delegations.
This delegation of authority shall take effect August 29, 1984,
revoking all previous delegations issued by DOC relating to these
authorities.
Dated: June 21, 1984.
Walter J. Olson,
Deputy Assistant Secretary of Commerce for Export Administration.
DPAS DEL. 3--Delegation of Authority to the Administrator of General
Services; Defense Priorities and Allocations System (15 CFR part 700)
1. Authority.
Defense Production Act of 1950, as amended (50 U.S.C. app. 2061, et
seq.); Executive Order 10480, 18 FR 4939, 3 CFR 1949-1953 Comp., p. 962,
as amended; and Defense Mobilization Order (DMO) 3, 44 CFR 322.
2. Purpose.
(a) This document delegates certain authority to the Administrator
of General Services necessary to the effective implementation of the
Defense Priorities and Allocations System (DPAS) regulation (15 CFR part
700).
(b) Certain specifics concerning the implementation of this
delegated authority are contained in a Statement of Conditions to this
delegation issued by the Office of Industrial Resource Administration
(OIRA), Department of Commerce (DOC).
3. Rating Authority.
The Administrator of General Services is delegated the authority to
place DO rated contracts and orders in support of the General Services
Administration's (GSA) Supply Distribution Program for items acquired
for authorized programs of the Departments of Defense and Energy. In
placing rated orders, GSA is to use the program identification symbol
K1.
4. Special Priorities Assistance.
The Administrator of General Services may sponsor requests by
persons for special priorities assistance upon determining the defense
urgency of the requested assistance. GSA will: (1) serve as the initial
point of contact for persons needing assistance, (2) verify the accuracy
of the information provided and make reasonable efforts to resolve the
issues, and when necessary, (3) expeditiously forward the request
through established GSA channels to DOC to facilitate timely resolution.
Upon receipt of the request for special priorities assistance, DOC will
take immediate action to effect resolution and will keep GSA advised of
progress.
[[Page 99]]
5. Compliance, Audits, and Training.
In exercising this delegation, the Administrator of General Services
should ensure that both GSA personnel and defense contractors are in
full compliance with the provisions of the DPAS regulation. Accordingly:
(a) The Administrator of General Services is delegated the authority
to review the implementation of the DPAS by all persons who are in
receipt of rated orders supporting the GSA Supply Distribution Program.
However, this review shall not include inquiries into any unrated
activities of these persons.
(b) The Administrator of General Services shall notify DOC of any
alleged violations of the priorities and allocations provisions of the
Defense Production Act or the DPAS regulation.
(c) The Administrator of General Services should conduct a
continuing training program to ensure that appropriate GSA and
contractor personnel are thoroughly familiar with the provisions of the
DPAS and this delegation.
6. Limitations of Authority.
(a) This delegation is restricted to the GSA Supply Distribution
Program and shall be implemented in accordance with the DPAS regulation,
the Statement of Conditions to this delegation (not published), and any
other regulations and official actions issued by DOC. It does not limit
the authority of the Secretary of Commerce under Executive Order 10480
or other authority.
(b) This delegated authority shall not be used for (1) material
purchased from exclusively retail establishments; (2) procurement of
items to be used primarily for administrative purposes, such as for
personnel or financial management; or (3) direct procurement by or for
GSA of any items specifically set forth in the Statement of Conditions
to this delegation (not published).
7. Redelegations of Authority.
The authority granted by this delegation may be redelegated within
GSA. Any redelegations of such authority shall be made in writing with a
copy furnished to DOC. No other redelegations of such authority shall be
made without the prior written approval of DOC.
8. Effective Date and Revocation of Previous Delegations.
This delegation of authority shall take effect August 29, 1984,
revoking all previous delegations issued by DOC to GSA relating to these
authorities.
Dated: June 21, 1984.
Walter J. Olson,
Deputy Assistant Secretary of Commerce for Export Administration.
DPAS DEL. 4--Delegation of Authority to the Director of the Federal
Emergency Management Agency; Defense Priorities and Allocations System
(15 CFR part 700)
1. Authority.
Defense Production Act of 1950, as amended (50 U.S.C. app. 2061, et
seq.); Executive Order 10480, 18 FR 4939, 3 CFR 1949-1953 Comp., p. 962,
as amended; and Defense Mobilization Order (DMO) 3, 44 CFR 322.
2. Purpose.
(a) This document delegates certain authority to the Director,
Federal Emergency Management Agency (FEMA), necessary to the effective
implementation of the Defense Priorities and Allocations System (DPAS)
regulation (15 CFR part 700).
(b) Certain specifics concerning the implementation of this
delegated authority are contained in a Statement of Conditions to this
delegation issued by the Office of Industrial Resource Administration
(OIRA), Department of Commerce (DOC).
3. Rating Authority.
The Director of FEMA is delegated the authority to place, and upon
application, to authorize state and local governments to place, DO rated
contracts and orders in support of federal, state, and local civil
defense programs or projects approved by FEMA as directly related to
programs for the national defense. In placing rated orders, FEMA and the
state and local governments are to use the program identification symbol
N1.
4. Special Priorities Assistance.
The Director of FEMA may sponsor requests by persons for special
priorities assistance upon determining the defense urgency of the
requested assistance. FEMA will: (1) serve as the initial point of
contact for persons needing assistance, (2) verify the accuracy of the
information provided and make reasonable efforts to resolve the issues,
and when necessary, (3) expeditiously forward the request through
established FEMA channels to DOC to facilitate timely resolution. Upon
receipt of the request for special priorities assistance, DOC will take
immediate action to effect resolution and will keep FEMA advised of
progress.
5. Compliance, Audits, and Training.
In exercising this delegation, the Director of FEMA should ensure
that FEMA personnel, federal, state, and local officials, and defense
contractors are in full compliance with the provisions of the DPAS
regulation. Accordingly:
(a) The Director of FEMA is delegated the authority to review the
implementation of the DPAS by all persons who are in receipt of, or
authorized to place, rated orders supporting the FEMA approved federal,
state and local civil defense programs or projects. However, this review
shall not include inquiries into any unrated activities of these
persons.
[[Page 100]]
(b) The Director of FEMA shall notify DOC of any alleged violations
of the priorities and allocations provisions of the Defense Production
Act or the DPAS regulation.
(c) The Director of FEMA should conduct a continuing training
program to ensure that appropriate FEMA personnel, federal, state, and
local officials, and contractor personnel are thoroughly familiar with
the provisions of the DPAS and this delegation.
6. Limitations of Authority.
(a) This delegation is restricted to federal, state, and local civil
defense programs and projects approved by FEMA as directly related to
programs for the national defense, and shall be implemented in
accordance with the DPAS regulation, the Statement of Conditions to this
delegation (not published), and any other regulations and official
actions issued by DOC. It does not limit the authority of the Secretary
of Commerce under Executive Order 10480 or other authority.
(b) This delegated authority shall not be used for (1) material
purchased from exclusively retail establishments; (2) procurement of
items to be used primarily for administrative purposes, such as for
personnel or financial management; or (3) direct procurement by or for
FEMA of any items specifically set forth in the Statement of Conditions
to this delegation (not published).
7. Redelegations of Authority.
The authority granted by this delegation may be redelegated within
FEMA. Any redelegations of such authority shall be made in writing with
a copy furnished to DOC. No other redelegations of such authority shall
be made without the prior written approval of DOC.
8. Effective Date of Delegation.
This delegation of authority shall take effect August 29, 1984.
Dated: June 21, 1984.
Walter J. Olson,
Deputy Assistant Secretary of Commerce for Export Administration.
[49 FR 30414, July 30, 1984; 49 FR 50171, Dec. 27, 1984]
Appendix II to Part 700--Interagency Memorandum of Understanding
Departments of Agriculture and Commerce--Memorandum of Understanding
Between the Departments of Agriculture and Commerce Concerning
Priorities and Allocations Jurisdiction and Responsibilities for Foods
Which Have Industrial Uses
A. Purpose
This Understanding sets forth the priorities and allocations
jurisdiction and responsibilities of the Department of Agriculture
(Agriculture) and the Department of Commerce (Commerce) for defense
mobilization in the event of a national emergency, and for emergency
preparedness functions, as they relate to foods which have industrial
uses.
B. Authority
1. Section 201(a) of Executive Order 10480, as amended (E.O. 10480),
and Defense Mobilization Order 3 (DMO 3) (44 CFR 322) provide for the
delegation of authority for the administration of priorities and
allocations functions under the Defense Production Act of 1950, as
amended (50 U.S.C. App. 2061, et seq.), to the Secretary of Agriculture
with respect to food; and to the Secretary of Commerce with respect to
all other materials and facilities not specifically delegated to other
agencies.
2. Section 901 et seq. of Executive Order 11490, as amended (E.O.
11490), delegates to the Secretary of Commerce the authority for
preparing national emergency plans and developing preparedness programs
covering the production and distribution of all materials and the use of
all production facilities, except those that are specifically assigned
to, or under the jurisdiction of other agencies. Section 801 et seq. of
E.O. 11490 provides for the delegation of authority with respect to the
production, processing, distribution, and storage of food resources, and
the use of food resource facilities, to the Secretary of Agriculture.
3. Section 601(h) of E.O. 10480 defines the term ``food'' as:
* * * all commodities and products, simple, mixed, or compound or
complements to such commodities or products, that are capable of being
eaten or drunk by either human beings or animals, irrespective of other
uses to which such commodities or products may be put, at all stages of
processing from the raw commodity to the products thereof in vendible
form for human or animal consumption * * *. The term ``food'' shall also
include all starches, sugars, vegetable and animal fats and oils,
cotton, tobacco, wool, mohair, hemp, flax fiber, and naval stores, but
shall not include any such material after it loses its identity as an
agricultural commodity or agricultural product.
Section 802(1) of E.O. 11490 defines the term ``food resources'' in the
same language. Accordingly, these terms are used interchangeably in this
Understanding.
4. The functions delegated by these authorities to the Secretaries
of Agriculture and Commerce have been redelegated by the Secretary of
Agriculture to the Administrator, Agricultural Stabilization and
Conservation Service (ASCS), and by the Secretary of Commerce to the
Director, Office of Industrial Resource Administration (OIRA).
[[Page 101]]
C. General Provisions
1. This Understanding covers only food and agricultural commodities
and products which have industrial uses. Jurisdiction over such
commodities will normally pass to Commerce at the point where the foods
are no longer capable of being eaten or drunk, except as otherwise
provided.
2. The provisions of this Understanding covering fibers are limited
to those specifically mentioned in E.O. 10480 and 11490 (i.e., cotton,
wool, mohair, hemp and flax fiber), and have the purpose of defining the
points at which these fibers lose their identity as agricultural
commodities or agricultural products.
3. Both Agriculture and Commerce have jurisdiction over the major
food commodities listed in section D of this Understanding. For each of
these commodities, the point at which the jurisdiction of Agriculture
will end is indicated and, except as otherwise provided, the
jurisdiction of Commerce will begin at that point.
(a) The points at which the jurisdiction of Agriculture will
terminate are expressed in terms of a particular stage of production or
processing pursuant to the authority provided in E.O. 10480 and 11490,
and at a point considered to be most administratively feasible.
(b) Consideration is given wherever possible to the structure of an
industry. The wet-milling industry, for example, is large and integrated
and it is desirable that Agriculture have jurisdiction over the raw
products while they are a part of this industry and until they enter the
processes of other industries which result in their becoming nonfood or
nonagricultural products. As an illustration, corn starch for textile
sizing would be under the jurisdiction of Agriculture while it is being
extracted from the corn and prepared for use by the textile industry. It
would still be under the jurisdiction of Agriculture until it enters the
textile manufacturing process. At this point, jurisdiction over this
commodity shifts to Commerce.
(c) Commodities such as fats and oils, grain products, egg products,
starch from all sources, spices, and tartaric acid are used for the
manufacture of so many nonfood or nonagricultural products that it is
not practical to enumerate all of these products in section D and to
identify in each case the exact beginning process. Consequently, the
principle for determining the respective jurisdiction of the two
Departments in cases of this type is expressed broadly and supplemented
by a few examples of nonfood and nonagricultural products so as to
clarify the application of the principle. These examples are not
intended to be all-inclusive.
4. Imports and exports of food and agricultural commodities and
products in any form prior to industrial uses are within the
jurisdiction of Agriculture, subject to meeting requirements that may be
imposed by any other agency in the exercise of its authority.
5. Agriculture will, with noted exceptions, allocate and exercise
priority controls on food and agricultural commodities and products,
taking into account claims presented by Commerce. However, the
suballocation of food and agricultural commodities or products for
conversion into non-food and non-agricultural commodities or products
will be made in accordance with the recommendations of Commerce.
6. It is understood that relationships between Agriculture and
Commerce involving jurisdiction over particular functions and particular
commodities may have to be amplified at a later time. It is also
recognized that there will be situations in which operations of the same
person, as defined in section 702(a) of the Defense Production Act of
1950, as amended (50 U.S.C. App. 2152(a)), will be affected by the
exercise of the respective authorities of the two Departments under this
Understanding. To avoid overlapping and duplication of reporting and
related operations in such situations, it is agreed that the two
Departments will work out specific cooperative arrangements whereby the
facilities of one shall be utilized by the other and that efforts will
be made to provide the most feasible arrangements for administering
necessary program controls.
7. To assure that both Agriculture and Commerce have full authority
to implement their respective responsibilities under E.O. 10480 and
11490, and DMO 3, as well as to effectuate the provisions of this
Understanding, each Department delegates to the other the requisite
authority for the exercise of priorities and allocations functions as
set forth in this Understanding.
D. Particular Commodities
The following list identifies some major food and agricultural
commodities and commodity groups in which both Agriculture and Commerce
have an interest and provides the point at which Agriculture's
jurisdiction ends and Commerce's jurisdiction begins. This list is not
all-inclusive but it does cover the major items for which jurisdiction
might become an issue.
1. Agriculture shall have jurisdiction over the following
commodities until they enter any manufacturing process and lose their
identity as food or as agricultural commodities or products (examples
are set forth in parentheses after the name of the commodity):
(a) Egg products. (Shampoos, products used in printing,
pharmaceuticals)
(b) Fats and oils. (Paints, soap, varnishes, lacquers, printer's
ink, cosmetics, pharmaceuticals)
[[Page 102]]
(c) Fatty acids. (Paints, soap, cosmetics, chemicals,
pharmaceuticals)
(d) Grain and grain products, including dextrin, corn syrups, grain
sugars, lactic acid, gluten, and low-grade wheat flour. (Textiles,
adhesives, leather, core binders, pharmaceuticals, nonbeverage alcohol)
(e) Molasses, including blackstrap and high-test, and potatoes.
(Nonbeverage alcohol)
(f) Spices, essential oils. (Cosmetics)
(g) Starches. (Adhesives, asbestos, textiles, explosives)
(h) Sugars. (Insecticides, plasticizing agents, adhesives)
(i) Tartaric acid. (Products used in photography, dyeing, textile
printing)
2. Agriculture shall have jurisdiction over the following
commodities until the specifically designated point in their processing,
except as otherwise provided:
(a) Cotton lint and linters, hemp and flax fiber--When the bale is
opened for the purpose of processing in the mill in which it is opened.
This authority shall extend to the delivery and distribution of soft
types of cotton waste but shall not include control over the use of such
waste in the mill producing it.
(b) Milk and milk products--When the milk and milk products enter a
plant where they are to be used or processed for industrial purposes as
distinct from use as human food or animal feed. Agriculture shall have
jurisdiction over imports of milk and milk products intended for use as
human food or animal feed, while Commerce shall have jurisdiction over
imports intended for industrial purposes only.
(c) Wool and mohair--When the wool and mohair (grease and scoured,
shorn and pulled) enter a plant where they are to be used, or
manufactured into a final product. Inventories of scoured wool or
scoured mohair held by manufacturers for their use in producing other
products, whether by incorporation into such products or otherwise,
shall be controlled by Commerce. The jurisdiction of Agriculture shall
extend to the delivery and distribution of noils but shall not include
control over the use of noils by the mill producing them.
(d) Naval stores:
(1) Tall oil (sulfate naval stores). Commerce shall have
jurisdiction over the production, distribution, processing, and
allocation. The distribution of tall oil fatty acids shall be under the
jurisdiction of Agriculture.
(2) Wood. Commerce shall have jurisdiction over production,
distribution, processing, and allocation.
(3) Gum. Agriculture shall have jurisdiction over production through
the first processing of the gum. Commerce shall have jurisdiction over
allocation.
(4) Commerce will consult with Agriculture before allocating naval
stores in order to avoid conflict with programs administered by
Agriculture.
3. The following commodities are under the jurisdiction of the
designated Department:
(a) Ice--Agriculture.
(b) Tobacco and tobacco products--Agriculture.
(c) Hides and leather, hair and bristles, feathers, soap.
detergents, beeswax, pharmaceuticals (including medicines and vitamins),
acetic acid, chemical leavening compounds and salt--Commerce.
4. In order to further clarify the division of authority for fats
and oils, Schedule A to this Understanding lists major fats and oils,
and fat and oil products, over which Agriculture has jurisdiction and
the major products of fats and oils, and products produced using fats
and oils, over which Commerce has jurisdiction.
5. It is recognized that quantities of certain commodities may be
needed for food use which are under the jurisdiction of Commerce.
Conversely, raw materials for manufacturing may be needed which are
under the jurisdiction of Agriculture. In situations of this kind and
for other similar commodities not listed in this section, working
arrangements will be developed between ASCS and OIRA as the need arises
pursuant to the principles set forth in this Understanding.
E. Effective Date
This Memorandum of Understanding supersedes the Memorandum of
Agreement between the Administrators of the Agricultural Marketing
Service and the ASCS of the Department of Agriculture, and the Acting
Deputy Assistant Secretary for Competitive Assessment and Business
Policy of the Department of Commerce, concerning foods which have
industrial uses, and signed by them on November 2, 7, and 10, 1973,
respectively (38 FR 33504, December 5, 1973); and shall take effect
August 29, 1984.
Department of Agriculture
Everett Rank,
Administrator, Agricultural Stabilization and Conservation Service
Date: June 15, 1984.
Department of Commerce
John A. Richards,
Director, Office of Industrial Resource Administration
Date: June 14, 1984.
Schedule A--Jurisdiction Over Fats and Oils
I. Fats and oils and fats and oils products under the jurisdiction
of Agriculture:
A. Animal and marine.
[[Page 103]]
1. Animal fats
Lard
Marrow
Tallows and greases
Wool grease and lanoline
Neats foot oil
2. Marine oils
Cod
Dogfish
Fulachon
Herring
Menhaden
Pilchard
Salmon
Sardine
Seal
Shark
Whale
3. Marine liver oils
Cod
Dogfish
Shark
Swordfish
Tuna fish
4. Other animal and marine fats and oils
Fatty acids
Foots
Oleo oil and oleo searin
Soap stocks
B. Vegetable.
1. Vegetable fats and oils
Cocoa butter
Fatty acids
Lecithin
Oiticic
Olive residue
Soap stocks
Tallows and greases
2. Major vegetable oils
Babassu nut
Castor
Corn
Coconut
Cottonseed
Linseed
Olive
Palm
Palm kernel
Peanut
Rapeseed
Safflower seed
Sesame
Soybean
Sunflower seed
Tung
3. Other vegetable oils
Cashew nut
Cohune
Colza
Hemp seed
Kapok seed
Murumuru
Mustard
Ouricury
Perilla
Poppy seed
Rubber seed
Tea seed
Tucum
C. Edible fats and oils products, including:
Butter
Cooking oil and compounds
Lard compounds
Margarine
Salad oils
Shortenings
D. Combinations and mixtures of animal, marine, vegetable, nut and
seed fats and oils, or any of them.
II. Products of fats and oils and products produced using fats and
oils under the jurisdiction of Commerce:
Coated fabrics and floor coverings
Glycerine
Inedible products of fats and oils
Paints, varnishes, lacquers
Printer's ink
Soap
Departments of Agriculture and Commerce--Memorandum of Understanding
Between the Departments of Agriculture and Commerce Concerning
Priorities and Allocations Jurisdiction and Responsibilities for Farm
Equipment
A. Purpose
This Understanding sets forth the priorities and allocations
jurisdiction and responsibilities of the Department of Agriculture and
the Department of Commerce for defense mobilization in the event of a
national emergency, and for emergency preparedness functions, as they
relate to the domestic distribution of farm equipment.
B. Authority
1. Section 201(a) of Executive Order 10480, as amended (E.O. 10480),
and Defense Mobilization Order 3 (DMO 3) (44 CFR 322) provide for the
delegation of authority for the administration of priorities and
allocations functions under the Defense Production Act of 1950, as
amended (50 U.S.C. app. 2061, et seq.), to the Secretary of Agriculture
with respect to the domestic distribution of farm equipment; and to the
Secretary of Commerce with respect to all other materials and facilities
not specifically delegated to other agencies.
2. Section 601(i) of E.O. 10480 defines the term ``farm equipment''
to mean equipment manufactured for use on farms in connection with the
production or processing of food.
3. Section 901 et seq. of Executive Order 11490, as amended (E.O.
11490), delegates to the Secretary of Commerce the authority for
preparing national emergency plans and developing preparedness programs
covering the production and distribution of all materials and the use of
all production facilities, except those that are specifically assigned
to, or under the jurisdiction of other agencies. Section 801 et seq. of
E.O. 11490 provides for the delegation of this authority with respect to
the domestic distribution of farm equipment to the Secretary of
Agriculture.
4. The functions delegated by these authorities to the Secretaries
of Agriculture and Commerce have been redelegated by the Secretary of
Agriculture to the Administrator, Agricultural Stabilization and
Conservation Service (ASCS), and by the Secretary of Commerce to the
Director, Office of Industrial Resource Administration (OIRA).
C. General Provisions
1. The term ``farm equipment'' as used in E.O. 10480 and 11490, for
the purposes of this Understanding, includes only those items of
[[Page 104]]
machinery, equipment, attachments, and repair or replacement parts
identified in Schedule A to this Understanding.
2. In a national emergency or mobilization situation, OIRA may
request ASCS to make special distribution of the farm equipment items
listed in Schedule A that can be used off the farm for civil defense and
life saving purposes. ASCS will give full consideration to these
requests in accordance with the priorities and allocations policies of
the Federal Government in effect at that time.
D. Effective Date
This Memorandum of Understanding supersedes the Memorandum of
Understanding and Agreement between the Administrator of the ASCS of the
Department of Agriculture, and the Acting Deputy Assistant Secretary for
Competitive Assessment and Business Policy of the Department of
Commerce, concerning the scope of the term ``Farm Equipment'', and
signed by them on November 7 and 10, 1973, respectively (38 FR 34749,
December 5, 1973); and shall take effect August 29, 1984.
Department of Agriculture
Everett Rank,
Administrator, Agricultural Stabilization and Conservation Service
Date: June 15, 1984.
Department of Commerce
John A. Richards,
Director, Office of Industrial Resource Administration
Date: June 14, 1984.
Schedule A--Farm Equipment
Tractors, Wheel, Manufactured Specifically for Farm Use
Farm Tractors, 2-Wheel Drive, 20 to 39 PTO HP
Farm Tractors, 2-Wheel Drive, 40 to 99 PTO HP
Farm Tractors, 2-Wheel Drive, Over 100 PTO HP
Farm Tractors, 4-Wheel Drive,
Tillage Equipment
Bedders, Bed Levelers, Shapers, and Splitters
Blockers and Thinners, row crop
Cultivators, Field, Row Crop, Tobacco and Vineyard, mounted and pull
type
Harrows, including: spike-tooth, spring-tooth, tine-tooth, disk, rotary,
offset, knife, oscillating, bush and bog, and tandem disk
Land Levelers
Middlebusters, Ridgebusters, and Clodbusters
Mulch Tillage Implements
Plows, including: moldboard, chisel, ditching, terracing, and one-way
disk
Pulverizers, stalk
Ridgelevelers
Rod Weeders
Rotary Hoes and Tillers, field type
Rollers and Cultipackers, including combination harrow-packers
Shredders, brush and stalk, bush hog
Stubble Shavers, cane
Subsoilers, Tractor mounted and pull-type
Tillers, basin and disk
Tool bars and carriers
Transport carriers, farm implement
Fertilizing and Liming Equipment
Anhydrous Ammonia Applicators, Pumps, Tanks and Tank Wagons
Dry and Liquid Fertilizer Attachments for Drills and Planters
Fertilizer Distributors and Applicators
Fertilizer storage bins and tanks
Pumps, Liquid Fertilizer
Side-Dressing attachments
Spreaders, Lime and Fertilizer, Tractor or Truck mounted and pull type
Sprayers, Liquid fertilizer, Truck mounted and pull type
Planting Equipment
Drills and Planters, including fertilizer attachments
Grass Seeder, Broadcast-type, Tractor mounted or pull type
Grass Seeder attachments, Drill and Tillage equipment
Listers
Planters, Minimum or no Tillage, Tractor mounted or pull type
Potato Planters, Brushers, Cutters, and Desprouters
Seeders
Transplanters
Agricultural Dusters and Sprayers
Dusters, Crop, Field, Livestock, Poultry, Orchard, and Vineyard
Foggers and Mist Blowers
Granular Chemical Applicators, Broadcast and Band-type
Herbicide Applicators, Low Volume
Sprayers, Field, Livestock, Poultry, Orchard, and Vineyard, Air Mist,
Boomtype and Boomless, Trailer or Tractor mounted and self-propelled
Harvesting Equipment
Augers, Conveyors and Elevators, farm type, portable and stationary,
with or without wheels
Bunchers and Tiers, Vegetable, farm type
Combines, Harvester-thresher, self-propelled and pull type, including
corn head and windrow attachments
Corn Cribs
Corn Pickers and Picker-shellers, self-propelled, pull type, and semi-
mounted
[[Page 105]]
Cotton Pickers and Strippers, self-propelled, Tractor mounted and pull
type
Crop and Grain Dryers and Fans, batch, bin, and continuous operation
types
Curers, Tobacco
Grain Bins, including: perforated floors, ladders, spreaders, stirring
devices, unloaders, and ventilation equipment
Grain Blowers
Harvesters, Harvesting and Handling Equipment for Corn, Grain,
Vegetables, Peanuts, Tobacco, Onions and Nuts
Hullers, Graders, Sorters, Sackers, Conveyors, farm type for Potatoes,
Fruit, Vegetables, Grain, Seed and Nuts
Orchard and Vineyard Pruning Equipment, power
Peanut Drying Equipment
Potato Diggers, Pickers and Baggers
Power Units for Harvesting Equipment, self-propelled
Sugar Beet Harvesters, Toppers, Lifters, and Loaders
Sugar Cane Harvesting Equipment
Toppers, Crop and Vegetable
Windrowers and Swathers, Dry Edible Beans and Pea Vine
Hay and Forage Harvesting Equipment
Balers, Twine, and Wire, self-propelled and pull type, including round
bale type
Forage Blowers and Cutter Blowers, Pipe, and Spouts
Forage Harvesters, self-propelled, Tractor mounted and pull type
Forage Wagons and Boxes, running gear and truck mounted
Giant Hay Balers, Stackers and Transportation Equipment
Hay Tedders
Hay Wafering and Cubing Machines
Mowers, Choppers, conditioners, Mower-conditioners, and Windrowers,
field, flail, rotary, or sickle bar, mounted or pull type
Rakes, side delivery
Loaders, loose hay
Loaders, Stackers and Bale Throwers
Dairy, Poultry and Livestock Equipment
Barn Manure Cleaners, dairy, livestock and poultry types
Bale Feeders, giant-size Bale and Stack types
Brooders, poultry and hog
Bunk Feeder Systems, including: Wagon or truck-mounted feeder boxes
Carriers, Hay, Litter and Feed, overhead and track type
Dairy Barn Equipment, including: pens, stanchions and stalls
Egg Gathers and Collecting Systems, automatic
Egg Room Coolers and Humidifiers
Egg Graders, Candlers and Washers
Feed Mills, Grinder-mixers, Roller Mills, and Mixers, stationary and
portable
Feed Storage Bins and Tanks, elevated, bulk
Feed and Grain Metering Devices
Feeders and Waterers, cattle, sheep, hog and poultry, automatic and
manual
Hog Confinement Systems, Farrowing Stalls and Feeding Systems
Incubators, poultry
Livestock Confinement Buildings, including: feeding, watering,
ventilation and cleaning systems
Livestock Handling Gates, Pens and Chutes
Liquid Manure Pumps and Tanks
Manure Loaders, Tractor mounted
Milk Cooling Tanks, bulk and can type
Milking Machines, Pipelines and Transfer Stations
Milk Room Equipment, including: water heaters, sterilizing and washing
tanks
Milking Parlor Stalls, including: feeding systems
Poultry Cages, Feed and Water Systems
Silo, upright and concrete trench-type
Silo Unloaders, upright and trench-type, top or bottom
Silo-filling Equipment, including: pipe and distribution equipment
Spreaders, Barn and Liquid Manure
Tanks, Livestock, Dipping and Stock Water
Ventilation Systems, automatic, electric
Water Supply Equipment
Jacks, Pump
Pumps, Hand, Windmill, electric, PTO and motor-powered
Water Systems including: storage and/or pressure tanks, domestic and
farmstead, deep and shallow well, jet and non-jet
Irrigation Equipment
Ditch Gates, Furrow Openers, Levee Plows
Pipe, Couplers, Valves and Sprinkler Heads
Systems Controls, automatic and center pivot
Systems Pumps, deep well, shallow well and surface water supply type
Other Farm Equipment, N.E.C.
Alcohol Distilling Plants, farm type
Chain Saws
Cleaners and Graders, farm type, grain and seed
Diggers, post-hole, Tractor mounted, farm type
Electric Generating Plants, farm type, continuous duty and standby,
Tractor or motor powered
Fencing Materials
Log Skidders and Splitters
Post Drivers and Pullers, power, farm type
Tracks, Crawler, combine and wheel Tractor
Wagon Running Gears, farm type
Wagon Boxes, including: Auger unloading, barge and flare, bunk feeding,
forage, feed-mixing, gravity and hydraulic dump
Windmill Towers and Heads
[[Page 106]]
Repair and Replacement Parts
Parts manufactured specifically for use in the maintenance and repair of
the farm equipment (including plowshares and disk blades) listed in this
Schedule.
Departments of Energy and Commerce--Memorandum of Understanding Between
the Departments of Energy and Commerce Concerning the Jurisdiction and
Responsibilities for Products and Equipment Associated with the
Production of Petroleum and Gas for Emergency Preparedness and
Mobilization
A. Purpose
This Understanding sets forth the jurisdiction and responsibilities
of the Department of Energy (DOE) and the Department of Commerce (DOC)
for defense mobilization, emergency preparedness, and resource
management programs under the authorities listed in section B, in the
event of a national emergency, as such programs relate to the production
and distribution of: (1) chemicals and fluids made especially for use in
the petroleum and gas industry; (2) oil and gas field machinery and
equipment; and (3) petrochemicals derived from oil, gas, and natural gas
liquids.
B. Authority
1. Pursuant to section 201(a) of Executive Order 10480, as amended
(E.O. 10480), Defense Mobilization Order 3 (DMO 3) (44 CFR 322)
delegates authority for the administration of priorities and allocations
functions under the Defense Production Act of 1950, as amended (50
U.S.C. app. 2061, et seq.), to the Secretary of Energy with respect to
petroleum, gas, solid fuels, and electric power; and to the Secretary of
Commerce with respect to all other materials and facilities not
specifically delegated to other agencies.
2. Executive Order 11490, as amended (E.O. 11490), delegates to the
Secretary of Commerce the authority for preparing national emergency
plans and developing preparedness programs covering the production and
distribution of all materials, and the use of all production facilities
except those that are specifically assigned to, or under the
jurisdiction of, other agencies. Such an exception is provided for the
production and distribution of, and the use of facilities for, petroleum
and gas. E.O. 11490 provides for the delegation of this authority to the
Secretary of Energy.
3. The functions delegated by these authorities to the Secretaries
of Energy and Commerce have been redelegated by the Secretary of Energy
to the Assistant Secretary for Environmental Protection, Safety, and
Emergency Preparedness, and by the Secretary of Commerce to the
Director, Office of Industrial Resource Administration (OIRA).
C. Departmental Jurisdiction
The primary use of a product or material is the basis for the
division of Departmental jurisdiction set forth below. Any product or
material not specifically identified in this Understanding which is used
primarily as a fuel or in a primary manufacturing process to produce
fuel, is under the jurisdiction of DOE. Generally, any non-fuel product
or material, or any product or material which is used primarily as an
industrial raw material, is under the jurisdiction of DOC. In the event
that questions arise with respect to jurisdiction over particular
products, materials, or production facilities, it is agreed that the two
Departments will resolve these questions in such a manner as to provide
the most feasible arrangements for program administration.
1. Production.
Department of Energy: DOE has jurisdiction over the production of:
(a) petroleum and gaseous fuels, natural gas liquids, and petroleum
lubricants, including ``refinery finished products,'' ``unfinished
oils,'' and ``petrochemical feedstocks''; (b) ``petrochemicals'' from
processing units located within a petroleum refinery where the weight of
``petrochemicals'' in the output of the processing unit constitutes less
than 30 percent by weight of the net input to the unit; (c) n-paraffin
``petrochemical intermediates''; (d) ``special petroleum chemical
supplies''; and (e) any fossil fuel or synthetic product not
specifically indentified which is or can be used as a fuel or lubricant.
Department of Commerce: DOC has jurisdiction over the production of:
(a) all ``chemicals'' including ``petroleum processing catalysts'' and
``fuel combustion improvers''; and (b) ``petrochemicals'' including
those from processing units located within a petroleum refinery where
the weight of ``petrochemcials'' in the output of the processing unit
constitutes 30 percent or more by weight of the net input to the unit;
and (c) oil and gas field machinery and equipment as identified in
Schedule A to this Understanding, as well as any machinery, equipment,
and technologies not yet developed for obtaining petroleum and natural
gas.
2. Facilities.
Department of Energy: DOE has jurisdiction over all facilities for
which production jurisdiction has been assigned to it by this
Understanding.
Department of Commerce: DOC has jurisdiction over all facilities for
which production jurisdiction has been assigned to it by this
Understanding.
3. Distribution.
Department of Energy: DOE has jurisdiction over the distribution of:
(a) all petroleum, gaseous fuels (when such jurisdiction as authorized
by E.O. 11490 is not exercised by the Federal Energy Regulatory
Commission),
[[Page 107]]
natural gas liquids, and petroleum lubricants; (b) all ``special
petroleum chemical supplies,'' ``petroleum processing catalysts,'' and
``fuel combustion improvers''; (c) ``petrochemical feedstocks'' except
those produced or gathered specifically for a chemical operation; (e)
any other fossil fuel or synthetic product which is or can be used as a
fuel; and (f) oil and gas field machinery and equipment as identified in
Schedule A to this Understanding, as well as any machinery, equipment,
and technologies not yet developed for obtaining petroleum and natural
gas.
Department of Commerce: DOC has jurisdiction over the distribution
of: (a) all ``chemicals'' including ``petrochemicals'' but excluding
those chemical product groups assigned to DOE; (b) ``petrochemical
feedstocks'' specifically produced or gathered for a chemical operation;
and (c) ``non-fuel or non-lubricant petroleum products.''
D. Definitions
Under this Understanding, the term ``petroleum'' means crude oil,
synthetic liquid fuel, their products and associated hydrocarbons,
including pipelines for their movement and facilities specially designed
for their storage; and the term ``gas'' means natural gas (excluding
helium) and manufactured gas (but not industrial gases), including
pipelines for their movement and facilities specially designed for their
storage, when such juridiction as authorized by E.O. 11490 is not
exercised by the Federal Energy Regulatory Commission. For the purpose
of assigning jurisdiction under this Understanding, the following
additional definitions shall apply:
1. ``Petrochemical Feedstocks''
Includes hydrocarbon materials obtained from petroleum and natural
gas when used as ``feedstock'' or raw material for the production of
``primary petrochemicals'' or ``petrochemical intermediates.'' These
materials also include:
Natural gas (methane) processed to a quality suitable for pipeline
transmission;
Natural gas liquids which are the several low boiling point, lower
molecular weight hydrocarbons that include ethane, propane, butanes,
pentanes, and liquified petroleum gases obtained from the processing of
natural gas;
Naphtha (light petroleum liquids) which is a medium boiling point
range mixture of hydrocarbons obtained from the processing of natural
gas, crude oil, or petroleum refining. Naphtha is the major component of
gasoline. The usual distillation range of naphtha feedstock is 100-
400 deg.F; and
Gas oil (heavy petroleum liquids) which is a high boiling point
mixture of hydrocarbons obtained from the processing of crude oil or
petroleum refining. Gas oil is the major component of distillate grades
of fuel oil. Atmospheric gas oil may comprise hydrocarbons in the
distillation range 400-650 deg.F; vacuum gas oil may comprise higher
boiling materials in the distillation range 650-1000 deg.F.
2. ``Chemicals''
For the purpose of this Understanding, ``chemicals'' shall comprise
those products listed under Major Group 28, Chemical and Allied
Products, Standard Industrial Classification Manual, 1977 Edition; and
shall specifically include ``petrochemicals,'' ``petroleum processing
catalysts,'' ``fuel combustion improvers''; but shall exclude ``special
petroleum chemical supplies.''
3. ``Petrochemicals''
Chemical materials which, directly or indirectly, are manufactured
from petrochemical feedstock hydrocarbons. These materials include:
Primary petrochemicals produced directly from feedstocks by chemical
conversion or breakdown and mainly used for the production of
``intermediates'' or petrochemical ``products'';
Petrochemical intermediates generally produced by chemical converson
of primary petrochemicals to form more complicated derived compounds.
Such compounds serve as the raw material for synthesis of petrochemical
``products,'' and for numerous other materials; and
Petrochemical products which are end products of the chemical
industry produced by chemical conversion of ``primary'' petrochemicals
or petrochemical ``intermediates.''
4. ``Refinery Finished Products''
Any one of the petroleum oils or mixtures of oils which can be used
without further processing, including:
Liquified petroleum gases (LPG);
Gasoline;
Jet fuel;
Naphtha;
Distillate fuel oils;
Lubricating oils and greases;
Residual fuel oils;
Asphalt; and
Natural gas products--natural gasoline.
5. ``Unfinished Oils''
Semi-finished refinery products, or unseparated mixtures of refinery
products, which are further processed for production of ``refinery
finished products.''
6. ``Special Petroleum Chemical Supplies''
Products made especially for use in the production, refining and
compounding of petroleum fuels and lubricants, including:
Hydrogen produced in a refinery for use in petroleum processing; and
Special additives:
for fuels and lubricants;
to facilitate the drilling of oil and gas wells;
to stimulate the production of oil and gas for enhanced oil recovery;
and
to facilitate the pipeline transmission of petroleum.
[[Page 108]]
7. ``Non-fuel or Non-lubricant Petroleum Products''
Certain products produced in the course of the refining of petroleum
whose primary uses are other than as fuels or lubricants, such as:
Asphalts;
Coke, petroleum--green and calcined;
Cresylic acids;
Naphthenic acids;
Oils, rubber extending;
Solvents--aliphatic and aromatic hydrocarbons;
Waxes, refined--paraffin and micro-crystalline; and
White oils, petrolatums, and other oils for medicinal,
pharmaceutical and cosmetic purposes.
8. ``Petroleum Processing Catalysts''
Solid inorganic compositions used in petroleum refining to
facilitate the conversion of hydrocarbons by chemical reaction,
including:
Catalytic cracking;
Hydrocracking;
Reforming;
Isomerization;
Desulfurization; and
Hydrotreating.
9. ``Fuel Combustion Improvers''
Chemical compostions added to liquid petroleum fuels to improve
combustion characteristics, including:
Ethanol (ethyl alcohol);
Methanol (methyl alcohol);
Methyl tertiary butyl ether;
Tertiary butyl alcohol;
Tetraethyl lead and tetramethyl lead, and their blends for use as
anti-knock materials; and
Other products such as amyl nitrate, hexyl nitrate, n-methyl
aniline, and the manganese-methyl cyclopentadiene complexes.
E. Delegation of Authority
To ensure that DOE and DOC have the requisite authority to implement
their responsibilities under E.O. 10480 and 11490, and DMO 3, as well as
to effectuate the provisions of this Understanding, each Department
delegates to the other its authority for the exercise of priorities and
allocations functions under Section 101(a) of the Defense Production Act
of 1950, as amended, with respect to the facilities, materials, and
products specified in this Understanding.
F. Effective Date
This Memorandum of Understanding shall take effect August 29, 1984,
superseding the Memorandum of Agreement between the Department of the
Interior and the Department of Commerce that became effective on October
30, 1973 (38 FR 30896, November 8, 1973). The Department of the
Interior's authority under this Memorandum of Agreement was transferred
to the Department of Energy effective October 1, 1977, by Executive
Order 12038 (43 FR 4957, February 7, 1978).
Department of Energy
H. A. Merklein
Assistant Secretary, International Affairs and Energy Emergencies
Date: July 10, 1984.
Department of Commerce
John A. Richards,
Director, Office of Industrial Resource Administration
Date: June 20, 1984.
Schedule A--Machinery and Equipment Required for the Discovery,
Development, or Completion of Oil and Gas Wells
Exploration and Development Drilling
Transportation (trucks, boats, helicopters)
Drilling (rigs, pipes, pumps, engines, tanks, etc.)
Drilling Fluids (weighting materials, chemicals, clays, etc.)
Well Equipment (casing, carbon and alloy steel wellheads)
Completion
Well Equipment (Christmas trees, tubing, liners, safety valves,
etc.)
Completion Equipment (workover or drilling rig, wireline unit)
Well Services (sand control, acidizing, fracturing, cleanout)
Oil Production Facilities
Pipe
Structures
Vessels
Instruments
Hardware and Accessories
Associated Gas Facilities
Gas Production Facilities
Field Gathering System
Compression Facilities
Processing Facilities
Artificial Lift Facilities
Rod Pump
Gas Lift
Submersible Pumps
Maintenance
Well Servicing
Well Equipment
Well Servicing Equipment
Well Services
Materials
Enhanced Recovery
Waterflooding
Gas Injection
[[Page 109]]
Tertiary Processes
Departments of the Interior and Commerce--Memorandum of Understanding
Between the Departments of the Interior and Commerce Concerning the
Jurisdiction and Responsibilities for Certain Minerals, Facilities and
Materials; and Delegation of Authority
A. Purpose
This Understanding sets forth the jurisdiction and responsibilities
of the Department of the Interior and the Department of Commerce for
defense mobilization, emergency preparedness programs, and resource
management in the event of a national emergency as they relate to stages
of processing and types of facilities concerning certain minerals. This
Understanding also provides for a delegation of certain authority to the
Secretary of the Interior which is presently assigned to the Secretary
of Commerce.
B. Authority
1. Section 201(a) of Executive Order 10480, as amended (E.O. 10480),
and Defense Mobilization Order 3 (DMO 3) (44 CFR 322), provide for the
delegation of authority to the Secretary of Commerce for administration
of priorities and allocations functions under the Defense Production Act
of 1950, as amended (50 U.S.C. App. 2061, et seq.), for materials and
facilities not specifically delegated to other agencies. Section 602 of
E.O. 10480 provides for redelegation of this authority.
2. Section 901 et seq. of E.O. 11490 provides for the delegation of
authority to the Secretary of Commerce for preparing national emergency
plans and developing preparedness programs covering the production and
distribution of all materials and the use of all production facilities,
except those that are specifically assigned to, or under the
jurisdiction of, other agencies. Such an exception is provided for the
production and related distribution of minerals. Section 701 et seq. of
E.O. 11490 provides for the delegation of this authority to the
Secretary of the Interior.
3. Section 702(5) of E.O. 11490 defines the term ``minerals'' to
mean:
* * * all raw materials of mineral origin * * * obtained by mining and
like operations and processed through the stages specified and at the
facilities designated in an agreement between the Secretary of Commerce
as being within the emergency preparedness responsibilities of the
Secretary of the Interior.
This Understanding implements this requirement.
4. The functions delegated by these authorities to the Secretaries
of Commerce and the Interior have been redelegated by the Secretary of
Commerce to the Director, Office of Industrial Resource Administration
(OIRA), and by the Secretary of the Interior to the Director, Bureau of
Mines.
C. Departmental Responsibilities
1. Department of the Interior. Schedule A to this Understanding
contains a listing of mineral commodities and related facilities and
materials. With respect to the mineral commodities listed in Column 1 of
Schedule A, the Secretary of the Interior shall have emergency
preparedness and mobilization responsibilities for the facilities listed
in Column 2 of the Schedule, the production of materials by these
facilities, and the distribution of the materials listed in Column 3 of
the Schedule.
2. Department of Commerce. With respect to the mineral commodities
listed in Column 1 of Schedule A, the Secretary of Commerce shall have
emergency preparedness and mobilization responsibilities for all
facilities other than those listed in Column 2 of the Schedule, for the
production of materials by these other facilities, and for distribution
of all materials not listed in Column 3 of the Schedule.
D. Delegation of Authority
1. Pursuant to the authority of section 602(b) of E.O. 10480, the
Secretary of Commerce hereby delegates to the Secretary of the Interior
with respect to the facilities and materials listed in Columns 2 and 3
of Schedule A, all the functions under the Defense Production Act of
1950, as amended (DPA), which are delegated or assigned to the Secretary
of Commerce by or pursuant to the following sections of E.O. 10480:
(a) Section 201(a), as implemented by section 3(a) of DMO 3
(relating to exercise of priorities and allocations authority under
Title I of the DPA);
(b) Section 301 (relating to development of measures for expansion
of production of materials necessary for the national defense);
(c) Section 302 (relating to guarantees of loans or contracts in
connection with the expediting of production and deliveries or services
under Government contracts for the procurement of materials or the
performance of services for the national defense, etc.);
(d) Section 312 (relating to recommendations for action under
sections 302 and 303 of the DPA);
(e) Section 501 (relating to consultation with industry and making
recommendations to the Director of the Federal Emergency Management
Agency respecting voluntary agreements under section 708 of the DPA);
and
(f) Section 602 (relating to the exercise of various general
administrative functions under Title VII of the DPA).
[[Page 110]]
2. This delegation shall be effective only with respect to the
facilities and materials listed in Columms 2 and 3 of Schedule A.
E. Effective Date
This Memorandum of Understanding and Delegation of Authority
supersedes the Agreement between the Secretary of the Interior and the
Secretary of Commerce and signed by them on June 21, 1962, and the
Delegation of Authority from the Secretary of Commerce to the Secretary
of the Interior published in 32 FR 2462 on February 4, 1967; and shall
take effect August 29, 1984.
Department of the Interior
Robert C. Horton,
Director, Bureau of Mines
Date: June 21, 1984.
Department of Commerce
John A. Richards,
Director, Office of Industrial Resource Administration
Date: June 20, 1984.
Schedule A--Mineral Commodities and Related Facilities and Materials
1 2 3
Commodity Facilities............ Materials
------------------------------------------------------------------------
Abrasives:
Alumina:
Fused..................... Processing plants..... Ores.
Zirconia.................. Do................ Do.
Corundum.................... Mines; crushing, Do.
sizing, washing,
grading and
concentrating plants.
Diamond:
Industrial................ Mines; concentrating Do.
plants.
Synthetic................. Processing plants..... Carbon.
Emery....................... Mines; beneficiation Ores.
plants.
Garnet...................... Do................ Do.
Grinding pebbles............ Do................ Do.
Grinding stones............. Quarries; cutting Crude stone.
plants.
Silicon carbide............. Processing plants..... Ores.
Tripoli and rottenstone..... Mines; crushing, Crude tripoli,
grinding, and grading amorphous
plants. silica,
rottenstone.
Aluminum...................... Bauxite mines; drying Crude, dried and
and calcining plants; calcined
alumina plants; bauxite,
reduction plants; alumina,
secondary smelters; aluminum-base
processing plants. scrap.
Antimony...................... Mines; concentrating Ores,
plants; primary concentrates,
smelters; refineries; residues,
leaching plants. scrap.
Arsenic....................... Mines; concentrating Do.
plants; smelters;
refineries.
Asbestos...................... Mines; separation and Ores.
classification plants.
Barium........................ Mines; beneficiating, Ores,
grinding and grading concentrates.
plants.
Beryllium..................... Mines; concentrating Do.
and grinding plants;
refineries.
Bismuth....................... Mines; concentrating Ores,
plants; smelters; concentrates,
refineries. base bullion,
residues.
Boron......................... Mines; wells; Ores, brines.
refineries.
Bromine....................... Plants recovering Bitterns,
bromine. brines.
Brucite....................... Mines; magnesium Ores.
compound recovery and
burning plants.
Cadmium....................... Concentrating plants; Ores,
smelters; refineries. concentrates,
residues.
Calcium:
Compounds................... Brines and synthetic Brines.
chemical processing
plants.
Metal....................... Processing plants..... Crude materials.
Cement........................ Blending, sintering, Limestone, clay,
and grinding plants. sand, gypsum,
iron-containing
materials.
Cesium........................ Mines; concentrating Ores,
plants; extraction concentrates,
plants. residues,
solutions.
Chromium...................... Mines; processing Ores,
plants. concentrates,
additives.
Clays:
Kaolin...................... Mines; drying, Ores.
grinding, calcining
and concentrating
plants.
Ball clay................... Mines; drying, Do.
calcining, shredding
and grinding plants.
Bentonite................... Mines; drying, Do.
activating, grinding,
concentrating and
sizing plants.
Fuller's earth.............. Mines; drying, Do.
calcining,
activating, grinding
and screening plants.
Fire clay................... Mines; drying, Do.
calcining,
concentrating and
grinding plants.
Common clay and shales...... Mines; beneficiation Crude common
plants; expanding clay, shale.
plants.
Cobalt........................ Mines; concentrating Ores,
plants; leaching concentrates,
plants; refineries. matte,
slurries, in-
process oxides,
smelter anodes.
Columbium..................... Mines; dredges; Ores, slags,
processing plants. additives.
Copper........................ Mines; concentrating Ores, scrap,
plants; leaching concentrates,
plants; precipitates,
electrowinning matte, speiss,
plants; smelters; blister,
refineries. smelter anodes.
[[Page 111]]
113Cryolite................... Mines; concentrating Ores,
and grading plants. concentrates.
Diatomite..................... Mines; beneficiation Crude materials.
plants.
Dolomite...................... Mines; compounds Ores.
recovery and burning
plants.
Feldspar...................... Mines; grinding, Do.
concentrating and
grading plants.
Ferroalloys................... Plants; furnaces...... Ores,
concentrates,
metallic
additives.
Fluorspar, natural and Mines; processing Ores,
synthetic. plants. concentrates,
hydrofluosilici
c acid.
Gallium....................... Refineries; processing Concentrates,
plants. residues.
Gem stones.................... Mines; concentrating Ores.
plants.
Germanium..................... Refineries............ Concentrates,
residues.
Gold.......................... Mines; concentrating Ores,
plants; leaching and concentrates,
precipitation plants; intermediate
smelters; refineries. smelter
products,
scrap.
Graphite, natural and Mines; beneficiating Ores, carbon.
synthetic. and processing plants.
Greensand..................... Mines; concentrating Ores.
plants.
Gypsum........................ Mines; crushing and Crude gypsum.
calcining plants.
Hafnium....................... Mines; concentrating Ores.
plants; reduction
plants.
Helium........................ Processing plants..... Helium-rich
natural gas.
Ilmenite...................... Mines; concentrating Ores,
plants; processing concentrates.
plants; grinding
plants.
Indium........................ Refineries; leaching Concentrates,
plants. fume, dusts,
residues,
slags.
Iodine........................ Mines; concentrating Ores, brines.
plants; wells.
Iron.......................... Mines; concentrating Ores,
plants; agglomerating concentrates,
plants; prereduction direct-reduced
plants; blast materials,
furnaces; crude scrap, pig
steelmaking iron,
facilities. additives.
Iron oxide pigments, natural Mines; beneficiating Ores, additives.
and synthetic. and processing plants.
Kyanite, andalusite, Mines; concentrating Do.
sillimanite, and dumortierite. and calcining plants.
Lead.......................... Mines; concentrating Ores,
plants; smelters; concentrates,
refineries; leaching base bullion,
plants. residues,
scrap.
Limestone (lime) and marl..... Mines; quarries; Crushed
crushing and grinding limestone,
plants; kilns and marl.
lime plants.
Lithium....................... Mines; concentrating Ores, brines.
plants; brine-
processing plants.
Magnesium..................... Mines; processing Do.
plants.
Manganese..................... Mines; concentrating Ores,
plants; agglomerating concentrates,
plants; leaching agglomerates.
plants.
Mercury....................... Mines; concentrating Ores,
plants; leaching concentrates,
plants; electrolytic scrap.
plants; retorts and
furnaces.
Mica.......................... Mines; beneficiation Crude mica.
plants.
Molybdenum.................... Mines; concentrating Ores,
plants; processing concentrates.
plants.
Nickel........................ Mines; concentrating Ores,
plants; leaching concentrates,
plants; smelters; matte,
refineries. slurries, in-
process oxides,
smelter anodes.
Nitrogen (fixed).............. Processing plants..... ................
Olivine....................... Mines; concentrating Ores,
plants. concentrates.
Perlite....................... Mines; grinding and Crude perlite.
screening plants;
expanding plants.
Phosphate rock................ Mines; beneficiation Ores,
plants. concentrates.
Platinum-group metals......... Mines; concentrating Ores,
plants; refineries. concentrates,
residues.
Potash........................ Mines; concentrating Ores,
plants; processing concentrates,
plants; refineries. brines.
Pumice........................ Mines; crushing, Ores.
drying, screening and
grading plants.
Quartz crystal................ Mines; grading plants. Do.
Rare-earth metals............. Mines; beneficiating Ores,
and processing plants. concentrates.
Refractories.................. Processing plants..... Ores.
Rhenium....................... Refineries; processing Ores,
plants. concentrates.
Rubidium...................... Mines; concentrating Ores,
plants; extraction concentrates,
plants. residues.
Rutile........................ Mines; concentrating Ores,
plants. concentrates.
Salt.......................... Mines; salt wells; Crude materials.
processing plants.
Sand and gravel............... Pits; washing and Crude sand and
grading plants. gravel.
Selenium...................... Refineries............ Residues,
slimes, scrap.
Silicon....................... Furnaces; metal plants Metallic
additives,
silica.
Silver........................ Mines; concentrating Ores,
plants; smelters; concentrates,
refineries; leaching intermediate
plants. smelter
products,
scrap.
Slag (iron and steel)......... Slag processing Furnace wastes.
facilities.
Slate......................... Quarries; splitting, Crude slate.
milling, crushing and
grading plants.
Sodium compounds.............. Mines; brine wells; Natural and
refineries; synthetic synthetic
soda ash plants. minerals,
brines.
Stone:
Crushed..................... Quarries; crushing and Broken stone.
grading plants.
[[Page 112]]
Dimension................... Quarries; milling and Block stone.
grading.
Staurolite.................... Mines; concentrating Ores.
plants.
Strontium..................... Do................ Do.
Sulfur........................ Mines; wells; Ores, gases.
processing plants.
Talc, soapstone and Mines; crushing, Ores.
pyrophylite. grinding, screening
and concentrating
plants.
Tantalum...................... Mines; dredges; Ores,
concentrating plants; concentrates,
processing plants. slags, scrap,
residues.
Tellurium..................... Refineries............ Residues,
slimes.
Thallium...................... Do................ Concentrates,
residues.
Tin........................... Mines; concentrating Ores,
plants; smelters; concentrates,
refineries; residues,
processing plants. scrap.
Titanium...................... Mines; concentrating Do.
plants; processing
plants.
Thorium....................... Non-energy processing Ores and
plants. compounds.
Tungsten, metal and compounds. Mines; concentrating Ores,
plants; reduction concentrates,
plants; processing brines, scrap.
plants.
Vanadium...................... Mines; concentrating Ores,
plants; leaching concentrates,
plants; reduction residues,
plants. slags, metallic
additives.
Vermiculite................... Mines; beneficiating Crude
plants; processing vermiculite.
plants.
Wollastonite.................. Mines; concentrating Ores.
plants.
Zeolites...................... Mines; processing Do.
plants.
Zinc.......................... Mines; concentrating Ores,
plants; roasting concentrates,
plants; smelters; calcines,
electrolytic plants. scrap, fume,
residues.
Zirconium..................... Mines; concentrating Ores, scrap.
and reduction plants.
[[Page 113]]
Appendix III to Part 700--Form ITA-999; Request for Special Priorities
Assistance
[GRAPHIC] [TIFF OMITTED] TC31SE91.000
[[Page 114]]
[GRAPHIC] [TIFF OMITTED] TC31SE91.001
[[Page 115]]
[GRAPHIC] [TIFF OMITTED] TC31SE91.002
[[Page 116]]
[GRAPHIC] [TIFF OMITTED] TC31SE91.003
[[Page 117]]
Appendix IV to Part 700--Memorandum of Understanding on Priorities and
Allocations Support Between the U.S. Department of Commerce and the
Canadian Department of Supply and Services
A. Purpose
Since 1950, the United States and Canada have been assisting each
other on priorities and allocations for programs important to the
defense of both nations. Details on the implementation of that
assistance were spelled out in the U.S. Defense Priorities System
Regulation No. 2 (DPS Reg. 2), Operations of the Priorities and
Allocations System between Canada and the United States (15 CFR part
351). The Defense Priorities and Allocations System (DPAS) regulation
(15 CFR part 700) supersedes the Defense Materials System and Defense
Priorities System regulations (15 CFR parts 330 through 351), including
DPS Reg. 2. While the revised regulation addresses the procedures for
obtaining priorities and allocations support from the United States and
Canada, it does not fully detail the working relationship between the
United States and Canada. Accordingly, the following Memorandum of
Understanding is set forth between the U.S. Department of Commerce and
the Canadian Department of Supply and Services.
B. General
1. The Office of Industrial Resource Administration, U.S. Department
of Commerce (DOC), is the United States point of contact for the
Canadian government with respect to priorities and allocations.
2. The Supply Information and Data Management Branch, Canadian
Department of Supply and Services (DSS), is the Canadian point of
contact for the U.S. government with respect to priorities and
allocations.
C. Priority Rating Authority
1. DOC will authorize the DSS to use priority ratings, including
those for the procurement of controlled materials, in the United States
in support of the following programs authorized by the Federal Emergency
Management Agency:
D1--Canadian Military Programs
D2--Canadian Production and Construction
D3--Canadian Atomic Energy Program
2. DOC must receive requests for priority rating authority, by
program, at least ninety days in advance of the calendar quarter in
which the authorization is required. Requests with respect to controlled
materials requirements must be received at least 240 days in advance of
the calendar quarter in which authorization is required.
D. DX Authority
DSS may authorize the use of the ``DX'' rating symbol for
procurements in the United States which are in support of U.S. ``DX''
rated programs.
E. Items Which Will Not Receive Priority Rating Authority
Priority ratings may not be used for procurements in the United
States of (1) civilian items for resale in Military Exchanges or the
packaging for such items; (2) material purchased from exclusively retail
establishments; (3) direct procurement of those Federal Supply
Classification classes, groups, or items specified in Attachment A to
this Understanding, unless those items are to be used as production
material for an authorized program; or (4) procurement of items to be
used primarily for administrative purposes, such as for personnel or
financial management.
F. Special Priorities Assistance
1. DOC will provide special priorities assistance as needed to
Canadian procurements in the United States which are in support of D1,
D2, and D3 programs when requests for such assistance are sponsored by
DSS.
2. DSS will provide assistance to United States procurements in
Canada which are in support of authorized programs when requests for
such assistance are sponsored by DOC.
G. Forms and Reports
1. Canadian requests for special priorities assistance from the
United States will be submitted to DOC on Form ITA-999, ``Request for
Special Priorities Assistance''.
2. Requests for priority rating authority will be submitted to DOC
on Form DSS-1451-1, ``Application for U.S. Priority Rating Covering
Importation of Quarterly Requirements of Materials from the United
States'', on Form DSS-1451-2, ``Application for U.S. Priority Rating
Covering Specific Materials'', or other forms as may be established by
DSS.
3. DSS will report monthly on the number of rating authorizations
and their dollar value against DOC rating authorizations during the
previous month.
4. DSS will report, two months following the close of each calendar
quarter, the number and quantity of controlled materials allotments
issued against DOC authorizations for each program during that quarter.
5. United States requests for assistance from Canada will be
submitted to DSS by letter.
[[Page 118]]
H. Compliance
1. DSS will ensure that Canadian Government personnel and Canadian
defense contractors are in compliance with the provisions of the DPAS
when placing rated orders in the United States, including those for
controlled materials.
2. DOC will ensure that U.S. Government personnel and U.S.
contractors are in compliance with the provisions of the DPAS when
placing rated orders in Canada, including controlled materials.
3. The DSS will inform DOC of any alleged violations of the DPAS of
which it may become aware.
I. Training
1. The DSS will develop and implement training programs on the DPAS
for appropriate Canadian Government procurement and contract
administration personnel and contractor personnel.
2. DOC will develop and implement training programs on the DPAS for
appropriate U.S. Government procurement and contract administration
personnel and contractor personnel.
3. DSS and DOC training programs shall be coordinated to ensure the
conduct of a comprehensive program and to minimize duplication.
J. Effective Date
This Memorandum of Understanding shall take effect August 29, 1984.
Canadian Department of Supply and Services
Peter Smith,
Assistant Deputy Minister, Operations
Date: June 26, 1984.
U.S. Department of Commerce
Walter J. Olson,
Deputy Assistant Secretary, Export Administration
Date: June 21, 1984.
Attachment A--Federal Supply Classification Classes, Groups, and Items
Not Eligible For Priority Ratings
Group
35 Services and trade equipment--except:
3510 Laundry and dry cleaning equipment
3520 Shoe repairing equipment
3530 Industrial sewing machines and mobile textile repair shoes
3540 Wrapping and packaging machinery
71* Furniture
---------------------------------------------------------------------------
*DOC will consider requests for special priority rating
authorization in the procurement of these items.
---------------------------------------------------------------------------
72* Household and commercial furnishings and appliances--except:
7240 Household and commercial utility containers
73* Food preparation and serving equipment--except:
7310 Food cooking, baking and serving equipment
7320 Kitchen equipment and appliances
7360 Sets, kits, and outfits: food preparation and serving
74 Office machines, visible record equipment, and data processing
equipment**
---------------------------------------------------------------------------
**This Group does not include general purpose automatic data
processing equipment, software, supplies and support equipment (see
Group 70).
---------------------------------------------------------------------------
75* Office supplies and devices
77* Musical instruments, phonographs and home-type radios
78* Recreational and athletic equipment
79 Cleaning equipment and supplies
85* Toiletries
87 1 Agricultural supplies
---------------------------------------------------------------------------
\1\ Only those items subject to DOC authority as delegated by E.O.
10480.
---------------------------------------------------------------------------
89 Subsistence
91* 1 Fuels, lubricants, oils, and waxes--except:
9135 Liquid propellant fuels and oxidizers, chemical base
9150 Oils and greases: cutting, lubricating, and hydraulic
9160 Miscellaneous waxes, oils and fats
94* Non-metallic crude materials--except:
9420 Fibers: vegetable, animal and synthetic
99* Miscellaneous
Class
7630 Newspapers and periodicals
7660 Sheet and book music
8325 Fur materials
8425 Underwear and nightwear, women's
9610 Ores
PART 701--REPORTING OF OFFSETS AGREEMENTS IN SALES OF WEAPON SYSTEMS OR DEFENSE-RELATED ITEMS TO FOREIGN COUNTRIES OR FOREIGN FIRMS--Table of Contents
Sec.
701.1 Purpose.
701.2 Definitions.
701.3 Applicability and scope.
701.4 Procedures.
701.5 Confidentiality.
Authority: Title I, sec. 124, Pub. L 102-558, 106 Stat. 4207 (50
U.S.C App. 2099).
Source: 59 FR 61796, Dec. 2, 1994, unless otherwise noted.
[[Page 119]]
Sec. 701.1 Purpose.
The Defense Production Act Amendments of 1992 require the Secretary
of Commerce to promulgate regulations for U.S. firms entering into
contracts for the sale of defense articles or defense services to
foreign countries or foreign firms that are subject to offset agreements
exceeding $5,000,000 in value to furnish information regarding such
agreements. The Secretary of Commerce has designated the Bureau of
Export Administration as the organization responsible for implementing
this provision. The information provided by U.S. firms will be
aggregated and used to determine the impact of offset transactions on
the defense preparedness, industrial competitiveness, employment, and
trade of the United States. Summary reports will be submitted annually
to the Congress pursuant Section 309 of the Defense Production Act of
1950, as amended.
Sec. 701.2 Definitions.
(a) Offsets--Compensation practices required as a condition of
purchase in either government-to-government or commercial sales of
defense articles and/or defense services as defined by the Arms Export
Control Act and the International Traffic in Arms Regulations.
(b) Military Export Sales--Exports that are either Foreign Military
Sales (FMS) or commercial (direct) sales of defense articles and/or
defense services as defined by the Arms Export Control Act and
International Traffic in Arms Regulations.
(c) Prime Contractor--A firm that has a sales contract with a
foreign entity or with the U.S. Government for military export sales.
(d) United States--Includes the 50 states, the District of Columbia,
Puerto Rico, and U.S. territories.
(e) Offset Agreement--Any offset as defined above that the U.S. firm
agrees to in order to conclude a military export sales contract. This
includes all offsets, whether they are ``best effort'' agreements or are
subject to penalty clauses.
(f) Offset Transaction--Any activity for which the U.S. firm claims
credit for full or partial fulfillment of the offset agreement.
Activities to implement offset agreements may include, but are not
limited to, coproduction, licensed production, subcontractor production,
overseas investment, technology transfer countertrade, barter,
counterpurchase, and buy back.
(g) Direct Offset--Contractual arrangements that involve defense
articles and services referenced in the sales agreement for military
exports.
(h) Indirect Offset--Contractual arrangements that involve defense
goods and services unrelated to the exports referenced in the sales
agreement.
Sec. 701.3 Applicability and scope.
(a) This rule applies to U.S. firms entering contracts for the sale
of defense articles or defense services (as defined in the Arms Export
Control Act and International Traffic in Arms Regulations) to a foreign
country or foreign firm for which the contract is subject to an offset
agreement exceeding $5,000,000 in value.
(b) This rule applies to all offset transactions completed in
performance of existing offset commitments since January 1, 1993 for
which offset credit of $250,000 or more has been claimed from the
foreign representative, and new offset agreements entered into since
that time.
Sec. 701.4 Procedures.
(a) To avoid double counting, firms should report only offset
transactions for which they are directly responsible for reporting to
the foreign customer (i.e., prime contractors should report for their
subcontractors if the subcontractors are not a direct party to the
offset agreement).
(b) Reports should be delivered to the Offsets Program Manager, U.S.
Department of Commerce, Office of Strategic Industries and Economic
Security, Bureau of Export Administration, Room 3878, 14th Street and
Pennsylvania Avenue, N.W., Washington DC 20230. The first industry
reports should be submitted to the Bureau of Export Administration not
later than March 15, 1995 and should cover offset transactions completed
during the calendar year 1993, as well as information regarding
unfulfilled offset agreements. After this initial submission, companies
should provide information once yearly
[[Page 120]]
not later than June 15 covering the preceding calendar year. All
submissions should include a point of contact (name and telephone
number) and should be by a company official authorized to provide such
information.
(c) Companies may submit this information in computerized
spreadsheet/database format (e.g., Lotus 1-2-3, Quattro Pro, dbase IV)
using a 3.5 inch 1.44 megabyte diskette, accompanied by a printed copy.
(d) Offset Transaction Reporting.
(1) Reports should include an itemized list of offset transactions
completed during the reporting period, including the following data
elements (Estimates are acceptable when actual figures are unavailable;
estimated figures should be followed by the letter ``E''):
(i) Name of Country--Country of entity purchasing the weapon system,
defense item or service subject to offset.
(ii) Name or Description of Weapon system, Defense Item, or Service
Subject to Offset.
(iii) Name of Offset Fulfilling Entity--Entity fulfilling offset
transaction (including first tier subcontractors).
(iv) Name of Offset Receiving Entity--Entity receiving benefits from
offset transaction.
(v) Offset Credit Value--Dollar value credits claimed by fulfilling
entity including any intangible factors/multipliers.
(vi) Actual Offset Value--Dollar value of the offset transaction
without multipliers/intangible factors.
(vii) Description of Offset Product/Service--Short description of
the type of offset (e.g., coproduction, technology transfer, subcontract
activity, training, purchase, cash payment, etc.).
(viii) Broad Industry Category--Broad classification of the industry
in which the offset transaction was fulfilled (e.g., aerospace,
electronics, chemicals, industrial machinery, textiles, etc.). Firms may
request a list of the Standard Industry Classification (SIC) codes to
assist in identifying an appropriate industry category. Forward such
requests to the Offsets Program Manager, U.S. Department of Commerce,
Office of Strategic Industries and Economic Security, Bureau of Export
Administration, Room 3878, 14th Street and Pennsylvania Avenue, N.W.,
Washington, D.C. 20230 or Fax 202-482-5650.
(ix) Direct or Indirect Offset--Specify whether the offset
transaction was direct or indirect offset.
(x) Name of Country in Which Offset was Fulfilled--United States,
purchasing country, or third country.
(2) Offset transactions of the same type (same fulfilling entity,
receiving entity, and offset product/service) completed during the same
reporting period may be combined.
(3) Any necessary comments or explanations relating to the above
information should be footnoted and supplied on separate sheets attached
to the report.
(e) Reporting on Offset Agreements Entered Into. (1) In addition to
the itemized list of offset transactions completed during the year as
specified above, U.S. firms should provide information regarding new
offset agreements entered into during the year, including the following
elements:
(i) Name of Country--Country of entity purchasing the weapon system,
defense item, or service subject to offset;
(ii) Name or Description of Weapon System, Defense Item, or Service
Subject to Offset;
(iii) Names/Titles of Signatories to the Offset Agreement;
(iv) Value of Export Sale Subject to Offset (approximate);
(v) Total Value of the Offset Agreement;
(vi) Term of Offset Agreement (months);
(vii) Description of Performance Measures--(e.g., ``Best Efforts,''
Liquidated Damages, (describe)).
(2) [Reserved]
Sec. 701.5 Confidentiality.
(a) As provided by Sec. 309(c) of the Defense Production Act of
1950, as amended, BXA shall not publicly disclose the information it
receives pursuant to this part, unless the firm furnishing the
information subsequently specifically authorizes public disclosure.
(b) Public disclosure must be authorized in writing by an official
of the
[[Page 121]]
firm competent to make such an authorization.
(c) Nothing in this provision shall prevent the use of data
aggregated from information provided pursuant to this part in the
summary report to the Congress described in Sec. 701.1.
PARTS 702-704 [RESERVED]
PART 705--EFFECT OF IMPORTED ARTICLES ON THE NATIONAL SECURITY--Table of Contents
Sec.
705.1 Definitions.
705.2 Purpose.
705.3 Commencing an investigation.
705.4 Criteria for determining effect of imports on the national
security.
705.5 Request or application for an investigation.
705.6 Confidential information.
705.7 Conduct of an investigation.
705.8 Public hearings.
705.9 Emergency action.
705.10 Report of an investigation and recommendation.
Authority: Sec. 232, Trade Expansion Act of 1962 (19 U.S.C. 1862),
as amended (Pub. L. 100-418, 102 Stat. 1107), Reorg. Plan No. 3 of 1979
(44 FR 69273, Dec. 3, 1979); E.O. 12188 of Jan. 2, 1980 (45 FR 989, Jan.
4, 1980).
Source: 47 FR 14693, Apr. 6, 1982, unless otherwise noted.
Redesignated at 54 FR 601, Jan. 9, 1989.
Sec. 705.1 Definitions.
As used in this part:
Department means the United States Department of Commerce and
includes the Secretary of Commerce and the Secretary's designees.
Secretary means the Secretary of Commerce or the Secretary's
designees.
Applicant means the person or entity submitting a request or
application for an investigation pursuant to this part.
Sec. 705.2 Purpose.
These regulations set forth the procedures by which the Department
shall commence and conduct an investigation to determine the effect on
the national security of the imports of any article. Based on this
investigation, the Secretary shall make a report and recommendation to
the President for action or inaction regarding an adjustment of the
imports of the article.
Sec. 705.3 Commencing an investigation.
Upon request of the head of any government department or agency,
upon application of an interested party, or upon motion of the
Secretary, the Department shall immediately conduct an investigation to
determine the effect on the national security of the imports of any
article.
Sec. 705.4 Criteria for determining effect of imports on the national security.
(a) To determine the effect on the national security of the imports
of the article under investigation, the Department shall consider the
quantity of the article in question or other circumstances related to
its import. With regard for the requirements of national security, the
Department shall also consider the following:
(1) Domestic production needed for projected national defense
requirements;
(2) The capacity of domestic industries to meet projected national
defense requirements;
(3) The existing and anticipated availabilities of human resources,
products, raw materials, production equipment and facilities, and other
supplies and services essential to the national defense;
(4) The growth requirements of domestic industries to meet national
defense requirements and the supplies and services including the
investment, exploration and development necessary to assure such growth;
and
(5) Any other relevant factors.
(b) In recognition of the close relation between the strength of our
national economy and the capacity of the United States to meet national
security requirements, the Department shall also, with regard for the
quantity, availability, character and uses of the imported article under
investigation, consider the following:
(1) The impact of foreign competition on the economic welfare of any
domestic industry essential to our national security;
(2) The displacement of any domestic products causing substantial
unemployment, decrease in the revenues of
[[Page 122]]
government, loss of investment or specialized skills and productive
capacity, or other serious effects; and
(3) Any other relevant factors that are causing or will cause a
weakening of our national economy.
Sec. 705.5 Request or application for an investigation.
(a) A request or application for an investigation shall be in
writing. The original and 12 copies shall be filed with the Director,
Office of Industrial Resource Administration, Room 3876, U.S. Department
of Commerce, Washington, DC 20230.
(b) When a request, application or motion is under investigation, or
when an investigation has been completed pursuant to Sec. 705.10 of this
part, any subsequently filed request or application concerning imports
of the same or related article that does not raise new or different
issues may be either consolidated with the investigation in progress as
provided in Sec. 705.7(e) of this part, or rejected. In either event, an
explanation for taking such action shall be promptly given to the
applicant. If the request or application is rejected, it will not be
returned unless requested by the applicant.
(c) Requests or applications shall describe how the quantity,
availability, character, and uses of a particular imported article, or
other circumstances related to its import, affect the national security,
and shall contain the following information to the fullest extent
possible:
(1) Identification of the applicant;
(2) A precise description of the article;
(3) Description of the domestic industry affected, including
pertinent information regarding companies and their plants, locations,
capacity and current output of the industry;
(4) Pertinent statistics on imports and domestic production showing
the quantities and values of the article;
(5) Nature, sources, and degree of the competition created by
imports of the article;
(6) The effect that imports of the article may have upon the
restoration of domestic production capacity in the event of national
emergency;
(7) Employment and special skills involved in the domestic
production of the article;
(8) Extent to which the national economy, employment, investment,
specialized skills, and productive capacity is or will be adversely
affected;
(9) Revenues of Federal, State, or local Governments which are or
may be adversely affected;
(10) National security supporting uses of the article including data
on applicable contracts or sub-contracts, both past and current; and
(11) Any other information or advice relevant and material to the
subject matter of the investigation.
(d) Statistical material presented should be, if possible, on a
calendar-year basis for sufficient periods of time to indicate trends.
Monthly or quarterly data for the latest complete years should be
included as well as any other breakdowns which may be pertinent to show
seasonal or short-term factors.
Sec. 705.6 Confidential information.
(a) Any information or material which the applicant or any other
party desires to submit in confidence at any stage of the investigation
that would disclose national security classified information or business
confidential information (trade secrets, commercial or financial
information, or any other information considered senstitive or
privileged), shall be submitted on separate sheets with the clear legend
``National Security Classified'' or ``Business Confidential,'' as
appropriate, marked at the top of each sheet. Any information or
material submitted that is identified as national security classified
must be accompanied at the time of filing by a statement indicating the
degree of classification, the authority for the classification, and the
identity of the classifying entity. By submitting information or
material identified as business confidential, the applicant or other
party represents that the information is exempted from public
disclosure, either by the Freedom of Information Act (5 U.S.C. 552 et
seq.) or by some other specific statutory exemption. Any request for
business confidential treatment must be accompanied at the time of
filing by a statement justifying non-disclosure
[[Page 123]]
and referring to the specific legal authority claimed.
(b) The Department may refuse to accept as business confidential any
information or material it considers not intended to be protected under
the legal authority claimed by the applicant, or under other applicable
legal authority. Any such information or material so refused shall be
promptly returned to the submitter and will not be considered. However,
such information or material may be resubmitted as non-confidential in
which case it will be made part of the public record.
Sec. 705.7 Conduct of an investigation.
(a) If the Department determines that it is appropriate to afford
interested parties an opportunity to present information and advice
relevant and material to an investigation, a public notice shall be
published in the Federal Register soliciting from any interested party
written comments, opinions, data, information or advice relative to the
investigation. This material shall be submitted as directed within a
reasonable time period to be specified in the notice. All material shall
be submitted with 6 copies. In addition, public hearings may be held
pursuant to Sec. 705.8 of this part.
(b) All requests and applications filed and all material submitted
by interested parties, except information on material that is classified
or determined to be confidential as provided in Sec. 705.6 of this part,
will be available for public inspection and copying in the Bureau of
Export Administration Freedom of Information Records Inspection
Facility, Room H-4886, U.S. Department of Commerce, Washington, DC
20230, in accordance with regulations published in part 4 of title 15,
Code of Federal Regulations.
(c) Further information may be requested by the Department from
other sources through the use of questionnaires, correspondence, or
other appropriate means.
(d) The Department shall, as part of an investigation, seek
information and advice from, and consult with, the Secretary of Defense
and any other appropriate officers of the United States or their
designees, as shall be determined. Communications received from agencies
of the U.S. Government or foreign governments will not be made available
for public inspection. The Department may also seek assistance in the
conduct of an investigation from other agencies of the United States, as
shall be necessary.
(e) Any request or application that is filed while an investigation
is in progress, concerning imports of the same or related article and
raising similar issues, may be consolidated with the request,
application or motion that initiated the investigation.
[47 FR 14693, Apr. 6, 1982. Redesignated at 54 FR 601, Jan. 9, 1989 and
amended at 54 FR 19355, May 5, 1989]
Sec. 705.8 Public hearings.
(a) If it is deemed appropriate by the Department, public hearings
may be held to elicit further information.
(1) A notice of hearing shall be published in the Federal Register
describing the date, time, place, the subject matter of each hearing and
any other information relevant to the conduct of the hearing. The name
of a person to contact for additional information or to request time to
speak at the hearing shall also be included. Public hearings may be held
in more than one location.
(2) Hearings shall be open to the public unless national security
classified information will be presented. In that event the presiding
officer at the hearing shall close the hearing, as necessary, to all
persons not having appropriate security clearances or not otherwise
authorized to have access to such information. If it is known in
sufficient time prior to the hearing that national security classified
information will be presented the notice of hearing published in the
Federal Register shall state that national security classified
information will be presented and that the hearing will be open only to
those persons having appropriate security clearances or otherwise
specifically authorized to have access to such information.
(b) Hearings shall be conducted as follows:
(1) The Department shall appoint the presiding officer;
[[Page 124]]
(2) The presiding officer shall determine all procedural matters
during the hearing;
(3) Interested parties may appear, either in person or by
representation, and produce oral or written information relevant and
material to the subject matter of the investigation;
(4) Hearings will be fact-finding proceedings without formal
pleadings or adverse parties. Formal rules of evidence will not apply;
(5) After a witness has testified, the presiding officer may
question the witness. Questions submitted to the presiding officer in
writing by any interested party may, at the discretion of the presiding
officer, be posed to the witness. No cross examination of any witness by
a party shall be allowed.
(6) Each hearing will be stenographically reported. Transcripts of
the hearing, excluding any national security classified information, may
be purchased from the Department at actual cost of duplication, and will
be available for public inspection in the Bureau of Export
Administration Freedom of Information Records Inspection Facility, Room
H-4886, U.S. Department of Commerce, Washington, DC 20230.
[47 FR 14693, Apr. 6, 1982. Redesignated at 54 FR 601, Jan. 9, 1989 and
amended at 54 FR 19355, May 5, 1989]
Sec. 705.9 Emergency action.
In emergency situations, or when in the judgment of the Department,
national security interests require it, the Department may vary or
dispense with any or all of the procedures set forth in Sec. 705.7 of
this part.
Sec. 705.10 Report of an investigation and recommendation.
(a) When an investigation conducted pursuant to this part is
completed, a report of the investigation shall be promptly prepared. The
report shall be organized in several sections, if necessary. One section
shall contain all information and material that is not classified or
confidential as provided in Sec. 705.6 of this part. Another section
shall contain all national security classified information and material.
A third section shall contain all business confidential information and
material.
(b) The Secretary shall report to the President the findings of the
investigation and a recommendation for action or inaction within one
year after receiving a request or application or otherwise beginning an
investigation pursuant to this part.
(c) The Executive Summary of the report, excluding the sections
containing national security classified and business confidential
information and material, shall be published in the Federal Register
upon the disposition of each request, application, or motion made
pursuant to this part. Copies of the full report will then be available
for public inspection and copying in the Bureau of Export Administration
Freedom of Information Records Inspection Facility, Room H-4886, U.S.
Department of Commerce, Washington, DC 20230.
[47 FR 14693, Apr. 6, 1982. Redesignated at 54 FR 601, Jan. 9, 1989 and
amended at 54 FR 19355, May 5, 1989]
PARTS 706-709 [RESERVED]
[[Page 125]]
SUBCHAPTER B [RESERVED]
PARTS 710-729 [RESERVED]
SUBCHAPTER C--EXPORT ADMINISTRATION REGULATIONS
PART 730--GENERAL INFORMATION--Table of Contents
Sec.
730.1 What these regulations cover.
730.2 Statutory authority.
730.3 Dual use exports.
730.4 Other control agencies and departments.
730.5 Coverage of more than exports.
730.6 Control purposes.
730.7 License requirements and exceptions.
730.8 How to proceed and where to get help.
730.9 How the Bureau of Export Administration is organized.
730.10 Advisory information.
Supplement No. 1 to Part 730--Information Collection Requirements Under
the Paperwork Reduction Act: OMB Control Numbers
Supplement No. 2 to Part 730--Technical Advisory Committees
Supplement No. 3 to Part 730--Other U.S. Government Departments and
Agencies With Export Control Responsibilities
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); 18 U.S.C. 2510 et seq.; 22 U.S.C. 287c;
22 U.S.C. 3201 et seq.; 22 U.S.C. 6004; Sec. 201, Pub. L. 104-58, 109
Stat. 557 (30 U.S.C. 185(s)); 30 U.S.C. 185(u); 42 U.S.C. 2139a; 42
U.S.C. 6212; 43 U.S.C. 1354; 46 U.S.C. app. 466c; 50 U.S.C. app. 5; E.O.
12924, 59 FR 43437, 3 CFR, 1994 Comp., p. 917; E.O. 11912, 41 FR 15825,
3 CFR, 1976 Comp., p. 114; E.O. 12002, 42 FR 35623, 3 CFR, 1977 Comp.,
p.133; E.O. 12058, 43 FR 20947, 3 CFR, 1978 Comp., p. 179; E.O. 12214,
45 FR 29783, 3 CFR, 1980 Comp., p. 256; E.O. 12851, 58 FR 33181, 3 CFR,
1993 Comp., p. 608; E.O. 12867, 58 FR 51747, 3 CFR, 1993 Comp., p. 649;
E.O. 12918, 59 FR 28205, 3 CFR, 1994 Comp., p. 899; E.O. 12924, 59 FR
43437, 3 CFR, 1994 Comp., p. 917; E.O. 12938, 59 FR 59099, 3 CFR, 1994
Comp., p. 950; Executive Order 13026 (November 15, 1996, 61 FR 58767);
Notice of August 15, 1995 (60 FR 42767, August 17, 1995); and Notice of
August 14, 1996 (61 FR 42527); E.O. 12981 (60 FR 62981).
Source: 61 FR 12734, Mar. 25, 1996, unless otherwise noted.
Sec. 730.1 What these regulations cover.
In this part, references to the Export Administration Regulations
(EAR) are references to 15 CFR chapter VII, subchapter C. The EAR are
issued by the United States Department of Commerce, Bureau of Export
Administration (BXA) under laws relating to the control of certain
exports, reexports, and activities. In addition, the EAR implement
antiboycott law provisions requiring regulations to prohibit specified
conduct by United States persons that has the effect of furthering or
supporting boycotts fostered or imposed by a country against a country
friendly to United States. Supplement No. 1 to part 730 lists the
control numbers assigned to information collection requirements under
the EAR by the Office of Management and Budget pursuant to the Paperwork
Reduction Act of 1995.
Sec. 730.2 Statutory authority.
The EAR have been designed primarily to implement the Export
Administration Act of 1979, as amended, 50 U.S.C. app. 2401-2420 (EAA).
There are numerous other legal authorities underlying the EAR. These are
listed in the Federal Register documents promulgating the EAR and at the
beginning of each part of the EAR in the Code of Federal Regulations
(CFR). From time to time, the President has exercised authority under
the International Emergency Economic Powers Act with respect to the EAR
(50 U.S.C. 1701-1706 (IEEPA)). The EAA is not permanent legislation, and
when it has lapsed, Presidential executive orders under IEEPA have
directed and authorized the continuation in force of the EAR.
Sec. 730.3 Dual use exports.
The convenient term dual use is sometimes used to distinguish the
[[Page 126]]
types of items covered by the EAR from those that are covered by the
regulations of certain other U.S. government departments and agencies
with export licensing responsibilities. In general, the term dual use
serves to distinguish EAR-controlled items that can be used both in
military and other strategic uses (e.g., nuclear) and commercial
applications. In general, the term dual use serves to distinguish EAR-
controlled items that can be used both in military and other strategic
uses and in civil applications from those that are weapons and military
related use or design and subject to the controls of the Department of
State or subject to the nuclear related controls of the Department of
Energy or the Nuclear Regulatory Commission. Note, however, that
although the short-hand term dual use may be employed to refer to the
entire scope of the EAR, the EAR also apply to some items that have
solely civil uses.
Sec. 730.4 Other control agencies and departments.
In addition to the departments and agencies mentioned in Sec. 730.3
of this part, other departments and agencies have jurisdiction over
certain narrower classes of exports and reexports. These include the
Department of Treasury's Office of Foreign Assets Control (OFAC), which
administers controls against certain countries that are the object of
sanctions affecting not only exports and reexports, but also imports and
financial dealings. For your convenience, Supplement No. 3 to part 730
identifies other departments and agencies with regulatory jurisdiction
over certain types of exports and reexports. This is not a comprehensive
list, and the brief descriptions are only generally indicative of the
types of controls administered and/or enforced by each agency.
Sec. 730.5 Coverage of more than exports.
The core of the export control provisions of the EAR concerns
exports from the United States. You will find, however, that some
provisions give broad meaning to the term ``export'', apply to
transactions outside of the United States, or apply to activities other
than exports.
(a) Reexports. Commodities, software, and technology that have been
exported from the United States are generally subject to the EAR with
respect to reexport. Many such reexports, however, may go to many
destinations without a license or will qualify for an exception from
licensing requirements.
(b) Foreign products. In some cases, authorization to export
technology from the United States will be subject to assurances that
items produced abroad that are the direct product of that technology
will not be exported to certain destinations without authorization from
BXA.
(c) Scope of ``exports''. Certain actions that you might not regard
as an ``export'' in other contexts do constitute an export subject to
the EAR. The release of technology to a foreign national in the United
States through such means as demonstration or oral briefing is deemed an
export. Other examples of exports under the EAR include the return of
foreign equipment to its country of origin after repair in the United
States, shipments from a U.S. foreign trade zone, and the electronic
transmission of non-public data that will be received abroad.
(d) U.S. person activities. To counter the proliferation of weapons
of mass destruction, the EAR restrict the involvement of ``United States
persons'' anywhere in the world in exports of foreign-origin items, or
in providing services or support, that may contribute to such
proliferation. The EAR also restrict technical assistance by U.S.
persons with respect to encryption commodities or software.
[61 FR 12734, Mar. 25, 1996, as amended at 61 FR 68577, Dec. 30, 1996]
Sec. 730.6 Control purposes.
The export control provisions of the EAR are intended to serve the
national security, foreign policy, nonproliferation, and short supply
interests of the United States and, in some cases, to carry out its
international obligations. Some controls are designed to restrict access
to dual use items by countries or persons that might apply such items to
uses inimical to U.S. interests. These include controls designed to stem
the proliferation of weapons of mass destruction and controls designed
[[Page 127]]
to limit the military and terrorism support capability of certain
countries. The effectiveness of many of the controls under the EAR is
enhanced by their being maintained as part of multilateral control
arrangements. Multilateral export control cooperation is sought through
arrangements such as the Nuclear Suppliers Group, the Australia Group,
and the Missile Technology Control Regime. The EAR also include some
export controls to protect the United States from the adverse impact of
the unrestricted export of commodities in short supply.
Sec. 730.7 License requirements and exceptions.
A relatively small percentage of exports and reexports subject to
the EAR require an application to BXA for a license. Many items are not
on the Commerce Control List (CCL) (Supplement No. 1 to Sec. 774.1 of
the EAR), or, if on the CCL, require a license to only a limited number
of countries. Other transactions may be covered by one or more of the
License Exceptions in the EAR. In such cases no application need be made
to BXA.
Sec. 730.8 How to proceed and where to get help.
(a) How the EAR are organized. The Export Administration Regulations
(EAR) are structured in a logical manner. In dealing with the EAR you
may find it helpful to be aware of the overall organization of these
regulations. In order to determine what the rules are and what you need
to do, review the titles and the introductory sections of the parts of
the EAR.
(1) How do you go about determining your obligations under the EAR?
Part 732 of the EAR provides steps you may follow to determine your
obligations under the EAR. You will find guidance to enable you to tell
whether or not your transaction is subject to the EAR and, if it is,
whether it qualifies for a License Exception or must be authorized
through issuance of a license.
(2) Are your items or activities subject to the EAR at all? Part 734
of the EAR defines the items and activities that are subject to the EAR.
Note that the definition of ``items subject to the EAR'' includes, but
is not limited to, items listed on the Commerce Control List in part 774
of the EAR.
(3) If subject to the EAR, what do the EAR require? Part 736 of the
EAR lists all the prohibitions that are contained in the EAR. Note that
certain prohibitions (General Prohibitions One through Three) apply to
items as indicated on the CCL, and others (General Prohibitions Four
through Ten) prohibit certain activities and apply to all items subject
to the EAR unless otherwise indicated.
(4) Do you need a license for your item or activity? What policies
will BXA apply if you do need to submit license application? The EAR
have four principal ways of describing license requirements:
(i) The EAR may require a license to a country if your item is
listed on the CCL and the Country Chart in part 738 of the EAR tells
that a license is required to that country. Virtually all Export Control
Classification Numbers (ECCN) on the CCL are covered by the Country
Chart in part 738 of the EAR. That part identifies the limited number of
entries that are not included on the Chart. These ECCNs will state the
specific countries that require a license or refer you to a self-
contained section, i.e., Short Supply in part 754 of the EAR, or
Embargoes in part 746 of the EAR. If a license is required, you should
consult part 740 of the EAR which describes the License Exception that
may be available for items on the CCL. Part 742 of the EAR describes the
licensing policies that BXA will apply in reviewing an application you
file. Note that part 754 of the EAR on short supply controls and part
746 on embargoes are self-contained parts that include the available
exceptions and licensing policy.
(ii) A license requirement may be based on the end-use or end-user
in a transaction, primarily for proliferation reasons. Part 744 of the
EAR describes such requirements and relevant licensing policies and
includes both restrictions on items and restrictions on the activities
of U.S. persons.
(iii) A license is required for virtually all exports to embargoed
destinations, such as Cuba. Part 746 of the EAR describes all the
licensing requirements, license review policies and License Exceptions
that apply to such
[[Page 128]]
destinations. If your transaction involves one of these countries, you
should first look at this part. This part also describes controls that
may be maintained under the EAR to implement UN sanctions.
(iv) In addition, under Secs. 736.2(b)(9) and (10) of the EAR, you
may not engage in a transaction knowing a violation is about to occur or
violate any orders, terms, and conditions under the EAR. Part 764 of the
EAR describes prohibited transactions with a person denied export
privileges or activity that violates the terms or conditions of a denial
order.
(5) How do you file a license application and what will happen to
the application once you do file it? What if you need authorization for
multiple transactions? Parts 748 and 750 of the EAR provide information
on license submission and processing. Part 752 of the EAR provides for a
Special Comprehensive License that authorizes multiple transactions. If
your application is denied, part 756 of the EAR provides rules for
filing appeals.
(6) How do you clear shipments with the U.S. Customs Service? Part
758 of the EAR describes the requirements for clearance of exports.
(7) Where do you find the rules on restrictive trade practices and
boycotts? Part 760 of the EAR deals with restrictive trade practices and
boycotts.
(8) Where are the rules on recordkeeping and enforcement? Part 762
of the EAR sets out your recordkeeping requirements, and parts 764 and
766 of the EAR deal with violations and enforcement proceedings.
(9) What is the effect of foreign availability? Part 768 of the EAR
provides rules for determining foreign availability of items subject to
controls.
(10) Do the EAR provide definitions and interpretations? Part 770 of
the EAR contains interpretations and part 772 of the EAR lists
definitions used.
(b) Why the EAR are so detailed. Some people will find the great
length of the EAR and their extensive use of technical terms
intimidating. BXA believes, however, that such detail and precision can
and does serve the interests of the public. The detailed listing of
technical parameters in the CCL establishes precise, objective criteria.
This should, in most cases, enable you to ascertain the appropriate
control status. Broader, more subjective criteria would leave exporters
and reexporters more dependent upon interpretations and rulings by BXA
officials. Moreover, much of the detail in the CCL is derived from
multilaterally adopted lists, and the specificity serves to enhance the
uniformity and effectiveness of international control practices and to
promote a ``level playing field''. The detailed presentation of such
elements as licensing and export clearance procedures enables you to
find in one place what you need to know to comply with pertinent
requirements. Of special importance is the detailed listing of License
Exception criteria, as these will enable you to determine quickly, and
with confidence, that you may proceed with a transaction without delay.
Finally, some of the detail results from the need to draft the EAR with
care in order to avoid loop-holes and to permit effective enforcement.
(c) Where to get help. Throughout the EAR you will find information
on offices you can contact for various purposes and types of
information. General information including; assistance in understanding
the EAR, information on how to obtain forms, electronic services,
publications, and information on training programs offered by BXA, is
available from the Office of Exporter Services at the following
locations:
Exporter Counselling Division, U.S. Department of Commerce, 14th and
Pennsylvania Avenue, N.W., Room H1099D, Washington, D.C., 20230,
Telephone number: (202) 482-4811, Facsimile number: (202) 482-3617
and
Western Regional Office, U.S. Department of Commerce, 3300 Irvine
Avenue, Suite 345, Newport Beach, California 92660, Telephone number:
(714) 660-0144, Facsimile number: (714) 660-9347
and
Santa Clara Branch Office, U.S. Department of Commerce, 5201 Great
America Parkway, Suite 333, Santa Clara, California 95054, Telephone
number: (408) 748-7450, Facsimile number: (408) 748-7470.
Sec. 730.9 How the Bureau of Export Administration is organized.
Functionally, the Bureau of Export Administration is divided into
two branches, Export Administration and
[[Page 129]]
Export Enforcement. Also, BXA manages a number of Technical Advisory
Committees consisting of industry and government representatives which
advise and assist BXA and other agencies with respect to actions
designed to implement the EAR.
(a) Export Administration. Export Administration implements and
administers the export controls reflected in the EAR. Export
Administration consists of five offices located in Washington D.C. and
two field offices in California under the supervision of the Assistant
Secretary for Export Administration:
(1) The Office of Nuclear and Missile Technology Controls is
responsible for policy and technical issues and license applications
related to the Nuclear Suppliers Group and the Missile Technology
Control Regime. This office has responsibility for items associated with
those regimes, and missile and nuclear related exports and reexports
subject to the Enhanced Proliferation Control Initiative.
(2) The Office Chemical/Biological Controls and Treaty Compliance is
responsible for implementing multilateral export controls under the
Australia Group. This office has licensing responsibility for items
associated with the Australia Group and related exports and reexports
subject to the Enhanced Proliferation Control Initiative.
(3) The Office of Strategic Trade and Foreign Policy Controls is
responsible for implementing multilateral export controls dealing with
conventional arms and related dual use items. This office is also
responsible for computer export control policies, and implements U.S.
foreign policy controls (e.g., crime control, anti-terrorism, and
regional stability). It also has licensing responsibility for items
controlled for national security and foreign policy reasons.
(4) The Office of Exporter Services is responsible for the Special
Comprehensive License, processing and routing all license applications,
and preparing responses to requests for advisory opinions and commodity
classifications. This office also provides counselling to exporters and
reexporters, conducts educational seminars for the business community,
maintains the Export Administration Regulations, and coordinates the
operations of two field offices listed in Sec. 730.8(c) of this part.
(5) The Office of Strategic Industries and Economic Security
implements programs to ensure the continued health of the U.S. defense
industrial base, facilitating diversification of U.S. defense related
industries into civilian markets, and promoting the conversion of
military enterprises. This office is also responsible for analyzing the
economic impact of U.S. export controls on industrial competitiveness.
(b) Export Enforcement. Export Enforcement implements the
enforcement provisions of the EAR, including part 760 of the EAR
(Restrictive Trade Practices and Boycotts). This office also conducts
outreach programs to assist members of the public in understanding their
obligation under EAR. The Office of Export Enforcement is organized into
three offices under the supervision of the Assistant Secretary for
Export Enforcement.
(1) The Office of Export Enforcement (OEE) is comprised of an office
in Washington, D.C. and eight field offices. OEE is staffed with
criminal investigators and analysts. This office investigates
allegations of violations and supports administrative and criminal
enforcement proceedings. The addresses and telephone numbers of the
eight field offices are listed in Sec. 764.5(c)(7) of the EAR.
(2) The Office of Enforcement Support (OES) is located in
Washington, D.C. OES supports BXA's preventive enforcement efforts,
including conducting pre-license checks and post-shipment verifications.
OES also provides administrative and analytical support for OEE.
(3) The Office of Antiboycott Compliance administers and enforces
the provisions of part 760 of the EAR (Restrictive Trade Practices and
Boycotts). It investigates and prepares cases on alleged violations of
this part.
(c) Technical Advisory Committees. The Technical Advisory Committees
(TACs) provide advice and assistance to BXA from U.S. industry regarding
the creation and implementation of export controls. For further
information regarding establishment of TACs and
[[Page 130]]
other information, see Supplement No. 2 to part 730. Existing TACs
include the following:
(1) The Computer Systems Technical Advisory Committee;
(2) The Electronics Technical Advisory Committee;
(3) The Materials Technical Advisory Committee;
(4) The Materials Processing Equipment Technical Advisory Committee;
(5) The Regulations and Procedures Technical Advisory Committee;
(6) The Sensors Technical Advisory Committee;
(7) The Telecommunications Equipment Technical Advisory Committee;
and
(8) The Transportation and Related Equipment Technical Advisory
Committee.
Sec. 730.10 Advisory information.
The general information in this part is just that--general. To
achieve brevity, so as to give you a quick overview, the information in
this part is selective, incomplete, and not expressed with regulatory
precision. The controlling language is the language of succeeding parts
of the EAR and of any other laws or regulations referred to or
applicable. The content of this part is not to be construed as modifying
or interpreting any other language or as in any way, limiting the
authority of BXA, any of its components or any other government
department or agency. You should not take any action based solely on
what you read in this part.
Supplement No. 1 to Part 730--Information Collection Requirements Under
the Paperwork Reduction Act: OMB Control Numbers
This supplement lists the control numbers assigned to the
information collection requirements for the Bureau of Export
Administration by the Office of Management and Budget (OMB), pursuant to
the Paperwork Reduction Act of 1995. This supplement complies with the
requirements of section 3506(c)(1)(B)(i) of the Paperwork Reduction Act
requiring agencies to display current control numbers assigned by the
Director of OMB for each agency information collection requirement.
------------------------------------------------------------------------
15 CFR part or section where
Current OMB control No. collections of information
are identified or described
------------------------------------------------------------------------
0694-0001................................. Sec. 748.12(d) of the EAR.
0694-0004................................. Part 768 of the EAR.
0694-0008................................. Sec. 748.13, Supplement No.
5 to part 748 of the EAR.
0694-0009................................. Sec. 748.10(e) of the EAR.
0694-0012................................. Part 760 and Sec. 762.2(b)
of the EAR.
0694-0013................................. Part 774 of the EAR.
0694-0015................................. Sec. 773.3 of the EAR.
0694-0016................................. Secs. 748.13 and 762.2(b)
of the EAR.
0694-0017................................. Sec. 748.10 of the EAR.
0694-0021................................. Secs. 748.11 and 762.2(b)
of the EAR.
0694-0023................................. Secs. 740.3(d) and 740.4(c)
of the EAR.
0694-0025................................. Secs. 754.4 and 762.2(b) of
the EAR.
0694-0026................................. Sec. 754.3 of the EAR.
0694-0027................................. Sec. 754.2 of the EAR.
0694-0029................................. Sec. 740.4(a) of the EAR.
0694-0030................................. Supplement No. 2 to part
748, paragraph (p) of the
EAR.
0694-0031................................. Sec. 750.9 of the EAR.
0694-0032................................. Sec. 748.4(d)(2) of the
EAR.
0694-0033................................. Secs. 740.7(b) and 762.2(b)
of the EAR.
0694-0038................................. Sec. 758.6(e)(2) of the
EAR.
0694-0040................................. Secs. 758.5(c)(2) and 758.8
of the EAR.
0694-0047................................. Supplement No. 2 to part
748, paragraph (o)(2) of
the EAR.
0694-0048................................. Sec. 748.3 of the EAR.
0694-0050................................. Sec. 752.5(c)(5) of the
EAR.
0694-0051................................. Sec. 750.10 of the EAR.
0694-0058................................. Secs. 762.2(b) and 764.5 of
the EAR.
0694-0064................................. Secs. 748.9 and 762.2(b) of
the EAR.
0694-0065................................. Sec. 754.4(c) of the EAR of
the EAR.
0694-0073................................. Sec. 742.12, Supplement No.
3 to part 742, and Sec.
762.2(b) of the EAR.
0694-0078................................. Supplement No. 1 to part 774
of the EAR.
0694-0086................................. Supplement No. 1 to part 774
of the EAR.
0694-0088................................. Parts 746, 748, and 752;
Sec. 762.2(b) of the EAR.
0694-0089................................. Part 752 and Sec. 762.2(b)
of the EAR.
0694-0093................................. Secs. 748.10 and 762.2(b)
of the EAR.
0694-0094................................. Part 758 of the EAR of the
EAR.
0694-0095................................. Secs. 740.7(a)(3)(ii) and
758.1(d) of the EAR.
0694-0096................................. Part 760, Sec. 762.6(a) of
the EAR.
0694-0097................................. Secs. 752.15(b), 758.6, and
762.2(b) of the EAR.
0694-0102................................. Secs. 754.6 and 754.7 of
the EAR.
0694-0101................................. Sec. 734.4 of the EAR.
0694-0100................................. Supplement No. 1 to part
730.
0607-0001................................. Sec. 758.2(m) of the EAR.
0607-0018................................. Secs. 740.1(d),
740.3(a)(3), 752.7(b), Sec.
752.15(a) of the EAR.
Secs. 754.2(h) and (i),
754.4(c) 758.1, Secs.
758.2(m) and 758.3 of the
EAR.
0607-0152................................. Secs. 740.1(d),
740.3(a)(3), 752.7(b),
Secs. 752.15(a) of the
EAR.
Secs. 754.2(h) and (i),
754.4(c), 758.1, Secs.
758.2(m), and 758.3 of the
EAR.
------------------------------------------------------------------------
Supplement No. 2 to Part 730--Technical Advisory Committees
(a) Purpose. The purpose of this supplement is to describe the
procedures and criteria for the establishment and operation of Technical
Advisory Committees.
[[Page 131]]
(b) Technical advisory committees. Any producer of articles,
materials, or supplies, including technology, software, and other
information, that are subject to export controls, or are being
considered for such controls because of their significance to the
national security of the United States, may request the Secretary of
Commerce to establish a technical advisory committee, under the
provisions of section 5(h) of the Export Administration Act of 1979, as
amended (EAA) to advise and assist the Department of Commerce and other
appropriate U.S. Government agencies or officials with respect to
questions involving technical matters; worldwide availability and actual
utilization of production technology; licensing procedures that affect
the level of export controls applicable to a clearly defined grouping of
articles, materials, or supplies, including technology, software, or
other information; and exports and reexports subject to all controls
that the United States maintains including proposed revisions of any
such controls. If producers of articles, materials, or supplies,
including technology, software, and other information, that are subject
to export controls because of their significance to the national
security of the United States, wish a trade association or other
representative to submit a written request on their behalf for the
appointment to a TAC, such request shall be submitted in accordance with
paragraph (b)(4) of this supplement.
(1) Form and substance of requests. Each request for the appointment
of a TAC shall be submitted in writing to: Assistant Secretary for
Export Administration, P.O. Box 273, Washington, DC 20044.
The request shall include:
(i) A description of the articles, materials, or supplies including
technology and software, in terms of a clear, cohesive grouping (citing
the applicable Export Control Classification Numbers where practical);
(ii) A statement of the reasons for requesting the appointment of a
TAC; and
(iii) Any information in support of any contention that may be made
that the request meets the criteria described in paragraph (b)(2) of
this supplement.
(2) Consideration of request for establishment of a TAC. The
Department of Commerce will review all requests for the establishment of
a TAC to determine if the following criteria are met:
(i) That a substantial segment of the industry producing the
specified articles, materials, or supplies including technology desires
such a committee; and
(ii) That the evaluation of such articles, materials, or supplies
including technology and software for export control purposes is
difficult because of questions involving technical matters, worldwide
availability and actual utilization of production and software
technology, or licensing procedures.
(3) Requests by a substantial segment of an industry. In determining
whether or not a substantial segment of any industry has requested the
appointment of a TAC, the Department of Commerce will consider:
(i) The number of persons or firms requesting the establishment of a
TAC for a particular grouping of commodities, software and technology in
relation to the total number of U.S. producers of such items; and
(ii) The volume of annual production by such persons or firms of
each item in the grouping in relation to the total U.S. production.
Generally, a substantial segment of an industry (for purposes of this
supplement) shall consist of:
(A) Not less than 30 percent of the total number of U.S. producers
of the items concerned; or
(B) Three or more U.S. producers who produce a combined total of not
less than 30 percent of the total U.S. annual production, by dollar
value of the items concerned; or
(C) Not less than 20 percent of the total number of U.S. producers
of the items concerned, provided that the total of their annual
production thereof is not less than 20 percent of the total U.S. annual
production, by dollar value.
(iii) If it is determined that a substantial segment of the industry
concerned has requested the establishment of a TAC concerning a specific
grouping of items that the Department of Commerce determines difficult
to evaluate for export control purposes, BXA will establish and use the
TAC requested.
(4) Requests from trade associations or other representatives.
Requests from trade associations or other representatives of U.S.
producers for the establishment of a TAC must comply with the provisions
of paragraphs (b) (1) through (3) of this supplement. In addition, in
order to assist BXA in determining whether the criteria described in
paragraph (b)(3) of this supplement have been met, a trade association
or other representative submitting a request for the establishment of a
TAC should include the following information:
(i) The total number of firms in the particular industry;
(ii) The total number of firms in the industry that have authorized
the trade association or other representative to act in their behalf in
this matter;
(iii) The approximate amount of total U.S. annual production by
dollar value of the items concerned produced by those firms that have
authorized the trade association or other representative to act in their
behalf; and
(iv) A description of the method by which authorization to act on
behalf of these producers was obtained.
(5) Nominations for membership on TACs. When the Department of
Commerce determines that the establishment of a TAC is
[[Page 132]]
warranted, it will request nominations for membership on the committee
among the producers of the items and from any other sources that may be
able to suggest well-qualified nominees.
(6) Selection of industry members of committee. Industry members of
a TAC will be selected by the Department of Commerce from a list of the
nominees who have indicated their availability for service on the
committee. To the extent feasible, the Department of Commerce will
select a committee balanced to represent all significant facets of the
industry involved, taking into consideration such factors as the size of
the firms, their geographical distribution, and their product lines. No
industry representative shall serve on a TAC for more than four
consecutive years. The membership of a member who is absent from four
consecutive meetings shall be terminated.
(7) Government members. Government members of a TAC will be selected
by the Department of Commerce from the agencies having an interest in
the subject matter concerned.
(8) Invitation to serve on committee. Invitations to serve on a TAC
will be sent by letter to the selected nominees.
(9) Election of Chair. The Chair of each TAC shall be elected by a
vote of the majority of the members of the committee present and voting.
(c) Charter. (1) No TAC established pursuant to this supplement
shall meet or take any action until an advisory committee charter has
been filed with the Assistant Secretary for Export Administration of the
Department of Commerce and with the standing committees of the Senate
and of the House of Representatives having legislative jurisdiction over
the Department. Such charter shall contain the following information:
(i) The committee's official designation;
(ii) The committee's objectives and the scope of its activities;
(iii) The period of time necessary for the committee to carry out
its purposes;
(iv) The agency or official to whom the committee reports;
(v) The agency responsible for providing the necessary support for
the committee;
(vi) A description of the duties for which the committee is
responsible, and, if such duties are not solely advisory, a
specification of the authority for such functions;
(vii) The estimated annual operating costs in dollars and years for
such committee;
(viii) The estimated number and frequency of committee meetings;
(ix) The committee's termination date, if less than two years from
the date of the committee's establishment; and
(x) The date the charter is filed.
(d) Meetings. (1) Each TAC established under the provisions of the
EAA and paragraph (b) of this supplement shall meet at least once every
three months at the call of its Chair unless it is specifically
determined by the Chair, in consultation with other members of the
committee, that a particular meeting is not necessary.
(2) No TAC may meet except at the call of its Chair.
(3) Each meeting of a TAC shall be conducted in accordance with an
agenda approved by a designated Federal government employee.
(4) No TAC shall conduct a meeting in the absence of a designated
Federal government employee who shall be authorized to adjourn any
advisory committee meeting, whenever the Federal government employee
determines adjournment to be in the public interest.
(e) Public notice. Notice to the public of each meeting of a TAC
will be issued at least 20 days in advance and will be published in the
Federal Register. The notice will include the time and place of the
meeting and the agenda.
(f) Public attendance and participation. (1) Any member of the
public who wishes to do so may file a written statement with any TAC
before or after any meeting of a committee.
(2) A request for an opportunity to deliver an oral statement
relevant to matters on the agenda of a meeting of a TAC will be granted
to the extent that the time available for the meeting permits. A
committee may establish procedures requiring such persons to obtain
advance approval for such participation.
(3) Attendance at meetings of TACs will be open to the public unless
it is determined pursuant to section 10(d) of the Federal Advisory
Committee Act to be necessary to close all, or some portion, of the
meeting to the public. A determination that a meeting or portion thereof
be closed to the public may be made if all or a specific portion of a
meeting of a TAC is concerned with matters described in section 552(b)
of Title 5, U.S.C.
(4) Participation by members of the public in open TAC meetings or
questioning of committee members or other participants shall not be
permitted except in accordance with procedures established by the
committee.
(5) Every effort will be made to accommodate all members of the
public who wish to attend.
(g) Minutes. (1) Detailed minutes of each meeting of each TAC will
be kept and will contain a record of the persons present, a complete and
accurate description of the matters discussed and conclusions reached,
and copies of all reports received, issued, or approved by the TAC.
(2) The accuracy of all the minutes will be certified to by the TAC
Chair.
(h) Records. (1) Subject to section 552 of Title 5, U.S.C. and
Department of Commerce
[[Page 133]]
Administrative Order 205-12, ``Public Information,'' and ``Public
Information'' regulations issued by the Department of Commerce that are
contained in 15 CFR part 4, Subtitle A, the records, reports,
transcripts, minutes, appendices, working papers, draft, studies,
agenda, or other documents that were made available to or prepared for
or by each TAC will be available for public inspection and copying.
(2) Each TAC will prepare once each year a report describing its
membership, functions, activities, and such related matters as would be
informative to the public consistent with the policy of section 552(b)
of Title 5, U.S.C.
(3)(i) Requests for records should be addressed to: Bureau of Export
Administration, Freedom of Information, Records Inspection Facility,
U.S. Department of Commerce, Room 4513, Washington, DC 20230, Telephone
(202) 482-2593.
(ii) Rules concerning the use of the Records Inspection Facility are
contained in 15 CFR part 4, Subtitle A, or may be obtained from this
facility.
(i) Compensation. If the Department of Commerce deems it
appropriate, a member of a TAC may be reimbursed for travel,
subsistence, and other necessary expenses incurred in connection with
the member's duties.
(j) Scope of advisory committee functions. All TACs are limited to
the functions described in their charters.
(k) Duration of committees. Each TAC will terminate at the end of
two years from the date the committee was established or two years from
the effective date of its most recent extension, whichever is later.
Committees may be continued only for successive two-year periods by
appropriate action taken by the authorized officer of the Department of
Commerce prior to the date on which such advisory committee would
otherwise terminate. TACs may be extended or terminated only after
consultation with the committee.
(l) Miscellaneous. (1) TACs established in accordance with paragraph
(b) of this supplement must conform to the provisions of the Federal
Advisory Committee Act (Pub. L. 92-463), Office of Management and Budget
Circular A-63 (Revision of March 1974), ``Advisory Committee
Management,'' Department of Commerce Administrative Order 205-12,
``Public Information,'' the applicable provisions of the EAA, and any
other applicable Department of Commerce regulations or procedures
affecting the establishment or operation of advisory committees.
(2) Whenever the Department of Commerce desires the advice or
assistance of a particular segment of an industry with respect to any
export control problem for which the service of a TAC, as described in
paragraph (b) of this supplement is either unavailable or impracticable,
an advisory committee may be established pursuant to the provisions of
section 9 of the Federal Advisory Committee Act. Such committees will be
subject to the requirements of the Federal Advisory Committee Act, OMB
Circular A-63 (Revision of March 1974), ``Advisory Committee
Management,'' Department of Commerce Administrative Order 205-12,
``Public Information,'' and any other applicable Department of Commerce
regulations or procedures affecting the establishment or operation of
advisory committees.
(3) Nothing in the provisions of this supplement shall be construed
to restrict in any manner the right of any person or firm to discuss any
export control matter with the Department of Commerce or to offer advice
or information on export control matters. Similarly, nothing in these
provisions shall be construed to restrict the Department of Commerce in
consulting any person or firm relative to any export control matter.
Supplement No. 3 to Part 730--Other U.S. Government Departments and
Agencies With Export Control Responsibilities
Note: The departments and agencies identified with an asterisk
control exports for foreign policy or national security reasons and, in
certain cases, such controls may overlap with the controls described in
the EAR (see part 734 of the EAR).
Defense Services and Defense Articles
* Department of State, Office of Defense Trade Controls, Tel. (703) 875-
6644, Fax: (703) 875-6647.
22 CFR parts 120 through 130.
Drugs, Chemicals and Precursors
Drug Enforcement Administration, International Chemical Control Unit,
Tel. (202) 307-7202, Fax: (202) 307-8570.
21 CFR parts 1311 through 1313.
Controlled Substances: Drug Enforcement Administration, International
Drug Unit, Tel. (202) 307-2414, Fax: (202) 307-8570.
21 CFR 1311 through 1313.
Drugs and Biologics: Food and Drug Administration, Import/Export, Tel.
(301) 594-3150, Fax: (301) 594-0165.
21 U.S.C. 301 et seq.
Investigational drugs permitted: Food and Drug Administration,
International Affairs, Tel. (301) 443-4480, Fax: (301) 443-0235.
21 CFR 312.1106.
Fish and Wildlife Controls; Endangered Species
Department of the Interior, Chief Office of Management Authority,
Tel. (703) 358-2093, Fax: (703) 358-2280.
50 CFR 17.21, 17.22, 17.31, 17.32.
[[Page 134]]
Foreign Assets and Transactions Controls
* Department of Treasury, Office of Foreign Assets Control, Licensing,
Tel. (202) 622-2480, Fax: (202) 622-1657.
31 CFR parts 500 through 590.
Medical Devices
Food and Drug Administration, Office of Compliance, Tel. (301) 594-4699,
Fax: (301) 594-4715.
21 U.S.C. 301 et seq.
Natural Gas and Electric Power
Department of Energy, Office of Fuels Programs, Tel. (202) 586-9482,
Fax: (202) 586-6050.
10 CFR 205.300 through 205.379 and part 590.
Nuclear Materials and Equipment
* Nuclear Regulatory Commission, Office of International Programs, Tel.
(301) 415-2344, Fax: (301) 415-2395.
10 CFR part 110.
Nuclear Technology; Technical Data for Nuclear Weapons/Special Nuclear
Materials
* Department of Energy, Office of Arms Control and Non Proliferation,
Export Control Division, Tel. (202) 586-2112, Fax: (202) 586-6977.
10 CFR part 810.
Ocean Freight Forwarders
Federal Maritime Commission, Office of Freight Forwarders, Tel. (202)
523-5843, Fax: (202) 523-5830.
46 CFR part 510.
Patent Filing Data Sent Abroad
* Department of Commerce, Patent and Trademark Office, Licensing and
Review; Tel. (703) 308-1722, Fax: (703) 305-3603, 3604.
37 CFR part 5.
Prohibition of Movement of American Carriers and Prohibition on
Transportation of Goods Destined for North Korea
Department of Transportation, Office of International Law, General
Counsel, Tel. (202) 366-2972, Fax: (202) 366-9188.
44 CFR part 403.
U.S. Flagged or U.S. Manufactured Vessels Over 1,000 Gross Tons
U.S. Maritime Administration, Division of Vessel Transfer and Disposal,
Tel. (202) 366-5821, Fax: (202) 366-3889.
46 CFR part 221.
PART 732--STEPS FOR USING THE EAR--Table of Contents
Sec.
732.1 Steps overview.
732.2 Steps regarding scope of the EAR.
732.3 Steps regarding the ten general prohibitions.
732.4 Steps regarding License Exceptions.
732.5 Steps regarding Shipper's Export Declaration, Destination Control
Statements, record keeping, license applications, and other
requirements.
732.6 Steps for other requirements.
Supplement No. 1 to Part 732--BXA's ``Know Your Customer'' Guidance and
Red Flags
Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; E.O.
12924, 59 FR 43437, 3 CFR, 1994 Comp., p. 917; Executive Order 13026
(November 15, 1996, 61 FR 58767) Notice of August 15, 1995 (60 FR 42767,
August 17, 1995); and Notice of August 14, 1996 (61 FR 42527).
Source: 61 FR 12740, Mar. 25, 1996, unless otherwise noted.
Sec. 732.1 Steps overview.
(a)(1) Introduction. In this part, references to the EAR are
references to 15 CFR chapter VII, subchapter C. This part is intended to
help you determine your obligations under the EAR by listing logical
steps in Sec. 732.2 through Sec. 732.5 of this part that you can take in
reviewing these regulations. By cross-references to the relevant
provisions of the EAR, this part describes the suggested steps for you
to determine applicability of the following:
(i) The scope of the EAR (part 734 of the EAR);
(ii) Each of the general prohibitions (part 736 of the EAR);
(iii) The License Exceptions (part 740 of the EAR); and
(iv) Other requirements such as clearing your export with the U.S.
Customs Service, keeping records, and completing and documenting license
applications.
(2) These steps describe the organization of the EAR, the
relationship among the provisions of the EAR, and the appropriate order
for you to consider the various provisions of the EAR.
(b) Facts about your transaction. The following five types of facts
determine your obligations under the EAR and will be of help to you in
reviewing these steps:
(1) What is it? What an item is, for export control purposes,
depends on its classification, which is its place on the
[[Page 135]]
Commerce Control List (see part 774 of the EAR).
(2) Where is it going? The country of ultimate destination for an
export or reexport also determines licensing requirements (see parts 738
and 774 of the EAR concerning the Country Chart and the Commerce Control
List).
(3) Who will receive it? The ultimate end-user of your item cannot
be a bad end-user. See General Prohibition Four (Denial Orders) in
Sec. 736.2(b)(4) and parts 744 and 764 of the EAR for a reference to the
list of persons you may not deal with.
(4) What will they do with it? The ultimate end-use of your item
cannot be a bad end-use. See General Prohibition Five (End-Use End-User)
in Sec. 736.2(b)(5) and part 744 of the EAR for general end-use and end-
user restrictions.
(5) What else do they do? Conduct such as contracting, financing,
and freight forwarding in support of a proliferation project (as
described in Sec. 744.6 of the EAR) may prevent you from dealing with
someone.
(c) Are your items and activities subject to the EAR? You should
first determine whether your commodity, software, or technology is
subject to the EAR (see part 734 of the EAR concerning scope), and Steps
1 through 6 help you do that. For exports from the United States, only
Steps 1 and 2 are relevant. If you already know that your item or
activity is subject to the EAR, you should go on to consider the ten
general prohibitions in part 736 of the EAR. If your item or activity is
not subject to the EAR, you have no obligations under the EAR and may
skip the remaining steps.
(d) Does your item or activity require a license under one or more
of the ten general prohibitions? (1) Brief summary of the ten general
prohibitions. The general prohibitions are found in part 736 of the EAR
and referred to in these steps. They consist, very briefly, of the
following:
(i) General Prohibition One (Exports and Reexports): Export and
reexport of controlled items to listed countries.
(ii) General Prohibition Two (Parts and Components Reexports):
Reexport and export from abroad of foreign-made items incorporating more
than a de minimis amount of controlled U.S. content.
(iii) General Prohibition Three (Foreign-produced Direct Product
Reexports): Reexport and export from abroad of the foreign-produced
direct product of U.S. technology and software.
(iv) General Prohibition Four (Denial Orders): Engaging in actions
prohibited by a denial order.
(v) General Prohibition Five (End-Use End-User): Export or reexport
to prohibited end-user or end-users.
(vi) General Prohibition Six (Embargo): Export or reexport to
embargoed destinations.
(vii) General Prohibition Seven (U.S. Person Proliferation
Activity): Support of proliferation activities.
(viii) General Prohibition Eight (In-Transit): In-transit shipments
and items to be unladen from vessels and aircraft.
(ix) General Prohibition Nine (Orders, Terms and Conditions):
Violation of any orders, terms, or conditions.
(x) General Prohibition Ten (Knowledge Violation to Occur):
Proceeding with transactions with knowledge that a violation has
occurred or is about to occur.
(2) Controls on items on the Commerce Control List (CCL). If your
item or activity is subject to the EAR, you should determine whether any
one or more of the ten general prohibitions require a license for your
export, reexport, or activity. Steps 7 through 11 refer to
classification of your item on the Commerce Control List (CCL) (part 774
of the EAR) and how to use the Country Chart (Supplement No. 1 to part
738 of the EAR) to determine whether a license is required based upon
the classification of your item. These steps refer to General
Prohibitions One (Exports and Reexports), Two (Parts and Components
Reexports), and Three (Foreign-Produced Direct Product Reexports) for
all countries except: Cuba, Iran, Iraq, Libya, and North Korea. For
these countries, you may skip Steps 7 through 11 and go directly to Step
12.
(3) Controls on activities. Steps 12 through 18 refer to General
Prohibitions Four through Ten. Those general prohibitions apply to all
items subject
[[Page 136]]
to the EAR, not merely those items listed on the CCL in part 774 of the
EAR. For example, they refer to the general prohibitions for persons
denied export privileges, prohibited end-uses and end-users, embargoed
countries (e.g., Cuba, Iran, Iraq, Libya, and North Korea), prohibited
activities of U.S. persons in support of proliferation of weapons of
mass destruction, prohibited unlading of shipments, compliance with
orders, terms and conditions, and activities when a violation has
occurred or is about to occur.
(4) General prohibitions. If none of the ten general prohibitions
applies, you should skip the steps concerning License Exceptions and for
exports from the United States, review Steps 27 through 29 concerning
Shipper's Export Declarations to be filed with the U.S. Customs Service,
Destination Control Statements for export control documents, and
recordkeeping requirements.
(e) Is a License Exception available to overcome the license
requirement? If you decide by reviewing the CCL in combination with the
Country Chart that a license is required for your destination, you
should determine whether a License Exception will except you from that
requirement. Steps 20 through 24 help you determine whether a License
Exception is available. Note that generally License Exceptions are not
available to overcome General Prohibitions Four through Ten. However,
selected License Exceptions for embargoed destinations are specified in
part 746 of the EAR and License Exceptions for short supply controls are
specified in part 754 of the EAR. If a License Exception is available
and the export is from the United States, you should review Steps 26
through 28 concerning Shipper's Export Declarations to be filed with the
U.S. Customs Service, Destination Control Statements for export control
documents and recordkeeping requirements. If a License Exception is not
available, go on to Steps 25 through 29.
(f) How do you apply for a license? If you must file a license
application, you should review the requirements of part 748 of the EAR
as suggested by Step 26. Then you should review Steps 27 through 29
concerning Shipper's Export Declarations to be filed with the U.S.
Customs Service, Destination Control Statements for export control
documents, and recordkeeping requirements.
Sec. 732.2 Steps regarding scope of the EAR.
Steps 1 through 6 aid you in determining the scope of the EAR.
(a) Step 1: Items subject to the exclusive jurisdiction of another
Federal agency. This step is relevant for both exports and reexports.
Determine whether your item is subject to the exclusive jurisdiction of
another Federal Agency as provided in Sec. 734.3 of the EAR.
(1) If your item is subject to the exclusive jurisdiction of another
Federal agency, comply with the regulations of that agency. You need not
comply with the EAR and may skip the remaining steps.
(2) If your item is not subject to the exclusive jurisdiction of
another federal agency, then proceed to Step 2 in paragraph (b) of this
section.
(b) Step 2: Publicly available technology and software. This step is
relevant for both exports and reexports. Determine if your technology or
software is publicly available as defined and explained at part 734 of
the EAR. Supplement No. 1 to part 734 of the EAR contains several
practical examples describing publicly available technology and software
that is outside the scope of the EAR. The examples are illustrative, not
comprehensive. Note that encryption software controlled for EI reasons
under ECCN 5D002 on the Commerce Control List (refer to Supplement No.1
to part 774 of the EAR) shall be subject to the EAR even if publicly
available. Accordingly, the provisions of the EAR concerning the public
availability of items are not applicable to encryption items controlled
for ``EI'' reasons under ECCN 5D002.
(1) If your technology or software is publicly available, and
therefore outside the scope of the EAR, you may proceed with the export
or reexport. You have no obligations under the EAR and need not comply
with the EAR. You may skip the remaining steps.
(2) If your technology or software is not publicly available and you
are exporting from the United States, skip to
[[Page 137]]
Step 7 in Sec. 732.3(b) of this part concerning the general
prohibitions.
(3) If you are exporting items from a foreign country, you should
then proceed to Step 3 in paragraph (c) of this section and the other
steps concerning the scope of the EAR.
(c) Step 3: Reexport of U.S.-origin items. This step is appropriate
only for reexporters. For an item in a foreign country, you should
determine whether the item is of U.S. origin. If it is of U.S.-origin,
skip to Step 7 in Sec. 732.3(b) of this part. If it is not of U.S.
origin, then proceed to Step 4 in paragraph (d) of this section.
(d) Step 4: Foreign-made items incorporating less than the de
minimis level of U.S. parts, components, and materials. This step is
appropriate only for items that are made outside the United States. Note
that encryption items controlled for EI reasons under ECCN 5A002 or ECCN
5D002 on the Commerce Control List (refer to Supplement No.1 to part 774
of the EAR) shall be subject to the EAR even if they incorporate less
than the de minimis level of U.S. content. Accordingly, the provisions
of the EAR concerning de minimis levels are not applicable to encryption
items controlled for ``EI'' reasons under ECCN 5A002, ECCN 5D002, or
ECCN 5E002.
(1) For an item made in a foreign country, you should determine
whether controlled U.S.-origin parts, components, or materials are
incorporated as provided in Sec. 734.4 of the EAR. Also, determine the
value of the U.S.-origin controlled content as provided in Supplement
No. 2 to part 734 of the EAR.
(2) To determine the value of the U.S.-origin controlled content,
you should classify the U.S.-origin content on the CCL, determine those
items that would require a license from BXA for reexport to the ultimate
destination of the foreign-made product if such parts, components, or
materials were reexported to that destination in the form received, and
divide the total value of the controlled U.S. parts, components, and
materials incorporated into the foreign-made item by the sale price of
the foreign-made item.
(3) If no U.S. parts, components, or materials are incorporated or
if the incorporated U.S. parts, components, and materials are below the
de minimis level described in Sec. 734.4 of the EAR, then the foreign-
made item is not subject to the EAR by reason of the parts and
components rule, the classification of a foreign-made item is irrelevant
in determining the scope of the EAR, and you should skip Step 4 and go
on to consider Step 5 regarding the foreign-produced direct product
rule.
(4) If controlled parts, components, or materials are incorporated
and are above the de minimis level, then you should go on to Step 5.
(e) Step 5: Foreign-made items incorporating more than the de
minimis level of U.S. parts, components, or materials. This step is
appropriate only for foreign-made items incorporating certain U.S.
parts. If the incorporated U.S. parts exceed the relevant de minimis
level, then your export from abroad is subject to the EAR. You then
should skip to Step 7 at Sec. 732.3 of this part and consider the steps
regarding all other general prohibitions, License Exceptions, and other
requirements.
(f) Step 6: Foreign-made items produced with certain U.S. technology
for export to specified destinations. This step is appropriate for
foreign-made items in foreign countries.
(1) If your foreign-produced item is described in an entry on the
CCL and the Country Chart requires a license to your export or reexport
destination for national security reasons, you should determine whether
your item is subject to General Prohibition Three (Foreign-Produced
Direct Product Reexports) (Sec. 736.2(b)(3) of the EAR). Your item is
subject to the EAR if it is captured by General Prohibition Three
(Foreign-Produced Direct Product Reexports), and that prohibition
applies if your transaction meets each of the following conditions:
(i) Country scope of prohibition. Your export or reexport
destination for the direct product is Cuba, North Korea, Libya, or a
destination in Country Group D:1 (see Supplement No. 1 to part 740 of
the EAR) (reexports of foreign-produced direct products exported to
other destinations are not subject to General Prohibition Three);
(ii) Scope of technology or software used to create direct products
subject to the prohibition. Technology or software
[[Page 138]]
that was used to create the foreign-produced direct product, and such
technology or software that was subject to the EAR and required a
written assurance as a supporting document for a license or as a
precondition for the use of License Exception TSR in Sec. 740.6 of the
EAR (reexports of foreign-produced direct products created with other
technology and software are not subject to General Prohibition Three);
and
(iii) Scope of direct products subject to the prohibition. The
foreign-produced direct products are subject to national security
controls as designated on the proper ECCN of the Commerce Control List
in part 774 of the EAR (reexports of foreign-produced direct products
not subject to national security controls are not subject to General
Prohibition Three).
(2) License Exceptions. Each License Exception described in part 740
of the EAR overcomes this General Prohibition Three if all terms and
conditions of a given License Exception are met by the exporter or
reexporter.
(3) Subject to the EAR. If your item is captured by the foreign-
produced direct product control at General Prohibition Three, then your
export from abroad is subject to the EAR. You should next consider the
steps regarding all other general prohibitions, License Exceptions, and
other requirements. If your item is not captured by General Prohibition
Three, then your export from abroad is not subject to the EAR. You have
completed the steps necessary to determine whether your transaction is
subject to the EAR, and you may skip the remaining steps. Note that in
summary, items in foreign countries are subject to the EAR when they
are:
(i) U.S.-origin commodities, software and technology unless
controlled for export exclusively by another Federal agency or unless
publicly available;
(ii) Foreign-origin commodities, software, and technology that are
within the scope of General Prohibition Two (Parts and Components
Reexports), or General Prohibition Three (Foreign-Produced Direct
Product Reexports). (However, such foreign-made items are also outside
the scope of the EAR if they are controlled for export exclusively by
another Federal agency or unless publicly available.)
[61 FR 12740, Mar. 25, 1996, as amended at 61 FR 64274, Dec. 4, 1996; 61
FR 68577, Dec. 30, 1996]
Sec. 732.3 Steps regarding the ten general prohibitions.
(a) Introduction. If your item or activity is subject to the scope
of the EAR, you should then consider each of the ten general
prohibitions listed in part 736 of the EAR. General Prohibitions One
((Exports and Reexports), Two (Parts and Components Reexports), and
Three (Foreign-Produced Direct Product Reexports) (Sec. 736.2(b) (1),
(2), and (3) of the EAR) are product controls that are shaped and
limited by parameters specified on the CCL and Country Chart. General
Prohibitions Four through Ten are prohibitions on certain activities
that are not allowed without authorization from BXA, and these
prohibitions apply to all items subject to the EAR unless otherwise
specified (Sec. 736.2(b) (4) through (10) of the EAR).
(b) Step 7: Classification. (1) You should classify your items in
the relevant entry on the CCL, and you may do so on your own without the
assistance of BXA. You are responsible for doing so correctly, and your
failure to correctly classify your items does not relieve you of the
obligation to obtain a license when one is required by the EAR.
(2) You have a right to request the applicable classification of
your item from BXA, and BXA has a duty to provide that classification to
you. For further information on how to obtain classification assistance
from BXA, see part 748 of the EAR.
(3) For items subject to the EAR but not listed on the CCL, the
proper classification is EAR99. This number is a ``basket'' for items
not specified under any CCL entry and appears at the end of each
Category on the CCL.
(c) Step 8: Country of ultimate destination. You should determine
the country of ultimate destination. The country of destination
determines the applicability of several general prohibitions, License
Exceptions, and other requirements. Note that part 754 of the EAR
concerning short supply controls is
[[Page 139]]
self-contained and is the only location in the EAR that contains both
the prohibitions and exceptions applicable to short supply controls.
(d) Step 9: Reason for control and the Country Chart. (1) Reason for
control and column identifier within the Export Control Classification
Number (ECCN). Once you have determined that your item is controlled by
a specific ECCN, you must use information contained in the ``License
Requirements'' section of that ECCN in combination with the Country
Chart to decide whether a license is required under General Prohibitions
One, Two, or Three to a particular destination. The CCL and the Country
Chart are taken together to define these license requirements. The
applicable ECCN will indicate the reason or reasons for control for
items within that ECCN. For example, ECCN 6A007 is controlled for
national security, missile technology, and anti-terrorism reasons.
(2) Reason for control within the Country Chart. With each of the
applicable Country Chart column identifiers noted in the correct ECCN,
turn to the Country Chart. Locate the correct Country Chart column
identifier on the horizontal axis, and determine whether an ``X'' is
marked in the cell next to the destination in question. Consult
Sec. 738.4 of the EAR for comprehensive instructions on using the
Country Chart and a detailed example.
(i) An ``X'' in the cell or cells for the relevant country and
reason(s) for control column indicates that a license is required for
General Prohibitions One (Exports and Reexports in the Form Received),
Two (Parts and Components Reexports), and Three (Foreign-Produced Direct
Product Reexports). (See Sec. 736.2 (b)(1), (b)(2), and (b)(3) of the
EAR).
(ii) If one or more cells have an ``X'' in the relevant column, a
license is required unless you qualify for a License Exception described
in part 740 of the EAR. If a cell does not contain an ``X'' for your
destination in one or more relevant columns, a license is not required
under the CCL and the Country Chart.
(iii) Additional controls may apply to your export. You must go on
to steps 12 through 18 described in paragraphs (g) to (m) of this
section to determine whether additional limits described in General
Prohibition Two (Parts and Components Reexports) and General Prohibition
Three (Foreign-Produced Direct Product Reexports ) apply to your
proposed transaction. If you are exporting an item from the United
States, you should skip Step 10 and Step 11. Proceed directly to Step 12
in paragraph (g) of this section.
(3) License requirements not on the Country Chart. There are two
instances where the Country Chart cannot be used to determine if a
license is required. Items controlled for short supply reasons are not
governed by the Country Chart. Part 754 of the EAR contains license
requirements and License Exceptions for items subject to short supply
controls. A limited number of ECCNs contained on the CCL do not identify
a Country Chart column identifier. In these instances, the ECCN states
whether a license is required and for which destinations. See
Sec. 738.3(a) of the EAR for a list of the ECCNs for which you do not
need to consult the Country Chart to determine licensing requirements.
(4) Destinations subject to embargo provisions. The Country Chart
does not apply to Cuba, Iran, Iraq, Libya, and North Korea; and for
those countries you should review the embargo provisions at part 746 of
the EAR and may skip this step concerning the Country Chart. For Angola,
Bosnia-Herzegovina, Croatia, Rwanda, and Serbia and Montenegro the
Country Chart provides for certain license requirements, and part 746 of
the EAR provides additional requirements.
(5) Items subject to the EAR but not on the CCL. Items subject to
the EAR that are not on the CCL are properly classified EAR99. For such
items, you may skip this step and proceed directly with Step 12 in
paragraph (g) of this section.
(e) Step 10: Foreign-made items incorporating U.S.-origin items and
the de minimis rule. (1) Parts and components rule. The following
considerations are appropriate for items abroad and are the same steps
necessary to determine whether a foreign-made item incorporating U.S.
parts, components, or materials is subject to the EAR. If your foreign-
made item is described in
[[Page 140]]
an entry on the CCL and the Country Chart requires a license to your
export or reexport destination, you should determine whether the
controlled U.S.-origin commodities, software, or technology incorporated
into the foreign-made item exceeds the de minimis level applicable to
the ultimate destination of the foreign-made item, as follows:
(i) A 10% de minimis level to embargoed and terrorist-supporting
countries; or
(ii) A 25% de minimis level to all other countries.
(2) Guidance for calculations. For guidance on how to calculate the
U.S.-controlled content, refer to Supplement No. 2 to part 734 of the
EAR. Note that certain rules issued by the Office of Foreign Assets
Control, certain exports from abroad by U.S.-owned or controlled
entities may be prohibited notwithstanding the de minimis provisions of
the EAR. In addition, the de minimis exclusions from the parts and
components rule do not relieve U.S. persons of the obligation to refrain
from supporting the proliferation of weapons of mass-destruction and
missiles as provided in General Prohibition Seven (U.S. Person
Proliferation Activity) described in Sec. 736.2(b)(7) of the EAR. Note
that encryption items controlled for EI reasons under ECCN 5A002 or ECCN
5D002 on the Commerce Control List (refer to Supplement No.1 to part 774
of the EAR) shall be subject to the EAR even if they incorporate less
than the de minimis level of U.S. content. Accordingly, the provisions
of the EAR concerning de minimis levels are not applicable to encryption
items controlled for ``EI'' reasons under ECCN 5A002, ECCN 5D002, or
ECCN 5E002.
(f) Step 11: Foreign-produced direct product. The following
considerations are appropriate for items abroad and are the same
considerations necessary to determine whether a foreign-produced direct
product is subject to the EAR under Step 6 in Sec. 732.2(f) of this
part.
(1) If your foreign-produced item is described in an entry on the
CCL and the Country Chart requires a license to your export or reexport
destination for national security reasons, you must determine whether
your item is subject to General Prohibition Three (Foreign-Produced
Direct Product Reexports) (Sec. 736.2(b)(3) of the EAR). Your item is
subject to this general prohibition if your transaction meets each of
the following conditions:
(i) Country scope of prohibition. Your export or reexport
destination for the direct product is Cuba, Libya, North Korea, or a
destination in Country Group D:1 (see Supplement No. 1 to part 740 of
the EAR) (reexports of foreign-produced direct products exported to
other destinations are not subject to General Prohibition Three
described in Sec. 736.2(b)(3) of the EAR);
(ii) Scope of technology or software used to create direct products
subject to the prohibition. Technology or software that was used to
create the foreign-produced direct product, and such technology or
software that was subject to the EAR and required a written assurance as
a supporting document for a license or as a precondition for the use of
License Exception TSR in Sec. 740.6 of the EAR (reexports of foreign-
produced direct products created with other technology and software are
not subject to General Prohibition Three); and
(iii) Scope of direct products subject to the prohibition. The
foreign-produced direct products are controlled for national security
reasons indicated in an ECCN on the CCL (reexports of foreign-produced
direct products not subject to national security controls are not
subject to General Prohibition Three).
(2) License Exceptions. Each License Exception described in part 740
of the EAR overcomes General Prohibition Three (Foreign-Produced Direct
Product Reexports) if all terms and conditions of a given License
Exception are met by the exporter or reexporter.
(g) Step 12: Persons denied export privileges. (1) Determine whether
your transferee, ultimate end-user, any intermediate consignee, or any
other party to a transaction is a person denied export privileges. (See
part 764 of the EAR). While it is not a violation of General Prohibition
Four (Denial Orders) (Sec. 736.2(b)(4) of the EAR) to fail to check the
Denied Persons List prior to a transfer, it is nonetheless a violation
of the EAR to engage in any activity that violates the terms or
conditions of a denial order. General Prohibition Four (Denial Orders)
applies to all
[[Page 141]]
items subject to the EAR, i.e. both items on the CCL and within EAR99.
(2) There are no License Exceptions to General Prohibition Four
(Denial Orders). The prohibition concerning persons denied export
privileges may be overcome only by a specific authorization from BXA,
something that is rarely granted.
(h) STEP 13: Prohibited end-uses and end-users. (1) Review the end-
uses and end-users prohibited under General Prohibition Five (End-Use
and End-User) (Sec. 736.2(b)(5) of the EAR) described in part 744 of the
EAR. Part 744 of the EAR contains all the end-use and end-user license
requirements, and those are in addition to the license requirements
under General Prohibitions One (Exports and Reexports), Two (Parts and
Components Reexports), and Three (Foreign-produced Direct Product
Reexports). Unless otherwise indicated, the license requirements of
General Prohibition Five (End-Use and End-User) described in part 744 of
the EAR apply to all items subject to the EAR, i.e. both items on the
CCL and within EAR99. Moreover, the requirements of General Prohibition
Five (End-Use and End-User) are in addition to various end-use and end-
user limitations placed on certain License Exceptions.
(2) There are no License Exceptions to General Prohibition Five
(End-Use and End-User) (Sec. 736.2(b)(5) of the EAR) described in part
740 of the EAR.
(i) Step 14: Embargoed countries and special destinations. If your
destination for any item is Bosnia-Herzegovina, Croatia, Cuba, Iran,
Iraq, Libya, North Korea, Rwanda, or Serbia and Montenegro, you must
consider the requirements of part 746 of the EAR. Unless otherwise
indicated, General Prohibition Six (Embargo) applies to all items
subject to the EAR, i.e. both items on the CCL and within EAR99. You may
not make an export or reexport contrary to the provisions of part 746 of
the EAR without a license unless:
(1) You are exporting or reexporting only publicly available
technology or software or other items outside the scope of the EAR, or
(2) You qualify for a License Exception referenced in part 746 of
the EAR concerning embargoed destinations. You may not use a License
Exception described in part 740 of the EAR to overcome General
Prohibition Six (Embargo) (Sec. 736.2(b)(6) of the EAR) unless it is
specifically authorized in part 746 of the EAR. Note that part 754 of
the EAR concerning short supply controls is self-contained and is the
only location in the EAR for both the prohibitions and exceptions
applicable to short supply controls.
(j) Step 15: Proliferation activity of U.S. persons unrelated to
exports and reexports. (1) Review the scope of activity prohibited by
General Prohibition Seven (U.S. Person Proliferation Activity)
(Sec. 736.2(b)(7) of the EAR) as that activity is described in
Sec. 744.6 of the EAR. Keep in mind that such activity is not limited to
exports and reexports and is not limited to items subject to General
Prohibition One (Exports and Reexports), Two (Parts and Components
Reexports), and Three (Foreign-Produced Direct Product Reexports).
Moreover, such activity extends to services and dealing in wholly
foreign-origin items in support of the specified proliferation activity
and is not limited to items listed on the CCL or included in EAR99.
(2) Review the definition of U.S. Person in part 744 of the EAR.
(k) Step 16: In-transit. Shippers and operators of vessels or
aircraft should review General Prohibition Eight (In-Transit) to
determine the countries in which you may not unladen or ship certain
items in-transit. General Prohibition Eight applies to all items subject
to the EAR, i.e. both items on the CCL and within EAR99.
(l) Step 17: Review orders, terms, and conditions. Review the
orders, terms, and conditions applicable to your transaction. General
Prohibition Nine (Orders, Terms, and Conditions) prohibits the violation
of any orders, terms, and conditions imposed under the EAR. Terms and
conditions are frequently contained in licenses. In addition, the ten
general prohibitions (part 736 of the EAR) and the License Exceptions
(part 740 of the EAR) impose terms and conditions or limitations on your
proposed transactions and use of License Exceptions. A given license or
License Exception may not be used unless each relevant term or condition
is met.
[[Page 142]]
(m) Step 18: Review the ``Know Your Customer'' Guidance and General
Prohibition Ten (Knowledge Violation to Occur). License requirements
under the EAR are determined solely by the classification, end-use, end-
user, ultimate destination, and conduct of U.S. persons. Supplement No.
1 to part 732 of the EAR is intended to provide helpful guidance
regarding the process for the evaluation of information about customers,
end-uses, and end-users. General Prohibition Ten (Knowledge Violation to
Occur) prohibits anyone from proceeding with a transaction with
knowledge that a violation of the EAR has occurred or is about to occur.
It also prohibits related shipping, financing, and other services.
General Prohibition Ten applies to all items subject to the EAR, i.e.
both items on the CCL and within EAR99.
(n) Step 19: Complete the review of the general prohibitions. After
completion of Steps described in this section and review of all ten
general prohibitions in part 736 of the EAR, including cross-referenced
regulations in the EAR, you will know which, if any, of the ten general
prohibitions of the EAR apply to you and your contemplated transaction
or activity.
(1) If none of the ten general prohibitions is applicable to your
export from the United States, no license from BXA is required, you do
not need to qualify for a License Exception under part 740 of the EAR.
You should skip the Steps in Sec. 732.4 of this part regarding License
Exceptions and proceed directly to the Steps in Sec. 732.5 of this part
regarding recordkeeping, clearing the U.S. Customs Service with the
appropriate Shipper's Export Declaration, and using the required
Destination Control Statement.
(2) If none of the ten general prohibitions is applicable to your
reexport or export from abroad, no license is required and you should
skip all remaining Steps.
(3) If one or more of the ten general prohibitions are applicable,
continue with the remaining steps.
[61 FR 12740, Mar. 25, 1996, as amended at 61 FR 64274, Dec. 4, 1996; 61
FR 68577, Dec. 30, 1996]
Sec. 732.4 Steps regarding License Exceptions.
(a) Introduction to Steps for License Exceptions. If your export or
reexport is subject to the EAR and is subject to General Prohibitions
One (Exports and Reexports), Two (Parts and Components Reexports), or
Three (Foreign-Produced Direct Product Reexports), consider the steps
listed in paragraph (b) of this section. If your export or reexport is
subject to General Prohibitions Four (Denial Orders), Seven (U.S. Person
Proliferation Activity), Eight (In-Transit), Nine (Orders, Terms, and
Conditions), or Ten (Knowledge Violation to Occur), there are no License
Exceptions available for your export or reexport. If your export is
subject to General Prohibition Five (End-Use End-User), consult part 744
of the EAR. If your export or reexport is subject to General Prohibition
Six (Embargo), consult part 746 of the EAR for applicable License
Exceptions.
(b) Steps for License Exceptions. (1) Step 20: Applicability of
General Prohibitions. Determine whether any one or more of the general
prohibitions described in Sec. 736.2(b) of the EAR apply to your export
or reexport. If no general prohibition applies to your export or
reexport, then you may proceed with your export or reexport and need not
review part 740 of the EAR regarding License Exceptions. You are
reminded of your recordkeeping obligations related to the clearance of
the U.S. Customs Service provided in parts 762 and 758 of the EAR.
(2) Step 21: Applicability of restrictions on all License
Exceptions. Determine whether any one or more of the restrictions in
Sec. 740.2 of the EAR applies to your export or reexport. If any one or
more of these restrictions apply, there are no License Exceptions
available to you, and you must either obtain a license or refrain from
the export or reexport.
(3) Step 22: Terms and conditions of the License Exceptions. (i) If
none of the restrictions in Sec. 740.2 of the EAR applies, then review
each of the License Exceptions to determine whether any one of them
authorizes your export or reexport. Eligibility for License Exceptions
is based on the item, the country of ultimate destination, the end-use,
and
[[Page 143]]
the end-user, along with any special conditions imposed within a
specific License Exception.
(ii) You may meet the conditions for more than one License
Exception. Moreover, although you may not qualify for some License
Exceptions you may qualify for others. Review the broadest License
Exceptions first, and use any License Exception available to you. You
are not required to use the most restrictive applicable License
Exception. If you fail to qualify for the License Exception that you
first consider, you may consider any other License Exception until you
have determined that no License Exception is available.
(iii) License Exceptions TMP, RPL, BAG, AVS, GOV, and TSU authorize
exports notwithstanding the provisions of the CCL. List-based License
Exceptions (LVS, GBS, CIV, TSR, and CTP) are available only to the
extent specified on the CCL. Part 740 of the EAR provides authorization
for reexports only to the extent each License Exception expressly
authorizes reexports. License Exception APR authorizes reexports only.
(4) Step 23: Scope of License Exceptions. Some License Exceptions
are limited by country or by type of item.
(i) Countries are arranged in country groups for ease of reference.
For a listing of country groups, please refer to Supplement No. 1 to
part 740 of the EAR. Unless otherwise indicated in a License Exception,
License Exceptions do not apply to any exports or reexports to embargoed
destinations. If your export or reexport is subject to General
Prohibition Six (Embargo) for embargoed destinations, License Exceptions
are only available to the extent specifically provided in part 746 of
the EAR concerning embargoed destinations.
(ii) Special commodity controls apply to short supply items. No
License Exceptions described in part 740 of the EAR may be used for
items listed on the CCL as controlled for Short Supply reasons. License
Exceptions for short supply items are found in part 754 of the EAR.
(5) Step 24: Compliance with all terms and conditions. If a License
Exception is available, you may proceed with your export or reexport.
However, you must meet all the terms and conditions required by the
License Exception that you determined authorized your export or
reexport. You must also consult part 758 and 762 of the EAR to determine
your recordkeeping and documentation requirements.
(6) Step 25: License requirements. If no License Exception is
available, then you must either obtain a license before proceeding with
your export or reexport or you must refrain from the proposed export or
reexport.
(7) Step 26: License applications. If you are going to file a
license application with BXA, you should first review the requirements
at part 748 of the EAR. Exporters, reexporters, and exporters from
abroad should review the instructions concerning applications and
required support documents prior to submitting an application for a
license.
[61 FR 12740, Mar. 25, 1996, as amended at 61 FR 64274, Dec. 4, 1996]
Sec. 732.5 Steps regarding Shipper's Export Declaration, Destination Control Statements, record keeping, license applications, and other requirements.
(a) Step 27--Shipper's Export Declaration. You should review
Sec. 758.3 of the EAR to determine what notations you must enter on the
Shipper's Export Declaration (SED). These steps should be reviewed by
exporters. Reexporters and firms exporting from abroad may skip Steps 27
through 29 and proceed directly to Sec. 732.6 of this part.
(1) NLR. The term ``NLR'' represents exports of listed items when no
license is required. Such exports do not require that you qualify for a
License Exception. The symbol ``NLR'' is required on the SED under two
circumstances. First, NLR is the correct symbol when exporting an item
subject to the EAR not listed on the CCL. Such items are classified
EAR99. Secondly, certain items are listed on the CCL but do not require
a license to all destinations under General Prohibitions One (Exports
and Reexports in the Form Received), Two (Parts and Components
Reexports), or Three (Foreign-Produced Direct Product Reexports)
(Sec. 736.2 (b)(1), (b)(2), or (b)(3) of the EAR). Such
[[Page 144]]
items do not have an ``X'' in the appropriate cell on the Country Chart.
If General Prohibitions Four through Ten (Sec. 736.2 (b)(4) of the EAR)
through (b)(10) of the EAR) also do not apply, you must clear exports of
such items by entering the symbol ``NLR'' in the appropriate place on
the SED.
(2) License Exception symbol. You must enter on any required SED the
letter code (e.g., LVS, TMP) of the License Exceptions under which you
are exporting. In the case of License Exceptions LVS, GBS, and CIV, the
ECCN of the item being exported must also be entered when an SED is
required. Please refer to Sec. 758.3 of the EAR for detailed information
on use of SEDs.
(3) License number. If you are exporting under a license, enter the
license number on the SED as required by Sec. 758.3 of the EAR.
(b) Step 28: Destination Control Statement. You are required to
enter an appropriate Destination Control Statement (DCS) on commercial
documents in accordance with the DCS requirements of Sec. 758.6 of the
EAR. Exporters should review Sec. 758.6 of the EAR and use the DCS as
required. Reexporters and exporters from abroad should review Sec. 752.6
for DCS requirements when using a Special Comprehensive License.
Otherwise, DCS requirements do not apply to reexports and exports from
abroad.
(c) Step 29: Recordkeeping. Records of transactions involving
exports under any license or License Exception must be maintained in
accordance with the recordkeeping requirements of part 762 of the EAR.
[61 FR 12740, Mar. 25, 1996, as amended at 61 FR 64274, Dec. 4, 1996]
Sec. 732.6 Steps for other requirements.
Sections 732.1 through 732.4 of this part are useful in determining
the license requirements that apply to you. Other portions of the EAR
impose other obligations and requirements. Some of them are:
(a) Requirements relating to the use of a license in Sec. 758.2 of
the EAR.
(b) Obligations of carriers, forwarders, exporters and others to
take specific steps and prepare and deliver certain documents to assure
that items subject to the EAR are delivered to the destination to which
they are licensed or authorized by a License Exception or some other
provision of the regulations in Sec. 758.4 through Sec. 758.6 of the
EAR.
(c) Duty of carriers to return or unload shipments at the direction
of U.S. Government officials (see Sec. 758.8 of the EAR).
(d) Specific obligations imposed on parties to Special Comprehensive
licenses in part 752 of the EAR.
(e) Recordkeeping requirements imposed in part 762 of the EAR.
(f) Requirements of part 764 of the EAR to disclose facts that may
come to your attention after you file a license application or make
other statements to the government concerning a transaction or proposed
transaction that is subject to the EAR.
(g) Certain obligations imposed by part 760 of the EAR on parties
who receive requests to take actions related to foreign boycotts and
prohibits certain actions relating to those boycotts.
Supplement No. 1 to Part 732--BXA's ``Know Your Customer'' Guidance and
Red Flags
``Know Your Customer'' Guidance
Various requirements of the EAR are dependent upon a person's
knowledge of the end-use, end-user, ultimate destination, or other facts
relating to a transaction or activity. These provisions include the
nonproliferation-related ``catch-all'' sections and the prohibition
against proceeding with a transaction with knowledge that a violation of
the EAR has occurred or is about to occur.
(a) BXA provides the following guidance on how individuals and firms
should act under this knowledge standard. This guidance does not change
or interpret the EAR.
(1) Decide whether there are ``red flags''. Take into account any
abnormal circumstances in a transaction that indicate that the export
may be destined for an inappropriate end-use, end-user, or destination.
Such circumstances are referred to as ``red flags''. Included among
examples of red flags are orders for items that are inconsistent with
the needs of the purchaser, a customer declining installation and
testing when included in the sales price or when normally requested, or
requests for equipment configurations that are incompatible with the
stated destination (e.g., 120 volts in a country with 220 volts).
Commerce has developed lists of such red flags that are not all-
inclusive but are intended to illustrate the types
[[Page 145]]
of circumstances that should cause reasonable suspicion that a
transaction will violate the EAR.
(2) If there are ``red flags'', inquire. If there are no ``red
flags'' in the information that comes to your firm, you should be able
to proceed with a transaction in reliance on information you have
received. That is, absent ``red flags'' (or an express requirement in
the EAR), there is no affirmative duty upon exporters to inquire,
verify, or otherwise ``go behind'' the customer's representations.
However, when ``red flags'' are raised in information that comes to your
firm, you have a duty to check out the suspicious circumstances and
inquire about the end-use, end-user, or ultimate country of destination.
The duty to check out ``red flags'' is not confined to the use of
License Exceptions affected by the ``know'' or ``reason to know''
language in the EAR. Applicants for licenses are required by part 748 of
the EAR to obtain documentary evidence concerning the transaction, and
misrepresentation or concealment of material facts is prohibited, both
in the licensing process and in all export control documents. You can
rely upon representations from your customer and repeat them in the
documents you file unless red flags oblige you to take verification
steps.
(3) Do not self-blind. Do not cut off the flow of information that
comes to your firm in the normal course of business. For example, do not
instruct the sales force to tell potential customers to refrain from
discussing the actual end-use, end-user, and ultimate country of
destination for the product your firm is seeking to sell. Do not put on
blinders that prevent the learning of relevant information. An
affirmative policy of steps to avoid ``bad'' information would not
insulate a company from liability, and it would usually be considered an
aggravating factor in an enforcement proceeding.
(4) Employees need to know how to handle ``red flags''. Knowledge
possessed by an employee of a company can be imputed to a firm so as to
make it liable for a violation. This makes it important for firms to
establish clear policies and effective compliance procedures to ensure
that such knowledge about transactions can be evaluated by responsible
senior officials. Failure to do so could be regarded as a form of self-
blinding.
(5) Reevaluate all the information after the inquiry. The purpose of
this inquiry and reevaluation is to determine whether the ``red flags''
can be explained or justified. If they can, you may proceed with the
transaction. If the ``red flags'' cannot be explained or justified and
you proceed, you run the risk of having had ``knowledge'' that would
make your action a violation of the EAR.
(6) Refrain from the transaction or advise BXA and wait. If you
continue to have reasons for concern after your inquiry, then you should
either refrain from the transaction or submit all the relevant
information to BXA in the form of an application for a validated license
or in such other form as BXA may specify.
(b) Industry has an important role to play in preventing exports and
reexports contrary to the national security and foreign policy interests
of the United States. BXA will continue to work in partnership with
industry to make this front line of defense effective, while minimizing
the regulatory burden on exporters. If you have any question about
whether you have encountered a ``red flag'', you may contact the Office
of Export Enforcement at 1-800-424-2980 or the Office of Exporter
Services at (202) 482-4532.
Red Flags
Possible indicators that an unlawful diversion might be planned by
your customer include the following:
1. The customer or purchasing agent is reluctant to offer
information about the end-use of a product.
2. The product's capabilities do not fit the buyer's line of
business; for example, a small bakery places an order for several
sophisticated lasers.
3. The product ordered is incompatible with the technical level of
the country to which the product is being shipped. For example,
semiconductor manufacturing equipment would be of little use in a
country without an electronics industry.
4. The customer has little or no business background.
5. The customer is willing to pay cash for a very expensive item
when the terms of the sale call for financing.
6. The customer is unfamiliar with the product's performance
characteristics but still wants the product.
7. Routine installation, training or maintenance services are
declined by the customer.
8. Delivery dates are vague, or deliveries are planned for out-of-
the-way destinations.
9. A freight forwarding firm is listed as the product's final
destination.
10. The shipping route is abnormal for the product and destination.
11. Packaging is inconsistent with the stated method of shipment or
destination.
12. When questioned, the buyer is evasive or unclear about whether
the purchased product is for domestic use, export or reexport.
PART 734--SCOPE OF THE EXPORT ADMINISTRATION REGULATIONS--Table of Contents
Sec.
734.1 Introduction.
734.2 Important EAR terms and principles.
734.3 Items subject to the EAR.
734.4 De minimis U.S. content.
[[Page 146]]
734.5 Activities of U.S. and foreign persons subject to the EAR.
734.6 Assistance available from BXA for determining licensing and other
requirements.
734.7 Published information and software.
734.8 Information resulting from fundamental research.
734.9 Educational information.
734.10 Patent applications.
734.11 Government-sponsored research covered by contract controls.
734.12 Effect on foreign laws and regulations.
Supplement No. 1 to Part 734--Questions and Answers--Technology and
Software Subject to the EAR
Supplement No. 2 to Part 734--Calculation of Values for De Minimus Rules
Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; E.O.
12924, 59 FR 43437, 3 CFR, 1994 Comp., p. 917; E.O. 12938, 59 FR 59099,
3 CFR, 1994 Comp., p. 950; Executive Order 13026 (November 15, 1996, 61
FR 58767); Notice of August 15, 1995 (60 FR 42767, August 17, 1995); and
Notice of August 14, 1996 (61 FR 42527).
Source: 61 FR 12746, Mar. 25, 1996, unless otherwise noted.
Sec. 734.1 Introduction.
(a) In this part, references to the Export Administration
Regulations (EAR) are references to 15 CFR chapter VII, subchapter C.
This part describes the scope of the Export Administration Regulations
(EAR) and explains certain key terms and principles used in the EAR.
This part provides the rules you need to use to determine whether items
and activities are subject to the EAR. This part is the first step in
determining your obligations under the EAR. If your item or activity is
not subject to the EAR, then you do not have any obligations under the
EAR and you do not need to review other parts of the EAR. If you already
know that your item or activity is subject to the EAR, you do not need
to review this part and you can go on to review other parts of the EAR
to determine your obligations. This part also describes certain key
terms and principles used in the EAR. Specifically, it includes the
following terms: ``subject to the EAR,'' ``items subject to the EAR,''
``export,'' and ``reexport.'' These and other terms are also included in
part 772 of the EAR, Definitions of Terms, and you should consult part
772 of the EAR for the meaning of terms used in the EAR. Finally, this
part makes clear that compliance with the EAR does not relieve any
obligations imposed under foreign laws.
(b) This part does not address any of the provisions set forth in
part 760 of the EAR, Restrictive Trade Practices or Boycotts.
(c) This part does not define the scope of legal authority to
regulate exports, including reexports, or activities found in the Export
Administration Act and other statutes. What this part does do is set
forth the extent to which such legal authority has been exercised
through the EAR.
Sec. 734.2 Important EAR terms and principles.
(a) Subject to the EAR--Definition. (1) ``Subject to the EAR'' is a
term used in the EAR to describe those items and activities over which
BXA exercises regulatory jurisdiction under the EAR. Conversely, items
and activities that are not subject to the EAR are outside the
regulatory jurisdiction of the EAR and are not affected by these
regulations. The items and activities subject to the EAR are described
in Sec. 734.2 through Sec. 734.5 of this part. You should review the
Commerce Control List (CCL) and any applicable parts of the EAR to
determine whether an item or activity is subject to the EAR. However, if
you need help in determining whether an item or activity is subject to
the EAR, see Sec. 734.6 of this part. Publicly available technology and
software not subject to the EAR are described in Sec. 734.7 through
Sec. 734.11 and Supplement No. 1 to this part.
(2) Items and activities subject to the EAR may also be controlled
under export-related programs administered by other agencies. Items and
activities subject to the EAR are not necessarily exempted from the
control programs of other agencies. Although BXA and other agencies that
maintain controls for national security and foreign policy reasons try
to minimize overlapping jurisdiction, you should be aware that in some
instances you may have to comply with more than one regulatory program.
(3) The term ``subject to the EAR'' should not be confused with
licensing
[[Page 147]]
or other requirements imposed in other parts of the EAR. Just because an
item or activity is subject to the EAR does not mean that a license or
other requirement automatically applies. A license or other requirement
applies only in those cases where other parts of the EAR impose a
licensing or other requirement on such items or activities.
(b) Export and reexport--(1) Definition of export. ``Export'' means
an actual shipment or transmission of items subject to the EAR out of
the United States, or release of technology or software subject to the
EAR to a foreign national in the United States, as described in
paragraph (b)(2)(ii) of this section. See part 772 of the EAR for the
definition that applies to exports of satellites subject to the EAR. See
paragraph (b)(9) of this section for the definition that applies to
exports of encryption source code and object code software subject to
the EAR.
(2) Export of technology or software. (See paragraph (b)(9) for
provisions that apply to encryption source code and object code
software.) ``Export'' of technology or software, excluding encryption
software subject to ``EI'' controls, includes:
(i) Any release of technology or software subject to the EAR in a
foreign country; or
(ii) Any release of technology or source code subject to the EAR to
a foreign national. Such release is deemed to be an export to the home
country or countries of the foreign national. This deemed export rule
does not apply to persons lawfully admitted for permanent residence in
the United States and does not apply to persons who are protected
individuals under the Immigration and Naturalization Act (8 U.S.C.
1324b(a)(3)). Note that the release of any item to any party with
knowledge a violation is about to occur is prohibited by
Sec. 736.2(b)(10) of the EAR.
(3) Definition of ``release'' of technology or software. Technology
or software is ``released'' for export through:
(i) Visual inspection by foreign nationals of U.S.-origin equipment
and facilities;
(ii) Oral exchanges of information in the United States or abroad;
or
(iii) The application to situations abroad of personal knowledge or
technical experience acquired in the United States.
(4) Definition of reexport. ``Reexport'' means an actual shipment or
transmission of items subject to the EAR from one foreign country to
another foreign country; or release of technology or software subject to
the EAR to a foreign national outside the United States, as described in
paragraph (b)(5) of this section. See part 772 of the EAR for the
definition that applies to reexports of satellites subject to the EAR.
(5) Reexport of technology or software. Any release of technology or
source code subject to the EAR to a foreign national of another country
is a deemed reexport to the home country or countries of the foreign
national. However, this deemed reexport definition does not apply to
persons lawfully admitted for permanent residence. The term ``release''
is defined in paragraph (b)(3) of this section. Note that the release of
any item to any party with knowledge or reason to know a violation is
about to occur is prohibited by Sec. 736.2(b)(10) of the EAR.
(6) For purposes of the EAR, the export or reexport of items subject
to the EAR that will transit through a country or countries or be
transshipped in a country or countries to a new country or are intended
for reexport to the new country, are deemed to be exports to the new
country.
(7) If a territory, possession, or department of a foreign country
is not listed on the Country Chart in Supplement No. 1 to part 738 of
the EAR, the export or reexport of items subject to the EAR to such
destination is deemed under the EAR to be an export to the foreign
country. For example, a shipment to the Cayman Islands, a dependent
territory of the United Kingdom, is deemed to be a shipment to the
United Kingdom.
(8) Export or reexport of items subject to the EAR does not include
shipments among any of the states of the United States, the Commonwealth
of Puerto Rico, or the Commonwealth of the Northern Mariana Islands or
any territory, dependency, or possession of the United States. These
destinations
[[Page 148]]
are listed in Schedules C & E, Classification of Country and Territory
Designations for U.S. Export Statistics, issued by the Bureau of the
Census.
(9) Export of encryption source code and object code software. (i)
For purposes of the EAR, the export of encryption source code and object
code software means:
(A) An actual shipment, transfer, or transmission out of the United
States (see also paragraph (b)(9)(ii) of this section); or
(B) A transfer of such software in the United States to an embassy
or affiliate of a foreign country.
(ii) The export of encryption source code and object code software
controlled for EI reasons under ECCN 5D002 on the Commerce Control List
(see Supplement No. 1 to part 774 of the EAR) includes downloading, or
causing the downloading of, such software to locations (including
electronic bulletin boards, Internet file transfer protocol, and World
Wide Web sites) outside the U.S., or making such software available for
transfer outside the United States, over wire, cable, radio,
electromagnetic, photooptical, photoelectric or other comparable
communications facilities accessible to persons outside the United
States, including transfers from electronic bulletin boards, Internet
file transfer protocol and World Wide Web sites, unless the person
making the software available takes precautions adequate to prevent
unauthorized transfer of such code outside the United States. Such
precautions shall include:
(A) Ensuring that the facility from which the software is available
controls the access to and transfers of such software through such
measures as:
(1) The access control system, either through automated means or
human intervention, checks the address of every system requesting or
receiving a transfer and verifies that such systems are located within
the United States;
(2) The access control system, provides every requesting or
receiving party with notice that the transfer includes or would include
cryptographic software subject to export controls under the Export
Administration Act, and that anyone receiving such a transfer cannot
export the software without a license; and
(3) Every party requesting or receiving a transfer of such software
must acknowledge affirmatively that he or she understands that the
cryptographic software is subject to export controls under the Export
Administration Act and that anyone receiving the transfer cannot export
the software without a license; or
(B) Taking other precautions, approved in writing by the Bureau of
Export Administration, to prevent transfer of such software outside the
U.S. without a license.
[61 FR 12746, Mar. 25, 1996, as amended at 61 FR 68578, Dec. 30, 1996]
Sec. 734.3 Items subject to the EAR.
(a) Except for items excluded in paragraph (b) of this section, the
following items are subject to the EAR:
(1) All items in the United States, including in a U.S. Foreign
Trade Zone or moving intransit through the United States from one
foreign country to another;
(2) All U.S. origin items wherever located;
(3) U.S. origin parts, components, materials or other commodities
incorporated abroad into foreign-made products, U.S. origin software
commingled with foreign software, and U.S. origin technology commingled
with foreign technology, in quantities exceeding de minimis levels as
described in Sec. 734.4 and Supplement No. 2 of this part;
(4) Certain foreign-made direct products of U.S. origin technology
or software, as described in Sec. 736.2(b)(3) of the EAR. The term
``direct product'' means the immediate product (including processes and
services) produced directly by the use of technology or software; and
(5) Certain commodities produced by any plant or major component of
a plant located outside the United States that is a direct product of
U.S.-origin technology or software, as described in Sec. 736.2(b)(3) of
the EAR.
(b) The following items are not subject to the EAR:
(1) Items that are exclusively controlled for export or reexport by
the following departments and agencies of the U.S. Government which
regulate
[[Page 149]]
exports or reexports for national security or foreign policy purposes:
(i) Department of State. The International Traffic in Arms
Regulations (22 CFR part 121) administered by the Office of Defense
Trade Controls relate to defense articles and defense services on the
U.S. Munitions List. Section 38 of the Arms Export Control Act (22
U.S.C. 2778).
(ii) Treasury Department, Office of Foreign Assets Control (OFAC).
Regulations administered by OFAC implement broad controls and embargo
transactions with certain foreign countries. These regulations include
controls on exports and reexports to certain countries (31 CFR chapter
V). Trading with the Enemy Act (50 U.S.C. app. section 1 et seq.), and
International Emergency Economic Powers Act (50 U.S.C. 1701, et seq.)
(iii) U.S. Nuclear Regulatory Commission (NRC). Regulations
administered by NRC control the export and reexport of commodities
related to nuclear reactor vessels (10 CFR part 110). Atomic Energy Act
of 1954, as amended (42 U.S.C. part 2011 et seq.).
(iv) Department of Energy (DOE). Regulations administered by DOE
control the export and reexport of technology related to the production
of special nuclear materials (10 CFR part 810). Atomic Energy Act of
1954, as amended (42 U.S.C. section 2011 et seq.).
(v) Patent and Trademark Office (PTO). Regulations administered by
PTO provide for the export to a foreign country of unclassified
technology in the form of a patent application or an amendment,
modification, or supplement thereto or division thereof (37 CFR part 5).
BXA has delegated authority under the Export Administration Act to the
PTO to approve exports and reexports of such technology which is subject
to the EAR. Exports and reexports of such technology not approved under
PTO regulations must comply with the EAR.
(2) Prerecorded phonograph records reproducing in whole or in part,
the content of printed books, pamphlets, and miscellaneous publications,
including newspapers and periodicals; printed books, pamphlets, and
miscellaneous publications including bound newspapers and periodicals;
children's picture and painting books; newspaper and periodicals,
unbound, excluding waste; music books; sheet music; calendars and
calendar blocks, paper; maps, hydrographical charts, atlases,
gazetteers, globe covers, and globes (terrestrial and celestial);
exposed and developed microfilm reproducing, in whole or in part, the
content of any of the above; exposed and developed motion picture film
and soundtrack; and advertising printed matter exclusively related
thereto.
(3) Publicly available technology and software, except software
controlled for EI reasons under ECCN 5D002 on the Commerce Control List,
that:
(i) Are already published or will be published as described in
Sec. 734.7 of this part;
(ii) Arise during, or result from, fundamental research, as
described in Sec. 734.8 of this part;
(iii) Are educational, as described in Sec. 734.9 of this part;
(iv) Are included in certain patent applications, as described in
Sec. 734.10 of this part.
Note to paragraphs (b)(2) and (b)(3) of this section: A printed book
or other printed material setting forth encryption source code is not
itself subject to the EAR (see Sec. 734.3(b)(2)). However,
notwithstanding Sec. 734.3(b)(2), encryption source code in electronic
form or media (e.g., computer diskette or CD ROM) remains subject to the
EAR (see Sec. 734.3(b)(3)).
(4) Foreign made items that have de minimis U.S. content based on
the principles described in Sec. 734.4 of this part.
(c) ``Items subject to the EAR'' consist of the items listed on the
Commerce Control List (CCL) in part 774 of the EAR and all other items
which meet the definition of that term. For ease of reference and
classification purposes, items subject to the EAR which are not listed
on the CCL are designated as ``EAR99.''
[61 FR 12746, Mar. 25, 1996, as amended at 61 FR 65464, Dec. 13, 1996;
61 FR 68578, Dec. 30, 1996]
Sec. 734.4 De minimis U.S. content.
(a) There is no de minimis level for the export from a foreign
country of a foreign-made computer exceeding 7000 MTOPS containing U.S.-
origin controlled semiconductors (other than
[[Page 150]]
memory circuits) classified under ECCN 3A001 or high speed interconnect
devices (ECCN 4A003.g) to Computer Tier 3 and 4 countries described in
Sec. 742.12 of the EAR.
(b) There is no de minimis level for the reexport of foreign-origin
items that incorporate the following:
(1) Items controlled by ECCN 9A004.a; or
(2) ``Information security'' systems and equipment, cryptographic
devices, software and components specifically designed or modified
therefor, and related technology controlled for ``EI'' reasons under
ECCN, 5A002 ECCN 5D002, and 5E002. Certain mass market encryption
software may become eligible for de minimis only after a one-time BXA
review (refer to Sec. 742.15(b)(1)).
(c) Except as provided in paragraph (a) of this section for certain
computers, for embargoed countries in part 746 of the EAR, and for
countries named as terrorist-supporting countries in part 744 of the
EAR, the following are not subject to the EAR:
(1) Reexports of a foreign-made commodity incorporating controlled
U.S.-origin commodities valued at 10% or less of the total value of the
foreign-made commodity;
(2) Reexports of foreign-made software incorporating controlled
U.S.-origin software valued at 10% or less of the total value of the
foreign-made software; or
(3) Reexports of foreign technology commingled with or drawn from
controlled U.S. origin technology valued at 10% or less of the total
value of the foreign technology.
(d) Except as provided in paragraph (a) of this section for certain
computers, for all other countries not included in paragraph (b) of this
section, the following are not subject to the EAR:
(1) Reexports of a foreign-made commodity incorporating controlled
U.S.-origin commodities valued at 25% or less of the total value of the
foreign-made commodity;
(2) Reexports of foreign-made software incorporating controlled
U.S.-origin software valued at 25% or less of the total value of the
foreign-made software; or
(3) Reexports of foreign technology commingled with or drawn from
controlled U.S.-origin technology valued at 25% or less of the total
value of the foreign technology.
(e) For purposes of determining de minimis levels, technology and
source code used to design or produce foreign-made commodities or
software are not considered to be incorporated into such foreign-made
commodities or software. Commodities subject only to short supply
controls are not included in calculating U.S. content.
(f) You are responsible for making the necessary calculations to
determine whether the de minimis provisions apply to your situation. See
Supplement No. 2 to part 734 for guidance regarding calculation of U.S.
controlled content.
(g) See Sec. 770.3 of the EAR for principles that apply to
commingled U.S.-origin technology and software.
(h) Notwithstanding the provisions of paragraphs (c) and (d) of this
section, U.S.-origin technology controlled by ECCN 9E003a.1 through
a.12, and .f, and related controls, and encryption software controlled
for ``EI'' reasons under ECCN 5D002 or encryption technology controlled
for ``EI'' reasons under ECCN 5E002 do not lose their U.S.-origin when
redrawn, used, consulted, or otherwise commingled abroad in any respect
with other software or technology of any other origin. Therefore, any
subsequent or similar software or technology prepared or engineered
abroad for the design, construction, operation, or maintenance of any
plant or equipment, or part thereof, which is based on or uses any such
U.S.-origin software or technology is subject to the EAR.
[61 FR 12746, Mar. 25, 1996, as amended at 61 FR 54543, Oct. 21, 1996;
61 FR 65464, Dec. 13, 1996; 61 FR 68578, Dec. 30, 1996]
Sec. 734.5 Activities of U.S. and foreign persons subject to the EAR.
The following kinds of activities are subject to the EAR:
(a) Certain activities of U.S. persons related to the proliferation
of chemical or biological weapons or of missile technology as described
in Sec. 744.6 of the EAR.
(b) Activities of U.S. or foreign persons prohibited by any order
issued under the EAR, including a Denial
[[Page 151]]
Order issued pursuant to part 766 of the EAR.
(c) Technical assistance by U.S. persons with respect to encryption
commodities or software as described in Sec. 744.9 of the EAR.
[61 FR 12746, Mar. 25, 1996, as amended at 61 FR 68578, Dec. 30, 1996]
Sec. 734.6 Assistance available from BXA for determining licensing and other requirements.
(a) If you are not sure whether a commodity, software, technology,
or activity is subject to the EAR, or is subject to licensing or other
requirements under the EAR, you may ask BXA for an advisory opinion,
classification, or a determination whether a particular item or activity
is subject to the EAR. In many instances, including those where the item
is specially designed, developed, configured, adapted, or modified for
military application, the item may fall under the licensing jurisdiction
of the Department of State and may be subject to the controls of the
International Traffic in Arms Regulations (22 CFR parts 120 through 130)
(ITAR). In order to determine if the Department of State has licensing
jurisdiction over an item, you should submit a request for a commodity
jurisdiction determination to the Department of State, Office of Defense
Trade Controls. Exporters should note that in a very limited number of
cases, the categories of items may be subject to both the ITAR and the
EAR. The relevant departments are working to eliminate any unnecessary
overlaps that may exist.
(b) As the agency responsible for administering the EAR, BXA is the
only agency that has the responsibility for determining whether an item
or activity is subject to the EAR and, if so, what licensing or other
requirements apply under the EAR. Such a determination only affects EAR
requirements, and does not affect the applicability of any other
regulatory programs.
(c) If you need help in determining BXA licensing or other
requirements you may ask BXA for help by following the procedures
described in Sec. 748.3 of the EAR.
Sec. 734.7 Published information and software.
(a) Information is ``published'' when it becomes generally
accessible to the interested public in any form, including:
(1) Publication in periodicals, books, print, electronic, or any
other media available for general distribution to any member of the
public or to a community of persons interested in the subject matter,
such as those in a scientific or engineering discipline, either free or
at a price that does not exceed the cost of reproduction and
distribution (See Supplement No. 1 to this part, Questions A(1) through
A(6));
(2) Ready availability at libraries open to the public or at
university libraries (See Supplement No. 1 to this part, Question A(6));
(3) Patents and open (published) patent applications available at
any patent office; and
(4) Release at an open conference, meeting, seminar, trade show, or
other open gathering.
(i) A conference or gathering is ``open'' if all technically
qualified members of the public are eligible to attend and attendees are
permitted to take notes or otherwise make a personal record (not
necessarily a recording) of the proceedings and presentations.
(ii) All technically qualified members of the public may be
considered eligible to attend a conference or other gathering
notwithstanding a registration fee reasonably related to cost and
reflecting an intention that all interested and technically qualified
persons be able to attend, or a limitation on actual attendance, as long
as attendees either are the first who have applied or are selected on
the basis of relevant scientific or technical competence, experience, or
responsibility (See Supplement No. 1 to this part, Questions B(1)
through B(6)).
(iii) ``Publication'' includes submission of papers to domestic or
foreign editors or reviewers of journals, or to organizers of open
conferences or other open gatherings, with the understanding that the
papers will be made publicly available if favorably received. (See
Supplement No. 1 to this part, Questions A(1) and A(3)).
[[Page 152]]
(b) Software and information is published when it is available for
general distribution either for free or at a price that does not exceed
the cost of reproduction and distribution. See Supplement No. 1 to this
part, Questions G(1) through G(3).
(c) Notwithstanding paragraphs (a) and (b) of this section, note
that encryption software controlled under ECCN 5D002 for ``EI'' reasons
on the Commerce Control List (refer to Supplement No. 1 to part 774 of
the EAR) remains subject to the EAR even when publicly available.
[61 FR 12746, Mar. 25, 1996, as amended at 61 FR 65464, Dec. 13, 1996;
61 FR 68578, Dec. 30, 1996]
Sec. 734.8 Information resulting from fundamental research.
(a) Fundamental research. Paragraphs (b) through (d) of this section
and Sec. 734.11 of this part provide specific rules that will be used to
determine whether research in particular institutional contexts
qualifies as ``fundamental research''. The intent behind these rules is
to identify as ``fundamental research'' basic and applied research in
science and engineering, where the resulting information is ordinarily
published and shared broadly within the scientific community. Such
research can be distinguished from proprietary research and from
industrial development, design, production, and product utilization, the
results of which ordinarily are restricted for proprietary reasons or
specific national security reasons as defined in Sec. 732.10 of this
part. (See Supplement No. 1 to this part, Question D(8)). Note that the
provisions of this section do not apply to encryption software
controlled under ECCN 5D002 for ``EI'' reasons on the Commerce Control
List (refer to Supplement No. 1 to part 774 of the EAR).
(b) University based research. (1) Research conducted by scientists,
engineers, or students at a university normally will be considered
fundamental research, as described in paragraphs (b) (2) through (6) of
this section. (``University'' means any accredited institution of higher
education located in the United States.)
(2) Prepublication review by a sponsor of university research solely
to insure that the publication would not inadvertently divulge
proprietary information that the sponsor has furnished to the
researchers does not change the status of the research as fundamental
research. However, release of information from a corporate sponsor to
university researchers where the research results are subject to
prepublication review, is subject to the EAR. (See Supplement No. 1 to
this part, Questions D(7), D(9), and D(10).)
(3) Prepublication review by a sponsor of university research solely
to ensure that publication would not compromise patent rights does not
change the status of fundamental research, so long as the review causes
no more than a temporary delay in publication of the research results.
(4) The initial transfer of information from an industry sponsor to
university researchers is subject to the EAR where the parties have
agreed that the sponsor may withhold from publication some or all of the
information so provided. (See Supplement No. 1 to this part, Question
D(2).)
(5) University based research is not considered ``fundamental
research'' if the university or its researchers accept (at the request,
for example, of an industrial sponsor) other restrictions on publication
of scientific and technical information resulting from the project or
activity. Scientific and technical information resulting from the
research will nonetheless qualify as fundamental research once all such
restrictions have expired or have been removed. (See Supplement No. 1 to
this part, Question D(7) and D(9).)
(6) The provisions of Sec. 734.11 of this part will apply if a
university or its researchers accept specific national security controls
(as defined in Sec. 732.11 of this part) on a research project or
activity sponsored by the U.S. Government. (See Supplement No. 1 to this
part, Questions E(1) and E(2).)
(c) Research based at Federal agencies or FFRDCs. Research conducted
by scientists or engineers working for a Federal agency or a Federally
Funded Research and Development Center (FFRDC) may be designated as
``fundamental research'' within any appropriate system devised by the
agency or
[[Page 153]]
the FFRDC to control the release of information by such scientists and
engineers. (See Supplement No. 1 to this part, Questions D(8) and
D(11).)
(d) Corporate research. (1) Research conducted by scientists or
engineers working for a business entity will be considered ``fundamental
research'' at such time and to the extent that the researchers are free
to make scientific and technical information resulting from the research
publicly available without restriction or delay based on proprietary
concerns or specific national security controls as defined in
Sec. 734.11 of this part.
(2) Prepublication review by the company solely to ensure that the
publication would compromise no proprietary information provided by the
company to the researchers is not considered to be a proprietary
restriction under paragraph (d)(1) of this section. However, paragraph
(d)(1) of this section does not authorize the release of information to
university researchers where the research results are subject to
prepublication review. (See Supplement No. 1 to this part, Questions
D(8), D(9), and D(10).)
(3) Prepublication review by the company solely to ensure that
prepublication would compromise no patent rights will not be considered
a proprietary restriction for this purpose, so long as the review causes
no more than a temporary delay in publication of the research results.
(4) However, the initial transfer of information from a business
entity to researchers is not authorized under the ``fundamental
research'' provision where the parties have agreed that the business
entity may withhold from publication some or all of the information so
provided.
(e) Research based elsewhere. Research conducted by scientists or
engineers who are not working for any of the institutions described in
paragraphs (b) through (d) of this section will be treated as corporate
research, as described in paragraph (d) of this section. (See Supplement
No. 1 to this part, Question D(8).)
[61 FR 12746, Mar. 25, 1996, as amended at 61 FR 68579, Dec. 30, 1996]
Sec. 734.9 Educational information.
``Educational information'' referred to in Sec. 734.3(b)(3)(iii) of
this part is not subject to the EAR if it is released by instruction in
catalog courses and associated teaching laboratories of academic
institutions. Dissertation research is discussed in Sec. 734.8(b) of
this part. (Refer to Supplement No. 1 to this part, Question C(1)
through C(6)). Note that the provisions of this section do not apply to
encryption software controlled under ECCN 5D002 for ``EI'' reasons on
the Commerce Control List (refer to Supplement No. 1 to part 774 of the
EAR).
[61 FR 68579, Dec. 30, 1996]
Sec. 734.10 Patent applications.
The information referred to in Sec. 734.3(b)(3)(iv) of this part is:
(a) Information contained in a patent application prepared wholly
from foreign-origin technical data where the application is being sent
to the foreign inventor to be executed and returned to the United States
for subsequent filing in the U.S. Patent and Trademark Office;
(b) Information contained in a patent application, or an amendment,
modification, supplement or division of an application, and authorized
for filing in a foreign country in accordance with the regulations of
the Patent and Trademark Office, 37 CFR part 5; 1 or
---------------------------------------------------------------------------
\1\ Regulations issued by the Patent and Trademark Office in 37 CFR
part 5 provide for the export to a foreign country of unclassified
technical data in the form of a patent application or an amendment,
modification, or supplement thereto or division thereof.
---------------------------------------------------------------------------
(c) Information contained in a patent application when sent to a
foreign country before or within six months after the filing of a United
States patent application for the purpose of obtaining the signature of
an inventor who was in the United States when the invention was made or
who is a co-inventor with a person residing in the United States.
[[Page 154]]
Sec. 734.11 Government-sponsored research covered by contract controls.
(a) If research is funded by the U.S. Government, and specific
national security controls are agreed on to protect information
resulting from the research, Sec. 734.3(b)(3) of this part will not
apply to any export or reexport of such information in violation of such
controls. However, any export or reexport of information resulting from
the research that is consistent with the specific controls may
nonetheless be made under this provision.
(b) Examples of ``specific national security controls'' include
requirements for prepublication review by the Government, with right to
withhold permission for publication; restrictions on prepublication
dissemination of information to non-U.S. citizens or other categories of
persons; or restrictions on participation of non-U.S. citizens or other
categories of persons in the research. A general reference to one or
more export control laws or regulations or a general reminder that the
Government retains the right to classify is not a ``specific national
security control''. (See Supplement No. 1 to this part, Questions E(1)
and E(2).)
Sec. 734.12 Effect on foreign laws and regulations.
Any person who complies with any of the license or other
requirements of the EAR is not relieved of the responsibility of
complying with applicable foreign laws and regulations. Conversely, any
person who complies with the license or other requirements of a foreign
law or regulation is not relieved of the responsibility of complying
with U.S. laws and regulations, including the EAR.
Supplement No. 1 to Part 734--Questions and Answers--Technology and
Software Subject to the EAR
This Supplement No. 1 contains explanatory questions and answers
relating to technology and software that is subject to the EAR. It is
intended to give the public guidance in understanding how BXA interprets
this part, but is only illustrative, not comprehensive. In addition,
facts or circumstances that differ in any material way from those set
forth in the questions or answers will be considered under the
applicable provisions of the EAR. Exporters should note that the
provisions of this supplement do not apply to encryption software
(including source code) transferred from the U.S. Munitions List to the
Commerce Control List consistent with E.O. 13026 of November 15, 1996
(61 FR 58767) and pursuant to the Presidential Memorandum of that date.
See Sec. 742.15 of the EAR. This supplement is divided into nine
sections according to topic as follows:
Section A: Publication of technology and exports and reexports of
technology that has been or will be published.
Section B: Release of technology at conferences.
Section C: Educational instruction.
Section D: Research, correspondence, and informal scientific
exchanges.
Section E: Federal contract controls.
Section F: Commercial consulting.
Section G: Software.
Section H: Availability in a public library.
Section I: Miscellaneous.
Section A: Publication
Question A(1): I plan to publish in a foreign journal a scientific
paper describing the results of my research, which is in an area listed
in the EAR as requiring a license to all countries except Canada. Do I
need a license to send a copy to my publisher abroad?
Answer: No. This export transaction is not subject to the EAR. The
EAR do not cover technology that is already publicly available, as well
as technology that is made public by the transaction in question
(Secs. 734.3 and 734.7 of this part). Your research results would be
made public by the planned publication. You would not need a license.
Question A(2): Would the answer differ depending on where I work or
where I performed the research?
Answer: No. Of course, the result would be different if your
employer or another sponsor of your research imposed restrictions on its
publication (Sec. 734.8 of this part).
Question (A)3: Would I need a license to send the paper to the
editors of a foreign journal for review to determine whether it will be
accepted for publication?
Answer: No. This export transaction is not subject to the EAR
because you are submitting the paper to the editors with the intention
that the paper will be published if favorably received
(Sec. 734.7(a)(4)(iii) of this part).
Question A(4): The research on which I will be reporting in my paper
is supported by a grant from the Department of Energy (DOE). The grant
requires prepublication clearance by DOE. Does that make any difference
under the Export Administration Regulations?
Answer: No, the transaction is not subject to the EAR. But if you
published in violation of any Department of Energy controls you
[[Page 155]]
have accepted in the grant, you may be subject to appropriate
administrative, civil, or criminal sanctions under other laws.
Question A(5): We provide consulting services on the design, layout,
and construction of integrated circuit plants and production lines. A
major part of our business is the publication for sale to clients of
detailed handbooks and reference manuals on key aspects on the design
and manufacturing processes. A typical cost of publishing such a
handbook and manual might be $500; the typical sales price is about
$15,000. Is the publication and sale of such handbooks or manuals
subject to the EAR?
Answer: Yes. The price is above the cost of reproduction and
distribution (Sec. 734.7(a)(1) of this part). Thus, you would need to
obtain a license or qualify for a License Exception before you could
export or reexport any of these handbooks or manuals.
Question A(6): My Ph.D. thesis is on technology, listed in the EAR
as requiring a license to all destinations except Canada, which has
never been published for general distribution. However, the thesis is
available at the institution from which I took the degree. Do I need a
license to send another copy to a colleague overseas?
Answer: That may depend on where in the institution it is available.
If it is not readily available in the university library (e.g., by
filing in open stacks with a reference in the catalog), it is not
``publicly available'' and the export or reexport would be subject to
the EAR on that ground. The export or reexport would not be subject to
the EAR if your Ph.D. research qualified as ``fundamental research''
under Sec. 734.8 of this part. If not, however, you will need to obtain
a license or qualify for a License Exception before you can send a copy
out of the country.
Question A(7): We sell electronically recorded information,
including software and databases, at wholesale and retail. Our products
are available by mail order to any member of the public, though intended
for specialists in various fields. They are priced to maximize sales to
persons in those fields. Do we need a license to sell our products to
foreign customers?
Answer: You would not need a license for otherwise controlled
technology or software if the technology and software are made publicly
available at a price that does not exceed the cost of production and
distribution to the technical community. Even if priced at a higher
level, the export or reexport of the technology or software source code
in a library accessible to the public is not subject to the EAR
(Sec. 734.7(a) of this part).
Section B: Conferences
Question B(1): I have been invited to give a paper at a prestigious
international scientific conference on a subject listed as requiring a
license under the EAR to all countries, except Canada. Scientists in the
field are given an opportunity to submit applications to attend.
Invitations are given to those judged to be the leading researchers in
the field, and attendance is by invitation only. Attendees will be free
to take notes, but not make electronic or verbatim recordings of the
presentations or discussions. Some of the attendees will be foreigners.
Do I need a license to give my paper?
Answer: No. Release of information at an open conference and
information that has been released at an open conference is not subject
to the EAR. The conference you describe fits the definition of an open
conference (Sec. 734.7(d) of this part).
Question B(2): Would it make any difference if there were a
prohibition on making any notes or other personal record of what
transpires at the conference?
Answer: Yes. To qualify as an ``open'' conference, attendees must be
permitted to take notes or otherwise make a personal record (although
not necessarily a recording). If note taking or the making of personal
records is altogether prohibited, the conference would not be considered
``open''.
Question B(3): Would it make any difference if there were also a
registration fee?
Answer: That would depend on whether the fee is reasonably related
to costs and reflects an intention that all interested and technically
qualified persons should be able to attend (Sec. 734.7(d)(4)(ii) of this
part).
Question B(4): Would it make any difference if the conference were
to take place in another country?
Answer: No.
Question B(5): Must I have a license to send the paper I propose to
present at such a foreign conference to the conference organizer for
review?
Answer: No. A license is not required under the EAR to submit papers
to foreign organizers of open conferences or other open gatherings with
the intention that the papers will be delivered at the conference, and
so made publicly available, if favorably received. The submission of the
papers is not subject to the EAR (Sec. 734.7(d)(4)(iii) of this part).
Question B(6): Would the answers to any of the foregoing questions
be different if my work were supported by the Federal Government?
Answer: No. You may export and reexport the papers, even if the
release of the paper violates any agreements you have made with your
government sponsor. However, nothing in the EAR relieves you of
responsibility for conforming to any controls you have agreed to in your
Federal grant or contract.
Section C: Educational Instruction
Question C(1): I teach a university graduate course on design and
manufacture of very high-speed integrated circuitry. Many of the
[[Page 156]]
students are foreigners. Do I need a license to teach this course?
Answer: No. Release of information by instruction in catalog courses
and associated teaching laboratories of academic institutions is not
subject to the EAR (Sec. 734.9 of this part).
Question C(2): Would it make any difference if some of the students
were from countries to which export licenses are required?
Answer: No.
Question C(3): Would it make any difference if I talk about recent
and as yet unpublished results from my laboratory research?
Answer: No.
Question C(4): Even if that research is funded by the Government?
Answer: Even then, but you would not be released from any separate
obligations you have accepted in your grant or contract.
Question C(5): Would it make any difference if I were teaching at a
foreign university?
Answer: No.
Question C(6): We teach proprietary courses on design and
manufacture of high-performance machine tools. Is the instruction in our
classes subject to the EAR?
Answer: Yes. That instruction would not qualify as ``release of
educational information'' under Sec. 734.9 of this part because your
proprietary business does not qualify as an ``academic institution''
within the meaning of Sec. 734.9 of this part. Conceivably, however, the
instruction might qualify as ``release at an open * * * seminar, * * *
or other open gathering'' under Sec. 734.7(d) of this part. The
conditions for qualification of such a seminar or gathering as ``open'',
including a fee ``reasonably related to costs (of the conference, not of
producing the data) and reflecting an intention that all interested and
technically qualified persons be able to attend,'' would have to be
satisfied.
Section D: Research, Correspondence, and Informal Scientific Exchanges
Question D(1): Do I need a license in order for a foreign graduate
student to work in my laboratory?
Answer: Not if the research on which the foreign student is working
qualifies as ``fundamental research'' under Sec. 734.8 of this part. In
that case, the research is not subject to the EAR.
Question D(2): Our company has entered into a cooperative research
arrangement with a research group at a university. One of the
researchers in that group is a PRC national. We would like to share some
of our proprietary information with the university research group. We
have no way of guaranteeing that this information will not get into the
hands of the PRC scientist. Do we need to obtain a license to protect
against that possibility?
Answer: No. The EAR do not cover the disclosure of information to
any scientists, engineers, or students at a U.S. university in the
course of industry-university research collaboration under specific
arrangements between the firm and the university, provided these
arrangements do not permit the sponsor to withhold from publication any
of the information that he provides to the researchers. However, if your
company and the researchers have agreed to a prohibition on publication,
then you must obtain a license or qualify for a License Exception before
transferring the information to the university. It is important that you
as the corporate sponsor and the university get together to discuss
whether foreign nationals will have access to the information, so that
you may obtain any necessary authorization prior to transferring the
information to the research team.
Question D(3): My university will host a prominent scientist from
the PRC who is an expert on research in engineered ceramics and
composite materials. Do I require a license before telling our visitor
about my latest, as yet unpublished, research results in those fields?
Answer: Probably not. If you performed your research at the
university, and you were subject to no contract controls on release of
the research, your research would qualify as ``fundamental research''
(Sec. 734.8(a) of this part). Information arising during or resulting
from such research is not subject to the EAR (Sec. 734.3(b)(3) of this
part).
You should probably assume, however, that your visitor will be
debriefed later about anything of potential military value he learns
from you. If you are concerned that giving such information to him, even
though permitted, could jeopardize U.S. security interests, the Commerce
Department can put you in touch with appropriate Government scientists
who can advise you. Write to Department of Commerce, Bureau of Export
Administration, P.O. Box 273, Washington, DC 20044.
Question D(4): Would it make any difference if I were proposing to
talk with a PRC expert in China?
Answer: No, if the information in question arose during or resulted
from the same ``fundamental research.''
Question D(5): Could I properly do some work with him in his
research laboratory inside China?
Answer: Application abroad of personal knowledge or technical
experience acquired in the United States constitutes an export of that
knowledge and experience, and such an export may be subject to the EAR.
If any of the knowledge or experience you export in this way requires a
license under the EAR,
[[Page 157]]
you must obtain such a license or qualify for a License Exception.
Question D(6): I would like to correspond and share research results
with an Iranian expert in my field, which deals with technology that
requires a license to all destinations except Canada. Do I need a
license to do so?
Answer: Not as long as we are still talking about information that
arose during or resulted from research that qualifies as ``fundamental''
under the rules spelled out in Sec. 734.8(a) of this part.
Question D(7): Suppose the research in question were funded by a
corporate sponsor and I had agreed to prepublication review of any paper
arising from the research?
Answer: Whether your research would still qualify as ``fundamental''
would depend on the nature and purpose of the prepublication review. If
the review is intended solely to ensure that your publications will
neither compromise patent rights nor inadvertently divulge proprietary
information that the sponsor has furnished to you, the research could
still qualify as ``fundamental.'' But if the sponsor will consider as
part of its prepublication review whether it wants to hold your new
research results as trade secrets or otherwise proprietary information
(even if your voluntary cooperation would be needed for it to do so),
your research would no longer qualify as ``fundamental.'' As used in
these regulations it is the actual and intended openness of research
results that primarily determines whether the research counts as
``fundamental'' and so is not subject to the EAR.
Question D(8): In determining whether research is thus open and
therefore counts as ``fundamental,'' does it matter where or in what
sort of institution the research is performed?
Answer: In principle, no. ``Fundamental research'' is performed in
industry, Federal laboratories, or other types of institutions, as well
as in universities. The regulations introduce some operational
presumptions and procedures that can be used both by those subject to
the regulations and by those who administer them to determine with some
precision whether a particular research activity is covered. Recognizing
that common and predictable norms operate in different types of
institutions, the regulations use the institutional locus of the
research as a starting point for these presumptions and procedures.
Nonetheless, it remains the type of research, and particularly the
intent and freedom to publish, that identifies ``fundamental research,''
not the institutional locus (Sec. 734.8(a) of this part).
Question D(9): I am doing research on high-powered lasers in the
central basic-research laboratory of an industrial corporation. I am
required to submit the results of my research for prepublication review
before I can publish them or otherwise make them public. I would like to
compare research results with a scientific colleague from Vietnam and
discuss the results of the research with her when she visits the United
States. Do I need a license to do so?
Answer: You probably do need a license (Sec. 734.8(d) of this part).
However, if the only restriction on your publishing any of that
information is a prepublication review solely to ensure that publication
would compromise no patent rights or proprietary information provided by
the company to the researcher your research may be considered
``fundamental research,'' in which case you may be able to share
information because it is not subject to the EAR. Note that the
information will be subject to the EAR if the prepublication review is
intended to withhold the results of the research from publication.
Question D(10): Suppose I have already cleared my company's review
process and am free to publish all the information I intend to share
with my colleague, though I have not yet published?
Answer: If the clearance from your company means that you are free
to make all the information publicly available without restriction or
delay, the information is not subject to the EAR. (Sec. 734.8(d) of this
part)
Question D(11): I work as a researcher at a Government-owned,
contractor-operated research center. May I share the results of my
unpublished research with foreign nationals without concern for export
controls under the EAR?
Answer: That is up to the sponsoring agency and the center's
management. If your research is designated ``fundamental research''
within any appropriate system devised by them to control release of
information by scientists and engineers at the center, it will be
treated as such by the Commerce Department, and the research will not be
subject to the EAR. Otherwise, you would need to obtain a license or
qualify for a License Exception, except to publish or otherwise make the
information public (Sec. 734.8(c) of this part).
Section E: Federal Contract Controls
Question E(1): In a contract for performance of research entered
into with the Department of Defense (DOD), we have agreed to certain
national security controls. DOD is to have ninety days to review any
papers we proposed before they are published and must approve assignment
of any foreign nationals to the project. The work in question would
otherwise qualify as ``fundamental research'' section under Sec. 734.8
of this part. Is the information arising during or resulting from this
sponsored research subject to the EAR?
Answer: Under Sec. 734.11 of this part, any export or reexport of
information resulting from government-sponsored research that is
[[Page 158]]
inconsistent with contract controls you have agreed to will not qualify
as ``fundamental research'' and any such export or reexport would be
subject to the EAR. Any such export or reexport that is consistent with
the controls will continue to be eligible for export and reexport under
the ``fundamental research'' rule set forth in Sec. 734.8(a) of this
part. Thus, if you abide by the specific controls you have agreed to,
you need not be concerned about violating the EAR. If you violate those
controls and export or reexport information as ``fundamental research''
under Sec. 734.8(a) of this part, you may subject yourself to the
sanctions provided for under the EAR, including criminal sanctions, in
addition to administrative and civil penalties for breach of contract
under other law.
Question E(2): Do the Export Administration Regulations restrict my
ability to publish the results of my research?
Answer: The Export Administration Regulations are not the means for
enforcing the national security controls you have agreed to. If such a
publication violates the contract, you would be subject to
administrative, civil, and possible criminal penalties under other law.
Section F: Commercial Consulting
Question F(1): I am a professor at a U.S. university, with expertise
in design and creation of submicron devices. I have been asked to be a
consultant for a ``third-world'' company that wishes to manufacture such
devices. Do I need a license to do so?
Answer: Quite possibly you do. Application abroad of personal
knowledge or technical experience acquired in the United States
constitutes an export of that knowledge and experience that is subject
to the Export Administration Regulations. If any part of the knowledge
or experience your export or reexport deals with technology that
requires a license under the EAR, you will need to obtain a license or
qualify for a License Exception.
Section G: Software 2
---------------------------------------------------------------------------
\2\ Exporters should note that these provisions do not apply to
software controlled under the International Traffic in Arms Regulations
(e.g., certain encryption software).
---------------------------------------------------------------------------
Question G(1): Is the export or reexport of software in machine
readable code subject to the EAR when the source code for such software
is publicly available?
Answer: If the source code of a software program is publicly
available, then the machine readable code compiled from the source code
is software that is publicly available and therefore not subject to the
EAR.
Question G(2): Is the export or reexport of software sold at a price
that does not exceed the cost of reproduction and distribution subject
to the EAR?
Answer: Software in machine readable code is publicly available if
it is available to a community at a price that does not exceed the cost
of reproduction and distribution. Such reproduction and distribution
costs may include variable and fixed allocations of overhead and normal
profit for the reproduction and distribution functions either in your
company or in a third party distribution system. In your company, such
costs may not include recovery for development, design, or acquisition.
In this case, the provider of the software does not receive a fee for
the inherent value of the software.
Question G(3): Is the export or reexport of software subject to the
EAR if it is sold at a price BXA concludes in a classification letter to
be sufficiently low so as not to subject it to the EAR?
Answer: In response to classification requests, BXA may choose to
classify certain software as not subject to the EAR even though it is
sold at a price above the costs of reproduction and distribution as long
as the price is nonetheless sufficiently low to qualify for such a
classification in the judgment of BXA.
Section H: Available in a Public Library
Question H(1): Is the export or reexport of information subject to
the EAR if it is available in a library and sold through an electronic
or print service?
Answer: Electronic and print services for the distribution of
information may be relatively expensive in the marketplace because of
the value vendors add in retrieving and organizing information in a
useful way. If such information is also available in a library--itself
accessible to the public--or has been published in any way, that
information is ``publicly available'' for those reasons, and the
information itself continues not to be subject to the EAR even though
you access the information through an electronic or print service for
which you or your employer pay a substantial fee.
Question H(2): Is the export or reexport of information subject to
the EAR if the information is available in an electronic form in a
library at no charge to the library patron?
Answer: Information available in an electronic form at no charge to
the library patron in a library accessible to the public is information
publicly available even though the library pays a substantial
subscription fee for the electronic retrieval service.
Question H(3): Is the export or reexport of information subject to
the EAR if the information is available in a library and sold for more
than the cost of reproduction and distribution?
Answer: Information from books, magazines, dissertations, papers,
electronic data bases, and other information available in a library that
is accessible to the public is not subject to the EAR. This is true even
if you
[[Page 159]]
purchase such a book at more than the cost of reproduction and
distribution. In other words, such information is ``publicly available''
even though the author makes a profit on your particular purchase for
the inherent value of the information.
Section I: Miscellaneous
Question I(1): The manufacturing plant that I work at is planning to
begin admitting groups of the general public to tour the plant
facilities. We are concerned that a license might be required if the
tour groups include foreign nationals. Would such a tour constitute an
export? If so, is the export subject to the EAR?
Answer: The EAR define exports and reexports of technology to
include release through visual inspection by foreign nationals of U.S.-
origin equipment and facilities. Such an export or reexport qualifies
under the ``publicly available'' provision and would not be subject to
the EAR so long as the tour is truly open to all members of the public,
including your competitors, and you do not charge a fee that is not
reasonably related to the cost of conducting the tours. Otherwise, you
will have to obtain a license, or qualify for a License Exception, prior
to permitting foreign nationals to tour your facilities (Sec. 734.7 of
this part).
Question I(2): Is the export or reexport of information subject to
the EAR if the information is not in a library or published, but sold at
a price that does not exceed the cost of reproduction and distribution?
Answer: Information that is not in a library accessible to the
public and that has not been published in any way, may nonetheless
become ``publicly available'' if you make it both available to a
community of persons and if you sell it at no more than the cost of
reproduction and distribution. Such reproduction and distribution costs
may include variable and fixed cost allocations of overhead and normal
profit for the reproduction and distribution functions either in your
company or in a third party distribution system. In your company, such
costs may not include recovery for development, design, or acquisition
costs of the technology or software. The reason for this conclusion is
that the provider of the information receives nothing for the inherent
value of the information.
Question I(3): Is the export or reexport of information contributed
to an electronic bulletin board subject to the EAR?
Answer: Assume each of the following:
1. Information is uploaded to an electronic bulletin board by a
person that is the owner or originator of the information;
2. That person does not charge a fee to the bulletin board
administrator or the subscribers of the bulletin board; and
3. The bulletin board is available for subscription to any
subscriber in a given community regardless of the cost of subscription.
Such information is ``publicly available'' and therefore not subject
to the EAR even if it is not elsewhere published and is not in a
library. The reason for this conclusion is that the bulletin board
subscription charges or line charges are for distribution exclusively,
and the provider of the information receives nothing for the inherent
value of the information.
Question I(4): Is the export or reexport of patented information
fully disclosed on the public record subject to the EAR?
Answer: Information to the extent it is disclosed on the patent
record open to the public is not subject to the EAR even though you may
use such information only after paying a fee in excess of the costs of
reproduction and distribution. In this case the seller does receive a
fee for the inherent value of the technical data; however, the export or
reexport of the information is nonetheless not subject to the EAR
because any person can obtain the technology from the public record and
further disclose or publish the information. For that reason, it is
impossible to impose export controls that deny access to the
information.
[61 FR 12746, Mar. 25, 1996, as amended at 61 FR 68579, Dec. 30, 1996]
Supplement No. 2 to Part 734--Calculation of Values for De Minimis Rules
(a) Use the following guidelines in determining values for
establishing exemptions or for submission of a request for
authorization:
(1) U.S. content value.
(i) U.S. content value is the delivered cost to the foreign
manufacturer of the U.S. origin parts, components, or materials. (When
affiliated firms have special arrangements that result in lower than
normal pricing, the cost should reflect ``fair market'' prices that
would normally be charged to similar, unaffiliated customers.)
(ii) In calculating the U.S. content value, do not include parts,
components, or materials that, according to the CCL (part 774 of the
EAR) and the Country Chart (part 738 of the EAR), could be exported from
the United States to the new country of destination without a license
(designated as ``NLR'') or under License Exception GBS (see part 740 of
the EAR).
(2) The foreign-made product value is the normal selling price
f.o.b. factory (excluding value added taxes or excise taxes).
(3) To determine the value of the U.S.-origin controlled content,
you should classify the U.S.-origin content on the Commerce Control
List, determine those items that
[[Page 160]]
would require a license from BXA for reexport to the ultimate
destination of the foreign-made product if such parts, components, or
materials were reexported to that destination in the form received, and
divide the total value of the controlled U.S. parts, components, and
materials incorporated into the foreign-made item by the sale price of
the foreign-made item.
(4) If no U.S. parts, components or materials are incorporated or if
the incorporated U.S. parts, components, and materials are below the de
minimis level, then the foreign-made item is not subject to the EAR by
reason of Sec. 734.4 of this part, the classification of a foreign-made
item is irrelevant in determining the scope of the EAR, and you should
skip Step 4 in Sec. 732.2(d) and go on to consider Step 6 in
Sec. 732.2(f) of the EAR regarding the foreign-produced direct product
rule.
(b) One-time report prior to reliance upon the de minimis exclusion.
Report requirement. Before you may rely upon the de minimis exclusion
for foreign software and technology commingled with U.S. software or
technology, you must file a one-time report for the foreign software or
technology. The report must include the percentage of U.S.-content by
value and a description of your calculations including relevant values,
assumptions, and the basis or methodologies for making the percentage
calculation. The three criteria important to BXA in its review of your
report will be the export price of the U.S.-content, the assumption
regarding future sales of software, and the choice of the scope of
foreign technology. Your methodologies must be based upon the accounting
standards used in the operation of your business, and you must specify
that standard in your report. Regardless of the accounting systems,
standard, or conventions you use in the operation of your business, you
may not depreciate the fair market values reported or otherwise reduce
the fair market values by other accounting conventions such as
depreciation. You may rely upon the de minimis exclusion from the
commingled rule only to the extent you have reported the relevant
calculations, values, assumptions, and the basis or methodologies for
the calculations. These values may be historic or projected. You may
rely on projected values only to the extent that and for so long as they
remain consistent with your report or future values reduce the U.S.-
content under your reported assumptions, basis, and methodologies. You
are not required to file the above report if you do not choose to take
advantage of the de minimis exclusion from the commingled rule.
(2) Export price. The report must include a description of the U.S.-
content including its classification on the Commerce Control List, its
performance characteristics and features, and the method of calculating
its fair market value. The fair market value shall be the arms-length
transaction price, if it is available. If an arms-length transaction
price is unavailable, then the report will describe the valuation method
chosen to calculate or derive the fair market value. Such methods may
include comparable market prices or costs of production and
distribution. This rule does not require calculations based upon any one
accounting system or U.S. accounting standards. However, you must
specify the accepted accounting standards you have chosen, and cost-
based methods of valuation must be based upon records you maintain in
the normal course of business. You should also indicate whether reported
values are actual arms-length market prices or derived from comparable
transactions or costs of production, overhead, and profit. For example,
if you chose to make calculations under the transfer pricing rules of
the United States Internal Revenue Code at section 482, your report
should indicate that this is the source for your methodology, and you
should also indicate which of the several methodologies in these
transfer pricing rules you have chosen.
(3) Future software sales. For calculations of U.S.-content in
foreign software, you shall include your estimate of future software
sales in units and value along with the rationale and basis for those
estimates in the report.
(4) Foreign technology and software. For calculations of U.S.-
content in foreign technology and software, you shall include in the
report a description of the foreign technology or software and a
description of its fair market value along with the rationale and basis
for the selection and valuation of such foreign software or technology.
The report does not require information regarding destinations and end
users for reexport. The purpose of the report is solely to permit the
U.S. Government to evaluate the reasonableness of U.S.-content
calculations.
(5) Report and wait. If you have not been contacted by BXA
concerning your report within thirty days after filing the report with
BXA, you may rely upon the calculations in your report and the de
minimis exclusions for software and technology for so long as you are
not contacted by BXA. BXA may contact you concerning your report to
inquire of you further or to indicate that BXA does not accept the
assumptions or rationale for your calculations. If you receive such a
contact or communication from BXA, you may not rely upon the de minimis
exclusions for software and technology in Sec. 734.4 of this part until
BXA has indicated whether or not you may do so in the future. You must
include in your report the name, title, address, telephone number, and
facsimile number of the person BXA may contact concerning your report.
[[Page 161]]
PART 736--GENERAL PROHIBITIONS--Table of Contents
Sec.
736.1 Introduction.
736.2 General prohibitions and determination of applicability.
Supplement No. 1 to Part 736--General Orders
Supplement No. 2 to Part 736--Administrative Orders
Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; E.O.
12924, 59 FR 43437, 3 CFR, 1994 Comp., p. 917; Executive Order 13026
(November 15, 1996, 61 FR 58767) Notice of August 15, 1995 (60 FR 42767,
August 17, 1995); and Notice of August 14, 1996 (61 FR 42527).
Source: 61 FR 12754, Mar. 25, 1996, unless otherwise noted.
Sec. 736.1 Introduction.
In this part, references to the EAR are references to 15 CFR chapter
VII, subchapter C. A person may undertake transactions subject to the
EAR without a license or other authorization, unless the regulations
affirmatively state such a requirement. As such, if an export, reexport,
or activity is subject to the EAR, the general prohibitions contained in
this part and the License Exceptions specified in part 740 of the EAR
must be reviewed to determine if a license is necessary. In the case of
all exports from the United States, you must document your export as
described in part 762 of the EAR regarding recordkeeping and clear your
export through the U.S. Customs Service as described in part 758 of the
EAR regarding export clearance requirements. Also note that for short
supply controls all prohibitions and License Exceptions are in part 754
of the EAR.
(a) In this part we tell you:
(1) The facts that make your proposed export, reexport, or conduct
subject to these general prohibitions, and
(2) The ten general prohibitions.
(b) Your obligations under the ten general prohibitions and under
the EAR depend in large part upon the five types of information
described in Sec. 736.2(a) of this part and upon the general
prohibitions described in Sec. 736.2(b) of this part. The ten general
prohibitions contain cross-references to other parts of the EAR that
further define the breadth of the general prohibitions. For that reason,
this part is not freestanding. In part 732, we provide certain steps you
may follow in proper order to help you understand the general
prohibitions and their relationship to other parts of the EAR.
(c) If you violate any of these ten general prohibitions, or engage
in other conduct contrary to the Export Administration Act, the EAR, or
any order, license, License Exception, or authorization issued
thereunder, as described in part 764 of the EAR regarding enforcement,
you will be subject to the sanctions described in that part.
Sec. 736.2 General prohibitions and determination of applicability.
(a) Information or facts that determine the applicability of the
general prohibitions. The following five types of facts determine your
obligations under the ten general prohibitions and the EAR generally:
(1) Classification of the item. The classification of the item on
the Commerce Control List (see part 774 of the EAR);
(2) Destination. The country of ultimate destination for an export
or reexport (see parts 738 and 774 of the EAR concerning the Country
Chart and the Commerce Control List);
(3) End-user. The ultimate end-user (see General Prohibition Four
(paragraph (b)(4) of this section) and parts 744 and 764 of the EAR for
a reference to the list of persons you may not deal with);
(4) End-use. The ultimate end-use (see General Prohibition Five
(paragraph (b)(5) of this section) and part 744 of the EAR for general
end-use restrictions); and
(5) Conduct. Conduct such as contracting, financing, and freight
forwarding in support of a proliferation project as described in part
744 of the EAR.
(b) General prohibitions. The following ten general prohibitions
describe certain exports, reexports, and other conduct, subject to the
scope of the EAR, in which you may not engage unless you either have a
license from the Bureau of Export Administration (BXA) or qualify under
part 740 of the EAR for a License Exception from each applicable general
prohibition in this paragraph. The License Exceptions at part 740 of the
EAR apply only to General
[[Page 162]]
Prohibitions One (Exports and Reexports in the Form Received), Two
(Parts and Components Reexports), and Three (Foreign-Produced Direct
Product Reexports); however, selected License Exceptions are
specifically referenced and authorized in part 746 of the EAR concerning
embargo destinations and in Sec. 744.2(c) of the EAR regarding nuclear
end-uses.
(1) General Prohibition One--Export and reexport of controlled items
to listed countries (Exports and Reexports). You may not, without a
license or License Exception, export any item subject to the EAR to
another country or reexport any item of U.S.-origin if each of the
following is true:
(i) The item is controlled for a reason indicated in the applicable
Export Control Classification Number (ECCN), and
(ii) Export to the country of destination requires a license for the
control reason as indicated on the Country Chart at part 738 of the EAR.
(The scope of this prohibition is determined by the correct
classification of your item and the ultimate destination as that
combination is reflected on the Country Chart.) 1 Note that
each License Exception described at part 740 of the EAR supersedes
General Prohibition One if all terms and conditions of a given License
Exception are met by the exporter or reexporter.
---------------------------------------------------------------------------
\1\ See part 738 of the EAR for selected controls that are not
specified on the Country Chart.
---------------------------------------------------------------------------
(2) General Prohibition Two--Reexport and export from abroad of
foreign-made items incorporating more than a de minimis amount of
controlled U.S. content (Parts and Components Reexports). (i) You may
not, without a license or License Exception, export, reexport or export
from abroad any foreign-made commodity, software, or technology
incorporating U.S.-origin commodities, software, or technology
respectively that is controlled to the country of ultimate destination
if the foreign-made item meets all three of the following conditions:
(A) It incorporates more than the de minimis amount of controlled
U.S. content, as defined in Sec. 734.4 of the EAR concerning the scope
of the EAR;
(B) It is controlled for a reason indicated in the applicable ECCN;
and
(C) Its export to the country of destination requires a license for
that control reason as indicated on the Country Chart. (The scope of
this prohibition is determined by the correct classification of your
foreign-made item and the ultimate destination, as that combination is
reflected on the Country Chart.)
(ii) Each License Exception described at part 740 of the EAR
supersedes General Prohibition One if all terms and conditions of a
given License Exception are met by the exporter or reexporter.
(3) General Prohibition Three--Reexport and export from abroad of
the foreign-produced direct product of U.S. technology and software
(Foreign-Produced Direct Product Reexports). (i) Country scope of
prohibition. You may not export, reexport, or export from abroad items
subject to the scope of this General Prohibition Three to Cuba, North
Korea, Libya, or a destination in Country Group D:1 (See Supplement No.
1 to part 740 of the EAR).
(ii) Product scope of foreign-made items subject to prohibition.
This General Prohibition 3 applies if an item meets either the
Conditions defining the direct product of technology or the Conditions
defining the direct product of a plant in paragraph (b)(3)(ii)(A) of
this section:
(A) Conditions defining direct product of technology. Foreign-made
items are subject to this General Prohibition 3 if they meet both of the
following conditions:
(1) They are the direct product of technology or software that
requires a written assurance as a supporting document for a license or
as a precondition for the use of License Exception TSR in Sec. 740.6 of
the EAR, and
(2) They are subject to national security controls as designated on
the applicable ECCN of the Commerce Control List at part 774 of the EAR.
(B) Conditions defining direct product of a plant. Foreign-made
items are also subject to this General Prohibition 3 if they are the
direct product of a complete plant or any major component of a plant if
both of the following conditions are met:
[[Page 163]]
(1) Such plant or component is the direct product of technology that
requires a written assurance as a supporting document for a license or
as a precondition for the use of License Exception TSR in Sec. 740.6 of
the EAR, and
(2) Such foreign-made direct products of the plant or component are
subject to national security controls as designated on the applicable
ECCN of the Commerce Control List at part 774 of the EAR.
(iii) License Exceptions. Each License Exception described at part
740 of the EAR supersedes this General Prohibition Three if all terms
and conditions of a given exception are met by the exporter or
reexporter.
(4) General Prohibition Four (Denial Orders)--Engaging in actions
prohibited by a denial order. (i) You may not take any action that is
prohibited by a denial order issued under part 766 of the EAR,
Administrative Enforcement Proceedings. These orders prohibit many
actions in addition to direct exports by the person denied export
privileges, including some transfers within a single country either in
the United States or abroad by other persons. You are responsible for
ensuring that any of your transactions in which a person who is denied
export privileges is involved do not violate the terms of the order. The
names of persons denied export privileges are published in the Federal
Register and are also included on the Denied Persons List, which is
referenced in Supplement No. 2 to part 764 of the EAR, Enforcement. The
terms of the standard denial order are set forth in Supplement No. 1 to
part 764. You should note that some denial orders differ from the
standard denial order. BXA may, on an exceptional basis, authorize
activity otherwise prohibited by a denial order. See Sec. 764.3(a)(3) of
the EAR.
(ii) There are no License Exceptions described in part 740 of the
EAR that authorize conduct prohibited by this General Prohibition Four.
(5) General Prohibition Five--Export or reexport to prohibited end-
uses or end-users (End-Use End-User). You may not, without a license,
knowingly export or reexport any item subject to the EAR to an end-user
of end-use that is prohibited by part 744 of the EAR.
(6) General Prohibition Six--Export or reexport to embargoed
destinations (Embargo). (i) You may not, without a license or License
Exception authorized under part 746, export or reexport any item subject
to the EAR to a country that is embargoed by the United States or
otherwise made subject to controls as both are described at part 746 of
the EAR.
(ii) License Exceptions to this General Prohibition Six are
described at part 746 of the EAR on Embargoes and Other Special
Controls; and unless a License Exception is authorized in part 746 of
the EAR, the License Exceptions at part 740 of the EAR are not available
to overcome this general prohibition.
(7) General Prohibition Seven--Support of Certain Activities by U.S.
persons--(i) Support of Proliferation Activities (U.S. Person
Proliferation Activity). If you are a U.S. Person as that term is
defined in Sec. 744.6(c) of the EAR, you may not engage in any
activities prohibited by Sec. 744.6 (a) or (b) of the EAR which
prohibits the performance, without a license from BXA, of certain
financing, contracting, service, support, transportation, freight
forwarding, or employment that you know will assist in certain
proliferation activities described further in part 744 of the EAR. There
are no License Exceptions to this General Prohibition Seven in part 740
of the EAR unless specifically authorized in that part.
(ii) You may not, without a license from BXA, provide certain
technical assistance to foreign persons with respect to encryption
items, as described in Sec. 744.9 of the EAR.
(8) General Prohibition Eight--In transit shipments and items to be
unladen from vessels or aircraft (Intransit). (i) Unlading and shipping
in transit. You may not export an item through or transit through a
country listed in (b)(8)(ii) of this section unless a License Exception
or license authorizes such an export directly to such a country of
transit.
(ii) Country scope. This General Prohibition Eight applies to
Albania, Armenia, Azerbaijan, Belarus, Bulgaria, Cambodia, Cuba,
Estonia, Georgia, Kazakhstan, Kyrgyzstan, Laos, Latvia, Lithuania,
Mongolia, North Korea, Russia, Tajikistan, Turkmenistan, Ukraine,
Uzbekistan, Vietnam.
[[Page 164]]
(9) General Prohibition Nine--Violation of any order, terms, and
conditions (Orders, Terms, and Conditions). You may not violate terms or
conditions of a license or of a License Exception issued under or made a
part of the EAR, and you may not violate any order issued under or made
a part of the EAR. There are no License Exceptions to this General
Prohibition Nine in part 740 of the EAR. Supplements Nos. 1 and 2 to
this part provide for certain General Orders and Administrative Orders.
(10) General Prohibition Ten--Proceeding with transactions with
knowledge that a violation has occurred or is about to occur (Knowledge
Violation to Occur). You may not sell, transfer, export, reexport,
finance, order, buy, remove, conceal, store, use, loan, dispose of,
transfer, 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. Nor may you rely
upon any license or License Exception after notice to you of the
suspension or revocation of that license or exception. There are no
License Exceptions to this General Prohibition Ten in part 740 of the
EAR.
[61 FR 12754, Mar. 25, 1996, as amended at 61 FR 64274, Dec. 4, 1996; 61
FR 68579, Dec. 30, 1996]
Supplement No. 1 to Part 736--General Orders [Reserved]
Supplement No. 2 to Part 736--Administrative Orders
Administrative Order One: Disclosure of License Issuance and Other
Information. Consistent with section 12(c) of the Export Administration
Act of 1979, as amended, information obtained by the U.S. Department of
Commerce for the purpose of consideration of or concerning license
applications, as well as related information, will not be publicly
disclosed without the approval of the Secretary of Commerce. Shipper's
Export Declarations also are exempt from public disclosure, except with
the approval of the Secretary of Commerce, in accordance with
Sec. 301(g) of Title 13, United States Code.
Administrative Order Two: Conduct of Business and Practice in
Connection with Export Control Matters.
(a) Conduct of business and practice in connection with export
control matters.
(1) Exclusion of persons guilty of unethical conduct or not
possessing required integrity and ethical standards.
(i) Who may be excluded. Any person, whether acting on his own
behalf or on behalf of another, who shall be found guilty of engaging in
any unethical activity or who shall be demonstrated not to possess the
required integrity and ethical standards, may be excluded from (denied)
export privileges on his own behalf, or may be excluded from practice
before BXA on behalf of another, in connection with any export control
matter, or both, as provided in part 764 of the EAR.
(ii) Grounds for exclusion. Among the grounds for exclusion are the
following:
(A) Inducing or attempting to induce by gifts, promises, bribes, or
otherwise, any officer or employee of BXA or any customs or post office
official, to take any action with respect to the issuance of licenses or
any other aspects of the administration of the Export Administration
Act, whether or not in violation of any regulation;
(B) Offering or making gifts or promises thereof to any such officer
or employee for any other reason;
(C) Soliciting by advertisement or otherwise the handling of
business before BXA on the representation, express or implied, that such
person, through personal acquaintance or otherwise, possesses special
influence over any officer or employee of BXA;
(D) Charging, or proposing to charge, for any service performed in
connection with the issuance of any license, any fee wholly contingent
upon the granting of such license and the amount or value thereof. This
provision will not be construed to prohibit the charge of any fee agreed
to by the parties; provided that the out-of-pocket expenditures and the
reasonable value of the services performed, whether or not the license
is issued and regardless of the amount thereof, are fairly compensated;
and
(E) Knowingly violating or participating in the violation of, or an
attempt to violate, any regulation with respect to the export of
commodities or technical data, including the making of or inducing
another to make any false representations to facilitate any export in
violation of the Export Administration Act or any order or regulation
issued thereunder.
(iii) Definition. As used in this Administration Order, the terms
``practice before BXA'' and ``appear before BXA'' include:
(A) The submission on behalf of another of applications for export
licenses or other documents required to be filed with BXA, or the
execution of the same;
[[Page 165]]
(B) Conferences or other communications on behalf of another with
officers or employees of BXA for the purpose of soliciting or expediting
approval by BXA of applications for export licenses or other documents,
or with respect to quotas, allocations, requirements or other export
control actions, pertaining to matters within the jurisdiction of BXA;
(C) Participating on behalf of another in any proceeding pending
before BXA; and
(D) Submission to a customs official on behalf of another of a
license or Shipper's Export Declaration or other export control
document.
(iv) Proceedings. All proceedings under this Administrative Order
shall be conducted in the same manner as provided in part 766 of the
EAR.
(2) Employees and former employees. Persons who are or at any time
have been employed on a full-time or part-time, compensated or
uncompensated, basis by the U.S. Government are subject to the
provisions of 18 U.S.C. 203, 205, and 207 (Pub. L. 87-849, 87th
Congress) in connection with representing a private party or interest
before the U.S. Department of Commerce in connection with any export
control matter.
PART 738--COMMERCE CONTROL LIST OVERVIEW AND THE COUNTRY CHART--Table of Contents
Sec.
738.1 Introduction.
738.2 Commerce Control List (CCL) structure.
738.3 Commerce Country Chart structure.
738.4 Determining whether a license is required.
Supplement No. 1 to Part 738--Commerce Country Chart
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); 18 U.S.C. 2510 et seq.; 22 U.S.C. 287c;
22 U.S.C. 3201 et seq.; 22 U.S.C. 6004; Sec. 201, Pub. L. 104-58, 109
Stat. 557 (30 U.S.C. 185(s)); 30 U.S.C. 185(u); 42 U.S.C. 2139a; 42
U.S.C. 6212; 43 U.S.C. 1354; 46 U.S.C. app. 466c; 50 U.S.C. app. 5; E.O.
12924, 59 FR 43437, 3 CFR, 1994 Comp., p. 917; Executive Order 13026
(November 15, 1996, 61 FR 58767); Notice of August 15, 1995 (60 FR
42767, August 17, 1995); and Notice of August 14, 1996 (61 FR 42527).
Source: 61 FR 112756, Mar. 25, 1996, unless otherwise noted.
Sec. 738.1 Introduction.
(a) Commerce Control List scope. (1) In this part, references to the
EAR are references to 15 CFR chapter VII, subchapter C. The Bureau of
Export Administration (BXA) maintains the Commerce Control List (CCL)
within the Export Administration Regulations (EAR), which includes items
(i.e., commodities, software, and technology) subject to the export
licensing authority of BXA. The CCL does not include those items
exclusively controlled for export or reexport by another department or
agency of the U.S. Government. In instances where agencies other than
the Department of Commerce administer controls over related items,
entries in the CCL contain a reference to these controls.
(2) The CCL is contained in Supplement No. 1 to part 774 of the EAR.
Supplement No. 2 to part 774 of the EAR contains the General Technology
and Software Notes relevant to entries contained in the CCL.
(b) Commerce Country Chart scope. BXA also maintains the Commerce
Country Chart. The Commerce Country Chart, located in Supplement No. 1
to part 738, contains licensing requirements based on destination and
Reason for Control. In combination with the CCL, the Commerce Country
Chart allows you to determine whether a license is required for items on
the CCL to any country in the world.
Sec. 738.2 Commerce Control List (CCL) structure.
(a) Categories. The CCL is divided into 10 categories, numbered as
follows:
0--Nuclear Materials, Facilities and Equipment and Miscellaneous
1--Materials, Chemicals, ``Microorganisms,'' and Toxins
2--Materials Processing
3--Electronics
4--Computers
5--Telecommunications and Information Security
6--Lasers and Sensors
7--Navigation and Avionics
8--Marine
9--Propulsion Systems, Space Vehicles and Related Equipment
(b) Groups. Within each category, items are arranged by group. Each
category contains the same five groups. Each Group is identified by the
letters A through E, as follows:
A--Equipment, Assemblies and Components
B--Test, Inspection and Production Equipment
C--Materials
[[Page 166]]
D--Software
E--Technology
(c) Order of review. In order to classify your item against the CCL,
you should begin with a review of the general characteristics of your
item. This will usually guide you to the appropriate category on the
CCL. Once the appropriate category is identified, you should match the
particular characteristics and functions of your item to a specific
ECCN. If the ECCN contains a list under the ``Items'' heading, you
should review the list to determine within which subparagraph(s) your
items are identified.
(d) Entries. (1) Composition of an entry. Within each group,
individual items are identified by an Export Control Classification
Number (ECCN). Each number consists of a set of digits and a letter. The
first digit identifies the general category within which the entry falls
(e.g., 3A001). The letter immediately following this first digit
identifies under which of the five groups the item is listed (e.g.,
3A001). The second digit differentiates individual entries by
identifying the type of controls associated with the items contained in
the entry (e.g., 3A001). Listed below are the Reasons for Control
associated with this second digit.
0: National Security reasons (including Dual Use and International
Munitions List) and Items on the NSG Dual Use Annex and
Trigger List
1: Missile Technology reasons
2: Nuclear Nonproliferation reasons
3: Chemical & Biological Weapons reasons
9: Anti-terrorism, Crime Control, Regional Stability, Short Supply, UN
Sanctions, etc.
(i) Since Reasons for Control are not mutually exclusive, numbers
are assigned in order of precedence. As an example, if an item is
controlled for both National Security and Missile Technology reasons,
the entry's third digit will be a ``0''. If the item is controlled only
for Missile Technology the third digit will be ``1''.
(ii) The numbers in either the second or third digit (e.g., 3A001)
serve to differentiate between multilateral and unilateral entries. An
entry with the number ``9'' as the second digit, identifies the entire
entry as controlled for a unilateral concern (e.g., 2B991 for anti-
terrorism reasons). If the number ``9'' appears as the third digit, the
item is controlled for unilateral purposes based on a proliferation
concern (e.g., 2A292 is controlled for unilateral purposes based on
nuclear nonproliferation concerns).
(2) Reading an ECCN. A brief description is provided next to each
ECCN. Following this description is the actual entry containing
``License Requirements,'' ``License Exceptions,'' and ``List of Items
Controlled'' sections. A brief description of each section and its use
follows:
(i) License Requirements. This section contains a separate line
identifying all possible Reasons for Control in order of precedence, and
two columns entitled ``Control(s)'' and ``Country Chart''.
(A) The ``Controls'' header identifies all applicable Reasons for
Control, in order of restrictiveness, and to what extent each applies
(e.g., to the entire entry or only to certain subparagraphs). Those
requiring licenses for a larger number of countries and/or items are
listed first. As you read down the list the number of countries and/or
items requiring a license declines. Since Reasons for Control are not
mutually exclusive, items controlled within a particular ECCN may be
controlled for more than one reason. The following is a list of all
possible Reasons for Control:
AT Anti-Terrorism
CB Chemical & Biological Weapons
CC Crime Control
EI Encryption Items
MT Missile Technology
NS National Security
NP Nuclear Nonproliferation
RS Regional Stability
SS Short Supply
XP Computers
(B) The ``Country Chart'' header identifies, for each applicable
Reason for Control, a column name and number (e.g., CB Column 1). These
column identifiers are used to direct you from the CCL to the
appropriate column identifying the countries requiring a license.
Consult part 742 of the EAR for an indepth discussion of the licensing
requirements and policies applicable to each Country Chart column.
(ii) License Exceptions. This section provides a brief eligibility
statement
[[Page 167]]
for each ECCN-driven License Exception that may be applicable to your
transaction, and should be consulted only AFTER you have determined a
license is required based on an analysis of the entry and the Country
Chart. The brief eligibility statement in this section is provided to
assist you in deciding which ECCN-driven License Exception related to
your particular item and destination you should explore prior to
submitting an application. The word ``Yes'' (followed in some instances
by the scope of Yes) appears next to each available ECCN-driven License
Exception. ``N/A'' will be noted for License Exceptions that are not
available within a particular entry. If one or more License Exceptions
appear to apply to your transaction, you must consult part 740 of the
EAR to review the conditions and restrictions applicable to each
available License Exception.
(iii) List of Items Controlled--(A) Units. The unit of measure
applicable to each entry is identified in the ``Units'' header. Most
measurements used in the CCL are expressed in metric units with an inch-
pound conversion where appropriate. Note that in some ECCNs the inch-
pound unit will be listed first. In instances where other units are in
general usage or specified by law, these will be used instead of metric.
Generally, when there is a difference between the metric and inch-pound
figures, the metric standard will be used for classification and
licensing purposes.
(B) Related definitions. This header identifies, where appropriate,
definitions or parameters that apply to all items controlled by the
entry. The information provided in this section is unique to the entry,
and hence not listed in the definitions contained in part 772 of the
EAR.
(C) Related controls. If another U.S. government agency or
department has export licensing authority over items related to those
controlled by an entry, a statement is included identifying the agency
or department along with the applicable regulatory cite. An additional
cross-reference may be included in instances where the scope of controls
differs between a CCL entry and its corresponding entry on list
maintained by the European Union. This information is provided to assist
readers who use both lists.
(D) Items. This header contains a positive list of all items
controlled by a particular entry and must be reviewed to determine
whether your item is controlled by that entry. In some entries, the list
is contained within the entry heading. In these entries a note is
included to direct you to the entry heading.
[61 FR 112756, Mar. 25, 1996, as amended at 61 FR 68579, Dec. 30, 1996]
Sec. 738.3 Commerce Country Chart structure.
(a) Scope. The Commerce Country Chart (Country Chart) allows you to
determine, based on the Reason(s) for Control associated with your item,
if you need a license to export or reexport your item to a particular
destination. There are only two instances where the chart cannot be used
for this purpose:
(1) Items controlled for short supply reasons. Due to the unique
nature of these controls, entries controlled for Short Supply reasons
will send you directly to part 754 of the EAR. Part 754 of the EAR is
self-contained and includes information on licensing requirements,
licensing policies, and all available License Exceptions, for items
controlled for Short Supply reasons.
(2) Unique entries. The following are unique entries where you do
not need to consult the Country Chart to determine whether a license is
required.
(A) ECCNs 0A983 and 5A980. A license is required for all
destinations of items controlled under these entries. No License
Exceptions apply. If your item is controlled by 0A983 or 5A980 you
should proceed directly to part 748 of the EAR for license application
instructions and Sec. 742.11 or Sec. 742.13 of the EAR for information
on the licensing policy relevant to these types of applications.
(B) ECCNs 0A986, 0A988, 1A988, 2A994, 2D994, 2E994 and 2B985. A
license is required for items controlled under these entries only to the
specific countries identified within each entry.
(b) Countries. The first column of the Country Chart lists all
countries in alphabetical order. There are a number of destinations that
are not listed in
[[Page 168]]
the Country Chart contained in Supplement No. 1 to part 738. If your
destination is not listed on the Country Chart and such destination is a
territory, possession, or department of a country included on the
Country Chart, the EAR accords your destination the same licensing
treatment as the country of which it is a territory, possession, or
department. For example, if your destination is the Cayman Islands, a
dependent territory of the United Kingdom, consult the United Kingdom on
the Country Chart for licensing requirements.
(c) Columns. Stretching out to the right are horizontal headers
identifying the various Reasons for Control. Under each Reason for
Control header are diagonal column identifiers capping individual
columns. Each column identifier consists of the two letter Reason for
Control and a column number. (e.g., CB Column 1). The column identifiers
correspond to those listed in the ``Country Chart'' header within the
``License Requirements'' section of each ECCN.
(d) Cells. The symbol ``X'' is used to denote licensing requirements
on the Country Chart. If an ``X'' appears in a particular cell,
transactions subject to that particular Reason for Control/Destination
combination require a license. There is a direct correlation between the
number of ``X''s applicable to your transaction and the number of
licensing reviews your application will undergo.
Sec. 738.4 Determining whether a license is required.
(a) Using the CCL and the Country Chart--(1) Overview. Once you have
determined that your item is controlled by a specific ECCN, you must use
information contained in the ``License Requirements'' section of that
ECCN in combination with the Country Chart to decide whether a license
is required.
(2) License decision making process. The following decision making
process must be followed in order to determine whether a license is
required to export or reexport a particular item to a specific
destination:
(i) Examine the appropriate ECCN in the CCL. Is the item you intend
to export or reexport controlled for a single Reason for Control?
(A) If yes, identify the single Reason for Control and the relevant
Country Chart column identifier (e.g., CB Column 1).
(B) If no, identify the Country Chart column identifier for each
applicable Reason for Control (e.g., NS Column 1, NP Column 1, etc.).
(ii) Review the Country Chart. With each of the applicable Country
Chart Column identifiers noted, turn to the Country Chart (Supplement
No. 1 to part 738). Locate the correct Country Chart column identifier
on the diagonal headings, and determine whether an ``X'' is marked in
the cell next to the country in question for each Country Chart column
identified in the applicable ECCN. If your item is subject to more than
one reason for control, repeat this step using each unique Country Chart
column identifier.
(A) If yes, a license application must be submitted based on the
particular reason for control and destination, unless a License
Exception applies. If ``Yes'' is noted next to any of the listed License
Exceptions, you should consult part 740 of the EAR to determine whether
you can use any of the available ECCN-drvien License Exceptions to
effect your shipment, rather than applying for a license. Each
affirmative license requirement must be overcome by a License Exception.
If you are unable to qualify for a License Exception based on each
license requirement noted on the Country Chart, you must apply for a
license. Note that other License Exceptions, not related to the CCL, may
also apply to your transaction (See part 740 of the EAR).
(B) If no, a license is not required based on the particular reason
for control and destination. Provided General Prohibitions Four through
Ten do not apply to your proposed transaction, you may effect your
shipment using the symbol ``NLR''. Proceed to parts 758 and 762 of the
EAR for information on export clearance procedures and recordkeeping
requirements. Note that although you may stop after determining a
license is required based on the first Reason for Control, it is best to
work through each applicable Reason for
[[Page 169]]
Control. A full analysis of every possible licensing requirement based
on each applicable Reason for Control is required to determine the most
advantageous License Exception available for your particular transaction
and, if a license is required, ascertain the scope of review conducted
by BXA on your license application.
(b) Sample analysis using the CCL and Country Chart--(1) Scope. The
following sample entry and related analysis is provided to illustrate
the type of thought process you must complete in order to determine
whether a license is required to export or reexport a particular item to
a specific destination using the CCL in combination with the Country
Chart.
(2) Sample CCL entry.
2A000: Entry heading.
License Requirements
Reason for Control: NS, NP, AT
------------------------------------------------------------------------
Control(s) Country Chart
------------------------------------------------------------------------
NS applies to entire entry................. NS Column 2
NP applies to 2A000.b...................... NP Column 1
AT applies to entire entry................. AT Column 1
------------------------------------------------------------------------
License Exceptions
LVS: $5,000
GBS: Yes
CIV: N/A
List of Items Controlled
Unit: Number
Related Definition: N/A
Related Controls: N/A
Items:
a. Having x.
b. Having z.
(3) Sample analysis. After consulting the CCL, I determine my item,
valued at $10,000, is classified under ECCN 2A000.a. I read that the
entire entry is controlled for national security, and anti-terrorism
reasons. Since my item is classified under paragraph .a, and not .b, I
understand that though nuclear nonproliferation controls apply to a
portion the entry, they do not apply to my item. I note that the
appropriate Country Chart column identifiers are NS Column 2 and AT
Column 1. Turning to the Country Chart, I locate my specific
destination, India, and see that an ``X'' appears in the NS Column 2
cell for India, but not in the AT Column 1 cell. I understand that a
license is required, unless my transaction qualifies for a License
Exception or Special Comprehensive License. From the License Exception
LVS value listed in the entry, I know immediately that my proposed
transaction exceeds the value limitation associated with LVS. Noting
that License Exception GBS is ``Yes'' for this entry, I turn to part 740
of the EAR to review the provisions related to use of GBS.
[[Page 170]]
[GRAPHIC] [TIFF OMITTED] TR25MR96.000
[[Page 171]]
[GRAPHIC] [TIFF OMITTED] TR25MR96.001
[[Page 172]]
[GRAPHIC] [TIFF OMITTED] TR25MR96.002
[[Page 173]]
[GRAPHIC] [TIFF OMITTED] TR25MR96.003
[[Page 174]]
[GRAPHIC] [TIFF OMITTED] TR25MR96.004
[[Page 175]]
[GRAPHIC] [TIFF OMITTED] TR25MR96.005
[[Page 176]]
[GRAPHIC] [TIFF OMITTED] TR25MR96.006
[[Page 177]]
[GRAPHIC] [TIFF OMITTED] TR25MR96.007
[[Page 178]]
PART 740--LICENSE EXCEPTIONS--Table of Contents
Sec.
740.1 Introduction.
740.2 Restrictions on all License Exceptions.
740.3 Shipments of limited value (LVS).
740.4 Shipments to Country Group B countries (GBS).
740.5 Civil end-users (CIV).
740.6 Technology and software under restriction (TSR).
740.7 Computers (CTP).
740.8 Key management infrastructure.
740.9 Temporary imports, exports, and reexports (TMP).
740.10 Servicing and replacement of parts and equipment (RPL).
740.11 Governments and international organizations (GOV).
740.12 Gift parcels and humanitarian donations (GFT).
740.13 Technology and software--unrestricted (TSU).
740.14 Baggage (BAG).
740.15 Aircraft and vessels (AVS).
740.16 Additional Permissive Reexports (APR).
Supplement No. 1 to Part 740--Country Groups
Supplement No. 2 to Part 740--Items That May Be Donated to Meet Basic
Human Needs Under the Humanitarian License Exception
Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; E.O.
12924, 59 FR 43437, 3 CFR, 1994 Comp., p. 917; Executive Order 13026
(November 15, 1996, 61 FR 58767) Notice of August 15, 1995 (60 FR 42767,
August 17, 1995); and Notice of August 14, 1996 (61 FR 42527).
Source: 61 FR 12768, Mar. 25, 1996, unless otherwise noted.
Sec. 740.1 Introduction.
In this part, references to the EAR are references to 15 CFR chapter
VII, subchapter C.
(a) Scope. A ``License Exception'' is an authorization contained in
this part that allows you to export or reexport, under stated
conditions, items subject to the Export Administration Regulations (EAR)
that would otherwise require a license under General Prohibitions One,
Two, or Three, as indicated under one or more of the Export Control
Classification Numbers (ECCN) in the Commerce Control List (CCL) in part
774 of the EAR. If your export or reexport is subject to General
Prohibition Six for embargoed destinations, refer to part 746 of the EAR
concerning embargoed destinations to determine the availability of any
License Exception. Special commodity controls apply to short supply
items. Exceptions for items listed on the CCL as controlled for Short
Supply reasons are found in part 754 of the EAR. If your export or
reexport is subject General Prohibition Seven, consult part 744 of the
EAR. If your export or reexport is subject to General Prohibitions Four,
Five, Eight, Nine, or Ten, then no License Exceptions apply.
(b) Certification. By using any of the License Exceptions you are
certifying that the terms, provisions, and conditions for the use of the
License Exception described in the EAR have been met. Please refer to
part 758 of the EAR for clearance of shipments and documenting the use
of License Exceptions.
(c) License Exception symbols. Each License Exception bears a three
letter symbol that will be used for export clearance purposes (see
paragraph (d) of this section).
(d) Shipper's Export Declaration--(1) Clearing exports under License
Exceptions. You must enter on any required Shipper's Export Declaration
(SED) the letter code (e.g., LVS, TMP) of the License Exception(s) under
which you are exporting. In the case of License Exceptions LVS, GBS, and
CIV, the ECCN of the item being exported must also be entered. Please
refer to Sec. 758.3 of the EAR for the use of SEDs.
(2) Clearing exports when no license is required (NLR). Certain
items are listed on the CCL but do not require a license to certain
destinations under General Prohibitions One, (Exports and Reexports in
the Form Received), Two (Parts and Components Reexports), or Three
(Foreign Produced Direct Product Reexports) (Sec. 732.6 (b)(1), (b)(2),
or (b)(3) of the EAR). (You will have determined this by consulting the
Country Chart and finding no ``X'' in the box(es) at the intersection(s)
of your country of destination and the column headings assigned to your
item by the CCL.) If General Prohibitions Four through Ten (Sec. 732.6
(b)(4) through (b)(10) of the EAR) also do not apply, you must clear
exports of such items by entering the symbol ``NLR'' in the
[[Page 179]]
appropriate place on the Shippers Export Declaration. The term ``NLR''
represents exports of listed items when no license is required. Such
exports do not require that you qualify for a License Exception.
(e) Destination Control Statement. You may be required to enter an
appropriate Destination Control Statement on commercial documents in
accordance with the Destination Control Statement requirements of
Sec. 758.5 of the EAR.
(f) Recordkeeping. Records of transactions involving exports under
any of the License Exceptions must be maintained in accordance with the
recordkeeping requirements of part 762 of the EAR.
[61 FR 12768, Mar. 25, 1996, as amended at 61 FR 64274, Dec. 4, 1996]