[Federal Register Volume 77, Number 120 (Thursday, June 21, 2012)]
[Proposed Rules]
[Pages 37524-37547]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-15074]



[[Page 37523]]

Vol. 77

Thursday,

No. 120

June 21, 2012

Part III





Department of Commerce





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Bureau of Industry and Security





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15 CFR Parts 734, 736, 740, et al.





Proposed Revisions to the Export Administration Regulations: 
Implementation of Export Control Reform; Revisions to License 
Exceptions After Retrospective Regulatory Review; Proposed Rule

  Federal Register / Vol. 77 , No. 120 / Thursday, June 21, 2012 / 
Proposed Rules  

[[Page 37524]]


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DEPARTMENT OF COMMERCE

Bureau of Industry and Security

15 CFR Parts 734, 736, 740, 742, 743, 744, 750, 758, 762, 764, 774

[Docket No. 120501427-2427-01]
RIN 0694-AF65


Proposed Revisions to the Export Administration Regulations: 
Implementation of Export Control Reform; Revisions to License 
Exceptions After Retrospective Regulatory Review

AGENCY: Bureau of Industry and Security, Commerce.

ACTION: Proposed rule.

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SUMMARY: President Obama directed the Administration in August 2009 to 
conduct a broad-based review of the U.S. export control system in order 
to identify additional ways to enhance national security. Then-
Secretary of Defense Gates described in April 2010 the initial results 
of that effort and why fundamental reform of the U.S. export control 
system is necessary to enhance national security. Since then, the 
Bureau of Industry and Security (BIS), Department of Commerce, and the 
Directorate of Defense Trade Controls (DDTC), Department of State, have 
published multiple proposed amendments to the Export Administration 
Regulations (EAR) and the International Traffic in Arms Regulations 
(ITAR), respectively, that would implement various aspects of what has 
become known as the Export Control Reform Initiative. One aspect of the 
reform effort would result in the transfer of control to the EAR of 
items the President determines no longer warrant control under ITAR, 
once congressional notification requirements and corresponding 
amendments to the ITAR and the EAR are completed. This proposed rule 
addresses issues pertaining to transition of control over such items. 
It complements the Export Control Transition Plan, a proposed policy 
statement and request for comments issued by DDTC.
    This rule proposes to amend the EAR by, inter alia, establishing a 
General Order regarding continued use of State authorizations for a 
specified period, by broadening license exceptions in the EAR to make 
them consistent with ITAR exemptions, and by extending the validity 
period of Commerce licenses. Any modifications to License Exceptions 
specific to particular types of items, such as firearms, will be 
addressed in the proposed rules pertaining specifically to those items. 
This rule also addresses specific concerns raised in public comments on 
recent rules by proposing a revised de minimis rule for ``600 series'' 
items, i.e., the items the President determines no longer warrant 
control on the USML and that would thus be controlled in the ``600 
series'' of the EAR's Commerce Control List (CCL). Finally, this rule 
proposes additional conforming changes that are necessary to implement 
the Export Control Reform Initiative, but also would affect items 
currently subject to the EAR, such as changes to reporting thresholds 
for the Automated Export System.
    In addition, this proposed rule addresses issues raised by the 
public in response to a notice requesting comments on the streamlining 
of BIS's regulations published on August 5, 2011 (76 FR 47527). On 
January 18, 2011, President Barack Obama issued Executive Order 13563, 
affirming general principles of regulation and directing government 
agencies to conduct retrospective reviews of existing regulations. 
Although the Export Control Reform Initiative did not originate with 
Executive Order 13563, it is entirely consistent in spirit and 
substance. BIS issued a notice soliciting public comment on 
streamlining its regulations pursuant to the President's Executive 
Order. In response to the public comments received on the notice, and 
consistent with BIS's internal analysis, this rule proposes revisions 
to license exceptions for government uses and temporary exports that 
streamline and update unduly complex or outmoded provisions in addition 
to broadening certain provisions to implement Export Control Reform. 
Other proposed changes to the EAR warranted by the Executive Order will 
be addressed in separate Federal Register notices. Commerce's full plan 
can be accessed at: http://open.commerce.gov/news/2011/08/23/commerce-plan-retrospective-analysis-existing-rules.

DATES: Comments must be received by BIS no later than August 6, 2012.

ADDRESSES: Comments may be submitted to the Federal rulemaking portal 
(http://www.regulations.gov). The regulations.gov ID for this notice of 
inquiry is: BIS-2012-0024. Comments may also be submitted via email to 
[email protected] or on paper to Regulatory Policy Division, 
Bureau of Industry and Security, Room 2099B, U.S. Department of 
Commerce, Washington, DC 20230. Please refer to RIN 0694-AF65 in all 
comments and in the subject line of email comments. All comments must 
be in writing. All comments (including any personal identifiable 
information) will be available for public inspection and copying. Those 
wishing to comment anonymously may do so by submitting their comment 
via regulations.gov and leaving the fields for identifying information 
blank.

FOR FURTHER INFORMATION CONTACT: Hillary Hess or Timothy Mooney, 
Regulatory Policy Division, Office of Exporter Services, Bureau of 
Industry and Security at 202-482-2440 or [email protected].

SUPPLEMENTARY INFORMATION:

Background

The Export Control Reform Initiative

    The objective of the Export Control Reform Initiative is to protect 
and enhance U.S. national security interests. On July 15, 2011 (76 FR 
41958), BIS published a proposed rule, Proposed Revisions to the Export 
Administration Regulations (EAR): Control of Items the President 
Determines No Longer Warrant Control Under the United States Munitions 
List (USML). The July 15 rule proposed a regulatory framework to 
control items on the USML that, in accordance with section 38(f) of the 
Arms Export Control Act (AECA) (22 U.S.C. 2778(f)(1)), the President 
determines no longer warrant control under the AECA. These items would 
be controlled under the Export Administration Regulations (EAR) once 
the congressional notification requirements of section 38(f) and 
corresponding amendments to the International Traffic in Arms 
Regulations (ITAR) (22 CFR parts 120-130) and its USML and the EAR and 
its Commerce Control List (CCL) are completed. After the July 15 rule 
established this regulatory framework, subsequent rules, including the 
November 7, 2011 (76 FR 68675) proposed rule, proposed specific changes 
to the USML and the CCL.
    Once the ITAR and its USML are amended so that they control only 
the items that provide the United States with a critical military or 
intelligence advantage or otherwise warrant the controls of the ITAR, 
and the EAR is amended to control military items that do not warrant 
USML controls, the U.S. export control system will enhance national 
security by (i) improving interoperability of U.S. military forces with 
allied countries, (ii) strengthening the U.S. industrial base by, among 
other things, reducing incentives for foreign manufacturers to design 
out and avoid U.S.-origin content and services, and (iii) allowing 
export control officials to

[[Page 37525]]

focus government resources on transactions of more concern.
    All references to the United States Munitions List (``USML'') in 
this rule are to the list of defense articles that are controlled for 
purposes of export or temporary import pursuant to the International 
Traffic in Arms Regulations (``ITAR''), 22 CFR Parts 120 et seq., and 
not to the list of defense articles on the USML that are controlled by 
the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) for 
purpose of permanent import under its regulations at 27 CFR part 447. 
Pursuant to section 38(a)(1) of the Arms Export Control Act (AECA), all 
defense articles controlled for export or import are part of the 
``USML'' under the AECA. For the sake of clarity, the list of defense 
articles controlled by ATF for purposes of permanent import are on the 
United States Munitions Import List (USMIL). The transfer of defense 
articles from the ITAR's USML to the EAR's CCL for purposes of export 
controls does not affect the list of defense articles controlled on the 
USMIL under the AECA for purposes of permanent import controls.

Public Comments on the July 15 and November 7 Proposed Rules

    BIS received 43 comments in response to the July 15 proposed rule. 
Those who submitted comments generally supported the proposed 
amendments to the EAR and the Export Control Reform Initiative 
objectives. However, they also expressed both general concerns about 
the process of transition from State to Commerce jurisdiction and 
specific concerns regarding certain proposed provisions. With respect 
to general concerns regarding the transition, nine commenters addressed 
perceived burdens caused by implementation of Export Control Reform, 
specifically expressing concern over shorter validity periods for 
licenses under the EAR than the ITAR and difficulty complying with two 
sets of regulations in the same transaction. They urged incremental 
implementation, including grandfathering of ITAR licenses and 
continuing opportunities for public participation in the rulemaking 
process. Ten commenters found that certain ITAR exemptions were broader 
than EAR license exceptions. While these comments on implementation 
concerns were outside the scope of the July 15 rule, they did 
anticipate issues that BIS planned to address in this proposed rule. 
One commenter requested adoption of a single licensing form, which is 
outside the scope of this rule but nonetheless something the 
Administration has announced it is developing.
    With respect to specific proposed provisions, fourteen commenters 
found the July 15 proposal regarding a revised de minimis rule for 
``600 series'' items too complex and unworkable. Commenters stated that 
having a 10 percent de minimis rule for ``600 series'' items and a 25 
percent de minimis rule for all other items subject to the EAR would be 
extremely burdensome, if not impossible, for the commenters to 
calculate.
    Three commenters on the July 15 rule requested clarification 
regarding application of the China military end-use restriction to 
``600 series'' items.
    Similar to the July 15 rule, BIS received public comments regarding 
implementation concerns in response to the November 7 rule. 
Implementation concerns were generally outside the scope of the 
November 7 rule, which proposed CCL entries for aircraft and related 
items the President determines do not warrant control on the USML; 
however, five commenters raised the issue that certain ITAR exemptions 
were broader than comparable EAR license exceptions.
    BIS plans to address comments received in response to the July 15 
and November 7 proposed rules, to the extent that they are germane to 
this proposed rule, when this rule is published in final form.

The ``600 Series'' and U.S. Arms Embargoed Countries

    As noted in the preamble to the July 15 rule, items determined to 
no longer warrant control under the ITAR would be controlled by a new 
series of ECCNs identified by the ``6'' at the third character of each 
ECCN and collectively referred to as ``600 series'' items. While these 
items no longer would be subject to the ITAR, they still would be 
military items or items ``specially designed'' for military uses. BIS 
is not suggesting by their inclusion on the CCL that they are ``dual-
use'' items. The CCL controls ``dual use'' (e.g., items designed for 
both military and civil applications), exclusively military, and other 
types of items warranting control. The amendments at issue in this part 
of the Export Control Reform Initiative would merely add significantly 
more military items to controls of the EAR. Applications to export such 
items to countries subject to U.S. arms embargoes as described in Sec.  
126.1 of the ITAR and subsequently in proposed Sec.  740.2 (a)(12) of 
the EAR in the July 15 rule would be subject to the general policy of 
denial proposed in the November 7 rule. (An exception to this would be 
those items contained in the .y paragraph of each ``600 series'' ECCN; 
while they are military items, they are so militarily insignificant 
that licenses would not be required except for export to terrorist 
supporting countries or for a military end use in China.) Another 
general principle underlying the incorporation of the ``600 series'' 
into the EAR is that because items subject to the EAR are less 
militarily significant than those subject to the ITAR, EAR exceptions 
should not be more restrictive than comparable ITAR exemptions. 
Similarly, EAR procedures should not be more restrictive than 
comparable ITAR procedures. As one public comment in response to the 
July 15 rule stated, ``[r]egulatory changes that have the unintended 
result of being more onerous than current requirements are not 
beneficial for U.S. national security or economic interests and will 
not further the stated objectives of comprehensive Export Control 
Reform.'' BIS agrees.

Revisions Addressed in This Proposed Rule

    This rule proposes certain measures to ease the transition for 
those items moving from State to Commerce jurisdiction, including 
establishing a General Order regarding continued use of State 
authorizations for a specified period, broadening license exceptions 
consistent with ITAR exemptions, and extending the two-year validity 
period of Commerce licenses to match State's four-year period. In the 
course of broadening certain license exceptions, this rule streamlines 
and updates existing text to reduce undue complexity. This rule also 
addresses concerns regarding the de minimis rule by proposing 
alternative provisions. Specifically, this rule responds to public 
comments by proposing a uniform 25 percent de minimis rule for 
reexports of ``600 series'' items to all countries, except for 
countries subject to U.S. arms embargoes, which would be subject to a 
zero percent de minimis rule.
    Moreover, this rule augments the framework constructed by the July 
15 rule (and modified by the November 7 rule) by proposing additional 
changes to the EAR necessary to implement Export Control Reform. Note 
that in addition to applying to items transitioning from the ITAR, many 
revisions also would apply to items currently subject to the EAR, such 
as changes to validity periods and reporting thresholds for the 
Automated Export System.
    Finally, in response to Executive Order 13563, this rule proposes 
revisions to license exceptions for government uses and temporary 
exports

[[Page 37526]]

that streamline and update unduly complex or outmoded provisions in 
addition to broadening certain provisions to implement Export Control 
Reform. On August 5, 2011, BIS issued a notice soliciting public 
comments on all of its existing and proposed rules, with the exception 
of those rules related to the Export Control Reform Initiative, which 
solicit public comment separately. The comment period for the notice 
closed on February 1, 2012. BIS received 22 comments. Three issues 
raised in these comments involve issues related to transition issues 
and are addressed in this proposed rule. The comments relevant to this 
rule suggested various amendments to make the EAR more consistent with 
the ITAR and State Department policy. License Exception GOV should be 
broadened to include those acting on behalf of the U.S. Government. 
License Exception TSU should be broadened to allow release of 
technology in the United States by U.S. universities to their 
employees. License validity periods should be lengthened. These 
comments dovetailed with comments submitted in response to the July 15 
and November 7 rules, and with BIS's own analysis. These proposed 
changes are discussed in the License Exception and License Issuance 
sections. Other comments on the August 5 notice will be summarized in 
future proposed rules as those issues are addressed. Commerce's full 
plan can be accessed at: http://open.commerce.gov/news/2011/08/23/commerce-plan-retrospective-analysis-existing-rules.

Transition

    This proposed rule details, and solicits public comment on, the 
amendments to the EAR that would be necessary to effect the transition 
of items from the ITAR. In addition to protecting and enhancing U.S. 
national security, Export Control Reform is expected to generate 
significant long-term benefits for U.S. exporters in the form of more 
efficient and flexible export controls that are more tailored to the 
significance of the item. In contrast, the ITAR, as a result of the 
Arms Export Control Act, is a less flexible regulatory structure. The 
least significant part or component is generally controlled the same 
way as the most significant part or component and the end item itself. 
In the short term, however, both government and industry will need to 
adjust licensing and compliance procedures.
    BIS anticipates that the Department of State, Directorate of 
Defense Trade Controls (DDTC) will set forth approximately a two-year 
period during which, under certain circumstances, holders of DDTC 
authorizations that include items transitioning to the EAR may continue 
to use those authorizations. This proposed rule should be read in 
conjunction with DDTC's proposed policy statement regarding its Export 
Control Reform Transition Plan (INSERT FR CITE). Consistent with DDTC's 
policy statement, all provisos, conditions, or other requirements 
placed on ITAR authorizations will continue to apply as long as such 
authorizations are in use.

General Order

    This rule proposes to add a new General Order No. 5 (Supplement No. 
1 to part 736 of the EAR). In the proposed General Order No. 5, holders 
of State licenses for items that transition to Commerce jurisdiction 
who wish to begin using BIS authorizations may do so as early as the 
effective date of the rule that transfers jurisdiction of their items 
by returning their DDTC licenses in accordance with Sec.  123.22 of the 
ITAR and complying with the EAR.
    On the effective date of each rule that adds an item to the CCL 
that was previously subject to the ITAR, that item will be subject to 
the EAR. Authorizations issued by DDTC before the transition date for 
those items may continue in effect as specified by DDTC in the 
Department of State's Export Control Reform Transition Plan. Foreign 
consignees or end users with items that have transitioned from State to 
Commerce jurisdiction must comply with the EAR for subsequent reexports 
or transfers.
    Exporters, temporary importers, manufacturers, and brokers are 
cautioned to closely monitor ITAR and EAR compliance concerning 
Department of State licenses and agreements for items transitioning 
from USML to CCL. Parties who discover that they may have violated the 
ITAR, the EAR, or any license or authorization issued thereunder, are 
strongly encouraged to consult with BIS or DDTC and avail themselves of 
the appropriate department's current, established procedures for 
submitting voluntary disclosures and for requesting specific 
authorization to take any further actions in connection with that item.

License Exceptions

    License Exceptions are published authorizations set forth in part 
740 of the EAR that allow exports, reexports, and in-country transfers 
that would otherwise require a license to proceed without one if 
certain conditions are met. The same principle underlies ITAR 
exemptions. As part of the general effort under the Export Control 
Reform Initiative to begin harmonizing the definitions, structure, and 
licensing aspects of the EAR and the ITAR, BIS undertook a 
comprehensive review of both EAR license exceptions and ITAR 
exemptions. While the EAR are generally believed to offer more 
flexibility than the ITAR, the BIS review of its regulations and public 
comments on the July 15 rule identified certain specific instances 
where the EAR would inadvertently be more restrictive. According to 
public comments received in response to the July 15 and November 7 
proposed rules, exporters found that exemptions under the ITAR for some 
of their items were broader than license exceptions under the EAR. 
These comments stemmed from concerns over implementing Export Control 
Reform for transactions of interest to those commenters rather than 
from any specific BIS proposals to revise license exceptions.
    This rule proposes to harmonize the provisions of several EAR 
license exceptions with several ITAR exemptions, as set out in detail 
below, but only insofar as they are permitted by law and otherwise 
relevant to ``600 series'' items and other items subject to the EAR. In 
particular, BIS has no authority to change the scope of license 
exceptions available for items controlled for Missile Technology 
reasons because of statutory restrictions. See section (6)(l) of the 
Export Administration Act of 1979, as amended, 50 U.S.C. appx. 2405(l).
    BIS welcomes comments on the differences between license exceptions 
under the EAR and exemptions under the ITAR and the issues they raise 
for those attempting to comply with both bodies of regulation or to 
transition from ITAR compliance to EAR compliance. Given the 
differences between the two systems, BIS is interested in comments 
regarding where deviations in the scope of control under the EAR versus 
the ITAR may be appropriate, especially with respect to treatment of 
reexports and in-country transfers. Note that license exceptions 
closely linked to specific items, such as firearms, that have not yet 
been proposed for control under the EAR will likely be addressed in 
rules related to those items. Descriptions of specific scenarios make 
particularly helpful examples.

Restrictions on All License Exceptions

    Proposed new paragraphs (a)(15) and (a)(16) to Sec.  740.2 describe 
restrictions on all license exceptions. This rule proposes restrictions 
on certain exports for which prior notification to Congress will be 
made, as explained below in the

[[Page 37527]]

discussion of major defense equipment. In addition, this rule proposes 
to revise a restriction originally proposed in the July 15 rule 
regarding the use of license exceptions for ``600 series'' items to 
U.S. arms embargoed countries, which was subsequently proposed to be 
amended in Revisions to the Export Administration Regulations (EAR): 
Control of Personal Protective Equipment, Shelters, and Related Items 
the President Determines No Longer Warrant Control Under the United 
States Munitions List (USML) published on June 7, 2012 (77 FR 33688). 
The text set forth in this rule uses as a baseline the proposed 
provision published on June 7, 2012. This rule proposes restricting 
most license exception eligibility for ``600 series'' items not only 
destined to U.S. arms embargoed countries, but also for ``600 series'' 
items manufactured in or shipped from those countries as well, 
consistent with the ITAR (Sec.  126.1(a)).

License Exception TMP

    This rule proposes a complete revision of Sec.  740.9, License 
Exception Temporary Imports, Exports and Reexports (TMP) paragraphs (a) 
(Temporary exports and reexports) and (b) (Exports of items temporarily 
in the United States) to streamline the existing exception, which 
successive amendments over the years have rendered increasingly 
difficult to read. This streamlining is consistent with the 
retrospective review and regulatory improvement directed in E.O. 13563 
and is not intended to substantively change the scope of TMP beyond 
adding explicit authority for in-country transfers and broadening to 
match the scope of the ITAR exemptions. Proposed amendments to 
streamline other EAR License Exceptions and other EAR provisions will 
be addressed in separate Federal Register notices. Changes in country 
scope of certain provisions reflect the limitations set forth in part 
746 of the EAR (Embargoes and Special Controls) unless otherwise noted. 
References to exports of items controlled for missile technology 
reasons were deleted because such exports are restricted by Sec.  
740.2(a)(5). Temporary exports under License Exception TMP to a U.S. 
subsidiary, affiliate, or facility abroad would no longer be limited to 
exports to Country Group B countries in order to make TMP consistent 
with Sec.  123.16(b)(9) of the ITAR.
    This rule would add notes to the temporary imports paragraph of 
License Exception TMP that incorporate concepts explicit in Sec. Sec.  
123.19 and 123.13 of the ITAR. In this paragraph, notes are added 
stating that a shipment originating in Canada or Mexico that 
incidentally transits the United States en route to a delivery point in 
the same country does not require a license, and that a shipment by air 
or vessel from one location in the United States to another location in 
the United States via a foreign country does not require a license. 
This rule proposes to add a note to TMP referencing the USMIL and a 
conforming change to part 734 noting that defense articles on the USMIL 
are controlled by the Bureau of Alcohol, Tobacco, Firearms and 
Explosives (ATF) for purpose of permanent import under its regulations 
at 27 CFR part 447. This rule also proposes to delete references to 
outdated forms in this paragraph. Finally, this rule proposes to remove 
the term ``unwanted'' from Sec.  740.9(b)(3), because the term, which 
was undefined, was confusing to the public.
    BIS welcomes comments on both substantive and structural aspects of 
the proposed clarifying changes to TMP.

License Exception RPL

    This rule proposes to revise RPL to allow export or reexport of 
spares up to $500 in total value. RPL would also be revised to remove 
the requirement that the ability to return serviced commodities and 
software or replace defective or unacceptable U.S.-origin equipment be 
limited to the original exporters. These revisions would correspond to 
Sec.  123.16(b)(2) of the ITAR, the availability of which is not 
limited to original exporters. The July 15 rule proposed to revise 
Sec.  740.10, License Exception Repair and Replacement (RPL) to reflect 
the proposed new definitions of certain terms, such as ``part'' or 
``component,'' and to allow replacement parts for defense articles to 
be exported under RPL. This rule does not modify the proposed July 15 
RPL revisions.

License Exception GOV

    Consistent with the retrospective review and regulatory improvement 
directed in Executive Order 13563, this rule proposes a complete 
revision of Sec.  740.11, License Exception GOV (Governments; 
International Organizations; International Inspections under the 
Chemical Weapons Convention; and the International Space Station). 
Because existing GOV contains many provisions that exclude items on the 
Wassenaar Arrangement's Sensitive and Very Sensitive Lists, and those 
provisions were always intended to match the Wassenaar Arrangement's 
Sensitive and Very Sensitive Lists, this rule proposes to add those 
lists to the EAR as supplements to the Commerce Control List and revise 
GOV to refer to the new supplements. This revision would shorten and 
simplify GOV, allowing its current supplement to Sec.  740.11 text to 
be consolidated in the main section. The supplements containing the 
Sensitive and Very Sensitive Lists would be new Supplement Nos. 6 and 7 
to part 774 of the EAR, as discussed below.
    The July 15 proposed rule restricted ``600 series'' items' 
eligibility for GOV to governments of those 36 countries listed in 
Sec.  740.20(c)(1) (License Exception STA) and the United States. The 
November 7 rule proposed certain changes to License Exception GOV with 
respect to restricting certain aircraft-related software and 
technology. This rule modifies those proposed provisions by excluding 
``software'' prohibited by proposed Supplement No. 4 to part 740 from 
eligibility for GOV. However, proposed Supplement No. 4 to part 740 is 
not republished in this rule; nor does BIS seek comment on its content.
    The July 15 rule proposed, and the November 7 rule proposed a 
modification to a provision in License Exception STA to allow exports, 
reexports, or transfers (in-country) of ``600 series'' items to non-
governmental end users as long as the items were for ultimate 
government end use. This rule similarly proposes expanding GOV to 
authorize items consigned to non-governmental end users, such as U.S. 
Government contractors, acting on behalf of the U.S. Government in 
certain situations, subject to written authorization from the 
appropriate agency and additional export clearance requirements. This 
rule also adds provisions for exports made under the direction of the 
U.S. Department of Defense consistent with Sec. Sec.  125.4(b)(1), 
125.4(b)(3) and 126.6(a) of the ITAR. This rule also proposes a note 
clarifying the authority for foreign military sales consistent with 
Sec.  126.6(c) of the ITAR.
    Generally, this rule does not propose expansion of License 
Exception GOV beyond the broadening necessary to create equivalent EAR 
authorizations to correspond to existing ITAR authorizations. This rule 
does propose, however, an expansion to the scope of countries eligible 
to receive items on the Sensitive List under the proposed revised Sec.  
740.11(a) (International Safeguards) and (c) (Cooperating Governments). 
The revised country scope for governments eligible to receive items on 
the Sensitive List under the proposed revised Sec.  740.11(c) would be 
the same governments of those 36 countries listed in Sec.  740.20(c)(1) 
(License Exception STA).

[[Page 37528]]

    BIS welcomes comments on both substantive and structural aspects of 
the proposed clarifying changes to License Exception GOV.

License Exception TSU

    This rule would revise Sec.  740.13 License Exception Technology 
and Software--Unrestricted (TSU) to include explicitly training 
information in the operation technology authorized, as it is in Sec.  
125.4(b)(5) of the ITAR. This rule also proposes adding TSU 
authorization for the release of software and technology in the United 
States by U.S. universities to their bona fide and full-time regular 
foreign national employees and other foreign nationals to correspond 
with a similar authorization in Sec.  125.4(b)(10) of the ITAR and an 
authorization at Sec.  125.4(b)(4) of the ITAR for copies of technology 
previously authorized for export to same recipient. This authorization 
would, however, be subject to the end-use and end-user restrictions in 
part 744 of the EAR, would not be available for encryption-related 
software controlled for ``EI'' and other software and technology 
controlled for ``MT'' (Missile Technology) reasons, and would not be 
eligible for nationals of countries subject to U.S. arms embargoes for 
``600 series'' items.
    Such changes are part of the broader, long-term Export Control 
Reform Initiative effort to harmonize the EAR's and the ITAR's 
definitions, terms, and, to the extent warranted, license exceptions. 
Efforts to harmonize other EAR and ITAR terms will be addressed in 
future Federal Register notices. BIS nonetheless encourages comments on 
all ITAR and EAR terms, phrases, and provisions that warrant 
harmonization.

License Exception STA

    This rule proposes an additional limitation on use of License 
Exception Strategic Trade Authorization (STA) in Sec.  740.20. This 
proposed revision would limit use of License Exception STA for ``600 
series'' items to foreign parties that have received U.S. items under a 
license issued either by BIS or DDTC. This ensures that such parties 
will have been vetted by a U.S. Government licensing process. For 
purchasers, intermediate consignees, ultimate consignees, and end users 
that have not been so vetted, a license would be required even for STA-
eligible items. Once that license has been issued, subsequent eligible 
exports may be made under STA.
    This rule also proposes that for ``600 series'' items, the prior 
consignee statement set forth in Sec.  740.20(d)(2) contain the 
consignee's confirmation that the items are for ultimate government end 
use and agreement to permit the U.S. Government to conduct end-use 
checks. These revisions provide a structure for verifying that ``600 
series'' items are used as intended and an assurance that end-use 
checks can be performed expeditiously.

License Issuance

    Current ITAR licenses are generally valid for four years compared 
to two years under the EAR. Agreements under the ITAR may be valid as 
long as ten years. In order to harmonize the EAR with the ITAR, this 
rule proposes to revise Sec.  750.7(g) to extend the validity period of 
BIS licenses from two years to four years, with some exceptions, unless 
otherwise specified on the license at the time that it is issued. 
Exporters may request an extended validity period pursuant to Sec.  
750.7(g)(1) beyond four years. Such requests will be reviewed on a 
case-by-case basis. Grounds for requesting extension would include 
having agreements previously approved by the Department of State for a 
longer period of time. BIS licenses generally designate one ultimate 
consignee and may have many designated end users. DDTC authorizations 
may designate multiple foreign end users. This rule proposes to revise 
Sec.  750.7(c) explicitly to allow direct shipments to approved end 
users.

License Review Policy

    License applications made to BIS receive interagency review. For 
``600 series'' items, this rule proposes to modify the section 
describing regional stability controls by adding to Sec.  742.6(b)(1) a 
policy of case-by-case review to determine whether the transaction is 
contrary to the national security or foreign policy interests of the 
United States. This proposed policy is consistent with the policy for 
State and Defense review of ITAR licenses. The July 15 and November 7 
rules proposed certain changes to the license review policy in Sec.  
742.6(b)(1). The July 15 proposal was adopted without change and 
published in final form on April 13, 2012 (77 FR 22199). This rule does 
not modify the proposed provisions from the November 7 rule, but the 
proposed provision is restated here for the public's convenience and to 
facilitate a complete understanding of BIS's license review policy 
proposal. As such, BIS is not seeking additional public comments on 
that provision in this rule.

Reporting and Notifications

    The current EAR require reporting for exports of items on the 
Wassenaar Arrangement's Sensitive List under license exception, and 
those provisions were always intended to match the Wassenaar 
Arrangement's Sensitive List. This rule would shorten the Wassenaar 
Arrangement reporting requirements section, found at Sec.  743.1, and 
would include a cross reference to the Sensitive List rather than 
setting forth ECCN paragraphs, much as was done in this rule's proposed 
License Exception GOV.
    As set forth in Sec.  123.15 of the ITAR, Section 36(c) of the Arms 
Export Control Act requires that a certification be provided to the 
Congress prior to approval of certain high-value exports of major 
defense equipment, other defense articles, or firearms. Major defense 
equipment (MDE), for purposes of Sec. Sec.  743.5 and 750.4 of the EAR, 
means any item of significant military equipment having a nonrecurring 
research and development cost of more than $50,000,000 or a total 
production cost of more than $200,000,000. Approvals may not be granted 
when the Congress has enacted a joint resolution prohibiting the 
export. While this process is not required for items subject to the 
EAR, BIS would institute these procedures in the EAR for such MDE items 
subject to the EAR. This rule proposes the creation of a new Sec.  
743.5, which would require exporters to notify BIS of such transactions 
for all exports except those made under License Exception GOV. When a 
license application is submitted, BIS would be able to, and will, draw 
the necessary information from the application to make the 
congressional notification. Section 740.2, restrictions on license 
exceptions, discussed above, would be revised to preclude use of 
license exceptions for such transactions.
    To reflect the proposed changes to part 743, this rule proposes 
amending the title of this part to read, ``Special Reporting and 
Notification.''

De Minimis U.S. Content in Foreign-Made Items and Foreign-Produced 
Direct Products of U.S. Technology

    Section 734.4 of the EAR sets forth the de minimis provisions, 
which provide that foreign-made items incorporating below de minimis 
levels of U.S. content are not subject to the EAR. The July 15 rule 
proposed a 10% de minimis level for ``600 series'' content. Many 
commenters found these proposed provisions confusing and anticipated 
difficulty implementing them, primarily due to having different de 
minimis levels for different items going to the same country. Several 
of the public comments in response to the July 15 rule suggested 
simplifying the proposed de minimis provisions by allowing a

[[Page 37529]]

25% level for those countries eligible for paragraph (c)(1) of License 
Exception Strategic Trade Authorization (STA) (see Sec.  740.20). Two 
commenters to the November 7 proposed rule suggested that BIS adopt the 
existing 25% de minimis rule described in the Export Administration Act 
for all countries except those subject to U.S. arms embargoes, which 
would be subject to a zero percent de minimis rule. Based on a review 
of those comments and further interagency deliberation, this rule 
proposes a rule suggested by commenters to the November 7 rule, i.e., 
an exclusion of ``600 series'' U.S. content from eligibility for de 
minimis when the foreign-made items are destined to U.S. arms embargoed 
countries and, consistent with current EAR provisions, a 25% de minimis 
for all other destinations. This proposal, in addition to its relative 
simplicity, retains the status quo for ``600 series'' content destined 
to U.S. embargoed countries in that the ITAR effectively has a zero 
percent de minimis rule.
    BIS believes that this proposal simultaneously addresses the 
calculation concerns of the commenters while tightening reexport 
controls over foreign-made items that contain any ``600 series'' 
content destined for countries subject to U.S. arms embargoes. This 
approach would advance the cause of the reform effort by reducing the 
negative impact of the ``see-through'' rule in place under the ITAR 
with respect to trade with most of the world; would be simpler to 
calculate; would maintain the EAR's 25 percent de minimis rule for 
reexports to most countries; and would carry forward the ITAR's zero 
percent de minimis rule with respect to reexports of military items to 
countries subject to U.S. arms embargoes. The latter aspect of the 
proposal furthers U.S. national security and foreign policy interests 
by discouraging, indeed prohibiting, the reexport of foreign-made items 
containing ``600 series'' content to countries subject to U.S. arms 
embargoes while removing the incentive the ITAR creates for foreign 
buyers to avoid U.S.-origin content with respect to trade by and 
between other countries.
    This rule also proposes changes to the regulations that address 
foreign-produced direct products of U.S. technology, which was a 
subject that was not addressed in the July 15 rule. Currently, certain 
foreign-produced direct products of U.S. technology are subject to the 
EAR: National security controlled items that are direct products of 
U.S. national security-controlled technology, when those products are 
destined to countries of concern for national security reasons (Country 
Group D:1) or terrorist-supporting countries (Country Group E:1). This 
proposed rule would expand these provisions by adding an additional 
country and product scope. Foreign-produced direct products of U.S.-
origin ``600 series'' technology, or of a plant that is a direct 
product of U.S.-origin ``600 series'' technology, that are ``600 
series'' items would be subject to the EAR when reexported to countries 
of concern for national security, chemical and biological weapons, 
missile technology or anti-terrorism reasons (Country Groups D:1, D:3, 
D:4 or E:1 in Supplement No 1 to part 740) or to a U.S. arms embargoed 
country (see Sec.  740.2(a)(12)). Foreign-made items subject to the EAR 
because of this rule would be subject to the same license requirements 
to the new country of destination as if of U.S. origin.
    Because of the expansion of the provisions at Sec.  736.2(b)(3) to 
include ``600 series'' items, this rule proposes to remove the 
penultimate paragraph in Supplement No. 1 to part 764 that states that 
the standard denial order ``does not prohibit any export, reexport, or 
other transaction subject to the EAR where the only items involved that 
are subject to the EAR are the foreign-produced direct product of U.S.-
origin technology.''

China Military End Use

    Section 744.21 of the EAR imposes a restriction on certain items 
destined for the People's Republic of China for a ``military end use,'' 
defined as for incorporation into military items or for the use, 
development or production of military items. The July 15 rule proposed: 
(1) Expanding the description of military items in the Sec.  744.21(f) 
definition of ``military end use'' to include ``600 series'' items; and 
(2) adding items controlled by the .y paragraphs in the ``600 series'' 
ECCNs to the list of items subject to this restriction (those listed in 
Supplement No. 2 to part 744 (List of Items Subject to the Military 
End-Use License Requirement of Sec.  744.21)). Three commenters 
requested clarification of whether 600 series and subparagraph .y items 
being exported to China would be subject to a policy of denial under 
the military end use controls. One commenter suggested that because 
such items have little or no military significance, they should be 
excluded from China military end use controls.
    Based on the comments' request for clarification and BIS's internal 
analysis, this rule proposes to expand Sec.  744.21 to state explicitly 
that all ``600 series'' items are subject to this restriction. The 
basis for this revision is that items ``specially designed'' for a 
defense article or other military end item are presumptively for a 
military end use. If an item were ``specially designed'' for a civil or 
a dual-use application, it would not be controlled by the .y lists 
within some of the 600 series ECCNs. Therefore, the effect of this 
proposed change would be to impose a license requirement for all ``600 
series'' items, including .y items, destined to China, which would be 
reviewed pursuant to Sec.  744.21. This proposal replaces the July 15 
proposed amendment to Supplement No. 2 to part 744; the July 15 
proposed amendment to Sec.  744.21(f) is unchanged.

Export Clearance

    Exporters enter information for both State- and Commerce-controlled 
transactions into the Automated Export System (AES). Many exports worth 
less than $2500 are exempted from the requirement to enter information 
on the transaction into AES. This rule proposes to revise Sec.  758.1 
to remove the low-value exemption for ``600 series'' items for all 
destinations, including Canada, and require AES filing for all ``600 
series'' items. Requiring entry of ``600 series'' information 
regardless of value or destination will provide the U.S. Government 
with the same information on exports of these items under Commerce 
control as is now available for such items when they are subject to the 
ITAR. This rule also proposes to revise Sec.  758.1 to require AES 
filing for all exports under License Exception Strategic Trade 
Authorization (STA), regardless of value, to enable the U.S. Government 
to obtain information about low-value shipments of these items.
    This rule proposes to preclude the option of post-departure filing 
for exports of ``600 series'' items because this option is not 
permitted for ITAR-controlled exports now. This rule also proposes 
removing the option of post-departure filing for License Exception STA 
and Authorization VEU because the nature of these authorizations 
requires pre-departure filing of this information to ensure compliance 
with their terms and conditions.
    The provisions of Sec.  758.6 require exports to be accompanied by 
a Destination Control Statement (DCS) identifying the items as subject 
to the EAR. Given the nature of the ``600 series'' items and 
requirements related to them, this rule proposes a more specific DCS 
for ``600 series'' items that would require exporters to identify the 
ECCNs of all ``600 series'' items being exported in the text to ensure 
that consignees are aware that they have such items.

[[Page 37530]]

ECCN 0A919 and Supplement Nos. 6 and 7 to the Commerce Control List

    This rule proposes to revise ECCN 0A919, which controls certain 
military commodities produced outside the United States, to conform to 
the proposed revisions of the de minimis and foreign-produced direct 
product rules set forth in this rule.
    As described above, this rule proposes creating two new supplements 
to part 774, the Commerce Control List. New Supplement Nos. 6 and 7 
would append to the Commerce Control List the Wassenaar Arrangement's 
Sensitive and Very Sensitive Lists. These lists would be referenced by 
proposed revised provisions in License Exception GOV and Wassenaar 
Arrangement reporting requirements in part 743. While the items on the 
lists would be identified by ECCN rather than by Wassenaar Arrangement 
numbering, the item descriptions would be drawn directly from the 
Wassenaar Arrangement.

Relationship to the July 15 and November 7 Proposed Rules

    As referenced above, the purpose of the July 15 proposed rule was 
to set up the framework to support the transfer of items from the USML 
to the CCL. To facilitate that goal, the July 15 proposed rule 
contained concepts that were meant to be applied across the EAR. 
However, as BIS undertakes rulemakings to move specific categories of 
items from the USML to the CCL, there may be unforeseen issues or 
complications that may require BIS to reexamine those concepts. The 
comment period for the July 15 proposed rule closed on September 13, 
2011.
    The November 7 proposed rule proposed modifications to that 
framework. The comment period for the November 7 rule closed on 
December 22, 2011.
    To the extent that this rule's proposals affect any provision in 
the July 15 or November 7 proposed rules or any provision in those 
proposed rules affects this proposed rule, BIS will consider comments 
on those provisions so long as they are within the context of the 
changes proposed in this rule.
    BIS believes that the following aspects of the July 15 and November 
7 proposed rules are among those that could affect or be affected by 
this proposed rule:
     De minimis provisions in Sec.  734.4;
     Restrictions on use of license exceptions in Sec. Sec.  
740.2, 740.10, 740.11, and 740.20;
     Licensing policy under Sec.  742.6(b)(1);
     Reporting requirements under part 743;
     Addition of ``600'' series items to Supplement No. 2 to 
Part 744--List of Items Subject to the Military End-Use Requirement of 
Sec.  744.21; and
     Records to be retained under Sec.  762.2.
    Although the Export Administration Act expired on August 20, 2001, 
the President, through Executive Order 13222 of August 17, 2001, 3 CFR, 
2001 Comp., p. 783 (2002), as extended by the Notice of August 12, 
2011, 76 FR 50661 (August 16, 2011), has continued the Export 
Administration Regulations in effect under the International Emergency 
Economic Powers Act. BIS continues to carry out the provisions of the 
Export Administration Act, as appropriate and to the extent permitted 
by law, pursuant to Executive Order 13222.

Regulatory Requirements

    1. Executive Orders 13563 and 12866 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distribute impacts, and equity). Executive 
Order 13563 emphasizes the importance of quantifying both costs and 
benefits, of reducing costs, of harmonizing rules, and of promoting 
flexibility. This rule has been designated a ``significant regulatory 
action,'' although not economically significant, under section 3(f) of 
Executive Order 12866. Accordingly, the rule has been reviewed by the 
Office of Management and Budget (OMB).
    2. Notwithstanding any other provision of law, no person is 
required to respond to, nor is subject to a penalty for failure to 
comply with, a collection of information, subject to the requirements 
of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.) (PRA), 
unless that collection of information displays a currently valid OMB 
control number. This proposed rule would affect the following approved 
collections: Simplified Network Application Processing System (control 
number 0694-0088), which includes, among other things, license 
applications; license exceptions (0694-0137); voluntary self-disclosure 
of violations (0694-0058); recordkeeping (0694-0096); export clearance 
(0694-0122); and the Automated Export System (0607-0152).
    As stated in the proposed rule published at 76 FR 41958 (July 15, 
2011), BIS believed that the combined effect of all rules to be 
published adding items to the EAR that would be removed from the ITAR 
as part of the administration's Export Control Reform Initiative would 
increase the number of license applications to be submitted by 
approximately 16,000 annually. As the review of the USML has 
progressed, the interagency group has gained more specific information 
about the number of items that would come under BIS jurisdiction 
whether those items would be eligible for export under license 
exception. As of June 21, 2012, BIS believes the increase in license 
applications may be 30,000 annually, resulting in an increase in burden 
hours of 8,500 (30,000 transactions at 17 minutes each) under control 
number 0694-0088.
    3. This rule does not contain policies with Federalism implications 
as that term is defined under E.O. 13132.
    4. The Regulatory Flexibility Act (RFA), as amended by the Small 
Business Regulatory Enforcement Fairness Act of 1996 (SBREFA), 5 U.S.C. 
601 et seq., generally requires an agency to prepare a regulatory 
flexibility analysis of any rule subject to the notice and comment 
rulemaking requirements under the Administrative Procedure Act (5 
U.S.C. 553) or any other statute, unless the agency certifies that the 
rule will not have a significant economic impact on a substantial 
number of small entities. Under section 605(b) of the RFA, however, if 
the head of an agency certifies that a rule will not have a significant 
impact on a substantial number of small entities, the statute does not 
require the agency to prepare a regulatory flexibility analysis. 
Pursuant to section 605(b), the Chief Counsel for Regulations, 
Department of Commerce, certified to the Chief Counsel for Advocacy, 
Small Business Administration that this proposed rule, if promulgated, 
will not have a significant impact on a substantial number of small 
entities for the reasons explained below. Consequently, BIS has not 
prepared a regulatory flexibility analysis. A summary of the factual 
basis for the certification is provided below.

Number of Small Entities

    The Bureau of Industry and Security (BIS) does not collect data on 
the size of entities that apply for and are issued export licenses. 
Although BIS is unable to estimate the exact number of small entities 
that would be affected by this rule, it acknowledges that this rule 
would affect some unknown number.

Economic Impact

    This proposed rule is part of the Administration's Export Control 
Reform Initiative. Under that initiative, the USML would be revised to 
be a

[[Page 37531]]

``positive'' list, i.e., a list that does not use generic, catch-all 
controls on any part, component, accessory, attachment, or end item 
that was in any way specifically modified for a defense article, 
regardless of the article's military or intelligence significance or 
non-military applications. At the same time, articles that are 
determined to no longer warrant control on the USML would become 
controlled on the CCL. Such items, along with certain military items 
that currently are on the CCL, will be identified in specific Export 
Control Classification Numbers (ECCNs) known as the ``600 series'' 
ECCNs. In addition, some items currently on the Commerce Control List 
would move from existing ECCNs to the new 600 series ECCNs.
    In particular, this rule proposes certain measures to ease the 
transition for those items moving from State to Commerce jurisdiction. 
The changes include establishing a General Order regarding continued 
use of State authorizations for a specified period, broadening license 
exceptions consistent with ITAR exemptions, and extending the two-year 
validity period of Commerce licenses to match State's four-year period. 
In the course of broadening certain license exceptions, this rule 
streamlines and updates existing text to reduce undue complexity. This 
rule also addresses specific concerns raised in public comments on 
recent rules by proposing a revised de minimis rule for ``600 series'' 
items. Moreover, this rule proposes additional conforming changes that 
are necessary to implement the Export Control Reform Initiative, but 
also would affect items currently subject to the EAR, such as changes 
to reporting thresholds for the Automated Export System. Finally, in 
response to the President's directive in Executive Order 13563, which 
directed agencies to conduct retrospective reviews of existing 
regulations, this rule proposes revisions to license exceptions for 
government uses and temporary exports that streamline and update unduly 
complex or outmoded provisions in addition to broadening certain 
provisions to implement Export Control Reform.
    In practice, the greatest impact of this rule on small entities 
would likely be reduced administrative costs and reduced delay for 
exports of items that are now on the USML but would become subject to 
the EAR. By streamlining provisions of the EAR, BIS would make it 
easier to understand and comply with certain license exceptions, which 
in turn would allow exporters to avail themselves of these exceptions 
and reduce their licensing and compliance burdens. This rule also 
proposes broadening license exceptions and extending license validity 
periods to correspond to those available under the ITAR to avoid 
imposing burdens on exporters as a result of their items' changing 
jurisdictional status. These proposed changes may also reduce the 
burden small companies (and all other entities) who export non-``600 
series'' items on the CCL.
    In addition, parts and components controlled under the ITAR remain 
under ITAR control when incorporated into foreign-made items, 
regardless of the significance or insignificance of the item, 
discouraging foreign buyers from incorporating such U.S. content. The 
availability of a de minimis rule under the EAR may reduce the 
incentive for foreign manufacturers to design out or avoid purchasing 
U.S.-origin parts and components. In response to comments on the July 
15 rule, this rule proposes a simpler method of calculating de minimis 
value for ``600 series'' content. A simpler method of calculating de 
minimis reduces the likelihood of foreign manufacturers' designing out 
U.S.-origin parts and components, thus increasing the ability of U.S. 
firms to compete in the global marketplace and to strengthen the U.S. 
defense industrial base.
    In spite of the benefits detailed above, the need for exporters to 
change established licensing and compliance procedures as their items 
change jurisdiction will likely incur short-term costs (e.g., for 
database changes). This rule proposes an implementation plan to 
mitigate these short-term costs by allowing affected entities to 
continue operating under their existing authorizations and procedures 
over a two-year transition period should they choose to do so, while 
allowing the option to transition as of the effective date of the final 
rule.

Conclusion

    BIS is unable to determine the precise number of small entities 
that would be affected by this rule. Based on the facts and conclusions 
set forth above, BIS believes that any burdens imposed by this rule 
would be offset by a reduction in the number of items that would 
require a license, increased opportunities for use of license 
exceptions for exports to certain countries, simpler export license 
applications, reduced or eliminated registration fees and application 
of a de minimis threshold for foreign-made items incorporating U.S.-
origin parts and components, which would reduce the incentive for 
foreign buyers to design out or avoid U.S.-origin content. For these 
reasons, the Chief Counsel for Regulations of the Department of 
Commerce certified to the Chief Counsel for Advocacy of the Small 
Business Administration that this rule, if adopted in final form, would 
not have a significant economic impact on a substantial number of small 
entities. Accordingly, no IRFA is required and none has been prepared.

List of Subjects

15 CFR Part 734

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

15 CFR Part 736

    Exports.

15 CFR Parts 740, 750 and 758

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

15 CFR Part 742

    Exports, Terrorism.

15 CFR Part 743

    Administrative practice and procedure, Reporting and recordkeeping 
requirements.

15 CFR Part 744

    Exports, Reporting and recordkeeping requirements, Terrorism.

15 CFR Part 762

    Administrative practice and procedure, Business and industry, 
Confidential business information, Exports, Reporting and recordkeeping 
requirements.

15 CFR Part 764

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

15 CFR Part 774

    Exports, Reporting and recordkeeping requirements.

    For the reasons stated in the preamble, the Export Administration 
Regulations (15 CFR parts 730 through 774) are proposed to be amended 
as follows:

PART 734--[AMENDED]

    1. The authority citations paragraph for part 734 continues to read 
as follows:

    Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; 
E.O. 12938, 59 FR 59099, 3 CFR, 1994 Comp., p. 950; E.O. 13020, 61 
FR 54079, 3 CFR, 1996 Comp., p. 219; E.O. 13026, 61 FR 58767, 3 CFR, 
1996 Comp., p. 228; E.O. 13222, 66 FR 44025, 3 CFR, 2001

[[Page 37532]]

Comp., p. 783; Notice of August 12, 2011, 76 FR 50661 (August 16, 
2011); Notice of November 9, 2011, 76 FR 70319 (November 10, 2011).

    2. Section 734.3 is amended by adding a new paragraph (b)(1)(vi) to 
read as follows:


Sec.  734.3  Items subject to the EAR.

* * * * *
    (b) * * *
    (vi) Bureau of Alcohol, Tobacco, Firearms and Explosives. Unless 
otherwise noted, all references to the United States Munitions List 
(``USML'') are to the list of defense articles that are controlled for 
purposes of export and temporary import pursuant to the International 
Traffic in Arms Regulations (``ITAR''), 22 CFR Parts 120 et seq., and 
not to the list of defense articles on the USML that are controlled by 
the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) for 
purpose of permanent import under its regulations at 27 CFR Part 447. 
Pursuant to section 38(a)(1) of the Arms Export Control Act (AECA), 22 
U.S.C. Sec.  2779, all defense articles controlled for export or import 
are part of the ``USML'' under the AECA. For the sake of clarity, the 
list of defense articles controlled by ATF for purposes of permanent 
import are on the United States Munitions Import List (USMIL). The 
transfer of defense articles from the ITAR's USML to the EAR's CCL for 
purposes of export controls does not affect the list of defense 
articles controlled on the USMIL under the AECA for purposes of 
permanent import controls.
* * * * *
    3. Section 734.4 is amended by redesignating paragraph (a)(6) as 
paragraph (a)(7), and by adding a new paragraph (a)(6) to read as 
follows:


Sec.  734.4  De minimis U.S. content.

    (a) Items for which there is no de minimis level.
* * * * *
    (6) There is no de minimis level for foreign-made items that 
incorporate U.S.-origin ``600 series'' items when destined for a 
country subject to a U. S. arms embargo (see Sec.  740.2(a)(12) of the 
EAR).
* * * * *

PART 736--[AMENDED]

    4. The authority citations paragraph for part 736 continues to read 
as follows:

    Authority:  50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; 
22 U.S.C. 2151 note; E.O. 12938, 59 FR 59099, 3 CFR, 1994 Comp., p. 
950; E.O. 13020, 61 FR 54079, 3 CFR, 1996 Comp., p. 219; E.O. 13026, 
61 FR 58767, 3 CFR, 1996 Comp., p. 228; E.O. 13222, 66 FR 44025, 3 
CFR, 2001 Comp., p. 783; E.O. 13338, 69 FR 26751, 3 CFR, 2004 Comp., 
p. 168; Notice of August 12, 2011, 76 FR 50661 (August 16, 2011); 
Notice of November 9, 2011, 76 FR 70319 (November 10, 2011).

    5. Section 736.2 is amended by revising paragraph (b)(3) to read as 
follows:


Sec.  736.2  General prohibitions and determination of applicability.

* * * * *

(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)

* * * * *
    (iv) Additional country scope of prohibition for ``600 series'' 
items. You may not, except as provided in paragraphs (b)(3)(vi) or 
(vii) of this section, reexport any ``600 series'' item subject to the 
scope of this General Prohibition 3 to a destination in Country Groups 
D:1, D:3, D:4, or E:1 (See Supplement No.1 to part 740 of the EAR) or 
to a U. S. arms embargoed country (see Sec.  740.2(a)(12) of the EAR).
    (v) Product scope of foreign-made items in the ``600 series'' 
subject to prohibition. This General Prohibition 3 applies if a ``600 
series'' 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)(v)(A) or (B) of this section:
    (A) Conditions defining direct product of technology for ``600 
series'' items. Foreign-made ``600 series'' items are subject to this 
General Prohibition 3 if the foreign-made items meet both of the 
following conditions:
    (1) They are the direct product of technology or software that is 
in the ``600 series'' as designated on the applicable ECCN of the 
Commerce Control List at part 774 of the EAR, and
    (2) They are in the ``600 series'' 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 for ``600 
series'' items. Foreign-made ``600 series'' 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:
    (1) Such plant or component is the direct product of technology 
that is in the ``600 series'' as designated on the applicable ECCN of 
the Commerce Control List at part 774 of the EAR, and
    (2) Such foreign-made direct products of the plant or component are 
in the ``600 series'' as designated on the applicable ECCN of the 
Commerce Control List at part 774 of the EAR.
    (vi) License Exceptions. Each license exception described in part 
740 of the EAR supersedes this General Prohibition 3 if all terms and 
conditions of a given exception are met and the restrictions in Sec.  
740.2 do not apply.
    (vii) ``600 series'' foreign-produced direct products of U.S. 
technology subject to this General Prohibition 3 do not require a 
license for reexport to the new destination unless the same item, if 
exported from the U.S. to the new destination, would have been 
prohibited or made subject to a license requirement by part 742, 744, 
746, or 764 of the EAR.
    6. Supplement No. 1 to part 736 is amended by adding General Order 
No. 5, to read as follows:

Supplement No. 1 to Part 736 General Orders

* * * * *

General Order No. 5

    General Order No. 5 of [INSERT DATE OF PUBLICATION OF FINAL 
RULE]; Authorization for Items the President Determines No Longer 
Warrant Control Under the United States Munitions List (USML)
    (a) Continued use of DDTC authorizations for items that become 
subject to the EAR. Items the President has determined no longer 
warrant control under the USML will become subject to the EAR as 
rules that effect this transition are published and effective. 
Authorizations issued by the Directorate of Defense Trade Controls 
(DDTC) of the Department of State for transactions involving these 
items may continue in effect as specified by DDTC in [INSERT CITE TO 
STATE'S FINAL EXPORT CONTROL REFORM TRANSITION PLAN]. To use BIS 
authorizations for these items, exporters, reexporters, and 
transferors of such items may return DDTC licenses in accordance 
with Sec.  123.22 of the ITAR or terminate Technical Assistance 
Agreements, Manufacturing License Agreements, or Distribution and 
Warehousing Agreements in accordance with Sec.  124.6 of the ITAR 
and thereafter export, reexport, or transfer (in-country) such items 
under applicable provisions of the EAR. No transfer (in-country) may 
be made of an item exported under a DDTC authorization containing 
provisos or other limitations without a license issued by BIS unless 
(i) the transfer (in-country) is authorized by an EAR License 
Exception and the terms and conditions of the License Exception have 
been satisfied or (ii), no license would otherwise be required under 
the EAR to export or reexport the item to the new end user.
    (b) Voluntary Self-Disclosure. Parties to transactions involving 
transitioning items are cautioned to monitor closely their 
compliance with the EAR and the ITAR. Should a possible or actual 
violation of the EAR or ITAR, or of any license or authorization 
issued thereunder, be

[[Page 37533]]

discovered, the person or persons involved are strongly encouraged 
to submit a Voluntary Self-Disclosure to the Office of Export 
Enforcement, in accordance with Sec.  764.5 of the EAR, or to DDTC, 
in accordance with Sec.  127.12 of the ITAR, as appropriate. 
Permission from the Office of Exporter Services, in accordance with 
Sec.  764.5(f) of the EAR, to engage in further activities in 
connection with that item may also be necessary.
    (c) Method of disclosure. For violations involving items the 
President has determined no longer warrant control under the USML 
that occur or are discovered in the period during which DDTC allows 
continued use of State authorization for these items, disclosures 
and requests for permission to engage in further activities should 
be submitted to DDTC or BIS as appropriate.

PART 740--[AMENDED]

    7. The authority citations paragraph for part 740 continues to read 
as follows:

    Authority:  50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; 
22 U.S.C. 7201 et seq.; E.O. 13026, 61 FR 58767, 3 CFR, 1996 Comp., 
p. 228; E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 783; Notice 
of August 12, 2011, 76 FR 50661 (August 16, 2011).

    8. Section 740.2 is amended by adding new paragraphs (a)(12), 
(a)(15) and (a)(16) to read as follows:


Sec.  740.2  Restrictions on all license exceptions.

    (a) * * *
    (12) Items classified under the ``600 series'' that are destined 
to, or were shipped from or manufactured in a country subject to a 
United States arms embargo (Afghanistan, Belarus, Burma, China, Cote 
d'Ivoire, Cuba, Cyprus, Democratic Republic of Congo, Eritrea, Fiji, 
Haiti, Iraq, Iran, Lebanon, Liberia, Libya, North Korea, Somalia, Sri 
Lanka, Sudan, Syria, Venezuela, Vietnam, Yemen, and Zimbabwe) may not 
be authorized under any license exception except by License Exception 
TMP under Sec.  740.9(a)(12) or License Exception BAG under Sec.  
740.14(h)(2) for exports to Afghanistan and Iraq, and License Exception 
GOV under Sec.  740.11(b)(2)(ii).

    Note to paragraph (a)(12):
     Countries subject to U.S. arms embargoes are identified by the 
State Department through notices published in the Federal Register. 
The list of arms embargoed destinations in this paragraph is drawn 
from 22 CFR Sec.  126.1 and State Department Federal Register 
notices related to arms embargoes (compiled at http://www.pmddtc.state.gov/embargoed_countries/index.html) and will be 
amended when the State Department publishes subsequent notices. If 
there are any discrepancies between the list of countries in this 
paragraph and the countries identified by the State Department as 
subject to a U.S. arms embargo (in the Federal Register), the State 
Department's list of countries subject to U.S. arms embargoes shall 
be controlling.

* * * * *
    (15) Items classified under the ``600 series'' are not eligible for 
any license exception, except to U.S. government end users under 
License Exception GOV (Sec.  740.11(b)), when they are destined to a 
country outside the countries listed in Sec.  740.20(c)(1) (License 
Exception STA) and are:
    (i) Major defense equipment sold under a contract in the amount of 
$14,000,000 or more;
    (ii) Other ``600 series'' items sold under a contract in the amount 
of $50,000,000 or more; or
    (iii) Firearms controlled under ECCN 0A601 under a contract in the 
amount of $1,000,000 or more.
    (16) Items classified under the ``600 series'' are not eligible for 
any license exception, except to U.S. government end users under 
License Exception GOV (Sec.  740.11(b)), when they are destined to a 
country listed in Sec.  740.20(c)(1) (License Exception STA) and are:
    (i) Major defense equipment sold under a contract in the amount of 
$25,000,000;
    (ii) Other ``600 series'' items sold under a contract in the amount 
of $100,000,000 or more; or
    (iii) Firearms controlled under ECCN 0A601 under a contract in the 
amount of $1,000,000 or more.
    9. Section 740.9 is amended by revising paragraphs (a) and (b) to 
read as follows:


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

    (a) Temporary exports, reexports, and transfers (in-country). 
License Exception TMP authorizes exports, reexports, and transfers (in-
country) of items for temporary use abroad (including use in or above 
international waters) subject to the conditions specified in this 
paragraph (a). No item may be exported or reexported under this 
paragraph (a) if an order to acquire the item has been received before 
shipment; with prior knowledge that the item will stay abroad beyond 
the terms of this License Exception; or when the item is for subsequent 
lease or rental abroad.
    (1) Tools of trade. Exports, reexports, or transfers (in-country) 
of commodities and software as tools of trade for use by the exporter 
or employees of the exporter may be made only to destinations other 
than Country Group E:2, Sudan or Syria; for Sudan, see paragraph (a)(2) 
of this section. The tools of trade must remain under the ``effective 
control'' of the exporter or the exporter's employee. Eligible items 
are usual and reasonable kinds and quantities of tools of trade for use 
in a lawful enterprise or undertaking of the exporter. Tools of trade 
include, but are not limited to, equipment and software as is necessary 
to commission or service items, provided that the equipment or software 
is appropriate for this purpose and that all items to be commissioned 
or serviced are of foreign origin, or if subject to the EAR, have been 
lawfully exported or reexported. Tools of trade may accompany the 
individual departing from the United States or may be shipped 
unaccompanied within one month before the individual's departure from 
the United States, or at any time after departure. Software used as a 
tool of trade must be protected against unauthorized access. Examples 
of security precautions to help prevent unauthorized access include the 
following:
    (A) Use of secure connections, such as Virtual Private Network 
connections, when accessing IT networks for activities that involve the 
transmission and use of the software authorized under this license 
exception;
    (B) Use of password systems on electronic devices that store the 
software authorized under this license exception; and
    (C) Use of personal firewalls on electronic devices that store the 
software authorized under this license exception.
    (2) Sudan: Tools of Trade. (i) Permissible users. A non-
governmental organization or an individual staff member, employee or 
contractor of such organization traveling to Sudan at the direction or 
with the knowledge of such organization may export, reexport, or 
transfer (in-country) under this paragraph (a)(2).
    (ii) Authorized purposes. Any tools of trade exported, reexported, 
or transferred (in-country) under this paragraph must be used to 
support activities to implement the Doha Document for Peace in Darfur; 
to provide humanitarian or development assistance in Sudan, to support 
activities to relieve human suffering in Sudan, or to support the 
actions in Sudan for humanitarian or development purposes; by an 
organization authorized by the Department of the Treasury, Office of 
Foreign Assets Control (OFAC) pursuant to 31 CFR 538.521 in support of 
its OFAC-authorized activities; or to support the activities to relieve 
human suffering in Sudan in areas that are exempt from the Sudanese 
Sanctions Regulations by virtue of the Darfur Peace and Accountability 
Act and Executive Order 13412.
    (iii) Method of export and maintenance of control. The tools of

[[Page 37534]]

trade must accompany (either hand carried or as checked baggage) a 
traveler who is a permissible user of this provision or be shipped or 
transmitted to such user by a method reasonably calculated to assure 
delivery to the permissible user of this provision. The permissible 
user of this provision must maintain ``effective control'' of the tools 
of trade while in Sudan.
    (iv) Eligible items. The only tools of trade that may be exported 
to Sudan under this paragraph (a)(2) are:
    (A) Commodities controlled under ECCNs 4A994.b (not exceeding an 
adjusted peak performance of 0.008 weighted teraFLOPS), 4A994.d, 
4A994.e (other than industrial controllers for chemical processing), 
4A994.g and 4A994.h and ``software'' controlled under ECCNs 4D994 or 
5D992 to be used on such commodities. Software must be loaded onto such 
commodities prior to export or reexport or be exported or reexported 
solely for servicing or in-kind replacement of legally exported or 
reexported software. All such software must remain loaded on such 
commodities while in Sudan;
    (B) Telecommunications equipment controlled under ECCN 5A991 and 
``software'' controlled under ECCN 5D992 to be used in the operation of 
such equipment. Software must be loaded onto such equipment prior to 
export or be exported or reexported solely for servicing or in-kind 
replacement of legally exported or reexported software. All such 
software must remain loaded on such equipment while in Sudan;
    (C) Global positioning systems (GPS) or similar satellite receivers 
controlled under ECCN 7A994; and
    (D) Parts and components that are controlled under ECCN 5A992, that 
are installed with, or contained in, commodities in paragraphs 
(a)(2)(iv)(A) and (B) of this section and that remain installed with or 
contained in such commodities while in Sudan.
    (3) Tools of trade: temporary exports and reexports of technology 
by U.S. persons. (i) This paragraph authorizes usual and reasonable 
kinds and quantities of technology for use in a lawful enterprise or 
undertaking of a U.S. person to destinations other than Country Group 
E:2, Sudan or Syria. Only U.S. persons or their employees traveling or 
on temporary assignment abroad may export, reexport, transfer (in-
country) or receive technology under the provisions of this paragraph 
(a)(3).
    (A) Because this paragraph (a)(3) does not authorize any new 
release of technology, employees traveling or on temporary assignment 
abroad who are not U.S. persons may only receive under TMP such 
technology abroad that they are already eligible to receive through a 
current license, a license exception other than TMP, or because no 
license is required;
    (B) A U.S. employer of individuals who are not U.S. persons must 
demonstrate and document for recordkeeping purposes the reason that the 
technology is needed by such employees in their temporary business 
activities abroad on behalf of the U.S. person employer, prior to using 
this paragraph (a)(3). This documentation must be created and 
maintained in accordance with the recordkeeping requirements of part 
762 of the EAR; and
    (C) The U.S. person must retain supervision over the technology 
that has been authorized for export or reexport under these or other 
provisions.
    (ii) The exporting, reexporting, or transferring party and the 
recipient of the technology must take security precautions to protect 
against unauthorized release of the technology while the technology is 
being shipped or transmitted and used overseas. Examples of security 
precautions to help prevent unauthorized access include the following:
    (A) Use of secure connections, such as Virtual Private Network 
connections, when accessing IT networks for email and other business 
activities that involve the transmission and use of the technology 
authorized under this license exception;
    (B) Use of password systems on electronic devices that will store 
the technology authorized under this license exception; and
    (C) Use of personal firewalls on electronic devices that will store 
the technology authorized under this license exception.
    (iii) Technology authorized under these provisions may not be used 
for foreign production purposes or for technical assistance unless 
authorized by BIS.
    (iv) Encryption technology controlled by ECCN 5E002 is ineligible 
for this license exception.
    (4) Kits consisting of replacement parts. Kits consisting of 
replacement parts may be exported, reexported, or transferred (in-
country) to all destinations except Country Group E:2 (see Supplement 
No. 1 to part 740), provided that:
    (i) The parts would qualify for shipment under paragraph 
(a)(4)(iii) of this section if exported as one-for-one replacements;
    (ii) The kits remain under effective control of the exporter or an 
employee of the exporter; and
    (iii) All parts in the kit are returned, except that one-for-one 
replacements may be made in accordance with the requirements of License 
Exception RPL and the defective parts returned (see ``parts'', Sec.  
740.10(a) of this part).
    (5) Exhibition and demonstration. This paragraph (a)(5) authorizes 
exports, reexports, and transfers (in-country) of commodities and 
software for exhibition or demonstration in all destinations except 
Country Group E:1 (see Supplement No. 1 to this part) provided that the 
exporter maintains ownership of the commodities and software while they 
are abroad and provided that the exporter, an employee of the exporter, 
or the exporter's designated sales representative retains ``effective 
control'' over the commodities and software while they are abroad. The 
commodities and software may not be used when abroad for more than the 
minimum extent required for effective demonstration. The commodities 
and software may not be exhibited or demonstrated at any one site more 
than 120 days after installation and debugging, unless authorized by 
BIS. However, before or after an exhibition or demonstration, pending 
movement to another site, return to the United States or the foreign 
reexporter, or BIS approval for other disposition, the commodities and 
software may be placed in a bonded warehouse or a storage facility 
provided that the exporter retains ``effective control'' over their 
disposition. The export documentation for this type of transaction must 
show the exporter as ultimate consignee, in care of the person who will 
have control over the commodities and software abroad.
    (6) Inspection and calibration. Commodities to be inspected, 
tested, calibrated, or repaired abroad may be exported and reexported 
under this paragraph (a)(6) to all destinations except Country Group 
E:1.
    (7) Containers. Containers for which another license exception is 
not available and that are necessary for shipment of commodities may be 
exported, reexported, and transferred (in-country) under this paragraph 
(a)(7). However, this paragraph does not authorize the export of the 
container's contents, which, if not exempt from licensing, must be 
separately authorized for export under either a license exception or a 
license.
    (8) Assembly in Mexico. Commodities may be exported to Mexico under 
Customs entries that require return to the United States after 
processing, assembly, or incorporation into end products by companies, 
factories, or facilities participating in Mexico's in-

[[Page 37535]]

bond industrialization program (Maquiladora) under this paragraph 
(a)(8), provided that all resulting end-products (or the commodities 
themselves) are returned to the United States.
    (9) News media. (i) Commodities necessary for news-gathering 
purposes (and software necessary to use such commodities) may be 
temporarily exported or reexported for accredited news media personnel 
(i.e., persons with credentials from a news gathering or reporting 
firm) to Cuba, North Korea, Sudan, or Syria (see Supplement No. 1 to 
part 740) if the commodities:
    (A) Are retained under ``effective control'' of the exporting news 
gathering firm in the country of destination;
    (B) Remain in the physical possession of the news media personnel 
in the country of destination. The term physical possession for 
purposes of this paragraph (a)(9) means maintaining effective measures 
to prevent unauthorized access (e.g., securing equipment in locked 
facilities or hiring security guards to protect the equipment); and
    (C) Are removed with the news media personnel at the end of the 
trip.
    (ii) When exporting under this paragraph (a)(9) from the United 
States, the exporter must email a copy of the packing list or similar 
identification of the exported commodities, to 
[email protected] specifying the destination and estimated 
dates of departure and return. The Office of Export Enforcement (OEE) 
may spot check returns to assure that the provisions of this paragraph 
(a)(9) are being used properly.
    (iii) Commodities or software necessary for news-gathering purposes 
that accompany news media personnel to all other destinations shall be 
exported or reexported under paragraph (a)(1), tools of trade, of this 
section if owned by the news gathering firm, or if they are personal 
property of the individual news media personnel. Note that paragraphs 
(a)(1), tools of trade and (a)(9), news media, of this section do not 
preclude independent accredited contract personnel, who are under 
control of news gathering firms while on assignment, from using these 
provisions, provided that the news gathering firm designates an 
employee of the contract firm to be responsible for the equipment.
    (10) Temporary exports to a U.S. person's foreign subsidiary, 
affiliate, or facility abroad. Components, parts, tools, accessories, 
or test equipment exported by a U.S. person to a subsidiary, affiliate, 
or facility owned or controlled by the U.S. person, if the components, 
parts, tools, accessories, or test equipment are to be used to 
manufacture, assemble, test, produce, or modify items, provided that 
such components, parts, tools, accessories or test equipment are not 
transferred (in-country) or reexported from such subsidiary, affiliate, 
or facility, alone or incorporated into another item, without prior 
authorization by BIS.
    (11) U.S. persons. For purposes of this section 740.9, a U.S. 
person is defined as follows: an individual who is a citizen of the 
United States, an individual who is a lawful permanent resident as 
defined by 8 U.S.C. 1101(a)(2) or an individual who is a protected 
individual as defined by 8 U.S.C. 1324b(a)(3). U.S. person also means 
any juridical person organized under the laws of the United States, or 
any jurisdiction within the United States (e.g., corporation, business 
association, partnership, society, trust, or any other entity, 
organization or group that is incorporated to do business in the United 
States).
    (12) Body armor. (i) Exports to countries not identified in Sec.  
740.2(a)(12). U.S. persons may temporarily export one set of body armor 
classified under ECCN 1A613.d to countries not identified in Sec.  
740.2(a)(12), provided that:
    (A) A declaration by the U.S. person and an inspection by a customs 
officer are made;
    (B) The body armor is with the U.S. person's baggage or effects, 
whether accompanied or unaccompanied (but not mailed); and
    (C) The body armor is for that person's exclusive use and not for 
reexport or other transfer of ownership.
    (ii) Exports to Afghanistan or Iraq. U.S. persons may temporarily 
export one set of body armor classified under ECCN 1A613.d to 
Afghanistan or Iraq, provided that:
    (A) A declaration by the U.S. person and an inspection by a customs 
officer are made;
    (B) The body armor is with the U.S. person's baggage or effects, 
whether accompanied or unaccompanied (but not mailed);
    (C) The body armor is for that person's exclusive use and not for 
reexport or other transfer of ownership; and
    (D) For temporary exports to Iraq, the U.S. person utilizing the 
license exception is either a person affiliated with the U.S. 
Government traveling on official business or is a person not affiliated 
with the U.S. Government but traveling to Iraq under a direct 
authorization by the Government of Iraq and engaging in humanitarian 
activities for, on behalf of, or at the request of the Government of 
Iraq.
    (iii) Body armor controlled under ECCN 1A005 is eligible for this 
license exception under paragraph (a)(1) of this section.
    (13) Destinations. Destination restrictions apply to temporary 
exports to and for use on any vessel, aircraft or territory under 
ownership, control, lease, or charter by any country specified in any 
authorizing paragraph of this section, or any national thereof.
    (14) Return or disposal of items. All items exported, reexported, 
or transferred (in-country) under these provisions must, if not 
consumed or destroyed in the normal course of authorized temporary use 
abroad, be returned as soon as practicable but no later than one year 
after the date of export, reexport, or transfer to the United States or 
other country from which the items were so transferred. Items not 
returned shall be disposed of or retained in one of the following ways:
    (i) Permanent export or reexport. An exporter or reexporter who 
wants to sell or otherwise dispose of the items abroad, except as 
permitted by this or other applicable provision of the EAR, must apply 
for a license in accordance with Sec. Sec.  748.1, 748.4 and 748.6 of 
the EAR. (Part 748 of the EAR contains for more information about 
license applications.) The application must be supported by any 
documents that would be required in support of an application for 
export license for shipment of the same items directly from the United 
States to the proposed destination.
    (ii) Use of a license. An outstanding license may also be used to 
dispose of items covered by the provisions of this paragraph (a), 
provided that the outstanding license authorizes direct shipment of the 
same items to the same new ultimate consignee in the new country of 
destination.
    (iii) Authorization to retain item abroad beyond one year. An 
exporter who wants to retain an item abroad beyond one year must apply 
for a license in accordance with Sec. Sec.  748.1, 748.4 and 748.6 of 
the EAR to BIS 90 days prior to the expiration of the one-year period. 
The application must include the name and address of the exporter, the 
date the items were exported, a brief product description, and the 
justification for the extension. If BIS approves the extension, the 
exporter will receive authorization for a one-time extension not to 
exceed six months. BIS normally will not allow an extension for items 
that have been abroad more than one year, nor will a second six-month 
extension be authorized. Any request for retaining the items abroad for 
a period

[[Page 37536]]

exceeding 18 months must be made in accordance with the requirements of 
paragraph (a)(14)(i) of this section.
    (b) Exports of items temporarily in the United States.

    Note 1 to paragraph (b):
    A commodity withdrawn from a bonded warehouse in the United 
States under a `withdrawal for export' customs entry is considered 
as `moving in transit'. It is not considered as `moving in transit' 
if it is withdrawn from a bonded warehouse under any other type of 
customs entry or if its transit has been broken for a processing 
operation, regardless of the type of customs entry.


    Note 2 to paragraph (b):
    Items shipped on board a vessel or aircraft and passing through 
the United States from one foreign country to another may be 
exported without a license provided that (a) while passing in 
transit through the United States, they have not been unladen from 
the vessel or aircraft on which they entered, and (b) they are not 
originally manifested to the United States.


    Note 3 to paragraph (b):
    A shipment originating in Canada or Mexico that incidentally 
transits the United States en route to a delivery point in the same 
country does not require a license.


    Note 4 to paragraph (b):
    A shipment by air or vessel from one location in the United 
States to another location in the United States via a foreign 
country does not require a license.


    Note 5 to paragraph (b):
    All references to the United States Munitions List (``USML'') in 
this rule are to the list of defense articles that are controlled 
for purposes of export or temporary import pursuant to the 
International Traffic in Arms Regulations (``ITAR''), 22 CFR Parts 
120 et seq., and not to the list of defense articles on the USML 
that are controlled by the Bureau of Alcohol, Tobacco, Firearms and 
Explosives (ATF) for purpose of permanent import under its 
regulations at 27 CFR Part 447. Pursuant to section 38(a)(1) of the 
Arms Export Control Act (AECA), 22 U.S.C. Sec.  2779, all defense 
articles controlled for export or import are part of the ``USML'' 
under the AECA. For the sake of clarity, the list of defense 
articles controlled by ATF for purposes of permanent import are on 
the United States Munitions Import List (USMIL). The transfer of 
defense articles from the ITAR's USML to the EAR's CCL for purposes 
of export controls does not affect the list of defense articles 
controlled on the USMIL under the AECA for purposes of permanent 
import controls.

    (1) Items moving in transit through the United States. Subject to 
the following conditions, the provisions of paragraph (b)(1) authorize 
export of items moving in transit through the United States under a 
Transportation and Exportation (T.&E.) customs entry or an Immediate 
Exportation (I.E.) customs entry made at a U.S. Customs and Border 
Protection Office.
    (i) Items controlled for national security (NS) reasons, nuclear 
proliferation (NP) reasons, or chemical and biological weapons (CB) 
reasons may not be exported to Country Group D:1, 2, or 3 (see 
Supplement No. 1 to part 740), respectively, under this paragraph 
(b)(1).
    (ii) Items may not be exported to Country Group E:1 under this 
section.
    (iii) The following may not be exported from the United States 
under this paragraph (b)(1):
    (A) Commodities shipped to the United States under an International 
Import Certificate, Form BIS-645P;
    (B) Chemicals controlled under ECCN 1C350; or
    (C) Horses for export by sea (refer to short supply controls in 
part 754 of the EAR).
    (iv) The authorization to export in paragraph (b)(1) shall apply to 
all shipments from Canada moving in transit through the United States 
to any foreign destination, regardless of the nature of the commodities 
or software or their origin, notwithstanding any other provision of 
paragraph (b)(1).
    (2) Items imported for marketing, or for display at U.S. 
exhibitions or trade fairs. Subject to the following conditions, the 
provisions of this paragraph (b)(2) authorize the export of items that 
were imported into the United States for marketing, or for display at 
an exhibition or trade fair and were either entered under bond or 
permitted temporary free import under bond providing for their export 
and are being exported in accordance with the terms of that bond.
    (i) Items may be exported to the country from which imported into 
the United States. However, items originally imported from Cuba may not 
be exported unless the U.S. Government had licensed the import from 
that country.
    (ii) Items may be exported to any destination other than the 
country from which imported except:
    (A) Items imported into the United States under an International 
Import Certificate;
    (B) Exports to Country Group E:1 (see Supplement No. 1 to part 
740); or
    (C) Exports to Country Group D:1, 2, or 3 (see Supplement No. 1 to 
part 740) of items controlled for national security (NS) reasons, 
nuclear nonproliferation (NP) reasons, or chemical and biological 
weapons (CB) reasons, respectively.
    (3) Return of foreign-origin items. A foreign-origin item may be 
returned under this license exception to the country from which it was 
imported if its characteristics and capabilities have not been enhanced 
while in the United States, except that no foreign-origin items may be 
returned to Cuba.
    (4) Return of shipments refused entry. Shipments of items refused 
entry by the U.S. Customs and Border Protection, the Food and Drug 
Administration, or other U.S. Government agency may be returned to the 
country of origin, except to:
    (i) A destination in Cuba; or
    (ii) A destination from which the shipment has been refused entry 
because of the Foreign Assets Control Regulations of the Treasury 
Department, unless such return is licensed or otherwise authorized by 
the Treasury Department, Office of Foreign Assets Control (31 CFR parts 
500-599).
    10. Section 740.10 is amended:
    a. By removing and reserving paragraph (b)(2)(iii);
    b. By removing and reserving paragraph (b)(3)(ii); and
    c. By revising paragraph (a)(3)(ii), to read as follows:


Sec.  740.10  License Exception Servicing and replacement of parts and 
equipment (RPL).

    (a) * * *
    (3) * * *
    (ii) No ``parts,'' ``components,'' ``accessories,'' or 
``attachments'' may be exported to be held abroad as spares for future 
use, unless the value of the ``parts,'' ``components,'' 
``accessories,'' or ``attachments'' is less than $500 per shipment and 
no more than 24 shipments per year are made to each approved end user. 
Replacements may be exported to replace spares that were authorized to 
accompany the export of equipment or other end items, as those spares 
are used in the repair of the equipment or other end item. This allows 
maintenance of the stock of spares at a consistent level as the parts, 
components, accessories, or attachments are used.
* * * * *
    11. Section 740.11 is revised to read as follows:


Sec.  740.11  Governments, International Organizations, International 
Inspections under the Chemical Weapons Convention, and the 
International Space Station (GOV).

    This License Exception authorizes exports and reexports for 
international nuclear safeguards; U.S. government agencies or 
personnel; agencies of cooperating governments; international 
inspections under the Chemical Weapons Convention; and the 
International Space Station.
    (a) International Safeguards. (1) Scope. The International Atomic 
Energy Agency (IAEA) is an international organization that establishes 
and administers safeguards, including Additional Protocols, designed to 
ensure that special nuclear materials

[[Page 37537]]

and other related nuclear facilities, equipment, and material are not 
diverted from peaceful purposes to non-peaceful purposes.
    Euratom is an international organization of European countries with 
headquarters in Luxembourg. Euratom establishes and administers 
safeguards designed to ensure that special nuclear materials and other 
related nuclear facilities, equipment, and material are not diverted 
from peaceful purposes to non-peaceful purposes. This paragraph (a) 
authorizes exports and reexports of commodities or software to the IAEA 
and Euratom, and reexports by IAEA and Euratom for official 
international safeguard use, as follows:
    (i) Commodities or software consigned to the IAEA at its 
headquarters in Vienna, Austria or its field offices in Toronto, 
Ontario, Canada or in Tokyo, Japan for official international 
safeguards use.
    (ii) Commodities or software consigned to the Euratom Safeguards 
Directorate in Luxembourg, Luxembourg for official international 
safeguards use.
    (iii) Commodities or software consigned to IAEA or Euratom may be 
reexported to any country for IAEA or Euratom international safeguards 
use provided that IAEA or Euratom maintains control of or otherwise 
safeguards the commodities or software and returns the commodities or 
software to the locations described in paragraphs (a)(1)(i) and 
(a)(1)(ii) of this section when they become obsolete, are no longer 
required, or are replaced.
    (iv) Commodity or software shipments may be made by persons under 
direct contract with IAEA or Euratom, or by Department of Energy 
National Laboratories as directed by the Department of State or the 
Department of Energy.
    (v) The monitoring functions of IAEA and Euratom are not subject to 
the restrictions on prohibited safeguarded nuclear activities described 
in Sec.  744.2(a)(3) of the EAR.
    (vi) When commodities or software originally consigned to IAEA or 
Euratom are no longer in IAEA or Euratom official safeguards use, such 
commodities may be disposed of by destruction or by reexport or 
transfer in accordance with the EAR.
    (2) Restrictions. (i) Items on the Sensitive List (see Supplement 
No. 6 to part 774) may not be exported or reexported under this 
paragraph (a), except to the countries listed in Sec.  740.20(c)(1) 
(License Exception STA).
    (ii) Items on the Very Sensitive List (see Supplement No. 7 to part 
774) may not be exported or reexported under this paragraph (a).
    (iii) Encryption items controlled for EI reasons under ECCNs 5A002, 
5D002, or 5E002 may not be exported or reexported under this paragraph 
(a).
    (iv) Without prior authorization from the Bureau of Industry and 
Security, nationals of countries in Country Group E:1 may not 
physically or computationally access computers that have been enhanced 
by ``electronic assemblies,'' which have been exported or reexported 
under License Exception GOV and have been used to enhance such 
computers by aggregation of processors so that the APP of the 
aggregation exceeds the APP parameter set forth in ECCN 4A003.b. of the 
Commerce Control List in Supplement No. 1 to part 774 of the EAR.
    (v) ``600 series'' items may not be exported or reexported under 
this paragraph (a), except to the countries listed in Sec.  
740.20(c)(1) (License Exception STA).
    (iv) Technology or software prohibited by Supplement No. 4 to this 
part may not be exported or reexported under this paragraph (a).
    (b) United States Government. (1) Scope. The provisions of 
paragraph (b) authorize exports and reexports to personnel and agencies 
of the U.S. Government and certain exports by the Department of 
Defense. ``Agency of the U.S. Government'' includes all civilian and 
military departments, branches, missions, government-owned 
corporations, and other agencies of the U.S. Government, but does not 
include such national agencies as the American Red Cross or 
international organizations in which the United States participates 
such as the Organization of American States. Therefore, shipments may 
not be made to these non-government national or international agencies, 
except as provided in paragraph (b)(2)(i) of this section for U.S. 
representatives to these organizations.
    (2) Eligibility. (i) Items for personal use by personnel and 
agencies of the U.S. Government. This provision is available for items 
in quantities sufficient only for the personal use of members of the 
U.S. Armed Forces or civilian personnel of the U.S. Government 
(including U.S. representatives to public international organizations), 
and their immediate families and household employees. Items for 
personal use include household effects, food, beverages, and other 
daily necessities.
    (ii) Exports, reexports, and transfers made by or consigned to a 
department or agency of the U.S. Government. This paragraph authorizes 
exports, reexports, and transfers of items when made by or consigned to 
a department or agency of the U.S. Government solely for its official 
use or for carrying out any U.S. Government program with foreign 
governments or international organizations that is authorized by law 
and subject to control by the President by other means. This paragraph 
does not authorize a department or agency of the U.S. Government to 
make any export, reexport, or transfer that is otherwise prohibited by 
other administrative provisions or by statute. Contractor Support 
Personnel of a department or agency of the U.S. Government are eligible 
for this authorization when in the performance of their duties pursuant 
to the applicable contract or other official duties. ``Contractor 
Support Personnel'' for the purpose of this provision means those 
persons who provide administrative, managerial, scientific or technical 
support under contract to a U.S. Government department or agency (e.g., 
contractor employees of Federally Funded Research Facilities or Systems 
Engineering and Technical Assistance contractors). This authorization 
is not available when a department or agency of the U.S. Government 
acts as a transmittal agent on behalf of a non-U.S. Government person, 
either as a convenience or in satisfaction of security requirements.
    (iii) Exports, reexports and transfers made for or on behalf of a 
department or agency of the U.S. Government.
    (A) This paragraph authorizes exports, reexports and transfers of 
items solely for use by a department or agency of the U.S. Government, 
when:
    (1) The items are destined to a U.S. person; and
    (2) The item is exported, reexported, or transferred pursuant to a 
contract between the exporter and a department or agency of the U.S. 
Government;
    (B) This paragraph authorizes exports, reexports, and transfers of 
items to implement or support any U.S. Government cooperative program, 
project, agreement, or arrangement with a foreign government or 
international organization or agency that is authorized by law and 
subject to control by the President by other means, when:
    (1) The agreement is in force and in effect, or the arrangement is 
in operation;
    (2) The exporter, reexporter, or transferor obtains a written 
authorization from the Secretary or agency head of the U.S. Government 
department or agency responsible for the program, agreement, or 
arrangement, or his or her designee, authorizing the exporter, 
reexporter, or transferor to use this license exception. The written 
authorization must include the scope of

[[Page 37538]]

items to be shipped under this license exception; the end users and 
consignees of the items; and any restrictions on the export, reexport, 
or transfer (including any restrictions on the foreign release of 
technology);
    (3) The exporter, reexporter, or transferor has a contract with a 
department or agency of the U.S. Government for the provision of the 
items in furtherance of the agreement, or arrangement; and
    (4) The items being exported, reexported, or transferred are not 
controlled for CW or CB reasons;
    (C) This paragraph authorizes the temporary export, reexport, or 
transfer of an item in support of any foreign assistance or sales 
program authorized by law and subject to the control of the President 
by other means, when:
    (1) The item is provided pursuant to a contract between the 
exporter and a department or agency of the U.S. Government; and
    (2) The exporter, reexporter, or transferor obtains a written 
authorization from the Secretary or agency head of the U.S. Government 
department or agency responsible for the program, or his or her 
designee, authorizing the exporter, reexporter, or transferor to use 
this license exception. The written authorization must include the 
scope of items to be shipped under this license exception; the end 
users and consignees of the items; and any restrictions on the export, 
reexport, or transfer (including any restrictions on the foreign 
release of technology);
    (D) This paragraph authorizes the export of commodities or software 
at the direction of the U.S. Department of Defense for an end use in 
support of an Acquisition and Cross Servicing Agreement (ACSA), when:
    (1) The ACSA is between the U.S. Government and a foreign 
government or an international organization and is in force and in 
effect;
    (2) The exporter, reexporter, or transferor has a contract with the 
department or agency of the U.S. government in furtherance of the ACSA; 
and
    (3) The exporter, reexporter, or transferor obtains a written 
authorization from the Secretary or agency head of the U.S. Government 
department or agency responsible for the ACSA, or his or her designee, 
authorizing the exporter, reexporter, or transferor to use this license 
exception. The written authorization must include the scope of items to 
be shipped under this license exception; the end-users and consignees 
of the items; and any restrictions on the export, reexport, or 
transfer;
    (E) This paragraph authorizes the export, reexport, or transfer of 
an item to implement or support a program directed by the Secretary of 
Defense, with the concurrence of the Secretary of State, to build the 
capacity of: A foreign government's national military forces in order 
for that country to conduct counterterrorist operations or participate 
in or support military and stability operations in which the U.S. Armed 
Forces are a participant; or a foreign country's maritime security 
forces to conduct counterterrorism operations, when:
    (1) The program is in operation;
    (2) The exporter, reexporter, or transferor has a contract with a 
department or agency of the U.S. Government in furtherance of the 
program; and
    (3) The exporter, reexporter, or transferor obtains a written 
authorization from the Secretary or agency head of the U.S. Government 
department or agency authorized to implement the program, or his or her 
designee, authorizing the exporter, reexporter, or transferor to use 
this license exception. The written authorization must also include the 
scope of items to be shipped under this license exception; the end 
users and consignees of the items; and any restrictions on the export, 
reexport, or transfer (including any restrictions on the foreign 
release of technology);
    (F) This paragraph authorizes the export, reexport, or transfer of 
Government Furnished Equipment (GFE) made by a U.S. Government 
contractor, when:
    (1) The GFE will not be provided to any foreign person; and
    (2) The export, reexport, or transfer is pursuant to a contract 
with a department or agency of the U.S. Government.
    (G) Electronic Export Information. (1) Electronic Export 
Information (EEI) must be filed in the Automated Export System (AES) 
for any export made pursuant to paragraph (b)(iii) of this section. The 
EEI must identify License Exception GOV as the authority for the export 
and indicate that the applicant has received the relevant documentation 
from the contracting U.S. Government department, agency, or service. 
The Internal Transaction Number must be properly annotated on shipping 
documents (bill of lading, airway bill, other transportation documents, 
or commercial invoice) and shipment documents must include the 
following statement, ``Property of [insert U.S. Government department, 
agency, or service]. Property may not enter the trade of the country to 
which it is shipped. Authorized under License Exception GOV. U.S. 
Government point of contact: [Insert name and telephone number].''
    (H) The exporter, reexporter, or transferor must obtain an 
authorization, if required, before any item previously exported, 
reexported, or transferred under this paragraph is resold, transferred, 
reexported, transshipped, or disposed of to an end user for any end 
use, or to any destination other than as authorized by this paragraph 
(e.g., property disposal of surplus defense articles outside of the 
United States), unless:
    (1) The transfer is pursuant to a grant, sale, lease, loan, or 
cooperative project under the Arms Export Control Act or the Foreign 
Assistance Act of 1961, as amended; or
    (2) The item has been destroyed or rendered useless beyond the 
possibility of restoration.
    (iv) Items exported at the direction of the U.S. Department of 
Defense. This paragraph authorizes technology to be released pursuant 
to an official written request or directive from the U.S. Department of 
Defense.
    (v) This paragraph authorizes items sold, leased, or loaned by the 
U.S. Department of Defense to a foreign country or international 
organization pursuant to the Arms Export Control Act or the Foreign 
Assistance Act of 1961 when the items are delivered to representatives 
of such a country or organization in the United States and exported on 
a military aircraft or naval vessel of that government or organization 
or via the Defense Transportation Service.
    (vi) This paragraph authorizes transfer of technology in 
furtherance of a contract between the exporter and an agency of the 
U.S. government, if the contract provides for such technology and the 
technology is not ``development'' or ``production'' technology for 
``600 series'' items.

    Note to paragraph (b)(2) to this section:
    Foreign Military Sales (FMS). The export of items subject to the 
EAR that are sold, leased, or loaned by the Department of Defense to 
a foreign country or international organization must be made in 
accordance with the FMS Program carried out under the Arms Export 
Control Act.

    (c) Cooperating Governments. (1) Scope. The provisions of paragraph 
(c) authorize exports and reexports of the items listed in paragraph 
(c)(2) of this section to agencies of cooperating governments. ``Agency 
of a cooperating government'' includes all civilian and military 
departments, branches, missions, and other governmental agencies of a 
cooperating national

[[Page 37539]]

government. Cooperating governments are the national governments of 
countries listed in Country Group A:1 (see Supplement No. 1 to part 
740) and the national governments of Argentina, Austria, Finland, Hong 
Kong, Ireland, Korea (Republic of), New Zealand, Singapore, Sweden, 
Switzerland and Taiwan.
    (2) Eligibility. (i) Items for official use within national 
territory by agencies of cooperating governments. This license 
exception is available for all items consigned to and for the official 
use of any agency of a cooperating government within the territory of 
any cooperating government, except items excluded by paragraph (c)(3) 
of this section.
    (ii) Diplomatic and consular missions of a cooperating government. 
This license exception is available for all items consigned to and for 
the official use of a diplomatic or consular mission of a cooperating 
government located in any country in Country Group B (see Supplement 
No. 1 to part 740), except items excluded by paragraph (c)(3) of this 
section.
    (3) Exclusions. The following items may not be exported or 
reexported under this paragraph (c):
    (i) Items on the Sensitive List (see Supplement No. 6 to part 774), 
except to the countries listed in Sec.  740.20(c)(1) (License Exception 
STA);
    (ii) Items on the Very Sensitive List (see Supplement No. 7 to part 
774);
    (iii) Encryption items controlled for EI reasons under ECCNs 5A002, 
5D002, or 5E002;
    (iv) Regional stability items controlled under Export Control 
Classification Numbers (ECCNs) 6A002.a.1.c, 6E001 ``technology'' 
according to the General Technology Note for the ``development'' of 
equipment in 6A002.a.1.c, and 6E002 ``technology'' according to the 
General Technology Note for the ``production'' of equipment in 
6A002.a.1.c.;
    (v) ``600 series'' items, except to the countries listed in Sec.  
740.20(c)(1) (License Exception STA);
    (vi) Items controlled for nuclear nonproliferation (NP) reasons;
    (vii) Technology or software prohibited by Supplement No. 4 to this 
part;
    (viii) Items listed as not eligible for STA in Sec.  
740.20(b)(2)(ii).
    (4) Reporting requirements. See Sec.  743.1 of the EAR for 
reporting requirements for exports of certain items under this 
paragraph (c)(2).
    (d) International inspections under the Chemical Weapons Convention 
(CWC or Convention).
    (1) The Organization for the Prohibition of Chemical Weapons (OPCW) 
is an international organization that establishes and administers an 
inspection and verification regime under the Convention designed to 
ensure that certain chemicals and related facilities are not diverted 
from peaceful purposes to non-peaceful purposes. This paragraph (d) 
authorizes exports and reexports to the OPCW and exports and reexports 
by the OPCW for official international inspection and verification use 
under the terms of the Convention as follows:
    (i) Commodities and software consigned to the OPCW at its 
headquarters in The Hague for official international OPCW use for the 
monitoring and inspection functions set forth in the Convention, and 
technology relating to the maintenance, repair, and operation of such 
commodities and software. The OPCW must maintain effective control of 
such commodities, software and technology.
    (ii) Controlled technology relating to the training of the OPCW 
inspectorate.
    (iii) Controlled technology relating to a CWC inspection site, 
including technology released as a result of:
    (A) Visual inspection of U.S.-origin equipment or facilities by 
foreign nationals of the inspection team;
    (B) Oral communication of controlled technology to foreign 
nationals of the inspection team in the U.S. or abroad; and
    (C) The application to situations abroad of personal knowledge or 
technical experience acquired in the U.S.
    (2) Exclusions. The following items may not be exported or 
reexported under the provisions of this paragraph (d):
    (i) Inspection samples collected in the U.S. pursuant to the 
Convention;
    (ii) Commodities and software that are no longer in OPCW official 
use. Such items must be transferred in accordance with the EAR.
    (iii) ``600 series'' items, except to the countries listed in Sec.  
740.20(c)(1) (License Exception STA).
    (iv) Technology or software prohibited by Supplement No. 4 to this 
part.
    (3) Confidentiality. The application of the provisions of this 
paragraph (d) is subject to the condition that the confidentiality of 
business information is strictly protected in accordance with 
applicable provisions of the EAR and other U.S. laws regarding the use 
and transfer of U.S. goods and services.
    (4) Restrictions. Without prior authorization from the Bureau of 
Industry and Security, nationals of countries in Country Group E:1 may 
not physically or computationally access computers that have been 
enhanced by ``electronic assemblies,'' which have been exported or 
reexported under License Exception GOV and have been used to enhance 
such computers by aggregation of processors so that the APP of the 
aggregation exceeds the APP parameter set forth in ECCN 4A003.b. of the 
Commerce Control List in Supplement No. 1 to part 774 of the EAR.
    (e) International Space Station (ISS). (1) Scope. The ISS is a 
research facility in a low-Earth orbit approximately 190 miles (350 km) 
above the surface of the Earth. The ISS is a joint project among the 
space agencies of the United States, Russia, Japan, Canada, Europe and 
Italy. This paragraph (e) authorizes exports and reexports required on 
short notice of certain commodities subject to the EAR that are 
classified under ECCN 9A004 to launch sites for supply missions to the 
ISS.
    (2) Eligible commodities. Any commodity subject to the EAR that is 
classified under ECCN 9A004 and that is required for use on the ISS on 
short notice.

    Note 1 to paragraph (e)(2):
    This license exception is not available for the export or 
reexport of parts and components to overseas manufacturers for the 
purpose of incorporation into other items destined for the ISS.


    Note 2 to paragraph (e)(2):
    For purposes of this paragraph (e), `short notice' means the 
exporter is required to have a commodity manifested and at the 
scheduled launch site for hatch-closure (final stowage) no more than 
forty-five (45) days from the time the exporter or reexporter 
received complete documentation. `Complete documentation' means the 
exporter or reexporter received the technical description of the 
commodity and purpose for use of the commodity on the ISS. `Hatch-
closure (final stowage)' means the final date specified by a launch 
provider by which items must be at a specified location in a launch 
country in order to be included on a mission to the ISS. The 
exporter or reexporter must receive the notification to supply the 
commodity for use on the ISS in writing. That notification must be 
kept in accordance with paragraph (e)(8) of this section and the 
Recordkeeping requirements in part 762 of the EAR.

    (3) Eligible destinations. Eligible destinations are France, Japan, 
Kazakhstan, and Russia. To be eligible, a destination needs to have a 
launch for a supply mission to the ISS scheduled by a country 
participating in the ISS.
    (4) Requirement for commodities to be launched on an eligible space 
launch vehicle (SLV). Only commodities that will be delivered to the 
ISS using United States, Russian, ESA (French), or Japanese space 
launch vehicles (SLVs) are eligible under this authorization. 
Commodities to be delivered to the ISS

[[Page 37540]]

using SLVs from any other countries are excluded from this 
authorization.
    (5) Authorizations. (i) Authorization to retain commodity at or 
near launch site for up to six months. If there are unexpected delays 
in a launch schedule for reasons such as mechanical failures in a 
launch vehicle or weather, commodities exported or reexported under 
this paragraph (e) may be retained at or near the launch site for a 
period of six (6) months from the time of initial export or reexport 
before the commodities must be destroyed, returned to the exporter or 
reexporter, or be the subject of an individually validated license 
request submitted to BIS to authorize further disposition of the 
commodities.
    (ii) Authorization to retain commodity abroad at launch country 
beyond six months. If, after the commodity is exported or reexported 
under this authorization, a delay occurs in the launch schedule that 
would exceed the 6-month deadline in paragraph (e)(5)(i) of this 
section, the exporter or reexporter or the person in control of the 
commodities in the launch country may request a one-time 6-month 
extension by submitting written notification to BIS requesting a 6-
month extension and noting the reason for the delay. If the requestor 
is not contacted by BIS within 30 days from the date of the postmark of 
the written notification and if the notification meets the requirements 
of this subparagraph, the request is deemed granted. The request must 
be sent to BIS at the address listed in part 748 of the EAR and should 
include the name and address of the exporter or reexporter, the name 
and address of the person who has control of the commodity, the date 
the commodities were exported or reexported, a brief product 
description, and the justification for the extension. To retain a 
commodity abroad beyond the 6-month extension period, the exporter, 
reexporter or person in control of the commodity must request 
authorization by submitting a license application in accordance with 
Sec. Sec.  748.1, 748.4 and 748.6 of the EAR to BIS 90 days prior to 
the expiration of the 6-month extension period.
    (iii) Items not delivered to the ISS because of a failed launch. If 
the commodities exported or reexported under this paragraph (e) of this 
section are not delivered to the ISS because a failed launch causes the 
destruction of the commodity prior to its being delivered, exporters 
and reexporters must make note of the destruction of the commodities in 
accordance with the recordkeeping requirements under paragraph 
(e)(8)(ii) of this section and part 762 of the EAR.
    (6) Reexports to an alternate launch country. If a mechanical or 
weather related issue causes a change from the scheduled launch country 
to another foreign country after a commodity was exported or 
reexported, then that commodity may be subsequently reexported to the 
new scheduled launch country, provided all of the terms and conditions 
of paragraph (e) of this section are met, along with any other 
applicable EAR provisions. In such instances, the 6-month time 
limitation described in paragraph (e)(5)(i) of this section would start 
over again at the time of the subsequent reexport transaction. Note 
that if the subsequent reexport may be made under the designation No 
License Required (NLR) or some other authorization under the EAR, a 
reexporter does not need to rely on the provisions contained in this 
paragraph (e).
    (7) Eligible recipients. Only persons involved in the launch of 
commodities to the ISS may receive and have access to commodities 
exported or reexported pursuant to this paragraph (e), except that:
    (i) No commodities may be exported, reexported, or transferred (in-
country) under paragraph (e) to any national of an E:1 country listed 
in Supplement No. 1 to part 740 of the EAR, and
    (ii) No person may receive commodities authorized under paragraph 
(e) of this section who is subject to an end-user or end-use control 
described in part 744 of the EAR, including the entity list in 
Supplement No. 4 to part 744.
    (8) Recordkeeping requirements. Exporters and reexporters must 
maintain records regarding exports or reexports made using this 
paragraph (e) of this section as well as any other applicable 
recordkeeping requirements under part 762 of the EAR.
    (i) Exporters and reexporters must retain a record of the initial 
written notification they received requesting these commodities be 
supplied on short notice for a supply mission to the ISS, including the 
date the exporter or reexporter received complete documentation (i.e., 
the day on which the 45-day clock begins).
    (ii) Exporters and reexporters must maintain records of the date of 
any exports or reexports made using this paragraph (e) and the date on 
which the commodities were launched into space for delivery to the ISS. 
If the commodities are not delivered to the ISS because of a failed 
launch whereby the item is destroyed prior to being delivered to the 
ISS, this must be noted for recordkeeping purposes.
    (iii) The return or destruction of defective or worn out parts or 
components is not required. However, if defective or worn out parts or 
components originally exported or reexported pursuant to this paragraph 
(e) are returned from the ISS, then those parts and components may be 
either: Returned to the original country of export or reexport; 
destroyed; or reexported or transferred (in-country) to a destination 
that has been designated by NASA for conducting a review and analysis 
of the defective or worn part or component. Documentation for this 
activity must be kept for recordkeeping purposes. No commodities that 
are subject to the EAR may be returned, under the provisions of this 
paragraph, to a country listed in Country Group E:1 in Supplement No. 1 
to part 740 or to any person if that person is subject to an end-user 
or end-use control described in part 744 of the EAR. For purposes of 
paragraph (e) of this section, a `defective or worn out' part or 
component is a part or component that no longer performs its intended 
function.
    12. Section 740.13 is amended by adding a sentence to paragraph 
(a)(1), redesignating paragraph (f) as paragraph (h), and by adding new 
paragraphs (f) and (g) to read as follows:


Sec.  740.13  Technology and Software--Unrestricted (TSU).

    (a) * * * This paragraph (a) authorizes training, provided the 
training is limited to the operation, maintenance and repair technology 
identified in this paragraph.
* * * * *
    (f) Release of technology and source code in the U.S. by U.S. 
universities to their bona fide and full time regular employees.
    (1) Scope. This paragraph authorizes the release in the United 
States of ``technology'' and source code that is subject to the EAR by 
U.S. universities to foreign persons who are their bona fide and full 
time regular employees.
    (2) Eligible ``technology''and source code. Any ``technology'' or 
source code that is subject to the EAR may be released, except for 
``technology'' or source code that is subject to a missile technology 
or EI reason for control or otherwise restricted from the use of 
license exceptions under Sec.  740.2 of the EAR.
    (3) Eligible foreign nationals (i.e., bona fide and full time 
regular employees of U.S. universities). This exception is only 
available if:

[[Page 37541]]

    (i) The employee's permanent abode throughout the period of 
employment is in the U.S.;
    (ii) The employee is not a national of a country subject to a U.S. 
arms embargo (see Sec.  740.2(a)(12)); and
    (iii) The university informs the individual in writing that the 
``technology'' or source code may not be transferred to other foreign 
persons without prior U.S. Government authorization.
    (4) Exclusions. (i) No ``technology'' or source code may be 
released to a foreign national for purposes of establishing or 
producing items subject to the EAR;
    (ii) No ``technology'' or source code may be released to a foreign 
person subject to a part 744 end-use or end-user control or where the 
release would otherwise be inconsistent with part 744; and
    (iii) No ``technology'' or source code controlled for ``EI'' 
(encryption) or ``MT'' (Missile Technology) reasons may be released 
under this paragraph (f).
    (g) Copies of technology previously authorized for export to same 
recipient. This paragraph authorizes the export, reexport, or transfer 
(in-country) of copies of technology previously authorized for export, 
reexport, or in-country transfer to the same recipient. This paragraph 
also authorizes the export, reexport, or transfer (in-country) of 
revised copies of such technology provided the following four 
conditions are met:
    (1) The item that the technology pertains to is the identical item;
    (2) The revisions to the technology are solely editorial and do not 
add to the content of technology previously exported, reexported, or 
transferred (in-country) or authorized for export, reexport, or 
transfer (in-country) to the same recipient;
    (3) The same recipient is not currently subject to an end-use 
control under the EAR (e.g., being subject to a Denial Order or Listed 
on the Entity List in Supplement No. 4 to part 744); and
    (4) The exporter, reexporter, or transferor has reason to believe 
the same recipient has used the technology in accordance with the 
original authorization.
    13. Section 740.20 is revised to read as follows:


Sec.  740.20  License Exception Strategic Trade Authorization (STA).

* * * * *
    (c) * * *

    Note 2 to paragraph (c). License Exception STA under Sec.  
740.20(c)(1) may be used to authorize the export, reexport, or 
transfer (in-country) of ``600 series'' items only if the purchaser, 
intermediate consignee, ultimate consignee, and end user have 
previously been approved on a license issued by BIS or the 
Directorate of Defense Trade Controls (DDTC), U.S. Department of 
State.

* * * * *
    (d) * * *
    (1) * * *
    (2) Prior consignee statement.
* * * * *
    (vi) For ``600 series items,'' confirms that the items are for 
ultimate end use by a government of a country listed in Sec.  
740.20(c)(1), the United States Government, or a person in the United 
States, and agrees to permit an end-use check.

PART 742--[AMENDED]

    14. The authority citations paragraph for part 742 continues to 
read as follows:

    Authority:  50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; 
22 U.S.C. 3201 et seq.; 42 U.S.C. 2139a; 22 U.S.C. 7201 et seq.; 22 
U.S.C. 7210; Sec. 1503, Pub. L. 108-11, 117 Stat. 559; E.O. 12058, 
43 FR 20947, 3 CFR, 1978 Comp., p. 179; E.O. 12851, 58 FR 33181, 3 
CFR, 1993 Comp., p. 608; E.O. 12938, 59 FR 59099, 3 CFR, 1994 Comp., 
p. 950; E.O. 13026, 61 FR 58767, 3 CFR, 1996 Comp., p. 228; E.O. 
13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 783; Presidential 
Determination 2003-23 of May 7, 2003, 68 FR 26459, May 16, 2003; 
Notice of August 12, 2011, 76 FR 50661 (August 16, 2011); Notice of 
November 9, 2011, 76 FR 70319 (November 10, 2011).

    15. Section 742.6 is revised to read as follows:


Sec.  742.6  Regional stability.

    (a) * * *
* * * * *
    (b) Licensing policy. Applications for exports and reexports of 
``600 series'' items will be reviewed on a case-by-case basis to 
determine whether the transaction is contrary to the national security 
or foreign policy interests of the United States. Other applications 
for exports and reexports described in paragraph (a)(1), (a)(2), (a)(6) 
or (a)(7) of this section will be reviewed on a case-by-case basis to 
determine whether the export or reexport could contribute directly or 
indirectly to any country's military capabilities in a manner that 
would alter or destabilize a region's military balance contrary to the 
foreign policy interests of the United States. Applications for 
reexports of items described in paragraph (a)(3) of this section will 
be reviewed applying the policies for similar commodities that are 
subject to the ITAR. Applications for export or reexport of items 
classified under any ``600 series'' ECCN listed in paragraph (a)(1) of 
this section will also be reviewed in accordance with U.S. arms embargo 
policies and generally will be denied if destined for a destination set 
forth in Sec.  740.2(a)(12) of the EAR. Applications for export or 
reexport of ``parts,'' ``components,'' ``accessories,'' 
``attachments,'' software, or technology ``specially designed'' or 
otherwise required for the F-14 aircraft will generally be denied.

PART 743--[AMENDED]

    16. The authority citations paragraph for part 743 continues to 
read as follows:

    Authority:  50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; 
E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 783; Notice of August 
12, 2011, 76 FR 50661 (August 16, 2011).

    17. Part 743 is amended by revising its title to read:

PART 743--SPECIAL REPORTING AND NOTIFICATION

    18. Section 743.1 is amended by revising paragraph (c) to read as 
follows:


Sec.  743.1  Wassenaar Arrangement.

* * * * *
    (c) Items for which reports are required. You must submit reports 
to BIS under the provisions of this section only for exports controlled 
on the Sensitive List (see Supplement No. 6 to part 774).
* * * * *
    19. New Section 743.5 is added to read as follows:


Sec.  743.5  Prior notifications to Congress of Exports of Major 
Defense Equipment and other transactions.

    (a) General requirement. Applications to export items on the 
Commerce Control List that are Major Defense Equipment (MDE) and 
certain other controlled transactions will be notified to Congress as 
provided in this section before licenses for such items are issued. 
`Major Defense Equipment' means any item having a nonrecurring research 
and development cost of more than $50,000,000 or a total production 
cost of more than $200,000,000. Exports to U.S. government end users 
under License Exception GOV (Sec.  740.11(b)) do not require such 
notification.
    (b) BIS will notify Congress prior to issuing a license authorizing 
the export of items controlled to a country outside the countries 
listed in Sec.  740.20(c)(1) (License Exception STA) that are:
    (1) Major Defense Equipment sold under a contract in the amount of 
$14,000,000 or more;
    (2) Other ``600 series'' items sold under a contract in the amount 
of $50,000,000 or more; or

[[Page 37542]]

    (3) Firearms controlled under ECCN 0A601 under a contract in the 
amount of $1,000,000 or more.
    (c) BIS will notify Congress prior to issuing a license authorizing 
the export of items controlled to a country listed in Sec.  
740.20(c)(1) (License Exception STA) that are:
    (1) Major Defense Equipment sold under a contract in the amount of 
$25,000,000 or more;
    (2) Other ``600 series'' items sold under a contract in the amount 
of $100,000,000 or more; or
    (3) Firearms controlled under ECCN 0A601 under a contract in the 
amount of $1,000,000 or more.
    (d) In addition to information required on the application, the 
exporter must include a copy of the signed contract (including a 
statement of the contract's value) for any proposed export described in 
paragraphs (b) or (c).
    (e) Address. Munitions Control Division at 
[email protected].
    (f) BIS will hold the case without action (HWA) until the 
notification period has expired.

PART 744--[AMENDED]

    20. The authority citations paragraph for part 744 continues to 
read as follows:

    Authority:  50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; 
22 U.S.C. 3201 et seq.; 42 U.S.C. 2139a; 22 U.S.C. 7201 et seq.; 22 
U.S.C. 7210; E.O. 12058, 43 FR 20947, 3 CFR, 1978 Comp., p. 179; 
E.O. 12851, 58 FR 33181, 3 CFR, 1993 Comp., p. 608; E.O. 12938, 59 
FR 59099, 3 CFR, 1994 Comp., p. 950; E.O. 12947, 60 FR 5079, 3 CFR, 
1995 Comp., p. 356; E.O. 13026, 61 FR 58767, 3 CFR, 1996 Comp., p. 
228; E.O. 13099, 63 FR 45167, 3 CFR, 1998 Comp., p. 208; E.O. 13222, 
66 FR 44025, 3 CFR, 2001 Comp., p. 783; E.O. 13224, 66 FR 49079, 3 
CFR, 2001 Comp., p. 786; Notice of August 12, 2011, 76 FR 50661 
(August 16, 2011); Notice of September 21, 2011, 76 FR 59001 
(September, 22, 2011); Notice of November 9, 2011, 76 FR 70319 
(November 10, 2011); Notice of January 19, 2012, 77 FR 3067 (January 
20, 2012).

    21. Section 744.21 is amended by redesignating paragraphs (a), 
(a)(1) and (a)(2) as paragraphs (a)(1), (a)(1)(i) and (a)(1)(ii) and by 
adding a new paragraph (a)(2) to read as follows:


Sec.  744.21  Restrictions on Certain Military End-Uses in the People's 
Republic of China (PRC).

    (a)(1) * * *
    (a)(2) General prohibition. In addition to the license requirements 
for ``600 series'' items specified on the Commerce Control List (CCL), 
you may not export, reexport, or transfer any ``600 series'' item, 
including .y items described in a ``600 series'' ECCN, to the PRC 
without a license.

PART 750--[AMENDED]

    22. The authority citations paragraph for part 750 continues to 
read as follows:

    Authority:  50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; 
Sec 1503, Public Law 108-11, 117 Stat. 559; E.O. 13026, 61 FR 58767, 
3 CFR, 1996 Comp., p. 228; E.O. 13222, 66 FR 44025, 3 CFR, 2001 
Comp., p. 783; Presidential Determination 2003-23 of May 7, 2003, 68 
FR 26459, May 16, 2003; Notice of August 12, 2011, 76 FR 50661 
(August 16, 2011).

    23. Section 750.4 is amended by adding paragraph (b)(7) to read as 
follows:


Sec.  750.4  Procedures for processing license applications.

* * * * *
    (b) Actions not included in processing time calculations. * * *
    (7) Major Defense Equipment. Congressional notification, including 
consultations prior to notification, prior to the issuance of an 
authorization to export Major Defense Equipment (as defined inSec.  
743.5 of the EAR).
    24. Section 750.7 is amended:
    (a) By adding a new paragraph (c)(1)(ix); and
    (b) By revising both the introductory text in paragraphs (g) and 
paragraph (g)(1) to read as follows:


Sec.  750.7  Issuance of licenses.

    (c) Changes to the license. * * *
* * * * *
    (ix) Direct exports or reexports to approved end users on an export 
or reexport license, provided those end users are listed by name and 
location on such export or reexport license and the license does not 
contain any conditions that are specific to the ultimate consignee that 
cannot be complied with by the end user, such as a reporting 
requirement that must be made by the ultimate consignee.
    (A) Restriction. Export and reexport licenses where a class of 
authorized end users is identified (e.g., by industry or by location), 
but specific end users are not identified by name on the export or 
reexport license are specifically excluded from this paragraph 
(c)(1)(ix). Direct exports or reexports to these types of end users are 
a material change to the export or reexport license. If exporters or 
reexporters wish to make such direct exports, they will need to submit 
an application for a new license in accordance with the instructions 
contained in Supplement No. 1 to part 748 of the EAR.
    (B) [RESERVED].
* * * * *
    (g) License validity period. Licenses involving the export or 
reexport of items will generally have a four-year validity period, 
unless a different validity period has been requested and specifically 
approved by BIS or is otherwise specified on the license at the time 
that it is issued. Exceptions from the four-year validity period 
include license applications reviewed and approved as an ``emergency'' 
(see Sec.  748.4(h) of the EAR) and license applications for items 
controlled for short supply reasons, which will be limited to a 12-
month validity period. Emergency licenses will expire no later than the 
last day of the calendar month following the month in which the 
emergency license is issued. The expiration date will be clearly stated 
on the face of the license. If the expiration date falls on a legal 
holiday (Federal or State), the validity period is automatically 
extended to midnight of the first day of business following the 
expiration date.
    (1) Extended validity period. BIS will consider granting a validity 
period exceeding 4 years on a case-by-case basis when extenuating 
circumstances warrant such an extension. Requests for such extensions 
may be made at the time of application or after the license has been 
issued and it is still valid. BIS will not approve changes regarding 
other aspects of the license, such as the parties to the transaction 
and the countries of ultimate destination. An extended validity period 
will generally be granted where, for example, the transaction is 
related to a multi-year project; when the period corresponds to the 
duration of a manufacturing license agreement, technical assistance 
agreement, warehouse and distribution agreement, or license issued 
under the International Traffic in Arms Regulations; when production 
lead time will not permit an export or reexport during the original 
validity period of the license; when an unforeseen emergency prevents 
shipment within the 4-year validity of the license; or for other 
similar circumstances.
    * * *
* * * * *

PART 758--[AMENDED]

    25. The authority citations paragraph for part 758 continues to 
read as follows:

    Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; 
E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 783; Notice of August 
12, 2011, 76 FR 50661 (August 16, 2011).

    26. Section 758.1 is amended by revising the section heading, 
redesignating paragraphs (b)(3) through (b)(5) as (b)(5) through (b)(7) 
and by

[[Page 37543]]

adding new paragraphs (b)(3) and (b)(4), to read as follows:


Sec.  758.1  The Automated Export System (AES) record.

* * * * *
    (b) * * *
    (1) * * *
    (2) * * *
    (3) For all exports of ``600 series'' items, regardless of value or 
destination, including exports to Canada;
    (4) For all exports under License Exceptions Strategic Trade 
Authorization (STA);
* * * * *
    27. Section 758.2(c) is revised by adding paragraph (c)(4) to read 
as follows:


Sec.  758.2  Automated Export System (AES).

* * * * *
    (a) * * *
    (b) * * *
    (4) Exports are made under Strategic Trade Authorization; are made 
under Authorization Validated End User (VEU); or are of ``600 series'' 
items.
    28. Section 758.6 is revised to read as follows:


Sec.  758.6  Destination control statement.

    (a) General requirement. The Destination Control Statement (DCS) 
must be entered on the invoice and on the bill of lading, air waybill, 
or other export control document that accompanies the shipment from its 
point of origin in the United States to the ultimate consignee or end-
user abroad. The person responsible for preparation of those documents 
is responsible for entry of the DCS. The DCS is required for all 
exports from the United States of items on the Commerce Control List 
that are not classified as EAR99, unless the export may be made under 
License Exception BAG or GFT (see part 740 of the EAR). At a minimum, 
and except as provided in paragraph (b), the DCS must state:
    ``These commodities, technology, or software were exported from the 
United States in accordance with the Export Administration Regulations. 
Diversion contrary to U.S. law is prohibited.''
    (b) ``600 series'' items. For exports of ``600 series'' items, at a 
minimum, the DCS must state:
    ``These commodities, technology, or software controlled under 
[INSERT ECCN(s)] were exported from the United States in accordance 
with the Export Administration Regulations. Diversion contrary to U.S. 
law is prohibited.''

PART 762--[AMENDED]

    29. The authority citations paragraph for part 762 continues to 
read as follows:

    Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; 
E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 783; Notice of August 
12, 2011, 76 FR 50661 (August 16, 2011).

    30. Section 762.2 is amended by adding paragraph (b)(48) to read as 
follows:


Sec.  762.2  Records to be retained.

    (a) * * *
    (b) * * *
    (48) Sec.  740.11(b)(2)(iii) and (iv), License Exception GOV.

PART 764--[AMENDED]

    31. The authority citations paragraph for part 764 continues to 
read as follows:

    Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; 
E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 783; Notice of August 
12, 2011, 76 FR 50661 (August 16, 2011).

    32. Supplement No. 1 to part 764 is amended by removing the 
penultimate paragraph: ``Fourth, that this order does not prohibit any 
export, reexport, or other transaction subject to the EAR where the 
only items involved that are subject to the EAR are the foreign-
produced direct product of U.S.-origin technology.''

PART 774--[AMENDED]

    33. The authority citations paragraph for part 774 continues to 
read as follows:

    Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; 
10 U.S.C. 7420; 10 U.S.C. 7430(e); 22 U.S.C. 287c, 22 U.S.C. 3201 et 
seq., 22 U.S.C. 6004; 30 U.S.C. 185(s), 185(u); 42 U.S.C. 2139a; 42 
U.S.C. 6212; 43 U.S.C. 1354; 15 U.S.C. 1824a; 50 U.S.C. app. 5; 22 
U.S.C. 7201 et seq.; 22 U.S.C. 7210; E.O. 13026, 61 FR 58767, 3 CFR, 
1996 Comp., p. 228; E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 
783; Notice of August 12, 2011, 76 FR 50661 (August 16, 2011).

    34. In Supplement No. 1 to part 774 (the Commerce Control List), 
Category 0--Nuclear Materials, Facilities, and Equipment (and 
Miscellaneous Items), ECCN 0A919 is amended by revising the ``Items'' 
paragraph to read as follows:

0A919 ``Military commodities'' as follows (see list of items 
controlled).
* * * * *
Items: ``Military commodities'' with all of the following 
characteristics:

    a. Described on either the United States Munitions List (22 CFR 
Part 121) or the Munitions List that is published by the Wassenaar 
Arrangement on Export Controls for Conventional Arms and Dual-Use 
Goods and Technologies (as set out on its Web site at http://www.wassenaar.org), but not any item listed in any Export Control 
Classification Number for which the last three characters are 018 or 
any item in the ``600 series'';
    b. Produced outside the United States;
    c. Not subject to the International Traffic in Arms Regulations 
(22 CFR Parts 120-130) for a reason other than presence in the 
United States; and
    d. One or more of the following characteristics:
    d.1. Incorporate one or more cameras classified under ECCN 
6A003.b.4.b;
    d.2. Incorporate more than a de minimis amount of ``600 series'' 
controlled content (see Sec.  734.4 of the EAR); or
    d.3. Are direct products of U.S.-origin ``600 series'' 
technology (see Sec.  736.2(b)(3) of the EAR).

    35. Part 774 is amended by adding new Supplement Nos. 6 and 7 to 
read as follows:

Supplement No. 6 to Part 774--Sensitive List

    (Note to Supplement No. 6: If text accompanies an ECCN below, 
then the Sensitive List is limited to a subset of items classified 
under the ECCN.)

(1) Category 1

    (i) 1A002 (entire entry).
    (ii) 1C001 (entire entry).
    (iii) 1C007.c and .d.
    (iv) 1C010.c and .d.
    (v) 1C012 (entire entry).
    (vi) 1D002--``software'' for the ``development'' of organic 
``matrix'', metal ``matrix'', or carbon ``matrix'' laminates or 
composites controlled under 1A002, 1C007.c, 1C007.d, 1C010.c or 
1C010.d.
    (vii) 1E001--``Technology'' according to the General Technology 
Note for the ``development'' or ``production'' of equipment and 
materials controlled under 1A002, 1C001, 1C007.c, 1C007.d, 1C010.c, 
1C010.d, or 1C012.
    (viii) 1E002.e and .f.

(2) Category 2

    (i) 2D001--``software'', other than that controlled by 2D002, 
specially designed for the ``development'' or ``production'' of 
equipment as follows:
    (A) Machine tools for turning (ECCN 2B001.a) having all of the 
following:
    (1) Positioning accuracy with ``all compensations available'' 
equal to or less (better) than 3.6 [mu]m according to ISO 230/2 
(2006) or national equivalents along any linear axis; and
    (2) Two or more axes which can be coordinated simultaneously for 
``contouring control'';
    (B) Machine tools for milling (ECCN 2B001.b) having any of the 
following:
    (1) Positioning accuracy with ``all compensations available'' 
equal to or less (better) than 3.6 [mu]m according to ISO 230/2 
(2006) or national equivalents along any linear axis, and three 
linear axes plus one rotary axis which can be coordinated 
simultaneously for ``contouring control'';
    (2) Five or more axes which can be coordinated simultaneously 
for ``contouring control'' and have a positioning accuracy with 
``all compensations available'' equal to or less (better) than 3.6 
[mu]m according to ISO 230/2 (2006) or national equivalents along 
any linear axis; or

[[Page 37544]]

    (3) A positioning accuracy for jig boring machines, with ``all 
compensations available'', equal to or less (better) than 3 [mu]m 
according to ISO 230/2 (2006) or national equivalents along any 
linear axis;
    (C) Electrical discharge machines (EDM) controlled under 
2B001.d;
    (D) Deep-hole-drilling machines controlled under 2B001.f;
    (E) ``Numerically controlled'' or manual machine tools 
controlled under 2B003.
    (ii) 2E001--``technology'' according to the General Technology 
Note for the ``development'' of ``software'' controlled within the 
specific provisions of 2D001 described in this Supplement or for the 
``development'' of equipment as follows:
    (A) Machine tools for turning (ECCN 2B001.a) having all of the 
following:
    (1) Positioning accuracy with ``all compensations available'' 
equal to or less (better) than 3.6 [mu]m according to ISO 230/2 
(2006) or national equivalents along any linear axis; and
    (2) Two or more axes which can be coordinated simultaneously for 
``contouring control'';
    (B) Machine tools for milling (ECCN 2B001.b) having any of the 
following:
    (1) Positioning accuracy with ``all compensations available'' 
equal to or less (better) than 3.6 [mu]m according to ISO 230/2 
(2006) or national equivalents along any linear axis, and three 
linear axes plus one rotary axis which can be coordinated 
simultaneously for ``contouring control'';
    (2) Five or more axes which can be coordinated simultaneously 
for ``contouring control'' and have a positioning accuracy with 
``all compensations available'' equal to or less (better) than 3.6 
[mu]m according to ISO 230/2 (2006) or national equivalents along 
any linear axis; or
    (3) A positioning accuracy for jig boring machines, with ``all 
compensations available'', equal to or less (better) than 3 [mu]m 
according to ISO 230/2 (2006) or national equivalents along any 
linear axis;
    (C) Electrical discharge machines (EDM) controlled under 
2B001.d;
    (D) Deep-hole-drilling machines controlled under 2B001.f;
    (E) ``Numerically controlled'' or manual machine tools 
controlled under 2B003.
    (iii) 2E002--``technology'' according to the General Technology 
Note for the ``production'' of equipment as follows:
    (A) Machine tools for turning (ECCN 2B001.a) having all of the 
following:
    (1) Positioning accuracy with ``all compensations available'' 
equal to or less (better) than 3.6 [micro]m according to ISO 230/2 
(2006) or national equivalents along any linear axis; and
    (2) Two or more axes which can be coordinated simultaneously for 
``contouring control'';
    (B) Machine tools for milling (ECCN 2B001.b) having any of the 
following:
    (1) Positioning accuracy with ``all compensations available'' 
equal to or less (better) than 3.6 [micro]m according to ISO 230/2 
(2006) or national equivalents along any linear axis, and three 
linear axes plus one rotary axis which can be coordinated 
simultaneously for ``contouring control'';
    (2) Five or more axes which can be coordinated simultaneously 
for ``contouring control'' and have a positioning accuracy with 
``all compensations available'' equal to or less (better) than 3.6 
[micro]m according to ISO 230/2 (2006) or national equivalents along 
any linear axis; or
    (3) A positioning accuracy for jig boring machines, with ``all 
compensations available'', equal to or less (better) than 3 [micro]m 
according to ISO 230/2 (2006) or national equivalents along any 
linear axis;
    (C) Electrical discharge machines (EDM) controlled under 
2B001.d;
    (D) Deep-hole-drilling machines controlled under 2B001.f;
    (E) ``Numerically controlled'' or manual machine tools 
controlled under 2B003.

(3) Category 3

    (i) 3A002.g.1.
    (ii) 3D001--``software'' specially designed for the 
``development'' or ``production'' of equipment controlled under 
3A002.g.1.
    (iii) 3E001--``technology'' according to the General Technology 
Note for the ``development'' or ``production'' of equipment 
controlled under 3A002.g.1.

(4) Category 4

    (i) 4A001.a.2.
    (ii) 4D001--``software'' specially designed for the 
``development'' or ``production'' of equipment controlled under ECCN 
4A001.a.2 or for the ``development'' or ``production'' of ``digital 
computers'' having an `Adjusted Peak Performance' (`APP') exceeding 
0.5 Weighted TeraFLOPS (WT).
    (iii) 4E001--``technology'' according to the General Technology 
Note for the ``development'' or ``production'' of any of the 
following equipment or ``software'': equipment controlled under ECCN 
4A001.a.2, ``digital computers'' having an `Adjusted Peak 
Performance' (`APP') exceeding 0.5 Weighted TeraFLOPS (WT), or 
``software'' controlled under the specific provisions of 4D001 
described in this Supplement.

(5) Category 5--Part 1

    (i) 5A001.b.3, .b.5, and .h.
    (ii) 5B001.a--equipment and specially designed components or 
accessories therefor, specially designed for the ``development'', 
``production'' or ``use'' of equipment, functions or features 
controlled under 5A001.b.3, b.5, or .h.
    (iii) 5D001.a--``software'' specially designed for the 
``development'' or ``production'' of equipment, functions or 
features controlled under 5A001.b.3, b.5, or .h.
    (iv) 5D001.b--``software'' specially designed or modified to 
support ``technology'' controlled by this Supplement's description 
of 5E001.a.
    (v) 5E001.a--``technology'' according to the General Technology 
Note for the ``development'' or ``production'' of equipment, 
functions or features controlled under 5A001.b.3, b.5, or .h or 
``software'' described in this Supplement's description of 5D001.a.

(6) Category 6

    (i) 6A001.a.1.b--systems or transmitting and receiving arrays, 
designed for object detection or location, having any of the 
following:
    (A) A transmitting frequency below 5 kHz or a sound pressure 
level exceeding 224 dB (reference 1 [micro]Pa at 1 m) for equipment 
with an operating frequency in the band from 5 kHz to 10 kHz 
inclusive;
    (B) Sound pressure level exceeding 224 dB (reference 1 [micro]Pa 
at 1 m) for equipment with an operating frequency in the band from 
10 kHz to 24 kHz inclusive;
    (C) Sound pressure level exceeding 235 dB (reference 1 [micro]Pa 
at 1 m) for equipment with an operating frequency in the band 
between 24 kHz and 30 kHz;
    (D) Forming beams of less than 1[deg] on any axis and having an 
operating frequency of less than 100 kHz;
    (E) Designed to operate with an unambiguous display range 
exceeding 5,120 m; or
    (F) Designed to withstand pressure during normal operation at 
depths exceeding 1,000 m and having transducers with any of the 
following:
    (1) Dynamic compensation for pressure; or
    (2) Incorporating other than lead zirconate titanate as the 
transduction element;
    (ii) 6A001.a.1.e.
    (iii) 6A001.a.2.a.1, a.2.a.2, a.2.a.3, a.2.a.5, and a.2.a.6.
    (iv) 6A001.a.2.b.
    (v) 6A001.a.2.c--processing equipment, specially designed for 
real time application with towed acoustic hydrophone arrays, having 
``user accessible programmability'' and time or frequency domain 
processing and correlation, including spectral analysis, digital 
filtering and beamforming using Fast Fourier or other transforms or 
processes.
    (vi) 6A001.a.2.d.
    (vii) 6A001.a.2.e.
    (viii) 6A001.a.2.f--processing equipment, specially designed for 
real time application with bottom or bay cable systems, having 
``user accessible programmability'' and time or frequency domain 
processing and correlation, including spectral analysis, digital 
filtering and beamforming using Fast Fourier or other transforms or 
processes.
    (ix) 6A002.a.1.a, a.1.b, and a.1.c.
    (x) 6A002.a.1.d.
    (xi) 6A002.a.2.a--image intensifier tubes having all of the 
following:
    (A) A peak response in the wavelength range exceeding 400 nm but 
not exceeding 1,050 nm;
    (B) Electron image amplification using any of the following:
    (1) A microchannel plate for electron image amplification with a 
hole pitch (center-to-center spacing) of 12 [mu]m or less; or
    (2) An electron sensing device with a non-binned pixel pitch of 
500 [mu]m or less, specially designed or modified to achieve `charge 
multiplication' other than by a microchannel plate; and
    (C) Any of the following photocathodes:
    (1) Multialkali photocathodes (e.g., S-20 and S-25) having a 
luminous sensitivity exceeding 700 [mu]A/lm;
    (2) GaAs or GaInAs photocathodes; or
    (3) Other ``III-V compound'' semiconductor photocathodes having 
a

[[Page 37545]]

maximum ``radiant sensitivity'' exceeding 10 mA/W.
    (xii) 6A002.a.2.b.
    (xiii) 6A002.a.3--subject to the following additional notes:

    Note 1: 6A002.a.3 does not apply to the following ``focal plane 
arrays'' in this Supplement:
    a. Platinum Silicide (PtSi) ``focal plane arrays'' having less 
than 10,000 elements;
    b. Iridium Silicide (IrSi) ``focal plane arrays''.


    Note 2:  6A002.a.3 does not apply to the following ``focal plane 
arrays'' in this Supplement:
    a. Indium Antimonide (InSb) or Lead Selenide (PbSe) ``focal 
plane arrays'' having less than 256 elements;
    b. Indium Arsenide (InAs) ``focal plane arrays'';
    c. Lead Sulphide (PbS) ``focal plane arrays'';
    d. Indium Gallium Arsenide (InGaAs) ``focal plane arrays''.


    Note 3:  6A002.a.3 does not apply to Mercury Cadmium Telluride 
(HgCdTe) ``focal plane arrays'' as follows in this Supplement:
    a. `Scanning Arrays' having any of the following:
    1. 30 elements or less; or
    2. Incorporating time delay-and-integration within the element 
and having 2 elements or less;
    b. `Staring Arrays' having less than 256 elements.


    Technical Notes: a. `Scanning Arrays' are defined as ``focal 
plane arrays'' designed for use with a scanning optical system that 
images a scene in a sequential manner to produce an image;
    b. `Staring Arrays' are defined as ``focal plane arrays'' 
designed for use with a non-scanning optical system that images a 
scene.


    Note 6: 6A002.a.3 does not apply to the following ``focal plane 
arrays'' in this List:
    a. Gallium Arsenide (GaAs) or Gallium Aluminum Arsenide (GaAlAs) 
quantum well ``focal plane arrays'' having less than 256 elements;
    b. Microbolometer ``focal plane arrays'' having less than 8,000 
elements.


    Note 7:  6A002.a.3.g does not apply to the linear (1-
dimensional) ``focal plane arrays'' specially designed or modified 
to achieve `charge multiplication' having 4,096 elements or less.


    Note 8:  6A002.a.3.g. does not apply to the non-linear (2-
dimensional) ``focal plane arrays'' specially designed or modified 
to achieve `charge multiplication' having a maximum linear dimension 
of 4,096 elements and a total of 250,000 elements or less.

    (xiv) 6A002.b.
    (xv) 6A002.c--`direct view' imaging equipment incorporating any 
of the following:
    (A) Image intensifier tubes having the characteristics listed in 
this Supplement's description of 6A002.a.2.a or 6A002.a.2.b;
    (B) ``Focal plane arrays'' having the characteristics listed in 
this Supplement's description of 6A002.a.3; or
    (C) Solid-state detectors having the characteristics listed in 
6A002.a.1.
    (xvi) 6A003.b.3--imaging cameras incorporating image intensifier 
tubes having the characteristics listed in this Supplement's 
description of 6A002.a.2.a or 6A002.a.2.b.

    Note:  6A003.b.3 does not apply to imaging cameras specially 
designed or modified for underwater use.

    (xvii) 6A003.b.4--imaging cameras incorporating ``focal plane 
arrays'' having any of the following:
    (A) Incorporating ``focal plane arrays'' specified by this 
Supplement's description of 6A002.a.3.a to 6A002.a.3.e;
    (B) Incorporating ``focal plane arrays'' specified by this 
Supplement's description of 6A002.a.3.f; or
    (C) Incorporating ``focal plane arrays'' specified by this 
Supplement's description of 6A002.a.3.g.

    Note 1:  `Imaging cameras' described in 6A003.b.4 include 
``focal plane arrays'' combined with sufficient ``signal 
processing'' electronics, beyond the read out integrated circuit, to 
enable as a minimum the output of an analog or digital signal once 
power is supplied.


    Note 2:  6A003.b.4.a does not control imaging cameras 
incorporating linear ``focal plane arrays'' with 12 elements or 
fewer, not employing time-delay-and-integration within the element, 
and designed for any of the following:
    a. Industrial or civilian intrusion alarm, traffic or industrial 
movement control or counting systems;
    b. Industrial equipment used for inspection or monitoring of 
heat flows in buildings, equipment or industrial processes;
    c. Industrial equipment used for inspection, sorting or analysis 
of the properties of materials;
    d. Equipment specially designed for laboratory use; or
    e. Medical equipment.


    Note 3:  6A003.b.4.b does not control imaging cameras having any 
of the following characteristics:
    a. A maximum frame rate equal to or less than 9 Hz;
    b. Having all of the following:
    1. Having a minimum horizontal or vertical `Instantaneous-Field-
of-View (IFOV)' of at least 10 mrad/pixel (milliradians/pixel);
    2. Incorporating a fixed focal-length lens that is not designed 
to be removed;
    3. Not incorporating a `direct view' display; and


    Technical Note: `Direct view' refers to an imaging camera 
operating in the infrared spectrum that presents a visual image to a 
human observer using a near-to-eye micro display incorporating any 
light-security mechanism.
    4. Having any of the following:
    a. No facility to obtain a viewable image of the detected field-
of-view; or
    b. The camera is designed for a single kind of application and 
designed not to be user modified; or


    Technical Note: `Instantaneous Field of View (IFOV)' specified 
in Note 3.b is the lesser figure of the `Horizontal FOV' or the 
`Vertical FOV'.
    `Horizontal IFOV' = horizontal Field of View (FOV)/number of 
horizontal detector elements
    `Vertical IFOV'= vertical Field of View (FOV)/number of vertical 
detector elements.

    c. Where the camera is specially designed for installation into 
a civilian passenger land vehicle of less than 3 tonnes three tons 
(gross vehicle weight) and having all of the following:
    1. Is operable only when installed in any of the following:
    a. The civilian passenger land vehicle for which it was 
intended; or
    b. A specially designed, authorized maintenance test facility; 
and
    2. Incorporates an active mechanism that forces the camera not 
to function when it is removed from the vehicle for which it was 
intended.

    Note: When necessary, details of the items will be provided, 
upon request, to the Bureau of Industry and Security in order to 
ascertain compliance with the conditions described in Note 3.b.4 and 
Note 3.c in this Note to 6A003.b.4.b.


    Note 4: 6A003.b.4.c does not apply to `imaging cameras' having 
any of the following characteristics:
    a. Having all of the following:
    1. Where the camera is specially designed for installation as an 
integrated component into indoor and wall-plug-operated systems or 
equipment, limited by design for a single kind of application, as 
follows:
    a. Industrial process monitoring, quality control, or analysis 
of the properties of materials;
    b. Laboratory equipment specially designed for scientific 
research;
    c. Medical equipment;
    d. Financial fraud detection equipment; and
    2. Is only operable when installed in any of the following:
    a. The system(s) or equipment for which it was intended; or
    b. A specially designed, authorized maintenance facility; and
    3. Incorporates an active mechanism that forces the camera not 
to function when it is removed from the system(s) or equipment for 
which it was intended;
    b. Where the camera is specially designed for installation into 
a civilian passenger land vehicle of less than 3 tonnes (gross 
vehicle weight), or passenger and vehicle ferries having a length 
overall (LOA) 65 m or greater, and having all of the following:
    1. Is only operable when installed in any of the following:
    a. The civilian passenger land vehicle or passenger and vehicle 
ferry for which it was intended; or
    b. A specially designed, authorized maintenance test facility; 
and
    2. Incorporates an active mechanism that forces the camera not 
to function when it is removed from the vehicle for which it was 
intended;
    c. Limited by design to have a maximum ``radiant sensitivity'' 
of 10 mA/W or less for wavelengths exceeding 760 nm, having all of 
the following:

[[Page 37546]]

    1. Incorporating a response limiting mechanism designed not to 
be removed or modified; and
    2. Incorporates an active mechanism that forces the camera not 
to function when the response limiting mechanism is removed; and
    3. Not specially designed or modified for underwater use; or
    d. Having all of the following:
    1. Not incorporating a `direct view' or electronic image 
display;
    2. Has no facility to output a viewable image of the detected 
field of view;
    3. The ``focal plane array'' is only operable when installed in 
the camera for which it was intended; and
    4. The ``focal plane array'' incorporates an active mechanism 
that forces it to be permanently inoperable when removed from the 
camera for which it was intended.


    Note: When necessary, details of the item will be provided, upon 
request, to the Bureau of Industry and Security in order to 
ascertain compliance with the conditions described in Note 4 above.


    Note 5: 6A003.b.4.c does not apply to imaging cameras specially 
designed or modified for underwater use.

    (xviii) 6A003.b.5.
    (xix) 6A004.c.
    (xx) 6A004.d.
    (xxi) 6A006.a.1.
    (xxii) 6A006.a.2--``magnetometers'' using optically pumped or 
nuclear precession (proton/Overhauser) ``technology'' having a 
`sensitivity' lower (better) than 2 pT (rms) per square root Hz.
    (xxiii) 6A006.c.1--``magnetic gradiometers'' using multiple 
``magnetometers'' specified by 6A006.a.1 or this Supplement's 
description of 6A006.a.2.
    (xxiv) 6A006.d--``compensation systems'' for the following:
    (A) Magnetic sensors specified by 6A006.a.2 and using optically 
pumped or nuclear precession (proton/Overhauser) ``technology'' that 
will permit these sensors to realize a 'sensitivity' lower (better) 
than 2 pT rms per square root Hz.
    (B) Underwater electric field sensors specified by 6A006.b.
    (C) Magnetic gradiometers specified by 6A006.c. that will permit 
these sensors to realize a `sensitivity' lower (better) than 3 pT/m 
rms per square root Hz.
    (xxv) 6A006.e--underwater electromagnetic receivers 
incorporating magnetometers specified by 6A006.a.1 or this 
Supplement's description of 6A006.a.2.
    (xxvi) 6A008.d, .h, and .k.
    (xxvii) 6B008.
    (xxviii) 6D001--``software'' specially designed for the 
``development'' or ``production'' of equipment specified by 6A004.c, 
6A004.d, 6A008.d, 6A008.h, 6A008.k, or 6B008.
    (xxix) 6D003.a.
    (xxx) 6E001.
    (xxxi) 6E002--``technology'' according to the General Technology 
Note for the ``production'' of equipment specified by the 6A or 6B 
provisions described in this Supplement.

(7) Category 7

    (i) 7D002.
    (ii) 7D003.a.
    (iii) 7D003.b.
    (iv) 7D003.c.
    (v) 7D003.d.1 to d.4, d.7.
    (vi) 7E001.
    (vii) 7E002.

(8) Category 8

    (i) 8A001.b to .d.
    (ii) 8A002.b--systems specially designed or modified for the 
automated control of the motion of submersible vehicles specified by 
8A001.b through .d using navigation data having closed loop servo-
controls and having any of the following:
    (A) Enabling a vehicle to move within 10 m of a predetermined 
point in the water column;
    (B) Maintaining the position of the vehicle within 10 m of a 
predetermined point in the water column; or
    (C) Maintaining the position of the vehicle within 10 m while 
following a cable on or under the seabed.
    (iii) 8A002.h and .j.
    (iv) 8A002.o.3.
    (v) 8A002.p.
    (vi) 8D001--``software'' specially designed for the 
``development'' or ``production'' of equipment in 8A001.b to .d, 
8A002.b (as described in this Supplement), 8A002.h, 8A002.j, 
8A002.o.3, or 8A002.p.
    (vii) 8D002.
    (viii) 8E001--``technology'' according to the General Technology 
Note for the ``development'' or ``production'' of equipment 
specified by 8A001.b to .d, 8A002.b (as described in this 
Supplement), 8A002.h, 8A002.j, 8A002.o.3, or 8A002.p.
    (ix) 8E002.a.

(9) Category 9

    (i) 9A011.
    (ii) 9B001.b.
    (iii) 9D001--``software'' specially designed or modified for the 
``development'' of equipment or ``technology'', specified by 9A011, 
9B001.b. 9E003.a.1, 9E003.a.2 to a.5 or 9E003.a.8 or 9E003.h.
    (iv) 9D002--``software'' specially designed or modified for the 
``production'' of equipment specified by 9A011 or 9B001.b.
    (v) 9D004.a and .c.
    (vi) 9E001.
    (vii) 9E002.
    (viii) 9E003.a.1.
    (ix) 9E003.a.2 to a.5, a.8, .h.

Supplement No. 7 to Part 774--Very Sensitive List

    (Note to Supplement No. 7: If text accompanies an ECCN below, 
then the Very Sensitive List is limited to a subset of items 
classified under the ECCN).

(1) Category 1

    (i) 1A002.a.
    (ii) 1C001 (entire entry).
    (iii) 1C012 (entire entry).
    (iv) 1E001--``technology'' according to the General Technology 
Note for the ``development'' or ``production'' of equipment and 
materials specified by 1A002.a, 1C001, or 1C012.

(2) Category 5--Part 1

    (i) 5A001.b.5.
    (ii) 5A001.h.
    (iii) 5D001.a--``software'' specially designed for the 
``development'' or ``production'' of equipment, functions or 
features specified by 5A001.b.5 or 5A001.h.
    (iv) 5E001.a--``technology'' according to the General Technology 
Note for the ``development'' or ``production'' of equipment, 
functions, features or ``software'' specified by 5A001.b.5, 5A001.h, 
or 5D001.a.

(3) Category 6

    (i) 6A001.a.1.b.1--systems or transmitting and receiving arrays, 
designed for object detection or location, having a sound pressure 
level exceeding 210 dB (reference 1 [mu]Pa at 1 m) and an operating 
frequency in the band from 30 Hz to 2 kHz.
    (ii) 6A001.a.2.a.1 to a.2.a.3, a.2.a.5, or a.2.a.6.
    (iii) 6A001.a.2.b.
    (iv) 6A001.a.2.c--processing equipment, specially designed for 
real time application with towed acoustic hydrophone arrays, having 
``user accessible programmability'' and time or frequency domain 
processing and correlation, including spectral analysis, digital 
filtering and beamforming using Fast Fourier or other transforms or 
processes.
    (v) 6A001.a.2.e.
    (vi) 6A001.a.2.f--processing equipment, specially designed for 
real time application with bottom or bay cable systems, having 
``user accessible programmability'' and time or frequency domain 
processing and correlation, including spectral analysis, digital 
filtering and beamforming using Fast Fourier or other transforms or 
processes.
    (vii) 6A002.a.1.c.
    (viii) 6B008.
    (ix) 6D001--``software'' specially designed for the 
``development'' or ``production'' of equipment specified by 6B008.
    (x) 6D003.a.
    (xi) 6E001--``technology'' according to the General Technology 
Note for the ``development'' of equipment or ``software'' specified 
by the 6A, 6B, or 6D provisions described in this Supplement.
    (xii) 6E002--``technology'' according to the General Technology 
Note for the ``production'' of equipment specified by the 6A or 6B 
provisions described in this Supplement.

(4) Category 7

    (i) 7D003.a.
    (ii) 7D003.b.

(5) Category 8

    (i) 8A001.b.
    (ii) 8A001.d.
    (iii) 8A002.o.3.b.
    (iv) 8D001--``software'' specially designed for the 
``development'' or ``production'' of equipment specified by 8A001.b, 
8A001.d, or 8A002.o.3.b.
    (v) 8E001--``technology'' according to the General Technology 
Note for the ``development'' or ``production'' of equipment 
specified by 8A001.b, 8A001.d, or 8A002.o.3.b.

(6) Category 9

    (i) 9A011.

[[Page 37547]]

    (ii) 9D001--``software'' specially designed or modified for the 
``development'' of equipment or ``technology'' specified by 9A011, 
9E003.a.1, or 9E003.a.3.a.
    (iii) 9D002--``software'' specially designed or modified for the 
``production'' of equipment specified by 9A011.
    (iv) 9E001--``technology'' according to the General Technology 
note for the ``development'' of equipment or ``software'' specified 
by 9A011 or this Supplement's description of 9D001 or 9D002.
    (v) 9E002--``technology'' according to the General Technology 
Note for the ``production'' of equipment specified by 9A011.
    (vi) 9E003.a.1.
    (vii) 9E003.a.3.a.

    Dated: June 15, 2012.
Kevin J. Wolf,
Assistant Secretary of Commerce for Export Administration.
[FR Doc. 2012-15074 Filed 6-20-12; 8:45 am]
BILLING CODE 3510-33-P