[Federal Register Volume 78, Number 73 (Tuesday, April 16, 2013)]
[Rules and Regulations]
[Pages 22660-22740]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-08352]



[[Page 22659]]

Vol. 78

Tuesday,

No. 73

April 16, 2013

Part III





Department of Commerce





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Bureau of Industry and Security





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15 CFR Parts 730, 732, 734, et al.





Department of State





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22 CFR Parts 120, 121, and 123





Revisions to the Export Administration Regulations: Initial 
Implementation of Export Control Reform; Amendment to the International 
Traffic in Arms Regulations: Initial Implementation of Export Control 
Reform; Final Rules

  Federal Register / Vol. 78 , No. 73 / Tuesday, April 16, 2013 / Rules 
and Regulations  

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DEPARTMENT OF COMMERCE

Bureau of Industry and Security

15 CFR Parts 730, 732, 734, 736, 738, 740, 742, 743, 744, 746, 748, 
750, 756, 758, 762, 764, 770, 772, and 774

[Docket No. 120403246-2657-01]
RIN 0694-AF65


Revisions to the Export Administration Regulations: Initial 
Implementation of Export Control Reform

AGENCY: Bureau of Industry and Security, Commerce.

ACTION: Final rule.

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SUMMARY: As part of the Export Control Reform (ECR) Initiative, the 
Bureau of Industry and Security (BIS), 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, to 
strengthen national security by fundamentally reforming the export 
control system. This final rule implements the initial ECR changes by 
adding a structure and related provisions to control munitions items 
that the President has determined no longer warrant export control on 
the U.S. Munitions List (USML) on the Commerce Control List (CCL), 
specifically aircraft, gas turbine engines, and related items. This 
rule is being published in conjunction with a Department of State rule 
that revises the USML so that upon the effective date of both rules, 
the USML and CCL and corresponding regulatory structures will be 
complementary. The revisions in this final rule are also part of 
Commerce's retrospective regulatory review plan under EO 13563, which 
Commerce completed in August 2011.

DATES: Effective Date: This rule is effective October 15, 2013.

ADDRESSES: Commerce's full plan can be accessed at: http://open.commerce.gov/news/2011/08/23/commerce-plan-retrospective-analysis-existing-rules.

FOR FURTHER INFORMATION CONTACT: For general questions about the ``600 
series'' control structure or transition related questions, contact 
Hillary Hess, Regulatory Policy Division, Office of Exporter Services, 
Bureau of Industry and Security, at 202-482-2440 or [email protected]. 
For technical questions about the ECCNs included in this rule contact 
Gene Christiansen, Office of National Security and Technology Transfer 
Controls, at 202-482-2984 or [email protected]. For 
questions about the definition of ``specially designed,'' contact 
Timothy Mooney, Regulatory Policy Division, Office of Exporter 
Services, Bureau of Industry and Security, at 202-482-2440 or 
[email protected].

SUPPLEMENTARY INFORMATION: This final rule implements the initial ECR 
changes by adding a structure and related provisions to control 
munitions items that the President has determined no longer warrant 
export control on the U.S. Munitions List (USML) on the Commerce 
Control List (CCL). In addition to adding this control structure, this 
rule creates ten new ``600 series'' Export Control Classification 
Numbers (ECCNs) to control an initial tranche of items moving from the 
USML to the CCL: aircraft and gas turbine engines, related parts, 
components, accessories, attachments, software, and technology.
    This rule also adopts as much as possible a common definition of 
``specially designed'' for use under the EAR and the ITAR, along with 
other key terms used on the two control lists. In addition, this rule 
addresses implementation issues related to the transition of items from 
the USML to the CCL, including the continued use of DDTC-issued 
licenses that include items transferred to the CCL.
    This rule implements changes that were proposed in five rules 
published between July 15, 2011 and June 21, 2012 under ECR. This rule 
is being published in conjunction with a Department of State rule that 
revises the USML so that upon the effective date of both rules, the 
USML and CCL and corresponding regulatory structures will be 
complementary.

Contents

I. The Export Control Reform Initiative
    A. Background
    B. List of Proposed Rules
    C. Relationship to Other Rules Implementing ECR
II. Addition of the ``600 series'' to the CCL
    A. General Structure
    B. Reasons for Control
    C. Items Paragraph
III. Transition
    A. Delayed Effective Date
    B. Amendment to the EAR To Address Dual Licensing
    C. Transition Period and General Order No. 5
IV. Retrospective Regulatory Review
V. Part 730--General Information
VI. Part 732--Steps for Using the EAR
VII. Supplement No. 3 to Part 732--Red Flags
VIII. Part 734--Scope of the EAR
    A. Dual Licensing
    B. De Minimis
IX. Part 736--General Prohibitions
    A. Foreign-Produced Direct Product
    B. General Order No. 5
X. Part 738--CCL Overview and the Country Chart
XI. Part 740--License Exceptions
    A. Restrictions
    B. License Exception TMP
    C. License Exception RPL
    D. License Exception GOV
    E. License Exception TSU
    F. License Exception STA
    G. Other License Exception STA Changes
    H. Country Groups
XII. Part 742--Control Policy
    A. National Security (NS) Review Policy
    B. Regional Stability (RS) License Requirements
    C. RS Review Policy
XIII. Part 743--Special Reporting
    A. Conventional Arms
    B. Major Defense Equipment
XIV. Part 744--End-User and End-Use Controls
    A. ``Military End Use'' in Sec. Sec.  744.17 and 744.21
    B. China Military End-Use Control
XV. Part 746--Embargoes and Other Special Controls
    A. Iraq
    B. UN Embargoes
XVI. Part 748--Applications and Documentation
    A. Classification Requests To Confirm That Items Are Not 
``Specially Designed''
    B. Unique Submission Requirements
XVII. Part 750--Application Processing, Issuance, and Denial
    A. Calculating Processing Times
    B. Shipment to Approved End Users
    C. Extended Validity
    D. Specificity on Application
XVIII. Part 756--Appeals
XIX. Part 758--Export Clearance Requirements
    A. Automated Export System (AES) Filing Regardless of Value, 
Except for .y Items
    B. Furnishing of ECCNs to Consignees
    C. Removal of Obsolete References in Revised Sections
XX. Part 762--Recordkeeping
XXI. Part 764--Foreign-Produced Direct Product and Denial Orders
XXII. Part 770--Interpretations
XXIII. Part 772--Definitions (Including Specially Designed)
    A. ``Specially Designed'' Definition
    B. Other Definitions
XXIV. Part 774--The Commerce Control List
    A. Product Group Headings
    B. ECCN 0A919
    C. Aircraft and Related Items ``600 Series'' ECCNs
    D. Gas Turbine Engines and Related Items ``600 Series'' ECCNs
    E. 9Y018 ECCNs Rolled Into ``600 Series''
    F. Supplement Nos. 6 and 7--Sensitive List and Very Sensitive 
List
    G. Supplement No. 4--Commerce Control List Order of Review
XXV. Procedural Amendment--Authority Citation Update

I. The Export Control Reform Initiative

A. Background

    The objective of the Export Control Reform (ECR) Initiative is to 
protect and

[[Page 22661]]

enhance U.S. national security interests. President Obama directed the 
Administration in August 2009 to conduct a broad-based review of the 
U.S. export control system to identify additional ways to enhance 
national security. In April 2010, then-Secretary of Defense Robert M. 
Gates, describing the initial results of that effort, explained that 
fundamental reform of the U.S. export control system is necessary to 
enhance national security. Once the International Traffic in Arms 
Regulations (ITAR) and its U.S. Munitions List (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 such 
controls, and the Export Administration Regulations (EAR) are 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 focus government resources on transactions that pose 
greater concern.
    On July 15, 2011, BIS published 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) (76 FR 41958) (hereinafter ``July 15 (framework) rule''). 
That 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 export control under the AECA. These items would be controlled 
under the EAR once the congressional notification requirements of 
section 38(f) and corresponding amendments to the ITAR (22 CFR parts 
120-130) and its USML and the EAR (15 CFR parts 730-774) and its 
Commerce Control List (CCL) are completed.
    After the July 15 (framework) rule proposed this regulatory 
framework, BIS published subsequent rules proposing specific changes to 
the CCL, and to other parts of the EAR. Among other rules, on June 21, 
2012, BIS published Proposed Revisions to the Export Administration 
Regulations: Implementation of Export Control Reform; Revisions to 
License Exceptions After Retrospective Regulatory Review (77 FR 37524) 
(hereinafter ``June 21 (transition) rule''). That rule proposed, inter 
alia, establishing a general order to facilitate the transition from 
ITAR to EAR licensing jurisdiction and broadening certain EAR license 
exceptions and licensing procedures to ensure they are not more 
restrictive than comparable ITAR exemptions and approvals.
    This final rule implements ECR by finalizing the provisions 
contained in five proposed rules published between July 15, 2011 and 
June 21, 2012, which adds to the CCL military aircraft, military gas 
turbine engines, and related items that the President has determined no 
longer warrant export control on the USML. The Department of State made 
the congressional notification required by Section 38(f) of the AECA 
for removal of these items from the USML. The majority of the revisions 
in this rule are specific to the munitions items that are transferred 
from the USML to the CCL; however, many revisions also affect items or 
transactions that were already subject to the EAR prior to the 
effective date of this rule.
    Rather than adding a new paragraph to Sec.  734.3 for the Bureau of 
Alcohol, Tobacco, Firearms and Explosives (ATF), as proposed, BIS is 
adding a note to section 734.3(b)(1)(i) to clarify the delegations of 
authority between the Departments of State and Justice with respect to 
defense articles identified on the USML in the ITAR and the United 
States Munitions Import List (USMIL). BIS received no comments from the 
public on this issue. BIS does not believe that this change is 
substantive; rather it more accurately reflects the relationship 
between the USML in the ITAR and the United States Munitions Import 
List.

B. List of Proposed Rules

    This rule implements amendments to the EAR proposed in the 
following five rules published between July 15, 2011 and June 21, 2012 
under ECR:
     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), (, 76 FR 
41958, July 15, 2011) (RIN 0694-AF17) (``July 15 (framework) rule'');
     Revisions to the Export Administration Regulations (EAR): 
Control of Aircraft and Related Items the President Determines No 
Longer Warrant Control Under the United States Munitions List (USML), 
(76 FR 68675, November 7, 2011) (RIN 0694-AF36) (``November 7 
(aircraft) rule'');
     Revisions to the Export Administration Regulations (EAR): 
Control of Gas Turbine Engines and Related Items the President 
Determines No Longer Warrant Control Under the United States Munitions 
List (USML), (76 FR 76072, December 6, 2011) (RIN 0694-AF41) 
(``December 6 (gas turbine engines) rule'');
     ``Specially Designed'' Definition, (77 FR 36409, June 19, 
2012) (RIN 0694-AF66) (``June 19 (specially designed) rule''); and
     Proposed Revisions to the Export Administration 
Regulations: Implementation of Export Control Reform; Revisions to 
License Exceptions After Retrospective Regulatory Review, (77 FR 37524, 
June 21, 2012) (RIN 0694-AF65) (``June 21 (transition) rule'').

C. Relationship to Other Rules Implementing ECR

    This final rule is published concurrently with the Department of 
State final rule, Revisions to the International Traffic in Arms 
Regulations: Initial Implementation of Export Control Reform. BIS 
anticipates additional final rules will be published concurrently by 
both agencies moving additional munitions items from the USML to the 
CCL, once the notification process is completed in accordance with 
section 38(f) of the AECA and subsequent USML categories and the 
corresponding Export Control Classification Numbers (ECCNs) are 
published in final form.

II. Addition of the ``600 Series'' to the CCL

    In the July 15 (framework) rule, BIS proposed to add a new 
``xY6zz'' control series to the CCL. This series, known as the ``600 
series,'' would control most items formerly on the USML that move to 
the CCL and would consolidate the thirteen existing Wassenaar 
Arrangement Munitions List (WAML) entries (i.e., those entries 
currently under ``xY018''). In implementing the ``600 series'' in this 
rule, as discussed below, BIS took into account comments related to the 
function and structure of the ``600 series'' submitted under all prior 
proposed rules issued as part of ECR that would move items from the 
USML to the CCL. These rules are:
     Revisions to the Export Administration Regulations (EAR): 
Control of Military Vehicles and Related Items That the President 
Determines No Longer Warrant Control on the United States Munitions 
List, (76 FR 76085, December 6, 2011);
     Revisions to the Export Administration Regulations (EAR): 
Control of Vessels of War and Related Articles the President Determines 
No Longer Warrant Control Under the

[[Page 22662]]

United States Munitions List (USML), (76 FR 80282, December 23, 2011);
     Revisions to the Export Administration Regulations (EAR): 
Control of Submersible Vessels, Oceanographic Equipment and Related 
Articles That the President Determines No longer Warrant Control Under 
the United States Munitions List (USML) (76 FR 80291, December 23, 
2011);
     Revisions to the Export Administration Regulations (EAR): 
Control of Energetic Materials and Related Articles That the President 
Determines No Longer Warrant Control Under the United States Munitions 
List (USML) (77 FR 25932, May 2, 2012);
     Revisions to the Export Administration Regulations: 
Auxiliary and Miscellaneous Items That No Longer Warrant Control Under 
the United States Munitions List and Items on the Wassenaar Arrangement 
Munitions List (77 FR 29564, May 18, 2012);
     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) (77 FR 33688, June 7, 2012); and
     Revisions to the Export Administration Regulations (EAR): 
Control of Military Training Equipment and Related Items the President 
Determines No Longer Warrants Control Under the United States Munitions 
List (USML) (77 FR 35310, June 13, 2012).
    These rules, as well as the rules referenced in Section I.B., 
above, published in 2011 and 2012, provided the public with extensive 
notice regarding the proposed control structure and transition-related 
provisions and offered a wide array of examples of proposed ``600 
series'' items. The public comments BIS received in response to these 
proposed rules have played an important role in helping the 
Administration refine the provisions that are included in this final 
rule and the corresponding Department of State final rule to achieve 
initial implementation of ECR. A summary of the comments and BIS' 
responses are provided below.

A. General Structure

    Under the July 15 (framework) rule, BIS proposed to add the new 
``600 series'' to each applicable CCL category so that it would fall 
after the 300 series (ECCNs that control items primarily for chemical 
and biological weapon proliferation reasons) and before the 900 series 
(ECCNs that control items for various U.S. foreign policy reasons). The 
``600 series'' framework would allow for identification, 
classification, and control of items transferred from the USML that, 
based on their technical or other characteristics, are not classified 
under an existing ECCN that is subject to controls for any reason other 
than Anti-Terrorism (AT) reasons. This structure would allow for a 
straightforward application of a licensing policy for items that move 
to the CCL from the USML. The fourth and fifth characters of each new 
``600 series'' ECCN would generally track the WAML categories for the 
types of items at issue.
    BIS is adopting the general structure of the ``600 series'' 
proposed under the July 15 (framework) rule. Most commenters were 
supportive of this structure, but some commenters were concerned that 
it did not make the CCL more ``positive'' and that dual-use items may 
be controlled under a ``600 series'' ECCN. BIS shares the goal of 
creating a more positive control list, but maintained a goal that no 
items be unintentionally decontrolled during the process of moving 
items from the USML to the CCL. Since the USML contains, inter alia, 
catch-all controls on parts, components, accessories, and attachments 
specifically designed or modified for defense articles, most of these 
catch-all controls are being moved to the CCL. BIS will continue to 
work to make the CCL more positive through the multilateral regimes and 
through considering public comments responding to the advance notice of 
proposed rulemaking, Feasibility of Enumerating ``Specially Designed'' 
Components, (77 FR 36419, June 19, 2012). Also, BIS does not believe 
that dual-use items or purely civil items--i.e., items that are now 
subject to the EAR and not subject to the jurisdiction of the ITAR--
would be moved to a ``600 series'' entry because items in a -018 ECCN 
are on the WAML and thus, even prior to this rule, are more properly 
described as munitions items than dual-use or purely civil items.

B. Reasons for Control

    In proposing the ``600 series,'' the July 15 (framework) rule also 
proposed the reasons for control for ``600 series'' ECCNs. Generally, 
such ECCNs would be subject to National Security Column 1 (``NS1''), 
Regional Stability Column 1 (``RS1''), Anti-Terrorism Column 1 
(``AT1''), and United Nations Embargo (``UN'') reasons for control. In 
addition, end items moving from the USML that are controlled by the 
Missile Technology Control Regime, Australia Group, and Firearms 
Convention would be controlled for Missile Technology Column 1 
(``MT1''), Chemical and Biological Weapons Proliferation Column 1 
(``CB1''), and Firearms Convention (``FC'') reasons, respectively, 
under the EAR. Items that were on the CCL prior to the creation of the 
``600 series'' and that move into the ``600 series'' would retain the 
reasons for control to which those items were subject prior to the 
creation of the ``600 series.''
    BIS is adopting the reasons for control described above in this 
final rule. Some commenters were concerned that the ``600 series'' 
ECCNs contained too many varying controls, unilateral NS controls, 
overly sensitive NS1 and RS1 controls, or could inaccurately contain MT 
controls. BIS does not agree with these comments. Almost all items 
moving from the USML to the ``600 series'' are also on the WAML, 
particularly considering the catch-all controls in the WAML. Thus, 
there is already multilateral agreement on such items and NS controls 
are warranted. To the extent an item in the ``600 series'' is not on 
the WAML, BIS has concluded that its inherent or unique military or 
intelligence applicability warrants RS1 controls, unless the item is 
specifically listed in a .y paragraph within the ECCN (see discussion 
below in Section II.C for an explanation of .y paragraphs). BIS has 
also determined that certain license exceptions should be available 
under certain circumstances and under specific conditions in order to 
better harmonize the EAR's exceptions with the exemptions in the ITAR 
or to otherwise implement the national security objectives of the 
reform effort as set forth above. With respect to MT controls, the 
Departments of Defense, State, and Commerce have reviewed the USML to 
determine which items are currently subject to MT controls. As 
mentioned, BIS will continue to review the CCL to make the entries more 
clear and positive, including reviewing the scope of controls on items 
subject to the EAR.
    The United Nations (UN) reason for control was added to the ``600 
series'' ECCNs after publication of the rule Export and Reexport 
Controls to Rwanda and United Nations Sanctions Under the Export 
Administration Regulations (77 FR 42973, July 23, 2012) established 
this convention for identifying items controlled to UN arms-embargoed 
destinations.

C. Items Paragraph

    Within each ``600 series'' ECCN, the July 15 (framework) rule 
proposed that specific ``end items,'' ``parts,'' ``components,'' 
``accessories,'' and ``attachments'' moving from the USML would, unless 
otherwise noted, be

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positively enumerated in paragraphs .a through .w. Former USML 
``parts,'' ``components,'' ``accessories,'' and ``attachments'' that 
are not (i) enumerated in the revised, positive USML or (ii) enumerated 
in a new ``600 series'' entry in paragraphs .a through .w would be 
controlled in the .x paragraph of each new corresponding ``600 series'' 
ECCN as ``parts,'' ``components,'' ``accessories,'' and ``attachments'' 
``specially designed'' for items controlled elsewhere in that ECCN or 
for defense articles controlled in the corresponding USML category.
    The .y paragraph of each ``600 series'' would control specific 
types of ``parts,'' ``components,'' ``accessories,'' and 
``attachments'' that, even if ``specially designed'' for a defense 
article or ``600 series'' end item, warrant no more than AT-only 
controls. Thus, one would not need to review the .x paragraph if a 
``part,'' ``component,'' ``accessory,'' or ``attachment'' is described 
in the .y paragraph. The .y paragraphs thus do not control the 
enumerated items if they were not ``specially designed'' for a ``600 
series'' item or a defense article subject to the ITAR.
    BIS received multiple comments regarding the structure of the .x 
and .y paragraphs. With respect to the .x paragraph, some commenters 
recommended that the descriptions of items should be more positive and 
avoid the use of ``specially designed,'' while other commenters 
believed that items in .x should only be subject to embargoes, end-use 
controls, and end-user controls. Again, BIS shares the goal of 
ultimately having a more positive list of items controlled in the ``600 
series'' and the CCL generally. However, the proposed revisions must 
comply with multilateral regime obligations and must not inadvertently 
decontrol items that are being moved from the USML. Moreover, it would 
be physically impossible and impractical to enumerate every U.S. and 
foreign-origin ``part,'' ``component,'' ``accessory,'' and 
``attachment'' that is or ever was ``specially designed'' for every 
U.S. and foreign-origin military item. Therefore, BIS is maintaining 
the use of ``specially designed'' when describing items in the .x 
paragraph. Further, while items in the .x paragraph are of less 
significance than the controls of the ITAR warrant, they nevertheless 
warrant control beyond the requirements of parts 744 and 746 due to 
their inherent military or intelligence characteristics.
    With respect to the .y paragraph, commenters expressed support for 
positively enumerating items in the .y paragraph and applying an AT 
control only. However, some commenters believed that .y items should be 
designated EAR99, that BIS should develop a list of items that would be 
controlled for AT reasons only across all ``600 series'' ECCNs, or that 
.y items should be controlled under an existing ECCN subject to AT 
control rather than a ``600 series'' ECCN.
    BIS does not accept these recommendations. All items described in 
the .y series have been subject to the ITAR in that they, by 
definition, were ``parts,'' ``components,'' ``accessories,'' or 
``attachments'' specifically designed or modified for a defense 
article. If such items were identified as not being ITAR controlled in 
a commodity jurisdiction (CJ) determination or were not otherwise 
specifically designed or modified for a defense article, then they were 
not ITAR-controlled and are not now becoming subject to a .y control. 
To avoid designating such items as EAR99, BIS developed the .y list 
structure and is implementing the .y list structure in this final rule 
to reflect the lesser military significance of such items. Also, as one 
commenter alluded to, the definition of ``specially designed'' already 
provides a list of ``parts'' in paragraph (b)(2) of the definition that 
are militarily less significant across all categories. The .y list is 
necessary for individual ``600 series'' entries because a ``part'' 
``specially designed'' for one end item or end use may not be 
considered critical, but similar ``parts'' may be critical for a 
different end item or end use. For example, ``hoses'' for military 
vehicles may warrant a .y listing in the ``600 series'' controls for 
military vehicles but not all ``hoses'' specially designed for military 
aircraft are per se insignificant. Moreover, BIS believes that the 
inherent military nature of .y items necessitates inclusion in a ``600 
series'' ECCN rather than an existing ECCN with an AT reason for 
control. Because different classification and marking schemes will 
already be necessary for such items since they are currently subject to 
the ITAR, there would be little benefit to exporters of using an 
existing ECCN vis-[agrave]-vis a .y entry in a ``600 series'' ECCN 
because both are subject to the same reason for control and the same 
reporting requirements in the Automated Export System (AES). As 
described below, part 758 is being amended to address issues pertaining 
to the reporting of ``600 series'' items in AES.
    This rule does not adopt the proposal to create .y.99 paragraphs 
that was first proposed in the November 7 (aircraft) rule. One 
commenter raised concerns about moving items to the .y.99 paragraph if 
the items were determined to be subject to the EAR under a prior CJ 
determination and are not on the CCL. BIS agrees that the burden of 
tracking down and analyzing whether items formally determined not to be 
subject to the ITAR were also EAR99 items because they were not 
identified on the CCL outweighs the once-contemplated organizational 
benefits of creating the .y.99 control. Such items have already gone 
through an interagency review process that concluded whether the items 
were subject to the ITAR. Thus, BIS has determined that any such items 
should retain EAR99 status if not otherwise identified on the CCL. 
Paragraph (b)(1) of the new definition of ``specially designed'' also 
reflects this understanding. An amendment to General Order No. 5 from 
what was proposed in the June 21 (transition) rule, as discussed 
further below in Section III.C, also addresses this issue.

III. Transition

A. Delayed Effective Date

    This rule adopts a delayed effective date of 180 days after 
publication in the Federal Register. The public comments addressing the 
effective date for this final rule varied. Some commenters requested a 
120-day delay before the effective date while other commenters 
requested a longer delay, ranging from 180 days to four years. They 
cited many tasks to be performed as a result of this transition, 
including classifying and marking items transferred to the CCL, 
obtaining new licenses, changing internal databases, modifying 
compliance practices, and training personnel. BIS and the Directorate 
of Defense Trade Controls (DDTC), Department of State have taken 
various steps to ease the transition from the USML to the CCL. This 
final rule includes specific provisions to ease the transition process, 
such as the new General Order No. 5 in Supplement No. 1 to part 736 
being added to the EAR in this final rule and the provisions to address 
the dual-licensing issue, that are discussed below in Sections III.B 
and III.C.
    These provisions, along with the other changes included in this 
final rule, are intended to ease the transition for exporters, 
reexporters and transferors from the USML to the CCL and alleviate some 
of the public concerns regarding the effective date of the rule. BIS 
agrees that a reasonable period of transition, including a delayed 
effective date for this final rule, should be provided. Therefore, this 
final rule has a delayed effective date of 180 days. This approximately 
six-month period will provide the regulated community a reasonable 
amount of time to implement

[[Page 22664]]

changes to conform their export control compliance systems to the new 
``600 series'' and the first ten ECCNs that are being added to the EAR 
in this final rule. A longer delay, such as four years, as recommended 
by one commenter, would not have been reasonable given the national 
security objectives of the reform effort set out above. A 180-day 
delayed effective date represents BIS's best effort to provide 
sufficient time for exporters, reexporters and transferors to update 
their internal systems and for BIS to provide education and outreach 
services to those affected who may not have been following closely the 
changes BIS has proposed over the course of the last two years.

B. Amendment to the EAR To Address Dual Licensing

    In response to the June 21 (transition) rule, many commenters 
expressed concerns that the movement of items from the USML to the CCL 
would result in the need to obtain a license from DDTC and a license 
from BIS for many transactions that currently only require one license 
from one agency. For example, exports of end items on the USML often 
contain related USML parts and components in the shipment, so such 
items are typically authorized under a single DDTC license, such as a 
DSP-5. Since many parts and components are moving from the USML to the 
CCL, this typical export scenario could require two separate 
authorizations from two agencies. Further, one commenter to the June 21 
(transition) rule stated that it is industry practice to include items 
currently subject to the EAR in a single license application to DDTC or 
under the Foreign Military Sales (FMS) program because such items will 
accompany USML items in a shipment authorized under a license or 
because such EAR items are included in an executed Letter of Offer and 
Acceptance (LOA) under the FMS program.
    To address these issues, BIS is amending part 734 to reflect the 
fact that the President has delegated to the Secretary of State the 
authority to license or otherwise authorize the export, reexport or in-
country transfer of items otherwise subject to the EAR, as agreed upon 
by the Secretaries of State and Commerce. (Executive Order 13637 of 
March 8, 2013, Administration of Reformed Export Controls, 78 FR 16129, 
March 13, 2013). The items will remain subject to the EAR, and BIS will 
continue to maintain jurisdiction for licensing and enforcement. 
However, applicants will be able to choose whether to use a DDTC or BIS 
authorization so long as the export, reexport, or in-country transfer 
meets the applicable requirements described herein.
    In accordance with new Sec.  120.5(b) of the ITAR, Sec.  734.3(e) 
authorizes the export, reexport or in-country transfer of items subject 
to the EAR when the items subject to the EAR will be used in or with 
items subject to the ITAR and are included on the same DDTC license, 
agreement, or other approval. Thus, a DDTC license, agreement, or other 
approval made in accordance with Sec.  120.5(b) of the ITAR will 
preclude the need for a separate license from BIS, and a BIS license 
will only be required when an export, reexport, or in-country transfer 
exceeds the scope of the DDTC license, agreement, or other approval or 
exceeds the scope of Sec.  120.5(b) of the ITAR. DDTC added Sec.  
120.5(b) to the ITAR on April 16, 2013.)
    Under this provision, DDTC has discretion in determining whether 
the requirements of Sec.  120.5 have been met and whether items subject 
to the EAR should be authorized under a license, agreement, or other 
approval by DDTC. To provide guidance on the use of Sec.  120.5(b) of 
the ITAR, items subject to the EAR may be exported, reexported, or 
transferred (in-country) using a valid DDTC license, agreement, or 
other approval. The following are illustrative scenarios for when such 
approvals may be used:
     Parts and components subject to the EAR that will be used 
in or with end items subject to the ITAR and that would otherwise 
require a license from BIS may all be exported under a DDTC license, 
such as a DSP-5, or reexported under a DDTC General Correspondence (GC) 
approval.
     Software subject to the EAR that will be used in or with 
software or an end item subject to the ITAR and that would otherwise 
require a license from BIS may all be exported under a DDTC license, 
such as a DSP-5, or reexported under a GC.
     Technology subject to the EAR that is used with technical 
data subject to the ITAR that will be used under the terms of a 
Technical Assistance Agreement (TAA) or Manufacturing License Agreement 
(MLA) and that would otherwise require a license from BIS may all be 
exported under the TAA or MLA.
     If a program authorized by a TAA or MLA requires that 
parts and components subject to the EAR and parts and components 
subject to the ITAR be shipped in furtherance of the TAA or MLA, then 
DSP-5 licenses may be used. However, if the program only requires that 
parts and components subject to the EAR be shipped in furtherance of 
the TAA or MLA, then authorization must be obtained from BIS and DSP-5 
licenses may not be used.
    One commenter also believed that another scenario would require 
additional licensing--the export and subsequent installation of a ``600 
series'' part or component into a foreign defense article. Under this 
situation, a license may be required from BIS to export the ``600 
series'' parts or components and then a TAA may be required from DDTC 
to perform the defense service in order to provide the installation and 
integration services with respect to a defense article. However, this 
scenario differs from those above because two authorizations would 
already be required under the ITAR. For instance, if the part or 
component to be exported is currently on the USML, then the applicant 
would need to apply for a TAA for the exchange of technical data 
pursuant to providing the installation and integration service 
regarding a defense article, while also applying for a separate DSP-5 
license for the export of the part or component. If the part or 
component is currently subject to the EAR or would become subject to 
the EAR as a ``600 series'' item, then a TAA would still be required 
from DDTC and a license or other authorization would be required from 
BIS for the export of the part or component. Since the number of 
authorizations would remain the same, this scenario would not be 
eligible for the provision described above.
    Section 734.3(e) authorizes the export, reexport or in-country 
transfer of items subject to the EAR when those items are subject to 
licenses, agreements, or other approvals issued by DDTC to authorize 
items subject to the EAR that will be exported, reexported, or 
transferred (in-country) under the FMS program. Items subject to the 
EAR that are included in an executed Letter of Offer and Acceptance 
under the FMS program may be identified in a DSP-94 submitted in 
accordance with Sec.  126.6(c) of the ITAR. The DSP-94 and use of Sec.  
126.6(c) will serve as authorization for items subject to the EAR, and 
no separate authorization from BIS will be required. However, any 
export, reexport, or in-country transfer of an item subject to the EAR 
that is outside the scope of the LOA or DSP-94 must adhere to the 
requirements of the FMS case. In addition, no separate authorization 
from BIS is required to supplement actions taken on FMS cases by the 
Department of State's Office of Regional Security and Arms Transfers 
(RSAT). Questions regarding Sec. Sec.  120.5(b) or 126.6(c) of the 
ITAR; the use of any DDTC license, agreement, or other approval; or FMS

[[Page 22665]]

cases should be directed to DDTC or RSAT, as appropriate.

C. Transition Period and General Order No. 5

    In the June 21 (transition) rule, BIS proposed creating General 
Order No. 5 in Supplement No. 1 to part 736 to describe the transition 
process for items moving from the USML to the CCL upon the publication 
of the pertinent final rules. The proposed general order described the 
grandfathering of DDTC licenses and agreements, the use of BIS 
authorizations, and the submission of disclosures to BIS and DDTC 
related to the transition of items from the USML to the CCL. In 
response to the proposed general order, BIS received public comments 
regarding: the timing for submitting a license application to BIS, 
clarification of when to submit a disclosure to BIS and when to submit 
a disclosure to DDTC, a recommendation to include some form of a ``safe 
harbor'' for violations when a DDTC approval is used for items subject 
to the EAR, and guidance on shipping documentation.
1. Timeline for Applications, Amendments, and Grandfathering
    Because BIS and DDTC are adopting a six-month delay in the 
implementation of this final rule, BIS has made corresponding 
amendments to General Order No. 5 regarding the earliest date that BIS 
will accept license applications for items moving from the USML to the 
CCL under this final rule and under future final rules. For those 
wishing to export under the authority of the EAR as soon as possible 
for items moving from the USML to the CCL, applicants may submit 
license applications immediately after the publication of the final 
rule adding such items to the CCL. Thus, applicants may, in effect, 
pre-position license applications early to facilitate processing of the 
license application. Such a pre-positioned license application will be 
processed in accordance with Sec.  750.4 of the EAR, but if BIS 
completes processing the application prior to the effective date of the 
applicable final rule, BIS will hold the application without action 
(HWA), until the effective date of that final rule. Applications for 
transitioned items received after the effective date of the applicable 
final rule will be processed as described in Sec.  750.4 of the EAR.
    Existing holders of DDTC licenses, agreements, or other approvals, 
may maintain existing authorizations or obtain new authorizations for 
items moving from the USML to the CCL in accordance with DDTC's 
transition plan. Proposed General Order No. 5 has been amended to more 
closely correspond to DDTC's finalized transition plan. Questions 
regarding the continued use of DDTC licenses, agreements, or other 
approvals should be directed to DDTC.
2. Submission of Voluntary Self-Disclosures
    BIS is amending the prior guidance in proposed General Order No. 5 
with respect to submitting disclosures to BIS or DDTC. The amendment 
makes clear the existing recommended practice will continue to apply. 
For potential violations of the EAR, persons are recommended to submit 
a voluntary self-disclosure to BIS; for potential violations of the 
ITAR, persons are recommended to submit a voluntary disclosure to DDTC; 
and for potential violations of both the EAR and ITAR, persons are 
recommended to submit disclosures to both agencies. One commenter 
suggested inserting a ``safe harbor'' provision for those who use a 
DDTC authorization for items subject to the EAR. BIS believes that the 
addition of Sec.  734.3(e) addresses that commenter's concerns, because 
it removes the dual licensing requirement that gave rise to those 
concerns (see Section III.B., above). Also, if a person uses a DDTC 
authorization for an item subject to the EAR that does not fall within 
the circumstances described in Sec.  734.3(e), BIS will exercise 
discretion in reviewing and responding to those who filed disclosures 
involving such scenarios.
3. Miscellaneous Issues
    Because of the six-month implementation period for this final rule, 
BIS believes that the public will have adequate time to adjust USML and 
CCL notations for shipping documents. BIS, therefore, is not adding 
provisions related to export clearance in General Order No. 5. BIS is, 
however, amending the proposed General Order No. 5 to add a paragraph 
(c) to address the removal of the proposed .y.99 paragraph for ``600 
series'' ECCNs by clarifying that if the U.S. Department of State has 
previously determined that an item is not subject to the ITAR and the 
item is not listed on the CCL, then the item will remain designated as 
EAR99.

IV. Retrospective Regulatory Review

    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 ECR did not originate with Executive Order 13563, 
it is consistent in spirit and substance. On August 5, 2011, BIS issued 
a notice soliciting public comment on streamlining its regulations 
pursuant to that executive order (76 FR 47527). In response to public 
comments received on the August 5, 2011 notice, and consistent with 
BIS's internal analysis, the June 21 (transition) rule proposed 
revisions to license exceptions for government uses (GOV, Sec.  740.11) 
and temporary exports (TMP, Sec.  740.9) that streamlined and updated 
unduly complex or outmoded provisions. At the same time, BIS broadened 
certain provisions within these license exceptions to implement ECR. 
One commenter to the June 21 (transition) rule stated that it 
appreciated BIS's efforts to streamline this regulatory text.
    BIS intends to address other proposed changes to the EAR in 
accordance with the executive order in separate Federal Register 
notices. BIS received a number of comments, particularly on license 
exceptions in response to the June 21 (transition) rule, that require 
extensive consideration, possibly including additional proposals 
seeking public comment. BIS intends to address these comments in future 
rules as part of BIS's continuing retrospective review of the EAR.
    Commerce's full retrospective regulatory review plan under 
Executive Order 13563 can be accessed at: http://open.commerce.gov/news/2011/08/23/commerce-plan-retrospective-analysis-existing-rules.

V. Part 730--General Information

    This rule revises the heading of Sec.  730.3 from ``Dual use 
exports'' to ````Dual use'' and other types of items subject to the 
EAR'' to reflect the scope of items subject to export controls under 
the EAR. Similarly, the revised text notes that while the term ``dual 
use'' is often used to describe the types of items subject to the EAR, 
more precisely, any item that is not exclusively controlled for export 
or reexport by another agency of the U.S. Government or excluded from 
the EAR pursuant to Sec.  734.3(b), is subject to the EAR.
    One commenter recommended deletion of part 730, because it is not 
regulatory, but guidance. BIS has not adopted this recommendation, 
because it was outside the scope of this rule. The part exists for the 
benefit of those new to exporting.

VI. Part 732--Steps for Using the EAR

    BIS is amending Sec. Sec.  732.2 (Steps regarding scope of the EAR) 
and 732.3 (Steps regarding the ten general prohibitions) to remove text 
that is redundant to that found in Sec.  736.2(b)(3)--General 
Prohibition Three. BIS received one comment in

[[Page 22666]]

response to the July 15 (framework) rule's part 732 proposal. The 
commenter recommended deletion of parts 730 and 732, because the 
commenter believes those provisions are guidance and not regulatory in 
nature. For reasons described in discussion to part 730 above, BIS has 
decided to keep parts 730 and 732 for the benefit of those new to 
exporting. However, BIS agreed with the recommendation to add a 
disclaimer to part 732 stating that part 732 should only be used as a 
general overview of the EAR. This disclaimer is in new Sec.  
732.1(a)(3). BIS also agreed that repeating regulatory text concerning 
General Prohibition Three in Sec. Sec.  732.2 and 732.3 is not useful; 
therefore, the repeated text is deleted and replaced by a brief 
explanation of the direct product rule (General Prohibition Three) and 
a reference to Sec.  736.2(b)(3) is added to Sec.  732.2(f). Although 
the June 21 (transition) rule proposed revisions to the direct product 
rule, it did not propose corresponding revisions to the steps. This 
final rule makes that conforming change.
    The order of review in Sec.  732.3(b) (Step 7: Classification) is 
revised to add a reference to Supplement No. 4 to part 774--Commerce 
Control List Order of Review. The July 15 (framework) rule proposed to 
add a cross reference in Step 22 (Terms and Conditions of the License 
Exceptions), Sec.  732.4(b)(3)(iv). The reference alerts exporters 
that, if they are exporting under License Exceptions LVS, TMP, RPL, 
STA, or GOV and their item is classified in the ``600 series,'' they 
should review Sec.  743.4 of the EAR to determine the applicability of 
certain reporting requirements for conventional arms exports. This rule 
implements that proposal.
    The July 15 (framework) rule also proposed to revise Step 26 
(license applications) to add a paragraph describing the process of 
requesting License Exception STA eligibility for export, reexport or 
in-country transfer of an aircraft controlled under ECCN 9A610.a. While 
the July 15 (framework) rule proposed eligibility requests for ``end 
items'' generally, ships, vehicles, and aircraft were the ``end items'' 
items identified in subsequent technical reviews as requiring a 
determination of eligibility for License Exception STA, and of those, 
only aircraft are included in this final rule. A reference is also 
added to Step 26 to Supplement No. 2 to part 748, paragraph (w) 
(License Exception STA eligibility requests), which contains 
instructions for how to request in an application that subsequent 
exports of such end items be eligible for License Exception STA. The 
revisions to Step 26 also indicate that exporters, reexporters and 
transferors may review the list of such end items that have already 
been approved for License Exception STA pursuant to Sec.  740.20(g) in 
the License Exceptions paragraph of ECCN 9A610. Lastly, to alert 
exporters, reexporters, and transferors who wish to use License 
Exception STA in such cases in which License Exception STA has been 
approved, a new Note was proposed to Sec.  734.4(b)(7)(ii) to remind 
them to review paragraphs (a) and (b) to determine the steps needed in 
using license exceptions. BIS did not receive any comments regarding 
these specific proposals.

VII. Supplement No. 3 to Part 732--Red Flags

    This rule expands the EAR's ``Know Your Customer'' Guidance and Red 
Flags to provide compliance guidance for License Exception STA and the 
``600 series.''
    The July 15 (framework) rule proposed creating two new red flags, 
designated as numbers 13 and 14 in Supplement No. 3 to part 732, that 
would be specific to ``600 series'' items in addition to the existing 
12 red flags in that supplement that apply to EAR transactions 
generally.
    One such proposed red flag (number 13) would address a proposed 
transaction involving ``parts'' of ``600 series'' items where the 
country of destination has no apparent need for the ``parts'' or for 
the quantity ordered. One commenter stated this proposed red flag 
overlaps with two existing red flags that address item suitability and 
quantity for transactions subject to the EAR. This commenter proposed 
generalizing the proposed new red flag to make it applicable to all 
transactions subject to the EAR, not just ``600 series'' items. Another 
commenter recommended that the phrase ``You receive an order'' in this 
red flag be changed to read ``An order received'' and that the term 
``components'' be added to the red flag to make the red flag consistent 
with other red flags. Finally, one commenter recommended that this red 
flag not apply to .y items because such application would place an 
unreasonable requirement on the exporter.
    The second proposed red flag would address a proposed transaction 
in which the customer indicates that the ``600 series'' items are 
destined for an arms embargoed country. One commenter suggested that 
this red flag be expanded to include customer indications of shipment 
to destinations or end users that would be prohibited or restricted for 
transactions involving all items subject to the EAR with a specific 
reference to ``600 series'' items and arms embargoed destinations.
    One commenter recommended that both proposed red flags not be 
adopted because they would not be applicable to any of the items 
proposed for the ``600 series'' in the July 15 (framework) rule.
    This final rule makes one change to the new proposed red flags in 
response to these comments. It adds the term ``components'' to red flag 
number 13 because BIS believes the additional term more completely 
describes the transactions that this red flag is intended to address, 
although the listing of ``parts'' and ``components'' is not intended to 
be an exhaustive listing of items that may fall within the scope of 
this red flag because other ``600 series'' items, such as 
``accessories'' and ``attachments'' could also be used in this 
scenario. This final rule also makes a non-substantive clarification, 
by changing references from ``item'' to ``end item'' to create greater 
consistency with how the term ``end item'' is being used in the context 
of this new red flag 13. Lastly, to conform to the changes being made 
in this final rule, BIS is replacing the reference to arms embargoed 
countries in new red flag 14, with a reference to destinations listed 
in Country Group D:5 (see Supplement No. 1 to part 740 of the EAR), 
which as described below, is a new country group being added to the EAR 
in this final rule.
    BIS did not adopt any of the other recommendations concerning the 
red flags for the following reasons. Generalizing red flags 13 and 14 
to apply to the entire EAR would dilute their effect in highlighting 
the military nature of the ``600 series'' items and the precautions 
appropriate for such items, including the various provisions being 
added to the EAR in this final rule to implement an appropriate control 
structure under the EAR for these munitions items. Adopting the phrase 
``An order received,'' would be only a minor stylistic change from the 
proposed text that does not provide additional clarity. Excluding .y 
items from red flag 13 would be inappropriate because, even though the 
.y items require a license to fewer destinations than ``600 series'' 
items generally, they are ``specially designed'' ``parts'' and 
``components'' for military items and, as such, deserve inclusion.
    Several commenters in response to the July 15 (framework) rule also 
noted that exporters who will be new to the EAR because their items 
were previously only subject to the ITAR would benefit by having 
outreach

[[Page 22667]]

materials developed specifically for them to assist them in 
understanding the EAR and the new ``600 series.'' Red flags in this 
supplement, including the new red flags 13 and 14 being added in this 
final rule, are and will be an important part of BIS's outreach 
program. The BIS outreach program focuses on assisting persons involved 
in transactions that are subject to the EAR in understanding their 
responsibilities and what steps they can take to avoid being involved 
in transactions that may violate the EAR. BIS believes the two new red 
flags described above will assist those persons involved in 
transactions that are subject to the EAR involving ``600 series'' 
items, in particular those exporters, reexporters and transferors who 
will be new to the EAR.

VIII. Part 734--Scope of the EAR

A. Dual Licensing

    As described above under section III.B., BIS is amending part 734 
to note the authority of DDTC to authorize certain exports of items 
subject to the EAR to address public comments regarding dual licensing 
concerns.

B. De Minimis

    Section 734.4 of the EAR sets forth the de minimis provisions, 
which provide that foreign-made items incorporating less than de 
minimis levels of U.S. content are not subject to the EAR. The July 15 
(framework) rule proposed to add special restrictions for de minimis 
applicability for ``600 series'' items. That rule proposed amending 
Sec.  734.4 (De minimis U.S. content) by adding paragraph (b)(3) and 
making a conforming change to paragraph (c). The rule proposed 
restricting the scope of de minimis for ``600 series'' ``parts,'' 
``components,'' and other items subject to the EAR (i.e., those 
classified under xB6zz, xC6zz, xD6zz and xE6zz entries). The rule also 
proposed that when foreign-made items that incorporate such controlled 
U.S.-origin ``600 series'' items are to be exported from abroad or 
reexported to any country they are subject to the 10% de minimis rule 
for U.S.-origin content rather than the 25% de minimis rule.
    Fourteen commenters found the July 15 (framework) rule proposal 
regarding a revised de minimis rule for ``600 series'' items too 
complex and unworkable. Commenters stated that having a 10% de minimis 
rule for ``600 series'' items and a 25% de minimis rule for all other 
items subject to the EAR would be extremely burdensome, if not 
impossible, for the commenters to calculate.
    The June 21 (transition) rule proposal addressed the calculation 
concerns of the commenters to the July 15 (framework) rule by proposing 
to 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 foreign-made items containing ``600 
series'' content to countries subject to U.S. arms embargoes (Country 
Group D:5 of Supplement No. 1 to part 740 of the EAR).
    BIS received eight comments to the June 21 (transition) rule. Four 
commenters agreed with this approach. Four commenters disagreed with 
this approach, generally suggesting that the arms embargoed countries 
be subject to the same 10% de minimis threshold that applies to 
countries in Country Group E:1. These commenters provided two reasons. 
First, they stated that foreign manufacturers determine de minimis at 
development stage and use the lowest possible threshold. The 
possibility of a 0% threshold may lead to designing out EAR content. 
Second, these commenters stated that three de minimis thresholds would 
make determining whether an item produced outside the United States is 
subject to the EAR unduly complex. BIS does not accept the 
recommendations to replace the 0% with a 10% U.S. content for foreign-
made items containing ``600 series'' items destined to U.S. arms 
embargoed destinations (Country Group D:5 of Supplement No. 1 to part 
740). BIS also does not agree with the comments that the approach would 
be unduly complex. All legal trade in defense articles is now with 
countries that are not subject to U.S. arms or other embargoes, and all 
such defense articles are subject to a 0% de minimis rule for all such 
destinations. Thus, for example, a foreign party's transfer of a 
foreign-made end item containing even one U.S.-origin ITAR-controlled 
component of any value from one NATO member to another NATO member 
requires State Department authorization. This naturally creates dis-
incentives to purchase U.S.-origin content even for end items to be 
sold to allies of the United States. This rule changes this current 0% 
de minimis rule of the ITAR for all such items to the standard 25% de 
minimis rule of the EAR for all such items. Contrary to the comments, 
this change is a dramatic reduction in complexity and will 
significantly reduce the current incentives for buyers in such 
countries to avoid purchasing what were ITAR-controlled parts and 
components and what will, with this rule and successive implementations 
of additional categories, become ``600 series'' items subject to the 
EAR. It will at the same time maintain the status quo with respect to 
the 0% de minimis rule for trade in items with countries subject to 
U.S. arms embargoes. This is a simple rule--trade in foreign-made items 
with non-arms embargoed countries containing U.S.-origin military items 
is subject to the same rule as all other items subject to the EAR and 
trade in such items with countries subject to arms embargoes is 
prohibited, as is the case today. This furthers the twin U.S. policy 
objectives of removing unnecessary barriers in trade with most of the 
world and discouraging or indeed prohibiting trade in military items 
containing controlled U.S.-origin content with arms embargoed 
destinations.
    One commenter asked that BIS clarify the de minimis provisions of 
the EAR by rewriting Supplement No. 2 to part 734 and by eliminating 
the one-time reporting requirement that applies to technology. BIS is 
not addressing this comment because it is outside the scope of any of 
the proposed rules being addressed by this final rule. Two commenters 
pointed out that Sec.  123.9 of the ITAR contains an exemption for 
U.S.-origin components incorporated into a foreign defense article to a 
government of a NATO country, or the governments of Australia, Japan, 
New Zealand, South Korea and Israel without prior written approval from 
DDTC. License Exception GOV is equivalent to this ITAR exemption, and 
other license exceptions in part 740 may also be available, e.g., 
License Exception STA, for such transactions. One comment suggested BIS 
clarify the method of calculating the de minimis value by rewriting 
Supplement No. 2 to part 734 of the EAR; this recommendation falls 
outside the scope of this final rule.
    In sum, this rule furthers U.S. national security and foreign 
policy interests by prohibiting the reexport of foreign-made items 
containing ``600 series'' content to countries subject to U.S. arms 
embargoes (Country Group D:5 in Supplement No. 1 to part 740), while 
removing the incentive the ITAR creates for foreign buyers to avoid 
such U.S.-origin content with respect to trade by and between other 
countries.

IX. Part 736--General Prohibitions

A. Foreign-Produced Direct Product

    Prior to the effective date of this rule, certain foreign-produced 
direct products of U.S. technology were subject to the EAR: national 
security controlled items that were direct products of U.S.

[[Page 22668]]

national security-controlled technology, or of a plant that is the 
direct product of national security-controlled technology, when those 
products were destined to countries of concern for national security 
reasons (Country Group D:1) or terrorist-supporting countries (Country 
Group E:1). The June 21 (transition) rule proposed to 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 or major component of a plant that is a direct product of 
U.S.-origin ``600 series'' technology, that are ``600 series'' items 
are now subject to the EAR when reexported or exported from abroad to 
countries listed in Country Groups D:1 (national security countries of 
concern), D:3 (chemical and biological countries of concern), D:4 
(missile technology countries of concern), D:5 (U.S. arms embargo 
countries) or E:1 (countries that support terrorism) in Supplement No. 
1 to part 740. Foreign-made items subject to the EAR because of this 
rule are subject to the same license requirements to the new country of 
destination as if they were of U.S. origin.
    BIS received three comments opposing the expanded country scope 
``to include countries of concern due to nuclear proliferation or 
missile technology reasons'' for ``600 series'' items on the grounds 
that ``600 series'' items are controlled for national security and 
regional stability reasons. BIS is not making the suggested changes and 
is adopting the expansion of the country scope to countries of concern 
for missile or chemical and biological weapon proliferation reasons, 
because some ``600 series'' items are or likely will be only controlled 
for missile technology or chemical and biological reasons. BIS does not 
anticipate that any ``600 series'' items will be controlled for nuclear 
nonproliferation reasons, so BIS did not propose expansion of the 
foreign-produced direct product rule for ``600 series'' items to 
countries of concern for nuclear proliferation and does not adopt such 
an approach in this final rule.

B. General Order 5

    As described above in section III.C., BIS is amending part 736 to 
add General Order No. 5 to Supplement No. 1.

X. Part 738--CCL Overview and the Country Chart

    This rule implements changes proposed in the July 15 (framework) 
rule to paragraph (b) of Sec.  738.2 (Commerce Control List (CCL) 
structure) by adding the new terms ``end items,'' ``attachments,'' 
``parts'' and ``systems'' to the description for Product Group A in 
order to describe the scope of items within CCL Product Group A with 
the more precise terms that are added to part 772 by this rule.
    BIS also adopts revisions to paragraph (c) of Sec.  738.2 (Order of 
review) to provide a cross reference to the new Supplement No. 4 to 
part 774--Commerce Control List Order of Review that is also being 
added in this final rule. This new Supplement No. 4 sets forth the 
steps that should be followed in classifying items that are ``subject 
to the EAR'' and provides new guidance for how to classify items in 
light of the addition of the ``600 series'' of ECCNs to the CCL and the 
new definition of ``specially designed'' also being added with this 
final rule.
    BIS had proposed in the July 15 (framework) rule to add to 
paragraph (d)(1) of Sec.  738.2 (Commerce Control List (CCL) structure) 
a reference to items warranting national security or foreign policy 
controls at the determination of the Department of Commerce under ECCN 
0Y521. BIS received one comment suggesting that the descriptor for 
ECCNs that have ``5'' as their third digit should be, ``Items subject 
to license requirements described in Sec.  742.6(a)(7).'' BIS does not 
accept this suggestion to allow broader applicability than the items 
described in Sec.  742.6(a)(7). Another commenter recommended adding 
``Unilateral National Security or Foreign Policy Reasons'' as a revised 
reason for control for ECCNs that have ``5'' as their third digit. This 
recommendation is also not accepted. BIS notes that in the final rule 
implementing the 0Y521 series, (4/13/12, 77 FR 22191) the EAR indicates 
that the determination to control ECCNs that have ``5'' as their third 
digit was made by the Department of Commerce, and the term ``Items 
warranting national security or foreign policy controls at the 
determination of the Department of Commerce'' provides a more precise 
descriptor for these ECCNs.
    In Sec.  738.2(d)(1), the July 15 (framework) rule proposed to add 
a reference to the ``600 series'' to indicate that items in which the 
third character is a ``6'' are ``600 series'' items and controlled 
because they are Wassenaar Arrangement Munitions List (WAML) and 
formerly USML items subject to the jurisdiction of the EAR. As 
described in Section XXIII (part 772--Definitions (including Specially 
Designed)) in this rule, this rule also adds a definition of ``600 
series'' to provide additional information to the public regarding this 
control series. To explain the meaning of the last two numbers in ``600 
series'' ECCNs, this rule adds a new paragraph (d)(1)(iv) that 
indicates that the last two characters of each ``600 series'' ECCN, 
with few exceptions, track the WAML categories for the types of items 
at issue. In order to stay consistent with the general structure of the 
groups within the CCL Categories, the Wassenaar Arrangement ML21 
(``software'') and ML22 (``technology''), however, are rolled into the 
existing D (``software'') and E (``technology'') CCL product groups. 
The WAML numbering structure for the last two characters is generally 
used rather than the USML numbering structure because the majority of 
items to be transferred are subject to the WAML, although the ``600 
series'' is not limited to items on the WAML. Thus, the numbering 
scheme is generally consistent with such controls. BIS, however, 
deviated from this scheme with respect to the new controls on military 
aircraft engines and related items that fall under new ECCNs 9A619, 
9B619, 9C619, 9D619, and 9E619. WAML Category 19 controls directed 
energy weapons, but BIS has used the ``19'' ECCN suffix in order to 
track the new USML category XIX that identifies the military aircraft 
engines and related items that were formerly controlled under USML 
Category VIII(b).
    This structure makes it easier to see that the United States 
continues to control all WAML items. In addition, multinational 
companies that must deal with both the USML system and the numbering 
system of most other allied countries (which generally track the WAML) 
should find compliance and tracking of controlled items somewhat 
easier.
    BIS received one comment suggesting that the ``600 series'' 
descriptor should be ``Commerce Munitions List.'' BIS did not accept 
the suggestion because it is not creating a new list of controlled 
items but rather incorporating items formerly subject to the ITAR into 
the existing Commerce Control List.
    This rule revises Sec.  738.2(d)(2)(ii) to state that in some ``600 
series'' ECCNs, the STA license exception paragraph or a note to the 
License Exceptions section contains additional information about 
License Exception STA applicability to that ECCN. This sentence is 
needed to distinguish the role of STA paragraphs in the License 
Exception sections of ``600 series'' ECCNs from the role of those 
paragraphs in other ECCNs where the STA paragraph only denotes 
ineligibility of STA for destinations listed in Sec.  740.20(c)(2). 
Upon the effective date of this final rule, those destinations will be 
listed in Supplement No. 1 to part 740, Country Group A:6. As described 
below in more

[[Page 22669]]

detail and briefly mentioned above, Country Group A:6 is one of the new 
country groups added to the EAR in this final rule. BIS proposed this 
revision to the text of Sec.  738.2(d)(2)(ii) in the November 7 
(aircraft) rule and received no comments. This final rule adopts the 
proposed text without change. As a conforming change, BIS is also 
replacing the phrase ``eight destinations listed in Sec.  740.20(c)(2) 
of the EAR'' where it appears in ECCN entries in part 774 with the 
phrase ``destinations listed in Country Group A:6 (see Supplement No. 1 
to part 740 of the EAR).''

XI. Part 740--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. License Exceptions operate under the EAR 
the same way exemptions operate under the ITAR.
    A 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. BIS recognizes that several commenters to the June 21 
(transition) rule agreed with this principle. The June 21 (transition) 
rule proposed 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 MT reasons because of statutory 
restrictions. See section (6)(l) of the Export Administration Act of 
1979, as amended, 50 U.S.C. app. Sec.  2405(l).
    When a license exception authorizes reexports under certain terms 
and conditions, there is no national security or foreign policy 
objective met by restricting in-country transfers that also meet those 
terms and conditions. In the June 21 (transition) rule, BIS proposed 
revising License Exceptions TMP and GOV (Sec. Sec.  740.9 and 740.11, 
respectively) to explicitly provide authorization for in-country 
transfers.
    One commenter responding to the July 15 (framework) rule stated 
that ``no limitation should be placed on in-country transfers of 
licensable items.'' The commenter continued, ``[t]he prospect that an 
item exported to an entity in a foreign country may be transferred to 
another entity in the same licensed country is inherent in the 
assessment of an export transaction. Accordingly, part 740 of the EAR 
should be revised to exclude all mentions of ``transfers (in-
country).'' BIS does not agree with this comment. The EAR's end-use and 
end-user controls evidence a longstanding policy that an assessment of 
an export transaction involves more than the country of destination. 
Further, conditions on most licenses restrict subsequent transfer of 
the licensed items. Rather than include in-country transfers in some 
license exceptions and not in others when the policy rationale is the 
same, this rule revises Sec.  740.1 to state that, when a license 
exception authorizes reexports, in-country transfers meeting the terms 
and conditions of the reexport are also authorized. While this specific 
revision was not proposed in the June 21 (transition) rule, it is a 
logical outgrowth of BIS's original proposal that stems from reviewing 
the related public comment and further thinking about how in-country 
transfers are addressed in part 740.

A. Restrictions

    Section 740.2 describes restrictions on all license exceptions, and 
this rule adds certain restrictions specific to ``600 series'' items in 
new paragraphs (a)(12) through (a)(16).
    In the July 15 (framework) rule, BIS proposed adding to Sec.  740.2 
new paragraphs (a)(12) (restricting the use of license exceptions to 
countries subject to a United States arms embargo) and (a)(13) 
(restricting the use of license exceptions for ``600 series'' items 
destined to countries other than those listed in proposed (a)(12)). In 
the June 21 (transition) rule, BIS proposed that in addition to items 
destined to arms-embargoed countries, items shipped from or 
manufactured in those destinations also be restricted from license 
exceptions. With this final rule, BIS adopts the (a)(12) proposal with 
an additional change. Rather than list the countries in (a)(12), they 
are being identified in a new Country Group D:5 (Supplement No. 1 to 
part 740 of the EAR), as explained below in the Country Groups 
discussion (Section XI.H). The restriction on using license exceptions 
for ``600 series'' items destined to, shipped from, or manufactured in 
a destination subject to a United States arms embargo as described in 
Sec.  126.1 of the ITAR remains set forth in paragraph (a)(12). One 
commenter recommended deleting Yemen from the (a)(12) list of countries 
to reflect an amendment to the ITAR; BIS agrees with this comment, and 
this rule does so in Country Group D:5. Further comments received on 
paragraph (a)(12) are described below, as part of the discussion of 
Country Groups in Section XI.H.
    Paragraph (a)(13) is adopted as set forth in the July 15 
(framework) rule. The license exceptions available for ``600 series'' 
items are listed in paragraph (a)(13). Each exception is available 
according to the terms and conditions set forth in its section and 
subject to the restrictions in Sec.  740.2.
    Finally, in the June 21 (transition) rule, BIS proposed adding to 
Sec.  740.2 two new paragraphs (a)(15) and (a)(16) restricting the 
availability of license exceptions for certain ``600 series'' exports 
for which prior notification to Congress will be made. This rule 
changes BIS's original proposal, as explained below in the discussion 
of ``600 Series Major Defense Equipment'' in Section XIII.B.

B. License Exception TMP

    This rule revises 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 consistent with the retrospective 
review and regulatory improvement directed in E.O. 13563, and to 
broaden the exception to correspond to certain ITAR exemptions. BIS 
proposed these revisions in the transition rule.
    BIS received three comments stating that, to correspond to the 
ITAR, TMP should provide for the return or disposal of items within 
four years rather than the current one year, and a further five 
comments stating that when authorization to retain the item abroad 
beyond one year is requested, that authorization be valid for four 
years rather than a one-time extension of six months.
    BIS does not agree that the term of TMP should be four years in 
order to correspond to the ITAR. Under the ITAR, most exemptions for 
temporary export require some other form of authorization to be in 
place for the exemption to be available. These requirements mean that 
simply extending TMP to a four-year term generally would be 
significantly more expansive than the ITAR exemptions. However, to 
better approximate ITAR controls, this rule revises TMP to provide 
that, when authorization to retain the item abroad beyond one year is 
requested, the term of the authorization may be for a total of four 
years rather than just an additional six months.

[[Page 22670]]

    Four commenters questioned the term ``order to acquire,'' seeking 
clarification on whether a purchase order would be considered an 
example of an order to acquire an item. BIS confirms that a purchase 
order would be one such example, and adds that example in this final 
rule. Four commenters asked for clarification that the term ``U.S. 
persons and their employees'' referred to employees of foreign 
branches. BIS is maintaining the existing definition in License 
Exception TMP of ``U.S. persons,'' which does not include foreign 
branches. Thus, no regulatory change is required.
    Seven commenters stated that Sec.  740.9(a)(3)(i)(B), as proposed 
in the June 21 (transition) rule, introduces ``additional recordkeeping 
requirements'' for a temporary export of technology as a tool of trade 
by a non-U.S. person. In fact, prior to publication of that proposed 
rule, that requirement existed in the EAR in Sec.  
740.9(a)(3)(iv)(A)(2). It was originally published on December 12, 2007 
(72 FR 70509) in a rule that established the ability to temporarily 
export technology as a tool of trade under License Exception TMP, which 
had previously been limited to commodities and software. This 2007 
expansion of TMP was based in part on Sec.  125.4(b)(9) of the ITAR, 
which allows certain exports of technical data by U.S. persons. The 
2007 rule also required that the employers of non-U.S. persons document 
the need to travel, as a safeguard to the expansion of the tools of 
trade provision of TMP beyond U.S. persons. This restriction does not 
impose additional requirements on any permanent release of technology, 
because License Exception TMP does not authorize any new (i.e., 
previously unauthorized) release of technology. It authorizes temporary 
exports of that technology as a tool of trade. BIS believes the 
commenters misconstrued this provision, and this final rule adopts it 
as proposed in the June 21 (transition) rule.
    In the June 21 (transition) rule, BIS proposed that temporary 
exports under License Exception TMP to a U.S. person's foreign 
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. Three commenters recommended 
adding ``materials'' to the types of items eligible for this provision. 
BIS did not make this change. Materials are unlikely to be returned in 
the form received and are inappropriate for this provision.
    Four commenters recommended replacing the country scope ``E:2, 
Sudan and Syria'' with ``E:1'' throughout TMP. BIS agrees that this 
expression is clearer and has made this change.
    One commenter requested that the requirement for personal 
inspection of body armor be dropped. In this final rule, BIS has 
dropped the entire paragraph relating to body armor. The issue will be 
addressed in a future final rule that will address controls on personal 
protective equipment.
    This rule updates the provision authorizing certain tools of the 
trade for Sudan by removing outdated technical parameters and ECCN 
paragraph references that no longer exist.
    Consistent with Sec.  123.19 of the ITAR, this rule adds a note to 
the temporary imports paragraph of License Exception TMP 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. BIS did not receive public comments on this note and 
adopts it as proposed in the June 21 (transition) rule. A note 
regarding shipments from one location in the United States to another 
location in the United States via a foreign country, also proposed in 
the June 21 (transition) rule, was not adopted in this final rule. BIS 
received no comments on this note, but, upon further review and 
interagency consultation, BIS determined that the concept is already 
implicit in Sec.  734.2(b)(8). Therefore, BIS deleted the proposed 
note.
    An additional note explaining that defense articles on the USMIL 
are controlled by the Bureau of Alcohol, Tobacco, Firearms and 
Explosives (ATF) for purposes of permanent import under its regulations 
at 27 CFR part 447, proposed in the June 21 (transition) rule, was not 
adopted because it duplicates the USMIL description added to part 734 
(described above).
    Three commenters requested confirmation that Sec.  740.9 (b)(3) 
applies to technology. BIS confirms that it does; technology is a 
component of the definition of ``items,'' as defined in Sec.  772.1.

C. License Exception RPL

    In the July 15 (framework) rule and the June 21 (transition) rule, 
BIS proposed changes to Sec.  740.10 (Servicing and replacement of 
parts and equipment (RPL)). The July 15 (framework) rule proposals all 
related directly to servicing and replacement of ``600 series'' items. 
The June 21 (transition) rule proposals were related to a similar ITAR 
exemption.
    In the July 15 (framework) rule, BIS proposed revising RPL to: (1) 
Add ``600 series'' ``parts,'' ``components,'' ``accessories,'' and 
``attachments'' to the scope of this authorization; (2) impose 
restrictions on the use of License Exception RPL for the export or 
reexport of ``parts,'' ``components,'' ``accessories,'' and 
``attachments'' classified in ``600 series'' ECCNs; (3) authorize 
exports and reexports of certain items ``subject to the EAR'' to or for 
a defense article described in an export or reexport authorization 
issued under the authority of the AECA; and (4) exclude from 
authorization the export or reexport of ``parts,'' ``components,'' 
accessories,'' or ``attachments'' that are defense articles identified 
on the USML (22 CFR Sec. Sec.  120.6 and 121.1). In this final rule, 
BIS adopts all of these proposals.
    One commenter to the July 15 (framework) rule suggested that 
``accessories'' and ``attachments'' be removed from License Exception 
RPL, as they are by definition not necessary for items' operation. BIS 
does not agree with this suggestion, as servicing and replacement of 
``accessories'' and ``attachments'' may be within the scope of 
transactions conducted under this license exception and thus should be 
authorized.
    The June 21 (transition) rule proposed to revise RPL to allow 
export or reexport of spares up to $500 in total value, and 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. BIS is not adopting these proposals 
at this time, for the reasons explained below.
    Six commenters addressed this proposal, most requesting 
clarification of the relationship between the shipment of spares under 
proposed revised RPL and low-value shipments under existing License 
Exception LVS. Two commenters proposed different ways of valuing the 
spares or suggested placing a value limit on the item shipped or the 
transaction rather than the shipment. One comment recommended 
restructuring the exception into separate paragraphs for spares as 
distinguished from one-for-one replacement parts, and another comment 
recommended numerous changes, amounting to a thorough revision of the 
license exception. Additionally, in response to the July 15 (framework) 
rule, BIS received a comment recommending that RPL define enhancement 
resulting from servicing or replacement of parts or components as 
``affecting a controlled characteristic of an end item.''
    Unlike License Exceptions TMP and GOV, BIS did not propose a 
wholesale clarification and streamlining of RPL in

[[Page 22671]]

the June 21 (transition) rule. Based on public comments and internal 
analysis, however, BIS has concluded that a completely revised RPL 
should be proposed separately as part of a retrospective regulatory 
review, using public comments already received as part of the basis for 
the new proposal. While the June 21 (transition) rule proposal to amend 
RPL was related to a similar ITAR exemption, it was not specific to the 
``600 series.'' As such, and because BIS plans to propose comprehensive 
revisions to RPL, this final rule adopts only the changes to RPL 
proposed in the July 15 (framework) rule. It does not adopt changes 
proposed in the June 21 (transition) rule or address comments received 
in response to those proposed changes in this final rule.

D. License Exception GOV

    Consistent with the retrospective review and regulatory improvement 
directed in Executive Order 13563, the June 21 (transition) rule 
proposed to completely revise Sec.  740.11, License Exception GOV 
(Governments; International Organizations; International Inspections 
under the Chemical Weapons Convention; and the International Space 
Station). Prior to the effective date of this rule, License Exception 
GOV contained references to items on the Wassenaar Arrangement's 
Sensitive and Very Sensitive Lists, which necessitated annual 
regulatory revisions and was so lengthy that it required a supplement 
to the section. The June 21 (transition) rule proposed shortening and 
simplifying License Exception GOV by including the Sensitive and Very 
Sensitive Lists as supplements to part 774, described below in Section 
XXIV.F. BIS received no public comments on this simplification, and 
this final rule adopts it without change.
    The July 15 (framework) rule proposed restricting certain ``600 
series'' items' eligibility for License Exception GOV, and the November 
7 (aircraft) rule proposed changes with respect to restricting certain 
aircraft-related software and technology as listed in a proposed 
Supplement No. 4 to part 740. The December 6 (gas turbine engines) rule 
added restrictions on certain engine-related software and technology to 
Supplement No. 4 to part 740. This final rule, however, does not adopt 
the proposal to include Supplement No. 4 to part 740, and instead 
incorporates these restrictions into the relevant ECCNs for ease of 
use, as described below in Sections XXIV.C and .D.
    As proposed in the June 21 (transition) rule, this rule expands 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. One 
commenter on the June 21 (transition) rule noted its agreement with 
BIS's proposal to extend GOV to U.S. Government contractors. Two 
commenters on the June 21 (transition) rule suggested that the 
requirement for written authorization be deleted in favor of relying on 
the actual contract, noting that certification is a burden on both the 
exporter and on the Department of Defense, and that OFAC's Sudanese 
Sanctions Regulations (31 CFR part 538) are less restrictive with a 
similar purpose. Another commenter requested confirmation that the 
exception includes subcontractors under certain contract clauses, and 
asked that the final rule include examples and scenarios. This final 
rule adopts as proposed the requirement for written authorization and 
does not allow use of the license exception by subcontractors. Given 
the broad scope of items authorized under the GOV license exception, 
written authorization and a direct relationship between the exporter 
and the U.S. Government is necessary to ensure proper use of the 
exception. BIS does not include examples in this final rule, but will 
attempt to generate such scenarios to include in outreach efforts. Four 
commenters recommended that references to A:1 countries, a narrow group 
of close allies, be replaced with ``Wassenaar member countries,'' a 
broader group. Another commenter recommended expanding the provisions 
available for cooperating governments to include all of Country Group 
B. Given the broad scope of items authorized under the GOV license 
exception, BIS considers the suggested changes to the country scopes 
too broad, and therefore does not accept them.
    One commenter recommended deletion of the requirement for a 
statement that the U.S. Government owned the property being exported 
because it was too broad. BIS agrees and has limited the requirement to 
Government Furnished Equipment. In response to a request for 
clarification of the scope of a provision describing programs related 
to capacity-building and counterterrorist operations, BIS determined 
that the provision was subsumed by a less specific provision describing 
cooperative efforts with foreign governments or international 
organizations, and deleted the unclear provision.
    This rule also adopts 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 provision was 
proposed in the June 21 (transition) rule and received no comments.
    The June 21 (transition) rule proposal to add a note regarding 
authorization of Foreign Military Sales is not adopted in this final 
rule. Authorization of Foreign Military Sales is addressed above in 
section III.B.
    This rule adopts provisions in the June 21 (transition) rule that 
expands the scope of countries eligible to receive items on the 
Sensitive List under Sec.  740.11(a) (International Safeguards) and (c) 
(Cooperating Governments) to include the governments of those 36 
countries listed in new Country Group A:5, discussed below in Section 
XI.H. BIS received no comments on this proposal.
    This rule makes one correction to GOV as proposed in the June 21 
(transition) rule. Section 740.11(b)(2)(iii)(G) has been amended to 
remove ``defense articles'' from the parenthetical in that paragraph 
since BIS does not have jurisdiction over items subject to the ITAR.

E. License Exception TSU

    This rule implements revisions proposed in the June 21 (transition) 
rule to Sec.  740.13 License Exception Technology and Software--
Unrestricted (TSU) that would include training information in the 
operation technology authorized, as it is in Sec.  125.4(b)(5) of the 
ITAR. This rule also adds TSU authorization for the release of software 
source code and technology in the United States by U.S. universities to 
their bona fide and full-time regular foreign national employees to 
correspond with a similar authorization in Sec.  125.4(b)(10) of the 
ITAR. Further, this rule amends TSU to add an authorization 
corresponding to Sec.  125.4(b)(4) of the ITAR for copies of technology 
previously authorized for export to the same recipient.
    Two commenters stated that the revised TSU for university employees 
should not be subject to the end-use and end-user restrictions in part 
744 of the EAR because such restrictions do not now exist in the 
comparable ITAR exemption at Sec.  125.4(b)(10). In addition, the 
commenters said that TSU should not preclude the unlicensed release of 
encryption-related software controlled for ``EI'' and other software 
and technology controlled for ``MT'' (Missile Technology) reasons 
because ITAR Sec.  125.4(b)(10) does not now preclude the release of 
such software and

[[Page 22672]]

technology to bona fide university employees under the exemption. This 
rule does not make the suggested revisions. While license exceptions 
under the EAR should not be more restrictive than corresponding 
exemptions under the ITAR, license exceptions must be implemented 
within the framework of the EAR. The restrictions proposed in the 
transition rule are consistent with those imposed on other license 
exceptions for national security and foreign policy reasons, and 
restrictions on MT items are statutory. Another commenter recommended 
that the provision be extended to entities other than universities. BIS 
does not accept this recommendation. This provision broadened TSU to 
correspond with an ITAR exemption for university employees; its 
expansion to other entities would exceed that rationale.
    One commenter suggested that the university employee's requirement 
not to transfer technology survive his employment at the university; 
BIS agrees, because export controls on technology exist independently 
of nondisclosure or other agreements. Another commenter suggested 
striking the prohibition on ``establishing or producing items,'' 
because the phrase is not uniquely defined in the EAR and does not 
provide clarity about what it excludes. BIS agrees with this analysis 
and has made this revision.
    With respect to paragraph (g), one commenter suggested deleting 
``copies'' from the heading and revising the text accordingly. BIS does 
not accept this recommendation. ``Copies'' is an accurate description 
of the intended scope of the provision.

F. License Exception STA

    This final rule describes how and under what circumstances License 
Exception STA may be used for ``600 series'' items. This rule 
implements the proposals regarding License Exception STA that appeared 
in the July 15 (framework) rule, the November 7 (aircraft) rule and the 
June 21 (transition) rule. Generally, License Exception STA will be 
available for exports, reexports and transfers (in-country) of ``600 
series'' items to any of the 36 destinations currently listed in Sec.  
740.20(c)(1) (which this rule will move to a new Country Group A:5 in 
Supplement No. 1 to part 740), but not to the destinations currently in 
Sec.  740.20(c)(2) of the EAR (which this rule will move to a new 
Country Group A:6 in that supplement). As with all license exceptions 
in the EAR, its use is optional. If an exporter, for example, prefers 
to export an item otherwise eligible to be exported under License 
Exception STA under the authority of a license, then the exporter may 
apply for such a license.
    License Exception STA may not be used for any ``600 series'' items 
identified in the relevant ECCN as not being eligible for export under 
STA. It may not be used to export, reexport, or transfer (in-country) 
``600 series'' items to persons, whether non-governmental or 
governmental, unless those persons are in and, if natural persons, 
nationals of a country listed in Country Group A:5 or the United States 
and either (a) the ultimate end user for such items is the armed 
forces, police, paramilitary, law enforcement, customs, correctional, 
fire, or a search and rescue agency of a government of one of the 
countries listed in Country Group A:5 or the United States Government, 
or (b) are for the ``development'' or ``production'' of an item in one 
of the countries listed in Country Group A:5 or the United States that 
will ultimately be used by any such government agencies, the United 
States Government, or a person in the United States. It may not be used 
to export, reexport, or transfer (in-country) end item aircraft 
described in ECCN 9A610.a until after BIS has approved their export 
under STA under the procedures set out in Sec.  740.20(g) of the EAR. 
It may not be used to export, reexport, or transfer (in-country) ``600 
series'' items ``subject to the EAR'' if they are ``600 Series Major 
Defense Equipment'' and the value of such items in the contract 
requiring their export exceeds $25,000,000. This rule also will add 
provisions to the License Exception STA consignee statement that will 
apply only to shipments containing ``600 series'' items. The consignee 
will have to acknowledge the end-use and consignee restrictions that 
apply to ``600 series'' shipments under License Exception STA and 
consent to U.S. Government post-shipment verifications.
    BIS is implementing these changes to License Exception STA with 
respect to ``600 series'' items because such items are, by definition, 
military items or specially designed for military applications and thus 
warrant controls beyond those dual-use and civil items eligible for 
export under STA. This revised License Exception STA will enhance 
national security because it will, with respect to such items, (a) 
allow for greater interoperability between the United States and its 
NATO and other multi-regime allies because it will permit more 
efficient and quick trade in such items than is now possible under the 
ITAR, (b) enhance the United States industrial base by reducing the 
incentive for buyers in such countries to avoid or design out such 
U.S.-origin content and, thus, create more opportunities to be regular, 
predictable suppliers to buyers in such countries, (c) allow the 
government to focus its limited licensing resources on transactions of 
concern rather than those that are routinely approved, and (d) allow 
for greater enforcement- and compliance-related visibility into such 
transactions.
    BIS received several comments concerning License Exception STA as 
it applies to ``600 series'' items. The comments and BIS's responses 
are summarized below.
    One commenter noted that, in some instances, ``600 series'' 
``components'' could be sent to an STA eligible destination for 
incorporation into an end item that would be exported to a non-STA 
eligible destination. One commenter requested that BIS ``pre-approve'' 
such end items for de minimis treatment. Another commenter stated its 
belief that License Exception STA may not be used to export a part that 
will be incorporated into an end item that will be shipped to a non STA 
eligible destination. This commenter asked that BIS clarify that the 
exporter of the ``600 series'' part could list the manufacturer of the 
end item as the end user on a license application because the end item 
would not be subject to the EAR.
    License Exception STA states that ``600 series'' items must be for 
ultimate government end-use to be eligible. If a ``600 series'' part or 
component to be exported is destined for ultimate end use by a 
government that is not among the STA-36 or the United States, then a 
license is required to export the part or component. However, there may 
be a third scenario in which items are not destined for end use in an 
STA-36 country but are destined for an end use that has been explicitly 
authorized by the U.S. Government. To address this scenario, BIS has 
made a change to STA as discussed below in Section XI.G.
    One commenter stated that paragraph (c)(1) in License Exception STA 
appears to exclude from STA all ECCNs that have antiterrorism as a 
reason for control. This same commenter expressed a belief that only 
governments would be eligible recipients of ``600 series'' items under 
License Exception STA. The commenter noted that the latter limit could 
seriously disrupt supply chain activity because licenses would be 
needed to supply vendors who supply STA eligible governments.
    BIS believes that this commenter misconstrues the terms of License 
Exception STA as proposed in the July 15 (framework) rule, the November 
7 (aircraft) rule and the June 21

[[Page 22673]]

(transition) rule. Paragraph (c)(1) of Sec.  740.20 refers to 
``Exports, reexports and in country transfers in which the only 
applicable reason for control is . . ..'' This text in the June 21 
(transition) rule is unchanged from the current text of paragraph 
(c)(1), except in that it identifies the authorized destinations and 
nationals by Country Group A:5. BIS has consistently construed the 
phrase ``applicable reason for control'' to mean the reasons for 
control that would impose a license requirement on the export, reexport 
or in country transfer at issue, not every reason for control that 
appears in the ECCN that covers the item being shipped. In accordance 
with part 742, AT controls do not apply to any destination for which 
License Exception STA is available. As proposed in the July 15 
(framework) rule and the November 7 (aircraft) rule, this rule makes 
private sector parties eligible recipients of ``600 series'' items 
exported under License Exception STA if the ``600 series'' item is for 
ultimate end use by a designated agency of an eligible government or 
for development, production, operation, installation, maintenance, 
repair, overhaul, or refurbishing in an eligible country or the United 
States for use by such a government agency or by the United States 
Government. Because ``600 series'' ECCNs do not specify controls on 
``use'' software or technology, the term ``use'' does not appear for 
those items in this license exception.
    The June 21 (transition) rule contained a note 2 to paragraph (c) 
providing that License Exception STA may authorize export, reexport or 
in country transfer 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. This proposal elicited a number of questions and 
comments.
    Commenters wanted to know whether the previous license had to be 
for the same commodity as will be shipped under License Exception STA, 
whether the validity of the prior license for purposes of STA 
eligibility continues after the name of the party changes and whether 
the prior license for a party authorized use of License Exception STA 
for all locations of that party within one country.
    The purpose of this requirement is to provide some assurance that 
the foreign parties in transactions involving ``600 series'' items 
under License Exception STA are reliable as evidenced by the fact that 
either BIS or DDTC have approved licenses for transactions in which 
that party was involved. Plans to export under License Exception STA a 
different item than that under previous licenses do not alter the fact 
that the U.S. Government had vetted through the licensing process the 
foreign parties at issue in the transaction. Also not affecting the 
conclusion that the U.S. Government has vetted a foreign party through 
the licensing process is if the company changes its name or has offices 
at various addresses. Because the approval must have been for the party 
that will receive items under STA, an approval for a different entity, 
even if it is related to or affiliated with that party, would not meet 
the requirements for note 2 to paragraph (c)(1). BIS believes that no 
changes are needed to the text proposed in the June 21 (transition) 
rule to implement these points.
    One commenter asked whether exporters would be required to provide 
the information about approved parties and, if so, specifically what 
information would have to be provided and how often would it have to be 
provided. The commenter suggested that the exporter should be required 
to provide the information only for the initial export under License 
Exception STA to the party.
    The June 21 (transition) rule did not propose any requirement that 
the exporter report to BIS information about the prior licenses. As 
with other license exceptions, by entering STA (or the corresponding 
AES license code) into AES, the exporter represents to the United 
States Government, subject to penalties for false statements, that all 
of the requirements of License Exception STA have been met. In 
addition, parties to transactions that are subject to the EAR must 
provide BIS or other authorized U.S. Government agency with documents 
relating to the transaction upon request. BIS believes that no change 
to the text as proposed in the June 21 (transition) rule is needed on 
this point.
    Some commenters noted that parties wishing to use STA would not 
have access to licensing records from which they could determine 
whether the party to which they wish to ship under License Exception 
STA had previously been on an approved license. These commenters 
recommended several changes to address this issue. One recommendation 
was to remove the requirement because ordinary screening of customers 
as part of company compliance programs should be adequate and, 
especially with exports to close allies, additional measures should not 
be needed. Another recommendation was that the government, which has 
all the licensing records needed to determine whether a party was on a 
previously approved license, could provide the information (including 
known name changes) on a Web site. Additionally, the government could 
implement a procedure whereby AES could notify an exporter who wishes 
to use License Exception STA for a ``600 series'' item that the 
consignee is not an eligible recipient. Such a notice could be based on 
the fact the consignee has not previously appeared on an approved 
license or on other non-public information that the government 
possesses.
    Items in the ``600 series'' are military items or items that are 
designed for military application. Although they are less significant 
military items that the President has determined do not warrant control 
on the USML, they nonetheless, as military items, warrant export under 
more extensive safeguards against diversion than are applied to some of 
the other items that are subject to the EAR. The presence of a party on 
a previous license provides such a safeguard for such items because it 
indicates that the United States Government has reviewed that party and 
approved a transaction in which that party participated. Although 
providing access to the information obtained in connection with a 
license application about the identity of parties on approved licenses 
to the public via a Web site would likely make use of License Exception 
STA for ``600 series'' items easier, Section 12(c) of the Export 
Administration Act precludes such disclosure absent a finding that 
doing so is in the national interest. Given the widespread access to 
items posted on public Web sites, including access by persons not 
intending to use License Exception STA, such a finding would be 
unlikely. Attempting to modify AES in the way suggested is not yet 
feasible. Moreover, AES filings for ``600 series'' items will take 
place shortly before the time of export. An exporter relying on AES to 
screen out ineligible consignees would have done all of the work 
necessary for an STA shipment including furnishing the ECCN(s) to and 
obtaining the required statement from the consignee only to find out 
almost at the moment of shipment that the consignee is not eligible. 
BIS expects that, in most instances, a consignee that is willing to 
make the commitments and certifications required under License 
Exception STA will also be willing to confirm to the potential 
exporter, reexporter or transferor whether it has been a party on any 
approved licenses. Accordingly, BIS is making no substantive changes to 
the note to

[[Page 22674]]

paragraph (c)(1) in response to these comments. (See Section XX below 
for recordkeeping requirements.)
    The June 21 (transition) rule would require consignees of ``600 
series'' items to state that the items are for ultimate end use (or 
will be used in development, production, use, operation, installation, 
maintenance, repair, overhaul, or refurbishing of an item for ultimate 
end use) by an authorized government agency or a person in the United 
States; and to consent to an end-use check. One commenter questioned 
whether a private consignee would be able to consent to an end-use 
check on a government end user.
    BIS agrees that a private party should not be expected to make a 
commitment on behalf of a government. In addition, the governments 
eligible to ultimately receive ``600 series'' items under License 
Exception STA were selected because of their status as NATO allies of 
the United States or multi-regime members. Therefore, this final rule 
revises the requirement to make clear that only a non-government 
consignee is required to consent to an end-use check. In such an 
instance, BIS recognizes that because a condition of STA is that ``600 
series'' items must ultimately go to an authorized government end user 
or a user in the United States, the items may no longer be on the 
consignee's premises. Nevertheless, an end use check at the consignee's 
premises may provide information that would help confirm the ultimate 
disposition of the items.

G. Other License Exception STA Changes

    The November 7 (aircraft) rule proposed creating a new Supplement 
No. 4 to part 740 that would list certain ``600 series'' items that are 
not eligible for License Exception STA. Both the November 7 (aircraft) 
rule and the December 6 (gas turbine engines) rule proposed items for 
inclusion in this new supplement. Upon reflection, BIS has concluded 
that listing these ineligible items in the ECCNs to which they apply 
will make the ineligible items more readily apparent to readers than 
will listing them in a separate supplement. Accordingly, this rule does 
not list these items in a supplement as proposed, but in ECCNs 9D610, 
9E610, 9D619 and 9E619. This change is purely one of format. The 
ineligible items listed in those four ECCNs are the same as those 
proposed in the November 7 (aircraft) rule and the December 6 (gas 
turbine engines) rule.
    The conditions under which License Exception STA may be used have 
been revised to allow for situations where the United States would, for 
national security, foreign policy, or other reasons, explicitly 
authorize its use in circumstances not yet contemplated. In response to 
the June 21 (transition) rule, commenters requested that BIS allow for 
the use of STA to authorize certain exports in situations in which the 
exporter knows that the items may be reexported to both STA-36 and non-
STA-36 destinations. This new provision is designed to give the U.S. 
Government, through the normal interagency license review process, 
flexibility to craft license authorizations and conditions to address 
atypical fact patterns and allow for the use of STA in situations that 
would not otherwise be authorized. For example, a foreign consignee may 
receive a U.S. Government authorization to reexport from an STA-36 
country a foreign-made item containing controlled U.S.-origin content. 
The new provision would allow the continued use of STA for exports of 
controlled items to a foreign consignee in one of the STA-36 countries 
so long as the foreign consignee has a valid license authorizing such a 
use of STA. The consignee would need to certify that it has such a 
license and, in addition, provide a copy of it to the U.S. exporter 
before License Exception STA may be used.

H. Country Groups

    This rule creates three new country groups in part 740 of the EAR 
following consideration of public comments described below recommending 
reorganization of various lists of countries in the EAR. Specifically, 
this rule adds two new columns to Country Group A to incorporate the 
lists of countries previously set forth in the text of License 
Exception STA, and it adds one new column to Country Group D to 
incorporate the list of countries subject to a U.S. arms embargo 
proposed in the July 15 (framework) rule to be set forth in Sec.  
740.2. Several commenters addressed the various groupings of countries 
in the EAR and noted possible ways to reduce the number of such 
groupings or highlighted areas where the current groupings and those 
proposed in the June 21 (transition) rule could be simplified. One 
commenter noted that many such groupings were nearly identical to each 
other and to existing Country Groups in Supplement No. 1 to part 740 of 
the EAR. This commenter suggested that several such groupings be 
replaced by existing country groups. This commenter also recommended 
that certain countries listed in Sec.  740.2(a)(12) of the transition 
rule that currently are subject to limited exceptions to the policy of 
denial under Sec.  126.1 of the ITAR be removed from Sec.  740.2(a)(12) 
in the final rule; BIS did not accept this recommendation because BIS 
believes it is appropriate to limit the use of license exceptions to 
countries subject to a U.S. arms embargo as a matter of foreign policy. 
One commenter suggested that the countries currently listed in Sec.  
740.2(a)(6) could be combined with the countries listed in proposed 
Sec.  740.2(a)(12) with a single de minimis level for both groups. 
Other commenters recommended a 10% de minimis level for both Sec.  
740.2(a)(6) and Sec.  740.2(a)(12) countries. A commenter also 
substituted the term STA-36 for references to destinations listed in 
Sec.  740.20(c)(1), demonstrating the usefulness of a shorthand 
reference for this group of countries.
    BIS recognizes that a number of the country groupings in the EAR 
are similar to each other and to the Country Groups in Supplement No. 1 
to part 740 of the EAR. The small differences between some of these 
country groupings reflect the fact that each country grouping generally 
implements a policy tailored to certain destinations that do not 
exactly match the broad Country Groups in Supplement No. 1 to part 740. 
A comprehensive revision of country groupings in the EAR is outside the 
scope of this rule, but BIS acknowledges that it is an appropriate 
subject to be examined in the future as part of a retrospective review.
    In addition, the countries listed in Sec.  740.2(a)(6) are 
countries that are subject to broad export controls and, in some cases, 
comprehensive embargoes that encompass items of no military 
significance. The countries listed in Sec.  740.2(a)(12) of the 
proposed transition rule are subject to United States arms embargoes. 
Moreover, paragraph (a)(6) applies to all items that are subject to the 
EAR whereas paragraph (a)(12) applies to the distinctly military items 
that are in ``600 series'' ECCNs. BIS believes that the distinctly 
military nature of ``600 series'' items justifies a stricter de minimis 
treatment compared to the broader universe of items that are subject to 
the EAR, and thus BIS does not adopt the commenter's suggestion.
    Although not adopting their specific recommendations, BIS believes 
that these commenters raised valid points concerning the need for 
clarity in grouping countries in the EAR. Accordingly, this rule 
revises Supplement No. 1 to part 740 to add new columns A:5 and A:6 to 
Country Group A and to add a new column D:5 to Country Group D. Column 
A:5 lists the 36 destinations that currently are in

[[Page 22675]]

Sec.  740.20(c)(1), Column A:6 lists the eight destinations that 
currently are in Sec.  740.20(c)(2), and Column D:5 lists the 
destinations subject to a United States arms embargo that were listed 
in Sec.  740.2(a)(12) of the June 21 (transition) rule and July 15 
(framework) rule. These changes are to format only and are not intended 
to change any controls.

XII. Part 742--Control Policy

A. National Security (NS) Review Policy

    In the July 15 (framework) rule, BIS proposed revising the review 
policy for license applications for items controlled for national 
security reasons by adding a new paragraph (b)(1)(ii) to Sec.  742.4 of 
the EAR. The proposed rule stated that in addition to the policy set 
forth in existing paragraph (b)(1)(i) of Sec.  742.4, items classified 
under the ``600 series'' ECCNs would be subject to a general policy of 
denial when destined to a country subject to a U.S. arms embargo.
    BIS received a comment on the proposed review policy that observed 
that such a policy would be more stringent than the policy for 
embargoed destinations and significant items under the ITAR. BIS has 
revised the proposed review policy in response to a commenter's 
observation as further discussed below.
    To harmonize the EAR's policy with that of the ITAR, a new 
paragraph (b)(1)(ii) to Sec.  742.4 is adopted to state that when 
destined for a country listed in D:5 in Supplement No. 1 to Part 740 of 
the EAR, items classified under ``600 series'' ECCNs will be reviewed 
consistent with the United States arms embargo (Sec.  126.1 of the 
ITAR). Although ``600 series'' items do not warrant control on the U.S. 
Munitions List, they are nonetheless items specially designed for 
military uses or applications or otherwise identified on the WAML and 
thus the stated review policy is appropriate. The scope of the U.S. 
arms embargoes is, however, not the same for each arms embargoed 
country. Section 126.1 of the ITAR has a detailed description of the 
policies for each such country to which BIS will defer.
    One commenter noted that the proposed transition rule listed in 
Sec.  740.2(a)(12) all the countries in Sec.  126.1 of the ITAR, but 
that the preamble referred only to Sec.  126.1(a) of the ITAR. Although 
at one point in its text, the preamble to the transition rule referred 
to Sec.  126.1 of the ITAR, in other places it referred to Sec.  
126.1(a). While this comment referred to the section on restrictions on 
license exceptions, the issue is more strongly related to license 
review policy. BIS's intent is to apply the general policy of denial 
for ``600 series'' items to all destinations that are subject to a 
United States arms embargo. For this reason, BIS is not removing any 
destinations that are subject to limited exceptions found in other 
paragraphs of Sec.  126.1 from the list of arms embargoed destinations. 
The general policy of denial provides adequate discretion to approve a 
license when the interagency license application review process 
pursuant to Executive Order 12981, as amended, recommends doing so in 
accordance with the national security and foreign policy of the United 
States and if no other law prohibits such approval. In other words, BIS 
is maintaining the status quo for ``600 series'' items to such 
destinations to conform to the State Department's policy and practice.

B. Regional Stability (RS) License Requirements

    The July 15 (framework) rule proposed to individually list each of 
the new ``600 series'' ECCNs that would be controlled for RS Column 1 
reasons in Sec.  742.6(a)(1), which currently lists in a single 
sentence all ECCNs or portions thereof that are subject to the RS 
Column 1 controls of that paragraph. That framework was difficult to 
read and the listing of ECCNs duplicated information provided by the 
combination of ECCN entries and the Commerce Country Chart in 
Supplement No. 1 to part 738. This final rule simplifies and 
streamlines Sec.  742.6(a)(1), which provides that a license is 
required for items designated in their ECCNs as subject to RS Column 1 
controls to all destinations other than Canada, which is consistent 
with the format of describing other reasons for control in part 742. 
This change to Sec.  742.6(a)(1) is in format only; it does not alter 
the license requirements for any item that is subject to the RS Column 
1 reason for control. New paragraph (a)(1) continues to exclude from 
its coverage items described in paragraphs (a)(2) or (a)(3) of Sec.  
742.6 because those items are subject to their own special RS Column 1 
controls. To conform to this rule's removal of ECCN 9A018.a, this rule 
revises Sec.  742.6(a)(4)(i) to remove three references to ECCN 
9A018.a.

C. RS Review Policy

    BIS proposed in the November 7 (aircraft) rule to revise paragraph 
(b)(1) of Sec.  742.6 to read that applications for ``600 series'' ECCN 
items listed in paragraph (a)(1) and destined to a country subject to a 
U.S. arms embargo would be reviewed in accordance with U.S. arms 
embargo policies and generally would be denied. In addition, a general 
policy of denial for a regional stability (``RS'') column 1 reason 
would apply to license applications for ``parts,'' ``components,'' 
``accessories,'' ``attachments,'' software, or technology ``specially 
designed'' or otherwise required for F-14 aircraft. BIS revised the 
November 7 proposed license application review policy in paragraph 
(b)(1) for ``600 series'' ECCN items destined to U.S. arms embargoed 
countries, stating that such applications generally would be denied. 
BIS adopts in this final rule the same purpose and rationale described 
for the national security review policy in Section XII.A. above for the 
RS review policy, which is that when destined for a country listed in 
D:5 in Supplement No. 1 to Part 740 of the EAR, items classified under 
``600 series'' ECCNs will be reviewed consistent with the United States 
arms embargo policies (Sec.  126.1 of the ITAR).
    The June 21 (transition) rule proposed that paragraph (b)(1) of 
Sec.  742.6 be further revised to add a case-by-case review to 
determine whether the ``600 series'' transaction is contrary to the 
national security or foreign policy interests of the United States, 
while retaining all provisions as published in a final rule which 
implemented the 0Y521 ECCN series, published April 13, 2012 (77 FR 
22191). The June 21 (transition) rule proposal for case-by-case review 
is adopted in this rule without change.

XIII. Part 743--Special Reporting

A. Conventional Arms

    The July 15 (framework) rule proposed to create a new semi-annual 
reporting requirement for ``600 series'' items that would be 
specifically identified in new Sec.  743.4(c)(1) as items that require 
reporting under the Wassenaar Arrangement. One commenter described 
addition of this conventional arms reporting as ``premature'' as it was 
``unlikely'' to be applicable to any ``600 series'' items. BIS did not 
agree with this comment. The framework must be established for this 
reporting to abide by U.S. multilateral commitments. Section 743.4 is 
adopted as it was proposed in the July 15 (framework) rule.

B. Major Defense Equipment

    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. Approvals may 
not be granted when the Congress has

[[Page 22676]]

enacted a joint resolution prohibiting the export. While this process 
is not statutorily required for items subject to the EAR, BIS proposed 
in the June 21 (transition) rule to institute similar procedures in the 
EAR for certain exports of items that were classified as Major Defense 
Equipment (MDE) under the ITAR and are now subject to the EAR. BIS is 
adopting these procedures for certain exports of MDE in this final 
rule. ``600 Series Major Defense Equipment'' means any item listed in 
ECCN 9A610.a, 9A619.a, 9A619.b or 9A619.c, which has nonrecurring 
research and development costs of more than $50,000,000 or total 
production cost of more than $200,000,000. The Defense Security 
Cooperation Agency (DSCA) maintains a list of MDE items, currently 
categorized by USML category, available online at http://www.dsca.osd.mil/samm/ESAMM/Appendix01.htm (``DSCA List'').
    This final rule adopts the July 15 (framework) rule proposal to 
create a new Sec.  743.5, which provides that BIS will notify the 
Congress of transactions that include ``600 Series Major Defense 
Equipment''--i.e., any ``600 series'' items identified on the DSCA 
List--valued in excess of $14,000,000 for destinations outside of the 
new Country Group A:5 and $25,000,000 for destinations listed in the 
new Country Group A:5. Notification will not be required for exports 
made under License Exception GOV. When a license application is 
submitted, BIS will draw the necessary information to make the 
congressional notification from the license application. Section 740.2, 
Restrictions on License Exceptions, discussed above, is also revised to 
preclude use of license exceptions, other than License Exception GOV, 
for such transactions.
    BIS received eleven comments on the congressional notification 
proposal. In general, the commenters complained that notification would 
be cumbersome and defeat many of the potential efficiencies of the EAR 
for transitioned items. The commenters also asserted that congressional 
notification is not required for items subject to the EAR. BIS does not 
agree with such comments. BIS recognizes that congressional 
notification procedures may impose a regulatory burden for some export 
transactions. However, BIS is not requiring notification for any 
transactions that would not now require notification under the ITAR and 
the Arms Export Control Act. Thus, there will be no increased burden on 
exporters as a result of the new notification requirements in the EAR.
    Six commenters stated that the threshold for congressional 
notification should be based on the value of the ``600 series'' items 
in the license application, not the total contract under which the 
items are sold. BIS accepts this recommendation. BIS recognizes that 
the total value of a contract that includes transitioned items may also 
include substantial sums for items subject to the ITAR or subject to 
the EAR, but which are not ``600 Series Major Defense Equipment.'' 
Therefore, to ensure that only transactions that include more than the 
applicable threshold of ``600 Series Major Defense Equipment'' items 
trigger the notification requirement, BIS is revising the notification 
requirement threshold to the value of the ``600 Series Major Defense 
Equipment'' items included in the contract.
    Five commenters requested that BIS specify that dual notification 
of a transaction is not required. BIS accepts the commenters' request. 
If a transaction includes more than the threshold amount of ITAR MDE or 
other ITAR items triggering the ITAR congressional reporting 
requirement, and also triggers the BIS requirement due to the value of 
the ``600 Series Major Defense Equipment'' items, it would serve little 
purpose to require that both BIS and DDTC notify the Congress for the 
same transaction. Therefore, BIS is revising the notification 
requirement to state that transactions that have been, or are 
concurrently being, notified to the Congress by DDTC do not require 
congressional notification by BIS. One commenter also suggested that 
applicants must provide notice of prior notification by providing BIS 
with the Congressional Notification Identification Number on their 
application in SNAP-R. BIS agrees with the suggestion and has amended 
the EAR accordingly. BIS, however, will not approve the license for 
items subject to the EAR until the applicable period for congressional 
notification has expired.
    One commenter noted that the congressional notification procedures 
require that the exporter provide BIS with the written contract under 
which the items are being sold, and that this requirement is unique in 
the EAR. BIS acknowledges that the requirements that exporters whose 
transactions meet the thresholds for congressional notification to 
provide the written contract for the sale of the items is unique in the 
EAR. But, BIS believes that relatively few transactions will require 
congressional notification each year and that those transactions are of 
such a size that it is unlikely that they will be concluded without a 
written contract. Additionally, a written contract is required for 
these transactions under the ITAR, so there is no increase in 
regulatory burden.
    Four commenters requested that BIS include the definition of Major 
Defense Equipment in part 772. BIS accepts this recommendation and has 
included a definition in part 772.

XIV. Part 744--End-User and End-Use Controls

A. ``Military End Use'' in Sec. Sec.  744.17 and 744.21

    In the July 15 (framework) rule, BIS proposed amending the 
definition of ``military end use'' used in Sec.  744.17 (Restrictions 
on certain exports and reexports of general purpose microprocessors for 
`military end uses' and to `military end users.') and Sec.  744.21 
(Restrictions on certain `military end uses' in the People's Republic 
of China (PRC)). In both sections, the definition of ``military end 
use'' was revised to include incorporation into items classified under 
``600 series'' Product Groups A, B or C ECCNs and for the ``use,'' 
``development,'' or ``production'' of items classified under ``600 
series'' Product Group A, B or C ECCNs. For consistency, BIS is making 
clarifying changes to the proposed language to ensure greater 
understanding of the scope of the provision. BIS received no public 
comments on these amendments to the military end use definition, and 
this final rule adopts the July 15 (framework) rule's proposal without 
substantive change.

B. China Military End-Use Control

    In the June 21 (transition) rule, BIS proposed to make all ``600 
series'' items subject to the China Military End Use provision set 
forth in Sec.  744.21 through a new paragraph (a)(2), which provided a 
general prohibition on exports to China of ``600 series'' items without 
a license. One commenter to the June 21 (transition) rule stated that 
this amendment would create an unnecessary burden for ``600 series'' 
paragraph .y items and that .y items should only be restricted for 
export to China if they are intended for a military end use. In 
addition, the commenter said that there is no need to restate the 
denial policy for non-.y ``600 series'' items because this is currently 
reflected in Sec.  742.6 (Regional Stability).
    BIS does not agree with this recommendation, and is adopting the 
June 21 (transition) rule addition of paragraph (a)(2) without change. 
``600 series'' items were previously on the USML or the WAML and 
therefore are

[[Page 22677]]

presumptively for a military end use. Accordingly, BIS is imposing 
under Sec.  744.21 a license requirement for all ``600 series'' items, 
including paragraph .y items, destined for China. Paragraph .y items 
are ``specially designed'' ``parts,'' ``components,'' ``accessories,'' 
and ``attachments'' for defense articles on the USML or for other 
military items (i.e., ``600 series'' items), and the definition of 
``military end use'' in Sec.  744.21 includes incorporation into a 
military item. The commenter's concerns regarding an unnecessary burden 
on paragraph .y items is outweighed by the national security need for a 
license requirement. As to the commenter's concern regarding restating 
the denial policy with respect to other ``600 series'' items, paragraph 
(a)(2) does not do this. Other ``600 series'' items are subject to 
multiple reasons for control on the CCL as well as to end-use and end-
user controls, and different licensing review policies may apply.
    After interagency review, BIS is amending the proposed text in 
Sec.  744.21(f) removing references to ``Product Group A, B or C.'' 
This change is intended to clarify the intent of the July 15 
(framework) rule, which was to maintain the scope of current policy 
with respect to defense articles that will remain on the USML or 
defense articles that will transfer to the CCL as ``600 series'' items.

XV. Part 746--Embargoes and Other Special Controls

A. Iraq

    The July 15 (framework) rule proposed to revise paragraph (b)(2) of 
Sec.  746.3 (Iraq) of the EAR to make ``600 series'' items, which are 
arms or arms-related, subject to the Iraq arms embargo provisions. No 
comments were received on this provision. This final rule revises that 
proposal by specifying that license applications for the export, 
reexport, or transfer to the Government of Iraq of ``600 series'' items 
will be subject to the review policies set forth for such items in 
Sec. Sec.  742.4(b) and 742.6(b) of the EAR to cross reference the 
review policies set forth in part 742 elsewhere in this rule.

B. UN Embargoes

    In the July 23, 2012 final rule on Export and Reexport Controls to 
Rwanda and United Nations Sanctions Under the Export Administration 
Regulations (77 FR 42973), BIS amended Sec.  746.1 to limit the use of 
license exceptions to countries subject to a United Nations Security 
Council arms embargo. The July 15 (framework) rule and the June 21 
(transition) rule proposed restrictions in Sec.  740.2(a)(12) on 
license exceptions for ``600 series'' items destined to countries 
subject to a U.S. arms embargo (a list that includes countries subject 
to United Nations Security Council arms embargoes). One commenter 
recommended that BIS make available license exceptions in addition to 
GOV for items being sent to countries subject to United Nations 
Security Council arms embargoes as implemented under the EAR. The 
commenter stated in support of the recommendation that some 
circumstances in which controls related to arms embargoes could be 
superseded by license exceptions was contemplated in a proposed 
amendment to paragraph (b)(3)(vi) (General Prohibition Three--Foreign-
Produced Direct Product Reexports) of Sec.  736.2 set forth in the June 
21 (transition) rule.
    BIS does not agree with the commenter's reasoning and is not 
adopting the recommendation. Part 746, as stated in Sec.  746.1(a), is 
the focal point for all the EAR requirements for transactions involving 
sanctioned and embargoed countries. Thus, the availability of license 
exceptions to those countries is governed primarily by the provisions 
in part 746. This rule does amend Sec.  746.1 to clarify that the 
availability of license exceptions for Iraq, North Korea, and Iran will 
continue in effect as set forth in Sec.  746.3 (Iraq), Sec.  746.4 
(North Korea), and Sec.  746.7 (Iran) rather than being governed by the 
more general restrictions being implemented in Sec.  746.1.

XVI. Part 748--Applications and Documentation

A. Classification Requests To Confirm That Items Are Not ``Specially 
Designed''

    In response to public comments received regarding the scope of the 
proposed definition of ``specially designed'' in the June 19 (specially 
designed) rule, this final rule adds a new paragraph (e) to Sec.  748.3 
(Classification requests, advisory opinions, and encryption 
registrations) to establish a process whereby the public may submit 
classification requests to confirm that a ``part,'' ``component,'' 
``accessory,'' ``attachment,'' or ``software'' is not ``specially 
designed.'' This new paragraph describes this process and identifies 
the criteria that must be met and the review criteria that will be used 
by the Departments of Commerce, State and Defense. A consensus 
determination of these three agencies is required to confirm that a 
``part,'' ``component,'' ``accessory,'' ``attachment,'' or 
``software,'' is not ``specially designed'' based on this new 
paragraph. The policy objective of this new provision is to replicate 
in the EAR the practice that the State and Defense Departments have 
adopted with respect to their consideration of commodity jurisdiction 
requests. Thus, the new paragraph (e) maintains the status quo with 
respect to the government's consideration of the control status of 
items that may be within the scope of a ``600 series'' ECCN or other 
specially designed catch-all provision that might have once seemed to 
have been within the scope of one of the ITAR's catch-all provisions. 
In other words, if the State Department would have issued a commodity 
jurisdiction determination that an item was not within the scope of one 
of the USML's catch-all provisions and was not otherwise subject to the 
ITAR, then the Commerce Department, after interagency consensus, would 
issue a similar classification determination that the same item was not 
within the scope of a ``600 series'' ECCN.

B. Unique Submission Requirements

1. License Exception STA Eligibility Requests for ``600 Series'' Items
    The July 15 (framework) rule proposed a new paragraph (g) to Sec.  
740.20 in License Exception STA that identified the requirements and 
process that would be used by license applicants to request License 
Exception STA eligibility for ``600 series'' ``end items.'' The public 
comments regarding License Exception STA were generally favorable, but 
some commenters made suggestions for how the process could be improved 
or simplified for these requests.
    Three commenters recommended that BIS allow applicants to submit 
License Exception STA eligibility requests either on their own or with 
an application for the export of the requested item. In the July 15 
(framework) rule, BIS proposed that License Exception STA eligibility 
requests could only be submitted at the time of a license application 
to minimize the potential of a large number of submissions at one time. 
However, as the review of the USML Categories has been completed and 
the revised USML Categories and corresponding ``600 series'' ECCNs have 
been published in proposed form, BIS, along with the Departments of 
Defense and State, has determined that the universe of ``600 series'' 
``end items'' that require a prior review from the U.S. Government 
should be limited to ECCNs 8A609.a (vessels), 0A606.a (vehicles), and 
9A610.a (aircraft); only ECCN 9A610.a is included in this final rule

[[Page 22678]]

and BIS will create ECCNs 8A609.a and 0A606.a in future final rules. 
All other ``600 series'' ``end items'' will be automatically eligible 
for License Exception STA, although the exporter must still ensure that 
the item and other aspects of the transaction are not restricted under 
Sec.  740.2 and the transaction meets the applicable terms and 
conditions of License Exception STA. There will nonetheless still be 
restrictions on the use of License Exception STA for various types of 
software and technology, as described below.
    Given this much smaller universe of ``600 series'' ``end items'' 
that will require the submission of License Exception STA eligibility 
requests, BIS accepts the commenter's recommendation to allow the 
public to submit License Exception STA eligibility requests at any time 
and will no longer require such requests to be submitted at the time of 
a license application requesting authorization for an export, reexport, 
or transfer (in-country). However, to assist in the tracking and 
efficient interagency review of such requests, these License Exception 
STA eligibility requests must be submitted via the BIS Simplified 
Network Application Process--Redesign (SNAP-R) system unless BIS 
authorizes submission via the BIS-748-P Multipurpose Application form. 
Accordingly, this final rule revises Sec.  748.1(d) to add License 
Exception STA eligibility requests to the list of applications that 
must be submitted via SNAP-R unless BIS authorizes paper submissions. 
In SNAP-R and on the BIS-748-P, a request for License Exception STA 
eligibility will be submitted as an export license application, but in 
the future these requests will be filed electronically as a separate 
work item type in SNAP-R. This will occur once the SNAP-R system is 
revised to accommodate STA eligibility requests as a separate work item 
type. These changes are limited to the process that will be used in 
SNAP-R for submitting License Exception STA eligibility requests. The 
types of information required to be submitted will be the same as that 
proposed in the July 15 (framework) rule.
    Upon reflection, BIS has determined that the July 15 (framework) 
rule's proposal to list the ``600 series'' end items approved for STA 
in a newly proposed Supplement No. 4 to part 774 would be unduly 
complex. As noted above, the end items in only three ECCNs will require 
a specific determination to be eligible for License Exception STA. 
Given this small number, BIS believes that readers of the regulations 
will find it easier to identify the approved end items if they are 
listed in their respective ECCNs rather than in a separate supplement. 
Accordingly, such end items will be listed in the ECCNs under which 
they are classified. To avoid a break in the series of supplements to 
part 774, in this final rule, Supplement No. 4 to part 774 contains a 
description of the order of review of the CCL as discussed below.
    This final rule also makes some conforming changes in Supplement 
No. 2 to part 748 (Unique Application and Submission Requirements) 
under the new paragraph (w) (License Exception STA eligibility requests 
for ``600 series'' end items) to conform to BIS's decision not to add a 
new Supplement No. 4 to part 774. This final rule revises the first 
three sentences of paragraph (w) to specify that to submit an STA 
eligibility request the applicant must mark an (X) in the ``Export'' 
box in Block 5 (Type of Application); mark an (X) in the ``Other'' box 
and insert the phrase ``STA request'' in Block 6 (Documents submitted 
with Application); and include the specific ``600 Series'' ECCN in 
Block 22 (ECCN). This final rule also removes the reference to 
Supplement No. 4 to part 774 and adds a reference to the ``600 series'' 
ECCN where such end items determined to be STA eligible through this 
new process would be identified on the CCL. Also to add greater 
specificity, this final rule uses the term ``end item'' for purposes of 
paragraph (w).
    This rule also adds two sentences to paragraph (w) to clarify that 
if an applicant cannot provide some of the information described under 
paragraph (w), the U.S. Government will still evaluate the request. 
This new text also clarifies that the U.S. Government will use 
resources and information that may only be available to the U.S. 
Government in evaluating License Exception STA eligibility requests, as 
a way to encourage applicants that even if they feel that they may not 
have information in certain areas that the U.S. Government will also 
use its resources and expertise in evaluating these requests. However, 
this new text also clarifies that when submitting such requests 
applicants should provide as much information as they can based on the 
criteria noted in paragraph (w) to assist the U.S. Government in 
evaluating these License Exception STA eligibility requests. Lastly, 
for the changes to paragraph (w), this final rule is removing the term 
``otherwise'' before the phrase ``or is available in countries that are 
not regime partners or close allies.'' The term otherwise was not 
needed to convey the intended meaning of the sentence, so BIS removed 
it.
    One commenter recommended that the timeline for the review of 
License Exception STA eligibility requests should be similar to those 
set forth by Sec.  740.17(b)(2) for ENC classifications, where a 
determination would be made thirty days after the submission of the 
request. BIS does not accept this recommendation because these ``STA 
requests'' are not the same as requests for ENC classification, which 
consists more of a technical review. The STA eligibility requests 
involve not only a technical review of the end item but also a broader 
policy review to determine whether such end items should be eligible 
for License Exception STA. These ``STA requests'' are not part of a 
license application requesting an authorization for an export, reexport 
or in-country transfer. However, BIS has determined using the timelines 
set forth in Executive Order 12981 and Sec.  750.4, as was proposed in 
the July 15 (framework) rule, is the best approach to establish clear 
guidelines for the timeline for the interagency reviews conducted by 
the Departments of Commerce, State and Defense.
    One commenter requested ``ECCN entry'' be changed to ``end item'' 
in Sec.  740.20(g)(5)(i) because BIS is not making the entire ECCN 
eligible, but only a specific end item. BIS does not accept this change 
because in certain cases BIS may approve an ECCN entry for License 
Exception STA eligibility, but in other cases the end item approved for 
STA eligibility may be more narrowly defined. Therefore, BIS is not 
changing the ``ECCN entry'' as requested, but is adding ``or end item'' 
to add greater specificity. This will clarify that when BIS publishes 
final rules adding License Exception STA eligibility to the EAR for 
``600 series'' end items, it may be done at the higher (i.e., more 
general description) ECCN level or specific end item level (e.g., a 
specific model number).
    Two other commenters requested BIS allow the STA eligibility 
requests to cover the entire ECCN subject to the request versus the 
specific end item in the request. BIS is not making the requested 
changes. As noted, the STA eligibility requests are not limited to a 
specific model and can be requested at the ECCN level or ECCN ``items'' 
paragraph level. However, BIS anticipates that initially the end items 
that are determined to be eligible for License Exception STA under the 
Sec.  740.20(g) process will likely be at the specific end item level. 
Over time as the U.S. Government has an opportunity to review more of 
these requests, it may be

[[Page 22679]]

possible that broader descriptions can be developed and authorized for 
License Exception STA. However, to protect U.S. national security 
interests a review of the end items classified in ECCN 9A610.a must be 
made by the U.S. Government prior to any of those end items being 
determined to be eligible for License Exception STA.
    Two commenters requested BIS provide applicants with an opportunity 
to participate in unclassified interagency discussions on their License 
Exception STA eligibility requests similar to the opportunity to 
participate in open sessions of interagency discussions associated with 
the interagency licensing review process. BIS does not need to make any 
regulatory changes to address this comment. Requesters who submit ``STA 
requests'' under Sec.  740.20(g) are participating in the review 
process in an important way. Therefore, such requesters are encouraged 
to submit any information that they believe would be relevant to the 
U.S. Government review of the License Exception STA eligibility 
requests. In reviewing and evaluating such requests, if BIS or one of 
the other departments has a question regarding what was submitted, a 
representative from BIS will likely contact the applicant through SNAP-
R to request an answer to the specific question or request additional 
information. This process is similar to the typical level of applicant 
participation that occurs in the license application review process, so 
BIS is not making any additional changes to the EAR or internal license 
review processes of the U.S. Government to create a greater role for 
the applicant in the interagency review process for License Exception 
STA eligibility requests.
    One commenter requested BIS allow an extension of the review period 
for STA eligibility if agreed to by the applicant. This commenter 
suggested this could be implemented in Sec.  750.4(f) (Procedures for 
processing license applications) by allowing for an additional review 
period of 10 calendar days, with an extension if agreed to by the 
applicant. BIS is not accepting this change because the License 
Exception STA eligibility requests and the license applications 
requesting an authorization for an export, reexport or in-country 
transfer are no longer going to be linked in this final rule, so the 
concern with the License Exception STA timeline interfering with the 
timeline for the review of the license application is no longer an 
issue.
    One commenter thought it would be useful to provide further clarity 
on the proposed ``STA eligibility'' review process, and its precise 
relationship to the ACEP licensing process. If it is the intent to 
review STA eligibility requests in tandem with the ACEP licensing 
review process, this commenter is concerned whether such a review would 
provide adequate administrative due process. As noted above, the 
License Exception STA eligibility requests will not be reviewed in 
tandem with the license application review process, so this concern is 
already addressed. In addition, as described in Sec.  740.20(g), in the 
event that STA eligibility is denied, exporters are able to seek 
reconsideration of the denial and are encouraged to provide any 
additional information supporting their request. Further, a denial of 
STA eligibility does not preclude an exporter from applying for a 
license for the same export.
    One commenter requested that BIS mandate applicants who receive a 
notification from BIS authorizing the use of License Exception STA for 
specific end items to share such determinations with other parties. BIS 
does not accept this change. Applicants who receive an approval may 
share that notification, but BIS does not believe that mandating that 
party to share the notification received from BIS is warranted. BIS 
will communicate such determinations based on an amendment to the EAR 
as described in Sec.  740.20(g)(5)(i). BIS believes this combination of 
a voluntary sharing approach followed by a regulatory change to inform 
the public is the best approach.
2. License Application for a ``600 Series'' Item That Is Equivalent to 
a Transaction Previously Approved Under a State License or Other 
Approval
    This final rule is making changes to Supplements Nos. 1 (Item 
Appendix, and BIS-748P-B: End-User Appendix; Multipurpose Application 
Instructions) and 2 (Unique Application and Submission Requirements) to 
part 748 to allow for the consideration of previous State licenses or 
other approvals that are equivalent to a new license application for a 
``600 series'' item. These changes are being made to address a comment 
regarding how previous ITAR licenses or other approvals could be 
considered as part of the EAR license review process. Other changes 
included in this final rule address the use of ITAR licenses and other 
approvals that remain valid (see Section III.C above).
    One comment requested BIS create an ID code in SNAP-R to 
automatically convert ITAR agreements to BIS licenses. Another 
commenter suggested implementing an amendment capability as it relates 
to licenses. BIS does not accept the suggested change to create an ID 
code in SNAP-R that would allow applicants for ``600 series'' items to 
automatically transfer previous ITAR agreements (e.g., MLA or TAA) to a 
BIS license because of technical limitations in the SNAP-R and the 
importance of reviewing these new proposed exports, reexports, and 
transfers (in-country) that will be made under the EAR licenses being 
applied for at the time of the new applications.
    However, BIS does agree that an export, reexport or in-country 
transfer previously authorized under an ITAR license or other approval 
(e.g., MLA or TAA) may be relevant to the review of a subsequent EAR 
license application if the transaction in question is equivalent to the 
transaction previously authorized. Therefore, BIS is making a change 
that was not proposed previously in the July 15 (framework) rule to 
revise the license application process to provide guidance to 
applicants on how to have a previous State license or other authority 
be considered as part of the license review process for a ``600 
series'' item.
    To implement this change, BIS is revising the instruction in 
Supplement No. 1 to part 748 (BIS-748P, BIS-748P-A: Item Appendix, and 
BIS-748P-B: End-User Appendix; Multipurpose Application Instructions) 
to create a process in SNAP-R for applicants to input a State license 
or other approval number in Block 24. The ITAR license or other 
approval number will alert BIS and the other U.S. Government agencies 
reviewing a particular ``600 series'' application that the new 
application is equivalent to a previous State license or other 
approval.
    Only those license applications where the particulars (e.g., the 
description of the item, the purchaser, ultimate consignee and end-
user(s)) are the same in both the EAR license application and the 
previously issued ITAR authorization, will receive full consideration 
under this paragraph. In some instances, review under this paragraph 
may result in a quicker processing time. The State license number or 
other identifier, such as a MLA or TAA identifier, must be included in 
Block 24 of the BIS license application, as noted above. Lastly, this 
final rule is adding a Note to paragraph (x) to clarify license 
applications submitted under paragraph (x) will still be reviewed on 
their own merits and in accordance with license review procedures and 
timelines identified in part 750.
    BIS agrees with the second commenter who suggested an amendment 
capability for licenses

[[Page 22680]]

would improve the efficiency of the EAR licensing process as the 
current EAR does not allow for amendments to licenses. Amendments to 
licenses are addressed with the submission of a replacement license 
when a change needs to be made to a previously authorized license for a 
change not described in Sec.  750.7(c) in accordance with the 
instructions contained in Supplement No. 1 to part 748 of the EAR, 
Block 11. At this time, BIS is not able to implement a process in this 
final rule to allow for amending of existing EAR licenses. However, BIS 
intends to reconsider this idea once the single licensing form is 
developed and the export control IT system has greater flexibility to 
address such changes, including creating an efficient process for 
allowing license holders to submit such requests for changes to a 
license and allowing for identification and efficient tracking of such 
changes. These types of improvements in the IT system will better 
ensure relevant U.S. Government enforcement officials can identify such 
approved changes to verify compliance with approved amended licenses.

XVII. Part 750--Application Processing, Issuance, and Denial

    In the June 21 (transition) rule, BIS proposed revising Sec.  750.4 
to address Congressional notification for the export of ``600 Series 
Major Defense Equipment'' and revising Sec.  750.7 to extend the 
validity period of BIS licenses and permit shipment to and among 
multiple end users. These proposals, public comments thereto, and final 
decisions are discussed in more detail below.

A. Calculating Processing Times

    As proposed in the June 21 (transition) rule, this rule amends 
Sec.  750.4(b) to add the congressional notification process associated 
with requests to export ``600 Series Major Defense Equipment'' to the 
list of actions not included in license application processing time 
calculations.

B. Shipment to Approved End Users

    BIS licenses generally designate one ultimate consignee and may 
have many designated end users. DDTC authorizations may designate 
multiple foreign end users. The June 21 (transition) rule proposed to 
revise Sec.  750.7(c) explicitly to allow direct shipments to approved 
end users on an export or reexport license if those end users are 
listed by name and location on such license. BIS received no comments 
that directly referred to this proposed revision, but one commenter 
expressed concern that EAR licenses would afford less flexibility than 
ITAR agreements, which may allow shipments among approved end users 
outside the United States in addition to direct shipment to approved 
end users from the United States. BIS acknowledges that this is a valid 
concern; therefore, this rule amends proposed Sec.  750.7(c)(1)(ix) by 
allowing direct export, reexport and transfer (in-country) to and among 
approved end users provided they are listed by name and location on 
such license and that the license does not contain any conditions that 
cannot be complied with by the end user, and by removing a proposed 
restriction on exports and reexports to unlisted end users. This rule 
also makes conforming changes to Sec.  758.5.

C. Extended Validity

    Current ITAR licenses are generally valid for four years. 
Agreements under the ITAR may be valid as long as ten years. Prior to 
the effective date of this rule, BIS licenses were generally valid for 
two years. In order to harmonize the EAR with the ITAR, the June 21 
(transition) rule proposed to revise Sec.  750.7(g) to extend the 
validity period of BIS licenses issued hereafter from two years to four 
years, with some exceptions, unless otherwise specified on the license.
    Three commenters expressed support for this extension, and none 
expressed opposition to it. However, one commenter suggested a default 
ten-year validity period for replacing an ITAR agreement. BIS does not 
accept the suggested revision, but BIS notes that 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 had agreements on similar 
matters previously approved by the Department of State for a longer 
period. BIS believes that setting up a new process for a default 
validity period would restrict the flexibility of the reviewing 
agencies without significantly lessening the burden on the applicant, 
as the same information would have to be supplied under a default 
process as will be required for a license application and request for 
extended validity.

D. Specificity on Application

    Three commenters asserted that BIS's proposed licensing process is 
more burdensome than DDTC licensing because the ITAR allows identifying 
general categories rather than parsing out each part covered by an 
application. BIS believes that most general categories of items 
transitioning from the USML will fall into general categories in the 
EAR as well, such as the .x paragraphs of the ``600 series'' ECCNs. 
Therefore, the burden should be comparable. For example, if a 
collection of parts specially designed for a military aircraft were 
formerly controlled under USML Category VIII(h) and were not identified 
in the revised USML Category VIII(h), then they would be controlled 
under ECCN 9A610.x. BIS does not and would not generally expect more 
detail on a BIS license application in this regard than what DDTC would 
generally expect on one of its license applications.

XVIII. Part 756--Appeals

    This final rule adopts the position described in the July 15 
(framework) rule that STA eligibility decisions cannot be appealed 
through part 756. BIS is maintaining this position for the reasons set 
forth in that rule, i.e., that the decision to grant STA eligibility is 
a foreign policy determination and because consensus is required among 
the considering agencies to do so. In addition, exporters should keep 
in mind that a denial of STA eligibility does not preclude the exporter 
from submitting a license application for the same transaction. This 
rule amends the regulatory text proposed in the July 15 (framework) 
rule to remove ambiguity about its scope.

XIX. Part 758--Export Clearance Requirements

A. AES Filing Regardless of Value, Except for .y Items

    The June 21 (transition) rule proposed to revise Sec.  758.1 to 
require that information on all exports of ``600 series'' items be 
filed in AES regardless of value or destination. Six commenters opposed 
this requirement. They cited difficulties in separating ``600 series'' 
items from other CCL items in their internal systems, and stated that 
applying different clearance requirements for items eligible for the 
same license exceptions was confusing. BIS did not accept these 
suggestions. Due to the nature of ``600 series'' items as items 
specially designed for military applications or end items, the U.S. 
Government needs to retain a degree of visibility into the movement of 
these items. This final rule adopts the amendment to Sec.  758.1 from 
the proposed rule, except with respect to .y items, which is discussed 
further below.
    Three commenters requested that .y items not be subject to as 
stringent requirements. BIS agrees, given the lesser military 
significance of .y items. To lessen the AES requirements on .y

[[Page 22681]]

items, BIS has removed .y items from the mandate to file in AES for all 
exports. Thus, the AES filing requirement for .y items would be the 
same for all other AT-only controlled items on the CCL.
    The June 21 (transition) rule proposed 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. That rule also proposed to revise Sec.  758.2 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, 
and the rule proposed 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. These proposals are 
adopted in this final rule.

B. Furnishing of ECCNs to Consignees

    Section 758.6 requires that exports of items on the CCL 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, additional information 
identifying ``600 series'' items is necessary. The June 21 (transition) 
rule proposed to revise Sec.  758.6 to require a more specific DCS for 
``600 series'' items, which would require exporters to identify in the 
text of the DCS the ECCNs of all ``600 series'' items being exported to 
ensure that consignees are aware that they are participating in a 
transaction that includes such items.
    BIS received comments on this proposal requesting that BIS not 
change the DCS, as it is pre-printed on certain export control 
documents, so tailoring it to different shipments is burdensome. Taking 
these views into account, but in continued recognition of the need to 
identify ``600 series'' items to consignees and national authorities, 
BIS has revised Sec.  758.6 to require that the ECCN for each ``600 
series'' item being shipped be provided on the same documents on which 
the DCS is required, but not in the text of the DCS itself. This rule 
requires that the ECCN for each ``600 series'' item must be entered on 
the invoice and on the bill of lading, air waybill, or another export 
control document that accompanies the shipment from its point of origin 
in the United States to the ultimate consignee or end user abroad. This 
final rule does not change the text of the DCS requirement; it merely 
adds a new ``[g]eneral requirement'' heading to the previously existing 
requirement.
    BIS received one comment that requested that BIS require the ECCN 
for all items, not just ``600 series'' items, in the DCS to assist 
foreign parties in classification. BIS recognizes the value to foreign 
parties of requiring exporters to furnish the ECCN for all items 
shipped. However, this rule's purpose is to revise the EAR to allow the 
transition of the ``600 series'' from the ITAR to the EAR. Therefore, 
BIS does not accept this recommendation as it is outside the scope of 
this final rule. BIS does, however, urge exporters to advise foreign 
parties to the transaction of the ECCNs of all exported items.
    BIS received eight comments requesting that it not require the 
inclusion of the ECCN for ``600 series'' items in the DCS. These 
commenters argued that there would be substantial burden in revising 
their information technology (IT) and compliance systems to insert the 
ECCN into the DCS and further burden in maintaining a separate DCS for 
``600 series'' items. Consistent with the discussion above, BIS agrees 
with commenters that the burden of including ECCNs in the DCS paragraph 
outweighs the value of notifying national authorities, consignees, and 
other parties of ECCNs via that statement. Therefore, BIS has 
determined that the ECCN must be included on the export control 
documents in a manner that will allow national authorities, consignees, 
and others who review those documents to quickly and easily determine 
the ECCN of each ``600 series'' item in a shipment, but will not 
require changes to the DCS paragraph. This will alert those interested 
parties to the export control classification of the ``600 series'' 
items and facilitate their determination of what controls are 
applicable to the particular ``600 series'' items. Allowing exporters 
flexibility in the placement of the ECCNs on the documents will allow 
each exporter to minimize the regulatory burden by adopting practices 
that fit most easily with its systems while helping to protect U.S. 
national security interests.
    Two commenters noted that the ECCN is already included in most 
export control documents, so inclusion in the DCS was unnecessary. BIS 
accepts this recommendation to the extent that it suggested that the 
ECCN requirement be removed from the DCS paragraph and applied to 
``export control documents'' more generally and notes that exporters 
will have flexibility as to how to include the ECCN on ``export control 
documents.'' This flexibility should minimize the impact of this 
requirement for those exporters that already include the ECCN on their 
export control documents.
    Five commenters suggested that BIS substitute written notification 
to consignees of 600-series status as a condition of license exception 
use. BIS does not accept this recommendation. License Exception STA 
already requires written notification of the ECCN as a condition of 
use, and this requirement will continue to apply with the addition of 
the ``600 series'' items to the CCL. Inclusion of the ECCN on the 
export control documents is desirable because it provides notice of the 
ECCN to parties in addition to the Ultimate Consignee, including 
freight forwarders and national authorities. It also assists U.S. 
Customs and Border Protection agents with an opportunity to conduct 
compliance checks to ensure that the information on the export control 
documents matches the electronic export information in AES.
    One commenter suggested requiring the ECCN in the business 
agreements, such as contracts, that the parties enter into in 
connection with an export transaction. BIS does not accept this 
suggestion. While this may represent a good compliance practice, BIS 
does not deem it appropriate to dictate what terms must be included in 
the parties' commercial agreements. BIS does not generally see the 
agreements, and they do not travel with the items during shipment. As 
noted above, several of the goals served by the inclusion of the ECCN 
on the ``export control documents'' are served by the fact that the 
documents travel with the items.
    One commenter stated that including the ECCN in the DCS would not 
raise awareness by foreign parties of the need for compliance with US 
export controls. BIS does not agree with this comment. Including the 
ECCN on the ``export control documents'' will increase the ability of 
foreign parties and national authorities to determine the relevant 
export controls. Additionally, requiring exporters and reexporters 
provide the ECCN is intended to improve compliance by ensuring that 
recipients of the items have a basis for determining license 
requirements.

C. Removal of Obsolete References in Revised Text

    In part 758, this rule removes references in revised text to the 
Shipper's Export Declaration or SED, because this form no longer 
exists.

XX. Part 762--Recordkeeping

    The July 15 (framework) rule and the June 21 (transition) rule both 
proposed

[[Page 22682]]

revising Sec.  762.2 to reference new recordkeeping requirements. The 
July 15 (framework) rule proposed to add references to Sec.  743.4, for 
Conventional Arms Reporting, and Sec.  740.20(g), for License Exception 
STA eligibility requests for ``600 series'' end items. Descriptions of 
the underlying requirements are found in Sections XIII.A and XVI.B.1 
above, respectively. As described in Section XI.F above, the June 21 
(transition) rule proposed to add a requirement to Sec.  740.20, note 
to paragraph (c)(1), that parties abroad must have been identified on a 
license or other approval issued by either BIS or DDTC prior to 
receiving ``600 series'' items under License Exception STA; this rule 
adds paragraph (b)(51) to conform to that requirement. The June 21 
(transition) rule also proposed to add references to Sec.  
740.11(b)(2)(iii) and (iv) (as described in Section XI.D of this rule), 
for exports made for or on behalf of a department or agency of the U.S. 
Government or at the direction of the Department of Defense. This rule 
adopts the proposed revisions to four paragraphs in Sec.  762.2 to 
reference the additional records to be maintained in Sec. Sec.  743.4, 
740.20(g), and 740.11(b)(2)(iii) and (iv) and adds a reference to the 
existing recordkeeping requirement in Sec.  740.9(a)(3), for temporary 
exports of technology. Lastly, the rule adds two new paragraphs to 
reference the ``specially designed'' definition in Sec.  772.2 
(described below in Section XXIII) and a note to paragraph (c)(1) of 
Sec.  740.20 of the EAR (described below in Section XXIV.C.5).
    BIS received two comments related to the recordkeeping references 
in response to the July 15 (framework) rule. One comment states that 
the addition of the reference to Sec.  743.4, for Conventional Arms 
Reporting, is premature, because no items are currently subject to the 
reporting requirement. BIS does not accept this recommendation. This 
rule provides the framework for the ``600 series'' within the EAR. It 
creates a reporting requirement for items listed on the Wassenaar 
Arrangement Munitions List and the UN Register of Conventional Arms. 
Therefore, a reference to that reporting requirement in Sec.  762.2 
(Records to be retained) is appropriate. One comment states that the 
government should not depend on the recipients of its responses to 
License Exception STA eligibility requests to maintain records of those 
responses. BIS notes that although responses are transmitted through 
SNAP-R, SNAP-R is not intended to be a recordkeeping archive. 
Therefore, BIS does not accept this recommendation, and this final rule 
will require that any person who submits a License Exception STA 
eligibility request to maintain records of such a request in accordance 
with the new provisions added to part 762.
    Lastly, as a result of proposals made in the June 19 (specially 
designed) rule, in this final rule, BIS is adding a new paragraph 
(b)(50) to Sec.  762.2 as a conforming change to notify the public that 
if they rely on the paragraph (b)(4), (b)(5), or (b)(6) exclusions of 
the ``specially designed'' definition that the documentation related to 
such release must be retained in accordance with part 762 
(Recordkeeping) of the EAR. One public comment in response to the June 
19 (specially designed) rule raised concern that the documentation 
requirements referenced in the note to paragraphs (b)(4) and (b)(5) 
could be overlooked and suggested BIS add a reference to Sec.  762.2. 
BIS agreed with the commenter's suggestion and is adding this change to 
the final rule, along with other changes to the recordkeeping 
requirements referenced above. As described in more detail below in 
Section XXIII.A, paragraph (b)(6) is a new ``development'' based 
exclusion that is being added to the definition of ``specially 
designed'' in this final rule. Because the paragraph (b)(6) exclusion 
is also a ``development'' based exclusion similar to (b)(4) and (b)(5) 
that includes the same types of documentation requirements, BIS is also 
adding a reference to paragraph (b)(6) to Sec.  762.2 in this final 
rule.

XXI. Part 764--Foreign-Produced Direct Products and Denial Orders

    Because of the expansion of the provisions at Sec.  736.2(b)(3) to 
include ``600 series'' items, the June 21 (transition) rule proposed to 
remove the penultimate paragraph in Supplement No. 1 to part 764. That 
penultimate paragraph 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.'' One 
commenter objected to removing this paragraph on the grounds that 
foreign parties may be unaware that their foreign-made items are 
subject to the EAR. BIS does not agree with the commenter's concern. 
Under General Prohibition 4 of the EAR, Sec.  736.2(b)(4), a party is 
responsible for ensuring that its transactions involving a denied 
person do not violate the terms of the applicable denial order. BIS 
also notes that the current standard denial order includes foreign-made 
items containing above a de minimis level of U.S. content. In 
transactions involving a denied person, foreign parties thus already 
need to determine whether foreign-made items are subject to the EAR. 
This rule adopts the provision as it was proposed.

XXII. Part 770--Interpretations

    The November 7 (aircraft) rule proposed to remove Interpretation 9 
from part 770. As discussed below, paragraph (b)(3) of the ``specially 
designed'' definition being revised in this final rule is intended to 
capture the scope of Section 17(c) of the Export Administration Act of 
1979, as implemented in the note to USML Category VIII(h) and 
Interpretation 9 to part 770 of the EAR, and apply it to the remainder 
of the USML and CCL. This means that any part, component, accessory, or 
attachment that was specifically designed or modified for a military 
aircraft but that would not be controlled under USML Category VIII(h) 
as a result of the note to USML Category VIII, would not be controlled 
by ECCN 9A610.x which controls such items if ``specially designed'' for 
a military aircraft and not elsewhere enumerated. Therefore, 
Interpretation 9 is no longer needed in the EAR and is being removed in 
this final rule.
    This final rule is also removing Interpretation 10 from part 770. 
This revision was not previously proposed, but the interpretation's 
description of differing Commerce and State jurisdiction is out of date 
and no longer accurate and conflicts with the structural changes 
adopted in this final rule. Therefore, the interpretation is removed as 
a conforming change.

XXIII. Part 772--Definitions (Including Specially Designed)

A. ``Specially Designed'' Definition

    In conjunction with the Department of State, BIS published a 
proposed definition of ``specially designed'' on June 19, 2012 (77 FR 
36409). The definition proposed in that rule took into account public 
comments received in response to an earlier proposed definition in the 
July 15 (framework) rule, and would create, insofar as practicable, a 
common definition of ``specially designed'' for use under the CCL and 
the USML. As seen in the July 15 (framework) rule, the definition of 
``specially designed'' proposed in the June 19 (specially designed) 
rule adopted a catch and release approach because the agencies found 
that it was easier to describe what the term did not or should not 
include rather than what it does include. Thus, paragraph (a) of the 
definition proposed in the June 19

[[Page 22683]]

(specially designed) rule contained three broad bases for items to be 
``specially designed''--the catch. If an item were caught by at least 
one of the three bases in paragraph (a), then paragraph (b) contained 
five exceptions to that item's being ``specially designed''--the 
release.
    The catch-and-release construct must be robust enough to capture 
all items that may warrant being controlled as ``specially designed.'' 
In order to protect U.S. national security interests, the paragraph (a) 
catch must be broad in scope. If paragraph (a) overreaches in certain 
cases, that can be tolerated to some degree, but as much as possible 
paragraph (b) of the definition tries to release those ``parts,'' 
``components,'' ``accessories,'' ``attachments,'' and ``software'' that 
do not warrant being treated as ``specially designed.'' However, it is 
important for protecting U.S. national security interests that only 
those ``parts,'' ``components, ``accessories,'' ``attachments,'' and 
``software'' that the U.S. Government has determined in all cases do 
not warrant being controlled as ``specially designed'' are released 
under paragraph (b). BIS received 31 comments in response to the 
proposed definition of ``specially designed'' contained in the June 19 
rule. Most commenters felt the proposed definition in the June 19 rule 
was a significant improvement over the July 15 (framework) rule 
proposal, but many expressed concerns about complexity, ambiguity of 
some of the terms used, and treatment of items that have undergone 
minor modifications in form or fit (more specific description of these 
comments and BIS's responses to them are addressed further herein). One 
commenter asserted that BIS should have prepared a regulatory 
flexibility analysis of the effect of the proposed definition instead 
of having Commerce's Chief Counsel for Regulations certify that the 
change would not have a significant impact on a substantial number of 
small entities, but this assertion was not supported by any specific 
information on the economic impact of adopting the proposed definition. 
BIS continues to believe that defining the term ``specially designed'' 
in the EAR, rather than leaving it undefined outside the MTCR context, 
helps all businesses by reducing uncertainty about how to classify 
their items. Small and medium-sized exporters who may not have export 
counsel or the resources available to obtain such assistance are less 
likely to need assistance to comply with a defined term than an 
undefined term. In addition, some commenters argued that a ``natural'' 
definition for the term already exists and that establishing a 
regulatory definition that would apply to all uses of ``specially 
designed'' needlessly complicates a ``straightforward'' and ``easily-
understood'' term. From extensive reviews of license applications, 
discussions with BIS's Technical Advisory Committee members, and the 
diverse comments received from the public, BIS has concluded that 
organizations within similar industries have been and are continuing to 
apply wide-ranging interpretations of ``specially designed.'' Some 
organizations have obtained commodity jurisdiction (CJ) determinations 
from the Department of State for a specific item and have then 
extrapolated the determination to similar items across multiple product 
lines despite potential differences in fact patterns, while others have 
limited the scope of CJs from applying to other product lines. They 
have applied the lessons learned from such cases to their application 
of ``specially designed.''
    Some organizations have applied the Missile Technology Control 
Regime (MTCR) definition of ``specially designed'' to all of their 
items, while other organizations have limited the applicability of the 
MTCR definition to items controlled for MT reasons only. Still other 
organizations have interpreted the text of Sec.  120.3(a)(ii) of the 
ITAR to mean that if an item has any performance equivalent to a non-
controlled item, even if some modification has been made that 
differentiates the item from a non-controlled item, then the item at 
issue is not subject to the ITAR or, by implication, caught under the 
``specially designed'' description of an ECCN. Some have made this 
interpretation despite the parenthetical in Sec.  120.3(a)(ii) 
describing performance equivalent as ``defined by form, fit and 
function'' (emphasis added). On the other hand, many organizations 
treat any item that has been slightly modified in fit or form for a 
controlled item as ``specially designed,'' even if the modifications 
made are insignificant.
    Two public comments even raised meeting minutes from a 1975 meeting 
of the Coordinating Committee on Export Controls (COCOM), which helps 
demonstrate the length of time for which the interpretation of 
``specially designed'' has been an issue. These commenters referred to 
these 1975 meeting minutes to support their position that an exclusive 
use based interpretation of ``specially designed'' is warranted. 
However, given COCOM ceased to exist on March 31, 1994, the minutes are 
not instructive for purposes of this final definition of ``specially 
designed.'' In addition, as identified in the June 19 (specially 
designed) rule, a single definition based on exclusive use would not be 
adequate to protect U.S. national security interests or to account for 
the variety of ways in which the term ``specially designed'' is used 
under the EAR.
    It is clear to BIS and other agencies involved in export controls 
that there is no ``natural'' definition or interpretation of 
``specially designed,'' and that this has led to competitive 
disparities for similarly situated organizations. Consequently, a 
single regulatory definition of ``specially designed'' is warranted. A 
single regulatory definition is the only way in which to adequately 
address the various and inconsistent interpretations of the term that 
are discussed above and is the clearest path for protecting U.S. 
national security interests and ensuring the U.S. Government is meeting 
its multilateral regime commitments. The United States has national 
discretion to establish a definition that is consistent with 
multilateral regime commitments, and this definition meets that 
requirement. However, while finalizing a definition of ``specially 
designed'' with this rule, BIS and its interagency partners share the 
goal of reducing the use of ``specially designed'' to describe 
controlled items and intend to work to do so through the multilateral 
regimes and through the Advanced Notice of Proposed Rulemaking 
published on June 19, 2012 (77 FR 36419) (``June 19 ANPRM''), which is 
one of the first steps in that process.
    The public comment period closed on the June 19 ANPRM on September 
17, 2012. BIS received four comments in response to the ANPRM. Two 
public commenters noted the challenges and difficulties that would 
arise in trying to enumerate all of the components that would warrant 
control as ``specially designed'' components. Both commenters also 
noted that given the progress that has already been made in developing 
a suitable definition of ``specially designed'' under ECR, it is 
preferable to continue with the track of adopting a single ``specially 
designed'' definition for use under the EAR and the ITAR, informed by 
the public comments received in response to the June 19 (specially 
designed) rule.
    The other two commenters were more optimistic about the feasibility 
of enumerating ``specially designed'' components. The third commenter 
in particular made a number of suggestions for how the ``specially 
designed'' components controlled in Category 5--

[[Page 22684]]

Part II (``Information Security'') could be enumerated, which BIS is 
still evaluating. The fourth commenter was quite supportive of the 
concept of enumerating ``specially designed'' components, but did not 
provide specific examples for how to describe the enumerated 
components, except to restate a comment that this commenter also 
submitted in response to the June 19 (specially designed) rule, which 
was to use the term ``required'' in place of ``specially designed.''
    As noted above, BIS and its interagency partners will continue to 
evaluate these comments and, consistent with the goal of ECR of trying 
to make the control lists as ``positive'' as possible, will continue to 
evaluate where ``components'' can be enumerated on the CCL and the USML 
and, where possible, to enumerate such ``components.'' However, the 
limited response to the June 19 ANPRM and the two commenters who 
specifically indicated the challenges and difficulties they perceived 
in relying on such an approach to enumerating ``specially designed'' 
``components'' further reinforces BIS's assessment regarding the need 
for the use of the term ``specially designed'' in particular under the 
.x and .y paragraphs that will play such an important role in the ``600 
series'' being added to the CCL, in addition to the other uses of 
``specially designed'' on the CCL outside of the ``600 series.''
    These comments also further reinforce BIS's assessment that the 
``specially designed'' definition included in this final rule, which 
was further refined based on the comments received in response to the 
June 19 (specially designed) rule, would make a significant step 
forward toward resolving this long-standing issue under U.S. export 
controls. BIS believes adopting this definition of ``specially 
designed'' is the most feasible approach to defining the controls for 
``specially designed'' ``components'' in the vast majority of cases on 
the CCL where ``specially designed'' is used as part of the control 
parameter. However, BIS will continue to evaluate the comments received 
in response to the June 19 ANPRM and where feasible develop proposals 
for enumerating or describing certain ``components'' on the CCL.
    The Departments of Defense, State, Commerce, Homeland Security, and 
Justice reviewed all comments in preparing the ``specially designed'' 
definition for this final rule. BIS understands that this 
implementation will change, and possibly increase, the number of items 
previously treated as ``specially designed;'' and thus controlled 
items. Adopting the definition in this rule is, however, necessary to 
eliminate the various and inconsistent interpretations, establish a 
level playing field for organizations, and appropriately reflect the 
national security and foreign policy concerns of the United States. In 
addition, the possible increase would likely be for those organizations 
noted above that were interpreting ``specially designed'' based on 
misperceptions of the perceived ``natural'' meaning of ``specially 
designed,'' which likely were not consistent with U.S. law and policy 
in regards to how the U.S. Government has interpreted ``specially 
designed.'' In certain cases, the public may have relied on U.S. 
Government interpretations for what was not ``specially designed'' 
through the CJ or commodity classification automated tracking system 
(CCATS) processes and for these items determined not to be ``specially 
designed,'' the final definition includes changes to preserve those 
legacy determinations made through previous CJs and CCATS under certain 
limitations. A discussion of the comments and changes made to the June 
19 (specially designed) rule are addressed below.
1. Introductory Text to the Definition of ``Specially Designed''
    The June 19 proposed definition included introductory text that 
outlined the sequential analysis that would be followed in evaluating 
the ``specially designed'' definition. Several commenters that 
supported the definition indicated the linear process outlined for 
reviewing the definition was helpful and an improvement. These 
commenters agreed the structure of the definition would lend itself to 
a decision tree process where the public could answer a series of yes/
no questions that would ultimately result in a consistent 
interpretation regarding what is and what is not ``specially 
designed.'' Going off this theme, some commenters also suggested 
developing formal decision trees and other regulatory guidance to 
assist the public in understanding and applying the ``specially 
designed'' definition. Other commenters suggested simplifying some of 
the introductory text because it was redundant with other portions of 
the definition.
    BIS addressed these comments by significantly simplifying (and thus 
expanding) the introductory text to the definition. The introductory 
text in the ``specially designed'' definition in this final rule simply 
states that when applying this definition, follow the sequential 
analysis set forth in the definition. However, to address those 
commenters who thought additional guidance would be helpful, the 
introductory text will now include a cross reference to direct the 
public for additional guidance on the order of review of ``specially 
designed,'' including how the review of the term relates to the larger 
CCL in a new Supplement No. 4 to part 774--Commerce Control List Order 
of Review, that is also being implemented in this final rule.
    BIS created Supplement No. 4 to part 774 to allow for more detail 
to be provided regarding the steps to be followed in applying the 
``specially designed'' definition and also how and when the public 
should review the ``specially designed'' definition in the larger 
review of the CCL. BIS added this guidance as a new supplement to part 
774 because other supplements, such as Supplements No. 2 and No. 3 also 
provide guidance on interpreting the CCL. BIS's decision to add this 
new Supplement No. 4 also took into account the widespread use of 
``specially designed'' on the CCL and in the new ``600 series'' in 
deciding that additional guidance is warranted on the appropriate order 
of review. In addition to the new supplement, BIS is also developing 
outreach materials to be used on the BIS Web site and outreach seminars 
to further public understanding of the ``specially designed'' 
definition added to the EAR in this final rule, along with the larger 
order of review for the CCL. The ``specially designed'' definition will 
play a key role in ECR. BIS and DDTC are committed to ensuring the 
public will have the necessary support and training materials available 
through the targeted outreach program BIS and State are developing to 
ensure the public is able to understand and use the new ``specially 
designed'' definition effectively.
2. Paragraph (a)--Identifying ``Specially Designed'' Items
    Under the ``catch'' provisions of the proposed June 19 definition, 
one must determine if, as a result of ``development'' activities, an 
item meets the scope of any one of paragraphs (a)(1), (a)(2), or 
(a)(3). Under paragraph (a)(1), an item is caught if, as a result of 
``development,'' it has properties ``peculiarly responsible for'' 
achieving or exceeding the performance levels, characteristics, or 
functions described in the relevant ECCN or USML paragraph. Paragraph 
(a)(1) would apply to all commodities, including materials, as well as 
software; the paragraph does not, however, generally apply to

[[Page 22685]]

technology. Controlled technology is generally identified by the 
already-defined term ``required'' and the General Technology Note in 
Supplement No. 2 to part 774 rather than the term ``specially 
designed.'' The scope of items controlled under paragraphs (a)(2) and 
(a)(3) would be more limited, but the scope of control arguably would 
be broader than paragraph (a)(1). Under paragraph (a)(2), a ``part'' or 
``component'' would be caught if, as a result of ``development,'' it is 
necessary for an enumerated or referenced commodity or defense article 
to function as designed. Under paragraph (a)(3), an accessory or 
attachment would be caught if, as a result of ``development,'' it would 
be used with an enumerated or referenced commodity or defense article 
to enhance its usefulness or effectiveness.
    In response to paragraph (a), commenters were generally supportive 
of the ``peculiarly responsible'' standard in paragraph (a)(1), and 
some commenters advocated using this same standard in paragraph (a)(2). 
Other commenters recommended inserting text that paragraph (a)(2) only 
applies to ``application specific'' ``parts'' and ``components'' or 
those having the performance levels that are the bases for control. 
Also, one commenter supported the MTCR's ``exclusive use'' standard to 
be used for all ``specially designed'' references, regardless of 
whether MT controls are implicated. Another commenter recommended 
creating an AT control only for components subject to a catch-all 
control. BIS does not accept these recommendations as they are 
inadequate to protect U.S. national security interests or to account 
for the variety of ways in which the term ``specially designed'' is 
used under the EAR.
    For purposes of determining when a ``part'' or ``component'' is 
``specially designed,'' an item may be controlled for reasons other 
than the level of technical sophistication or contribution to enabling 
a component or end item to reach the parameters identified in an ECCN 
or USML paragraph. For example, a particular ``part'' may not be 
considered sophisticated in and of itself, but it may be essential to 
the repair or continued operation of a ``component'' or ``end item'' 
that is technically sophisticated or described on the CCL or USML. BIS 
believes that it is necessary to extend the ``catch'' of the 
``specially designed'' definition to reach these less sophisticated 
``parts'' or ``components'' that warrant control for national security 
or foreign policy reasons. In addition, BIS believes that a peculiarly 
responsible standard solely used to determine what ``parts'' and 
``components'' are ``caught'' under ``specially designed'' would 
present too much room for subjectivity in terms of when a ``part'' or 
``component'' would meet the peculiarly responsible standard.
    BIS needs a definition that is clear and objective such that if ten 
people were provided with the same set of facts, they would 
consistently make the same determination whether a ``part'' or 
``component'' was ``caught'' under ``specially designed.'' The 
peculiarly responsible standard is a good indicator for what is special 
and warrants control under ``specially designed'' which is why the 
(a)(1) criterion is included in this final rule. However, the 
peculiarly responsible standard should not be the sole criterion for 
what ``parts,'' ``components,'' ``accessories,'' ``attachments'' or 
``software'' would be ``caught'' under ``specially designed.'' Because 
of its utility in identifying ``specially designed'' items, in 
particular for end items and material, BIS has maintained the 
``peculiarly responsible'' standard in proposed paragraph (a)(1) and 
only made minor conforming edits to (a)(1) based on other changes 
described further below.
    Additional commenters requested clarification, with respect to 
paragraph (a)(2), on interpreting the terms ``necessary'' and ``to 
function as designed.'' For example, commenters questioned whether 
anti-lock brake systems or airbag systems modified for vehicles in USML 
Category VII would be necessary for the vehicles to function as 
designed. Similarly, some commenters presented concerns for determining 
when an accessory or attachment enhances the usefulness or 
effectiveness under paragraph (a)(3), while other commenters stated 
that the text in (a)(3) would simply repeat the definition of 
``accessory'' and ``attachment.'' To address these concerns, one 
commenter recommended that paragraph (a)(3) be removed and that 
paragraph (a)(2) be revised to read as follows: ``is a `part,' 
`component,' `accessory,' or `attachment' used in or with commodities 
enumerated on the CCL or the USML.''
    BIS agrees that the wording proposed in paragraph (a)(2) presents 
ambiguity for fact patterns like the two items described above. BIS 
also concurs that paragraph (a)(3) unnecessarily repeats text from 
already-defined terms. Consequently, with this final rule, BIS is 
eliminating paragraph (a)(3) and moving ``accessories'' and 
``attachments'' to a revised paragraph (a)(2), that catches ``parts,'' 
``components,'' ``accessories,'' ``attachments'' or ``software'' ``for 
use in or with a commodity or defense article enumerated or otherwise 
described on the CCL or the USML.'' BIS believes that this change 
enhances clarity and furthers the intent of paragraph (a)(2), and the 
proposed (but now eliminated) paragraph (a)(3), to be a broad 
``catch.'' This simplified approach will catch any ``part,'' 
``component,'' ``accessory,'' ``attachment'' or ``software'' that is in 
any way for use in or with (regardless of the perceived insignificance) 
a commodity or defense article enumerated or otherwise described on the 
CCL or USML. While this change will result in more ``parts,'' 
``components,'' ``accessories,'' ``attachments'' and ``software'' being 
caught under paragraph (a)(2) than the June 19 proposal, the release 
provisions in paragraph (b) will likely be applicable for many of the 
``parts,'' ``components,'' ``accessories,'' ``attachments'' and 
``software'' that would not otherwise have been previously caught by 
the draft paragraph (a) in the June 19 proposal.
    BIS is also amending paragraph (a)(2) to include ``software'' with 
``parts,'' ``components,'' ``accessories,'' and ``attachments'' in this 
final rule. One commenter expressed concerns that ``software'' would be 
caught under paragraph (a) but not released under paragraph (b), which 
could potentially catch more ``software'' than intended. BIS shares 
this concern, and is including ``software'' within the release 
provisions of paragraph (b) in this final rule.
    One commenter contended it was unfair that if its ``part'' or 
``component'' was excluded under paragraph (a)(1) for the ``part'' or 
``component'' to then potentially get caught under ``specially 
designed'' on the basis of the broader paragraph (a)(2). This comment 
misses the point that both the catch provisions of paragraph (a) and 
the release portions of paragraph (b) are intended to work together to 
identify those items that warrant being ``specially designed.'' Viewing 
one paragraph of the definition in isolation misses the larger 
objectives of the definition, which is to ensure that the appropriate 
items are classified as ``specially designed'' based on answering a 
series of simple yes/no questions. Paragraph (b) discussed below is 
structured in a similar way as paragraph (a) where the public should 
review each paragraph of (b) to determine whether a particular ``part'' 
``component,'' ``accessory'' or ``attachment'' or ``software'' is 
``specially designed.'' One distinction between paragraph (a) and (b) 
is that once exporters determined their ``part,''

[[Page 22686]]

``component,'' ``accessory,'' ``attachment,'' or ``software'' is 
excluded on the basis of any paragraph under (b), no further review of 
the definition of ``specially designed'' will be necessary.
3. Changes to Note to Paragraph (a)(1)
    Several commenters indicated the Note to paragraph (a)(1) was a 
very good addition to the ``specially designed'' definition in the June 
19 (specially designed) rule. However, BIS decided based on some of the 
comments received that appeared to misunderstand the relationship 
between paragraphs (a)(1) and (a)(2) that providing an example of an 
end item or material in the Note to paragraph (a)(1) (demonstrating the 
applicability and inapplicability of the peculiarly responsible 
standard) would be more helpful than a component example. Therefore, 
BIS is replacing the component example of ECCN 2B207.a with an end item 
example based on ECCN 1A007. The intent of the Note to paragraph (a)(1) 
is not changing. This final rule is only adding the ECCN 1A007 example 
because it better reflects the items that will most likely be captured 
under the (a)(1) criteria and helps to avoid the confusion certain 
commenters were having in understanding the relationship between 
paragraphs (a)(1) and (a)(2). Specifically, the Note intends to make 
clear that ``parts'' or ``components'' not meeting the ``peculiarly 
responsible'' standard of paragraph (a)(1) may still be caught under 
the broader controls of paragraph (a)(2).
4. Paragraph (b)--Excluding Items Caught Under Paragraph (a) From 
``Specially Designed''
    The June 19 definition of ``specially designed'' proposed five 
exclusions under paragraph (b) for ``parts,'' ``components,'' 
``accessories,'' and ``attachments'' that would otherwise be caught as 
``specially designed'' under paragraph (a). The release portion of the 
definition plays an important role in the definition and as noted above 
works together with paragraph (a) to refine the set of ``parts,'' 
``components,'' ``accessories'' and attachments'' that get ``caught'' 
under ``specially designed.'' As discussed above, BIS is expanding 
paragraph (b) to allow software to be eligible for these exclusions 
with the exception of paragraph (b)(2) which is specific to certain 
``parts'' and minor components specified in that paragraph. Below is a 
description of the proposed paragraph (b) exclusions, the comments 
received, and the changes made to the exclusions in this final rule.
5. Paragraph (b)(1)--Resolving Potential Jurisdictional Conflicts and 
Determining Order of Review
    Under the June 19 proposal, paragraph (b)(1) would clarify that a 
``part,'' ``component,'' ``accessory,'' or ``attachment'' enumerated on 
the USML is excluded from the definition of ``specially designed'' 
within any ECCN on the CCL. In response to proposed paragraph (b)(1), 
one commenter stated the provision avoids jurisdictional disagreements, 
while another commenter stated that the provision was redundant and 
thus added confusion. An additional commenter expressed concerns of a 
conflict or overlap between proposed Category VIII(h)(1) and proposed 
ECCN 9A610.y. BIS does not agree that there is a conflict or overlap 
between proposed Category VIII(h)(1) and proposed ECCN 9A610.y.
    BIS agrees that proposed paragraph (b)(1) is redundant, but it was 
included to remind readers that any ``part,'' ``component,'' 
``accessory,'' or ``attachment'' enumerated on the USML is subject to 
the ITAR. No further review of the catch-all provisions (or other 
provisions) of the CCL or the EAR definition of ``specially designed'' 
is necessary. To streamline the definition of ``specially designed,'' 
BIS is removing the text in paragraph (b)(1) proposed in the June 19 
(specially designed) rule and addressing jurisdictional issues and the 
order of review in the new Supplement No. 4 to part 774, which was 
discussed above.
    Several commenters requested guidance regarding how items subject 
to past CJs or CCATS determinations would be treated under the 
``specially designed'' definition. Specifically, whether a CJ 
determination ruled that an item was not subject to the ITAR or a CCATS 
where an item that was subject to the EAR was not classified as a 
``specially designed'' item would be treated for purposes of the 
``specially designed'' definition. These commenters suggested a 
grandfathering provision be added to address such past U.S. Government 
CJ and CCATS determinations.
    In addition to addressing these legacy CJs and CCATS, some 
commenters suggested that although the paragraph (b) exclusions would 
exclude many of the types of items that should be excluded from 
``specially designed'' ultimately either a broadening of some of the 
paragraph (b) exclusions was needed or, alternatively, some type of 
U.S. Government review mechanism needed to be created to allow for some 
discretion in terms of perceived insignificant items that may get 
``caught'' under paragraph (a) of the ``specially designed'' 
definition, but not warrant control as a ``specially designed'' item. 
As discussed below, BIS is making additional changes to broaden the 
scope of some of the paragraph (b) exclusions and is making certain 
changes in this final rule to improve the clarity of these exclusions 
based on the comments received.
    This final rule is also revising the definition proposed in the 
June 19 (specially designed) rule by adding a new paragraph (b)(1) to 
address the treatment of past CJ and CCATS determinations. In the case 
of a CJ determination where an item was determined to not be subject to 
the ITAR and the CJ determination indicated a classification on the CCL 
other than as a ``specially designed'' item, such items would remain 
under that classification and not be ``caught'' under the ``specially 
designed'' definition. Paragraph (b)(1) would release such ``parts,'' 
``components,'' accessories,'' ``attachments,'' and ``software.'' This 
grandfathering provision is added because in these fact-specific cases 
the U.S. Government has already reviewed the specialness of a 
particular ``part,'' ``component,'' accessory,'' ``attachment,'' or 
``software'' and made a determination that such an item is not 
``specially designed.'' Therefore, such items do not warrant being 
``caught'' under the ``specially designed'' definition and can be 
released under paragraph (b)(1) that is being added in this final rule. 
Under the November 7 (aircraft) rule, BIS proposed a similar 
grandfathering provision under the .y.99 concept for items determined 
to be EAR99 in past CJs or CCATS determinations and for items 
classified under other ECCNs. Such classifications would be 
grandfathered in. After further review of the public comments, BIS has 
decided a better and simpler approach is to address issues related to 
past CJ and CCATS determinations in the definition of ``specially 
designed'' itself under the new paragraph (b)(1).
    The paragraph (b)(1) exclusion grandfathering is based on past CJ 
determinations that indicated that the classification of the ``part,'' 
``component,'' ``accessory,'' ``attachment,'' or ``software'' on the 
CCL was in a ECCN paragraph that does not use ``specially designed.'' 
BIS is aware that in certain cases a CJ may have been issued that did 
not include a recommendation regarding the appropriate CCL 
classification, but a subsequent CCATS determination provided the 
classification. In such cases, a resubmission of the CCATS may be made 
under the new process

[[Page 22687]]

identified in Sec.  748.3(e), which is also included in this final 
rule, as was discussed above (see Section XVI.A.). Provided there is a 
consensus interagency agreement with the original CCATS determination 
that such an item is not ``specially designed,'' such an item would not 
be caught under ``specially designed'' and would be released under the 
new paragraph (b)(1) exclusion added in this final rule. The 
grandfather requests made pursuant to Sec.  748.3(e) should include the 
original CCATS number, as described above.
    The new paragraph (b)(1) exclusion is also forward looking. 
Paragraph (b)(1) provides a U.S. Government review mechanism for those 
``parts,'' ``components,'' ``accessories,'' ``attachments,'' or 
``software'' where a person believes such a ``part,'' ``component,'' 
``accessory,'' ``attachment,'' or ``software'' is so insignificant or 
minor that it should not be considered ``specially designed.'' This new 
paragraph (b)(1) acknowledges that there are additional ``parts,'' 
``components,'' accessories,'' ``attachments,'' or ``software,'' that 
may warrant also being released from ``specially designed'' because of 
their perceived insignificance to the functioning of the item, but in 
order to protect U.S. national security interests, the U.S. Government, 
through a consensus determination of the Departments of Commerce, State 
and Defense, may make such determinations, either through the CJ 
process or the new CCATS interagency process outlined in Sec.  
748.3(e). The new paragraph (b)(1) is not a new idea. It is, in effect, 
merely the codification for classification determinations of the 
current practice with respect to the State and Defense Departments' 
consideration of commodity jurisdiction requests.
6. Paragraph (b)(2)--Parts Common Across All Product Lines That Should 
Be Excluded From ``Specially Designed''
    The June 19 proposed definition of ``specially designed'' included 
an exception for single, unassembled ``parts'' commonly used in 
multiple types of commodities not enumerated on the USML or the CCL, 
with illustrative lists provided for threaded fasteners, other 
fasteners, and basic hardware. The preamble of the proposed rule noted 
that minor components were intentionally excluded from the scope of 
paragraph (b)(2).
    Commenters generally supported the concept of paragraph (b)(2), but 
some requested that the scope of paragraph (b)(2) be expanded to 
include minor components and to supplement the illustrative lists to 
specify more ``parts'' or ``components'' that could be released under 
paragraph (b)(2). In addition, some commenters requested that BIS 
confirm that variations in form or fit would not exclude a ``part'' 
from qualifying for the exclusion in paragraph (b)(2) and that BIS 
clarify the phrases ``single unassembled'' and ``multiple types of 
commodities.''
    With this final rule, BIS is confirming that variations in form or 
fit do not exclude parts or minor components from qualifying for 
paragraph (b)(2) and is thus adding the phrase ``regardless of form or 
fit'' to that paragraph to make the intent of the exclusion more 
explicit. Moreover, BIS concurs with the concerns regarding ambiguity 
of ``single unassembled'' and ``multiple types of commodities.'' BIS 
agrees with the commenters that using the phrase ``single unassembled'' 
is redundant since that phrase is already captured in the definition of 
``part.'' With respect to ``multiple types of commodities,'' the intent 
was to provide an exception in (b)(2) for ``parts'' that are common 
across different products, such as aircraft and vehicles. ``Multiple 
types of commodities'' was not meant to apply to ``parts'' common 
across different models of aircraft only or different versions of 
vehicles only. To improve clarity, BIS is removing both ``single 
unassembled'' and ``multiple types of commodities'' from (b)(2) in this 
final rule.
    While BIS did not intend for paragraph (b)(2) to include minor 
components, it appears that the June 19 proposal included at least one 
minor component--nut plates. After reviewing the public comments, BIS 
has decided to retain nut plates and allow certain minor components to 
qualify for (b)(2). However, BIS is also reducing the scope of (b)(2) 
by removing the terms ``other fasteners'' and ``basic hardware.'' The 
``parts'' that were proposed to be described under ``other fasteners'' 
and ``basic hardware'' will now be positively listed and will no longer 
constitute an illustrative list. Based on the public comments, BIS does 
not believe that ``basic hardware'' provides enough clarity and that it 
could be construed more broadly than intended. Therefore, these changes 
result in making paragraph (b)(2) a positive list, with the exception 
of the illustrative list for threaded fasteners.
    These changes to (b)(2) allow for greater flexibility in terms of 
allowing certain minor components to be released, which was requested 
in several of the comments. These changes also ensure the ``parts'' and 
minor ``components'' released under the paragraph (b)(2) exclusion will 
stay within clearly defined parameters. This will ensure that any 
release from ``specially designed'' under paragraph (b)(2) will be 
consistent with U.S. national security interests by not allowing any 
other ``parts'' or other minor ``components'' to be released under 
paragraph (b)(2) than those noted in paragraph (b)(2). As noted above, 
there will be ``parts'' or other minor ``components,'' that will not be 
released on the basis of paragraph (b)(2). This does not mean such 
``parts'' or ``components'' are necessarily ``specially designed'' 
because another paragraph (b) exclusion may potentially release such 
``parts'' or other minor ``components.'' In addition, ``components,'' 
``accessories,'' ``attachments,'' or ``software'' that are not eligible 
for the paragraph (b)(2) exclusion may potentially be released under 
another paragraph (b) exclusion. If not, and they are caught by 
paragraph (a), then they would be ``specially designed'' and controlled 
under the relevant ECCNs.
7. Paragraphs (b)(3)--(b)(6)--How the Exclusions Work Together
    Before getting into the discussion of the paragraph (b)(3) comments 
and provisions implemented in this final rule, it is important that the 
public understand how proposed paragraphs (b)(3), (b)(4) and (b)(5) 
work together. Having a better understanding of how these three 
exclusion paragraphs work together will help the public better 
understand the intent and scope of these three exclusion paragraphs, as 
well as the new paragraph (b)(6), discussed below, which was not 
contained in the June 19 (specially designed) proposed rule but is 
being added in this rule to simplify the application of paragraph 
(b)(4) . Paragraph (b)(6) is another example of a ``development'' 
exclusion similar to paragraphs (b)(4) and (b)(5) discussed here in 
relation to paragraph (b)(3). The June 19 (specially designed) rule 
definition included paragraphs (b)(3), (b)(4) and (b)(5). Each of these 
paragraph (b) exclusions would play an important and distinct role in 
the release portion of the ``specially designed'' definition. Some 
commenters seemed to have issues regarding understanding the role of 
these three different paragraphs and conceptually how they would work 
together to achieve the policy objectives of releasing certain 
``parts,'' ``components,'' ``accessories,'' ``attachments,'' or 
``software.''
    The important thing to remember is that paragraph (b)(3) is the 
``production'' exclusion. There is thus no need to know the original 
``development'' history of the ``part,'' ``component,''

[[Page 22688]]

``accessory,'' ``attachment,'' or ``software'' to rely on the paragraph 
(b)(3) exclusion. The paragraph (b)(3) exclusion recognizes that once a 
``part,'' component,'' ``accessory,'' ``attachment,'' or ``software'' 
is used in the ``production'' of an EAR99 item or an item described on 
the CCL that is only controlled for AT-reasons that is not in a `catch-
all' paragraph, such a ``part,'' ``component,'' accessory,'' 
``attachment,'' or ``software'' regardless of its original 
``development'' history or its original significance has crossed over 
into broader commercial applicability and would no longer warrant 
control as ``specially designed.''
    This paragraph basically adopts the concept in the note to USML 
Category VIII (the ``17(c) note'') and the carve-outs in USML 
Categories XI(c) and XII(e) that preclude an electronic, fire control, 
or other part, component, accessory or attachment that was once 
specifically designed or modified for a defense article from being ITAR 
controlled if it has entered into ``normal commercial use.'' BIS does 
not want its catch-all provisions pertaining to parts, components, 
accessories, and attachments to be more restrictive than the comparable 
provisions in the USML. Thus, for example, if an aircraft part would 
not be ITAR controlled as a result of the note in USML Category VIII, 
the part would not be controlled by 9A610.x as a result of the 
application of the definition of ``specially designed.'' Moreover, the 
policy in ITAR Sec.  120.3(a) states that items designed or modified 
for military applications should not be ITAR controlled if they have 
predominant civil applications or performance equivalents to those of 
an article used in civil applications. To the extent an item meeting 
these standards nonetheless warrants control, the U.S. Government has 
an obligation to positively identify it on the USML or in a particular 
ECCN. If it does not, then such items should not be captured within the 
scope of a ``specially designed'' catch-all provision. Paragraph (b)(3) 
accomplishes this already existing ITAR policy in the EAR and applies 
it across the CCL. It is, thus, not a new idea, but merely a 
consolidation of existing control concepts in one definition.
    Unlike in paragraph (b)(3), in order to rely on either paragraphs 
(b)(4) and (b)(5), and also the new paragraph (b)(6) described below, 
the ``development'' history is important and must be known. The 
paragraphs (b)(4) and (b)(5), and also the new paragraph (b)(6), 
exclusions release certain ``parts,'' ``components,'' ``accessories,'' 
``attachments,'' and ``software'' if the person has ``knowledge'' of 
the ``development'' history and that meets the stated criteria in 
paragraphs (b)(4) or (b)(5). In summary, paragraph (b)(3) is the 
``production'' exclusion. Paragraphs (b)(4) and (b)(5), and also the 
new paragraph (b)(6) described below, are the ``development'' 
exclusions.
    Some commenters noted concerns that applying paragraphs (b)(4) and 
(b)(5) for items that are decades old may be difficult because the 
original development history may no longer be known. If the original 
``development'' history is no longer known, then a person could not 
rely on the paragraphs (b)(4) or (b)(5) exclusion or the new paragraph 
(b)(6) being added in this final rule. However, if the ``part,'' 
``component,'' ``accessory,'' ``attachment'' or ``software'' was truly 
``developed'' for use in the ``production'' of those lower level items 
or for no particular purpose, the chances are good that the ``part,'' 
``component,'' ``accessory,'' ``attachment,'' or ``software,'' would 
have subsequently been used in the ``production'' of an item that would 
meet the criteria of paragraph (b)(3), in which case the ``part,'' 
``component,'' ``accessory,'' ``attachment,'' or ``software'' would be 
excluded from ``specially designed'' on the basis of paragraph (b)(3) 
regardless of the original ``development'' history. Again, paragraphs 
(b)(4) and (b)(5) are not new ideas. Central to the existing ITAR and 
EAR export control structures is the concept that an item is not 
``specially designed'' for a controlled item if it was deliberately 
made for use in both controlled and uncontrolled applications, i.e., a 
``dual-use'' item. The primary difference between the current concept 
and this new definition is that one must now be able to prove the 
design intent through contemporary documentation in order to be able to 
rely upon this release part of the mechanism. Without such 
documentation, parts and components that are used in or with controlled 
items and that do not otherwise meet one of the release provisions of 
paragraph (b) are ``specially designed'' items. BIS understands from 
the public comments that this is a more aggressive control stance than 
many perceive to be the case today. BIS nonetheless believes that it is 
better for the national security and other objectives of the reform 
effort in that it controls the items the U.S. Governments wants to 
control and creates more reliable, predictable rules that are easier to 
comply with.
8. Paragraph (b)(3) (i.e., the ``Production'' Exclusion)--Releasing 
Commodities and Software Equivalent to Existing Commodities and 
Software Used in the ``Production'' of Items That Are Not on the USML 
or CCL or Controlled for AT Reasons Only
    In the June 19 (specially designed) rule, BIS proposed an exclusion 
under paragraph (b)(3) for ``parts,'' ``components,'' ``accessories,'' 
or ``attachments'' ``caught'' under paragraph (a) if such items have 
the same form, fit, and performance capabilities as a ``part,'' 
``component,'' ``accessory,'' or ``attachment'' used in or with a 
commodity that (i) is or was in ``production'' and (ii) is either not 
enumerated on the USML or CCL, or is described in an ECCN controlled 
only for AT reasons. Additionally, while proposed paragraph (b)(3) 
requires the same form, fit, and performance capabilities, BIS can also 
confirm that paragraph (b)(3) does not require a design intent analysis 
and eliminates any concern that market fluctuations resulting in more 
sales to military applications in some years but not others could lead 
to an item's having its classification status changed as a result.
    The most prevalent comment submitted in response to proposed 
paragraph (b)(3) was that the paragraph was too narrow by requiring the 
same form, fit, and performance capability for it to apply. Commenters 
recommended various changes, including allowing ``minor'' changes in 
fit, certain changes in form, or only requiring the same performance 
capability. One commenter recommended that only certain types of 
changes in fit be allowed, and the commenter specified that those 
changes should be allowed for mounting, control values on electronic 
parts, or cosmetic changes. Other commenters requested clarification on 
specific instances of changes in form or fit, such as for conversion 
from British imperial units to metric units or changes to mounting 
brackets. Additionally, should the same form, fit, and performance 
capability be required, some commenters requested that BIS create a 
process to release items caught by ``specially designed'' if changes in 
form or fit are found to be insignificant, which BIS has accepted, but 
addressed the requested change under the discussion of revised 
paragraph (b)(1) above instead of here. Commenters also suggested that 
commodities previously determined under a CJ to be subject to the EAR 
should remain under EAR jurisdiction and not revert back to the ITAR 
under a ``specially designed'' control in the USML. BIS has also 
accepted this

[[Page 22689]]

change, but addressed the requested change under the discussion of 
revised paragraph (b)(1) and new Sec.  748.3(e) CCATS process above 
instead of here.
    The June 19 proposed paragraph (b)(3) follows the same construct as 
Sec.  120.3 of the ITAR in requiring the same form, fit, and 
performance capabilities. BIS used the criteria of the same form, fit, 
and performance capabilities because one change to a specific ``part'' 
or ``component'' may be deemed to be minor or insignificant; however, 
the same change to the same ``part'' for a different ``component'' or 
end item may not be minor or insignificant. Consequently, BIS and its 
interagency partners do not agree with the comments that allowing a 
subjective significance test for changes made to any ``part,'' 
``component,'' ``accessory,'' or ``attachment'' would be appropriate in 
the context of the paragraph (b)(3) exclusion.
    However, BIS and its interagency partners agree that there is a way 
to allow for certain changes in form and fit within the scope of the 
paragraph (b)(3) exclusion, while not opening the door of subjectivity 
that was at the core of the original rationale for requiring the same 
form, fit and performance capabilities. BIS is revising the 
introductory text of the paragraph (b)(3) exclusion to specify the 
commodity or software must have the same function, performance 
capabilities and the same or `equivalent' form and fit as a commodity 
or software used in or with an item that is in ``production'' that 
meets the criteria of paragraph (b)(3)(ii). The inclusion of 
`equivalent' form and fit addresses the public comments in this area 
and provides relief for insignificant or minor changes in form or fit, 
while still keeping this exclusion within the carefully drawn bounds of 
what was originally intended in the June 19 (specially designed) rule. 
Such permissible changes in fit must be clearly identified to ensure no 
change in form or fit that may affect U.S. national security interests 
is released under paragraph (b)(3). The revised paragraph (b)(3) in 
this final rule addresses the comments in this area, while keeping 
consistent with the larger objectives BIS intends for the ``specially 
designed'' definition.
9. Revised Note to Paragraph (b)(3) and New Notes 2 and 3 to Paragraph 
(b)(3)
    As a result of changes BIS is making to paragraph (b)(3) in this 
final rule to address the comments, BIS found it necessary to also make 
changes to the Note to paragraph (b)(3) included in the June 19 
(specially designed) rule, and to add two notes to paragraph (b)(3). 
These two additional notes will further bound the paragraph (b)(3) 
exclusion to ensure the exclusion is not interpreted more broadly than 
intended.
    The original Note to paragraph (b)(3) included in the June 19 
proposal is being redesignated as Note 1 to paragraph (b)(3) in this 
final rule. Some public comments requested additional guidance 
regarding the applicability of the Note to paragraph (b)(1) included in 
the June 19 (specially designed) rule proposal. BIS acknowledges that 
additional guidance should be provided regarding the applicability of 
the proposed Note to paragraph (b)(1). BIS is also including additional 
text to the Note to paragraph (b)(1) to describe the difference between 
development activities for ``feature enhancements'' versus those that 
``change the basic performance or capability'' to address these 
comments requesting additional clarification. Specifically, this final 
rule is adding the phrase ``such as those that would result in 
enhancements or improvements only in the reliability or maintainability 
of the commodity (e.g., an increased mean time between failure 
(MTBF))'' after the phrase ```development' activities'' to further 
clarify the types of commodities or software that may be subject to 
subsequent ``development'' activities, but still stay within the scope 
of the paragraph (b)(3) exclusion.
    BIS is adding a new Note 2 to paragraph (b)(3) to define the term 
`equivalent' for purposes of the limited form and fit changes that are 
being allowed under the revised paragraph (b)(3) in this final rule. 
This new note will clarify that with respect to a commodity, 
`equivalent' means that its form has been modified solely for fit 
purposes. As noted above, to allow for certain changes in form and fit 
to be permissible within the scope of the paragraph (b)(3) exclusion, 
it is important that the permissible form and fit changes be clearly 
defined. This new note will ensure the paragraph (b)(3) exclusion is 
not interpreted more broadly than is intended by BIS and also aid the 
public's understanding.
    At the suggestion of commenters, BIS is also adding a new Note 3 to 
paragraph (b)(3) to define form, fit, performance capabilities and 
function for commodities and software in the context of the paragraph 
(b)(3) exclusion. Because form, fit, and performance capability are 
important terms used in the paragraph (b)(3) exclusion and have been 
referenced widely under the ITAR, BIS is adopting the explanatory text 
of the ITAR from the Note to Sec.  120.4 of the ITAR, subject to slight 
revisions to make the definitions specific to the EAR. This explanatory 
text is being added as a new Note 3 to paragraph (b)(3) in this final 
rule. This new note will provide additional guidance to the public on 
how to interpret changes in form, fit, performance capabilities and 
function in the context of the paragraph (b)(3) exclusion.
    BIS is also making additional changes to the text of paragraph 
(b)(3) to improve the clarity of what was proposed in the June 19 
(specially designed) rule and to address the expansion of paragraph 
(b)(3) to include ``software.'' Because software is being included in 
the paragraph (b) release, BIS is revising the introductory text of 
paragraph (b)(3) to add two references to ``software.'' Also, for the 
paragraph (b)(3)(ii) criteria, BIS is replacing ``enumerated'' with 
``described'' in relation to an ECCN controlled only for AT reasons 
because the use of `enumerated' in that context conflicts with the 
definition of the term in Note 1, as was noted in the public comments.
    Commenters also suggested deleting the reference to ``production'' 
and removing the reference to paragraph (b)(3) in Note 1 to the 
definition as proposed in the June 19 (specially designed) rule. BIS 
does not accept this recommendation. BIS is maintaining the reference 
to ``production'' as (b)(3) is intended to address equivalence to 
existing items already in ``production,'' as opposed to those in 
``development.'' Also, BIS is maintaining the reference to AT controls 
in (b)(3) of Note 1, because some AT controls have ``specially 
designed'' in their descriptions. BIS is removing the reference to 
``enumerated'' because the public found this aspect of paragraph 
(b)(3)(ii) and its relationship to Note 1 unnecessarily complicated. 
This change will improve clarity and simplify applying the definition.
    Lastly, in evaluating whether the paragraph (b)(3) exclusion or any 
of the other paragraph (b) exclusions is broad enough in scope, it is 
important to review the specific paragraph (b) exclusion, such as 
paragraph (b)(3), in light of the other paragraph (b) exclusions 
included in this final rule. In the case of paragraph (b)(3), it is 
particularly important to also consider the revised paragraph (b)(1) 
described above that is creating a `release' process whereby the public 
may submit additional ``parts,'' ``components,'' ``accessories,'' and 
``attachments'' for reconsideration when they believe the changes in 
form or fit would make them no longer eligible for the paragraph (b)(3) 
exclusion, but still believe such items should be treated as 
insignificant or minor and therefore not warrant

[[Page 22690]]

being ``specially designed.'' This revised and slightly expanded 
paragraph (b)(3), working with the additional potential `release' under 
paragraph (b)(1) through the CJ process or the CCATS process described 
in Sec.  748.3(e), addresses the public comments in regards to the 
paragraph (b)(3) exclusion being unnecessarily limited in scope.
10. Paragraphs (b)(4) and (b)(5), and the New Paragraph (b)(6) (i.e., 
the ``Development'' Exclusions)--Incorporating Intent During the 
Development Phase for Consideration of Whether To Exclude Certain 
Commodities From ``Specially Designed''
    To address the concern that a first use of a ``part'' or 
``component'' could result in the part or component being considered 
``specially designed,'' BIS incorporated aspects of design intent into 
proposed paragraphs (b)(4) and (b)(5) and the new paragraph (b)(6) 
being added in this final rule. As noted above in the discussion on the 
relationship among paragraphs (b)(3), (b)(4) and (b)(5), and the new 
paragraph (b)(6), paragraphs (b)(4) and (b)(5) and the new paragraph 
(b)(6) are the ``development'' exclusions. Under the June 19 proposal, 
paragraph (b)(4) would exclude ``parts,'' ``components,'' 
``accessories,'' and ``attachments'' if they were or are being 
developed with a reasonable expectation of (i) use in or with 
commodities described on the CCL and commodities not enumerated on the 
CCL or USML, or (ii) use in or with commodities not enumerated on the 
CCL or USML. Paragraph (b)(5) would exclude ``parts,'' ``components,'' 
``accessories,'' and ``attachments'' that are developed for no 
particular application.
    Some commenters mistakenly believed that paragraphs (b)(4) and 
(b)(5) depend on predominant market share of the item, while other 
commenters correctly understood that (b)(4) and (b)(5) were not 
dependent on predominant market share, but requested confirmation that 
their understanding was correct. BIS can confirm that market share does 
not have an impact on the applicability of paragraphs (b)(4) and 
(b)(5). Paragraphs (b)(4) and (b)(5) are rather dependent on intent 
during the ``development'' of the item. By definition, market share 
cannot be an issue because at the time of its ``development'' the item 
had not yet been released to the market. Likewise, an evolving market 
(e.g., shift from primarily civilian customers to military customers) 
following release of the ``part,'' ``component,'' ``accessory,'' 
``attachment'' or ``software'' does not change the earlier 
determination made during the time of ``development.'' This approach 
essentially adopts the policy of Sec.  120.3 of the ITAR that the 
``intended use of the article * * * after its export (i.e., for a 
military or civilian purpose) is not relevant in determining whether 
the article'' is subject to controls. Thus, again, BIS is not 
introducing a new concept in export control law, but rather applying 
more broadly in the EAR for classification purposes and in one 
definition a concept that is already in the ITAR's statement of policy 
regarding the types of unspecified items that warrant control for 
export. In other words, the jurisdictional and classification status of 
an item should be set at its production and development stages and not 
affected by how it is later used. If something is so significant that 
it warrants control regardless of the intention of the designer, then 
it is the U.S. Government's obligation to positively list that item on 
the USML or the CCL.
    ``Knowledge'' of the original design intent must be demonstrated, 
however, by documents contemporaneous with ``development,'' in their 
totality, as required under the Note to proposed paragraphs (b)(4) and 
(b)(5), which is now becoming Note to paragraphs (b)(4), (b)(5) and 
(b)(6) in this final rule as described below. Thus, for a reseller, 
laboratory, or other non-manufacturer to rely upon (b)(4) or (b)(5) or 
the new paragraph (b)(6) in determining that the item is not 
``specially designed,'' such party must examine the source of 
``development'' for documentation or have some other reliable source 
regarding the original ``development'' history. This requirement does 
not increase the burden common to compliance practices today. It is 
possible, though, for a non-manufacturer or any other party to use the 
exclusions under new paragraph (b)(1), or paragraphs (b)(2) or (b)(3), 
as discussed above, without having to rely on paragraphs (b)(4) or 
(b)(5) or the new paragraph (b)(6), which do require ``knowledge'' of 
the original design intent based on the totality of documentation 
contemporaneous with the ``development'' to demonstrate the criteria in 
exclusion paragraphs (b)(4) or (b)(5) or the new paragraph (b)(6).
    With respect to (b)(4), BIS also received additional comments 
requesting clarification of the term ``reasonable expectation,'' as 
well as replacing ``described'' with ``enumerated'' in (b)(4)(i), 
replacing ``commodities'' with ``end items'' in (b)(4)(i), replacing 
``use'' with ``ultimate use'' in both (b)(4)(i) and (b)(4)(ii), and 
adding ``both'' to (b)(4)(i). To clarify ``reasonable expectation,'' 
BIS has decided to replace the phrase with the term ``knowledge,'' 
which is already defined in part 772 of the EAR. By adopting the 
already defined term ``knowledge'' for paragraph (b)(4), the release 
portion of the definition of specially designed will establish a more 
objective standard that will be more easily understood by the public. 
In developing the ``specially designed'' definition BIS has tried to 
rely as much as possible on established EAR terms and concepts. The 
public has generally been quite supportive of this approach of relying 
on established concepts and terms as much as possible in developing the 
``specially designed'' definition. Adopting the term ``knowledge'' for 
paragraph (b)(4) and the new paragraph (b)(6) in this final rule is 
another example of simplifying the ``specially designed'' definition, 
while also establishing a more objective definition by relying on 
established terms and concepts under the EAR. BIS does not accept 
replacing ``described,'' ``commodities,'' or ``use'' as those 
recommendations would make the paragraph (b)(4) exclusion too narrow. 
BIS did not accept the recommendation to add ``both'' to (b)(4)(i), but 
BIS is adding the term ``also'' to (b)(4)(ii) in this final rule. BIS 
is making this change to make the relationship between (b)(4)(i) and 
(ii) more explicit in terms of the criteria that must be met for a 
``part,'' ``component,'' ``accessory, ``attachment,'' or ``software'' 
to be excluded on the basis of the paragraph (b)(4) exclusion.
    For paragraph (b)(5), for the same rationale noted above for the 
changes to paragraph (b)(4), BIS, in this final rule, is also replacing 
``reasonable expectation'' with ``knowledge.'' Because ``knowledge'' is 
now going to be included in the paragraph (b)(5) exclusion, BIS is also 
deleting the proposed Note to paragraph (b)(5). BIS is making this 
change because including the explanation of the definition of 
``knowledge'' from the June 19 (specially designed) rule would be 
redundant given ``knowledge'' is already a defined term in part 772.
    As a clarification to what was proposed in the June 19 (specially 
designed) rule, BIS is making some additional changes to the wording of 
the paragraph (b)(5) exclusion. These changes do not change the scope 
of the exclusion proposed on June 19, but clarify what is being 
excluded from ``specially designed'' on the basis of paragraph (b)(5). 
First, after the word ``developed,'' BIS is adding the phrase ``as a 
general purpose commodity.'' BIS is also adding an ``i.e.,'' in this 
final rule

[[Page 22691]]

after that new phrase to specify that a general purpose commodity is 
one that was or is being ``developed'' with no ``knowledge'' of 
intended use in a particular commodity or type of commodity.
    In this final rule, BIS is removing the phrase ``particular 
application'' from what was proposed (b)(5) in the June 19 (specially 
designed) rule and replacing it with ``particular commodity'' because 
commenters expressed concerns with the use of ``application,'' and BIS 
believes that using ``commodity'' will ensure maintaining the 
appropriate scope of (b)(5) and enhance clarity. In addition, to 
further address the public comments in this area in terms of adding 
greater specificity, BIS is adding a second qualifier with the phrase 
``or type of commodity'' in this final rule. BIS is adding two 
illustrative examples for a particular commodity by adding the examples 
of an F/A-18 or HMMWV. For example, if the person has ``knowledge'' a 
component was or is being developed for a F-18 or other military 
aircraft, such a commodity is not a general purpose commodity and 
therefore could not be excluded from ``specially designed'' on the 
basis of paragraph (b)(5). BIS is also adding two illustrative examples 
for ``a type of commodity'' by including the examples of an aircraft 
and machine tool. For example, if the person has ``knowledge'' a part 
was or is being developed for an aircraft, such a commodity is not a 
general purpose commodity and therefore could not be excluded from 
``specially designed'' on the basis of paragraph (b)(5).
    BIS is adding a new paragraph (b)(6) in this final rule that will 
release from ``specially designed'' ``parts,'' ``components,'' 
``accessories,'' ``attachments, and ``software'' where there is 
``knowledge'' that it would be for use in or with commodities or 
software described in an ECCN controlled for AT-only reasons and also 
EAR99 commodities or software. This paragraph (b)(6) exclusion that is 
being added in this final rule will also release from ``specially 
designed'' those ``parts,'' ``components,'' ``accessories,'' 
``attachments'' and ``software'' where the item was or is being 
developed with ``knowledge'' that it would be exclusively for use in or 
with EAR99 commodities or software.
    By adding the (b)(6) exclusion, BIS can simplify the application of 
paragraph (b)(4), including aligning it more closely with the structure 
and terminology used in paragraph (b)(3), along with addressing those 
scenarios where there is ``knowledge'' that the ``part,'' 
``component,'' ``accessory,'' ``attachment,'' or ``software'' was 
developed for use in or with commodities or software ECCNs controlled 
for AT-only reasons and EAR99 or exclusively for use in or with EAR99 
commodities or software. BIS believes having a separate paragraph 
(b)(6) exclusion to release such ``parts,'' ``components,'' 
``accessories,'' ``attachments,'' and ``software,'' will be easier to 
understand than trying to fit this exclusion within the scope of 
paragraph (b)(4). Finally, for the Note to paragraphs (b)(4) and 
(b)(5), one commenter stated that the recordkeeping requirement could 
be overlooked, and another commenter requested that military 
specifications be included as an example of documentation to establish 
the elements of (b)(4) or (b)(5). BIS is also updating the title of 
this note to reflect the new paragraph (b)(6) exclusion being added to 
the definition in this final rule. The revised note is Note to 
paragraphs (b)(4), (b)(5) and (b)(6). To address the concern of 
overlooking recordkeeping requirements, BIS is inserting a reference to 
the ``specially designed'' recordkeeping requirement in Sec.  762.2 
(Records to be maintained) under a new paragraph (b)(50) as described 
below. BIS does not accept, however, the recommendation to add military 
specifications to the note. Generally, military specifications are not 
determinative of jurisdiction and are just one factor for 
consideration. Thus, they do not warrant inclusion in the illustrative 
list of contemporaneous documentation included in that note.
11. Implementation of Definition of ``Specially Designed''
    Like the rest of this final rule, this definition of ``specially 
designed'' will become effective as of October 15, 2013. Some 
commenters asked that BIS phase and test the implementation for ``600 
series'' items only. BIS does not accept this recommendation. In order 
to ensure consistency with the multilateral regimes and reduce further 
complexity, BIS is adopting this definition of ``specially designed'' 
for all uses of the term on the CCL. Because this definition is an 
important concept under the EAR, BIS will work to conduct outreach and 
develop tools to help the public's review and use of the term. The 
Department of State has indicated it also intends to conduct similar 
outreach with the public for the use of the term under the ITAR.

B. Other Definitions

    BIS proposed adding or revising several definitions to part 772 of 
the EAR under ECR. These definitions will aid in aligning the CCL with 
the USML by adopting common definitions for terms used in the CCL and 
the USML where possible. In total, this final rule adds or revises 
fifteen CCL terms. Specifically, this final rule adds twelve 
definitions to the EAR: ``600 series,'' ``600 Series Major Defense 
Equipment,'' ``accessories,'' ``attachments,'' ``build-to-print 
technology,'' ``component,'' ``end item,'' ``equipment,'' 
``facilities,'' ``material,'' ``part'' and ``systems.'' This final rule 
also revises three definitions currently in the EAR: ``military 
commodity,'' ``dual use,'' and ``specially designed.''
    New or revised definitions for these terms were proposed in one or 
more of three rules published under ECR: the July 15 (framework) rule; 
the November 7 (aircraft) rule; and the June 19 (specially designed) 
rule. Definitions of ``end item,'' ``accessories and attachments,'' and 
``specially designed'' originally were proposed in the July 15 
(framework) rule and were re-proposed in revised form in the June 19 
(specially designed) rule. The term ``600 Series Major Defense 
Equipment'' was not previously proposed as a definition; however, the 
concept was introduced in the June 21 (transition) rule and several 
commenters requested that it be included as a definition in part 772 of 
the EAR. As described in the June 21 (transition) rule, the definition 
addresses items for which notification would be required to Congress 
prior to approval of certain high-value exports. This rule also revises 
the term ``dual use'' as a conforming change, although the change was 
not previously proposed.
1. 600 Series
    This final rule adopts the definition of ``600 series'' that was 
proposed in the July 15 (framework) rule without any substantive 
changes, except to remove a reference to the Commerce Munitions List, a 
phrase used in several of the proposed rules that has been removed to 
avoid confusion regarding whether the ``600 series'' is part of the 
CCL. BIS did not receive any comments on the definition of 600 series.
2. 600 Series Major Defense Equipment
    This rule adopts a definition of ``600 Series Major Defense 
Equipment'' that includes all of the elements that were in the proposed 
Major Defense Equipment section of the June 21 (transition) rule, but 
adds an element, limiting ``600 Series Major Defense Equipment'' to 
items contained in specified ``600 series'' ECCN paragraphs. BIS did 
not receive any comments on the definition of Major Defense Equipment.

[[Page 22692]]

3. Component
    This final rule adopts the definition of ``component'' that was 
proposed in the July 15 (framework) rule without any changes.
    One commenter suggested removing the example of ``battery'' from 
the ``component'' definition because of potential ambiguity regarding 
whether a battery would be considered a ``component'' or an ``end 
item.'' Specifically, the commenter questioned whether an item, such as 
a car battery that can put out an electrical charge whether it is 
incorporated into an automobile or not, would cause ambiguity regarding 
whether it is an ``end item'' or a ``component.'' BIS is not changing 
the example of the ``battery'' in the definition of ``component.'' The 
revised ``end item'' definition that was proposed in the June 19 
(specially designed) rule also addressed this comment regarding the 
reference to a car battery in the example of ``component.'' BIS 
believes the primary reason for the commenter's confusion was the use 
of the term ``stand-alone'' in the ``end item'' definition that was 
proposed in the July 15 (framework) rule. The re-proposed ``end item'' 
definition included in the June 19 (specially designed) rule addressed 
this issue by removing the term ``stand-alone.'' This change to the 
definition of ``end item'' also addressed the comment here by resolving 
any potential perceived ambiguity regarding whether a ``component,'' 
such as car battery, would be an ``end item.''
    Two commenters suggested that the definition of ``component'' 
improperly equates ``components'' and assemblies. The commenters noted 
that ``components'' and assemblies should be distinct terms, as such, 
the definition of ``component'' should be limited to items that are not 
subject to disassembly. BIS does not agree with the commenter's 
suggestion. During drafting of the July 15 (framework) rule, members of 
BIS's Technical Advisory Committees (TACs) advised BIS that assemblies 
should be within the scope of the ``component'' definition. Based on 
the guidance provided by BIS's TACs and the U.S. Government's own 
analysis, BIS stated in the ``component'' definition that, for purposes 
of the definition, an assembly and a ``component'' are the same. At 
this time, given only two commenters raised this issue, and BIS's TACs, 
which comprise representatives from various industries, advised taking 
BIS's proposed approach, BIS will not incorporate the suggestion 
because information from the TACs suggested that a number of industries 
involved in exporting treat assemblies as components and therefore the 
``component'' definition should reflect this.
    In addition, BIS does not agree that the criteria provided by one 
of the commenters for distinguishing between an assembly and a 
``component'' would be sufficient. The criteria provided by the 
commenter would likely result in inadvertent decontrols of 
``components'' on the CCL where a case could be made that the item in 
question is an assembly and not a ``component.'' The term ``component'' 
is used extensively on the CCL and the term ``assembly'' much less so, 
so taking this commenter's approach would likely have far reaching 
impacts on the scope of the CCL, which likely would be inconsistent 
with U.S. Government multilateral regime commitments to control certain 
components. As noted in the BIS response to the next comment, the U.S. 
Government intends to discuss with the Wassenaar Arrangement four 
entries in which the terms ``components'' and ``assemblies'' are used 
in the same ECCN. The U.S. Government may reevaluate this issue after 
those discussions are complete.
    One commenter noted the need to update the headings and 
descriptions of certain items enumerated on the CCL. The commenter 
noted as an example that ECCN 9A003, which currently controls 
previously undefined ``specially designed assemblies and components'' 
should be changed to reflect the new definitions of ``components'' and 
``parts.'' BIS has already taken steps to address this comment with the 
development of another ECR rule, Revisions to the Export Administration 
Regulations (EAR) to Make the Commerce Control List (CCL) Clearer. This 
rule is referred to as the (CCL Clean-up) rule. It will implement 
changes that published in a proposed rulemaking also entitled Revisions 
to the Export Administration Regulations (EAR) To Make the Commerce 
Control List (CCL) Clearer (77 FR 71214, November 29, 2012). In the 
(CCL Clean-up) rule, BIS will make a number of changes to the CCL to 
incorporate the terms ``parts'' and ``components'' in specific ECCNs 
and to address other issues such as the use of both ``assemblies'' and 
``components'' in a number of ECCNs to conform to the definitions of 
``parts'' and ``components'' added in this final rule. These changes in 
the way ``parts'' and ``components'' are used on the CCL will ensure 
that no changes are made to the status quo in terms of how the U.S. 
Government interprets these ECCNs.
    One commenter asked for clarification as to whether ``software'' 
can also be considered a ``component.'' BIS is clarifying here that the 
definition of ``components'' does not include ``software.'' 
``Software'' is defined separately under part 772 of the EAR.
    One commenter provided an alternative definition of ``components'' 
that would remove the discussion of ``major components'' and ``minor 
components.'' This commenter thought these proposed changes would add 
clarity and better distinguish ``components'' from ``accessories and 
attachments.'' BIS is not incorporating this suggestion. The references 
to major components and minor components that were proposed in the July 
15 (framework) rule provide additional specificity regarding what is a 
``component.'' This additional text identifying the two types of 
components (i.e., major components and minor components) does not 
create ambiguity regarding what is a ``component'' and what is an 
``accessory'' or an ``attachment.'' In addition, although the terms 
``minor component'' and ``major component'' are not widely used on the 
CCL, BIS intends over time and in conjunction with the multilateral 
export control regimes to use these ancillary terms of the 
``component'' definition to further refine the scope of certain ECCNs.
4. Equipment
    In response to the comments received on the July 15 (framework) 
rule, this rule changes the definition of ``equipment'' from that 
definition that was proposed in the July 15 (framework) rule. The new 
definition of ``equipment'' being adopted by BIS is consistent with the 
definition of ``equipment'' proposed by DDTC in its November 28, 2012 
proposed rule regarding Category XI (77 FR 70958).
    One commenter contended that there is no need to separate the 
``equipment'' definition from the ``end item'' definition. The 
commenter noted that the term ``equipment'' is mentioned in the ``end 
item'' definition and is treated no differently from an ``end item.'' 
Accordingly, the commenter suggested that breaking ``equipment'' out as 
a separate definition adds confusion rather than clarity, and 
recommended that it be folded into the ``end item'' definition. BIS 
does not incorporate the suggestion because ``equipment'' is a sub-set 
of ``end items,'' but not all ``end items'' would meet the 
``equipment'' definition. Similar to the relationship between the 
broader term ``item'' and narrower terms of ``commodity,'' 
``software,'' and ``technology,'' the

[[Page 22693]]

relationship between the broader term ``equipment'' and ``end items'' 
is not mutually exclusive. The term ``equipment'' is used extensively 
on the CCL and is used in the ``600 series,'' including in the ECCNs 
added with this final rule. In addition, the term ``equipment'' is used 
extensively on the multilateral export control regime control lists, 
including the Wassenaar Arrangement Munitions List (WAML). Therefore, 
BIS has determined that adding a definition for this term is warranted 
and will assist the public in understanding the meaning of this term 
when used on the CCL.
    One commenter suggested replacing the phrase ``assembled for a 
specific purpose'' with the phrase ``gathered, collected or compiled 
for a specific purpose'' to avoid confusion about whether sets of tools 
or devices are assemblies or equipment. BIS does not agree with this 
suggestion. However, to clarify any confusion about the difference 
between ``component'' and ``equipment,'' this rule changed the 
definition of ``equipment'' to be a ``combination of parts, components, 
accessories, attachments, firmware, or software that operate together 
to perform a specialized function of an end item or system.'' BIS 
believes that this change to the definition of ``equipment'' clarifies 
any confusion raised by the proposed definition.
    For example, a laser device incorporated into a cutting saw that 
allows the operator to precisely line up the cut would be a 
``component.'' A laser device that is assembled for the purpose of 
allowing a person to determine a straight line on a wall to hang a 
picture is an example of a laser device that would be ``equipment.'' 
The definitions of ``component'' and ``equipment'' added to the EAR 
with this final rule are clear enough in scope to allow the public to 
make such distinctions.
5. Facilities
    This final rule adopts the definition of ``facilities'' that was 
proposed in the July 15 (framework) rule without any changes.
    One commenter suggested removing the phrase ``a particular 
purpose'' from the definition of ``facilities,'' and replacing it with 
the more specific phrase, ``the particular purpose stated in the export 
control item using the term `facilities.' '' BIS agrees with the 
commenter's general assumption regarding how controls on ``facilities'' 
are typically worded under the EAR, but the purpose of the definition 
of ``facilities'' in part 772 is not intended to impose controls on any 
particular type of facility. The further identification of the types of 
``facilities'' subject to control is in the particular ECCN entries and 
does not need to be referenced in the definition of ``facilities'' in 
part 772. In the context of ECCNs or other controls under the EAR, such 
as end use controls that use the term ``facilities,'' those controls 
will specify the types of ``facilities'' that are subject to control. 
Therefore, no additional text is needed in the definition to clarify 
the type of ``particular purpose'' that is controlled for an ECCN or 
other EAR control that uses the term ``facilities.''
6. Material
    This final rule adopts the definition of ``material'' that was 
proposed in the July 15 (framework) rule, with a minor non-substantive 
change to ensure that the definition conforms to the definitions of 
``accessories'' and ``attachments'' being added to part 772 in this 
final rule and discussed below. This conforming change separates the 
terms ``accessories and attachments'' into two distinct terms, 
``accessories'' and ``attachments,'' as was proposed in the June 19 
(specially designed) rule.
    One commenter identified certain Product Group C ECCNs in CCL 
Category 1 controlled for Nuclear Nonproliferation (NP) reasons that 
were perceived to be inconsistent with the proposed ``material'' 
definition because they extend NP controls to certain end items, 
components, accessories, attachments, parts, software, systems, 
equipment, or facilities. BIS addresses this comment in this final rule 
by adding a sentence to the end of the definition making clear that 
material classified as a Product Group C ECCN remains classified as 
that ECCN even if the material can be identified as an ``end item,'' 
``component,'' ``accessory,'' ``attachment,'' ``part,'' ``software,'' 
``system,'' ``equipment,'' or ``facility.'' This new sentence also 
identifies the Product Group C ECCNs that deviate from the general 
definition. For example, ECCN 1C232 controls ``Helium-3 (\3\He), 
mixtures containing helium-3, and products or devices containing any of 
the foregoing.'' Thus, a product containing the material Helium-3 
(\3\He) that is also identifiable as a ``component'' or ``part,'' is 
still controlled under ECCN 1C232.
    One commenter suggested that ``software,'' ``system,'' 
``equipment,'' and ``facilities'' are so unlikely to be mistaken as 
``crude or processed matter'' as to not warrant mention in the 
definition of ``material,'' unless the intention is to make 
``material'' a catch-all. This commenter believes the ``material'' 
definition should simply be limited to the first part of the proposed 
definition, meaning material ``is any list-specified crude or processed 
matter.'' BIS does not agree because the term ``processed matter'' in 
particular has the potential to be interpreted broadly unless the 
exclusions are included in the definition of ``material'' as was 
proposed in the July 15 (framework) rule. For example a ``part'' or 
``component'' of an engine prior to entering the manufacturing process 
will likely be a type of processed material, such as a piece of 
hardened steel. As the production process progresses, the ``material'' 
such as the hardened steel will transition from ``processed matter'' to 
a ``part'' or a ``component'' or some other type of item excluded from 
the ``material'' definition. Once the processed ``material'' is 
identifiable as one of those types of items excluded from the 
``material'' definition, it would no longer be controlled under Product 
Group C as a ``material'' and should therefore be controlled under the 
other ECCN entry as a ``part'' or ``component'' in either Product 
Groups A or B.
    One commenter recommended the deletion of the definition of 
``material'' because the commenter had not identified a need for such a 
definition. The commenter also noted the proposed definition is in a 
negative, rather than the desired positive, format. BIS does not agree 
that this definition is not needed because adding this definition of 
``material'' helps to better align the CCL with how the term 
``material'' is used under the USML and also how it is used under the 
Wassenaar Arrangement's WAML. BIS does not agree the definition is 
written in the negative. The first part of the definition is written in 
positive terms and the second part excludes in a positive fashion those 
items within the scope of those other defined terms identified in the 
last sentence to the ``material'' definition.
7. Military Commodity
    This final rule adopts the definition of ``military commodity'' 
that was proposed in the July 15 (framework) rule. In response to 
comments, this final rule makes the reference to the ``600 series'' 
Related Controls paragraphs more explicit by moving the Related 
Controls reference to the beginning of the list of ``600 series'' ECCNs 
referenced in the ``military commodity'' definition. In addition, this 
final rule adopts a more general reference to the related controls 
paragraphs for the ``600 series,'' instead of identifying specific 
``600 series'' ECCNs, as was originally proposed in the July 15 
(framework) rule. This approach is not substantively

[[Page 22694]]

different from the proposal in the July 15 (framework) rule. Including 
a general reference to the ``600 series'' instead of separately listing 
each ``600 series'' ECCN will reduce the need to update this definition 
each time ECCNs are added to or removed from the ``600 series.''
    One commenter suggested that, in the definition of ``military 
commodity,'' the phrase ``Related Controls for'' be relocated to before 
reference to ``600 series'' ECCNs. This would make it clear that none 
of these ECCNs covers ``military commodities.'' BIS agrees that moving 
the ``(Related Controls)'' reference to the beginning of the ``600 
series'' ECCNs referenced in the ``military commodity'' definition will 
communicate more clearly the intent of this cross reference to these 
``600 series'' ECCNs.
8. Part
    This final rule adopts the definition of ``part'' that was proposed 
in the July 15 (framework) rule without any changes.
    One commenter suggested expanding the scope of the ``part'' 
definition to include passive electrical parts. Specifically, this 
commenter suggested expanding the scope of the definition to include 
basic building block electrical parts, including, for example, 
capacitors, resistors, connectors, and thermistors, that are passive 
single-function parts (i.e., excluding active components such as 
integrated circuits that perform active, and in some cases, multiple 
functions). The definition of ``part'' proposed in the July 15 
(framework) rule was intended as much as possible to create a common 
definition of this term under the EAR and the ITAR. BIS does not adopt 
the suggested change because it would blur distinctions between what is 
a ``part'' and a ``component.'' Adopting the commenter's suggested 
change would broaden the scope of the ``part'' definition and would 
create a fundamental difference between the EAR definition and the ITAR 
definition of ``part.''
    One commenter suggested deleting the definition of ``part'' and all 
references to ``parts'' in the EAR and ITAR. To support this position, 
the commenter cites the examples given in the definition of ``part'' 
that are explicitly excepted from the definition of ``specially 
designed.'' BIS is not incorporating either this suggested change of 
removing all ``parts'' references from the CCL or the suggestion to not 
add a definition of ``parts'' to part 772 of the EAR. The intent of the 
CCL, among other things, is to control certain ``parts.'' As such, 
certain ECCNs describe ``parts'' that are subject to control under 
those ECCNs. The ``600 series'' ECCNs in particular would in most cases 
control ``parts'' under the .x and .y ``items'' paragraphs. This 
includes several of the ten ECCNs added to the CCL in this final rule. 
In terms of the reference to ``parts'' and ``specially designed,'' this 
person was referring to the definition of ``specially designed'' that 
was proposed in the July 15 (framework) rule. This same type of 
exclusion was also proposed in the June 19 (specially designed) rule 
and the definition of ``specially designed'' included in this final 
rule. However, the commenter appears to be confused regarding the 
relationship between certain ``parts'' that may be excluded under 
paragraph (b)(2) of the ``specially designed'' definition and the 
definition of ``parts.'' Not all ``parts'' that are controlled on the 
CCL are ``specially designed'' ``parts.'' The commenter incorrectly 
infers that, because certain ``parts'' are excluded from ``specially 
designed'' on the basis of being excluded under paragraph (b)(2), all 
``parts'' should therefore not be controlled on the CCL. This is not a 
correct interpretation of either the ``specially designed'' definition 
or the intent of the U.S. Government in terms of how ``parts'' should 
be controlled on the CCL. The paragraph (b)(2) exclusion under 
``specially designed'' also includes other criteria, which further 
refine the set of ``parts'' that would be excluded from ``specially 
designed'' on the basis of that exclusion paragraph.
9. System
    This final rule adopts the definition of ``system'' that was 
proposed in the July 15 (framework) rule without any changes.
    One commenter expressed difficulty in distinguishing between what 
items would be captured under certain terms, in particular, the 
proposed definitions of ``end items,'' ``components'' and ``systems.'' 
The commenter urged BIS to provide examples, illustrations, charts, or 
annotations to assist exporters in the uniform application of these 
terms. This commenter noted that the consequences of which definition 
applies is important, particularly under the proposed ``specially 
designed'' definition and with respect to whether something is 
considered a ``component'' for purposes of License Exception STA 
eligibility for the ``600 series.'' BIS already addressed some of these 
concerns by proposing in the June 19 (specially designed) rule a 
revised definition of ``end item'' that would clarify the relationship 
between ``end items'' and ``components.'' BIS is also developing a 
targeted outreach program to support exporters whose items will move 
from the USML to the CCL and who are less familiar with the EAR. As 
part of that outreach, BIS also intends to develop decision tools and 
other types of support information to assist the public in 
understanding and applying the definitions added or revised in this 
final rule, similar to the decision tree that was developed and posted 
on the BIS Web site in 2012 for License Exception STA. The June 19 
(specially designed) rule, in particular the lengthy preamble 
discussion that included numerous examples for how to apply the term 
``specially designed,'' is representative of the types of training 
materials that BIS intends to develop for assisting the public in 
understanding and applying these other key terms.
    In the short-term, there will be some degree of adjustment as the 
public and the U.S. Government apply these new definitions. BIS is 
committed to supporting stakeholders during this transition period. 
These definitions will provide significant benefits by adding more 
specificity to the EAR for how these terms are defined and used in the 
CCL. In addition, these terms will play an important role in 
delineating between items on the USML and on the CCL.
    One commenter noted that, in the definition of ``accessories and 
attachments'' proposed in the July 15 (framework) rule, a ``system'' is 
addressed separately from an ``end item,'' but the definition of ``end 
item'' includes systems, and the definition of ``systems'' includes 
``end items.'' This commenter believes the implication is that BIS 
considers ``systems'' as both ``end items'' and elements of ``end 
items.'' This commenter thought additional explanation or examples 
would be helpful.
    In terms of the definition of ``accessories and attachments'' 
proposed in the July 15 (framework) rule and re-proposed as separate 
stand-alone definitions in the June 19 (specially designed) rule, an 
``accessory'' or ``attachment'' is not necessary, but enhances the 
operation of a ``component,'' ``end item'' or ``system.'' The 
definitions of ``system'' and ``accessories'' and ``attachments'' are 
not intended to be mutually exclusive. For example, a ``system'' could 
be made up of a combination of ``accessories.'' If such a ``system'' 
still met the definition of ``accessories,'' the item would be 
considered an ``accessory'' as well as a ``system.''
    Similarly, the definitions of ``system'' and ``end item'' are not 
intended to be mutually exclusive. A ``system'' can be an ``end item,'' 
provided the ``system''

[[Page 22695]]

in question also meets the definition of ``end item.'' However, not all 
``systems'' will meet the definition of ``end item.'' For example, some 
``systems,'' such as landing gear for an aircraft, consist of a 
combination of ``parts'' and ``components'' that form a portion of a 
larger ``end item'' (e.g., an aircraft). In other cases, such as a 
computer system (consisting of a monitor, CPU, keyboard, and mouse), 
where a ``system'' is a combination of ``end items'' designed, 
modified, or adapted to operate together to perform a specialized 
function, the ``system'' itself may also meet the definition of ``end 
item.''
    One commenter suggested that, in the definition of ``system,'' the 
phrase ``a specialized function'' be changed to ``the function 
specified in the export control item using the term `system,' '' 
because there is no other specialized function which is relevant to 
export controls.
    BIS does not incorporate this suggestion. Defined terms from part 
772, such as ``system'' or ``facilities,'' that are used in the ECCN 
entries are further refined with control parameters included in those 
ECCNs. For that reason, BIS does not adopt this change.
10. Build-to-Print Technology
    This final rule adopts the definition of ``build-to-print 
technology'' that was proposed in the November 7 (aircraft) rule with a 
minor non-substantive change to conform to the standard format used in 
part 772 (i.e., the defined term appears first in italics and is 
followed with a sentence that begins the definition).
    Several commenters suggested broadening the scope of the proposed 
build-to-print technology definition, and one commenter noted that the 
proposed definition is not the same as the current ITAR definition. BIS 
does not accept the comment to broaden the scope of the build-to-print 
technology definition. Similar to how the term is used in the ITAR, the 
scope of the EAR definition is meant to be narrow. The suggested 
broadening of the definition would not be consistent with how the term 
is defined and used under the ITAR and also would be inconsistent with 
the policy objectives for the use of this term under the EAR for 
purposes of the ``600 series.'' Lastly, the EAR and ITAR definitions 
are slightly different because of the different regulatory terms used; 
however, the substantive control is identical. As much as possible, a 
common definition of build-to-print technology is being added to the 
EAR in this final rule to correspond to the ITAR definition, but both 
definitions will be tied to the respective regulations.
11. Accessories
    This final rule adopts the definition of ``accessories'' that was 
proposed in the June 19 (specially designed) rule. No comments were 
submitted on the proposed definition.
12. Attachments
    This final rule adopts the definition of ``attachments'' that was 
proposed in the June 19 (specially designed) rule. No comments were 
submitted on the proposed definition.
13. End Item
    This final rule adopts the definition of ``end item'' that was 
proposed in the June 19 (specially designed) rule.
    Two commenters suggested clarifying the applicability of the end 
item definition as it relates to integrated circuits (ICs) by adding 
the phrase ``capable of operating by itself and performing functions 
independent of any other item.'' The concern was whether an IC would be 
an end item instead of a component. To further clarify this point, 
these commenters also suggested adding the term ``computers'' to the 
illustrative list of end item examples.
    BIS does not accept adding the phrase ``capable of operating by 
itself and performing functions independent of any other item'' because 
it is not needed because the definition of ``component'' is adequate in 
its scope to capture ICs. However, to address the concern that ICs 
might be viewed incorrectly as end items, BIS clarifies here that ICs 
are classified as ``components'' and not an end item, which should 
address these two commenters' concern. BIS does accept the suggestion 
of adding the term ``computers'' to the illustrative list of end item 
examples.
    One commenter suggested adding the phrase ``like electricity'' as 
an example of another energy source that could be used to place an end 
item in its operating state. This commenter also suggested adding the 
term ``fully'' before the phrase operating state for clarity. BIS does 
not accept these changes because the intent of the definition is clear 
without these additions.
14. Dual Use
    A conforming change is implemented in Sec.  730.6 that was not 
previously proposed as was described above. To conform to the change to 
Sec.  730.6, the definition of ``dual use'' in part 772 is also revised 
by adding the phrase ``and certain munitions items listed on the 
Wassenaar Arrangement Munitions List (WAML)'' in order to harmonize 
with the revised description of the scope of the EAR.

XXIV. Part 774--The Commerce Control List

A. Product Group Headings

    This rule implements changes proposed in the July 15 (framework) 
rule to the Product Group A heading by adding the new terms ``end 
items,'' ``accessories,'' ``attachments,'' and ``parts.'' These changes 
help with the structural alignment of the CCL and USML by ensuring 
these terms and control lists' product group headings are used in a 
consistent way. The July 15 (framework) rule also proposed adding 
double quotes around the term ``materials'' in Product Group C. After 
evaluating the terms used in the heading of all the product groups, 
this rule adds double quotes around the terms ``end items,'' 
``equipment,'' ``accessories,'' ``attachments,'' ``parts,'' 
``components,'' ``systems,'' ``software,'' ``technology,'' ``production 
equipment,'' and ``materials'' because these terms are defined in part 
772.

B. ECCN 0A919

    Under ECCN 0A919, the EAR controls the reexports of certain 
foreign-made munitions not otherwise subject to the ITAR. The July 15 
(framework) rule proposed expanding ECCN 0A919 to also include foreign-
made munitions items that incorporate more than 10% ``600 series'' 
controlled content. The June 21 (transition) rule proposed to further 
revise ECCN 0A919 to conform to the proposed revisions of the de 
minimis and foreign-produced direct product rules set forth in that 
proposed rule. The de minimis level for ``600 series'' ECCNs is 0% for 
countries in Country Group D:5 of Supplement No. 1 to part 740 and 25% 
for all other countries (see Sec.  734.4 of the EAR). The foreign-
produced direct product rules for ``600 series'' ECCNs may be found in 
Sec.  736.2(b)(3) of the EAR.
    One commenter stated, ``The definition of ``military commodity'' 
and the chapeau exclude any item in the ``600 series.'' Thus, a 
commodity listed in 0A600.a, b, or c. [sic] of 100% foreign manufacture 
might be decontrolled by the chapeau, and recontrolled by virtue of 
having more than 10% 600 series parts and components. At a minimum, the 
text needs to be rewritten to eliminate the conflict and to clarify the 
intent.'' ECCN 0A919 is not intended to control foreign made ``600 
series'' commodities as such. One must apply the characteristics within 
the Items paragraphs, only to the scope of commodities described in the 
Heading of the ECCN. The Items paragraphs further define what is caught 
by the broad description of the heading of

[[Page 22696]]

ECCNs; they do not expand the scope of the heading of an ECCN.
    One commenter on the June 21 (transition) rule recommended adding 
``U.S. origin'' to paragraph d.2. BIS agrees this clarification is 
helpful and has done so in two places with the Items paragraphs.
    One commenter noted that proposed paragraphs .a and .c seem to 
contradict each other. BIS agrees that the text of the paragraphs in 
the Items section needs clarification. BIS noticed that the first 
introductory text was an undesignated paragraph. This rule removes 
paragraph .a, because it is for the most part the definition of 
``military commodities,'' and replaces it with the introductory text, 
`` ``Military commodities'' having all of the following 
characteristics:'' The word ``with'' in the introductory text is 
replaced with ``having'' to conform to Wassenaar Arrangement wording. 
The definition for ``military commodities,'' from part 772, is added to 
the Related Definitions section of ECCN 0A919 for the convenience of 
the reader. Paragraph .b is redesignated as paragraph .a and is revised 
to read, ``produced and located outside the United States.'' This 
change was made for two reasons. Some people were not clear that ECCN 
0A919 only controls foreign-produced ``military commodities'' that are 
located outside the United States. Paragraph .c is redesignated as 
paragraph a.2 and is revised to remove the phrase ``for a reason other 
than presence in the United States,'' because this phrase made the 
sentence confusing. Basically, there are three ways a foreign-made 
``military commodity'' could be subject to the ITAR: (1) The foreign-
made ``military commodity'' contains an ITAR item; (2) The foreign-made 
``military commodity'' is a direct product of ITAR technology; and (3) 
The foreign-made ``military commodity'' is in the United States. If 
none of the three scenarios exists, the foreign-made item is not 
subject to the ITAR, but may be subject to the EAR and classified under 
ECCN 0A919.
    One commenter requested clarification about the jurisdiction of 
ECCN 0A919 commodities that are located in the United States. When a 
``military commodity'' is in the United States, it is under the 
jurisdiction of the Department of State and subject to the ITAR. One 
commenter disagreed with the whole concept of ECCN 0A919, because the 
commodity would have one classification (0A919) and jurisdiction (BIS) 
when outside the United States and another classification and 
jurisdiction (Department of State's DDTC) when in the United States. 
BIS has concluded that 0A919 may be complex, but it is necessary for 
national security reasons. Therefore, BIS does not accept the 
recommendation to remove ECCN 0A919.
    Paragraph .d is redesignated as paragraph a.3 and is revised by 
adding the word ``Having'' to the beginning of the phrase to conform to 
Wassenaar Arrangement wording. Paragraph d.1 is redesignated as 
paragraph a.3.a and is revised by adding ECCNs 6A003.b.3 and b.4.c, 
because these cameras were added by the publication of the Wassenaar 
rule on July 2, 2012. These changes were included in the July 15 rule, 
though prematurely. Paragraph d.2 is redesignated as paragraph a.3.b 
and is revised by adding the words ``U.S.-origin'' as suggested by a 
commenter for clarity. Paragraph d.3 is redesignated as paragraph a.3.c 
and is published as proposed. Double quotes are added around the term 
``military commodity'' in the related controls and related definitions 
sections of ECCN 0A919, because this term is defined in part 772 of the 
EAR.

C. Aircraft and Related Items ``600 Series'' ECCNs: Establishment of 
``600 Series'' ECCNs for Certain Military Aircraft and Related Items in 
ECCNs 9A610, 9B610, 9C610, 9D610, and 9E610

    In the November 7 (aircraft) rule, BIS proposed to control certain 
military aircraft and related items that the President determines no 
longer warrant control in USML Category VIII under new ECCNs 9A610, 
9B610, 9C610, 9D610, and 9E610. Specifically, the November 7 (aircraft) 
rule proposed that ECCN 9A610 would control the following: ``end 
items'' in paragraphs .a through .k (while reserving paragraphs .b 
through .e); Unmanned Aerial Vehicle (UAV)-related items identified on 
the Missile Technology Control Regime (MTCR) Annex in paragraphs .l 
through .n; ``parts,'' ``components,'' ``accessories,'' and 
``attachments'' ``specially designed'' for commodities in paragraphs .a 
through .k or defense articles in USML Category VIII in paragraph .x; 
and commodities ``specially designed'' for a commodity in 9A610 or 
defense article in USML Category VIII and warranting less strict 
controls because of little or no military significance in paragraph .y. 
ECCN 9A610 would also include items currently controlled under ECCN 
9A018 paragraphs .a, .c, .d, .e, and .f.
    The November 7 (aircraft) rule also proposed the following related 
ECCNs. ECCN 9B610 would control test, inspection, and production 
equipment and related commodities ``specially designed'' for the 
``development'' or ``production'' of commodities enumerated in ECCN 
9A610 or USML Category VIII. ECCN 9C610 would control materials 
``specially designed'' for aircraft and related commodities controlled 
by ECCN 9A610 that are not specified elsewhere on the CCL, such as in 
CCL Category 1, or on the USML. ECCN 9D610 would control software 
``specially designed'' for commodities in ECCNs 9A610, 9B610, or 9C610. 
Finally, the November 7 (aircraft) rule proposed that ECCN 9E610 would 
control technology that is required for commodities in ECCNs 9A610, 
9B610, or 9C610, as well as for software in ECCN 9D610.
    This rule adopts these new ECCNs with the changes described below.
1. Review of Public Comments Related to ``600 Series'' for Certain 
Military Aircraft and Related Items
    In response to the November 7 (aircraft) rule, BIS received a 
number of comments on the proposed ``600 series'' for military 
aircraft, and these comments are addressed below in this section. BIS 
also received comments in response to the November 7 (aircraft) rule 
that pertain to other aspects of ECR, such as grandfathering existing 
ITAR authorizations, ITAR exemptions versus EAR license exceptions, the 
definition of ``specially designed,'' and various licensing issues. 
These comments are addressed in this final rule under the applicable 
topic to which they relate. Finally, additional comments in response to 
the November 7 (aircraft) rule addressed issues outside of the scope of 
ECR, such as recalibrating controls on encryption and revisiting the 
proposed intra-company transfer license exception. As these comments 
are outside of the scope of the proposed rules addressed under this 
final rule, they are not addressed herein.
2. Comments Regarding ECCN 9A610
    Two commenters submitted comments that any UAV that is specially 
designed for a military application, is not in Category I of the MTCR 
Annex, and does not include any specially designed capability covered 
by the USML, should be transferred to the CCL under either ECCN 9A610 
or 9A012. In addition, two commenters stated that the November 7 
(aircraft) rule did not specifically address whether ECCN 9A012 would 
be eliminated in the same manner as ECCN 9A018.
    The Department of Defense-led review of USML Category VIII found 
that technical capabilities for UAVs do not provide the flexibility to 
differentiate as

[[Page 22697]]

finely as the comment suggested between critical and non-critical 
military systems. Consequently, the November 7 (aircraft) rule did not 
propose to include UAVs in ECCN 9A610, and this final rule makes no 
changes to that proposal. With respect to ECCN 9A012, BIS did not 
propose any amendments in the November 7 (aircraft) rule to 9A012, 
including removal of the ECCN, because 9A012 would continue to control 
UAVs and related items that are not enumerated on USML Category VIII 
and are not ``specially designed'' for a military use.
    One commenter suggested that Note 1 to ECCN 9A610.a should be 
revised to make clear that the requirements of pre-1956 manufacture 
applies only to ``unarmed military aircraft,'' and not to other types 
of aircraft listed in the note. Specifically, the commenter proposed 
that unarmed military aircraft be moved into a new sentence as follows: 
``Other unarmed military aircraft, regardless of origin or designation, 
manufactured before 1956 and unmodified since manufacture are also 
included in the term `military aircraft'.''
    BIS accepts this recommendation in part. A comma has been added 
after ``lighter than air aircraft'' to more clearly separate ``unarmed 
military aircraft'' from the rest of the series of items so that the 
pre-1956 manufacture applies only to ``unarmed military aircraft.'' The 
suggested sentence is not adopted as BIS believes that the change made 
to the sentence addresses the concern.
    In response to both the Department of State's proposed rule for 
USML Category VIII and BIS's November 7 (aircraft) rule, one commenter 
recommended that bearings used in the landing wheels of stealth 
aircraft should be moved from proposed USML Category VIII(h)(1) to the 
CCL. In support of this recommendation, the commenter stated that these 
bearings do not relate to stealth or combat capabilities of the 
aircraft.
    Both the State Department's and the Commerce Department's proposed 
rules contemplated that parts, components, accessories, attachments, 
and equipment ``specially designed'' for enumerated aircraft possessing 
low observable characteristics would remain subject to the ITAR, and 
that such parts, components, accessories, attachments and equipment 
were retained on the USML for reasons beyond stealth capability. 
Neither rule stated that all parts merely ``used'' on those enumerated 
aircraft would be subject to the ITAR. Parts that are not ``specially 
designed'' but rather common to the military aircraft enumerated in 
Category VII(h)(1) and to other military aircraft and that are not 
enumerated on the USML or to civilian aircraft would be subject to the 
EAR. BIS believes that no change to the proposed rule is needed to 
clarify this point.
    One commenter believed that some ground equipment falling under 
ECCN 9A610.f does not warrant NS and RS controls. The commenter 
recommended that the beginning of paragraph .y read as follows: 
``Specific `parts,' `components,' `accessories and attachments' and 
associated ground support equipment `specially designed' for a 
commodity subject to control in this ECCN or a defense article in USML 
Category VIII * * *'' Further, the commenter suggested that the 
following ground support equipment be added to 9A610.y: blade 
positioning poles; dollies and carts; hand tools; inlet and other 
covers; jacks; tow bars; and tie down straps, lines, rings, and related 
hardware.
    The Departments of Defense, State, and Commerce reviewed the 
specified ground equipment for inclusion in 9A610.y and found that such 
items do not in all cases merit inclusion in the .y paragraph. Thus, 
the interagency review found that such items are adequately described 
under the .x paragraph as parts, components, accessories, or 
attachments for ground equipment in 9A610.f and that the ``specially 
designed'' parameter sufficiently limits excessive control of such 
items.
    One commenter stated that ECCN 9A610.h would cover ``canopies,'' 
but the November 7 (aircraft) rule did not clarify whether 9A610 would 
also cover other types of windows or transparencies, such as door 
windows, cabin windows, or lenses, etc., regardless of their special 
characteristics (e.g., ballistic protection or electromagnetic 
interference). The commenter further suggested that transparencies for 
aircraft, other than canopies, should be identified in 9A610.y.
    Proposed 9A610.h was intended to apply to parachute canopies, which 
are not related to windows and other transparencies used in aircraft. 
Nevertheless, the Departments of Defense, State, and Commerce reviewed 
transparencies for inclusion in 9A610.y and found that such items do 
not merit inclusion in the .y paragraph. Rather, such items are 
adequately controlled depending on whether they are ``specially 
designed'' for defense articles in USML Category VIII or commodities in 
9A610.a. Consequently, no change has been made as a result of this 
comment.
    Two commenters provided separate lists of commodities that they 
believed warranted control under the .y paragraph due to little or no 
military significance. These commodities included the following: air 
vents and outlets; cabin doors and door seals; crew and cabin seats; 
cargo rings; drain lines; fire extinguishers; flame and smoke/
CO2 detectors; heating, air conditioning, and air management 
equipment; helicopter control mixers; junction boxes; lithium-ion 
batteries and battery cells; map cases; ram air turbines; reservoirs; 
steps for crew and passenger entry and exit; windows and window seals; 
fasteners; light bulbs, fixtures, and lenses; safety items used when 
the aircraft is on the ground, known as ``red gear'' (e.g., safety pins 
with remove-before-flight streamers, engine outlet and inlet covers, 
grounding wires, etc.); flightline ground-handling/support equipment 
(e.g., tow vehicles and tow bars); lifts, jacks, ladders, and stands; 
power, hydraulic, heating, and cooling carts; ground crew-to-pilot 
communication gear; intermediate and depot-level support equipment for 
structural and hydraulic test and maintenance; non-Radar Cross Section 
(RCS) paints, coatings, primers, and application equipment; access 
doors and hatches; cargo systems and furnishings; fittings; light 
plates; insulation blankets; intercostals and gussets; floor panels and 
floor structure; seat tracks; shims; wire bundles; and labels, 
placards, name plates, and signs.
    The Departments of Defense, State, and Commerce reviewed the 
suggested items and agreed to add fire extinguishers, flame and smoke/
CO2 detectors, and map cases to ECCN 9A610.y. Many of the 
other items, such as fasteners, were not added to 9A610.y because the 
agencies believe that the definition of ``specially designed'' would 
preclude many of these items from being classified under ECCN 9A610.x. 
(Fasteners are further addressed in the response immediately below.) 
Finally, other items suggested do not, in all cases, warrant control 
under the AT-only .y controls. Thus, they were not added to the list.
    In addition to recommending that fasteners be included in the .y 
paragraph, two commenters addressed further concerns regarding 
fasteners. Specifically, one commenter stated that fasteners designed 
for military aircraft are often special combinations of characteristics 
that are widely used in fasteners for civil applications. In addition, 
the commenter stated that multipart fasteners and fastening systems for 
military aircraft are often interchangeable with those for civilian 
aircraft. For these reasons, the commenter recommended that fasteners

[[Page 22698]]

should be considered EAR99 or 9A991.d, but not 9A610.x. Another 
commenter supported the idea that the USML should control critical 
fasteners that contribute to the properties of key U.S. origin aircraft 
that have low observable features or characteristics, while recognizing 
that other types of fasteners are truly commercial in nature and 
require little or no export control.
    As discussed under the section on ``specially designed,'' certain 
fasteners are precluded from being classified under ECCN 9A610.x due to 
paragraph (b)(2) of the definition of ``specially designed,'' and 
multipart fasteners may be eligible for the (b)(3) exclusion in the 
definition. If the fasteners were determined to be in an ECCN paragraph 
that does not contain ``specially designed'' as a control parameter or 
as EAR99 items under a prior CJ, they would also be precluded from 
being ``specially designed'' under 9A610.x. Finally, in light of the 
proposed addition of paragraph (b)(1) to the definition of ``specially 
designed,'' organizations may submit a CCATS pursuant to new Sec.  
748.3(e) to request that a fastener be removed from control under 
9A610.x if the fastener otherwise meets the definition of ``specially 
designed.''
    One commenter stated the understanding that only forgings 
``specially designed'' for a specific list of U.S. origin aircraft that 
have low observable features or characteristics or U.S. Government 
technology demonstrators will be subject to continued control on the 
USML and that all other forgings ``specially designed'' for military 
aircraft would be on the CCL.
    Forgings would only be controlled on the CCL if the commodity for 
which they are ``specially designed'' is also on the CCL. Some parts 
and components for military aircraft are specifically enumerated in 
USML Category VIII(h). For many of the entries in Category VIII(h), 
parts and components ``specially designed'' therefor are also 
controlled. Consequently, forgings ``specially designed'' for such 
items are also controlled under USML Category VIII(h).
    One commenter stated that castings, forgings, and other unfinished 
products for parts in 9A610.x are themselves 9A610.x if they are 
clearly identifiable by material composition, material, geometry, or 
function as controlled by 9A610.x. The commenter further stated support 
that this language is consistent with WAML Category 16 when they are 
identifiable for material composition, geometry, or function. In 
addition, the commenter stated that although many forgings have a part 
number on them, they should not be on the CCL based on that part number 
unless the forging itself is identifiable as that part by material 
composition, geometry, or function. BIS does not agree with the 
commenter's interpretation of the regulations. ``Note 1'' to ECCN 
9A610.x states that forgings, castings, and other unfinished products, 
such as extrusions and machined bodies, are also controlled by 9A610.x 
if they ``have reached a stage in manufacturing where they are clearly 
identifiable by material composition, geometry, or function as 
commodities controlled by ECCN 9A610.x.'' The note does not refer to 
part numbers. Thus, whether a forging or casting is stamped with a part 
number is not relevant to determining whether it is controlled by 
9A610.x.
3. Additional Changes Made to ECCN 9A610
    BIS is amending proposed ECCN 9A610 to make conforming changes due 
to the finalization of certain proposed rules published after the 
November 7 (aircraft) rule. The Related Controls paragraph is amended 
to reflect the revised de minimis level for ``600 series'' items, as 
proposed in the June 21 (transition) rule and finalized in this rule. 
In addition, references using the defined term ``accessories and 
attachments'' have been changed to ``accessories'' and ``attachments'' 
to reflect the separation of those defined terms, as proposed in the 
June 19 (specially designed) rule and finalized in this rule.
    BIS has added the phrase ``mechanical properties'' to the forgings 
and castings note to 9A610.x because there may be circumstances when 
the mechanical properties, as well as the material composition, 
geometry or function, of a forging, casting, or unfinished product may 
have been altered specifically for a 9A610.x part or component. BIS 
believes that the omission of ``mechanical properties'' from the list 
proposed in the November 7 (aircraft) rule was an error, and it is 
being corrected in this rule.
    In the November 7 (aircraft) rule, Note 1 to 9A610.a was generally 
intended to exclude all military aircraft manufactured before 1956 that 
do not have weapons from being controlled under 9A610. In order to make 
this concept more clear and to conform with the current text of the 
WAML, BIS is revising Note 1 and adding a Note 2 to 9A610.a to clarify 
that military aircraft manufactured before 1946 and meeting the 
parameters described in Note 2 are not controlled under 9A610. Further, 
to address such aircraft manufactured from 1946 to 1955, BIS is adding 
a new 9A610.y.29 for military aircraft manufactured during that 
timeframe that also meet the parameters described in that provision. 
BIS is making these changes to improve clarity and to comply with 
multilateral regime requirements.
    BIS is also revising 9A610.f, .g, and .i to conform to the WAML. 
Also, BIS is renumbering entries within the Items paragraph to allow 
for ease of future revisions to the ECCN. These are not substantive 
revisions to the November 7 (aircraft) rule.
4. Comments Regarding ECCN 9B610
    Two commenters believed that the proposed text for ECCN 9B610 is 
too open-ended and appears to add additional control to hardware. They 
recommended revising the heading of the ECCN to read as follows: 
``Test, inspection and production `equipment' `specially designed' for 
the `development' or `production' of commodities enumerated in ECCN 
9A610 and having embedded technology that is exclusively or 
predominately used in the `development' or `production' of the 
enumerated end item.'' BIS believes that the use of ``specially 
designed'' is sufficiently limiting to preclude ECCN 9B610 from being 
an open-ended control. Therefore, no change has been made to 9B610 as a 
result of this comment.
    One commenter stated that all entries in 9B610.a through .y list 
the limiting text ``specially designed'' with the exception of 9B610.b 
for environmental test facilities. Under 9B610.b, only the word 
``designed'' is used. To avoid over-controlling items, the commenter 
suggested using ``specially designed'' in 9B610.b. BIS accepts this 
recommendation, and has amended 9B610.b to replace ``designed'' with 
``specially designed.''
    BIS is also making correctional and clarifying changes to this 
ECCN. BIS is correcting the scope of controls for 9B610.a to read: 
``Test, inspection, and production `equipment' `specially designed' for 
the `production, `development,' repair, overhaul or refurbishment of 
commodities . . .'' This change conforms to the text proposed in 
9B619.a. Also, BIS is adding a reference to new USML Category 
VIII(h)(i) in the Related Controls paragraph.
5. Comments Regarding ECCNS 9D610, 9E610, and Availability of License 
Exception STA
    As previously discussed under the section on License Exception STA, 
BIS

[[Page 22699]]

is removing proposed Supplement No. 4 to part 740 to move restrictions 
on the use of License Exception STA for ``600 series'' software and 
technology to the STA paragraph in the License Exceptions section of 
the applicable ``600 series'' ECCN. To effect this change for ECCNs 
9D610 and 9E610, BIS has revised the Items paragraphs of those ECCNs to 
specifically name the restricted software or technology in the ECCN 
itself.
    Following this new framework, ECCN 9D610.b now controls software 
for the ``development'' or ``production'' of items previously described 
in paragraphs (a)(1) through (a)(15) in proposed Supplement No. 4 to 
part 740. While this revision does not substantively affect the reasons 
for control applying to the software at issue (or any software 
controlled under 9D610), this change more positively enumerates this 
software in 9D610.b. To correspond with this change, the following 
additional revisions have been made to 9D610: revised descriptions of 
the applicability of the reasons for control to the specific paragraphs 
within 9D610, revised description of eligibility under the STA 
paragraph in the License Exceptions section of 9D610 to add that 
paragraph (c)(1) of License Exception STA (Sec.  740.20(c)(1)) may not 
be used for software described in 9D610.b, and removal of the note to 
the License Exceptions section.
    For ECCN 9E610, 9E610.b now controls ``technology'' (other than 
``build-to-print technology'') ``required'' for the ``development'' or 
``production'' of any of the items previously described in paragraphs 
(a)(1) through (a)(15) in proposed Supplement No. 4 to part 740. As 
with 9D610, this revision does not substantively affect the reasons for 
control that apply to such technology. To correspond with this change, 
the following additional revisions have been made to 9E610: revised 
descriptions of the applicability of the reasons for control to the 
specific paragraphs within 9E610, revised description of eligibility 
under the STA paragraph in the License Exceptions section of 9E610 to 
add that paragraph (c)(1) of License Exception STA (Sec.  740.20(c)(1)) 
may not be used for software described in 9E610.b., removal of the note 
to the License Exceptions section, and an insertion of a note to 
paragraph .a with respect to ``build-to-print technology'' for the 
``production'' of items in paragraphs b.1 through b.15.
    In addition to inserting 9D610.b, BIS is also not finalizing 
9D610.b and .c that were proposed in the November 7 (aircraft) rule to 
control software related to commodities controlled for MT reasons under 
ECCNs 9A610 and 9B610. BIS is making this change to conform with the 
revised applicability of the MT reason for control to ECCN 9D610, which 
simplifies the description of software subject to MT controls.
    BIS did receive comments pertaining to the specific software and 
technology that was proposed to be restricted from use of License 
Exception STA under the November 7 (aircraft) rule. Descriptions of the 
comments with BIS's responses are below.
    One commenter recommended that the words ``except for Military 
Commercial Derivative Aircraft'' be deleted from paragraphs (a)(6) and 
(a)(7) of Supplement No. 4 to part 740. The commenter reasoned that 
this exclusion refers to technology in ECCN 9E003, and could thus 
result in confusion that 9E003 technology is subject to the limitations 
on the use of STA and GOV described in Supplement No. 4. BIS does not 
accept this recommendation. The reference to military commercial 
derivative aircraft is a carve-out of the STA license exception and is 
not limited to ECCN 9E003.
    One commenter stated that the use of an aircraft weight threshold 
(i.e., 21,000 pounds) to determine which landing gear, parts, and 
components are subject to the restrictions in paragraph (a)(7) in 
Supplement No. 4 to part 740 is impractical. Instead, the commenter 
recommended that BIS specifically identify those categories of aircraft 
that would be subject to paragraph (a)(7). BIS does not accept this 
recommendation. Using the categories of aircraft as the parameter to 
identify the software and technology to be excluded from STA and most 
GOV eligibility would be impractical. This would lead to an exhaustive 
list that would be constantly changing based on new developments.
    Two commenters expressed concerns that the scope of software under 
9D610 and technology under 9E610 that would be restricted from STA 
eligibility is too broad. They commented that the restriction would 
apply to nearly every part and component on an aircraft platform, that 
the items affected are common to commercial aircraft for which 
technology and software can already be exported without a license, and 
that many STA-eligible countries already participate in the development 
and production of the items at issue and have comparable indigenous 
software and technology. In addition, one of the commenters felt that 
this framework makes the use of STA more complex. The restriction on 
the use of License Exception STA applies to software and technology 
related to parts and components ``specially designed'' for military 
aircraft controlled under USML Category VIII or ECCN 9A610. While there 
may be similarities between these items and commercial equivalents, the 
interagency review identified these items as warranting closer review. 
In addition, the use of License Exception STA for ``600 series'' items 
is to support military activities rather than development activities. 
As a result, parts and components may be exported or reexported under 
License Exception STA, but certain software and technology related to 
the ``development'' or ``production'' of the specified parts and 
components may not be exported or reexported under STA. Also, as 
previously described, BIS is changing the STA framework to make it less 
complex.
    No changes have been made to reduce the scope of aircraft software 
or technology subject to the restriction on the use of License 
Exception STA. However, as described in section XXIV.C.6, BIS is 
correcting 9D610 and 9E610, which impacts the scope of software and 
technology, respectively, controlled under those ECCNs. Also, as 
previously mentioned, BIS is removing proposed Supplement No. 4 to part 
740 to make the framework on STA restrictions for ``600 series'' items 
less complicated.
    One commenter objected to the terminology ``types of parts and 
components'' in paragraph (a) of Supplement No. 4 to part 740 (i.e., 
``License Exception STA may not be used . . . [for] `software' or . . . 
`technology' for the `development' or `production' of any of the types 
of `parts' or `components' listed below.''). The commenter stated that 
this wording implies that other parts and components are captured, and 
thus ``types of'' should be deleted.
    This final rule does remove the use of ``types of'' by not 
finalizing proposed Supplement No. 4 to part 740 and moving the 
description of the items in that supplement to ECCNs 9D610 or 9E610. 
However, this change was made to simplify License Exception STA. The 
use of the term ``types of'' was not intended to control every part and 
component of an aircraft, but rather the parts and components with 
similar functionality.
6. Additional Changes Made to ECCNs 9D610 and 9E610
    BIS is correcting 9D610 and 9E610 to remove software ``specially 
designed'' for the ``development'' or ``production'' of fuel cells that 
are ``specially designed'' for use in UAV or Lighter-than-Air-Vehicles. 
Such fuel cells will

[[Page 22700]]

be enumerated in USML Category VIII, so related software should also be 
controlled under the ITAR rather than the CCL.
    BIS is also amending ECCNs 9D610 and 9E610 to make conforming 
changes due to the finalization of certain proposed rules published 
after the November 7 (aircraft) rule. The Related Controls paragraph of 
9D610 is amended to reflect the revised de minimis levels for ``600 
series'' items, as proposed in the transition rule and finalized in 
this rule. The Related Controls paragraph of 9E610 is also revised to 
reflect the revised de minimis levels, but this final rule removes 
entirely the reference to ECCN 0A919 foreign-made ``military 
commodities'' because technology would not be considered for conducting 
a de minimis calculation for a commodity. In addition, to improve 
clarity and make corrections, this rule merges 9D610.y.1 and y.2 into 
9D610.y, merges 9E610.y.1 and y.2 into 9E610.y, and inserts the 
descriptor ``software'' in 9E610.y since that entry applies to certain 
technology related to 9D610 software. Finally, after interagency 
review, on the correct scope of intended controls BIS is removing 
installation, repair, overhaul, and refurbishing ``software'' from 
9D610; and adding refurbishing ``technology'' to 9E610.y.

D. Gas Turbine Engines and Related Items ``600 Series'' ECCNs: 
Establishment of ``600 Series'' ECCNs for Certain Military Gas Turbine 
Engines and Related Items in ECCNs 9A619, 9B619, 9C619, 9D619, and 
9E619

    In the December 6 (gas turbine engines) rule, BIS proposed to 
control certain military gas turbine engines and related items that the 
President determines no longer warrant control in USML Category VIII 
(or new Category XIX) under new ECCNs 9A619, 9B619, 9C619, 9D619, and 
9E619. These ECCNs were proposed in conjunction with the Department of 
State's proposal to create USML Category XIX under the proposed rule, 
Amendment to the International Traffic in Arms Regulations: 
Establishment of U.S. Munitions List Category XIX for Gas Turbine 
Engines, (12/06/11, 76 FR 76097) (RIN 1400-AC98). Specifically, the 
December 6 (gas turbine engines) rule proposed that ECCN 9A619.a 
through .d would control, while reserving paragraphs .e through .w, gas 
turbine engines ``specially designed'' for military use that would not 
be controlled under proposed USML Category XIX, digital engine controls 
``specially designed'' for gas turbine engines in ECCN 9A619, hot 
section components and related cooled components ``specially designed'' 
for gas turbine engines in ECCN 9A619, and engine monitoring systems 
for gas turbine engines and components in ECCN 9A619. ECCN 9A619.x 
would consist of ``parts,'' ``components,'' ``accessories and 
attachments'' (including certain unfinished products that have reached 
a stage in manufacturing where they are clearly identifiable as 
commodities controlled by paragraph .x) that are ``specially designed'' 
for a commodity in ECCN 9A619 (other than ECCN 9A619.c) or a defense 
article in proposed USML Category XIX and not elsewhere specified in 
the CCL or on the USML. Paragraph .y would consist of eight specific 
types of commodities that, if ``specially designed'' for a commodity 
subject to control in ECCN 9A619 or a defense article in proposed USML 
Category XIX, warrant less strict controls because they have little 
military significance.
    The December 6 (gas turbine engines) rule also proposed the 
following related ECCNs. ECCN 9B619 would controls test, inspection, 
and production ``equipment'' and related commodities ``specially 
designed'' for the ``development'' or ``production'' of commodities 
enumerated in ECCN 9A619 or proposed USML Category XIX. One specific 
item, a bearing puller, was enumerated in the proposed .y paragraph of 
9B619. ECCN 9C619 would control materials ``specially designed'' for 
commodities controlled by 9A619 not elsewhere specified in the CCL or 
on the USML. ECCN 9D619 would control software ``specially designed'' 
for the ``development,'' ``production,'' operation, or maintenance of 
military gas turbine engines and related commodities controlled by 
9A619. Finally, the December 6 (gas turbine engines) rule proposed that 
ECCN 9E619 would control ``technology'' ``required'' for the 
``development,'' ``production,'' operation, installation, maintenance, 
repair, overhaul, or refurbishment of military gas turbine engines and 
related commodities controlled by 9A619, equipment controlled by 9B619, 
materials controlled by 9C619, or software controlled by 9D619.
    This rule adopts these new ECCNs with the changes described below.
1. Review of Public Comments Related to ``600 Series'' for Certain 
Military Gas Turbine Engines and Related Items
    In response to the December 6 (gas turbine engines) rule, BIS 
received a number of comments on the proposed ``600 series'' for 
military gas turbine engines, and these comments are addressed below in 
this section. BIS also received comments in response to the December 6 
(gas turbine engines) rule that pertain to other aspects of ECR, such 
as the de minimis threshold for ``600 series'' items, grandfathering 
existing ITAR authorizations, ITAR exemptions versus EAR license 
exceptions, etc. These comments are addressed in this final rule under 
the applicable topic to which they relate. Finally, additional comments 
addressed issues outside the scope of ECR, such as program licensing 
and the proposed intra-company transfer license exception. As these 
comments are outside of the scope of the proposed rules addressed under 
this final rule, they are not addressed herein.
2. Comments Regarding Separate USML Category and ``600 Series'' ECCNs 
for Gas Turbine Engines
    One commenter stated that gas turbine engines and associated 
equipment should be controlled under the same USML category that 
controls the end-item platform and that delineating between the end-
item platform and engine components may be difficult in some cases. In 
addition, the commenter stated that if a new USML category is created 
for gas turbine engines, then the category should include the existing 
USML Category VIII note regarding Section 17(c) of the Export 
Administration Act (EAA), as amended. The commenter believed that 
omission of the note could be interpreted to mean that certification by 
the Federal Aviation Administration would no longer be applicable to 
determine licensing jurisdiction for aircraft engines.
    The Departments of Defense, State, and Commerce believe that gas 
turbine engines are sufficiently different to warrant a separate USML 
category and separate ``600 series'' ECCNs, so BIS is maintaining the 
use of the 9Y619 series for controlling certain military gas turbine 
engines. With respect to the note in USML Category VIII regarding 
Section 17(c) of the EAA, the agencies believe that any concerns with 
the removal of the note would be adequately addressed by the definition 
of ``specially designed.'' Thus, if an engine or engine part or 
component would not be subject to the ITAR as a result of the 
application of the note to USML Category VIII (the ``17(c)'' note) then 
that engine or part, by virtue of the application of the definition of 
``specially designed,'' would not be subject to the controls of 9A619.
3. Comments Regarding ECCN 9A619
    For the Related Controls paragraph of ECCN 9A619, one commenter 
stated

[[Page 22701]]

that the phrase ``directly related'' should be replaced with 
``required'' in the sentence ``[m]ilitary gas turbine engines and 
related articles that are enumerated in USML Category XIX, and 
technical data (including software) directly related thereto, are 
subject to the jurisdiction of the International Traffic in Arms 
Regulations.''
    BIS does not accept this recommendation as the phrase ``directly 
related'' is intended to correlate with the wording used in USML 
Category XIX. The reference to USML Category XIX in the Related 
Controls does not impose any requirements independent of those in USML 
Category XIX, so there is no need to define that term for purposes of 
the EAR. Any interpretation of that term must be consistent with the 
requirements of the ITAR.
    One commenter pointed out potential overlapping controls with ECCN 
9A619.a and proposed USML Category XIX. ECCN 9A619.a controls military 
gas turbine engines ``specially designed'' for a military use that are 
not controlled in USML Category XIX(a), (b), or (d). However, proposed 
USML Category XIX(c) also controls such engines. The commenter 
recommended that 9A619.a be revised to exclude engines enumerated in 
USML Category XIX(c), in addition to XIX(a), (b), and (d). BIS accepts 
this recommendation and has included USML Category XIX(c) along with 
the reference to XIX(a), (b), and (d) in ECCN 9A619.a.
    Two commenters stated that the definition of ``military gas turbine 
engines'' used in ECCN 9A619.a should be added to Sec.  772.1 of the 
EAR and to the USML. BIS does not accept the recommendation to add 
``military gas turbine engines'' to Sec.  772.1 as the text was 
intended to provide objective criteria by which to determine 
jurisdiction and classification rather than to provide a definition.
    Four commenters raised several concerns regarding the control of 
hot section components under proposed ECCN 9A619.c. The commenters 
believed that 9A619.c would be a significant expansion of controls for 
such items as many components would move to the USML and be considered 
significant military equipment under the ITAR. Further, one commenter 
requested confirmation that the listed hot section components are the 
only hot section components controlled. Two commenters recommended that 
the definition of hot section components be consistent with the current 
USML definition, which was published by DDTC in 2008. In addition, one 
commenter recommended that 9A619.c be split into two parts as follows--
(i) hot section parts and components (i.e., combustion chambers and 
liners; high pressure turbine blades, vanes, disks and related cooled 
structure; cooled low pressure turbine blades, vanes, disks and related 
cooled structure; cooled augmenters; and cooled nozzles) ``specially 
designed'' for gas turbine engines controlled in this ECCN 9A619; (ii) 
uncooled turbine and exhaust system components not specified in 
9A619.c.1 (i.e., uncooled intermediate and low turbine vanes, blades, 
disks, and ``tip shrouds;'' exhaust liners, tail cones, and nozzles) 
for engines controlled in this ECCN 9A619 or in USML XIX, except for 
engines controlled by USML XIX(f)(1). The commenter further recommended 
that the description of items in 9A619.c was redundant in identifying 
subsets of parts already more broadly described and that proposed USML 
Category XIX(f)(2) contained a reference to ``combustor shells'' 
whereas proposed 9A619.c did not.
    When reviewing gas turbine engines and related items, the 
Departments of Defense, State, and Commerce did not intend to move hot 
section parts and components currently controlled on the CCL to the 
USML. To address this concern and others raised with regard to proposed 
9A619.c, BIS is revising 9A619.c and adding two new paragraphs .d and 
.e. 9A619.c controls hot section components (i.e., combustion chambers 
and liners; high pressure turbine blades, vanes, disks and related 
cooled structure; cooled low pressure turbine blades, vanes, disks and 
related cooled structure; cooled augmenters; and cooled nozzles) 
``specially designed'' for gas turbine engines controlled in 9A619.a. 
ECCN 9A619.d controls uncooled turbine blades, vanes, disks, and 
shrouds ``specially designed'' for gas turbine engines controlled in 
9A619.a. ECCN 9A619.e controls combustor cowls, diffusers, domes, and 
shells ``specially designed'' for gas turbine engines controlled in 
9A619.a. Engine monitoring systems previously proposed for control 
under 9A619.d are being redesignated as 9A619.f.
    One commenter stated that 9A619.d (now redesignated as 9A619.f) 
should include a definition for ``engine monitoring systems'' 
controlled under that entry. BIS does not accept this recommendation. 
Engine monitoring systems are intended to reflect industry standard 
terminology. BIS is, however, clarifying the parenthetical description 
in this entry to better identify those engine monitoring systems 
controlled under this ECCN.
    One commenter recommended that pressure sensors, thermocouples, and 
wire-harnesses should be considered as parts and components excluded 
from the ``specially designed'' definition. Alternatively, if not 
excluded, then the commenter stated that such items should be 
controlled under ECCN 9A619.y. In addition, the commenter recommended 
that speed sensors, actuators, electro-hydraulic servo valves, fuel 
flow meters, fuel filters, oil filters, air actuated control valves, 
and fuel actuated control valves also be controlled under 9A619.y. BIS 
has determined that such items do not, in all cases, meet the standards 
for being controlled in a .y control. Thus, to the extent they are 
``specially designed'' for a military aircraft engine controlled in 
either 9A619.a or USML Category XIX(a), they would be controlled by 
9A619.x. BIS notes that this control is materially different than these 
items' current controls in USML Category VIII(h) and that it 
substantially furthers the national security and defense industrial 
base objectives described above.
4. Additional Changes Made to ECCN 9A619
    BIS is also amending ECCN 9A619 to make conforming changes due to 
the finalization of certain proposed rules published after the December 
6 (gas turbine engines) rule. The Related Controls paragraph is amended 
to reflect the revised de minimis level for ``600 series'' items, as 
proposed in the June 21 (transition) rule and finalized in this rule. 
In addition, references using the defined term ``accessories and 
attachments'' have been changed to ``accessories'' and ``attachments'' 
to reflect the separation of those defined terms, as proposed in the 
June 19 ``specially designed'' rule and finalized in this rule. 
Finally, the word ``paragraphs'' has been removed from 9A619.a, and the 
note to 9A619.a has been amended to reflect the current status of the 
reform initiative. BIS has not yet published final rules that would 
create ECCNs 0A606 or 8A609 for vehicles and vessels, respectively. 
Consequently, BIS is revising the note to make clear that those ECCNs 
are still proposed and do not currently exist in the EAR.
    BIS is clarifying that 9A619.d applies to ``tip shrouds'' rather 
than just ``shrouds.'' Also, BIS has added the phrase ``mechanical 
properties'' to the forgings and castings notes to 9A619.e and 9A619.x 
because there may be circumstances when the mechanical properties, as 
well as the material composition, geometry or function, of a

[[Page 22702]]

forging, casting, or unfinished product may have been altered 
specifically for a 9A619.x part or component. BIS believes that the 
omission of ``mechanical properties'' from the list proposed in the 
December 6 (gas turbine engines) rule was an error, and it is being 
corrected in this rule.
5. Comments Regarding ECCNs 9B619 and 9C619
    One commenter stated that the Unit paragraphs in the List of Items 
Controlled sections of ECCNs 9B619 and 9C619 should contain a unit of 
measure and recommended that ``$ value'' be used. BIS concurs with the 
comment, and ECCNs 9B619 and 9C619 have been revised accordingly.
    One commenter recommended that ECCN 9B619.y be revised to apply to 
specific test, inspection, and production equipment ``specially 
designed'' for the ``production'' or ``development'' of commodities 
enumerated in 9A619.y, rather than 9A619. BIS does not accept this 
recommendation as items specifically enumerated in the .y paragraph of 
9B619 are not intended to be limited to those items ``specially 
designed'' for the ``production'' or ``development'' of items 
identified in the .y paragraph of 9A619.
6. Additional Changes Made to ECCNs 9B619 and 9C619
    BIS is also amending ECCNs 9B619 and 9C619 to make the following 
conforming changes due to the finalization of certain proposed rules 
published after the December 6 (gas turbine engines) rule. The Related 
Controls paragraph of 9C619 is amended to reflect the revised de 
minimis levels for ``600 series'' items, as proposed in the June 21 
(transition) rule and finalized in this rule. In addition, references 
in 9B619 using the defined term ``accessories and attachments'' have 
been changed to ``accessories'' and ``attachments'' to reflect the 
separation of those defined terms, as proposed in the June 19 
(specially designed) rule and finalized in this rule.
7. Comments Regarding ECCNs 9D619, 9E619, and Availability of License 
Exceptions STA and GOV
    One commenter raised concerns with the wording used in the Related 
Controls paragraphs of ECCNs 9D619 and 9E619. The December 6 (gas 
turbine engines) rule provides a reference for technical data or 
software directly related to articles enumerated in proposed USML 
Category XIX. Rather than using ``directly related to,'' the commenter 
proposed using `` `required' to achieve the military functionality.'' 
BIS does not accept this recommendation as this wording was intended to 
track the text of proposed USML Category XIX(g). Interpreting 
``directly related to'' in Category XIX(g) is an issue for the ITAR and 
not the EAR.
    For the NS and RS controls in ECCN 9E619, one commenter recommended 
that ``9D619.y'' be added to the list of 9Y619 items that are excepted 
from the NS or RS control. BIS accepts this recommendation, and 9E619 
has been revised accordingly to make this correction. In addition, BIS 
has inserted the word ``software'' to the description of items excepted 
from the NS or RS control.
    One commenter stated in response to the December 6 (gas turbine 
engines) rule that the proposed Supplement No. 4 to part 740 would 
create such complexity that exporters would seek licenses to avoid 
determining whether License Exceptions STA and GOV are available. The 
commenter further noted the complexity in having two separate 
restrictions varying with respect to ``build-to-print technology'' in 
proposed paragraphs (b)(1) and (b)(2) in that supplement.
    BIS understands concerns with the complexity in navigating the 
proposed rule to determine if License Exception STA and portions of 
License Exception GOV are available for software and technology related 
to military gas turbine engines. However, BIS believes drawing such 
distinctions in availability to use STA and GOV is necessary to allow 
those license exceptions to be used for some portion of the software 
and technology at issue. Otherwise, drawing a brighter line could 
result in no software and technology related to military gas turbine 
engines being eligible for License Exceptions STA and portions of 
License Exception GOV. However, as discussed previously, BIS is 
removing proposed Supplement No. 4 to part 740, which will leave the 
majority of the information necessary to determine whether STA and 
portions of GOV are available to the applicable ``600 series'' ECCN. In 
this case, ECCN 9D619 has been revised to move the list of items in 
(b)(1)(i) through (ix) and (b)(2)(i) through (vii) in Supplement No. 4 
to part 740 to 9D619.b. Thus, 9D619.b would control software 
``specially designed'' for the ``development'' or ``production'' of the 
items previously described in (b)(1)(i) through (ix) and (b)(2)(i) 
through (vii) of Supplement No. 4 to part 740. The STA paragraph in the 
License Exceptions section of the ECCN has been revised to read that 
paragraphs (c)(1) and (c)(2) of STA may not be used for 9D619.b, and 
the License Exceptions Note has been removed. Paragraph (c)(1) of STA 
would still be available for 9D619.a software. Similar text with 
respect to use of GOV for 9D619 has also been added to Sec.  740.11. It 
is important to note that the revisions to 9D619 do not substantively 
change the license requirements proposed in the December 6 (gas turbine 
engines) rule. Therefore, the reasons for control have been revised to 
reflect the changes to the Items paragraph, and a parenthetical has 
been added to 9D619.a to exclude software in 9D619.b from 9D619.a.
    In addition, ECCN 9E619 has been revised to move the list of items 
in (b)(1)(i) through (ix) in Supplement No. 4 to part 740 to Items 
paragraph .b. Thus, 9E619.b would control technology, other than 
``build-to-print technology,'' ``required'' for the ``development'' or 
``production'' of the items previously described in (b)(1)(i) through 
(ix) of Supplement No. 4. As reflected in the new note after Items 
paragraph .a, ``build-to-print technology'' ``required'' for the 
``production'' of items described in paragraphs .b.1 through b.9 in 
9E619 is classified under 9E619.a. To correspond to this change, the 
STA paragraph in the License Exceptions section is revised to read that 
paragraph (c)(1) of STA may not be used for 9E619.b. This revision does 
not prohibit the use of paragraph (c)(1) of STA for 9E619.a, which 
includes ``build-to-print technology'' for items described in 9E619.b.1 
through b.9.
    Further, BIS is moving the items previously described in paragraphs 
(b)(2)(i) through (vii) of Supplement No. 4 to part 740 to Items 
paragraph .c. Thus, 9E619.c would control technology required for the 
``development'' or ``production'' of any of the items previously in 
(b)(2)(i) through (vii) of Supplement No. 4. To correspond to this 
change, the STA paragraph in the License Exceptions section of 9E619 
has been revised to read that paragraph (c)(1) of STA may be used with 
technology in 9E619.c, which includes ``build-to-print technology.'' 
BIS has also revised the STA paragraph to provide that paragraph (c)(2) 
of STA is not available any technology controlled in 9E619.
    As with 9D619, these revisions to 9E619 do not substantively change 
the license requirements proposed in the December 6 (gas turbine 
engines) rule. As a result, the reasons for control have been revised 
to reflect the changes to the Items paragraph, and a parenthetical has 
been added to 9E619.a to exclude technology in 9E619.b and .c from 
falling under 9E619.a.

[[Page 22703]]

    BIS also received comments raising concerns over the software and 
technology in ECCNs 9D619 and 9E619 that were proposed to be subject to 
the restrictions described in proposed Supplement No. 4 to part 740. 
One commenter stated that the same restrictions imposed on significant 
military equipment under the ITAR should not be imposed on items not 
deemed to be of substantial military utility or capability when 
controlled as ``600 series'' items on the CCL. As a result, the items 
identified in paragraphs (b)(2)(i) through (iii) and (b)(2)(vii) of 
Supplement No. 4 to part 740 should be moved to paragraph (b)(1) of 
Supplement No. 4, which would make ``build-to-print technology'' for 
such items eligible for License Exceptions STA and GOV. BIS does not 
accept this recommendation. Based on the results of the Defense 
Department-led review of the USML, it was determined that the software 
or technology used to produce or develop some types of parts and 
components is more sensitive than the finished parts and components 
themselves.
    Rather than splitting the jurisdiction between the technology (as 
ITAR controlled) and the parts and components (as EAR controlled), BIS 
decided to keep the jurisdictional status the same but to impose ITAR-
like worldwide licensing obligations on the technology. This approach 
satisfies the Government's objective of having visibility in to the 
export of such technology even for use by close allies while allowing 
for the more efficient flow of parts and components to close allies and 
the industry's objective of a control structure where both the parts/
components and related technology are subject to the same set of 
regulations.
    One commenter stated that development and production software and 
technology for items described in paragraph (b)(2) of Supplement No. 4 
to part 740 are similar to, and in some cases, less sophisticated than 
commercial production and development software and technology for the 
commercial equivalents of such items, which would be classified under 
ECCNs 9E003 or 9E991. Consequently, the commenter recommended that 
``build-to-print technology'' be authorized under STA for all parts 
classified under 9A619.x for engines classified under 9A619.a. BIS 
rejects this suggestion. The controls are warranted because, by 
definition, the engines and parts at issue are ``specially designed'' 
for military aircraft. As such, they warrant control regardless of 
whether they are more or less sophisticated than their purely civil 
counterparts.
8. Additional Changes Made to ECCNs 9D619 and 9E619
    BIS is clarifying that 9D619 and 9E619 control software and 
technology, respectively, for the development of production of ``tip 
shrouds'' rather than just ``shrouds.'' Further, BIS is removing the 
Note to 9D619 and Note to 9E619 because BIS added Supplement No.4 to 
part 774 for the CCL order of review, which more clearly addresses the 
concept outlined in those notes. Also, BIS is amending ECCNs 9D619 and 
9E619 to make conforming changes due to finalization of certain 
proposed rules published after the December 6 (gas turbine engines) 
rule. The Related Controls paragraph of 9D619 is amended to reflect the 
revised de minimis levels for ``600 series'' items, as proposed in the 
June 21 (transition) rule and finalized in this rule. The Related 
Controls paragraph of 9E619 is also revised to remove the reference to 
ECCN 0A919 foreign-made ``military commodities'' because technology 
would not be considered in conducting a de minimis calculation for a 
commodity. Also, to improve clarity, 9D619.y.1 and y.2 are merged into 
9D619.y, and 9E619.y.1 and y.2 are merged into 9E619.y. Finally, the 
wording used in ECCNs 9D619.b.15 and 9E619.c.6 has been revised 
slightly to parallel the wording used in State's revised USML Category 
XIX(e), as published April 16, 2013, to read ``[d]igital engine control 
systems'' rather than ``[d]igital engine controls.''

E. 9Y018 ECCNs Rolled Into ``600 Series''

    Consistent with the regulatory construct identified in the July 15 
(framework) rule (i.e., to move items from 018 ECCNs to the appropriate 
``600 series'' ECCNs in order to consolidate the WAML and former USML 
items into one series of ECCNs), this rule moves aircraft, refuelers, 
ground equipment, parachutes, harnesses, and instrument flight 
trainers, as well as parts and accessories and attachments for the 
forgoing that, prior to the effective date of this final rule, were 
controlled under ECCN 9A018.a.1, .a.3, .c, .d, .e, or .f to new ``600 
series'' ECCN 9A610. In addition, this rule moves military trainer 
aircraft turbo prop engines and parts and components therefor that were 
controlled under ECCN 9A018.a.2 or .a.3 to new ``600 series'' ECCN 
9A619. ECCN 9A018.a is removed and reserved and references to 9A018.a 
are removed from the Regional Stability license requirement paragraph 
of ECCNs 9A018, 9D018 and 9E018. In addition, this rule removes the 
sentence about parachute systems in the Related Definition paragraph of 
9A018. Related ``software'' and ``technology'' that were controlled 
under ECCNs 9D018 and 9E018, are now controlled under new ``600 
series'' ECCNs 9D610, 9D619, 9E610, and 9E619.
    Furthermore, consistent with the July 15 (framework) rule's 
statement that 018 entries would remain in the CCL for a time, but only 
for cross-reference purposes, this rule amends the Related Controls 
paragraphs in ECCNs 9A018, 9D018, and 9E018 to include references to 
the new ``600 series'' ECCNs indicated above. Specifically, the Related 
Controls paragraph in ECCN 9A018 refers to ECCN 9A610, for commodities 
previously controlled under ECCN 9A018.a.1, .a.3, .c, .d, .e, and .f, 
and to ECCN 9A619, for commodities previously controlled under ECCN 
9A018.a.2 or .a.3. Similarly, ECCN 9D018 refers to new ECCNs 9D610 and 
9D619 for related ``software,'' and ECCN 9E018 refers to ECCNs 9E610 
and 9E619 for related ``technology.''
    However, ground vehicles in ECCN 9A018 that would be moved to new 
``600 series'' ECCN 0A606 under a proposed rule that BIS published on 
December 6, 2011 (76 FR 76085), will continue to be controlled under 
ECCN 9A018.b until BIS publishes the final rule that would add new 
``600 series'' ECCNs 0A606, 0B606, 0C606, 0D606 and 0E606 to the CCL to 
control articles the President determines no longer warrant control 
under Category VII (military vehicles and related articles) of the 
USML. In addition, related ``software'' and ``technology'' for these 
ground vehicles will continue to be controlled under ECCNs 9D018 and 
9E018, respectively, until BIS publishes the final rule that adds the 
0x606 ECCNs to the CCL.

F. Supplement Nos. 6 and 7--Sensitive List and Very Sensitive List

    The June 21 (transition) rule proposed adding new Supplement Nos. 6 
and 7, the Sensitive List and the Very Sensitive List, respectively, to 
the Commerce Control List. These lists are referenced in License 
Exception GOV (Sec.  740.11) and Wassenaar Arrangement reporting 
requirements (part 743). As explained in the June 21 (transition) rule, 
these lists replace the list of items previously set forth in 
Supplement No. 1 to Sec.  740.11. While the items on the lists are 
identified by ECCN rather than by Wassenaar Arrangement numbering, the 
item descriptions are drawn directly from the Wassenaar Arrangement.

[[Page 22704]]

    Two commenters recommended removing the titles for Supplement Nos. 
6 and 7 and only referencing these supplements by location in the EAR, 
because they thought it was confusing to use the same titles that are 
used in Wassenaar Arrangement's List of Dual-use Goods and Technologies 
and Munitions List, but not to use the same numbering system. BIS does 
not accept this recommendation, because removing the titles makes the 
purpose of the lists less clear to the public. The titles and 
explanations in the notes at the start of each list provide valuable 
information about the source of the lists, the relation of the items to 
national security controls, the organizational body that makes changes 
to the list, and, for those familiar with the Wassenaar Arrangement, 
provide a context for how changes are made and generally when to expect 
changes to be made to the lists. Therefore, this rule implements, 
without change from the June 21 (transition) rule proposal, the 
addition of Supplement Nos. 6 and 7, the Sensitive List and the Very 
Sensitive List, respectively. The version of Supplement No. 6 contained 
in this final rule is modified from that published in the June 21 
(transition) rule to reflect revisions to the Sensitive List agreed to 
by the Wassenaar Arrangement members subsequent to publication of that 
proposed rule.

G. Supplement No. 4--Commerce Control List Order of Review

    This final rule is adding a new Supplement No. 4 to part 774--
Commerce Control List Order of Review. A different Supplement No. 4 to 
part 774 listing ``600 series'' items eligible for License Exception 
STA was proposed in the November 7 (aircraft) rule. BIS elected to 
incorporate information on STA eligibility into the relevant ECCN 
rather than create a Supplement.
    This new supplement will provide the public with guidance on the 
steps that are to be taken (i.e., the order of review) when reviewing 
the CCL, in light of the new ``600 series'' and the new definition of 
``specially designed'' also being added in this final rule. This new 
supplement also clarifies the existing policy in regards to the ITAR 
taking precedence over the EAR and how the ``600 series'' takes 
precedence over the rest of the CCL in terms of the order of review 
when reviewing the CCL for items that are ``subject to the EAR.'' This 
new supplement will clearly identify the steps the public should follow 
to classify items on the CCL. As described above under the changes to 
part 738, a new cross reference is also being added to Sec.  738.2 
paragraph (c) to direct the public to this new supplement.

XXV. Procedural Amendment--Authority Citation Update

    This rule revises the authority citation paragraphs for parts 730, 
734, 743, and 750 of the EAR to cite Executive Order 13637 of March 8, 
2013 (78 FR 16129, March 13, 2013). That executive order provided 
authority underlying the issuance of licenses for items that are 
subject to the EAR by DDTC and directed the Secretary of Commerce to 
develop procedures for notifying Congress of certain exports. Parts 
730, 734, 743, and 750 address the issuance of licenses by DDTC and 
Congressional notifications. Adding this citation to the EAR authority 
citation paragraphs is a purely procedural action to keep authority 
citations listed the Code of Federal Regulations accurate and current. 
It does not alter any right, obligation or prohibition that applies to 
any person under the EAR.
    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 amended by Executive Order 13637 of March 
8, 2013, 78 FR 16129 (March 13, 2013) and as extended by the Notice of 
August 15, 2012, 77 FR 49699 (August 16, 2012), 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 final 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 July 15 (framework) rule, 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 to BIS by approximately 16,000 annually. 
As the review of the USML progressed, the interagency group gained more 
specific information about the number of items that would come under 
BIS jurisdiction. As of the June 21 (transition) rule, BIS estimated 
the increase in license applications to 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. BIS continues to review 
its estimate of this level of increase as more information becomes 
available. As described below, the net burden U.S. export controls 
impose on U.S. exporters will go down as a result of the transfer of 
less sensitive military items to the jurisdiction of the CCL and the 
application of the license exceptions and other provisions set forth in 
this rule.
    Some items formerly on the USML will become eligible for License 
Exception STA under this rule. Other such items may become eligible for 
License Exception STA upon approval of an eligibility request. BIS 
believes that the increased use of License Exception STA resulting from 
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 burden associated 
with control number 0694-0137 by about 14,758 hours (12,650 
transactions at 1 hour and 10 minutes each).
    BIS expects that this increase in burden would be more than offset 
by a reduction in burden hours associated

[[Page 22705]]

with approved collections related to the ITAR.
    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 Regulation, 
Department of Commerce, certified to the Chief Counsel for Advocacy, 
Small Business Administration that the following proposed rules will 
not have a significant impact on a substantial number of small entities 
for the reasons explained below: the July 15 (framework) rule, November 
7 (aircraft) rule, December 6 (gas turbine engines) rule, June 19 
(specially designed) rule, and June 21 (transition) rule, if 
promulgated. Summaries of the factual basis for the certification were 
provided in the respective proposed rules that are being finalized in 
this rule and are not repeated here. No comments were received 
regarding the economic impact of this final rule. Consequently, BIS has 
not prepared a regulatory flexibility analysis.

List of Subjects

15 CFR Part 730

    Administrative practice and procedure, Advisory committees, 
Exports, Reporting and recordkeeping requirements, Strategic and 
critical materials.

15 CFR Parts 732, 740, 748, 750 and 758

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

15 CFR Part 734

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

15 CFR Parts 736, 738, 770 and 772

    Exports.

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 Parts 746 and 774

    Exports, Reporting and recordkeeping requirements.

15 CFR Part 756

    Administrative practice and procedure, Exports, Penalties.

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.

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

PART 730--[AMENDED]

0
1. The authority citation for 15 CFR part 730 is revised 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. 2151 
note; 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. 11912, 41 FR 15825, 3 CFR, 1976 Comp., p. 114; E.O. 12002, 42 
FR 35623, 3 CFR, 1977 Comp., p. 133; E.O. 12058, 43 FR 20947, 3 CFR, 
1978 Comp., p. 179; E.O. 12214, 45 FR 29783, 3 CFR, 1980 Comp., p. 
256; E.O. 12851, 58 FR 33181, 3 CFR, 1993 Comp., p. 608; E.O. 12854, 
58 FR 36587, 3 CFR, 1993 Comp., p. 179; E.O. 12918, 59 FR 28205, 3 
CFR, 1994 Comp., p. 899; 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. 
12981, 60 FR 62981, 3 CFR, 1995 Comp., p. 419; 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. 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; E.O. 13338, 69 FR 26751, 3 
CFR, 2004 Comp., p. 168; E.O. 13637 of March 8, 2013, 78 FR 16129 
(March 13, 2013); Notice of January 19, 2012, 77 FR 3067 (January 
20, 2012); Notice of May 9, 2012, 77 FR 27559 (May 10, 2012); Notice 
of August 15, 2012, 77 FR 49699 (August 16, 2012); Notice of 
September 11, 2012, 77 FR 56519 (September 12, 2012); Notice of 
November 1, 2012, 77 FR 66513 (November 5, 2012).


0
2. Section 730.3 is revised to read as follows:


Sec.  730.3  ``Dual use'' and other Types of Items Subject to the EAR.

    The term ``dual use'' is often used to describe the types of items 
subject to the EAR. A ``dual-use'' item is one that has civil 
applications as well as terrorism and military or weapons of mass 
destruction (WMD)-related applications. The precise description of what 
is ``subject to the EAR'' is in Sec.  734.3, which does not limit the 
EAR to controlling only dual-use items. In essence, the EAR control any 
item warranting control that is not exclusively controlled for export, 
reexport, or transfer (in-country) by another agency of the U.S. 
Government or otherwise excluded from being subject to the EAR pursuant 
to Sec.  734.3(b) of the EAR. Thus, items subject to the EAR include 
purely civilian items, items with both civil and military, terrorism or 
potential WMD-related applications, and items that are exclusively used 
for military applications but that do not warrant control under the 
International Traffic in Arms Regulations (ITAR) (22 CFR parts 120 et 
seq.).


0
3. Section 730.6 is amended by revising the first and second sentences 
to read as follows:


Sec.  730.6  Control purposes.

    The export control provisions of the EAR are intended to serve the 
national security, foreign policy, nonproliferation of weapons of mass 
destruction, and other interests of the United States, which in many 
cases are reflected in international obligations or arrangements. Some 
controls are designed to restrict access to items subject to the EAR by 
countries or persons that might apply such items to uses inimical to 
U.S. interests. * * *

PART 732--[AMENDED]


0
4. The authority citation for 15 CFR part 732 continues to read as 
follows:

    Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; 
E.O. 13026, 61 FR 58767, 3 CFR, 1996 Comp., p. 228; E.O. 13222, 66 
FR 44025, 3 CFR, 2001 Comp., p. 783; Notice of August 15, 2012, 77 
FR 49699 (August 16, 2012).


0
5. Section 732.1 is amended by adding paragraph (a)(3) to read as 
follows:


Sec.  732.1  Steps overview.

    (a) * * *

[[Page 22706]]

    (3) The general information in this part is intended to provide an 
overview of the steps to be taken for certain requirements in the EAR, 
though not all of them. Nothing in this part shall be construed as 
altering or affecting any other authority, regulation, investigation or 
other enforcement measure provided by or established under any other 
provision of federal law, including provisions of the EAR.
* * * * *


0
6. Section 732.2 is amended by revising paragraph (f) to read as 
follows:


Sec.  732.2  Steps regarding the scope of the EAR.

* * * * *
    (f) Step 6: Direct product rule. Foreign items that are the direct 
product of U.S. technology, software, or plant or major component of a 
plant made from U.S. technology or software may be subject to the EAR 
if they meet the conditions of General Prohibition Three in Sec.  
736.2(b)(3) of the EAR. Direct products that are subject to the EAR may 
require a license to be exported from abroad or reexported to certain 
countries.
    (1) Subject to the EAR. If your foreign item is captured by the 
direct product rule (General Prohibition Three), then the item is 
subject to the EAR and its export from abroad or reexport may require a 
license. You should next consider the steps regarding all other general 
prohibitions, license exceptions, and other requirements. If the item 
is not captured by General Prohibition Three, then you have completed 
the steps necessary to determine whether the item is subject to the 
EAR, and you may skip the remaining steps. As described in part 734 of 
the EAR, items outside the U.S. are subject to the EAR when they are:
    (i) U.S.-origin commodities, software, or technology, unless 
controlled for export exclusively by another U.S. Federal agency or 
unless publicly available;
    (ii) Foreign-origin commodities, software, or technology that are 
within the scope of General Prohibition Two (De minimis rules), or 
General Prohibition Three (Direct Product rule). However, such foreign-
origin items are also outside the scope of the EAR if they are 
controlled for export exclusively by another U.S. Federal Agency or, if 
technology or software, are publicly available as described in 
paragraph (b) of this section.
    (2) [Reserved]
* * * * *


0
7. Section 732.3 is amended by revising paragraphs (b)(1) and (f), to 
read as follows:


Sec.  732.3  Steps regarding the ten general prohibitions.

* * * * *
    (b) * * *
    (1) You should classify your items ``subject to the EAR'' in the 
relevant entry on the CCL, and you may do so on your own without BIS 
assistance. The CCL includes a Supplement No. 4 to part 774--Commerce 
Control List Order of Review. This supplement establishes the steps 
(i.e., the order of review) that should be followed in classifying 
items that are ``subject to the EAR.'' The exporter, reexporter, or 
transferor is responsible for correctly classifying the items in a 
transaction, which may involve submitting a classification request to 
BIS. Failure to classify or have classified the item correctly does not 
relieve the person of the obligation to obtain a license when one is 
required by the EAR.
* * * * *
    (f) Step 11: Direct product rule--General Prohibition Three. Items 
located outside the U.S. that are also produced outside the U.S. from 
U.S. technology or software or a plant or major component of a plant 
made from U.S. technology or software may be subject to the EAR if they 
meet the conditions of General Prohibition Three in Sec.  736.2(b)(3) 
of the EAR. Direct products that are subject to the EAR may require a 
license to be exported from abroad or reexported to specified 
countries. If your foreign item is captured by the direct product rule 
(General Prohibition Three), then your export from abroad or reexport 
is subject to the EAR. You should next consider the steps regarding all 
other general prohibitions, license exceptions, and other requirements. 
If your item is not captured by General Prohibition Three, then your 
export from abroad or reexport is not subject to the EAR. You have 
completed the steps necessary to determine whether your transaction is 
subject to the EAR, and you may skip the remaining steps.
* * * * *


0
8. Section 732.4 is amended by:
0
a. Adding a sentence to the end of paragraph (b)(3)(iv); and
0
b. Revising paragraph (b)(7).
    The addition and revision read as follows:


Sec.  732.4  Steps regarding using License Exceptions.

* * * * *
    (b) * * *
    (3) * * *
    (iv) * * * If you are exporting under License Exceptions LVS, TMP, 
RPL, STA, or GOV and your item is classified in the ``600 series,'' you 
should review Sec.  743.4 of the EAR to determine the applicability of 
certain reporting requirements for conventional arms exports.
* * * * *
    (7) Step 26: License applications. (i) If you are going to file a 
license application with BIS, you should first review the requirements 
in part 748 of the EAR. Exporters, reexporters, and transferors should 
review the instructions concerning applications and required support 
documents prior to submitting an application for a license.
    (ii) If you are going to file a license application with BIS for 
the export, reexport or in-country transfer for an aircraft controlled 
under ECCNs 9A610.a, Sec.  740.20(g) permits you to request in the 
application that subsequent exports of the type of aircraft at issue be 
eligible for export under License Exception STA. The types of aircraft 
controlled under ECCN 9A610.a that have been determined to be eligible 
for License Exception STA pursuant to Sec.  740.20(g) are identified in 
the License Exceptions paragraph of ECCN 9A610. Supplement No. 2 to 
part 748, paragraph (w) (License Exception STA eligibility requests), 
contains the instructions for such applications.

    Note to paragraph (b)(7)(ii): If you intend to use License 
Exception STA, return to paragraphs (a) and then (b) of this section 
to review the Steps regarding the use of license exceptions.



0
9. Supplement No. 3 to part 732 is amended by adding paragraphs (b)13. 
and (b)14. to read as follows:

Supplement No. 3 to Part 732--BIS's ``Know Your Customer'' Guidance and 
Red Flags

* * * * *
    (b) * * *
    13. You receive an order for ``parts'' or ``components'' for an end 
item in the ``600 series.'' The requested ``parts'' or ``components'' 
may be eligible for License Exception STA, another authorization, or 
may not require a destination-based license requirement for the country 
in question. However, the requested ``parts'' or ``components'' would 
be sufficient to service one hundred of the ``600 series'' end items, 
but you ``know'' the country does not have those types of end items or 
only has two of those end items.
    14. The customer indicates or the facts pertaining to the proposed 
export suggest that a ``600 series'' item may be reexported to a 
destination listed in Country Group D:5 (see Supplement No. 1 to part 
740 of the EAR).

[[Page 22707]]

PART 734--[AMENDED]

0
10. The authority citation for part 734 is revised 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 Comp., p. 
783; E.O. 13637 of March 8, 2013, 78 FR 16129 (March 13, 2013); 
Notice of August 15, 2012, 77 FR 49699 (August 16, 2012); Notice of 
November 1, 2012, 77 FR 66513 (November 5, 2012).


0
11. Section 734.3 is amended by adding a note to paragraph (b)(1)(i) 
and paragraph (e) to read as follows:


Sec.  734.3  Items subject to the EAR.

* * * * *
    (b) * * *
    (1) * * *

    Note to paragraph (b)(1)(i): If a defense article or service is 
controlled by the U.S. Munitions List set forth in the International 
Traffic in Arms Regulations, its export and temporary import is 
regulated by the Department of State. The President has delegated 
the authority to control defense articles and services for purposes 
of permanent import to the Attorney General. The defense articles 
and services controlled by the Secretary of State and the Attorney 
General collectively comprise the U.S. Munitions List under the Arms 
Export Control Act (AECA). As the Attorney General exercises 
independent delegated authority to designate defense articles and 
services for purposes of permanent import controls, the permanent 
import control list administered by the Department of Justice has 
been separately labeled the U.S. Munitions Import List (27 CFR Part 
447) to distinguish it from the list set out in the International 
Trade in Arms Regulations. In carrying out the functions delegated 
to the Attorney General pursuant to the AECA, the Attorney General 
shall be guided by the views of the Secretary of State on matters 
affecting world peace, and the external security and foreign policy 
of the United States.

* * * * *
    (e) Items subject to the EAR may be exported, reexported, or 
transferred in country under licenses, agreements, or other approvals 
from the Department of State's Directorate of Defense Trade Controls 
pursuant to Sec. Sec.  120.5(b) and 126.6(c) of the International 
Traffic in Arms Regulations (ITAR) (22 CFR 120.5(b) and 126.6(c)). 
Exports, reexports, or in-country transfers not in accordance with the 
terms and conditions of a license, agreement, or other approval under 
Sec.  120.5(b) of the ITAR requires separate authorization from BIS. 
Exports, reexports, or in-country transfers of items subject to the EAR 
under a Foreign Military Sales case that exceed the scope of Sec.  
126.6(c) of the ITAR or the scope of actions made by the Department of 
State's Office of Regional Security and Arms Transfers require separate 
authorization from BIS.

0
12. 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) * * *
    (6) There is no de minimis level for foreign-made items that 
incorporate U.S.-origin ``600 series'' items when destined for a 
country listed in Country Group D:5 of Supplement No. 1 to part 740 of 
the EAR.
* * * * *

PART 736--[AMENDED]

0
13. The authority citation 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 May 9, 2012, 77 FR 27559 (May 10, 2012); Notice of 
August 15, 2012, 77 FR 49699 (August 16, 2012); Notice of November 
1, 2012, 77 FR 66513 (November 5, 2012).


0
14. Section 736.2 is amended by revising paragraph (b)(3)(iii) and 
adding paragraphs (b)(3)(iv) through (vi) to read as follows:


Sec.  736.2  General prohibitions and determination of applicability.

* * * * *
    (b) * * *
    (3) * * *
    (iii) Additional country scope of prohibition for ``600 series'' 
items. You may not, except as provided in paragraphs (b)(3)(v) or (vi) 
of this section, reexport or export from abroad without a license any 
``600 series'' item subject to the scope of this General Prohibition 
Three to a destination in Country Groups D:1, D:3, D:4, D:5 or E:1 (See 
Supplement No.1 to part 740 of the EAR).
    (iv) Product scope of ``600 series'' items subject to this 
prohibition. This General Prohibition Three applies if a ``600 series'' 
item meets either of the following conditions:
    (A) Conditions defining direct product of technology or software 
for ``600 series'' items. Foreign-made ``600 series'' items are subject 
to this General Prohibition Three 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 in part 774 of the EAR; and
    (2) They are in the ``600 series'' as designated on the applicable 
ECCN of the Commerce Control List in 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 Three 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 ``600 series'' 
technology or software as designated on the applicable ECCN of the 
Commerce Control List in 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 in part 774 of the EAR.
    (v) ``600 series'' foreign-produced direct products of U.S. 
technology or software subject to this General Prohibition Three do not 
require a license for reexport or export from abroad 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.
    (vi) License Exceptions. Each license exception described in part 
740 of the EAR supersedes this General Prohibition Three if all terms 
and conditions of a given exception are met and the restrictions in 
Sec.  740.2 do not apply.
* * * * *


0
15. 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 April 16, 2013; Authorization for Items the 
President Determines No Longer Warrant Control under the United States 
Munitions List (USML).
    (a) Continued use of DDTC approvals from the Department of State's 
Directorate of Defense Trade Controls (DDTC) 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 
published final rules that

[[Page 22708]]

transfer the items to the CCL become effective. DDTC licenses, 
agreements, or other approvals that contain items transitioning from 
the USML to the CCL and that are issued prior to the effective date of 
the final rule transferring such items to the CCL may continue to be 
used in accordance with the Department of State's final rule, 
Amendments to the International Trade in Arms Regulations: Initial 
Implementation of Export Control Reform, published on April 16, 2013 in 
the Federal Register.
    (b) BIS authorization.
    (1) Where continued use of DDTC authorization is not or is no 
longer an available option, or a holder of an existing DDTC 
authorization returns or terminates that authorization, any required 
authorization to export, reexport, or transfer (in-country) a 
transitioned item on or after the effective date of the applicable 
final rule must be obtained under the EAR. Following the publication 
date and prior to the effective date of a final rule moving an item 
from the USML to the CCL, applicants may submit license applications to 
BIS for authorization to export, reexport, or transfer (in-country) the 
transitioning item. BIS will process the license applications in 
accordance with Sec.  750.4 of the EAR, hold the license application 
without action (HWA) if necessary, and issue a license, if approved, to 
the applicant no sooner than the effective date of the final rule 
transitioning the items to the CCL.
    (2) Following the effective date of a final rule moving items from 
the USML to the CCL, 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 Warehouse and Distribution 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, including any applicable license requirements. 
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.
    (c) Prior commodity jurisdiction determinations. If the U.S. State 
Department has previously determined that an item is not subject to the 
jurisdiction of the ITAR and the item was not listed in a then existing 
``018'' series ECCN, then the item is per se not within the scope of a 
``600 series'' ECCN. If the item was not listed elsewhere on the CCL at 
the time of such determination (i.e., the item was designated EAR99), 
the item shall remain designated as EAR99 unless specifically 
enumerated by BIS or DDTC in an amendment to the CCL or to the USML, 
respectively.
    (d) 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 of any license or authorization issued thereunder, be 
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. 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. Should a possible or actual violation of the ITAR, or of any 
license or authorization issued thereunder, be discovered, the person 
or persons involved are strongly encouraged to submit a Voluntary 
Disclosure to DDTC, in accordance with Sec.  127.12 of the ITAR. For 
possible or actual violations of both the EAR and ITAR, the person or 
persons involved are strongly encouraged to submit disclosures to both 
BIS and DDTC, indicating to each agency that they also have made a 
disclosure to the other agency.

PART 738--[AMENDED]

0
16. The authority citation for 15 CFR part 738 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 15, 2012, 77 FR 49699 (August 16, 2012).


0
17. Section 738.2 is amended by:
0
a. Revising paragraph (c);
0
b. In the introductory text of paragraph (d)(1), adding paragraphs 
``5:'' and ``6:'' after paragraph ``3:'' and before paragraph ``9:'';
0
c. Adding paragraph (d)(1)(iv); and
0
d. Adding to paragraph (d)(2)(ii) a sentence immediately following the 
fifth sentence.
    The revision and additions read as follows:


Sec.  738.2  Commerce Control List (CCL) structure.

* * * * *
    (c) Order of review. The CCL includes a Supplement No. 4 to part 
774--Commerce Control List Order of Review. This supplement establishes 
the steps (i.e., the order of review) that should be followed in 
classifying items that are ``subject to the EAR.''
    (d) * * *
    (1) * * *
    5: Items warranting national security or foreign policy controls at 
the determination of the Department of Commerce.
    6: ``600 series'' controls items because they are items on the 
Wassenaar Arrangement Munitions List (WAML) or formerly on the U.S. 
Munitions List (USML).
* * * * *
    (iv) Last two characters in a ``600 series'' ECCN. The last two 
characters of each ``600 series'' ECCN generally track the Wassenaar 
Arrangement Munitions List (WAML) categories for the types of items at 
issue. The WAML ML21 (``software'') and ML22 (``technology'') are, 
however, included in D (``software'') and E (``technology'') CCL 
product groups to remain consistent with the structure of the CCL.
    (2) * * *
    (ii) * * * In some ``600 series'' ECCNs, the STA license exception 
paragraph or a note to the License Exceptions section contains 
additional information on the availability of License Exception STA for 
that ECCN.
* * * * *

PART 740--[AMENDED]

0
18. The authority citation 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 15, 2012, 77 FR 49699 (August 16, 2012).


0
19. Section 740.1 is amended by adding a sentence to end of paragraph 
(a) to read as follows:


Sec.  740.1  Introduction.

* * * * *
    (a) Scope. * * * Any license exception authorizing reexports also 
authorizes in-country transfers, provided the terms and conditions for 
reexports under that license exception are met.
* * * * *


0
20. Section 740.2 is amended by adding paragraphs (a)(12), (13), (15), 
and (16), and a note to paragraph (a) to read as follows:

[[Page 22709]]

Sec.  740.2  Restrictions on all license exceptions.

    (a) * * *
    (12) The item is described in a ``600 series'' ECCN and is destined 
to, shipped from, or was manufactured in a destination listed in 
Country Group D:5 (see Supplement No.1 to part 740 of the EAR), except 
that such items are eligible for License Exception GOV (Sec.  
740.11(b)(2) of the EAR) unless otherwise restricted by that paragraph.
    (13) ``600 series'' items that are controlled for missile 
technology (MT) reasons may not be exported, reexported, or transferred 
(in-country) under License Exception STA (Sec.  740.20 of the EAR). 
Items controlled under ECCNs 9D610.b, 9D619.b, 9E610.b, or 9E619.b or 
.c are not eligible for license exceptions except for License Exception 
GOV (Sec.  740.11(b)(2) of the EAR). The only license exceptions under 
which other ``600 series'' items may be exported to destinations not 
identified in Country Group D:5 (see Supplement No.1 to part 740 of the 
EAR) are the following:
    (i) License Exception LVS (Sec.  740.3 of the EAR);
    (ii) License Exception TMP (Sec.  740.9 of the EAR);
    (iii) License Exception RPL (Sec.  740.10 of the EAR);
    (iv) License Exception TSU (Sec.  740.13(a) or (b) of the EAR);
    (v) License Exception GOV (Sec.  740.11(b) or (c) of the EAR); and
    (vi) License Exception STA under Sec.  740.20(c)(1) of the EAR if 
the ``600 series'' item at the time of export, reexport, or transfer 
(in-country):
    (A) Is destined to one of the countries listed in Country Group A:5 
or the United States;
    (B) Is for the ultimate end use by the armed forces, police, 
paramilitary, law enforcement, customs, correctional, fire, or a search 
and rescue agency of a government of one of the countries listed in 
Country Group A:5 or the United States Government, or the 
``development,'' ``production,'' operation, installation, maintenance, 
repair, overhaul, or refurbishing of an item in one of the countries 
listed in Country Group A:5 or the United States for ultimate end use 
by any such government agencies, the United States Government, or a 
person in the United States;
    (C) Is transferred in compliance with the conditions on the use of 
License Exception STA contained in Sec.  740.20(b)(2) of the EAR; and
    (D) Is not precluded in the relevant ECCN from being exported under 
License Exception STA or until after the review and clearance 
requirements in Sec.  740.20(g) of the EAR for ECCN 9A610.a end items 
have been satisfied.
* * * * *
    (15) If they are sold under a contract that includes $14,000,000 or 
more of ``600 Series Major Defense Equipment'' (as defined in Sec.  
772.1), exports of ``600 series'' items to a country not listed in 
Country Group A:5 (see Supplement No. 1 to Part 740 of the EAR), are 
not eligible for any license exception except to U.S. Government end 
users under License Exception GOV (Sec.  740.11(b) of the EAR).
    (16) If they are sold under a contract that includes $25,000,000 or 
more of ``600 Series Major Defense Equipment'' (as defined in Sec.  
772.1), exports of ``600 series'' items to a country listed in Country 
Group A:5 (see Supplement No. 1 to Part 740 of the EAR), are not 
eligible for any license exception except to U.S. Government end users 
under License Exception GOV (Sec.  740.11(b) of the EAR).

    Note to paragraph (a): Items subject to the exclusive export 
control jurisdiction of another agency of the U.S. Government may 
not be authorized by a license exception or any other authorization 
under the EAR. If your item is subject to the exclusive jurisdiction 
of another agency of the U.S. Government, you must determine your 
export licensing requirements pursuant to the other agency's 
regulations. See Sec.  734.3(b) and Supplement No. 3 to part 730 of 
the EAR for other U.S. Government departments and agencies with 
export control responsibilities.

* * * * *


0
21. Section 740.9 is amended by revising paragraphs (a) and (b) to read 
as follows:


Sec.  740.9  Temporary imports, exports, reexports, and transfers (in-
country) (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, reexported, or transferred (in-
country) under this paragraph (a) if an order to acquire the item, such 
as a purchase order, 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. The references to various countries and country groups in these 
TMP-specific provisions do not limit or amend the prohibitions in Sec.  
740.2 of the EAR on the use of license exceptions generally, such as 
for exports of ``600 series'' items to destinations in Country Group 
D:5.
    (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:1; 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, commodities and software as is 
necessary to commission or service items, provided that the commodity 
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, reexported, or transferred. 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:
    (i) 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;
    (ii) Use of password systems on electronic devices that store the 
software authorized under this license exception; and
    (iii) 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

[[Page 22710]]

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 
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, 
reexported or transferred (in-country) to Sudan under this paragraph 
(a)(2) are:
    (A) Commodities controlled under ECCNs 4A994.b and ``software'' 
controlled under ECCNs 4D994 or 5D992 to be used on such commodities. 
Software must either be loaded onto the commodities prior to export, 
reexport, or transfer (in-country) or be exported, reexported, or 
transferred (in-country) solely for servicing or in-kind replacement of 
legally exported or reexported software. All such software must remain 
loaded on the 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) Commodities that are controlled under ECCN 5A992, including 
commodities 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, reexports, and transfers (in-
country) of technology by U.S. persons. (i) This paragraph authorizes 
exports, reexports, and transfers (in-country) of 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:1. 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, reexport, or transfer (in-country) 
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 or components. Kits 
consisting of replacement parts or components may be exported, 
reexported, or transferred (in-country) to all destinations except 
Country Group E:1 (see Supplement No. 1 to part 740 of the EAR), 
provided that:
    (i) The parts and components 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 and components 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 and 
components returned (see Parts, Components, Accessories and Attachments 
in 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 for 
longer 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, reexported, and 
transferred (in-country) under this paragraph (a)(6)

[[Page 22711]]

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-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 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, reexported, or transferred (in-country) 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) [Reserved].
    (12) U.S. persons. For purposes of this Sec.  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 authorized to do business in the United 
States).
    (13) Destinations. Destination restrictions apply to temporary 
exports, reexports, or transfers (in-country) 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, reexport, or transfer (in-country). 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 or end-user.
    (iii) Authorization to retain item abroad beyond one year. An 
exporter, reexporter or transferor who wants to retain an item at the 
temporary location 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 at 
least 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 
applicant will receive authorization for an extension not to exceed 
four years from the date of initial export, reexport, or transfer. Any 
request for retaining the items abroad for a period exceeding four 
years 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. (1) Items 
moving in transit through the United States. Subject to the following 
conditions, the provisions of this 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, D:2, or D: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.

[[Page 22712]]

    (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 
this 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, D:2, or D: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).

    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.

* * * * *

0
22. Section 740.10 is revised to read as follows:


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

    License Exception RPL authorizes exports and reexports associated 
with one-for-one replacement of parts, components, accessories, and 
attachments. License Exception RPL also authorizes exports and 
reexports of certain items currently ``subject to the EAR'' to or for, 
or to replace, a defense article described in an export or reexport 
authorization issued under the authority of the Arms Export Control 
Act. It does not, however, authorize the export or reexport of defense 
articles subject to the ITAR, i.e., described on the United States 
Munitions List (22 CFR 121.1).
    (a) Parts, Components, Accessories, and Attachments. (1) Scope. The 
provisions of this paragraph (a) authorize the export and reexport of 
one-for-one replacement parts, components, accessories, and attachments 
for previously exported equipment or other end items.
    (2) One-for-one replacement of parts, components, accessories, or 
attachments. (i) The terms replacement parts, components, accessories, 
or attachments as used in this section mean parts, components, 
accessories, or attachments needed for the immediate repair of 
equipment or other end items, including replacement of defective or 
worn parts or components. (These terms include `subassemblies,' but do 
not include test instruments or operating supplies. The term 
`subassembly' means a number of parts or components assembled to 
perform a specific function or functions within a commodity. One 
example would be printed circuit boards with components mounted 
thereon. This definition does not include major subsystems such as 
those composed of a number of `subassemblies.') Items that improve or 
change the basic design characteristics, e.g., as to accuracy, 
capability, performance or productivity, of the equipment or other end 
item upon which they are installed, are not deemed to be replacement 
parts, components, accessories, or attachments. For kits consisting of 
replacement parts or components, consult Sec.  740.9(a)(4) of this 
part.
    (ii) Parts, components, accessories, and attachments may be 
exported only to replace, on a one-for-one basis, parts, components, 
accessories, or attachments, respectively, contained in commodities 
that were: lawfully exported from the United States; lawfully 
reexported; or made in a foreign country incorporating authorized U.S.-
origin parts, components, accessories, or attachments. ``600 series'' 
parts, components, accessories and attachments may be exported only to 
replace, on a one-for-one basis, parts, components, accessories, or 
attachments that were: lawfully exported from the United States, or 
lawfully reexported. (For exports or reexports to the installed base in 
Libya, see Sec.  764.7 of the EAR.) The conditions of the original U.S. 
authorization must not have been violated. Accordingly, the export of 
replacement parts, components, accessories, and attachments may be made 
only by the party who originally exported or reexported the commodity 
to be repaired, or by a party that has confirmed the existence of 
appropriate authority for the original transaction.
    (iii) The parts, components, accessories, or attachments to be 
replaced must either be destroyed abroad or returned promptly to the 
person who supplied the replacements, or to a foreign firm that is 
under the effective control of that person.
    (3) Exclusions to License Exception RPL. (i) No replacement parts, 
components, accessories, or attachments may be exported to repair a 
commodity exported under a license or other authorization if that 
license or other

[[Page 22713]]

authorization included a condition that any subsequent replacements may 
be exported only under a license.
    (ii) No parts, components, accessories, or attachments may be 
exported to be held abroad as spares for future use. 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.
    (iii) No parts, components, accessories, or attachments may be 
exported to any destination, except the countries listed in Supplement 
No. 3 to part 744 of the EAR (Countries Not Subject to Certain Nuclear 
End Use Restrictions in Sec.  744.2(a)), if the item is to be 
incorporated into or used in nuclear weapons, nuclear explosive 
devices, nuclear testing related to activities described in Sec.  
744.2(a) of the EAR, the chemical processing of irradiated special 
nuclear or source material, the production of heavy water, the 
separation of isotopes of source and special nuclear materials, or the 
fabrication of nuclear reactor fuel containing plutonium, as described 
in Sec.  744.2(a) of the EAR.
    (iv) No replacement parts, components, accessories, or attachments 
may be exported to countries in Country Group E:1 (see Supplement No. 1 
to this part) (countries designated by the Secretary of State as 
supporting acts of international terrorism) if the commodity to be 
repaired is an ``aircraft'' (as defined in Sec.  772.1 of the EAR) or 
is controlled for national security (NS) reasons.
    (v) No replacement parts, components, accessories, or attachments 
may be exported to countries in Country Group E:1 (see Supplement No. 1 
to this part) if the commodity to be repaired is explosives detection 
equipment classified under ECCN 2A983 or related software classified 
under ECCN 2D983.
    (vi) No replacement parts, components, accessories, or attachments 
may be exported to countries in Country Group E:1 (see Supplement No. 1 
to this part) if the commodity to be repaired is concealed object 
detection equipment classified under ECCN 2A984 or related software 
classified under ECCN 2D984.
    (vii) The conditions described in this paragraph (a)(3) relating to 
replacement of parts, components, accessories, or attachments do not 
apply to reexports to a foreign country of parts, components 
accessories, or attachments as replacements in foreign-origin products, 
if at the time the replacements are furnished, the foreign-origin 
product is eligible for export to such country under any of the license 
exceptions in this part or the exceptions in Sec.  734.4 of the EAR (De 
minimis U.S. content).
    (viii) Parts, components, accessories, and attachments classified 
in ``600 Series'' ECCNs may not be exported or reexported to a 
destination listed in Country Group D:5 (see Supplement No. 1 to this 
part).
    (4) Reexports. (i) Parts, components, accessories, and attachments 
exported from the United States may be reexported to a new country of 
destination, provided that the conditions established in paragraphs 
(a)(2) and (3) of this section are met. A party reexporting U.S.-origin 
one-for-one replacement parts, components, accessories, or attachments 
shall ensure that the commodities being repaired were shipped to their 
present location in accordance with U.S. law and continue to be 
lawfully used, and that either before or promptly after reexport of the 
replacement parts, components, accessories, or attachments, the 
replaced commodities and software are either destroyed or returned to 
the United States, or to the foreign firm in Country Group B (see 
Supplement No. 1 to this part) that shipped the replacement parts.
    (ii) The conditions described in paragraph (a)(3) relating to 
replacement of parts, components, accessories, or attachments 
(excluding ``600 series'' ECCNs) do not apply to reexports to a foreign 
country of parts, components, accessories, or attachments as 
replacements in foreign-origin products, if at the time the 
replacements are furnished, the foreign-origin product is eligible for 
export to such country under any of the License Exceptions in this part 
or the foreign-origin product is not subject to the EAR pursuant to 
Sec.  734.4.
    (b) Servicing and replacement. (1) Scope. The provisions of this 
paragraph (b) authorize the export and reexport to any destination, 
except for ``600 series'' items to destinations identified in Country 
Group D:5 (see Supplement No. 1 to this part) or otherwise prohibited 
under the EAR, of commodities and software that were returned to the 
United States for servicing and the replacement of defective or 
unacceptable U.S.-origin commodities and software.
    (2) Commodities and software sent to a United States or foreign 
party for servicing.
    (i) Definition. ``Servicing'' as used in this section means 
inspection, testing, calibration or repair, including overhaul and 
reconditioning. The servicing shall not have improved or changed the 
basic characteristics (e.g., the accuracy, capability, performance, or 
productivity) of the commodity or software as originally authorized for 
export or reexport.
    (ii) Return of serviced commodities and software. When the serviced 
commodity or software is returned, it may include any replacement or 
rebuilt parts, components, accessories, or attachments necessary to its 
repair and may be accompanied by any spare parts, components, tools, 
accessories, attachments or other items sent with it for servicing.
    (iii) Commodities and software imported from Country Group D:1 
except the People's Republic of China (PRC). Commodities and software 
legally exported or reexported to a consignee in Country Group D:1 
(except the People's Republic of China (PRC)) (see Supplement No. 1 to 
this part) that are sent to the United States or a foreign party for 
servicing may be returned to the country from which it was sent, 
provided that both of the following conditions are met:
    (A) The exporter making the shipment is the same person or firm to 
whom the original license was issued; and
    (B) The end use and the end user of the serviced commodities or 
software and other particulars of the transaction, as set forth in the 
application and supporting documentation that formed the basis for 
issuance of the license have not changed.
    (iv) Terrorist supporting countries. No repaired commodity or 
software may be exported or reexported to countries in Country Group 
E:1 (see Supplement No. 1 to this part).
    (3) Replacements for defective or unacceptable U.S.-origin 
equipment.
    (i) Subject to the following conditions, commodities or software 
may be exported or reexported to replace defective or otherwise 
unusable (e.g., erroneously supplied) items.
    (A) The commodity or software is ``subject to the EAR'' (see Sec.  
734.2(a) of the EAR).
    (B) The commodity or software to be replaced must have been 
previously exported or reexported in its present form under a license 
or authorization granted by BIS or an authorization, e.g., a license or 
exemption, issued under the authority of the Arms Export Control Act.
    (C) No commodity or software may be exported or reexported to 
replace equipment that is worn out from normal use, nor may any 
commodity or software be exported to be held in stock abroad as spare 
equipment for future use.

[[Page 22714]]

    (D) The replacement item may not improve the basic characteristic, 
e.g., as to accuracy, capability, performance, or productivity, of the 
equipment as originally authorized, e.g., under a license, license 
exception or an exemption, for export or reexport.
    (E) No shipment may be made to countries in Country Group E:1 (see 
Supplement No. 1 to this part), or to any other destination to replace 
defective or otherwise unusable equipment owned or controlled by, or 
leased or chartered to, a national of any of those countries.
    (F) Commodities or software ``subject to the EAR'' and classified 
in ``600 Series'' ECCNs may not be exported or reexported to a 
destination identified in Country Group D:5 (see Supplement No. 1 to 
this part).
    (ii) Special conditions applicable to exports to Country Group B 
and Country Group D:1. In addition to the general conditions in 
paragraph (b)(3)(i) of this section, the following conditions apply to 
exports or reexports of replacements for defective or unacceptable 
U.S.-origin commodities or software to a destination in Country Group B 
or Country Group D:1 (see Supplement No. 1 to this part):
    (A) By making such an export or reexport, the exporter represents 
that all the requirements of this paragraph (b) have been met and 
undertakes to destroy or return the replaced parts as provided in 
paragraph (b)(3)(ii)(C) of this section.
    (B) The defective or otherwise unusable equipment must be replaced 
free of charge, except for transportation and labor charges. If 
exporting to the countries listed in Country Group D:1 (except the 
PRC), the exporter shall replace the commodity or software within the 
warranty period or within 12 months of its shipment to the ultimate 
consignee in the country of destination, whichever is shorter.
    (C) The commodity or software to be replaced must either be 
destroyed abroad or returned to the United States, or to a foreign firm 
in Country Group B that is under the effective control of the exporter, 
or to the foreign firm that is providing the replacement part or 
equipment. The destruction or return must be effected before, or 
promptly after, the replacement item is exported from the United 
States.
    (D) A party reexporting replacements for defective or unacceptable 
U.S.-origin equipment must ensure that the commodities or software 
being replaced were shipped to their present location in accordance 
with U.S. law and continue to be legally used. See Sec.  764.7 of the 
EAR for exports or reexports to the installed base in Libya.
    (c) Special recordkeeping requirements: ECCNs 2A983, 2A984, 2D983 
and 2D984, and ``600 Series'' ECCNs. (1) In addition to the other 
recordkeeping requirements set forth elsewhere in the EAR, exporters 
are required to maintain records, as specified in this section, for any 
items exported or reexported pursuant to License Exception RPL to 
repair, replace, or service previously lawfully exported or reexported 
items classified under ECCNs 2A983, 2A984, 2D983 and 2D984 or a ``600 
Series'' ECCN. The following information must be maintained for each 
such export or reexport transaction:
    (i) A description of the item replaced, repaired or serviced;
    (ii) The type of repair or service;
    (iii) Certification of the destruction or return of item replaced;
    (iv) Location of the item replaced, repaired or serviced;
    (v) The name and address of those who received the items for 
replacement, repair, or service;
    (vi) Quantity of items shipped; and
    (vii) Country of ultimate destination.
    (2) Records maintained pursuant to this section may be requested at 
any time by an appropriate BIS official as set forth in Sec.  762.7 of 
the EAR. Records that must be included in the annual or semi-annual 
reports of exports and reexports of ``600 Series'' items under the 
authority of License Exception RPL are described in Sec.  743.4 and 
Sec.  762.2(b)(4), (b)(47) and (b)(48).

0
23. 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 and other related nuclear 
facilities, equipment, and material are not diverted from peaceful 
purposes to non-peaceful purposes. European Atomic Energy Community 
(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 of the EAR) may not be exported, reexported, or 
transferred (in-country) under this paragraph (a), except to the 
countries listed in Country Group A:5 (See Supplement No.1 to part 740 
of the EAR).
    (ii) Items on the Very Sensitive List (see Supplement No. 7 to part 
774 of the EAR) may not be exported, reexported, or transferred (in-
country) under this paragraph (a).
    (iii) Encryption items controlled for EI reasons under ECCNs 5A002, 
5D002, or 5E002 may not be exported, reexported, or transferred (in-
country) under this

[[Page 22715]]

paragraph (a). See Sec.  740.17 of the EAR (License Exception ENC) for 
possible alternative license exception authorization.
    (iv) Without prior authorization from the Bureau of Industry and 
Security, nationals of countries in Country Group E:1(see Supplement 
No. 1 to this part) 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.
    (v) ``600 series'' items may not be exported or reexported under 
this paragraph (a), except to the countries listed in Country Group A:5 
(see Supplement No.1 to this part).
    (b) United States Government. (1) Scope. The provisions of this 
paragraph (b) authorize exports, reexports, and transfers (in-country) 
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-governmental 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 (in-country) 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 (in-country) made for or on 
behalf of a department or agency of the U.S. Government.
    (A) This paragraph authorizes exports, reexports, and transfers 
(in-country) 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 (in-country) 
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 
(in-country) 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 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 (in-country) 
(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 (in-
country) are not controlled for Chemical Weapons Convention (CW) or 
proliferation of chemical and biological weapons (CB) reasons;
    (C) This paragraph authorizes the temporary export, reexport, or 
transfer (in-country) 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, reexporter, or transferor 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 (in-country) (including any restrictions on the 
foreign release of technology);
    (D) This paragraph authorizes the export, reexport, or transfer 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

[[Page 22716]]

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 (in-country);
    (E) This paragraph authorizes the export, reexport, or transfer 
(in-country) of Government Furnished Equipment (GFE) made by a U.S. 
Government contractor, when:
    (1) The GFE will not be provided to any foreign person;
    (2) The export, reexport, or transfer (in-country) is pursuant to a 
contract with a department or agency of the U.S. Government; and
    (3) 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].''
    (F) Electronic Export Information. 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 assigned by AES must be properly 
annotated on shipping documents (bill of lading, airway bill, other 
transportation documents, or commercial invoice).
    (G) The exporter, reexporter, or transferor must obtain an 
authorization, if required, before any item previously exported, 
reexported, or transferred (in-country) 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 items 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 items to be exported, reexported, or 
transferred (in-country) 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, 
reexported, or transferred 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.
    (c) Cooperating Governments. (1) Scope. The provisions of this 
paragraph (c) authorize exports reexports, and transfers (in-country) 
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 government. 
Cooperating governments are the national governments of countries 
listed in Country Group A:1 (see Supplement No. 1 to this part) 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 this part), except items excluded by paragraph (c)(3) of this 
section.
    (3) Exclusions. The following items may not be exported, 
reexported, or transferred (in-country) under this paragraph (c):
    (i) Items on the Sensitive List (see Supplement No. 6 to part 774 
of the EAR), except to the countries listed in Country Group A:5 (see 
Supplement No.1 to this part);
    (ii) Items on the Very Sensitive List (see Supplement No. 7 to part 
774 of the EAR);
    (iii) Encryption items controlled for EI reasons under ECCNs 5A002, 
5D002, or 5E002 (see Sec.  740.17 of the EAR for License Exception 
ENC);
    (iv) Regional stability items controlled under 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 Country 
Group A:5 (see Supplement No. 1 to this part);
    (vi) Items controlled for nuclear nonproliferation (NP) reasons;
    (vii) Items listed as not eligible for License Exception STA in 
Sec.  740.20(b)(2)(ii) of the EAR.
    (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.

[[Page 22717]]

    (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 
Country Group A:5 (see Supplement No.1 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 (see 
Supplement No. 1 to this part) 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.
    (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,'' ``components,'' 
``accessories,'' and ``attachments'' 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 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 pursuant to an 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 (see 
Supplement No. 1 to this part), 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.

[[Page 22718]]

    (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 (see Supplement No. 
1 to this part) 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.

0
24. Section 740.13 is amended by adding a sentence to the end of 
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 nationals who are their bona fide and full time 
regular employees.
    (2) Eligible foreign nationals (i.e., bona fide and full time 
regular employees of U.S. universities). This exception is only 
available if:
    (i) The employee's permanent residence throughout the period of 
employment is in the U.S.;
    (ii) The employee is not a national of a destination listed in 
Country Group D:5 (see Supplement No. 1 to part 740 of the EAR); and
    (iii) The university informs the individual in writing that the 
``technology'' or source code may not be transferred to other foreign 
nationals without prior U.S. Government authorization. The obligation 
not to transfer technology extends beyond the tenure of employment at 
the university.
    (3) Regular employee. A regular employee means:
    (i) An individual permanently and directly employed by the 
university; or
    (ii) An individual in a long-term contractual relationship with the 
university where the individual works at the university's facilities; 
works under the university's direction and control; works full time and 
exclusively for the university; executes nondisclosure certifications 
for the university; and where the staffing agency that has seconded the 
individual has no role in the work the individual performs (other than 
providing that individual for that work) and the staffing agency would 
not have access to any controlled technology (other than where 
specifically authorized by a license or where a license exception is 
available).
    (4) Exclusions. (i) No ``technology'' or source code may be 
released to a foreign national who is subject to a part 744 end-use or 
end-user control or where the release would otherwise be inconsistent 
with part 744; and
    (ii) No ``technology'' controlled for ``EI'' (encryption) reasons 
or ``technology'' or source code controlled for ``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 transfer (in-country) to the same recipient. This 
paragraph also authorizes the export, reexport, or transfer (in-
country) of revised copies of such technology provided the following 
three 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; and
    (3) The exporter, reexporter, or transferor has no reason to 
believe the same recipient has used the technology in violation of the 
original authorization.
* * * * *

0
25. Section 740.20 is amended by:
0
a. Revising paragraph (a);
0
b. Removing the phrase ``destinations indicated in paragraph (c)(1) of 
this section'' and adding in its place ``destinations indicated in 
Country Group A:5 (See Supplement No.1 to this part)'' in paragraph 
(b)(2)(vi);
0
c. Adding paragraph (b)(3);
0
d. Revising paragraphs (c)(1) and (2);
0
e. Adding three sentences immediately following the first sentence of 
paragraph (d)(2);
0
f. Removing the word ``and'' that follows the semicolon at the end of 
paragraph (d)(2)(v);
0
g. Adding paragraphs (d)(2)(vi), (d)(2)(vii)) and (g); and
0
h. Removing the phrase ``country listed in paragraph (c)(1) or (c)(2) 
of this section'' and adding in its place ``country listed in Country 
Group A:5 or A:6 (See Supplement No.1 to this part)'' in paragraph 
(d)(4).
    The revisions and additions read as follows:


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

    (a) Introduction. This section authorizes exports, reexports, and 
transfers (in-country), including releases within a single country of 
software source code and technology to foreign nationals, in lieu of a 
license that would otherwise be required pursuant to part 742 of the 
EAR.
    (b) * * *
    (3) Limitations on the Use of STA that are Specific to ``600 
series'' Items. (i) License Exception STA may not be used for any ``600 
series'' items identified in the relevant ECCN as not being eligible 
for STA.

[[Page 22719]]

    (ii) License Exception STA may be used to export, reexport, and 
transfer (in-country) ``600 series'' items to persons, whether non-
governmental or governmental, if they are in and, for natural persons, 
nationals of a country listed in Country Group A:5 (See Supplement No.1 
to part 740 of the EAR) or the United States and if:
    (A) The ultimate end user for such items is the armed forces, 
police, paramilitary, law enforcement, customs, correctional, fire, or 
a search and rescue agency of a government of one of the countries 
listed in Country Group A:5, or the United States Government;
    (B) For the ``development,'' ``production,'' operation, 
installation, maintenance, repair, overhaul, or refurbishing of an item 
in one of the countries listed in Country Group A:5 or the United 
States that will ultimately be used by any such government agencies, 
the United States Government, or a person in the United States; or
    (C) The United States Government has issued a license that 
authorizes the use of License Exception STA, the license is in effect, 
and the consignee provides a copy of such authorization to the 
exporter.
    (iii) License Exception STA may not be used to export, reexport, or 
transfer (in-country) end items described in ECCN 9A610.a until after 
BIS has approved their export under STA under the procedures set out in 
Sec.  740.20(g).
    (iv) License Exception STA may not be used to export, reexport, or 
transfer (in-country) ``600 series'' items if they are ``600 Series 
Major Defense Equipment'' and the value of such items in the contract 
requiring their export exceeds $25,000,000.
    (c) Authorizing paragraphs--(1) Multiple reasons for control. 
Exports, reexports, and transfers (in-country) in which the only 
applicable reason(s) for control is (are) national security (NS); 
chemical or biological weapons (CB); nuclear nonproliferation (NP); 
regional stability (RS); crime control (CC), and/or significant items 
(SI) are authorized for destinations in or nationals of Country Group 
A:5 (See Supplement No.1 to part 740 of the EAR).

    Note to paragraph (c)(1). 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.

    (2) Controls of lesser sensitivity. Exports, reexports and 
transfers (in-country) in which the only applicable reason for control 
is national security (NS) and the item being exported, reexported or 
transferred (in-country) is not designated in the STA paragraph in the 
License Exception section of the ECCN that lists the item are 
authorized for destinations in or nationals of Country Group A:6 (See 
Supplement No.1 to this part).
* * * * *
    (d) * * *
    (1) * * *
    (2) Prior consignee statement. * * * Paragraphs (d)(2)(i) through 
(v) of this section are required for all transactions. In addition, 
paragraph (d)(2)(vi) is required for all transactions in ``600 series'' 
items and paragraph (vii) of this section is required for transactions 
in ``600 series'' items if the consignee is not the government of a 
country listed in Country Group A:5 (See Supplement No. 1 to part 740 
of the EAR).
* * * * *
    (vi) Understands that License Exception STA may be used to export, 
reexport, and transfer (in-country) ``600 series'' items to persons, 
whether non-governmental or governmental, only if they are in and, for 
natural persons, nationals of a country listed in Country Group A:5 
(See Supplement No.1 to part 740 of the EAR) or the United States and 
if:
    (A) The ultimate end user for such items is the armed forces, 
police, paramilitary, law enforcement, customs, correctional, fire, or 
a search and rescue agency of a government of one of the countries 
listed in Country Group A:5 or the United States Government;
    (B) For the ``development,'' ``production,'' operation 
installation, maintenance, repair, overhaul, or refurbishing of an item 
in one of the countries listed in Country Group A:5 or the United 
States that will ultimately be used by any such government agencies, 
the United States Government, or a person in the United States; or
    (C) A United States Government license authorizes the use of 
License Exception STA, the license is in effect, and is attached to the 
consignee statement.
    (vii) Agrees to permit a U.S. Government end-use check with respect 
to the items.
* * * * *
    (g) License Exception STA eligibility requests for ``600 series'' 
end items. (1) Applicability. Any person may request License Exception 
STA eligibility for aircraft described in ECCN 9A610.a.
    (2) Required information and manner of requests. Requests for 
License Exception STA eligibility must be made via the BIS Simplified 
Network Application Process-Redesign (SNAP-R) system unless BIS 
authorizes submission via the paper BIS-748-P Multipurpose Application 
form. For situations in which BIS 748-P submissions may be authorized, 
see Sec.  748.1(d)(1). For required information specific to License 
Exception STA eligibility requests, see Supplement No. 1 to part 748, 
Blocks 5 and 6 and Supplement No. 2 to part 748, paragraph (w). In 
SNAP-R the work type for these applications is ``Export.''
    (3) Timeline for USG review. The Departments of Commerce, Defense 
and State will review License Exception STA eligibility requests in 
accordance with the timelines set forth in Executive Order 12981 and 
Sec.  750.4. If the License Exception STA request is approved, the 
process outlined in paragraph (g)(5)(i) of this section is followed.
    (4) Review criteria. The Departments of Commerce, Defense and State 
will determine whether the ``end item'' is eligible for this license 
exception based on an assessment of whether it provides a critical 
military or intelligence advantage to the United States or is otherwise 
available in countries that are not regime partners or close allies. If 
the ``end item'' does not provide a critical military or intelligence 
advantage to the United States or is otherwise available in countries 
that are not regime partners or close allies, the Departments will 
determine that License Exception STA is available unless an overarching 
foreign policy rationale for restricting STA availability can be 
articulated. Consensus among the Departments is required in order for 
an ``end item'' to be eligible for License Exception STA. Such 
determinations are made by the departments' representatives to the 
Advisory Committee on Export Policy (ACEP), or their designees.
    (5) Disposition of License Exception STA eligibility requests. (i) 
Approvals. If the request for STA eligibility is approved, the 
applicant will receive notification from BIS authorizing the use of the 
additional License Exception STA for the specific end items requested. 
This will be in the form of a notice generated by SNAP-R to the 
applicant. Applicants who receive an approval notification may share it 
with companies affiliated with them, such as a branch or distributor, 
and may also take steps to make it public (e.g., on their Web site) if 
the applicants so wish. In addition, BIS will add a description of the 
approved end item in the relevant ECCN and in an online table posted on 
the BIS Web site, which removes the restriction on the use of License 
Exception STA for the end item identified in the approved request. BIS

[[Page 22720]]

will publish, as needed, a final rule adding this license exception 
eligibility to the EAR for that ECCN entry or end item.
    (ii) Denials. If the STA eligibility request is not approved, the 
applicant will receive written notification from BIS. This will be in 
the form of a notice generated by SNAP-R to the applicant. Applicants 
may re-submit STA eligibility requests at any time.

0
26. Supplement No. 1 to part 740, Country Group A is amended by:
0
a. Adding two columns A:5 and A:6 to the right of column A:4; and
0
b. Adding rows for: Albania, Israel, Singapore, and Taiwan, in 
alphabetic order, to read as follows:

------------------------------------------------------------------------
 
------------------------------------------------------------------------
                                    *******         [A:5]         [A:6]
------------------------------------------------------------------------
Albania.......................      *******   ............            X
Argentina.....................      *******             X   ............
Australia.....................      *******             X   ............
Austria \1\...................      *******             X   ............
Belarus.......................      *******   ............  ............
Belgium.......................      *******             X   ............
Brazil........................      *******   ............  ............
Bulgaria......................      *******             X   ............
Canada........................      *******             X   ............
Croatia.......................      *******             X   ............
Cyprus........................      *******   ............  ............
Czech Republic................      *******             X   ............
Denmark.......................      *******             X   ............
Estonia.......................      *******             X   ............
Finland \1\...................      *******             X   ............
France........................      *******             X   ............
Germany.......................      *******             X   ............
Greece........................      *******             X   ............
Hong Kong \1\.................      *******   ............            X
Hungary.......................      *******             X   ............
Iceland.......................      *******             X   ............
India.........................      *******   ............            X
Ireland \1\...................      *******             X   ............
Israel........................      *******   ............            X
Italy.........................      *******             X   ............
Japan.........................      *******             X   ............
Kazakhstan....................      *******   ............  ............
Korea, South \1\..............      *******             X   ............
Latvia........................      *******             X   ............
Lithuania.....................      *******             X   ............
Luxembourg....................      *******             X   ............
Malta.........................      *******   ............            X
Netherlands...................      *******             X   ............
New Zealand \1\...............      *******             X   ............
Norway........................      *******             X   ............
Poland........................      *******             X   ............
Portugal......................      *******             X   ............
Romania.......................      *******             X   ............
Russia........................      *******   ............  ............
Singapore.....................      *******   ............            X
Slovakia......................      *******             X   ............
Slovenia......................      *******             X   ............
South Africa..................      *******   ............            X
Spain.........................      *******             X   ............
Sweden \1\....................      *******             X   ............
Switzerland \1\...............      *******             X   ............
Taiwan........................      *******   ............            X
Turkey........................      *******             X   ............
Ukraine.......................      *******   ............  ............
United Kingdom................      *******             X   ............
United States.................      *******   ............  ............
------------------------------------------------------------------------
\1\ Cooperating Countries.


0
27. Supplement No. 1 to part 740, Country Group D is amended by:
0
a. Adding column D:5 to the right of column D:4; and
0
b. Adding rows, in alphabetical order, for: Congo (Democratic Republic 
of), Cote d'Ivoire, Cyprus, Eritrea, Fiji, Haiti, Liberia, Somalia, Sri 
Lanka, Sudan, Venezuela, and Zimbabwe, to read as follows:

------------------------------------------------------------------------
                                                 *******
------------------------------------------------------------------------
                   Country                        *******         [D:5]
                                                              U.S. Arms
                                                              Embargoed
                                                                       Countries\1\
---------------------------------------------              -------------
Afghanistan.................................      *******             X
Armenia.....................................      *******   ............
Azerbaijan..................................      *******   ............
Bahrain.....................................      *******   ............
Belarus.....................................      *******             X
Burma.......................................      *******             X
Cambodia....................................      *******   ............
China (PRC).................................      *******             X
Congo, Democratic Republic of...............      *******             X

[[Page 22721]]

 
Cote d'Ivoire...............................      *******             X
Cuba........................................      *******             X
Cyprus......................................      *******             X
Egypt.......................................      *******   ............
Eritrea.....................................      *******             X
Fiji........................................      *******             X
Georgia.....................................      *******   ............
Haiti.......................................      *******             X
Iran........................................      *******             X
Iraq........................................      *******             X
Israel......................................      *******   ............
Jordan......................................      *******   ............
Kazakhstan..................................      *******   ............
Korea, North................................      *******             X
Kuwait......................................      *******   ............
Kyrgyzstan..................................      *******   ............
Laos........................................      *******   ............
Lebanon.....................................      *******             X
Liberia.....................................      *******             X
Libya.......................................      *******             X
Macau.......................................      *******   ............
Moldova.....................................      *******   ............
Mongolia....................................      *******   ............
Oman........................................      *******   ............
Pakistan....................................      *******   ............
Qatar.......................................      *******   ............
Russia......................................      *******   ............
Saudi Arabia................................      *******   ............
Somalia.....................................      *******             X
Sri Lanka...................................      *******             X
Sudan.......................................      *******             X
Syria.......................................      *******             X
Taiwan......................................      *******   ............
Tajikistan..................................      *******   ............
Turkmenistan................................      *******   ............
Ukraine.....................................      *******   ............
United Arab Emirates........................      *******   ............
Uzbekistan..................................      *******   ............
Venezuela...................................      *******             X
Vietnam.....................................      *******             X
Yemen.......................................      *******   ............
Zimbabwe....................................      *******             X
------------------------------------------------------------------------
\1\ Note to Country Group D:5: 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.

PART 742--[AMENDED]

0
28. The authority citation 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 15, 2012, 77 FR 49699 (August 16, 2012); Notice of 
November 1, 2012, 77 FR 66513 (November 5, 2012).


0
29. Section 742.4 is amended by revising paragraph (b)(1), to read as 
follows:


Sec.  742.4  National security.

* * * * *
    (b) Licensing policy. (1)(i) The policy for national security 
controlled items exported or reexported to any country except a country 
in Country Group D:1 (see Supplement No. 1 to part 740 of the EAR) is 
to approve applications unless there is a significant risk that the 
items will be diverted to a country in Country Group D:1.
    (ii) When destined to a country listed in Country Group D:5 in 
Supplement No. 1 to Part 740 of the EAR, however, items classified 
under ``600 series'' ECCNs will also be reviewed consistent with United 
States arms embargo policies (Sec.  126.1 of the ITAR).
* * * * *

0
30. Section 742.6 is amended by:
0
a. Revising paragraph (a)(1);
0
b. Removing the phrase ``9A018.a and .b, 9D018 (only software for the 
``use'' of commodities in ECCN 9A018.a and .b), and 9E018 (only 
technology for the ``development'', ``production'', or ``use'' of 
commodities in 9A018.a and .b)'' and adding in its place ``9A018.b, 
9D018 (only software for the ``use'' of commodities in ECCN 9A018.b), 
and 9E018 (only technology for the ``development'', ``production'', or 
``use'' of commodities in 9A018.b)'' at the end of paragraph (a)(4)(i); 
and
0
c. Revising paragraph (b)(1).
    The revisions read as follows:


Sec.  742.6  Regional stability.

    (a) * * *
    (1) RS Column 1 license requirements in general. A license is 
required for exports and reexports to all destinations, except Canada, 
for all items in ECCNs on the CCL that include RS Column 1 in the 
Country Chart column of the ``License Requirements'' section. 
Transactions described in paragraphs (a)(2) or (3) of this section are 
subject to the RS Column 1 license requirements set forth in those 
paragraphs rather than the license requirements set forth in this 
paragraph (a)(1).
* * * * *
    (b) Licensing policy. (1) 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), (2), (6) or 
(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 requiring a license in 
accordance with paragraph (a)(1) of this section will also be reviewed 
consistent with United States arms embargo policies (Sec.  126.1 of the 
ITAR) if destined to a country set forth in Country Group D:5 in 
Supplement No. 1 to part 740 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--SPECIAL REPORTING AND NOTIFICATION

0
31. The authority citation for part 743 is revised to read as follows:

    Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; 
E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 783; E.O. 13637 of 
March 8, 2013, 78 FR 16129 (March 13, 2013); Notice of August 15, 
2012, 77 FR 49699 (August 16, 2012).


0
32. The heading for part 743 is revised to read as set forth above.

0
33. Section 743.1 is amended by adding two sentences at the end of 
paragraph (a) introductory text and by revising paragraph (c) to read 
as follows:


Sec.  743.1  Wassenaar Arrangement.

    (a) * * * This section is limited to the Wassenaar Arrangement 
reporting requirements for items listed on the Wassenaar Arrangement's 
Dual-Use list. For reporting requirements for conventional arms listed 
on the Wassenaar Arrangement Munitions List that are subject to the EAR 
(i.e., ``600 series'' ECCNs), see Sec.  743.4 of this part for 
Wassenaar Arrangement and United Nations reporting requirements.
* * * * *
    (c) Items for which reports are required. You must submit reports 
to BIS under the provisions of this section only for exports of items 
on the

[[Page 22722]]

Sensitive List (see Supplement No. 6 to part 774 of the EAR).
* * * * *
0
34. Add Sec.  743.4 to read as follows:


Sec.  743.4  Conventional arms reporting.

    (a) Scope. This section outlines special reporting requirements for 
exports of certain items listed on the Wassenaar Arrangement Munitions 
List and the UN Register of Conventional Arms. Participating States of 
the Wassenaar Arrangement exchange information every six months on 
deliveries to non-participating states of conventional arms set forth 
in the Wassenaar Arrangement's Basic Documents under Part II Guideline 
and Procedures, including the Initial Elements, Appendix 3: Specific 
Information Exchange on Arms Content by Category (at 
www.wassenaar.org), derived from the categories of the UN Register of 
Conventional Arms (at www.un.org/disarmament/convarms/Register/). 
Similar, although not identical, information is also reported by the 
U.S. Government to the United Nations on an annual basis. The reported 
information should include the quantity and the name of the recipient 
state and, except in the category of missiles and missile launchers, 
details of model and type. Such reports must be submitted to BIS semi-
annually in accordance with the provisions of paragraph (f) of this 
section for items identified in paragraph (c)(1) and annually for items 
identified in paragraph (c)(2), and records of all exports subject to 
the reporting requirements of this section must be kept in accordance 
with part 762 of the EAR. This section does not require reports for 
reexports or transfers (in-country).

    Note to paragraph (a): For purposes of Sec.  743.4, the term 
``you'' has the same meaning as the term ``exporter'', as defined in 
part 772 of the EAR.

    (b) Requirements. You must submit one electronic copy of each 
report required under the provisions of this section and maintain 
accurate supporting records (see Sec.  762.2(b) of the EAR) for all 
exports of items specified in paragraph (c) of this section for the 
following:
    (1) Exports authorized under License Exceptions LVS, TMP, RPL, STA, 
or GOV (see part 740 of the EAR);
    (2) Exports authorized under the Special Comprehensive License 
procedure (see part 752 of the EAR); and
    (3) Exports authorized under the Validated End User authorization 
(see Sec.  748.15 of the EAR).
    (c) Items for which reports are required--. (1) Wassenaar 
Arrangement reporting. You must submit reports to BIS under the 
provisions of this section only for exports of items classified under 
the following ECCNs:
    (i) [Reserved]
    (ii) [Reserved]
    (2) United Nations reporting. You must submit reports to BIS under 
the provisions of this section only for exports of items classified 
under the following ECCNs:
    (i) [Reserved]
    (ii) [Reserved]
    (d) Country Exceptions for Wassenaar Arrangement reporting. You 
must report each export subject to the provisions of this section, 
except for exports to Wassenaar member countries, identified in 
Supplement No. 1 to part 743 for reports required under paragraph 
(c)(1) of this section.
    (e) Information that must be included in each report. (1) Each 
report submitted to BIS for items other than those identified in 
paragraph (e)(2) of this section must include the following information 
for each export during the time periods specified in paragraph (f) of 
this section:
    (i) Export Control Classification Number and paragraph reference as 
identified on the Commerce Control List;
    (ii) Number of units in the shipment; and

    Note to paragraph (e)(1)(ii): For exports of technology for 
which reports are required under Sec.  743.1(c) of this section, the 
number of units in the shipment should be reported as one (1) for 
the initial export of the technology to a single ultimate consignee. 
Additional exports of the technology must be reported only when the 
type or scope of technology changes or exports are made to other 
ultimate consignees.

    (iii) Country of ultimate destination.
    (f) Frequency and timing of reports -- (1) Semi-annual reports for 
items identified in paragraph (c)(1) of this section. You must submit 
reports subject to the provisions of this section semiannually. The 
reports must be labeled with the exporting company's name and address 
at the top of each page and must include for each such export all the 
information specified in paragraph (e) of this section. The reports 
shall cover exports made during six-month time periods from January 1 
through June 30 and July 1 through December 31.
    (i) The first report must be submitted to and received by BIS no 
later than 180 days after the effective date of the rule that revises 
paragraph (c)(1) of this section to add the ECCN for the item being 
reported. Thereafter, reports are due according to the provisions of 
paragraphs (f)(2) and (f)(3) of this section.
    (ii) Reports for the reporting period ending June 30 must be 
submitted to and received by BIS no later than August 1.
    (iii) Reports for the reporting period ending December 31 must be 
submitted to and received by BIS no later than February 1.
    (2) Annual reports for items identified in paragraph (c)(2) of this 
section. You must submit reports subject to the provisions of this 
section annually. The reports must be labeled with the exporting 
company's name and address at the top of each page and must include for 
each such export all the information specified in paragraph (e) of this 
section. The reports shall cover exports made during twelve month time 
periods from January 1 through December 31.
    (i) The first report must be submitted to and received by BIS no 
later than 180 days after the effective date of the rule that revises 
paragraph (c)(1) of this section to add the ECCN for the item being 
reported. Thereafter, reports are due according to the provisions of 
paragraph (f)(2) of this section.
    (ii) Reports for the reporting period ending December 31 must be 
submitted to and received by BIS no later than February 1.
    (g) Submission of reports. Information should be submitted in the 
form of a spreadsheet and emailed to [email protected] or 
[email protected].
    (h) Contacts. General information concerning the Wassenaar 
Arrangement and reporting obligations thereof is available from the 
Office of National Security and Technology Transfer Controls, Tel. 
(202) 482-0092, Fax: (202) 482-4094.

0
35. Section 743.5 is added to read as follows:


Sec.  743.5  Prior notifications to Congress of Exports of ``600 Series 
Major Defense Equipment.''

    (a) General requirement. Applications to export items on the 
Commerce Control List that are ``600 Series Major Defense Equipment'' 
will be notified to Congress as provided in this section before 
licenses for such items are issued.
    (1) Exports of ``600 Series Major Defense Equipment'' to U.S. 
Government end users under License Exception GOV (Sec.  740.11(b) of 
the EAR) do not require such notification.
    (2) Exports of ``600 Series Major Defense Equipment'' that have 
been or will be described in a notification filed by the U.S. State 
Department under the Arms Export Control Act do not require such 
notification by BIS.
    (b) BIS will notify Congress prior to issuing a license authorizing 
the export

[[Page 22723]]

of items to a country outside the countries listed in Country Group A:5 
(see Supplement No.1 to part 740 of the EAR) that are sold under a 
contract that includes $14,000,000 or more of ``600 Series Major 
Defense Equipment.''
    (c) BIS will notify Congress prior to issuing a license authorizing 
the export of items to a country listed in Country Group A:5 (see 
Supplement No.1 to part 740 of the EAR) that are sold under a contract 
that includes $25,000,000 or more of ``600 Series Major Defense 
Equipment.''
    (d) In addition to information required on the application, the 
exporter must include a copy of the signed contract (including a 
statement of the value of the ``600 Series Major Defense Equipment'' 
items to be exported under the contract) for any proposed export 
described in paragraphs (b) or (c) of this section.
    (e) Address. Munitions Control Division at 
[email protected].

PART 744--[AMENDED]

0
36. The authority citation for part 744 continues to read as follows:

    Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; 
22 U.S.C. 3201 et seq.; 42 U.S.C. 2139a; 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 January 19, 2012, 77 FR 3067 
(January 20, 2012); Notice of August 15, 2012, 77 FR 49699 (August 
16, 2012); Notice of September 11, 2012, 77 FR 56519 (September 12, 
2012); Notice of November 1, 2012, 77 FR 66513 (November 5, 2012).

0
37. Section 744.17 is amended by revising the section heading and 
paragraph (d) to read as follows:


Sec.  744.17  Restrictions on certain exports and reexports of general 
purpose microprocessors for `military end uses' and to `military end 
users.'

* * * * *
    (d) Military end use. In this section, the phrase `military end 
use' means incorporation into: a military item described on the U.S. 
Munitions List (USML) (22 CFR part 121, International Traffic in Arms 
Regulations) or the Wassenaar Arrangement Munitions List (as set out on 
the Wassenaar Arrangement Web site at http://www.wassenaar.org); 
commodities classified under ECCNs ending in ``A018'' or under ``600 
series'' ECCNs; or any commodity that is designed for the ``use,'' 
``development,'' ``production,'' or deployment of military items 
described on the USML, the Wassenaar Arrangement Munitions List or 
classified under ECCNs ending in ``A018'' or under ``600 series'' 
ECCNs. Supplement No. 1 of this part lists examples of `military end 
use.'
* * * * *

0
38. 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), by adding a 
new paragraph (a)(2), and by revising paragraph (f) to read as follows:


Sec.  744.21  Restrictions on certain `military end uses' in the 
People's Republic of China (PRC).

    (a)(1) * * *
    (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.
* * * * *
    (f) In this section, `military end use' means: incorporation into a 
military item described on the U.S. Munitions List (USML) (22 CFR part 
121, International Traffic in Arms Regulations); incorporation into a 
military item described on the Wassenaar Arrangement Munitions List (as 
set out on the Wassenaar Arrangement Web site at http://www.wassenaar.org); incorporation into items classified under ECCNs 
ending in ``A018'' or under ``600 series'' ECCNs; or for the ``use,'' 
``development,'' or ``production'' of military items described on the 
USML or the Wassenaar Arrangement Munitions List, or items classified 
under ECCNs ending in ``A018'' or under ``600 series'' ECCNs. * * *
* * * * *

PART 746--[AMENDED]

0
39. The authority citation for part 746 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. 287c; Sec 1503, Pub. L. 108-11, 117 Stat. 559; 22 U.S.C. 
6004; 22 U.S.C. 7201 et seq.; 22 U.S.C. 7210; E.O. 12854, 58 FR 
36587, 3 CFR, 1993 Comp., p. 614; E.O. 12918, 59 FR 28205, 3 CFR, 
1994 Comp., p. 899; E.O. 13222, 3 CFR, 2001 Comp., p. 783; E.O. 
13338, 69 FR 26751, 3 CFR 2004 Comp., p. 168; Presidential 
Determination 2003-23 of May 7, 2003, 68 FR 26459, May 16, 2003; 
Presidential Determination 2007-7 of December 7, 2006, 72 FR 1899 
(January 16, 2007); Notice of May 9, 2012, 77 FR 27559 (May 10, 
2012); Notice of August 15, 2012, 77 FR 49699 (August 16, 2012).

0
40. Section 746.1 is amended by revising paragraph (b)(4) to read as 
follows:


Sec.  746.1  Introduction.

* * * * *
    (b) * * *
    (4) You may not use any License Exception, other than License 
Exception GOV, for items for personal or official use by personnel and 
agencies of the U.S. Government or agencies of cooperating governments 
as set forth in Sec.  740.11(b) of the EAR, to export or reexport items 
with a UN reason for control to countries listed in paragraph (b)(2) of 
this section. This paragraph does not apply to Iraq, which is governed 
by Sec.  746.3(c) of this part; North Korea, which is governed by Sec.  
746.4(c) of this part; or Iran, which is governed by Sec.  746.7(c) of 
this part.

0
41. Section 746.3 is amended by revising paragraph (b)(2) to read as 
follows:


Sec.  746.3  Iraq.

* * * * *
    (b) * * *
    (2) License applications for the export or reexport to Iraq or 
transfer within Iraq of machine tools controlled for national security 
(NS) or nuclear nonproliferation (NP) reasons, as well as for any items 
controlled for crime control (CC) or United Nations (UN) reasons 
(including items classified under ECCN 0A986) or ECCNs that end in the 
number ``018'' or items classified under ``600 series'' ECCNs, that 
would make a material contribution to the production, research, design, 
development, support, maintenance or manufacture of Iraqi weapons of 
mass destruction, ballistic missiles or arms and related materiel will 
be subject to a general policy of denial. Exports of ``600 series'' 
items to the Government of Iraq will be reviewed under the policies set 
forth for such items in Sec. Sec.  742.4(b) and 742.6(b) of the EAR.
* * * * *

PART 748--[AMENDED]

0
42. The authority citation for part 748 continues to read as follows:

    Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; 
E.O. 13026, 61 FR 58767, 3 CFR, 1996 Comp., p. 228; E.O. 13222, 66 
FR 44025, 3 CFR, 2001 Comp., p. 783; Notice of August 15, 2012, 77 
FR 49699 (August 16, 2012).


0
43. In Sec.  748.1, paragraph (d) introductory text is amended by 
revising the first sentence to read as follows:


Sec.  748.1  General Provisions.

* * * * *

[[Page 22724]]

    (d) Electronic Filing Required. All export and reexport license 
applications (other than Special Comprehensive License or Special Iraq 
Reconstruction License applications), encryption registrations, License 
Exception AGR notifications, requests to authorize use of License 
Exception STA for ``600 series'' end items (which are currently 
submitted as export license applications) and classification requests 
and their accompanying documents must be filed via BIS's Simplified 
Network Application Processing system (SNAP-R), unless BIS authorizes 
submission via the paper forms BIS 748-P (Multipurpose Application 
Form), BIS-748P-A (Item Appendix) and BIS-748P-B, (End-User Appendix). 
* * *
* * * * *
0
44. Section 748.3 is amended by adding paragraph (e) to read as 
follows:


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

* * * * *
    (e) Classification requests to confirm that a ``part,'' 
``component,'' ``accessory,'' ``attachment,'' or ``software'' is not 
``specially designed.'' (1) Scope. If you have a ``part,'' 
``component,'' ``accessory,'' ``attachment,'' or ``software'' that is 
``specially designed'' on the basis of paragraph (a)(1) or (2) of the 
``specially designed'' definition in Sec.  772.1 of the EAR, you may 
submit a request in accordance with the procedures in Sec.  748.1 to 
confirm that the item is not ``specially designed'' provided you meet 
the following criteria:
    (i) The ``part,'' ``component,'' ``accessory,'' ``attachment,'' or 
``software'' does not meet the criteria of exclusion paragraph (b)(3) 
of the ``specially designed'' definition, but would meet the criteria 
if the minor changes in form or fit were determined to be insignificant 
by the U.S. Government.
    (ii) The performance capabilities of the ``part,'' ``component,'' 
``accessory,'' ``attachment,'' or ``software'' are the same as those of 
a ``part,'' ``component,'' ``accessory,'' ``attachment,'' or 
``software'' that would meet the criteria of exclusion paragraph (b)(3) 
of the definition of ``specially designed'' in Sec.  772.1 of the EAR.
    (2) Information to be provided. Applicants wishing to submit a 
CCATS requesting confirmation that a ``part,'' ``component,'' 
``accessory,'' ``attachment,'' or ``software'' is not ``specially 
designed'' must submit classification requests in accordance with the 
procedures in Sec.  748.1 and general provisions regarding submitting 
classification requests in Sec.  748.3(b). In addition, applicants must 
submit additional information identified in this paragraph (e)(2).
    (i) The classification request must indicate in Block 24 or in a 
separate PDF attachment included with the CCATS submission that the 
``part,'' ``component,'' ``accessory,'' ``attachment'' or ``software'' 
would meet the criteria in paragraph (e)(1)(i) and (ii) of this 
section;
    (ii) A detailed explanation must be provided regarding all changes 
in form and fit; and
    (iii) A rationale must be provided that explains why such changes 
in form and fit should be treated as minor or insignificant in terms of 
their role in the performance capabilities of the enumerated item.
    (3) U.S. Government Review. Commodity classification requests 
submitted pursuant to Sec.  748.3(e) are reviewed by the Departments of 
Commerce, State and Defense. A consensus determination is required to 
confirm that a ``part,'' ``component,'' ``accessory,'' ``attachment,'' 
or ``software'' is not ``specially designed'' on the basis of this 
paragraph. The interagency review process will ensure U.S. national 
security and foreign policy interests are evaluated prior to any 
confirmation pursuant to Sec.  748.3(e). The interagency review will 
consider on a case-by-case basis whether a particular ``part,'' 
``component,'' ``accessory,'' ``attachment,'' or ``software'' is 
``specially designed'' taking into account all the following:
    (i) The insignificance of the changes in form and fit;
    (ii) The overall role of the ``part,'' ``component,'' 
``accessory,'' ``attachment,'' or ``software'' in the performance 
capabilities of the enumerated item that it is used in or with;
    (iii) How substantively common it is to the other ``part,'' 
``component,'' ``accessory,'' ``attachment,'' or ``software'' that 
would meet the paragraph (b)(3) criteria;
    (iv) Whether such a confirmation would be consistent with U.S. 
Government multilateral export control regime commitments; and
    (v) Any other criteria that may be relevant in determining whether 
the ``part,'' ``component,'' ``accessory,'' ``attachment,'' or 
``software'' is ``specially designed,'' including an evaluation of how 
such a confirmation may affect U.S. national security and foreign 
policy interests.
    (4) CCATS response. The BIS response to the CCATS request will 
reflect the interagency consensus determination and the response will 
be made in accordance with the procedures in Sec. Sec.  748.1 and 
748.3(b). In addition, the BIS response will indicate one of the 
following:
    (i) The ``part,'' ``component,'' ``accessory,'' ``attachment,'' or 
``software'' is not ``specially designed'' on the basis of being within 
the scope of paragraph (b)(3) because the changes in form and fit have 
been determined by the U.S. Government to be minor or insignificant. In 
such cases, the new classification, which may be EAR99 or in another 
ECCN entry that does not use ``specially designed,'' will be provided 
as part of the BIS response;''
    (ii) The request under Sec.  748.3(e) has been denied and the 
``part,'' ``component,'' ``accessory,'' ``attachment,'' or ``software'' 
continues to be classified under a ``specially designed'' `catch-all' 
(see the definition of ``specially designed'' in Sec.  772.1 of the 
EAR). The response will also include a determination regarding where 
the ``specially designed'' ``part,'' ``component,'' ``accessory,'' 
``attachment,'' or ``software'' is classified on the CCL; or
    (iii) Returned without action (RWA) because insufficient 
information was provided or information was not provided in a timely 
fashion. These requests will be reviewed closely, and they will likely 
require additional follow up questions of applicants, so responding to 
such requests in a timely fashion will be an important part of the 
process to ensure such requests are considered by the U.S. Government.

    Note to paragraph (e): Although these requests for confirmation 
that an item is not ``specially designed'' are also reviewed by the 
Departments of State and Defense, similar to Sec.  748.3(b)(3), the 
public is reminded that neither the BIS classification nor the CCATS 
number may be relied upon or cited as evidence that the U.S. 
Government has determined that the ``parts,'' ``components,'' 
``accessories,'' ``attachments'' and ``software'' described in the 
commodity classification determination or a release made from 
``specially designed'' pursuant to Sec.  748.3(e) are subject to the 
EAR (see Sec.  734.3 of the EAR).


0
45. Section 748.8 is amended by adding paragraphs (w) and (x) to read 
as follows:


Sec.  748.8  Unique application and submission requirements.

* * * * *
    (w) License Exception STA eligibility requests for ``600 series'' 
end items.
    (x) License application for ``600 series'' item that is equivalent 
to a transaction previously approved under an ITAR license or other 
approval.

[[Page 22725]]

0
46. Supplement No. 1 to part 748 (BIS-748P, BIS-748P-A: Item Appendix, 
and BIS-748P-B: End-User Appendix; Multipurpose Application 
Instructions) is amended by:
0
a. Adding a sentence to the end of Block 5;
0
b. Adding a sentence to the end of Block 6; and
0
c. Adding five sentences to the end of Block 24, to read as follows:

Supplement No. 1 to Part 748--Item Appendix, and BIS-748P-B: End-User 
Appendix; Multipurpose Application Instructions

* * * * *
    Block 5: * * *
    If you are submitting a License Exception STA eligibility 
request pursuant to Sec.  740.20(g), mark the box labeled ``Export'' 
with an +X) and then proceed to Block 6 of this supplement for 
instructions specific to such requests.
    Block 6: * * *
    Mark the ``Other'' box with an (X) and insert the phrase ``STA 
request'' for the description of the support document to submit a 
request for License Exception STA eligibility pursuant to Sec.  
740.20(g). (See Supplement No. 2 to part 748 under paragraph (w) for 
unique application and submission requirements for License Exception 
STA eligibility requests described under this Block 6.)
* * * * *

Block 24: Additional Information

    This Block should be completed if your application includes a 
``600 series'' item that is equivalent to a transaction previously 
approved under an ITAR license or other approval. Enter the previous 
State license number or other approval identifier in Block 24 of the 
BIS license application. If more than one previous State license 
number or other approval identifier is applicable, then enter the 
most recent one. Only those license applications where the 
particulars of the EAR license application are equivalent as 
previously authorized under the ITAR license or other approval in 
regard to the description of the item (including the item's 
function, performance capabilities, form and fit), purchaser, 
ultimate consignee and end users on the license will receive full 
consideration under this paragraph, which may result in a quicker 
processing time. The classification of the ``600 series'' item in 
question will no longer be the same because the item would no longer 
be ``subject to the ITAR,'' but all other aspects of the description 
of the item must be the same in order to be reviewed under this 
expedited process under paragraph (x)of Supplement No. 2 to part 748 
of the EAR.4.)
* * * * *

0
47. Supplement No. 2 to part 748 (Unique Application and Submission 
Requirements) is amended by adding paragraphs (w) and (x) to read as 
follows:

Supplement No. 2 to Part 748--Unique Application and Submission 
Requirements

* * * * *
    (w) License Exception STA eligibility requests for ``600 
series'' end items. To request a License Exception STA eligibility 
requests for ``600 series'' end items pursuant to Sec.  740.20(g), 
you must mark an (X) in the ``Export'' box in Block 5 (Type of 
Application) block. You must mark an (X) in the ``Other'' box and 
insert the phrase ``STA request'' '' in Block 6 (Documents submitted 
with application) block. You must include the specific ``600 
Series'' ECCN in Block 22. In addition to the ECCN, you will need to 
provide sufficient information for the U.S. Government to make a 
determination as to STA eligibility. This will require you to submit 
more than merely a description of the end item. In particular, you 
will need to provide supporting information for why you believe that 
the end item does not, for example, provide a critical military or 
intelligence advantage to the United States or is available in 
countries that are not regime partners or close allies. You will 
also need to provide information regarding whether and, if so, how 
the end item is controlled by the export control laws and 
regulations of close allies and regime partners, if known. If you 
are not able to provide some of the information described above, the 
U.S. Government will still evaluate the request, including using 
resources and information that may only be available to the U.S. 
Government. However, when submitting such requests you are 
encouraged to provide as much information as you can based on the 
criteria noted above to assist the U.S. Government in evaluating 
these License Exception STA eligibility requests. In addition, you 
should provide BIS with the text you would propose BIS use in 
describing the end item in the appropriate ``600 series'' ECCN and 
the online table referenced in Sec.  740.20(g)(5)(i) in anticipation 
that the request may be approved pursuant to Sec.  740.20(g). You 
may submit additional information that you believe is relevant to 
the U.S. Government in reviewing the License Exception STA 
eligibility request as part of that support document or as an 
additional separate support document attachment to the license 
application.
    (x) License application for a ``600 series'' item that is 
equivalent to a transaction previously approved under an ITAR 
license or other license authority. To request that the U.S. 
Government review of a license application for a ``600 series'' item 
also take into consideration a previously approved ITAR license or 
other approval, applicants must also include the State license 
number or other approval identifier in Block 24 of the BIS license 
application (See the instructions in Supplement No. 1 to part 748 
under Block 24).

    Note to paragraph (x): License applications submitted under 
paragraph (x) will still be reviewed in accordance with license 
review procedures and timelines identified in part 750, including 
Sec. Sec.  750.3 and 750.4. Applicants are advised that including a 
previously approved State license or other approval may have no 
effect on the license review process since each application is 
reviewed on its own merits at the time of submission. However, in 
some cases, previous licensing history may result in license 
applications being reviewed more quickly.

 PART 750--[AMENDED]

0
48. The authority citation for part 750 is revised to read as follows:

    Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; 
Sec 1503, Pub. L. 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; E.O. 13637 of March 8, 2013, 78 FR 16129 (March 13, 2013); 
Presidential Determination 2003-23 of May 7, 2003, 68 FR 26459, May 
16, 2003; Notice of August 15, 2012, 77 FR 49699 (August 16, 2012).


0
49. Section 750.4 is amended by adding paragraph (b)(7) to read as 
follows:


Sec.  750.4  Procedures for processing license applications.

* * * * *
    (b) * * *
    (7) Congressional Notification. Congressional notification, 
including any consultations prior to notification, prior to the 
issuance of an authorization to export when notification is required by 
Sec.  743.5 of the EAR.
0
50. Section 750.7 is amended by adding paragraph (c)(1)(ix) and 
revising paragraphs (g) introductory text and (g)(1) introductory text 
to read as follows:


Sec.  750.7  Issuance of licenses.

    (c) * * *
    (1) * * *
    (ix) Direct exports, reexports, or transfers (in-country) to and 
among approved end users on a license, provided those end users are 
listed by name and location on such license and the license does not 
contain any conditions 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. Reexports and transfers (in-
country) among approved end users may be further limited by license 
conditions.
* * * * *
    (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 for items controlled for

[[Page 22726]]

short supply reasons, which will be limited to a 12-month validity 
period and license applications reviewed and approved as an 
``emergency'' (see Sec.  748.4(h) of the EAR). 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 business day 
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 756--[AMENDED]

0
51. The authority citation for part 756 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 
15, 2012, 77 FR 49699 (August 16, 2012).


0
52. Section 756.1 is amended by adding paragraph (a)(4) to read as 
follows:


Sec.  756.1  Introduction.

    (a) * * *
    (4) A decision on whether License Exception STA is available for 
``600 series'' ``end items'' pursuant to Sec.  740.20(g).
* * * * *

PART 758--[AMENDED]

0
53. The authority citation 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 
15, 2012, 77 FR 49699 (August 16, 2012).


0
54. Section 758.1 is amended by revising the section heading, 
redesignating paragraphs (b)(3) through (5) as paragraphs (b)(5) 
through (7), and by adding new paragraphs (b)(3) and (4) to read as 
follows:


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

* * * * *
    (b) * * *
    (3) For all exports of ``600 series'' items enumerated in 
paragraphs .a through .x of a ``600 series'' ECCN regardless of value 
or destination, including exports to Canada;
    (4) For all exports under License Exception Strategic Trade 
Authorization (STA);
* * * * *

0
55. Section 758.2 is amended by adding paragraph (c)(4) to read as 
follows:


Sec.  758.2  Automated Export System (AES).

* * * * *
    (c) * * *
    (4) Exports are made under License Exception Strategic Trade 
Authorization (STA); are made under Authorization Validated End User 
(VEU); or are of ``600 series'' items.

0
56. Section 758.5 is amended by revising paragraphs (a), (b), (c), and 
(d) to read as follows:


Sec.  758.5  Conformity of documents and unloading of items.

    (a) Purpose. The purpose of this section is to prevent items 
licensed for export from being diverted while in transit or thereafter. 
It also sets forth the duties of the parties when the items are 
unloaded in a country other than that of the ultimate consignee or end 
user as stated on the export license.
    (b) Conformity of documents. When a license is issued by BIS, the 
information entered on related export control documents (e.g., the AES 
record, bill of lading or air waybill) must be consistent with the 
license.
    (c) Issuance of the bill of lading or air waybill. (1) Ports in the 
country of the ultimate consignee or end user. No person may issue a 
bill of lading or air waybill that provides for delivery of licensed 
items to any foreign port located outside the country of an 
intermediate consignee, ultimate consignee, or end user named on the 
BIS license and in the AES record.
    (2) Optional ports of unloading. (i) Licensed items. No person may 
issue a bill of lading or air waybill that provides for delivery of 
licensed items to optional ports of unloading unless all the optional 
ports are within the country of ultimate destination or are included on 
the BIS license and in the AES record.
    (ii) Unlicensed items. For shipments of items that do not require a 
license, the exporter may designate optional ports of unloading in AES 
record and on other export control documents, so long as the optional 
ports are in countries to which the items could also have been exported 
without a license.
    (d) Delivery of items. No person may deliver items to any country 
other than the country of an intermediate consignee, ultimate 
consignee, or end user named on the BIS license and AES record without 
prior written authorization from BIS, except for reasons beyond the 
control of the carrier (such as acts of God, perils of the sea, damage 
to the carrier, strikes, war, political disturbances or insurrection).
* * * * *

0
57. Section 758.6 is revised to read as follows:


Sec.  758.6  Destination control statement and other information 
furnished to consignees.

    (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, 
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) Additional requirement for ``600 series'' items. In addition to 
the DCS as required in paragraph (a) of this section, the ECCN for each 
``600 Series'' item being exported must be printed 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.

PART 762--[AMENDED]

0
58. The authority citation for part 762 continues to read as follows:


[[Page 22727]]


    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 
15, 2012, 77 FR 49699 (August 16, 2012).


0
59. Section 762.2 is amended by:
0
a. Revising paragraphs (b)(5), (7), (10), and (13);
0
b. Removing the ``and'' at the end of the paragraph (b)(48);
0
c. Removing the period at the end of paragraph (b)(49) and adding a 
semi-colon in its place; and
0
d. Adding paragraphs (b)(50) and (51).
    The revisions and additions read as follows:


Sec.  762.2  Records to be retained.

* * * * *
    (b) * * *
    (5) Sec.  740.9(a)(3)(i)(B), Tools of trade: Temporary exports, 
reexports, and transfers (in country) of technology by U.S. persons 
(TMP);
* * * * *
    (7) Sec.  740.11(b)(2)(iii) and (iv), Exports, reexports and 
transfers (in-country) made for or on behalf of a department or agency 
of the U.S. Government and Items exported at the direction of the U.S. 
Department of Defense (GOV);
* * * * *
    (10) Sec.  740.20(g), Responses to License Exception STA 
eligibility requests for ``600 series'' end items (STA);
* * * * *
    (13) Sec.  743.4(c)(1) and (c)(2), Conventional arms reporting;
* * * * *
    (50) Sec.  772.2, ``Specially designed'' definition, note to 
paragraphs (b)(4), (b)(5), and (b)(6); and
    (51) Sec.  740.20, note to paragraph (c)(1), License Exception STA 
prior approval on a BIS or DDTC license (STA).

PART 764--[AMENDED]

0
60. The authority citation 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 
15, 2012, 77 FR 49699 (August 16, 2012).

Supplement No. 1 to Part 764 [Amended]

0
61. Supplement No. 1 to part 764 is amended by removing the penultimate 
paragraph.

PART 770--[AMENDED]

0
62. The authority citation for part 770 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 
15, 2012, 77 FR 49699 (August 16, 2012).


Sec.  770.2  [Amended]

0
63. Section 770.2 is amended by removing and reserving paragraphs (i) 
and (j).

PART 772--[AMENDED]

0
64. The authority citation for part 772 continues to read as follows:

    Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; 
E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 783; Notice of August 
15, 2012, 77 FR 49699 (August 16, 2012).


0
65. Section 772.1 is amended by:
0
a. Revising the definitions of ``dual use,'' ``military commodity,'' 
and ``specially designed;'' and
0
b. Adding, in alphabetical order, the following twelve definitions for 
the terms ``600 series,'' ``600 Series Major Defense Equipment'' or 
``MDE,'' ``accessories,'' ``attachments,'' ``build-to-print 
technology,'' ``component,'' ``end item,'' ``equipment,'' 
``facilities,'' ``material,'' ``part,'' and ``system''.
    The revisions and additions read as follows:


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

* * * * *
    600 series. ECCNs in the ``xY6zz'' format on the Commerce Control 
List (CCL) that control items on the CCL that were previously 
controlled on the U.S. Munitions List or that are covered by the 
Wassenaar Arrangement Munitions List (WAML). The ``6'' indicates the 
entry is a munitions entry on the CCL. The ``x'' represents the CCL 
category and ``Y'' the CCL product group. The ``600 series'' 
constitutes the munitions ECCNs within the larger CCL. 600 Series Major 
Defense Equipment or MDE. Any item listed in ECCN 9A610.a, 9A619.a, 
9A619.b or 9A619.c, having a nonrecurring research and development cost 
of more than $50,000,000 or a total production cost of more than 
$200,000,000.

    Note to ``600 Series Major Defense Equipment'': For the most 
current list of MDE, see Appendix 1, (Nonrecurring Cost Recoupment 
Charges for Major Defense Equipment) to DoD 5105.38-M, ``Security 
Assistance Management Manual (SAMM),'' dated 04/30/2012, available 
online at http://www.dsca.osd.mil/samm/ESAMM/Appendix01.htm. 
Accessories. These are associated items for any ``component,'' ``end 
item,'' or ``system,'' and which are not necessary for their 
operation, but which enhance their usefulness or effectiveness. For 
example, for a riding lawnmower, ``accessories'' and ``attachments'' 
will include the bag to capture the cut grass, and a canopy to 
protect the operator from the sun and rain. For purposes of this 
definition, ``accessories'' and ``attachments'' are the same.

* * * * *
    Attachments. These are associated items for any ``component,'' 
``end item,'' or ``system,'' and which are not necessary for their 
operation, but which enhance their usefulness or effectiveness. For 
example, for a riding lawnmower, ``accessories'' and ``attachments'' 
will include the bag to capture the cut grass, and a canopy to protect 
the operator from the sun and rain. For purposes of this definition, 
``attachments'' and ``accessories'' are the same.
* * * * *
    Build-to-Print technology. (1) This is ``production'' 
``technology'' that is sufficient for an inherently capable end user to 
produce or repair a commodity from engineering drawings without:
    (i) Revealing ``development'' ``technology,'' such as design 
methodology, engineering analysis, detailed process or manufacturing 
know-how;
    (ii) Revealing the production engineering or process improvement 
aspect of the ``technology;'' or
    (iii) Requiring assistance from the provider of the technology to 
produce or repair the commodity.
    (2) Acceptance, test, or inspection criteria pertaining to the 
commodity at issue is included within the scope of ``build-to-print 
technology'' only if it is the minimum necessary to verify that the 
commodity is acceptable.
* * * * *
    Component. This is an item that is useful only when used in 
conjunction with an ``end item.'' ``Components'' are also commonly 
referred to as assemblies. For purposes of this definition an assembly 
and a ``component'' are the same. There are two types of 
``components'': ``Major components'' and ``minor components.'' A 
``major component'' includes any assembled element which forms a 
portion of an ``end item'' without which the ``end item'' is 
inoperable. For example, for an automobile, ``components'' will include 
the engine, transmission, and battery. If you do not have all those 
items, the automobile will not function, or function as effectively. A 
``minor component'' includes any assembled element of a ``major 
component.'' ``Components'' consist of ``parts.'' References in the CCL 
to ``components'' include both ``major components'' and ``minor 
components.''
* * * * *
    Dual use. Items that have both commercial and military or 
proliferation applications. While this term is used informally to 
describe items that are subject to the EAR, purely commercial items and 
certain munitions items listed

[[Page 22728]]

on the Wassenaar Arrangement Munitions List (WAML) or the Missile 
Technology Control Regime Annex are also subject to the EAR (see Sec.  
734.2(a) of the EAR).
* * * * *
    End item. This is an assembled commodity ready for its intended 
use. Only ammunition, fuel or other energy source is required to place 
it in an operating state. Examples of end items include ships, 
aircraft, computers, firearms, and milling machines.
* * * * *
    Equipment. This is a combination of parts, components, accessories, 
attachments, firmware, or software that operate together to perform a 
specialized function of an end item or system.
* * * * *
    Facilities. This means a building or outdoor area in which people 
use an item that is built, installed, produced, or developed for a 
particular purpose.
* * * * *
    Material. This is any list-specified crude or processed matter that 
is not clearly identifiable as any of the types of items defined in 
Sec.  772.1 under the defined terms, ``end item,'' ``component,'' 
``accessories,'' ``attachments,'' ``part,'' ``software,'' ``system, 
``equipment,'' or ``facilities.'' The exclusion from the definition of 
material for clearly identifiable items defined in Sec.  772.1, such as 
for ``parts'' and ``components,'' does not apply to the following 
ECCNs: 1C233, 1C234, 1C235, 1C236, 1C237, 1C239, 1C350, 1C395, 1C991, 
1C992, and 1C995.
* * * * *
    Military commodity. As used in Sec.  734.4(a)(5), Supplement No. 1 
to part 738 (footnote No. 3), Sec. Sec.  740.2(a)(11), 740.16(a)(2), 
740.16(b)(2), 742.6(a)(3), 744.9(a)(2), 744.9(b), ECCN 0A919 and 
(Related Controls) in ``600 series'' ECCNs, ``military commodity'' or 
``military commodities'' means an article, material, or supply that is 
described on the U.S. Munitions List (22 CFR Part 121) or on the 
Munitions List that is published by the Wassenaar Arrangement on Export 
Controls for Conventional Arms and Dual-Use Goods and Technologies, but 
does not include software, technology and any item listed in any ECCN 
for which the last three numerals are 018 or any item in the ``600 
series.''
* * * * *
    Part. This is any single unassembled element of a ``component,'' 
``accessory,'' or ``attachment'' which is not normally subject to 
disassembly without the destruction or the impairment of design use. 
Examples include threaded fasteners (e.g., screws, bolts, nuts, nut 
plates, studs, inserts), other fasteners (e.g., clips, rivets, pins), 
common hardware (e.g., washers, spacers, insulators, grommets, 
bushings), springs and wire.
* * * * *
    Specially designed. When applying this definition, follow this 
sequential analysis set forth below. (For additional guidance on the 
order of review of ``specially designed,'' including how the review of 
the term relates to the larger CCL, see Supplement No. 4 to Part 774 of 
the EAR--Commerce Control List Order of Review.)
    (a) Except for items described in (b), an ``item'' is ``specially 
designed'' if it:
    (1) As a result of ``development'' has properties peculiarly 
responsible for achieving or exceeding the performance levels, 
characteristics, or functions in the relevant ECCN or U.S. Munitions 
List (USML) paragraph; or
    (2) Is a ``part,'' ``component,'' ``accessory,'' ``attachment,'' or 
``software'' for use in or with a commodity or defense article 
`enumerated' or otherwise described on the CCL or the USML.
    (b) A ``part,'' ``component,'' ``accessory,'' ``attachment,'' or 
``software'' that would be controlled by paragraph (a) is not 
``specially designed'' if it:
    (1) Has been identified to be in an ECCN paragraph that does not 
contain ``specially designed'' as a control parameter or as an EAR99 
item in a commodity jurisdiction (CJ) determination or interagency-
cleared commodity classification (CCATS) pursuant to Sec.  748.3(e);
    (2) Is, regardless of `form' or `fit,' a fastener (e.g., screw, 
bolt, nut, nut plate, stud, insert, clip, rivet, pin), washer, spacer, 
insulator, grommet, bushing, spring, wire, solder;
    (3) Has the same function, performance capabilities, and the same 
or `equivalent' form and fit, as a commodity or software used in or 
with an item that:
    (i) Is or was in ``production'' (i.e., not in ``development''); and
    (ii) Is either not `enumerated' on the CCL or USML, or is described 
in an ECCN controlled only for Anti-Terrorism (AT) reasons;
    (4) Was or is being developed with ``knowledge'' that it would be 
for use in or with commodities or software (i) described in an ECCN and 
(ii) also commodities or software either not `enumerated' on the CCL or 
the USML (e.g., EAR99 commodities or software) or commodities or 
software described in an ECCN controlled only for Anti-Terrorism (AT) 
reasons;
    (5) Was or is being developed as a general purpose commodity or 
software, i.e., with no ``knowledge'' for use in or with a particular 
commodity (e.g., an F/A-18 or HMMWV) or type of commodity (e.g., an 
aircraft or machine tool); or
    (6) Was or is being developed with ``knowledge'' that it would be 
for use in or with commodities or software described (i) in an ECCN 
controlled for AT-only reasons and also EAR99 commodities or software; 
or (ii) exclusively for use in or with EAR99 commodities or software.

    Note 1:  `Enumerated' refers to any item (i) on either the USML 
or CCL not controlled in a `catch-all' paragraph and (ii) when on 
the CCL, controlled by an ECCN for more than Anti-Terrorism (AT) 
reasons only. An example of an `enumerated' ECCN is 2A226, which 
controls valves with the following three characteristics: a 
``nominal size'' of 5 mm or greater; having a bellows seal; and 
wholly made of or lined with aluminum, aluminum alloy, nickel, or 
nickel alloy containing more than 60% nickel by weight. The CCL also 
contains notes excluding from control ``parts'' and ``components'' 
``specially designed'' for uncontrolled items. Such uncontrolled 
items are merely `described' and are not `enumerated.' Note 2 to 
ECCN 1A002 is an example of items excluded from control based on 
being ``specially designed'' for a `described' item. Commodities or 
software in an ECCN controlled only for AT reasons are other 
examples of items `described' on the CCL. ECCN 2B996, which controls 
dimensional inspection or measuring systems or equipment not 
controlled by 2B006, is an example of a commodity `described' in an 
ECCN controlled only for AT reasons.


    Note 2: A `catch-all' paragraph is one that does not refer to 
specific types of ``parts,'' ``components,'' ``accessories,'' or 
``attachments'' but rather controls non-specific ``parts,'' 
``components,'' ``accessories,'' or ``attachments'' because they 
were ``specially designed'' for an enumerated item. For example, 
ECCN paragraph 9A610.x is a catch-all, because it controls 
``parts,'' ``components,'' ``accessories,'' and ``attachments'' 
``specially designed'' for military aircraft, but does not identify 
specific types of ``parts,'' ``components,'' ``accessories,'' or 
``attachments'' within its control. Another example of a `catch-all' 
is the heading of 7A102, which controls ``specially designed'' 
components for the gyros enumerated in 7A102, but does not identify 
the specific types of ``components'' within its control.


    Note to paragraph (a)(1): Items that as a result of 
``development'' have properties peculiarly responsible for achieving 
or exceeding the performance levels, `functions' or characteristics 
in a relevant ECCN paragraph may have properties shared by different 
products. For example, ECCN

[[Page 22729]]

1A007 controls equipment and devices, specially designed to initiate 
charges and devices containing energetic materials, by electrical 
means. An example of equipment not meeting the peculiarly 
responsible standard under paragraph (a)(1) is a garage door opener, 
that as a result of ``development'' has properties that enable the 
garage door opener to send an encoded signal to another piece of 
equipment to perform an action (i.e., the opening of a garage door). 
The garage door opener is not ``specially designed'' for purposes of 
1A007 because although the garage door opener could be used to send 
a signal by electrical means to charges or devices containing 
energetic materials, the garage door opener does not have properties 
peculiarly responsible for a achieving or exceeding the performance 
levels, `functions' or characteristics in 1A007. For example, the 
garage door opener is designed to only perform at a limited range 
and the level of encoding is not as advanced as the encoding usually 
required in equipment and devices used to initiate charges and 
devices containing energetic materials, by electrical means. 
Conversely, another piece of equipment that, as a result of 
``development,'' has the properties (e.g., sending a signal at a 
longer range, having signals with advanced encoding to prevent 
interference, and having signals that are specific to detonating 
blasting caps) needed for equipment used to initiate charges and 
devices containing energetic materials, would be peculiarly 
responsible because the equipment has a direct and proximate causal 
relationship that is central or special for achieving or exceeding 
the performance levels, `functions' or characteristics identified in 
1A007.


    Note 1 to paragraph (b)(3): Commodities in ``production'' that 
are subsequently subject to ``development'' activities, such as 
those that would result in enhancements or improvements only in the 
reliability or maintainability of the commodity (e.g., an increased 
mean time between failure (MTBF)), including those pertaining to 
quality improvements, cost reductions, or feature enhancements, 
remain in ``production.'' However, any new models or versions of 
such commodities developed from such efforts that change the basic 
performance or capability of the commodity are in ``development'' 
until and unless they enter into ``production.''


    Note 2 to paragraph (b)(3): With respect to a commodity, 
`equivalent' means that its form has been modified solely for `fit' 
purposes.


    Note 3 to paragraph (b)(3): The `form' of a commodity is defined 
by its configuration (including the geometrically measured 
configuration), material, and material properties that uniquely 
characterize it. The ``fit' of a commodity is defined by its ability 
to physically interface or interconnect with or become an integral 
part of another item. The `function' of the item is the action or 
actions it is designed to perform. `Performance capability' is the 
measure of a commodity's effectiveness to perform a designated 
function in a given environment (e.g., measured in terms of speed, 
durability, reliability, pressure, accuracy, efficiency). For 
software, `form' means the design, logic flow, and algorithms. `Fit' 
means the ability to interface or connect with an item subject to 
the EAR. The `function' means the action or actions it performs 
directly to an item subject to the EAR or as a stand-alone 
application. `Performance capability' means the measure of 
software's effectiveness to perform a designated function.


    Note to paragraphs (b)(4), (b)(5) and (b)(6): For a commodity or 
software to be not ``specially designed'' on the basis of paragraphs 
(b)(4), (b)(5) or (b)(6), documents contemporaneous with its 
``development,'' in their totality, must establish the elements of 
paragraphs (b)(4), (b)(5) or (b)(6). Such documents may include 
concept design information, marketing plans, declarations in patent 
applications, or contracts. Absent such documents, the ``commodity'' 
may not be excluded from being ``specially designed'' by paragraphs 
(b)(4), (b)(5) or (b)(6).

* * * * *
    System. This is a combination of ``end items,'' ``parts,'' 
``components,'' ``accessories,'' ``attachments,'' firmware, or 
``software'' that are designed, modified or adapted to operate together 
to perform a specialized `function.'
* * * * *

PART 774--[AMENDED]

0
66. The authority citation 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 15, 2012, 77 FR 49699 (August 16, 2012).

0
67. In Supplement No. 1 to part 774 (the Commerce Control List) is 
amended by:
0
a. Removing the Product Group A heading, in all 10 categories of the 
CCL, ``SYSTEMS, EQUIPMENT AND COMPONENTS'' and adding in its place the 
Product Group A heading ``END ITEMS,'' ``EQUIPMENT,'' ``ACCESSORIES,'' 
``ATTACHMENTS,'' ``PARTS,'' ``COMPONENTS,'' AND ``SYSTEMS'';
0
b. Adding quotes around the term ``PRODUCTION EQUIPMENT'' in the 
heading of Product Group B in all 10 categories of the CCL; and
0
c. Adding quotes around the Product Group C heading ``MATERIALS'' in 
all 10 categories of the CCL;
0
d. Adding quotes around the Product Group D heading ``SOFTWARE'' in all 
10 categories of the CCL; and
0
e. Adding quotes around the Product Group E heading ``TECHNOLOGY'' in 
all 10 categories of the CCL.
0
68. Supplement No. 1 to part 774 is amended by removing the phrase 
``eight destinations listed in Sec.  740.20(c)(2) of the EAR'' wherever 
it is found and adding in its place ``destinations listed in Country 
Group A:6 (See Supplement No.1 to part 740 of the EAR'').
0
69. In Supplement No. 1 to part 774 (the Commerce Control List), 
Category 0-, ECCN 0A919 is amended by revising the heading and the 
``Related Controls,'' ``Related Definitions,'' and ``Items'' paragraphs 
to read as follows:

0A919 ``Military Commodities'' Located and Produced Outside the 
United States as Follows (see list of items controlled).
* * * * *

List of Items Controlled

    Unit: * * *
    Related Controls: (1) ``Military commodities'' are subject to 
the export licensing jurisdiction of the Department of State if they 
incorporate items that are subject to the International Traffic in 
Arms Regulations (ITAR) (22 CFR Parts 120-130). (2) ``Military 
commodities'' described in this paragraph are subject to the export 
licensing jurisdiction of the Department of State if such 
commodities are described on the U.S. Munitions List (22 CFR Part 
121) and are in the United States. (3) The furnishing of assistance 
(including training) to foreign persons, whether in the United 
States or abroad, in the design, development, engineering, 
manufacture, production, assembly, testing, repair, maintenance, 
modification, operation, demilitarization, destruction, processing, 
or use of defense articles that are subject to the ITAR; or the 
furnishing to foreign persons of any technical data controlled under 
22 CFR 121.1 whether in the United States or abroad are under the 
licensing jurisdiction of the Department of State. (4) Brokering 
activities (as defined in 22 CFR 129) of ``military commodities'' 
that are subject to the ITAR are under the licensing jurisdiction of 
the Department of State.
Related Definitions: ``Military commodity'' or ``military 
commodities'' means an article, material or supply that is described 
on the U.S. Munitions List (22 CFR Part 121) or on the Munitions 
List that is published by the Wassenaar Arrangement on Export 
Controls for Conventional Arms and Dual-Use Goods and Technologies 
(i.e., the Wassenaar Arrangement Munitions List (WAML)), but does 
not include software, technology, any item listed in any ECCN for 
which the last three numerals are 018, or any item in the ``600 
series.''
Items:
    a. ``Military commodities'' produced and located outside the 
United States having all of the following characteristics:
    a.1. Not subject to the International Traffic in Arms 
Regulations (22 CFR Parts 120-130); and
    a.2. Having one or more of the following characteristics:

[[Page 22730]]

    a.2.a. Incorporate one or more cameras controlled under ECCN 
6A003.b.3, .b.4.b, or .b.4.c.
    a.2.b. Incorporate more than a de minimis amount of U.S.-origin 
``600 series'' controlled content (see Sec.  734.4 of the EAR); or
    a.2.c. Are direct products of U.S.-origin ``600 series'' 
technology (see Sec.  736.2(b)(3) of the EAR).
    b. [RESERVED]


0
70. In Supplement No. 1 to part 774 (the Commerce Control List), 
Category 9, ECCN 9A018 is amended by:
0
a. Removing the phrase ``9A018.a and b'' and adding in its place 
``9A018.b'' in the RS paragraph of the License Requirements section;
0
b. Revising the ``Related Controls'' and ``Related Definitions'' 
paragraph in the List of Items Controlled section, as set forth below; 
and
0
c. Revising the ``Items'' paragraph in the List of Items Controlled 
section by removing and reserving paragraph .a, and by removing 
paragraphs .c through .f.

9A018 Equipment on the Wassenaar Arrangement Munitions List.
* * * * *

List of Items Controlled

Unit: * * *
Related Controls: (1) The Department of State, Directorate of 
Defense Trade Controls has export licensing jurisdiction for: (a) 
all military ground vehicles and ``components'' therefor as 
described in 22 CFR 121, Category VII; and (b) vehicles that have 
been armed or armored with articles described in 22 CFR 121 or that 
have been manufactured or fitted with special reinforcements for 
mounting arms or other specialized military equipment described in 
22 CFR 121, Category VII, see Sec.  770.2(h) Interpretation 8: 
``Ground vehicles''. (2) See ECCN 9A610 for the aircraft, refuelers, 
ground equipment, parachutes, harnesses, and instrument flight 
trainers, as well as ``parts,'' ``accessories,'' and ``attachments'' 
for the forgoing that, immediately prior to October 15, 2013, were 
classified under 9A018.a.1, .a.3, .c, .d, .e, or .f. (3) See ECCN 
9A619 for military trainer aircraft turbo prop engines and ``parts'' 
and ``components'' therefor that, immediately prior to October 15, 
2013, were classified under ECCN 9A018.a.2 or .a.3.
Related Definitions: N/A
Items: a. [Reserved]
    b. * * *


0
71. In Supplement No. 1 to part 774 (the Commerce Control List), 
Category 9-- Aerospace and Propulsion, ECCN 9D018 is amended by:
0
a. Removing the phrase ``9A018.a and .b'' and adding in its place 
``9A018.b'' in the RS paragraph of the ``License Requirements'' 
section; and
0
b. Revising the ``Related Controls'' paragraph in the ``List of Items 
Controlled'' section, to read as follows:

9D018 ``Software'' for the ``use'' of equipment controlled by 9A018.
* * * * *

List of Items Controlled

Unit: * * *
Related Controls: (1) See ECCN 9D610 for ``software'' related to 
aircraft, refuelers, ground equipment, parachutes, harnesses, 
instrument flight trainers and ``parts,'' ``accessories,'' and 
``attachments'' for the forgoing that, immediately prior to October 
15, 2013, were classified under 9A018.a.1, .a.3, .c, .d, .e, or .f. 
(2) See ECCN 9D619 for ``software'' related to military trainer 
aircraft turbo prop engines and ``parts'' and ``components'' 
therefor that, immediately prior to October 15, 2013, were 
classified under ECCN 9A018.a.2 or .a.3.
Related Definitions: * * *
Items: * * *


0
72. In Supplement No. 1 to part 774 (the Commerce Control List), 
Category 9, ECCN 9E018 is amended by:
0
a. Removing the phrase ``9A018.a and .b'' and adding in its place 
``9A018.b'' in the RS paragraph of the License Requirements section; 
and
0
b. Revising the ``Related Controls'' paragraph, to read as follows:

9E018 ``Technology'' for the ``development,'' ``production,'' or 
``use'' of equipment controlled by 9A018.
* * * * *

List of Items Controlled

Unit: * * *
Related Controls: (1) See ECCN 9E610 for ``technology'' related to 
aircraft, refuelers, ground equipment, parachutes, harnesses, 
instrument flight trainers and ``parts,'' ``accessories,'' and 
``attachments'' for the forgoing that, immediately prior to October 
15, 2013, were classified under 9A018.a.1, .a.3, .c, .d, .e, or .f. 
(2) See ECCN 9E619 for ``technology'' related to military trainer 
aircraft turbo prop engines and ``parts'' and ``components'' 
therefor that, immediately prior to October 15, 2013, were 
classified under ECCN 9A018.a.2 or .a.3.
Related Definitions: * * *
Items: * * *


0
73. In Supplement No. 1 to part 774, Category 9, add new Export Control 
Classification Numbers 9A610 and 9A619 between Export Control 
Classification Numbers 9A120 and 9A980 to read as follows:

9A610 Military aircraft and related commodities.

License Requirements

Reason for Control: NS, RS, MT, AT, UN

 
                Control(s)                          Country chart
 
NS applies to entire entry except 9A610.u,  NS Column 1
 .v, .w, and .y.
RS applies to entire entry except 9A610.y.  RS Column 1
MT applies to 9A610.u, .v, and .w.........  MT Column 1
AT applies to entire entry................  AT Column 1
UN applies to entire entry except 9A610.y.  See Sec.   746.1(b) for UN
                                             controls
 

License Exceptions

LVS: $1500
GBS: N/A
CIV: N/A
STA: (1) Paragraph (c)(1) of License Exception STA (Sec.  
740.20(c)(1) of the EAR) may not be used for any item in 9A610.a 
(i.e., ``end item'' military aircraft), unless determined by BIS to 
be eligible for License Exception STA in accordance with Sec.  
740.20(g) (License Exception STA eligibility requests for ``600 
series'' end items). (2) Paragraph (c)(2) of License Exception STA 
(Sec.  740.20(c)(2) of the EAR) may not be used for any item in 
9A610.

List of Items Controlled

Unit: ``End items'' in number; ``parts,'' ``components,'' 
``accessories,'' and ``attachments'' in $ value
Related Controls: Military aircraft and related articles that are 
enumerated in USML Category VIII, and technical data (including 
software) directly related thereto, are subject to the ITAR. See 
ECCN 0A919 for controls on foreign-made ``military commodities'' 
that incorporate more than a de minimis amount of U.S.-origin ``600 
series'' controlled content.
Related Definitions: N/A
Items:
    a. `Military Aircraft' ``specially designed'' for a military use 
that are not enumerated in USML paragraph VIII(a).

    Note 1: For purposes of paragraph .a the term `military 
aircraft' includes the following types of aircraft to the extent 
they were ``specially designed'' for a military use, and are not 
enumerated in USML paragraph VIII(a): trainer aircraft; cargo 
aircraft; utility fixed wing aircraft; military helicopters; 
observation aircraft; military non-expansive balloons and other 
lighter than air aircraft, and unarmed military aircraft, regardless 
of origin or designation. Aircraft with modifications made to 
incorporate safety of flight features or other FAA or NTSB 
modifications such as transponders and air data recorders are 
``unmodified'' for the purposes of this paragraph .a.


    Note 2: 9A610.a does not control ' military aircraft' that:
    a. Were first manufactured before 1946;
    b. Do not incorporate defense articles enumerated on the U.S. 
Munitions List, unless the items are required to meet safety or 
airworthiness standards of a Wassenaar Arrangement Participating 
State; and
    c. Do not incorporate weapons enumerated on the U.S. Munitions 
List, unless inoperable and incapable of being returned to 
operation.

    b. [Reserved].
    c. [Reserved].
    d. [Reserved].
    e. [Reserved].

[[Page 22731]]

    f. `Ground equipment' ``specially designed'' for aircraft 
controlled by either USML paragraph VIII(a) or ECCN 9A610.a.

    Technical Note:  `Ground equipment' includes pressure refueling 
equipment and equipment designed to facilitate operations in 
confined areas.

    g. Aircrew life support equipment, aircrew safety equipment and 
other devices for emergency escape from aircraft controlled by 
either USML paragraph VIII(a) or ECCN 9A610.a.
    h. Parachutes, paragliders, complete canopies, harnesses, 
platforms, electronic release mechanisms ``specially designed'' for 
use with aircraft controlled by either USML paragraph VIII(a) or 
ECCN 9A610.a, and ``equipment'' ``specially designed'' for military 
high altitude parachutists, such as suits, special helmets, 
breathing systems, and navigation equipment.
    i. Controlled opening equipment or automatic piloting systems, 
designed for parachuted loads.
    j. Ground effect machines (GEMS), including surface effect 
machines and air cushion vehicles, ``specially designed'' for use by 
a military.
    k. through s. [Reserved]
    t. Military aircraft instrument flight trainers that are not 
``specially designed'' to simulate combat. (See USML Cat IX for 
controls on such trainers that are ``specially designed'' to 
simulate combat.)
    u. Apparatus and devices ``specially designed'' for the 
handling, control, activation and non-ship-based launching of UAVs 
or drones controlled by either USML paragraph VIII(a) or ECCN 
9A610.a, and capable of a range equal to or greater than 300 km.
    v. Radar altimeters designed or modified for use in UAVs or 
drones controlled by either USML paragraph VIII(a) or ECCN 9A610.a., 
and capable of delivering at least 500 kilograms payload to a range 
of at least 300 km.
    w. Hydraulic, mechanical, electro-optical, or electromechanical 
flight control systems (including fly-by-wire systems) and attitude 
control equipment designed or modified for UAVs or drones controlled 
by either USML paragraph VIII(a) or ECCN 9A610.a., and capable of 
delivering at least 500 kilograms payload to a range of at least 300 
km.
    x. ``Parts,'' ``components,'' ``accessories,'' and 
``attachments'' that are ``specially designed'' for a commodity 
subject to control in this ECCN or a defense article in USML 
Category VIII and not elsewhere specified on the USML or the CCL.

    Note 1: Forgings, castings, and other unfinished products, such 
as extrusions and machined bodies, that have reached a stage in 
manufacturing where they are clearly identifiable by mechanical 
properties, material composition, geometry, or function as 
commodities controlled by ECCN 9A610.x are controlled by ECCN 
9A610.x.


    Note 2:  ``Parts,'' ``components,'' ``accessories,'' and 
``attachments'' specified in USML subcategory VIII(f) or VIII(h) are 
subject to the controls of that paragraph. ``Parts,'' 
``components,'' ``accessories,'' and ``attachments'' specified in 
ECCN 9A610.y are subject to the controls of that paragraph.

    y. Specific ``parts,'' ``components,'' ``accessories,'' and 
``attachments'' ``specially designed'' for a commodity subject to 
control in this ECCN or a defense article in USML Category VIII and 
not elsewhere specified in the USML or the CCL, and other aircraft 
commodities ``specially designed'' for a military use, as follows:
    y.1. Aircraft tires;
    y.2. Analog cockpit gauges and indicators;
    y.3. Audio selector panels;
    y.4. Check valves for hydraulic and pneumatic systems;
    y.5. Crew rest equipment;
    y.6. Ejection seat mounted survival aids;
    y.7. Energy dissipating pads for cargo (for pads made from paper 
or cardboard);
    y.8. Filters and filter assemblies for hydraulic, oil and fuel 
systems;
    y.9. Galleys;
    y.10. Hydraulic and fuel hoses, straight and unbent lines, 
fittings, clips, couplings, nutplates, and brackets;
    y.11. Lavatories;
    y.12. Life rafts;
    y.13. Magnetic compass, magnetic azimuth detector;
    y.14. Medical litter provisions;
    y.15. Mirrors, cockpit;
    y.16. Passenger seats including palletized seats;
    y.17. Potable water storage systems;
    y.18. Public address (PA) systems;
    y.19. Steel brake wear pads (does not include sintered mix or 
carbon/carbon materials);
    y.20. Underwater beacons;
    y.21. Urine collection bags/pads/cups/pumps;
    y.22. Windshield washer and wiper systems;
    y.23. Filtered and unfiltered cockpit panel knobs, indicators, 
switches, buttons, and dials;
    y.24. Lead-acid and Nickel-Cadmium batteries;
    y.25. Propellers, propeller systems, and propeller blades used 
with reciprocating engines;
    y.26. Fire extinguishers;
    y.27. Flame and smoke/CO2 detectors; and
    y.28. Map cases.
    y.29. `Military Aircraft' that were first manufactured from 1946 
to 1955 that do not incorporate defense articles enumerated on the 
U.S. Munitions List, unless the items are required to meet safety or 
airworthiness standards of a Wassenaar Arrangement Participating 
State; and do not incorporate weapons enumerated on the U.S. 
Munitions List, unless inoperable and incapable of being returned to 
operation.

9A619 Military gas turbine engines and related commodities.

License Requirements

Reason for Control: NS, RS, AT, UN

 
                Control(s)                          Country chart
 
NS applies to entire entry except 9A619.y.  NS Column 1
RS applies to entire entry except 9A619.y.  RS Column 1
AT applies to entire entry................  AT Column 1
UN applies to entire entry except 9A619.y.  See Sec.   746.1(b) for UN
                                             controls
 

License Exceptions

LVS: $1,500
GBS: N/A
CIV: N/A
STA: Paragraph (c)(2) of License Exception STA (Sec.  740.20(c)(2) 
of the EAR) may not be used for any item in ECCN 9A619.

List of Items Controlled

Unit: ``End items'' in number; ``parts,'' ``components,'' 
``accessories,'' and ``attachments'' in $ value.
Related Controls: (1) Military gas turbine engines and related 
articles that are enumerated in USML Category XIX, and technical 
data (including software) directly related thereto, are subject to 
the jurisdiction of the International Traffic in Arms Regulations 
(ITAR). (2) See ECCN 0A919 for foreign-made ``military commodities'' 
that incorporate more than a de minimis amount of U.S.-origin ``600 
series'' controlled content.
Related Definitions: N/A
Items:
    a. ``Military Gas Turbine Engines'' ``specially designed'' for a 
military use that are not controlled in USML Category XIX(a), (b), 
(c), or (d).

    Note: For purposes of ECCN 9A619.a, the term ``military gas 
turbine engines'' means gas turbine engines ``specially designed'' 
for ``end items'' enumerated in USML Category VIII or on the CCL 
under ECCN 9A610.

    b. Digital engine controls (e.g., Full Authority Digital Engine 
Controls (FADEC) and Digital Electronic Engine Controls (DEEC)) 
``specially designed'' for gas turbine engines controlled in this 
ECCN 9A619.
    c. If ``specially designed'' for gas turbine engines controlled 
in 9A619.a, hot section components (i.e., combustion chambers and 
liners; high pressure turbine blades, vanes, disks and related 
cooled structure; cooled low pressure turbine blades, vanes, disks 
and related cooled structure; cooled augmenters; and cooled 
nozzles);
    d. If ``specially designed'' for gas turbine engines controlled 
in 9A619.a, uncooled turbine blades, vanes, disks, and tip shrouds;
    e. If ``specially designed'' for gas turbine engines controlled 
in 9A619.a, combustor cowls, diffusers, domes, and shells;

    Note:  Forgings, castings, and other unfinished products, such 
as extrusions and machined bodies, that have reached a stage in 
manufacturing where they are clearly identifiable by mechanical 
properties, material composition, geometry, or function as 
commodities controlled by ECCN 9A619.c are controlled by ECCN 
9A619.c.

    f. Engine monitoring systems (i.e., those that conduct 
prognostics, diagnostics, and monitor health) ``specially designed'' 
for gas turbine engines and components controlled in this ECCN 
9A619.
    g. through w. [Reserved]

[[Page 22732]]

    x. ``Parts,'' ``components,'' ``accessories,'' and 
``attachments'' that are ``specially designed'' for a commodity 
controlled by this ECCN 9A619 (other than ECCN 9A619.c) or for a 
defense article enumerated in USML Category XIX and not specified 
elsewhere in the CCL or on the USML.

    Note 1: Forgings, castings, and other unfinished products, such 
as extrusions and machined bodies, that have reached a stage in 
manufacturing where they are clearly identifiable by mechanical 
properties, material composition, geometry, or function as 
commodities controlled by ECCN 9A619.x are controlled by ECCN 
9A619.x.


    Note 2: ``Parts,'' ``components,'' ``accessories,'' and 
``attachments'' specified in USML subcategory XIX(f) are subject to 
the controls of that paragraph. ``Parts,'' ``components,'' 
``accessories,'' and ``attachments'' specified in ECCN 9A619.y are 
subject to the controls of that paragraph.

    y. Specific ``parts,'' ``components,'' ``accessories,'' and 
``attachments'' ``specially designed'' for a commodity subject to 
control in this ECCN 9A619 or for a defense article in USML Category 
XIX and not elsewhere specified on the USML or in the CCL, and other 
aircraft commodities, as follows:
    y.1. Oil tank and reservoirs;
    y.2. Oil lines and tubes;
    y.3. Fuel lines and hoses;
    y.4. Fuel and oil filters;
    y.5. V-Band, cushion, ``broomstick,'' hinged, and loop clamps;
    y.6. Shims;
    y.7. Identification plates;
    y.8. Air, fuel, and oil manifolds.

0
74. In Supplement No. 1 to part 774, Category 9, add new ECCNs 9B610 
and 9B619 between ECCNs 9B117 and 9B990 to read as follows:

9B610 Test, inspection, and production ``equipment'' and related 
commodities ``specially designed'' for the ``development'' or 
``production'' of commodities enumerated in ECCN 9A610 or USML 
Category VIII.

License Requirements

Reason for Control: NS, RS, MT, AT, UN

 
                Control(s)                          Country chart
 
NS applies to entire entry except 9B610.c.  NS Column 1
RS applies to entire entry................  RS Column 1
MT applies to 9B610.c.....................  MT Column 1
AT applies to entire entry................  AT Column 1
UN applies to entire entry................  See Sec.   746.1(b) for UN
                                             controls
 

License Exceptions

LVS: $1500
GBS: N/A
CIV: N/A
STA: Paragraph (c)(2) of License Exception STA (Sec.  740.20(c)(2) 
of the EAR) may not be used for any item in 9B610.

List of Items Controlled

Unit: N/A
Related Controls: USML Category VIII(h)(i) controls parts, 
components, accessories, and attachments specially designed for 
various models of stealth and low-observable aircraft.
Related Definitions: N/A
Items:

    a. Test, inspection, and production ``equipment'' ``specially 
designed'' for the ``production,'' ``development,'' repair, 
overhaul, or refurbishment of commodities enumerated in ECCN 9A610 
(except 9A610.y) or USML Category VIII, and ``parts,'' 
``components,'' ``accessories,'' and ``attachments'' ``specially 
designed'' therefor.
    b. Environmental test facilities ``specially designed'' for the 
certification, qualification, or testing of commodities enumerated 
in ECCN 9A610 (except for 9A610.y) or USML Category VIII and 
``parts,'' ``components,'' ``accessories,'' and ``attachments'' 
``specially designed'' therefor.
    c. ``Production facilities'' designed or modified for UAVs or 
drones that are (i) controlled by either USML paragraph VIII(a) or 
ECCN 9A610.a and (ii) capable of a range equal to or greater than 
300 km.

9B619 Test, inspection, and production ``equipment'' and related 
commodities ``specially designed'' for the ``development'' or 
``production'' of commodities enumerated in ECCN 9A619 or USML 
Category XIX.

License Requirements

Reason for Control: NS, RS, AT, UN

 
                Control(s)                          Country chart
 
NS applies to entire entry except 9B619.y.  NS Column 1
RS applies to entire entry except 9B619.y.  RS Column 1
AT applies to entire entry................  AT Column 1
UN applies to entire entry except 9B619.y.  See Sec.   746.1(b) for UN
                                             controls
 

License Exceptions

LVS: $1,500
GBS: N/A
CIV: N/A
STA: Paragraph (c)(2) of License Exception STA (Sec.  740.20(c)(2) 
of the EAR) may not be used for any item in ECCN 9B619.

List of Items Controlled

Unit: $ value
Related Controls: N/A
Related Definitions: N/A
Items:

    a. Test, inspection, and production ``equipment'' ``specially 
designed'' for the ``production,'' ``development,'' repair, 
overhaul, or refurbishment of commodities enumerated in ECCN 9A619 
(except for 9A619.y) or in USML Category XIX, and ``parts,'' 
``components,'' ``accessories,'' and ``attachments'' ``specially 
designed'' therefor.
    b. Equipment, cells, or stands ``specially designed'' for 
testing, analysis and fault isolation of engines, ``systems,'' 
``components,'' ``parts,'' ``accessories,'' and ``attachments'' 
specified in ECCN 9A619 on the CCL or in Category XIX on the USML.
    c. through x. [Reserved]
    y. Bearing pullers ``specially designed'' for the -
``production'' or ``development'' of commodities enumerated in ECCN 
9A619 (except for 9A619.y) or USML Category XIX and ``parts,'' 
``components,'' ``accessories,'' and ``attachments'' ``specially 
designed'' therefor.


0
75. In Supplement No. 1 to part 774, Category 9, add new ECCNs 9C610 
and 9C619 between ECCNs 9C110 and the product group header that reads 
``D. Software'' to read as follows:

9C610 Materials ``specially designed'' for commodities controlled by 
9A610 not elsewhere specified in the CCL or the USML.

License Requirements

Reason for Control: NS, RS, AT, UN

 
                Control(s)                          Country chart
 
NS applies to entire entry................  NS Column 1
RS applies to entire entry................  RS Column 1
AT applies to entire entry................  AT Column 1
UN applies to entire entry................  See Sec.   746.1(b) for UN
                                             controls
 

License Exceptions

LVS: $1500
GBS: N/A
CIV: N/A
STA: Paragraph (c)(2) of License Exception STA (Sec.  740.20(c)(2) 
of the EAR) may not be used for any item in 9C610.

List of Items Controlled

Unit: N/A
Related Controls: USML subcategory XIII(f) controls structural 
materials specifically designed, developed, configured, modified, or 
adapted for defense articles, such as USML subcategory VIII(a) 
aircraft. See ECCN 0A919 for foreign made ``military commodities'' 
that incorporate more than a de minimis amount of U.S.-origin ``600 
series'' controlled content.
Related Definitions: N/A
Items:

    a. Materials not elsewhere specified in the USML or the CCL and 
``specially designed'' for commodities enumerated in ECCN 9A610 
(except 9A610.y).

    Note 1: Materials enumerated elsewhere in the CCL, such as in a 
CCL Category 1 ECCN, are controlled pursuant to controls of the 
applicable ECCN.


    Note 2: Materials ``specially designed'' for both aircraft 
enumerated in USML Category VIII and aircraft enumerated in ECCN 
9A610 are subject to the controls of this ECCN.

    b. [Reserved].

9C619 Materials ``specially designed'' for commodities controlled by 
9A619 not elsewhere specified in the CCL or on the USML.

[[Page 22733]]

License Requirements

Reason for Control: NS, RS, AT, UN

 
                Control(s)                          Country chart
 
NS applies to entire entry................  NS Column 1
RS applies to entire entry................  RS Column 1
AT applies to entire entry................  AT Column 1
UN applies to entire entry................  See Sec.   746.1(b) for UN
                                             controls
 

License Exceptions

LVS: $1,500
GBS: N/A
CIV: N/A
STA: Paragraph (c)(2) of License Exception STA (Sec.  740.20(c)(2) 
of the EAR) may not be used for any item in ECCN 9C619.

List of Items Controlled

Unit: $ value
Related Controls: (1) See USML subcategory XIII(f) for controls on 
structural materials specifically designed, developed, configured, 
modified, or adapted for defense articles, such as USML Category XIX 
engines. (2) See ECCN 0A919 for foreign made ``military 
commodities'' that incorporate more than a de minimis amount of 
U.S.-origin ``600 series'' controlled content.
Related Definitions: N/A
Items:

    a. Materials not elsewhere specified in the CCL or on the USML 
and ``specially designed'' for commodities enumerated in ECCN 9A619 
(except for 9A619.y).

    Note 1: Materials enumerated elsewhere in the CCL, such as in a 
CCL Category 1 ECCN, are controlled pursuant to the controls of the 
applicable ECCN.


    Note 2: Materials ``specially designed'' for both an engine 
enumerated in USML Category XIX and an engine enumerated in ECCN 
9A619 are subject to the controls of this ECCN 9C619.

    b. [Reserved].

0
76. In Supplement No. 1 to part 774, Category 9, add new ECCNs 9D610 
and 9D619 between ECCNs 9D105 and 9D990 to read as follows:


9D610 Software ``specially designed'' for the ``development,'' 
``production,'' operation, or maintenance of military aircraft and 
related commodities controlled by 9A610, equipment controlled by 
9B610, or materials controlled by 9C610.

License Requirements

Reason for Control: NS, RS, MT, AT, UN

 
                Control(s)                          Country chart
 
NS applies to entire entry except 9D610.y.  NS Column 1
RS applies to entire entry except 9D610.y.  RS Column 1
MT applies to software ``specially          MT Column 1
 designed'' for the operation,
 installation, maintenance, repair,
 overhaul, or refurbishing of commodities
 controlled for MT reasons in 9A610 or
 9B610.
AT applies to entire entry................  AT Column 1
UN applies to entire entry except 9D610.y.  See Sec.   746.1(b) for UN
                                             controls
 

License Exceptions

CIV: N/A
TSR: N/A
STA: (1) Paragraph (c)(1) of License Exception STA (Sec.  
740.20(c)(1) of the EAR) may not be used for 9D610.b. (2) Paragraph 
(c)(2) of License Exception STA (Sec.  740.20(c)(2) of the EAR) may 
not be used for any software in 9D610.

List of Items Controlled

Unit: $ value
Related Controls: Software directly related to articles enumerated 
in USML Category VIII is subject to the control of USML paragraph 
VIII(i).
Related Definitions: N/A
Items:
    a. ``Software'' (other than software controlled in paragraphs .b 
or .y of this entry) ``specially designed'' for the ``development,'' 
``production,'' operation, or maintenance of commodities controlled 
by ECCN 9A610, ECCN 9B610, or ECCN 9C610.
    b. ``Software'' ``specially designed'' for the ``development'' 
or ``production'' of any of the following:
    b.1. Static structural members;
    b.2. Exterior skins, removable fairings, non-removable fairings, 
radomes, access doors and panels, and in-flight opening doors;
    b.3. Control surfaces, leading edges, trailing edges, and 
leading edge flap seals;
    b.4. Leading edge flap actuation system commodities (i.e., power 
drive units, rotary geared actuators, torque tubes, asymmetry 
brakes, position sensors, and angle gearboxes) ``specially 
designed'' for fighter, attack, or bomber aircraft controlled in 
USML Category VIII;
    b.5. Engine inlets and ducting;
    b.6. Fatigue life monitoring systems ``specially designed'' to 
relate actual usage to the analytical or design spectrum and to 
compute amount of fatigue life ``specially designed'' for aircraft 
controlled by either USML subcategory VIII(a) or ECCN 9A610.a, 
except for Military Commercial Derivative Aircraft;
    b.7. Landing gear, and ``parts'' and ``components'' ``specially 
designed'' therefor, ``specially designed'' for use in aircraft 
weighing more than 21,000 pounds controlled by either USML 
subcategory VIII(a) or ECCN 9A610.a, except for Military Commercial 
Derivative Aircraft;
    b.8. Conformal fuel tanks and ``parts'' and ``components'' 
``specially designed'' therefor;
    b.9. Electrical ``equipment,'' ``parts,'' and ``components'' 
``specially designed'' for electro-magnetic interference (EMI)--
i.e., conducted emissions, radiated emissions, conducted 
susceptibility and radiated susceptibility--protection of aircraft 
that conform to the requirements of MIL-STD-461;
    b.10. HOTAS (Hand-on Throttle and Stick) controls, HOCAS (Hands 
on Collective and Stick), Active Inceptor Systems (i.e., a 
combination of Active Side Stick Control Assembly, Active Throttle 
Quadrant Assembly, and Inceptor Control Unit), rudder pedal 
assemblies for digital flight control systems, and parts and 
components ``specially designed'' therefor;
    b.11. Integrated Vehicle Health Management Systems (IVHMS), 
Condition Based Maintenance (CBM) Systems, and Flight Data 
Monitoring (FDM) systems;
    b.12. Equipment ``specially designed'' for system prognostic and 
health management of aircraft;
    b.13. Active Vibration Control Systems; or
    b.14. Self-sealing fuel bladders ``specially designed'' to pass 
a .50 caliber or larger gunfire test (MIL-DTL-5578, MIL-DTL-27422).
    c. to x. [RESERVED]
    y. Specific ``software'' ``specially designed'' for the 
``development,'' ``production,'' operation, or maintenance of 
commodities enumerated in ECCN 9A610.y.

9D619 Software ``specially designed'' for the ``development,'' 
``production,'' operation or maintenance of military gas turbine 
engines and related commodities controlled by 9A619, equipment 
controlled by 9B619, or materials controlled by 9C619.

License Requirements

Reason for Control: NS, RS, AT, UN

 
                Control(s)                          Country chart
 
NS applies to entire entry except 9D619.y.  NS Column 1
RS applies to entire entry except 9D619.y.  RS Column 1
AT applies to entire entry................  AT Column 1
UN applies to entire entry except 9D619.y.  See Sec.   746.1(b) for UN
                                             controls
 

License Exceptions

CIV: N/A
TSR: N/A
STA: (1) Paragraph (c)(1) of License Exception STA (Sec.  
740.20(c)(1) of the EAR) may not be used for 9D619.b. (2) Paragraph 
(c)(2) of License Exception STA (Sec.  740.20(c)(2) of the EAR) may 
not be used for any software in ECCN 9D619.

List of Items Controlled

Unit: $ value
Related Controls: Software directly related to articles enumerated 
in USML Category XIX is subject to the control of USML paragraph 
XIX(g).
Related Definitions: N/A

[[Page 22734]]

Items:

    a. ``Software'' (other than software controlled in paragraph .b 
of this entry) ``specially designed'' for the ``development,'' 
``production,'' operation, or maintenance of commodities controlled 
by ECCN 9A619 (except 9A619.y), ECCN 9B619 (except 9B619.y), or ECCN 
9C619.
    b. ``Software'' ``specially designed'' for the ``development'' 
or ``production'' of any of the following:
    b.1. Front, turbine center, and exhaust frames;
    b.2. Low pressure compressor (i.e., fan) ``components'' and 
``parts'' as follows: Nose cones, casings, blades, vanes, spools, 
shrouds, blisks, shafts and disks;
    b.3. High pressure compressor ``components'' and ``parts'' as 
follows: Casings, blades, vanes, spools, shrouds, blisks, shafts, 
disks, and impellers;
    b.4. Combustor ``components'' and ``parts'' as follows: Casings, 
fuel nozzles, swirlers, swirler cups, deswirlers, valve injectors, 
igniters, diffusers, liners, chambers, cowlings, domes and shells;
    b.5. High pressure turbine ``components'' and ``parts'' as 
follows: Casings, shafts, disks, blades, vanes, nozzles, and tip 
shrouds;
    b.6. Low pressure turbine ``components'' and ``parts'' as 
follows: Casings, shafts, disks, blades, vanes, nozzles, and tip 
shrouds;
    b.7. Augmentor ``components'' and ``parts'' as follows: Casings, 
flame holders, spray bars, pilot burners, augmentor fuel controls, 
flaps (external, convergent, and divergent), guide and 
syncronization rings, and flame detectors and sensors;
    b.8. Mechanical ``components'' and ``parts'' as follows: Fuel 
metering units and fuel pump metering units, valves (fuel throttle, 
main metering, oil flow management), heat exchangers (air/air, fuel/
air, fuel/oil), debris monitoring (inlet and exhaust), seals 
(carbon, labyrinth, brush, balance piston, and ``knife-edge''), 
permanent magnetic alternator and generator, eddy current sensors;
    b.9. Torquemeter assembly (i.e., housing, shaft, reference 
shaft, and sleeve);
    b.10. Digital engine control systems (e.g., Full Authority 
Digital Engine Controls (FADEC) and Digital Electronic Engine 
Controls (DEEC)) ``specially designed'' for gas turbine engines 
controlled in this ECCN; or
    b.11. Engine monitoring systems (i.e., prognostics, diagnostics, 
and health) ``specially designed'' for gas turbine engines and 
components controlled in this ECCN.
    c. to x. [RESERVED]
    y. Specific ``software'' ``specially designed'' for the 
``development,'' ``production,'' operation, or maintenance of 
commodities enumerated in ECCN 9A619.y or 9B619.y.

0
77. In Supplement No. 1 to part 774, Category 9, add new Export Control 
Classification Numbers 9E610 and 9E619 between Export Control 
Classification Numbers 9E102 and 9E990 to read as follows:

9E610 Technology ``required'' for the ``development,'' 
``production,'' operation, installation, maintenance, repair, 
overhaul, or refurbishing of military aircraft and related 
commodities controlled by 9A610, equipment controlled by 9B610, 
materials controlled by 9C610, or software controlled by 9D610.

License Requirements

Reason for Control: NS, RS, MT, AT, UN

 
                Control(s)                          Country chart
 
NS applies to entire entry except 9E610.y.  NS Column 1
RS applies to entire entry except 9E610.y.  RS Column 1
MT applies to ``technology'' ``required''   MT Column 1
 for the ``development,'' ``production,''
 operation, installation, maintenance,
 repair, overhaul, or refurbishing of
 commodities or software controlled for MT
 reasons in 9A610, 9B610, or 9D610 for MT
 reasons.
AT applies to entire entry................  AT Column 1
UN applies to entire entry except 9E610.y.  See Sec.   746.1(b) for UN
                                             controls
 

License Exceptions

CIV: N/A
TSR: N/A
STA: (1) Paragraph (c)(1) of License Exception STA (Sec.  
740.20(c)(1) of the EAR) may not be used for 9E610.b. (2) Paragraph 
(c)(2) of License Exception STA (Sec.  740.20(c)(2) of the EAR) may 
not be used for any technology in 9E610.

List of Items Controlled

Unit: $ value
Related Controls: Technical data directly related to articles 
enumerated in USML Category VIII are subject to the control of USML 
paragraph VIII(i).
Related Definitions: N/A
Items:

    a. ``Technology'' (other than technology controlled by 
paragraphs .b or .y of this entry) ``required'' for the 
``development,'' ``production,'' operation, installation, 
maintenance, repair, overhaul, or refurbishing of commodities or 
software controlled by ECCN 9A610, 9B610, 9C610, or 9D610.

    Note: ``Build-to-print technology'' ``required'' for the 
``production'' of items described in paragraphs b.1 through b.15 of 
this entry is classified under 9E610.a.

    b. ``Technology'' (other than ``build-to-print technology'') 
``required'' for the ``development'' or ``production'' of any of the 
following:
    b.1. Static structural members;
    b.2. Exterior skins, removable fairings, non-removable fairings, 
radomes, access doors and panels, and in-flight opening doors;
    b.3. Control surfaces, leading edges, trailing edges, and 
leading edge flap seals;
    b.4. Leading edge flap actuation system commodities (i.e., power 
drive units, rotary geared actuators, torque tubes, asymmetry 
brakes, position sensors, and angle gearboxes) ``specially 
designed'' for fighter, attack, or bomber aircraft controlled in 
USML Category VIII;
    b.5. Engine inlets and ducting;
    b.6. Fatigue life monitoring systems ``specially designed'' to 
relate actual usage to the analytical or design spectrum and to 
compute amount of fatigue life ``specially designed'' for aircraft 
controlled by either USML subcategory VIII(a) or ECCN 9A610.a, 
except for Military Commercial Derivative Aircraft;
    b.7. Landing gear, and ``parts'' and ``components'' ``specially 
designed'' therefor, ``specially designed'' for use in aircraft 
weighing more than 21,000 pounds controlled by either USML 
subcategory VIII(a) or ECCN 9A610.a, except for Military Commercial 
Derivative Aircraft;
    b.8. Conformal fuel tanks and ``parts'' and ``components'' 
``specially designed'' therefor;
    b.9. Electrical ``equipment,'' ``parts,'' and ``components'' 
``specially designed'' for electro-magnetic interference (EMI)--
i.e., conducted emissions, radiated emissions, conducted 
susceptibility and radiated susceptibility--protection of aircraft 
that conform to the requirements of MIL-STD-461;
    b.10. HOTAS (Hand-on Throttle and Stick) controls, HOCAS (Hands 
on Collective and Stick), Active Inceptor Systems (i.e., a 
combination of Active Side Stick Control Assembly, Active Throttle 
Quadrant Assembly, and Inceptor Control Unit), rudder pedal 
assemblies for digital flight control systems, and parts and 
components ``specially designed'' therefor;
    b.11. Integrated Vehicle Health Management Systems (IVHMS), 
Condition Based Maintenance (CBM) Systems, and Flight Data 
Monitoring (FDM) systems;
    b.12. Equipment ``specially designed'' for system prognostic and 
health management of aircraft;
    b.13. Active Vibration Control Systems; or
    b.14. Self-sealing fuel bladders ``specially designed'' to pass 
a .50 caliber or larger gunfire test (MIL-DTL-5578, MIL-DTL-27422).
    c. through x. [Reserved]
    y. Specific ``technology'' ``required'' for the ``production,'' 
``development,'' operation, installation, maintenance, repair, 
overhaul, or refurbishing of commodities or software enumerated in 
ECCN 9A610.y or 9D610.y.

9E619 ``Technology'' ``required'' for the ``development,'' 
``production,'' operation, installation, maintenance, repair, 
overhaul, or refurbishment of military gas turbine engines and 
related commodities controlled by 9A619, equipment controlled by 
9B619, materials controlled by 9C619, or software controlled by 
9D619.

License Requirements

Reason for Control: NS, RS, AT, UN

[[Page 22735]]



 
                Control(s)                          Country chart
 
NS applies to entire entry except 9E619.y.  NS Column 1
RS applies to entire entry except 9E619.y.  RS Column 1
AT applies to entire entry................  AT Column 1
UN applies to entire entry except 9E619.y.  See Sec.   746.1(b) for UN
                                             controls
 

License Exceptions

CIV: N/A
TSR: N/A
STA: (1) Paragraph (c)(1) of License Exception STA (Sec.  
740.20(c)(1) of the EAR) may not be used for 9E619.b. or .c. (2) 
Paragraph (c)(2) of License Exception STA (Sec.  740.20(c)(2) of the 
EAR) may not be used for any technology in ECCN 9E619.

List of Items Controlled

Unit: $ value
Related Controls: (1) Technical data directly related to articles 
enumerated in USML Category XIX are subject to the control of USML 
Category XIX(g). (2) Technology described in ECCN 9E003 is 
controlled by that ECCN.
Related Definitions: N/A
Items:

    a. ``Technology'' (other than ``technology'' controlled by 
paragraphs .b and .c of this entry) ``required'' for the 
``development,'' ``production,'' operation, installation, 
maintenance, repair, overhaul, or refurbishment of items controlled 
by ECCN 9A619 (except 9A619.y), ECCN 9B619 (except 9B619.y), ECCN 
9C619, or ECCN 9D619 (except 9D619.y).

    Note: ``Build-to-print technology'' ``required'' for the 
``production'' of items described in paragraphs b.1 through b.9 of 
this entry is classified under 9E619.a.

    b. ``Technology'' (other than ``build-to-print technology'') 
``required'' for the ``development'' or ``production'' of any of the 
following:
    b.1. Front, turbine center, and exhaust frames;
    b.2. Low pressure compressor (i.e., fan) ``components'' and 
``parts'' as follows: nose cones and casings;
    b.3. High pressure compressor ``components'' and ``parts'' as 
follows: casings;
    b.4. Combustor ``components'' and ``parts'' as follows: casings, 
fuel nozzles, swirlers, swirler cups, deswirlers, valve injectors, 
and igniters;
    b.5. High pressure turbine ``components'' and ``parts'' as 
follows: casings;
    b.6. Low pressure turbine ``components'' and ``parts'' as 
follows: casings;
    b.7. Augmentor ``components'' and ``parts'' as follows: casings, 
flame holders, spray bars, pilot burners, augmentor fuel controls, 
flaps (external, convergent, and divergent), guide and 
syncronization rings, and flame detectors and sensors;
    b.8. Mechanical ``components'' and ``parts'' as follows: fuel 
metering units and fuel pump metering units, valves (fuel throttle, 
main metering, oil flow management), heat exchangers (air/air, fuel/
air, fuel/oil), debris monitoring (inlet and exhaust), seals 
(carbon, labyrinth, brush, balance piston, and ``knife-edge''), 
permanent magnetic alternator and generator, eddy current sensors; 
or
    b.9. Torquemeter assembly (i.e., housing, shaft, reference 
shaft, and sleeve).
    c. ``Technology'' ``required'' for the ``development'' or 
``production'' of any of the following:
    c.1. Low pressure compressor (i.e., fan) ``components'' and 
``parts'' as follows: blades, vanes, spools, shrouds, blisks, shafts 
and disks;
    c.2. High pressure compressor ``components'' and ``parts'' as 
follows: blades, vanes, spools, shrouds, blisks, shafts, disks, and 
impellers;
    c.3. Combustor ``components'' and ``parts'' as follows: 
diffusers, liners, chambers, cowlings, domes and shells;
    c.4. High pressure turbine ``components'' and ``parts'' as 
follows: shafts and disks, blades, vanes, nozzles, tip shrouds;
    c.5. Low pressure turbine ``components'' and ``parts'' as 
follows: shafts and disks, blades, vanes, nozzles, tip shrouds;
    c.6. Digital engine control systems (e.g., Full Authority 
Digital Engine Controls (FADEC) and Digital Electronic Engine 
Controls (DEEC)) ``specially designed'' for gas turbine engines 
controlled in this ECCN; or
    c.7. Engine monitoring systems (i.e., prognostics, diagnostics, 
and health) ``specially designed'' for gas turbine engines and 
components controlled in this ECCN.
    d. through x. [Reserved]
    y. Specific ``technology'' ``required'' for the ``development,'' 
``production,'' operation, installation, maintenance, repair, 
overhaul, or refurbishment of commodities controlled by 9A619.y or 
9B619.y, or ``software'' controlled by ECCN 9D619.y.


0
78. Add Supplement No. 4 to Part 774, to read as follows:

Supplement No. 4 to Part 774--Commerce Control List Order of Review

    (a) As described in EAR Sec.  734.3, the EAR govern only items 
``subject to the EAR,'' e.g., items not subject to the exclusive 
jurisdiction of another agency. Thus, for example, if an item is 
described in the U.S. Munitions List (USML) (22 CFR Part 121) of the 
International Traffic in Arms Regulations (ITAR) (22 CFR Parts 120-
130), including one of its catch-all paragraphs, then the item is a 
``defense article'' subject to the ITAR and there is no need to review 
the CCL with respect to whether it describes the item. See 22 CFR Sec.  
120.6 (``Defense article means any item or technical data designated in 
Sec.  121.1 of the ITAR. The policy described in Sec.  120.3 is 
applicable to designations of additional items''). If an item is not 
described on the USML and is otherwise ``subject to the EAR,'' then 
work through each of the following steps to determine where the item is 
covered by the CCL or, if it is not covered by the CCL, and is 
therefore designated as EAR99.
    (1) Step 1. To classify an item ``subject to the EAR'' against the 
CCL, review the general characteristics of the item. This will usually 
guide you to the appropriate category (0 through 9) on the CCL.
    (2) Step 2. Once the potentially applicable CCL categories are 
identified, determine which product group within the CCL category or 
categories--i.e., A, B, C, D, or E--is applicable to the item.
    (3) Step 3. The ``600 series'' describes military items that were 
once subject to the ITAR. Just as the ITAR effectively trumps the EAR, 
items described in a ``600 series'' ECCN trump other ECCNs on the CCL. 
Thus, the next step in conducting a classification analysis of an item 
``subject to the EAR'' is to determine whether it is described in a 
``600 series'' ECCN paragraph other than a ``catch-all'' paragraph such 
as a ``.x'' paragraph that controls unspecified ``parts'' and 
``components'' ``specially designed'' for items in that ECCN or the 
corresponding USML paragraph. If so, the item is classified under that 
``600 series'' ECCN paragraph.
    (4) Step 4. If the item is not described in a ``600 series'' ECCN, 
then determine whether the item is classified under a ``600 series'' 
catch-all paragraph, i.e., one that controls non-specific ``parts,'' 
``components,'' ``accessories,'' and ``attachments'' ``specially 
designed'' for items in that ECCN or the corresponding USML paragraph. 
Such items are generally in the ``.x'' paragraph of the ``600 series'' 
ECCNs.
    (i) Step 4.a. Determine whether the item would meet the criteria of 
either paragraphs (a)(1) or (a)(2) of the ``specially designed'' 
definition in Sec.  772.1 of the EAR. (These are informally known as 
the ``catch'' paragraphs.) If not applicable, then the item is not 
within the scope of the ECCN paragraph that contains a ``specially 
designed'' control parameter. Skip to Step 5.
    (ii) Step 4.b. If the item meets the criteria of either paragraph 
(a)(1) or (a)(2) of the ``specially designed'' definition, then 
determine whether any of the provisions of paragraph (b) of the 
``specially designed'' definition would apply. (These are informally 
known as the ``release'' provisions.) If so, then the item is not 
within the scope of the ECCN paragraph that contains a ``specially 
designed'' control parameter.

    Note to paragraph (a)(4): The emphasis on the word ``control'' 
in Steps 4.a and 4.b is deliberate. Some ECCNs use ``specially 
designed'' as a de-control parameter. If an item would not be 
classified under a

[[Page 22736]]

particular ECCN because it falls within the scope of either 
subparagraph (a)(1) or (a)(2) of the ``specially designed'' 
definition, then there is no need to analyze whether any element of 
paragraph (b) of the definition would apply to the item. One needs 
only review the ``release'' provisions in paragraph (b) of the 
``specially designed'' definition if paragraph (a) of the 
``specially designed'' definition applies to the item in a 
``control'' paragraph of an ECCN that uses the term ``specially 
designed.''

    (5) Step 5. If an item is not classified by a ``600 series'' ECCN, 
then starting from the beginning of the product group analyze each ECCN 
to determine whether any other ECCN in that product group describes the 
item. If any ECCN uses the term ``specially designed,'' see Steps 4a 
and 4b above in paragraphs (a)(4)(i) and (a)(4)(ii) respectively. If 
the item is described in one of these ECCNs, then the item is 
classified under that ECCN.
    (6) Step 6. If the item is not described under any ECCN of any 
category of the CCL, then the item is designated as EAR99. EAR99 items 
may require a license if destined for a prohibited or restricted end 
user, end use or destination. See paragraphs (g) through (n) of Sec.  
732.3 ``Steps Regarding the Ten General Prohibitions,'' or General 
Prohibitions Four through Ten of part 736 of the EAR for license 
requirements other than those imposed by the CCL.
    (b) [Reserved].


0
79. Part 774 is amended by adding Supplement Nos. 6 and 7 to read as 
follows:

Supplement No. 6 to Part 774--Sensitive List

    Note to Supplement No. 6: While the items on this list are 
identified by ECCN rather than by Wassenaar Arrangement numbering, 
the item descriptions are drawn directly from the Wassenaar 
Arrangement's Sensitive List. If text accompanies an ECCN below, 
then the Sensitive List is limited to a subset of items classified 
under the specific ECCN or has differing parameters.

(1) Category 1

    (i) 1A002.
    (ii) 1C001.
    (iii) 1C007.c and .d.
    (iv) 1C010.c and .d.
    (v) 1C012.
    (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 3.0 [micro]m according to ISO 230/2 (2006) or 
national equivalents along one or more 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) Having all of the following:
    (a) Positioning accuracy with ``all compensations available'' equal 
to or less (better) than 3.0 [micro]m according to ISO 230/2 (2006) or 
national equivalents along one or more linear axis; and
    (b) Three linear axes plus one rotary axis which can be coordinated 
simultaneously for ``contouring control'';
    (2) Specified by 2B001.b.2.a, 2B001.b.2.b or 2B001.b.2.c and having 
a positioning accuracy with ``all compensations available'' equal to or 
less (better) than 3.0 [micro]m according to ISO 230/2 (2006) or 
national equivalents along one or more 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 one or more 
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'' specified by 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 3.0 [micro]m according to ISO 230/2 (2006) or 
national equivalents along one or more 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) Having all of the following:
    (a) Positioning accuracy with ``all compensations available'' equal 
to or less (better) than 3.0 [micro]m according to ISO 230/2 (2006) or 
national equivalents along one or more linear axis; and
    (b) Three linear axes plus one rotary axis which can be coordinated 
simultaneously for ``contouring control'';
    (2) Specified by 2B001.b.2.a, 2B001.b.2.b or 2B001.b.2.c and having 
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 one or more 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 one or more 
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 3.0 [micro]m according to ISO 230/2 (2006) or 
national equivalents along one or more 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) Having all of the following:
    (a) Positioning accuracy with ``all compensations available'' equal 
to or less (better) than 3.0 [micro]m according to ISO 230/2 (2006) or 
national equivalents along one or more linear axis; and
    (b) Three linear axes plus one rotary axis which can be coordinated 
simultaneously for ``contouring control'';
    (2) Specified by 2B001.b.2.a, 2B001.b.2.b or 2B001.b.2.c and having 
a positioning accuracy with ``all compensations available'' equal to or 
less (better) than 3.0 [micro]m according to ISO 230/2 (2006) or 
national equivalents along one or more 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 one or more 
linear axis;
    (C) Electrical discharge machines (EDM) controlled under 2B001.d;

[[Page 22737]]

    (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'' or 
``production'' 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 
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

[[Page 22738]]

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 twelve 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:
    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)

[[Page 22739]]

``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) 7E001.
    (vi) 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: While the items on this list are 
identified by ECCN rather than by Wassenaar Arrangement numbering, 
the item descriptions are drawn directly from the Wassenaar 
Arrangement's Very Sensitive List, which is a subset of the 
Wassenaar Arrangement's Sensitive List. If text accompanies an ECCN 
below, then the Very Sensitive List is limited to a subset of items 
classified under the specific ECCN or has differing parameters.

(1) Category 1

    (i) 1A002.a.
    (ii) 1C001.
    (iii) 1C012.
    (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.

[[Page 22740]]

    (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.
    (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.

Kevin J. Wolf,
Assistant Secretary of Commerce for Export Administration.
[FR Doc. 2013-08352 Filed 4-15-13; 8:45 am]
BILLING CODE 3510-33-P