[Federal Register Volume 79, Number 25 (Thursday, February 6, 2014)]
[Proposed Rules]
[Pages 7105-7110]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-01176]


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DEPARTMENT OF COMMERCE

Bureau of Industry and Security

15 CFR Parts 748, 750, 758, and 772

[Docket No. 121025583-2583-01]
RIN 0694-AF67


Delegation of License Requirements Determination and Licensing 
Responsibility to a Foreign Principal Party

AGENCY: Bureau of Industry and Security, Commerce.

ACTION: Proposed rule.

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SUMMARY: This proposed rule clarifies the responsibilities under the 
Export Administration Regulations (EAR) of parties involved in export 
transactions where the foreign principal party in interest (FPPI) is 
responsible for the transportation out of the United States of items 
subject to the EAR. These transactions are currently referred to as 
``routed export transactions.'' In such transactions, the U.S. 
principal party in interest (USPPI) may retain the responsibility and 
authority under the EAR to determine license requirements and, if 
necessary, to apply for a license from the Bureau of Industry and 
Security (BIS). Alternatively, if certain criteria are met, the USPPI 
may allow the FPPI, acting through a U.S. agent, to assume these 
responsibilities and authority. To enhance clarity, this proposed rule 
would remove the defined term ``Routed Export Transaction'' from the 
EAR and create a new term to better define certain transactions of 
particular interest to BIS, specifically a ``Foreign Principal Party 
Controlled Export Transaction'' which is a transaction where an FPPI 
which is responsible for the export of items subject to the EAR, also 
assumes the authority and responsibility for licensing requirements. 
This proposed rule also would refine certain procedures for creating a 
``Foreign Principal Party Controlled Export Transaction''. These 
proposed changes are intended to facilitate enhanced public 
understanding of the EAR by eliminating perceived discrepancies between 
the EAR and the Bureau of the Census's Foreign Trade Regulations (FTR) 
with respect to the definition of a ``routed export transaction.'' 
Specifically, this proposed rule will clarify the responsibilities of 
each party engaged in a transaction subject to the EAR and provide 
clearer instructions for USPPIs to delegate responsibility for license 
requirement determinations.

DATES: Comments must be received by April 7, 2014.

ADDRESSES: You may submit comments by any of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
The identification number for this rulemaking is BIS-2014-0004.
     By email directly to [email protected]. Include 
RIN 0694-AF67 in the subject line.
     By mail or delivery to Regulatory Policy Division, Bureau 
of Industry and Security, U.S. Department of Commerce, Room 2099B, 14th 
Street and Pennsylvania Avenue NW., Washington, DC 20230. Refer to RIN 
0694-AF67.

FOR FURTHER INFORMATION CONTACT: Robert Monjay, Office of Exporter 
Services, Bureau of Industry and Security, by telephone (202) 482-2440 
or email: [email protected].

SUPPLEMENTARY INFORMATION: 

Overview

    The Bureau of Industry and Security is proposing to amend the 
Export Administration Regulations (EAR) by removing the term ``routed 
export transaction'' from the EAR, including the definition of this 
term in Sec.  772.1, and creating a new defined term, ``Foreign 
Principal Party Controlled Export Transaction.'' This new term would 
define the export transactions currently identified and permitted under 
Sec.  758.3(b) of the EAR. This new term will better distinguish 
between the EAR's concept described in Sec.  758.3(b) and other 
regulations that use the term ``routed export transaction.'' In 
addition to improving the clarity of this EAR-specific term, this 
proposed rule will

[[Page 7106]]

also revise the procedures with which parties must comply to use Sec.  
758.3(b).
    Currently, the Bureau of the Census (Census Bureau) determines 
through provisions in the Foreign Trade Regulations (FTR) (15 CFR Part 
30), whether an export transaction is treated as a ``routed export 
transaction'' for the filing of electronic export information (EEI) in 
the Automated Export System (AES). However, this term risks creating 
confusion because while ``routed export transaction'' is defined in 
both the FTR and the EAR, each set of regulations has a different 
definition for that term. In order to provide greater clarity to 
exporters, the term ``routed export transaction'' would be removed from 
the EAR. That term would be replaced by a new term that more accurately 
describes transactions that are of particular interest to BIS, 
specifically, a subset of ``routed export transactions'' (as they are 
currently defined in the EAR) where the FPPI has assumed from the USPPI 
responsibility for export license determinations and licensing. This 
change to the Regulations should facilitate enhanced public 
understanding, as the same term would no longer be used by both the EAR 
and FTR to refer to potentially different types of transactions.
    This proposed rule would remove the terms ``routed export 
transaction'' and ``routed transaction'' in five sections of the EAR, 
specifically from Sec. Sec.  748.4, 750.7, 758.1, 758.3 and 772.1, and 
add, as appropriate, the new term ``Foreign Principal Party Controlled 
Export Transaction.'' Each of these sections would be revised to 
clarify the responsibilities of each party to a transaction. BIS will 
still allow an FPPI to assume responsibility and authority for its U.S. 
agent to determine license requirements and apply for a license on 
behalf of the FPPI, subject to the revised terms and conditions set 
forth in Sec.  758.3(b).
    These revisions will clarify the responsibilities that accrue to 
each party engaged in a transaction subject to the EAR, and will 
provide clearer instructions for USPPIs wishing to delegate 
responsibility for license requirement determinations and licensing to 
the FPPI and its U.S. agent. Further, this type of transaction would be 
defined as a ``Foreign Principal Party Controlled Export Transaction.''

Background

    On January 18, 2011, President Barack Obama issued Executive Order 
13563, affirming general principles of regulation and directing 
government agencies to improve regulation and regulatory review. Among 
other things, the President stressed the need for the regulatory system 
to allow for public participation and an open exchange of ideas, as 
well as promote predictability and reduce uncertainty. The President 
also emphasized that regulations must be accessible, consistent, 
written in plain language, and easy to understand.
    On August 5, 2011, BIS issued ``Notice of Inquiry: Retrospective 
Regulatory Review Under E.O. 13563,'' 76 FR 47527, soliciting public 
comments on its existing regulations and proposed rules as part of 
BIS's ongoing effort to ensure that its regulations are clear, 
effective, and up-to-date. BIS sought comments identifying any 
unnecessary compliance burden caused by rules that are unduly complex, 
outmoded, inconsistent, or overlapping, and comments identifying ways 
to make any aspect of the EAR more effective in protecting the national 
security or advancing the foreign policy interests of the United 
States. This proposed rule arose out of a public comment submitted in 
response to that notice of inquiry, which is summarized and responded 
to later in this preamble. In addition, BIS conducts various outreach 
seminars that include representatives from the U.S. Census Bureau. 
During some of these outreach seminars, questions arose related to 
``routed export transactions,'' and in particular why the term ``routed 
export transactions'' can have different meanings in the EAR and FTR. 
This proposed rule seeks to address questions brought up during the 
public comment period and outreach seminars.

Routed Export Transaction

    The Census Bureau collects certain information regarding nearly 
every export from the United States. One such piece of information is 
whether the transaction is a ``routed export transaction.''
    An export transaction generally has a U.S. seller, the USPPI, and a 
foreign buyer, the FPPI. In a typical export transaction, the USPPI 
ships an item out of the United States and is responsible for all 
license determinations and for obtaining export clearances, including 
applying for a license if one is required. The EAR defines a ``routed 
export transaction'' as a transaction where the FPPI agrees to terms of 
sale that include taking delivery of items inside the United States and 
assuming responsibility for transporting those items from the United 
States to a foreign destination. The FPPI, not being in the United 
States, generally takes possession and exports items through an agent 
in the United States.
    The specific terms of sale between the USPPI and the FPPI in a 
``routed export transaction'' vary with respect to who the responsible 
party is for determining if a license is required for the transaction 
and which party will apply for a license if one is required. BIS 
structures its regulations to allow the parties in each transaction to 
structure the transaction as they see fit, provided the export is made 
in accordance with the EAR.
    BIS imposes a general obligation on the USPPI, as the exporter, to 
ensure that a transaction is conducted in full compliance with all 
export-licensing requirements. However, in a ``routed export 
transaction,'' Sec.  758.3(b) of the EAR authorizes the USPPI to allow 
the FPPI to expressly assume, in writing, responsibility from the USPPI 
for determining license requirements and for obtaining export 
authorizations, when required. Under the EAR, an ``exporter'' must be 
in the United States. As a result, an FPPI must authorize a U.S. agent 
to obtain any necessary export authorization when required. The FPPI's 
U.S. agent becomes the ``exporter'' for export control purposes. 
Without such a written authorization, the USPPI remains the exporter, 
with all attendant responsibilities, regardless of which party, such as 
the FPPI or any other party, directs the export. When the USPPI allows 
the FPPI to assume responsibility for export licensing determination 
and licensing, the USPPI retains the responsibility to provide the FPPI 
with certain information, specifically: Any and all information the 
USPPI knows could affect a licensing determination; upon request, an 
item's export control classification number (ECCN); sufficient 
technical information about the item so that the ECCN can be 
determined.

Response to Comment

    This rule is prompted, in part, by a public comment submitted in 
response to the August 5, 2011 Notice of Inquiry. The comment noted 
that the definitions of ``routed export transaction'' in the EAR and 
the Census Bureau's Foreign Trade Regulations are different and that 
this causes confusion for exporters. The FTR's definition contains two 
elements, namely that the FPPI's U.S. agent is given authorization to 
(1) facilitate an export and (2) file the required export information 
through the Automated Export System (AES). The EAR definition, however, 
contains only one element, that the FPPI's U.S. agent is given 
authorization to facilitate an export.
    The comment stated that members of the trade community are confused

[[Page 7107]]

whether to indicate that a transaction is a ``routed export 
transaction'' when the FPPI's U.S. agent is physically transporting the 
goods out of the United States, but the FPPI has not assumed 
responsibility for determining licensing requirements and obtaining a 
license. Members of the trade community are further confused whether 
the FPPI's U.S. agent is authorized to prepare and file the electronic 
export information (EEI) in the AES.
    The commenter suggests that BIS revise its definition of ``routed 
export transaction'' to include a second element: That the FPPI must 
authorize its U.S. agent to be responsible for determining and 
obtaining the export license authority. While this comment raises 
issues of significant concern to BIS, the suggested remedy would not 
fully resolve the issues. Therefore, BIS proposes the below changes to 
the EAR to clarify the parties' obligations and more clearly 
distinguish the existing FTR ``routed export transaction'' definition 
from the new term that will be added to the EAR to replace the term 
``routed export transaction.''

Revisions to Sec.  748.4, Basic Guidance Related To Applying for a 
License

    Section 748.4, paragraph (a)(2) describes the licensing options 
available in a ``routed export transaction.'' It provides that either 
the USPPI or the FPPI's U.S. agent may apply for an export license and 
specifies that the FPPI's U.S. agent must have written authorization 
from the FPPI before submitting an application.
    This rule proposes to revise Sec.  748.4(a)(2) by changing the 
heading to ``Foreign Principal Party Controlled Export Transaction.'' 
It further proposes revising the text of Sec.  748.4(a)(2) to provide 
that, unless authorized by Sec.  758.3, the USPPI will be the exporter 
and the party responsible for applying to BIS for a license, when 
required, even if the FPPI is responsible for the export of the items 
out of the United States. When authorized by Sec.  758.3, the FPPI's 
designated U.S. agent may apply for a license to export items from the 
United States. This revision maintains and clarifies the obligations of 
each party and removes the potential confusion resulting from the use 
of the term ``routed export transaction.''
    This rule also proposes to revise Sec.  748.4(b)(2)(i)(a) by 
removing the phrase ``routed transaction'' and replacing it with the 
phrase ``Foreign Principal Party Controlled Export Transaction.''

Revisions to Sec.  750.7, Issuance of Licenses

    Section 750.7, paragraph (d) describes the responsibilities of the 
licensee, the person to whom the license is issued. It provides that in 
a reexport or routed export transaction, a U.S. agent, if there is one, 
for an FPPI will be the licensee and that both the U.S. agent and the 
FPPI are responsible for ensuring compliance with the license. This 
rule proposes to remove the phrase ``routed export transaction'' and 
replace it with ``Foreign Principal Party Controlled Export 
Transaction.''

Revisions to Sec.  758.1, Automated Export System (AES) Record

    In section 758.1, which describes the Automated Export System (AES) 
record, the phrase ``routed transaction'' is used in paragraphs (f)(2) 
and (h)(1)(i). This term means the same as a ``routed export 
transaction.'' This rule proposes to remove both phrases and replace 
them with the phrase ``Foreign Principal Party Controlled Export 
Transaction.''

Revisions to Sec.  758.3, Responsibilities of Parties to the 
Transaction

    Section 758.3 provides that all parties who participate in 
transactions subject to the EAR must comply with the EAR. It also 
describes the responsibilities of the parties to an export transaction 
and describes the requirements for delegating certain of those 
responsibilities to other parties to the transaction or to agents. This 
proposed rule would revise this section to clarify the responsibilities 
of the parties to the transaction and provide for increased information 
sharing. BIS is not proposing to alter the general responsibilities of 
the parties. This rule does, however, propose changes to the 
requirements for delegating the responsibility for licensing 
determination and licensing to the FPPI, by clarifying that the USPPI 
must agree to the delegation, through a written authorization, and that 
the FPPI must accept the delegation in writing and identify the U.S. 
agent authorized to act as the exporter, as described in detail below 
in the description of the proposed changes to Sec.  758.3(b).

Section 758.3(a), Export Transactions

    This rule proposes to revise Sec.  758.3(a) by changing the first 
sentence to state: ``The U.S. principal party in interest is the 
exporter, except in certain transactions and subject to certain 
requirements, described in paragraph (b) of this section.'' Some 
exporters, freight forwarders, and foreign parties have misunderstood 
the current language to require the USPPI to allow the FPPI to assume 
responsibility for determining licensing requirements and obtaining 
license authority in all routed export transactions, as defined by the 
Census Bureau, because the current language states that the USPPI is 
the exporter ``except in certain routed transactions.'' This change 
will clarify that the USPPI is the exporter in all export transactions, 
except when the specific requirements of Sec.  758.3(b) are met to 
create a ``Foreign Principal Party Controlled Export Transaction.'' 
However, this does not change the USPPI's responsibilities as defined 
in the Foreign Trade Regulations (15 CFR Part 30).

Section 758.3(b), Routed Export Transactions

    This rule proposes to revise Sec.  758.3(b) to state that when the 
agreement between the parties to a transaction allows the FPPI, through 
its U.S. agent, to take possession and control the movement of items 
sent out of United States, the USPPI may allow the FPPI to assume 
responsibility for determining licensing requirements and obtaining 
license authority if, and only if, the FPPI complies with certain 
requirements. These requirements will be described in three new 
paragraphs: Sec. Sec.  758.3(b)(1)-(b)(3). These requirements will 
generally follow the documentary requirements in the current Sec.  
758.3(b) and Sec.  758.3(d) and the information sharing requirements in 
the current Sec.  758.3(c). These new sections will strengthen the 
requirements by providing greater detail on the required contents of 
the documentation and information sharing. This rule would also remove 
Sec.  758.3(c) and Sec.  758.3(d).
    In addition, the heading for paragraph (b) to section 758.3 would 
also be revised to ``Foreign Principal Party Controlled Export 
Transaction.'' The end-use and end-user controls found in Part 744 of 
the EAR and the General Prohibitions found in Part 736 of the EAR would 
continue to be applicable to all transactions, including ``Foreign 
Principal Party Controlled Export Transactions.''

Section 758.3(b)(1), Written Assumption of Responsibility

    This rule proposes new Sec.  758.3(b)(1), which would state that in 
order to transfer licensing responsibility, the USPPI must provide the 
FPPI with a written authorization (such as a contract, letter, 
facsimile, or email) which assigns to the FPPI responsibility for 
determining licensing requirements and obtaining license authority. The 
FPPI must provide the USPPI with a writing that acknowledges its 
assumption of those responsibilities,

[[Page 7108]]

and which identifies the U.S. agent of the foreign principal party in 
interest authorized to act as the exporter for EAR purposes. A single 
writing may still be used to cover multiple transactions between the 
same principals.

Section 758.3(b)(2), Power of Attorney or Other Written Authorization

    This rule proposes new Sec.  758.3(b)(2), which would state that 
prior to assuming responsibility from the USPPI for determining 
licensing requirements and obtaining license authority, the FPPI would 
be required to designate an agent in the United States to represent the 
FPPI. The FPPI would also be required to provide a power of attorney or 
other written authorization to its U.S. agent to authorize the agent to 
act on its behalf. The FPPI's U.S. agent would be required to have the 
power of attorney or other written authorization before the agent may 
represent the FPPI or apply for a license on the FPPI's behalf. The 
FPPI would also be required to provide the USPPI with a copy of the 
power of attorney or other written authorization prior to the FPPI's 
assuming responsibility from the USPPI for determining licensing 
requirements and obtaining license authority.

Section 758.3(b)(3), Information Sharing Requirement

    This rule proposes a new Sec.  758.3(b)(3), with two sub-
paragraphs. Section 758.3(b)(3)(i) would require the USPPI to provide 
the FPPI and its U.S. agent with the correct Export Control 
Classification Number (ECCN), or with sufficient technical information 
to determine a classification, upon the request of the FPPI or its U.S. 
agent. The USPPI would also be required to provide the FPPI and its 
U.S. agent with any information that the USPPI ``knows'' may affect the 
determination of license requirements or export authorization. The 
USPPI will be held to the ``knowledge'' standard defined in Part 772 of 
the EAR.
    Section 758.3(b)(3)(ii) would require the FPPI to authorize the 
USPPI to obtain from the FPPI's U.S. agent certain information related 
to the transaction, and direct the U.S. agent to provide such 
information to the USPPI, upon request. Specifically, upon request, the 
FPPI's U.S. agent must provide the USPPI with the date of export, port 
of export, country of ultimate destination and destination port, method 
of transportation and specific carrier identification, and export 
authorization (e.g., license number, license exemption, or NLR 
designation). This information sharing will enable the USPPI to confirm 
that the export was properly authorized.

Revisions to Sec.  772.1, Responsibilities of Parties to the 
Transaction

    This proposed rule would revise Sec.  772.1 to remove the term 
``routed export transaction'' from the list of definitions of terms 
used in the EAR, as this definition will become unnecessary. This rule 
would also revise the definitions of ``Forwarding agent'' to remove the 
term ``routed export transaction'' from that definition and to replace 
it with ``Foreign Principal Party Controlled Export Transaction.'' 
Finally, the term, ``Foreign Principal Party Controlled Export 
Transaction'' is proposed to be added to Sec.  772.1 and defined as a 
transaction meeting the requirements of Sec.  758.3(b). It would also 
state that the FPPI may only assume the responsibility for determining 
licensing requirements and obtaining license authority when the FPPI is 
responsible for the movement of the items out of the United States.

Request for Comments

    BIS seeks comments on this proposed rule. BIS will consider all 
comments received on or before April 7, 2014. All comments (including 
any personally identifying information or information for which a claim 
of confidentiality is asserted in either those comments or their 
transmittal emails) will be made available for public inspection and 
copying. Parties who wish to comment anonymously may do so by 
submitting their comments via Regulations.gov, leaving the fields that 
would identify the commenter blank and including no identifying 
information in the comment itself.

Export Administration Act

    Although the Export Administration Act of 1979, as amended, expired 
on August 20, 2001, the President, through Executive Order 13222 of 
August 17, 2001, 3 C.F.R., 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 8, 2013, 78 FR 49107 (August 
12, 2013), has continued the EAR 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.

Rulemaking 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, distributive 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 ``not significant 
regulatory action,'' under Sec.  3(f) of Executive Order 12866.
    2. Notwithstanding any other provision of law, no person is 
required to respond to, nor shall any person be subject to a penalty 
for failure to comply with a collection of information, subject to the 
requirements of Paperwork Reduction Act, unless that collection of 
information displays a currently valid Office of Management and Budget 
Control Number. This rule does not affect any paperwork collection.
    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 Sec.  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 Sec.  605(b), the Chief Counsel for Regulation, Department 
of Commerce, certified to the Chief Counsel for Advocacy, Small 
Business Administration that this proposed rule, if promulgated, will 
not have a significant impact on a substantial number of small entities 
for the reasons explained below. Consequently, BIS has not prepared a 
regulatory flexibility analysis. A summary of the factual basis for the 
certification is provided below.

Number of Small Entities

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

[[Page 7109]]

rule, it acknowledges that this rule would affect some unknown number.

Economic Impact

    For the majority of businesses impacted by this rule, including the 
majority of small businesses, the likely effect of this rule will be a 
reduction in the burden associated with preparing export-related 
documents. This rule will reduce the burden on small entities by 
simplifying the regulatory burden on exporters when determining whether 
or not to mark the transaction as a ``routed export transaction'' as 
required in the Foreign Trade Regulations. This rule would accomplish 
this by reducing or eliminating potential confusion stemming from 
differences between the Foreign Trade Regulations and Export 
Administration Regulations (EAR) through the elimination of the term 
``routed export transaction'' entirely from the EAR. In addition, to 
eliminate the use of the term ``routed export transaction'' under the 
EAR, this rule would refine certain procedures for creating a ``Foreign 
Principal Party Controlled Export Transaction''. The USPPI would be 
required to authorize the delegation of the responsibility for 
licensing determination and licensing to the FPPI, through a written 
authorization, and the FPPI must accept the delegation in writing and 
identify the U.S. agent authorized to act as the exporter, although 
this may be accomplished within a single writing.

List of Subjects:

15 CFR Parts 748, 750, and 758

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

15 CFR Part 772

    Exports.

    Accordingly, Parts 748, 750, 758, and 772 of the EAR (15 CFR Parts 
730-774) are proposed to be amended as follows:

PART 748--[AMENDED]

0
1. 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 8, 2013, 78 FR 
49107 (August 12, 2013).

0
2. Section 748.4 is amended by revising paragraph (a)(2) and 
(b)(2)(i)(A), to read as follows:


Sec.  748.4  Basic guidance related to applying for a license.

    (a) * * *
    (2) Foreign Principal Party Controlled Export Transaction. In an 
export transaction where the foreign principal party in interest is 
responsible for the movement of the items out of the United States, 
either the U.S. principal party in interest or, when authorized by 
Sec.  758.3(b) of the EAR, the foreign principal party in interest's 
designated U.S. agent may apply for a license to export items from the 
United States. Prior to submitting an application, the U.S. agent that 
applies for a license on behalf of the foreign principal party in 
interest must obtain a power of attorney or other written authorization 
from the foreign principal party in interest pursuant to Sec.  
758.3(b)(2) of the EAR.
* * * * *
    (b) * * *
    (2) * * *
    (i) * * *
    (A) An agent, applicant, licensee and exporter for a foreign 
principal party in interest in a ``Foreign Principal Party Controlled 
Export Transaction;'' or
* * * * *

PART 750--[AMENDED]

0
3. The authority citation for Part 750 continues to read as follows:

    Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; 
Sec 1503, 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; Presidential Determination 2003-23 of May 7, 2003, 68 FR 
26459, May 16, 2003; Notice of August 8, 2013, 78 FR 49107 (August 
12, 2013).

0
4. Section 750.7 is amended by removing ``routed export transactions'' 
and adding in its place ``Foreign Principal Party Controlled Export 
Transactions'' in the third sentence of paragraph (d).

PART 758--[AMENDED]

0
5. 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 
8, 2013, 78 FR 49107 (August 12, 2013).

0
6. Section 758.1 is amended by:
0
a. Removing ``routed transactions'' and adding in its place ``Foreign 
Principal Party Controlled Export Transactions'' in paragraph (f)(2); 
and
0
b. Removing ``routed transaction'' and adding in its place ``Foreign 
Principal Party Controlled Export Transaction'' in paragraph (h)(1)(i).
0
7. Section 758.3 is revised to read as follows:


Sec.  758.3  Responsibilities of parties to the transaction.

    All parties that participate in transactions subject to the EAR 
must comply with the EAR. Parties are free to structure transactions as 
they wish, and to delegate functions and tasks as they deem necessary, 
so long as the transaction complies with the EAR. However, acting 
through a forwarding or other agent, or delegating or redelegating 
authority, does not in and of itself relieve any party of 
responsibility for compliance with the EAR.
    (a) Export transactions. The U.S. principal party in interest is 
the exporter, except in a ``Foreign Principal Party Controlled Export 
Transaction'' described in paragraph (b) of this Section. The exporter 
must determine licensing authority (License or License Exception) or 
that no license is required (NLR), and obtain the appropriate license 
or other authorization, if necessary, prior to exporting. The exporter 
may hire forwarding or other agents to perform these tasks, but doing 
so does not relieve the exporter of these responsibilities.
    (b) Foreign Principal Party Controlled Export Transaction. In 
export transactions where the foreign principal party in interest is 
responsible for the movement of the items out of the United States, the 
U.S. principal party in interest may allow the foreign principal party 
in interest to assume responsibility for determining licensing 
requirements and, if necessary, obtaining a license or other export 
authorization, subject to the requirements set forth in the remainder 
of this paragraph. Absent full compliance with these requirements, the 
U.S. principal party in interest is the exporter for purposes of the 
EAR, and must determine licensing requirements and obtain the 
appropriate license or other export authorization, if necessary. All 
provisions of the EAR, including the end-use and end-user controls 
found in Part 744 of the EAR, and the General Prohibitions found in 
Part 736 of the EAR, apply to all parties to a Foreign Principal Party 
Controlled Export Transaction.
    (1) Written Assumption of Responsibility. The U.S. principal party 
in interest may assign the foreign principal party in interest, in a 
writing, responsibility for determining licensing requirements and 
obtaining license authority, if necessary. The foreign principal party 
in interest must provide the U.S. principal party in interest a written 
document that acknowledges the foreign principal party in interest's 
assumption of the responsibility and

[[Page 7110]]

identifies the U.S. agent of the foreign principal party in interest 
authorized to act as exporter for export licensing purposes. One 
writing may cover multiple transactions between the same principals.
    (2) Power of Attorney or Other Written Authorization. The foreign 
principal party in interest must designate an agent in the United 
States for a ``Foreign Principal Party Controlled Export Transaction.'' 
The U.S. agent must obtain a power of attorney or other written 
authorization from the foreign principal party in interest before it 
may act on its behalf or apply for a license. Upon request, the foreign 
principal party in interest must provide the U.S. principal party in 
interest with a copy of the power of attorney or other written 
authorization.
    (3) Information Sharing Requirements. (i) The U.S. principal party 
in interest, upon request, must provide the foreign principal party in 
interest and its forwarding or other agent with the correct Export 
Control Classification Number (ECCN), or with sufficient technical 
information to determine classification. In addition, the U.S. 
principal party in interest must provide the foreign principal party in 
interest or the foreign principal's agent any information that it knows 
may affect the determination of license requirements or export 
authorization.
    (ii) The foreign principal party in interest must authorize the 
U.S. principal party in interest to obtain from the foreign principal 
party in interest's U.S. agent the following information, and direct 
its U.S. agent to provide such information to the U.S. principal party 
in interest, upon request:
    (A) Date of export;
    (B) Port of export;
    (C) Country of ultimate destination;
    (D) Destination port;
    (E) Method of transportation;
    (F) Specific carrier identification; and
    (G) Export authorization (e.g., license number, license exemption, 
or NLR designation).

PART 772--[AMENDED]

0
8. 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 
08, 2013, 78 FR 49107 (August 12, 2013).

0
9. Section 772 is amended by:
0
a. Adding the definition for ``Foreign Principal Party Controlled 
Export Transaction'' in alphabetical order, as set forth below;
0
b. Revising the definition for ``Forwarding agent'', as set forth 
below; and
0
c. Removing the definition of ``Routed export transaction.''


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

* * * * *
    Foreign Principal Party Controlled Export Transaction. A 
transaction meeting the requirements of Sec.  758.3(b), where the 
foreign principal party in interest assumes responsibility for 
determining licensing requirements and obtaining license authority 
through its U.S. agent. The assumption of responsibility for 
determining licensing requirements and obtaining license authority is 
only authorized when the foreign principal party in interest is 
responsible for the movement of the items out of the United States.
* * * * *
    Forwarding agent. The person in the United States who is authorized 
by a principal party in interest to perform the services required to 
facilitate the export of the items from the United States. This may 
include air couriers or carriers. In Foreign Principal Party Controlled 
Export Transactions, the forwarding agent and the exporter may be the 
same for compliance purposes under the EAR.
* * * * *


    Dated: January 15, 2014.
Kevin J. Wolf,
Assistant Secretary for Export Administration.
[FR Doc. 2014-01176 Filed 2-5-14; 8:45 am]
BILLING CODE 3510-33-P