[Federal Register Volume 89, Number 166 (Tuesday, August 27, 2024)]
[Rules and Regulations]
[Pages 68539-68544]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-19132]


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DEPARTMENT OF COMMERCE

Bureau of Industry and Security

15 CFR Parts 734, 740, 744, and 746

[Docket No. 240820-0220]
RIN 0694-AJ78


Implementation of Additional Sanctions Against Russia and Belarus 
Under the Export Administration Regulations (EAR); and Corrections

AGENCY: Bureau of Industry and Security, Department of Commerce.

ACTION: Final rule.

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SUMMARY: In this final rule, the Bureau of Industry and Security (BIS) 
makes changes to the Russian and Belarusian sanctions under the Export 
Administration Regulations (EAR). This final rule expands the scope of 
the Russia/Belarus-Military End User (MEU) Foreign-Direct Product (FDP) 
rule, and renames it accordingly, so that the rule will also apply to 
transactions involving entities on the Entity List that pose a 
significant risk of involvement in the supply or diversion of items 
subject to the EAR to procurement networks for Russia's and Belarus's 
defense industry or intelligence services. This final rule also adds 
controls on the export, reexport, or transfer (in-country) to or within 
Russia or Belarus of ``software'' for the operation of computer 
numerical control (CNC) machine tools. In addition, this final rule 
makes corrections and clarifications to certain aspects of the EAR's 
Russia and Belarus sanctions.

DATES: This rule is effective August 27, 2024 except for amendatory 
instruction 11, which is effective September 16, 2024.

FOR FURTHER INFORMATION CONTACT: 
    For general questions on this final rule, contact Collmann Griffin, 
Senior Policy Advisor, International Policy Office, Bureau of Industry 
and Security, Department of Commerce, Phone: 202-482-1430, Email: 
[email protected].
    For questions on the Entity List changes in this final rule, 
contact Chair, End-User Review Committee, Office of the Assistant 
Secretary for Export Administration, Bureau of Industry and Security, 
Department of Commerce, Phone: (202) 482-5991, Email: [email protected]. 
For emails, include ``Russia and Belarus, August 2024 export control 
measures'' in the subject line.

SUPPLEMENTARY INFORMATION:

I. Background

A. Export Controls Implemented Against Russia and Belarus

    In response to Russia's February 2022 full-scale invasion of 
Ukraine, BIS imposed extensive sanctions on Russia under the EAR as 
part of the final rule, ``Implementation of Sanctions Against Russia 
Under the Export Administration Regulations (EAR)'' (``Russia Sanctions 
Rule'') (87 FR 12226, March 3, 2022). To address Belarus's complicity 
in the invasion, BIS imposed similar sanctions on Belarus under the EAR 
in a final rule, ``Implementation of Sanctions Against Belarus'' 
(``Belarus Sanctions Rule'') (87 FR 13048, March 6, 2022). Since March 
2022, BIS has published numerous final rules strengthening the export 
controls on Russia and Belarus, including measures undertaken in 
coordination with U.S. allies and partners.

B. Overview of This Final Rule

    BIS is amending the EAR (15 CFR parts 730 through 774) to 
strengthen export controls against Russia and Belarus by targeting 
entities that pose a risk of supplying items to the Russian and 
Belarusian defense industry or intelligence services by making them 
subject to foreign direct product rule-related restrictions. This final 
rule also imposes licensing requirements on certain operation 
``software'' designated as EAR99 that is destined for Russia or Belarus 
and corrects or clarifies certain Russia and/or Belarus export controls 
that were added to the EAR by rules issued earlier this year. The three 
sets of changes this final rule makes are described in section II as 
follows:
    A. Expansion of FDP rule to apply to Russia and Belarus Procurement 
Entities;
    B. Addition of License Requirements for Operation ``Software'' for 
Machine Tools; and
    C. Corrections and clarifications to the EAR's Russia and Belarus 
controls that are related to a January 2024 Final Rule and a June 2024 
Final Rule.

II. Amendments to the EAR

A. Expansion of FDP Rule To Apply to Russia and Belarus Procurement 
Entities

    The EAR's jurisdiction extends to certain foreign-made items that 
meet the criteria under one of the FDP rules under Sec.  734.9 that are 
the ``direct product'' of certain ``technology'' or ``software'' or 
produced by a complete plant or `major component' of a plant that 
itself is a ``direct product'' of certain ``technology'' or 
``software.'' Each FDP rule also includes a product scope, and certain 
FDP rules include an end-user or end-use scope. Among these different 
FDP rules, there are two that are specific to Russia and Belarus that 
were added to the EAR to address Russia's full-scale invasion of 
Ukraine: (1) the FDP rule under Sec.  734.9(f) (Russia/Belarus/
Temporarily occupied Crimea region of Ukraine FDP rule); and (2) the 
FDP rule under Sec.  734.9(g) (Russia/Belarus-Military End User FDP 
rule). The Russia/Belarus/Temporarily occupied Crimea region of Ukraine 
FDP rule applies to the destinations of Russia/Belarus/Temporarily 
occupied Crimea region of Ukraine, and the Russia/Belarus-Military End 
User FDP rule has a broader product scope that is specific to Russian 
and Belarusian Military End Users, wherever located. As described in 
this section II.A, this final rule expands the scope of the Russia/
Belarus-Military End User FDP Rule to further address the national 
security and foreign policy concerns due to the significant risk of 
procurement entities (as described below) supplying items to the 
Russian and Belarusian defense industry or intelligence services.
    Specifically, this final rule is modifying the name of the Russia/
Belarus-Military End User FDP rule in Sec.  734.9(g) to the ``Russia/
Belarus-Military End User and Procurement FDP rule,'' so that the rule, 
as renamed, applies to both Russian and Belarusian military end users 
as defined in Sec.  744.21 of the EAR, as well as to a second, new 
category of entities under the EAR: Russian or Belarusian Procurement 
Entities (i.e., an entity that poses a significant risk of involvement 
in the supply or diversion of items subject to the EAR to procurement 
networks for Russia's or Belarus's defense industry or intelligence 
services) (as described below). Such Russian or Belarusian Procurement 
Entities are entities placed on the Entity List under Sec.  744.11 of 
the EAR and that pose a significant risk of involvement in the supply 
or diversion of items subject to the EAR to procurement networks for 
Russia's or Belarus's defense industry or intelligence services. 
Entities affected by the Russia/Belarus-Military End User and 
Procurement FDP rule will continue to be identified with footnote 3 on 
the Entity List in supplement no. 4 to part 744. The standard for a 
footnote 3 designation, as revised and expanded to refer to Russian or 
Belarusian Procurement entities, is described in note 3 to paragraph 
(g) in Sec.  734.9. All footnote 3 designated entities will be

[[Page 68540]]

subject to the (now renamed) Russia/Belarus-Military End User and 
Procurement FDP rule set forth in Sec.  734.9(g), along with the 
license requirements set forth in Sec.  746.8(a)(3) of the EAR.
    The creation of this new category of Russian and Belarusian 
Procurement Entities addresses the continuing efforts of Russia and 
Belarus to obtain items needed to support Russia's war against Ukraine. 
As the U.S. and its partners and allies have steadily expanded the 
scope of export controls against Russia and Belarus since Russia's 
unprovoked full-scale invasion of Ukraine in February 2022, Russia and 
Belarus have in turn developed extensive procurement networks to obtain 
restricted items from third countries. These procurement networks have 
been used to funnel controlled items, including those described on the 
Common High Priority List (see https://www.bis.doc.gov/index.php/all-articles/13-policy-guidance/country-guidance/2172-russia-export-controls-list-of-common-high-priority-items), and including 
microelectronics and other items that have been recovered from Russian 
weapons systems found on the battlefield in Ukraine, to Russia's 
defense industrial base. Due to the elongated nature of these supply 
chains, entities involved in this procurement may be multiple steps 
removed from military production, even as they supply items critical to 
Russia's war effort. This has been especially true as Russia and 
Belarus have shifted their economies to a wartime footing, converting 
large sectors of their industry to support the production of weapons 
systems and other items needed by the military. As a result, many of 
the items (including foreign-produced items that may be U.S.-branded) 
that are sought out by these procurement networks (e.g., the kinds of 
items described in Sec.  744.21(f) of the EAR) are likely destined for 
military end uses in Russia or Belarus, or to intelligence services in 
furtherance of Russia's war. It is possible that third-country 
intermediaries may not have actual knowledge of the intended end use of 
the items they are providing to Russia or Belarus. This rule will 
enable the United States to more aggressively target such 
intermediaries and other procurement entities that are not directly 
involved in supplying the Russian or Belarusian defense industry or 
intelligence services, but that obtain items that ultimately support 
military production or use by intelligence services. For example, as a 
result of the change made by this rule, an entity in a third country 
that sends U.S.-branded electronic ``components'' produced outside the 
United States to a Russian trading company with a record of supplying 
the Russian defense industry or intelligence services may qualify as a 
Russian or Belarusian Procurement Entity. This set of FDP-related 
restrictions under the EAR would limit this entity's ability to 
continue to obtain the U.S.-branded electronic components that are of 
concern, including certain foreign-made items, and cut off the support 
such entity is providing to Russian or Belarusian defense industry or 
intelligence services. Prior to this, this procurement entity would 
have had to have been a `military end user' as defined in Sec.  
744.21(g) in order to be subject to the FDP-related restrictions on 
foreign-made items. To implement this more expansive FDP rule, this 
rule revises note 3 to paragraph (g) in Sec.  734.9 to establish a 
standard pursuant to which the End User Review Committee (ERC) may 
designate an entity as a footnote 3 entity if the ERC determines that 
the entity is a Russian or Belarusian MEU, as defined in Sec.  744.21 
of the EAR, or a Russian or Belarusian Procurement Entity. The rule 
also makes corresponding changes to the headings to paragraphs (g)(1) 
and (2) in Sec.  734.9. The ERC, composed of representatives of the 
Departments of Commerce (Chair), State, Defense, Energy, and, where 
appropriate, the Treasury, makes all decisions regarding additions to, 
removals from, or other modifications to the Entity List. The ERC makes 
all decisions to add an entry to the Entity List by majority vote and 
makes all decisions to remove or modify an entry by unanimous vote.
    Along with the amendments to Sec.  734.9, BIS in this final rule is 
amending Sec.  744.11 of the EAR to clarify that FDP license 
requirements relating to footnote 3 are described in Sec.  746.8 of the 
EAR. In Sec.  744.11 under paragraph (a)(2), the EAR specifies the FDP 
license requirements associated with footnotes 1 and 4. In this rule, a 
reference to footnote 3 is added to ensure that reexporters and 
transferors understand where to find these license requirements. As a 
conforming change, BIS amends the numbering and organization of the 
paragraphs under Sec.  744.11(a)(2), so the footnotes associated with 
the Entity List are specified and described in numerical order. 
Consistent with these structural changes, paragraph (a)(2)(ii) under 
Sec.  744.11 is removed and reserved, and new paragraphs (a)(2)(iii) 
and (iv) under Sec.  744.11 are added for footnote 3 and footnote 4, 
respectively.
    Restrictions on certain military end uses and military end users 
are located in Sec.  744.21. BIS is making a conforming change to Sec.  
744.21 of the EAR to clarify that only footnote 3 entities meeting the 
MEU definition on the Entity List will cross-reference Sec.  744.21, 
but footnote 3 entities meeting the procurement-related standard will 
not cross-reference Sec.  744.21. As a result, Sec.  744.21(a)(2) and 
(b)(1) are revised to reflect that MEUs placed on the Entity List will 
be identified with a footnote 3 designation and a reference to Sec.  
744.21.
    In supplement no. 4 to part 744--Entity List, this final rule makes 
conforming changes to footnotes 3 and 4. A reference to Sec.  744.11 is 
added to footnote 3 to parallel the addition of the footnote 3 
description in Sec.  744.11(a)(2)(iii) in this final rule, and the 
paragraphs are reorganized to be in numerical order. With the 
reorganization of the footnote descriptions under Sec.  744.11(a)(2) in 
this final rule, footnote 4 is updated by removing the reference to it 
in paragraph (a)(2)(ii) and adding that reference to paragraph 
(a)(2)(iv), the location of the description of footnote 4.
    In Sec.  746.8 (Sanctions against Russia and Belarus), a conforming 
change is made to Sec.  746.8(a)(3), which describes the Russian and 
Belarusian Military End User FDP rule. This FDP rule is being renamed 
consistent with the changes made by this final rule as the ``Russian 
and Belarusian Military End User and Procurement FDP rule''. This final 
rule also amends Sec.  746.8(a)(3) to add a reference to procurement 
entities for Russia's defense industry or intelligence services. Note 1 
to paragraph (a)(3), which had identified MEUs on the Entity List as 
having a footnote 3 designation, is removed consistent with the changes 
made by this rule so that footnote 3 designations may be applied to 
Russian and Belarusian MEUs or to Russian or Belarusian Procurement 
Entities. The relevant description of a footnote 3 designation is now 
located in note 3 to paragraph (g) in Sec.  734.9.
    BIS estimates these changes described in section II.A will result 
in an additional fifteen license applications submitted to BIS 
annually.

B. Imposition of License Requirements for Operation ``Software'' for 
Machine Tools

    With this final rule, BIS is amending the license requirements that 
apply to ``software'' designated as EAR99 (EAR99 ``software'') in Sec.  
746.8(a)(8) of the EAR. Specifically, BIS is adding controls on EAR99 
``software'' for the operation of computer numerical control (CNC) 
machine tools (i.e., operation

[[Page 68541]]

``software'') to ensure that CNC machine tools that are already 
restricted for export, reexport, and transfer to or within Russia and 
Belarus under the EAR cannot receive ``software'' updates. While Sec.  
746.8 already restricts ``software'' used to design industrial 
``parts'' and ``components'' and convert them into machine-readable 
instructions, this expansion in controls targets operation ``software'' 
embedded in CNC machine tools that allows them to carry out these 
instructions to produce the finished industrial ``parts'' and 
``components,'' including:
     ``Software'' that provides a user interface for setting 
up, operating, and troubleshooting the machine tool;
     ``Software'' that translates the instructions produced by 
computer-aided manufacturing (CAM) software into physical actions by 
the machine tool;
     ``Software'' that monitors conditions during the machining 
process; and
     ``Software'' that automatically adjusts the machine tool's 
settings based on real-time conditions.
    Much of this ``software'' is typically installed within the machine 
tool itself, and software updates are often purchased and loaded after 
the fact. Machine tools currently operating in Russia and Belarus are 
likely to already have some version of this ``software'' pre-installed. 
However, it is not uncommon for the companies that produce CNC machine 
tools to offer ``software'' updates for existing tools which can 
improve performance by modernizing the ``software'' installed in older 
tools, or fix ``software'' defects that came to light after the 
original machine was shipped. Controlling Russian and Belarusian access 
to these ``software'' updates will limit the utility of these machine 
tools. As with other EAR99 ``software'' that is otherwise restricted 
from export, reexport, and transfer (in country) to or within Russia 
and/or Belarus, there will be an exclusion for EAR99 operation software 
destined for companies exclusively operating in either of the two 
countries' agricultural or medical industries (see 89 FR 51644, June 
18, 2024; adding 15 CFR 746.8(a)(12)(iv)).
    This amendment has a delayed effective date of September 16, 2024, 
consistent with the effective date of other controls on EAR99 
``software'' that were added in the June 18, 2024 Final Rule.
    BIS estimates these changes described in section II.A will result 
in an additional twenty license applications submitted to BIS annually.

C. Corrections and Clarifications

    On January 25, 2024, BIS published the final rule, ``Implementation 
of Additional Sanctions Against Russia and Belarus Under the Export 
Administration Regulations (EAR) and Refinements to Existing Controls'' 
(89 FR 4804) (January 2024 Final Rule) and on June 18, 2024 the final 
rule, ``Implementation of Additional Sanctions Against Russia and 
Belarus Under the Export Administration Regulations (EAR) and 
Refinements to Existing Controls'' (89 FR 51644) (June 2024 Final 
Rule). This final rule corrects inadvertent errors introduced by those 
two final rules and eliminates obsolete cross references. BIS estimates 
that these changes, as described in section II.C.1 through .3, will 
result in a reduction of five license applications submitted to BIS 
annually because of the restoration of the availability of certain 
license exceptions that had been inadvertently rendered unavailable.
1. Correction to License Exception MED To Update the Cross Reference to 
the License Requirements That May Be Overcome
    In Sec.  740.23 (Medical Devices (MED)), this final rule corrects 
the cross reference to the license requirements that this license 
exception may overcome. This correction addresses an inadvertent error 
made by the June 2024 Final Rule that consolidated various Russia and 
Belarus-related sanctions into an expanded Sec.  746.8. Specifically, 
this final rule replaces outdated references to Sec. Sec.  746.5 and 
746.10 in the last sentence of paragraph (a) introductory text in Sec.  
740.23 with a cross reference to paragraphs (a)(5) through (8) of Sec.  
746.8 of the EAR, which is where the applicable license requirements 
are now located following the consolidation made by the June 2024 Final 
Rule.
2. Correction to Amendatory Instruction for Software Controls in the 
June 2024 Final Rule
    This final rule also corrects an error inadvertently introduced by 
an incorrect amendatory instruction in the June 2024 Final Rule. 
Specifically, amendatory instruction 14a. erroneously omitted the term 
``revising.'' By making this correction, the new text from this 
instruction for Sec.  746.8(a) will be incorporated as intended in the 
CFR. This error is corrected in instruction 11 of this final rule. 
Consistent with the June 2024 Final Rule, this correction has a delayed 
effective date of September 16, 2024.
3. Corrections Involving License Exception Eligibility in Sec.  
746.8(c)(2)
    In this final rule, BIS issues a correction to text erroneously 
added by the June 2024 Final Rule that had inadvertently restricted the 
availability of certain license exceptions for exports, reexports, or 
transfer (in-country) to or within Russia and Belarus. This correction 
is made by removing limiting text in paragraphs (c)(2)(i) to (viii) in 
Sec.  746.8 to correct inconsistencies regarding license exception 
availability in connection with the Russia controls in Sec. Sec.  
746.5, 746.8, and 746.10 of the EAR.
    In the preamble of the January 2024 Final Rule, BIS explained that 
it was harmonizing license exceptions across Sec. Sec.  746.5, 746.8, 
and 746.10 by adding eligibility for several license exceptions or 
portions of license exceptions that were previously excluded under 
certain sections of the Russian and Belarus sanctions. However, in 
certain cases a restriction in the introductory text to paragraph (c) 
in Sec. Sec.  746.5, 746.8, and 746.10 was inadvertently retained, 
thereby resulting in inconsistent limits on the availability of certain 
license exceptions or portions of those license exceptions. Those 
limits were subsequently carried over to the revised Sec.  746.8 by the 
June 2024 Final Rule. BIS is now removing that text from paragraphs 
(c)(2)(i) to (viii) in Sec.  746.8 as included in the June 2024 Final 
Rule to reflect the original intent of the January 2024 Final Rule to 
change the EAR such that the regulatory text specifies the correct 
limits on license exception availability.
    The removal of this limitation does not change the fact that in 
order to use any EAR license exception, the export, reexport, or 
transfer (in-country) must not be otherwise restricted under Sec.  
740.2, must meet all of the applicable terms and conditions of the 
referenced license exception, and must also be consistent with Sec.  
746.8(c), which excludes the use of all EAR license exceptions, except 
for those license exceptions or portions of license exceptions 
specifically identified in Sec.  746.8(c).
    To implement these changes in Sec.  746.8, this final rule corrects 
paragraph (c)(1) to remove the restriction on the use of license 
exceptions for the license requirements in paragraph (a)(8) of that 
section. Consistent with the intent of the June 2024 Final Rule, this 
final rule removes the reference to paragraph (a)(8) regarding the 
availability of license exceptions from paragraph (c)(1) and adds that 
reference to paragraph (c)(2).

[[Page 68542]]

BIS has also determined that apart from the introductory text of 
paragraph (c)(2), specifying the applicable license requirements in 
each paragraph under (c)(2)(i) through (viii) creates unnecessary 
complexity and confusion. The other restrictions specified in these 
paragraphs, the terms and conditions of the referenced license 
exceptions or portions of license exceptions referenced in paragraphs 
(c)(2)(i) through (viii), and the general restrictions on the use of 
license exceptions under Sec.  740.2, are sufficient to allow limited 
exports, reexports, and transfers (in-country) to or within Russia and 
Belarus that are consistent with U.S. national security and foreign 
policy interests. For these reasons, BIS makes these changes to Sec.  
746.8(c)(1) and (2) to position the reference to paragraph (a)(8) in 
the paragraph (c)(2) and to simplify the structure of paragraph (c)(2). 
These changes should facilitate understanding of these provisions while 
also aligning the regulatory text with the intent of the January 2024 
Final Rule.

Savings Clause

    For the changes being made in this final rule, shipments of items 
removed from eligibility for a License Exception or export, reexport, 
or transfer (in-country) without a license (NLR) as a result of this 
regulatory action that were en route aboard a carrier to a port of 
export, reexport, or transfer (in-country), on August 27, 2024, 
pursuant to actual orders for export, reexport, or transfer (in-
country) to or within a foreign destination, may proceed to that 
destination under the previous eligibility for a License Exception or 
export, reexport, or transfer (in-country) without a license (NLR), 
provided the export, reexport, or transfer (in-country) is completed no 
later than on September 26, 2024.

Export Control Reform Act of 2018

    On August 13, 2018, the President signed into law the John S. 
McCain National Defense Authorization Act for Fiscal Year 2019, which 
included the Export Control Reform Act of 2018 (ECRA) (codified, as 
amended, at 50 U.S.C. 4801-4852). ECRA provides the legal basis for 
BIS's principal authorities and serves as the authority under which BIS 
issues this rule.

Rulemaking Requirements

    1. BIS has examined the impact of this rule as required by 
Executive Orders (E.O.) 12866, 13563, and 14094, which 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 (e.g., potential economic, environmental, public, 
health, and safety effects, distributive impacts, and equity). Pursuant 
to E.O. 12866, as amended, this final rule has not been determined to 
be a ``significant regulatory action.''
    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 the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et 
seq.) (PRA), unless that collection of information displays a currently 
valid Office of Management and Budget (OMB) Control Number. This rule 
involves the following OMB-approved collections of information subject 
to the PRA:
     0694-0088, ``Simple Network Application Process and 
Multipurpose Application Form,'' which carries a burden hour estimate 
of 29.4 minutes for a manual or electronic submission;
     0694-0096, ``Five Year Records Retention Period,'' which 
carries a burden hour estimate of less than 1 minute; and
     0607-0152, ``Automated Export System (AES) Program,'' 
which carries a burden hour estimate of 3 minutes per electronic 
submission.
    BIS estimates that these new controls on Russia and Belarus under 
the EAR will result in an increase of thirty license applications 
submitted annually to BIS. However, the additional burden falls within 
the existing estimates currently associated with these control numbers. 
Additional information regarding these collections of information--
including all background materials--can be found at https://www.reginfo.gov/public/do/PRAMain by using the search function to enter 
either the title of the collection or the OMB Control Number.
    3. This rule does not contain policies with Federalism implications 
as that term is defined under E.O. 13132.
    4. Pursuant to section 1762 of ECRA (50 U.S.C. 4821), this action 
is exempt from the Administrative Procedure Act (APA) (5 U.S.C. 553) 
requirements for notice of proposed rulemaking, opportunity for public 
participation, and delay in effective date. While section 1762 of ECRA 
provides sufficient authority for such an exemption, this action is 
also independently exempt from these APA requirements because it 
involves a military or foreign affairs function of the United States (5 
U.S.C. 553(a)(1)).
    5. Because neither the Administrative Procedure Act nor any other 
law requires that notice of proposed rulemaking and an opportunity for 
public comment be given for this rule, the analytical requirements of 
the Regulatory Flexibility Act (5 U.S.C. 601 et seq.) are not 
applicable. Accordingly, no Final Regulatory Flexibility Analysis is 
required, and none has been prepared.

List of Subjects

15 CFR Part 734

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

15 CFR Part 740

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

15 CFR Part 744

    Exports, Reporting and recordkeeping requirements, Terrorism.

15 CFR Part 746

    Exports, Reporting and recordkeeping requirements.
    Accordingly, parts 734, 740, 744, and 746 of the Export 
Administration Regulations (15 CFR parts 730 through 774) are revised 
to read as follows:

PART 734--SCOPE OF THE EXPORT ADMINISTRATION REGULATIONS

0
1. The authority citation for 15 CFR part 734 continues to read as 
follows:

    Authority:  50 U.S.C. 4801-4852; 50 U.S.C. 4601 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, 78 FR 16129, 3 CFR, 2014 Comp., 
p. 223; Notice of November 1, 2023, 88 FR 75475 (November 3, 2023).


0
2. Section 734.9 is amended by revising the headings of paragraphs (g), 
(g)(1), and (g)(2), and revising the note to paragraph (g), to read as 
follows:


Sec.  734.9  Foreign-Direct Product (FDP) Rules.

* * * * *
    (g) Russia/Belarus-Military End User and Procurement FDP rule. * * 
*
    (1) Product Scope of Russia/Belarus-Military End User and 
Procurement FDP rule. * * *
* * * * *
    (2) End-user scope of the Russia/Belarus-Military End User and 
Procurement FDP rule. * * *
* * * * *

[[Page 68543]]

    Note 3 to paragraph (g). Footnote 3 may be added to an entity that 
the End User Review Committee has determined to be either a Russian or 
Belarusian `military end user' as defined in Sec.  744.21 of the EAR, 
or a Russian or Belarusian Procurement Entity that poses a significant 
risk of involvement in the supply or diversion of items subject to the 
EAR to procurement networks for Russia's or Belarus's defense industry 
or intelligence services.
* * * * *

PART 740--LICENSE EXCEPTIONS

0
3. The authority citation for 15 CFR part 740 continues to read as 
follows:

    Authority:  50 U.S.C. 4801-4852; 50 U.S.C. 4601 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.


0
4. Section 740.23 is amended by revising the second to last sentence of 
paragraph (a) introductory text to read as follows:


Sec.  740.23  Medical Devices (MED).

* * * * *
    (a) * * * This license exception authorizes transactions involving 
items designated as EAR99 that would otherwise require a license 
pursuant to Sec.  746.6 or paragraphs (a)(5) through (8) of Sec.  746.8 
of the EAR, subject to the terms and conditions described in this 
section. * * *
* * * * *

PART 744--CONTROL POLICY: END-USER AND END-USE BASED

0
5. The authority citation for 15 CFR part 744 continues to read as 
follows:

    Authority: 50 U.S.C. 4801-4852; 50 U.S.C. 4601 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. 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 September 7, 2023, 88 FR 62439 (September 11, 2023); Notice of 
November 1, 2023, 88 FR 75475 (November 3, 2023).


0
6. Amend Sec.  744.11 by removing and reserving paragraph (a)(2)(ii) 
and adding paragraphs (a)(2)(iii) and (a)(2)(iv) to read as follows:


Sec.  744.11  License requirements that apply to entities acting or at 
significant risk of acting contrary to the national security or foreign 
policy interests of the United States.

* * * * *
    (a) * * *
    (2) * * *
    (iii) Footnote 3 entities. License requirements for foreign-
produced items involving entities marked with footnote 3 are described 
in Sec.  746.8(a)(3). The license review policy is set forth in the 
entry in supplement no. 4 to this part for each entity with a footnote 
3 designation.
    (iv) Footnote 4 entities. You may not, without a license, reexport, 
export from abroad, or transfer (in-country) any foreign-produced item 
subject to the EAR pursuant to Sec.  734.9(e)(2) of the EAR when an 
entity designated with footnote 4 on the Entity List in supp. no. 4 to 
this part is a party to the transaction, or that will be used in the 
``development'' or ``production'' of any ``part,'' ``component,'' or 
``equipment'' produced, purchased, or ordered by any such entity. See 
Sec.  744.23 for additional license requirements that may apply to 
these entities. The license review policy for foreign-produced items 
subject to this license requirement is set forth in the entry in 
supplement no. 4 to this part for each entity with a footnote 4 
designation.
* * * * *

0
7. Section 744.21 is amended by revising the last sentence of paragraph 
(a)(2) and the third and sixth sentences of the introductory text of 
paragraph (b)(1) to read as follows:


Sec.  744.21  Restrictions on certain 'military end uses' or 'military 
end users'.

    (a) * * *
    (2) * * * Belarusian or Russian `military end users' located 
outside of Belarus or Russia are limited to entities identified on the 
Entity List under supplement no. 4 to this part with a footnote 3 
designation and a reference to this section.
* * * * *
    (b) * * *
    (1) * * * Such Belarusian or Russian `military end users' may also 
be added to supplement no. 4 to this part (Entity List) and will be 
listed with a footnote 3 designation and a reference to this section. * 
* * As specified in paragraphs (a)(1) and (2) of this section, 
`military end users' of a country identified in this section not 
located in that same country are exhaustively listed on either the 
Entity List with a footnote 3 designation and a reference to this 
section, or on the MEU List under supplement no. 7 this part. * * *
* * * * *

0
8. Supplement no. 4 to part 744 is amended by revising footnotes 3 and 
4 to read as follows:

Supplement No. 4 to Part 744--Entity List

* * * * *
    \3\ For this entity, ``items subject to the EAR'' includes foreign-
produced items that are subject to the EAR under Sec.  734.9(g) of the 
EAR. See Sec. Sec.  744.11, 744.21, and 746.8 of the EAR for related 
license requirements, license review policy, and restrictions on 
license exceptions.
    \4\ For this entity, ``items subject to the EAR'' includes foreign-
produced items that are subject to the EAR under Sec.  734.9(e)(2) of 
the EAR. See Sec.  744.11(a)(2)(iv) for related license requirements 
and license review policy.
* * * * *

PART 746--EMBARGOES and OTHER SPECIAL CONTROLS

0
9. The authority citation for 15 CFR part 746 continues to read as 
follows:

    Authority:  50 U.S.C. 4801-4852; 50 U.S.C. 4601 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. 2151 note; 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, 
66 FR 44025, 3 CFR, 2001 Comp., p. 783; E.O. 13338, 69 FR 26751, 3 
CFR, 2004 Comp., p 168; Presidential Determination 2003-23, 68 FR 
26459, 3 CFR, 2004 Comp., p. 320; Presidential Determination 2007-7, 
72 FR 1899, 3 CFR, 2006 Comp., p. 325; Notice of May 8, 2024, 89 FR 
40355 (May 9, 2024).


0
10. In Sec.  746.8 amend paragraph (a)(3) by:
0
a. Revising the paragraph heading; and
0
b. Removing note 1 to paragraph (a)(3).
    The revision reads as follows:


Sec.  746.8  Sanctions against Russia and Belarus.

    (a) * * *
    (3) Russia/Belarus-Military End User and Procurement FDP rule. * * 
*
* * * * *

0
11. Effective September 16, 2024, amend Sec.  746.8 by:
0
a. Revising the first and last sentences of the introductory text of 
paragraph (a), and paragraphs (a)(8)(ii); (c)(1) and (2) to read as 
follows:


Sec.  746.8  Sanctions against Russia and Belarus.

    (a) License requirements. Except as described in the exclusions in 
paragraph (a)(12), and in addition to license requirements specified on 
the

[[Page 68544]]

Commerce Control List (CCL) in supplement no. 1 to part 774 of the EAR 
and in other provisions of the EAR, including part 744 and other 
sections of part 746, a license is required as specified under 
paragraphs (a)(1) through (8) of this section. * * * License 
requirements in paragraph (a)(4) of this section that apply to exports, 
reexports, and transfers (in-country) involved in certain end uses 
should be reviewed only after license requirements in paragraphs (a)(1) 
through (3) and (5) through (8) of this section are reviewed.
* * * * *
    (8) * * *
    (ii) The following types of software subject to the EAR are in the 
scope of paragraph (a)(8): Enterprise resource planning (ERP); customer 
relationship management (CRM); business intelligence (BI); supply chain 
management (SCM); enterprise data warehouse (EDW); computerized 
maintenance management system (CMMS); project management software, 
product lifecycle management (PLM); building information modelling 
(BIM); computer aided design (CAD); computer-aided manufacturing (CAM); 
engineering to order (ETO); and software for the operation of computer 
numerical control (CNC) machine tools. The scope of paragraph (a)(8) 
also includes software updates for software identified in this 
paragraph that are subject to the EAR and designated as EAR99.
* * * * *
    (c) * * *
    (1) No license exceptions may overcome the license requirements in 
paragraph (a)(3) of this section, except as specified in the entry for 
a Footnote 3 entity on the Entity List in supplement no. 4 to part 744 
of the EAR.
    (2) No license exceptions may overcome the license requirements in 
paragraphs (a)(1), (2), and (4) through (8) of this section except the 
following:
    (i) License Exception TMP for items for use by the news media as 
set forth in Sec.  740.9(a)(9) of the EAR.
    (ii) License Exception GOV (Sec.  740.11(b) of the EAR).
    (iii) License Exception TSU for software updates for civil end-
users that are wholly-owned U.S. subsidiaries, branches, or sales 
offices; foreign subsidiaries, branches, or sales offices of U.S. 
companies that are joint ventures with other U.S. companies; joint 
ventures of U.S. companies with companies headquartered in countries 
from Country Group A:5 and A:6 in supplement no. 1 to part 740 of the 
EAR countries; the wholly-owned subsidiaries, branches, or sales 
offices of companies headquartered in countries from Country Group A:5 
and A:6 in supplement no. 1 to part 740; or joint ventures of companies 
headquartered in Country Group A:5 and A:6 with other companies 
headquartered in Country Groups A:5 and A:6 (Sec.  740.13(c) of the 
EAR).
    (iv) License Exception BAG, excluding firearms and ammunition 
(Sec.  740.14, excluding paragraph (e), of the EAR).
    (v) License Exception AVS, excluding any aircraft registered in, 
owned or controlled by, or under charter or lease by Russia or Belarus 
or a national of Russia or Belarus (Sec.  740.15(a) and (b) of the 
EAR).
    (vi) License Exception encryption commodities, software, and 
technology (ENC) for civil end-users that are wholly-owned U.S. 
subsidiaries, branches, or sales offices; foreign subsidiaries, 
branches, or sales offices of U.S. companies that are joint ventures 
with other U.S. companies; joint ventures of U.S. companies with 
companies headquartered in countries from Country Group A:5 and A:6 in 
supplement no. 1 to part 740 of the EAR countries; the wholly-owned 
subsidiaries, branches, or sales offices of companies headquartered in 
countries from Country Group A:5 and A:6 in supplement no. 1 to part 
740; or joint ventures of companies headquartered in Country Group A:5 
and A:6 with other companies headquartered in Country Groups A:5 and 
A:6 (Sec. Sec.  740.13(c) and 740.17 of the EAR).
    (vii) License Exception CCD (Sec.  740.19 of the EAR).
    (viii) License Exception MED (Sec.  740.23 of the EAR).
* * * * *

Thea D. Rozman Kendler,
Assistant Secretary for Export Administration.
[FR Doc. 2024-19132 Filed 8-23-24; 8:45 am]
BILLING CODE 3510-JT-P