
[Federal Register: December 4, 2009 (Volume 74, Number 232)]
[Proposed Rules]               
[Page 63685-63688]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr04de09-35]                         

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DEPARTMENT OF COMMERCE

Bureau of Industry and Security

15 CFR Parts 740, 748, 750 and 762

[Docket No. 0907201151-91153-01]
RIN 0694-AE66

 
Issuance of Electronic Document and Related Recordkeeping 
Requirements

AGENCY: Bureau of Industry and Security, Commerce.

ACTION: Proposed rule.

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SUMMARY: The Bureau of Industry and Security (BIS) is proposing to 
eliminate the use of most paper documents that it sends to parties 
having business before the agency. The documents that would be affected 
by this proposed rule are: Export and reexport licenses, notices of 
denial of license applications, notices of return of a license 
application without action, classification results, License Exception 
AGR notification results and encryption review request results. This 
proposed rule would modify the Export Administration Regulations (EAR) 
to implement those changes. This proposed rule also would make changes 
to the recordkeeping requirements associated with the elimination of 
paper documents. BIS is proposing to make these changes to reduce 
mailing costs and to free up staff time currently devoted to mailing 
these documents for use in other tasks.

DATES: Comments must be received by BIS no later than February 2, 2010.

FOR FURTHER INFORMATION CONTACT: Thomas Andrukonis, Office of Exporter 
Services, Bureau of Industry and Security, U.S. Department of Commerce 
at 202 482 6393 or e-mail tandrukoi@bis.doc.gov.

SUPPLEMENTARY INFORMATION: 

Background

    The Bureau of Industry and Security administers an export licensing 
program pursuant to the Export Administration Regulations. As part of 
this program, BIS issues various documents in response to applications 
and notifications submitted to BIS by the public. Those documents 
include export licenses, reexport licenses, notice that an export or 
reexport license applications has been denied, notice that an export or 
reexport license application is being returned to the applicant without 
action, responses to License Exception AGR notifications, and notice of 
the results of a classification request. Collectively, these documents 
are referred to in this preamble as license related documents.
    Currently, BIS issues the license related documents in two ways: 
Electronically in BIS's Simplified Network Application Processing 
Redesign system (SNAP-R) and on paper. Most license related documents 
are issued in both electronic and paper form. However, a few documents 
are issued only on paper. BIS now proposes to eliminate the paper 
version of the license related documents that it currently issues both 
electronically in SNAP-R and on paper.
    The EAR require that export license applications, reexport license 
applications and License Exception AGR notifications, encryption review 
requests and classification requests be submitted to BIS electronically 
using SNAP-R unless BIS authorizes a paper submission. The license 
related documents associated with a SNAP-R submission are issued on 
line in SNAP-R where the submitter may view, save or print a copy. In 
addition, a paper version of each of those documents is mailed to the 
party. BIS does not issue electronic license related documents in 
situations in which BIS authorized a paper submission and in situations 
in which BIS must reissue the license related documents because it 
reopened a matter previously considered to be completed. BIS is not 
proposing to stop issuing paper license related documents in these two 
situations in which it currently issues only paper documents. BIS also 
is not proposing to change its practices regarding issuance of Special 
Comprehensive Licenses or Special Iraq Reconstruction Licenses. BIS is 
proposing to discontinue issuing paper documents in the situations 
where it currently issues both paper and electronic versions of the 
license related documents. BIS is also proposing to make certain 
changes to the recordkeeping requirements in connection with this 
change.

Specific Proposed Changes

Clarification that Electronic Notification in SNAP-R is Considered, for 
Purposes of the EAR, Written Notification of the Results of a License 
Exception AGR Request
    This proposed rule would revise Sec.  740.18(c)(5) to state that 
BIS will issue confirmation in SNAP-R or by other written notification 
of the decision that no agency has objected to a party's proposed use 
of License Exception AGR. Currently, that section merely states that 
BIS will issue written confirmation.
Removal of Requirement to Maintain a Log of Electronic Submissions
    This proposed rule would remove the requirement currently found in 
Sec.  748.7(c) that companies maintain a log of electronic submissions. 
The requirement was established in connection with BIS' initial 
electronic application process, which was instituted in the 1980s. At 
that time, electronic submissions were facilitated by a number of 
private sector vendors and the logs may have been necessary for 
auditing purposes. However, currently, the information required to be 
kept in the log duplicates information that parties are required to 
include in their SNAP-R submissions or that is automatically recorded 
by SNAP-R. BIS is proposing to discontinue the log keeping requirement 
because it is redundant of information available to BIS in SNAP-R. The 
proposed rule would accomplish this change by removing paragraph (c) of 
Sec.  748.7 and

[[Page 63686]]

redesignating existing paragraph (d) as paragraph (c).
Removal of Language Relating to ``Computer Generated'' Licenses, the 
Department of Commerce Seal and Attachments to Licenses
    The proposed rule would revise Sec.  750.7(b) to state merely that 
BIS may issue export and reexport licenses either electronically or on 
paper and that each license will bear a license number. Existing 
language regarding ``computer generated'' licenses, the Department of 
Commerce seal and attachments to licenses would be removed as would an 
explicit requirement that exporters use the license number when 
communicating with BIS about the license. The proposed language would 
allow BIS to exercise discretion in deciding whether to issue a license 
electronically in SNAP-R or on paper. However, BIS expects that it will 
issue nearly all licenses electronically. Unless some exceptional 
circumstances exist, only licenses for which the applicant was 
authorized to file on paper and licenses that BIS cannot issue 
electronically (currently, only reopened licenses) will be issued on 
paper. BIS is proposing this change to reduce the costs of generating 
and mailing paper copies of licenses and to be able to assign to other 
tasks staff currently assigned to handling paper licenses. Because no 
EAR provision currently addresses issuance of the other license related 
documents with the specificity that Sec.  750.7(b) addresses licenses, 
only Sec.  750.7(b) need be modified to implement this change. However, 
BIS's intent is to issue only the electronic version of all license 
related documents unless BIS authorized paper submission of the 
original application, notice or request, or BIS cannot issue an 
electronic version of the applicable license related documents.
Removal of Requirement To Attach a Replacement License to the Original
    This proposed rule would revise Sec.  750.7(h)(4) to remove a 
requirement that the license holder attach a replacement license issued 
by BIS to the original license that it replaces. That requirement dates 
to an era in which electronic licenses did not exist and is impractical 
with electronic licenses issued in SNAP-R. The proposed rule would 
retain the requirement that the license holder keep both the original 
license and the replacement license.
Removal of Requirement To Retain Copies of Documents Submitted to BIS 
Via the SNAP-R System
    This proposed rule would exempt parties who submit documents to BIS 
via BIS's SNAP-R system from requirements to retain copies of documents 
so submitted even though those documents are ``export control 
documents'' as defined in part 772 of the EAR. BIS believes the 
reliability of the SNAP-R system provides adequate assurance that the 
documents received by BIS were submitted and that all submitted 
documents are received by BIS. This proposed change would not preclude 
parties from storing copies of these documents.
Addition of Certain Documents to Recordkeeping Requirements in Part 762
    This proposed rule would add the following documents to the list of 
documents required to be kept found in Sec.  762.2(a)(10): Notification 
from BIS that an application is being returned without action; 
Notification from BIS that an application is being denied; Notification 
from BIS of the results of a commodity classification or encryption 
review request conducted by BIS. BIS believes that requiring recipients 
of these documents to retain them is needed to confirm receipt and to 
verify that the recipient received notice of the terms of the document. 
BIS is not proposing to require parties to retain requests for 
additional information concerning active matters that they receive from 
BIS.
Application of Original Document Retention Requirement to Documents 
Issued in SNAP-R
    This proposed rule would state that parties who receive documents 
issued by BIS in SNAP-R may store the documents in one of two ways and 
that either way would meet the requirement of Sec.  762.5 that original 
documents be retained. The two methods are: Storage of complete 
documents issued by BIS in SNAP-R electronically in a format readable 
by software possessed by the recipient party; or printing out and 
storing a complete paper copy of the document. BIS believes that either 
method that would be authorized by the proposed changes to Sec.  762.5 
would provide an accurate representation of the contents of the record 
and, therefore, either method should be treated as the equivalent of an 
original document.

Reasons for the Proposed Changes

    Under its current procedure, BIS is expending funds and staff time 
to mail information to certain parties that is entirely duplicative of 
information that BIS sends to the same parties electronically. BIS is 
proposing these changes to reduce its operating costs and to free the 
staff time currently devoted to mailing paper documents for other 
purposes. BIS estimates that it currently spends approximately $25,000 
annually in direct mailing costs (envelopes, supplies and postage) to 
send out paper copies of the licenses, and responses to classification 
requests, encryption review requests and License Exception AGR 
notifications. BIS also estimates that about 1.5 hours of staff time is 
expended each day in connection with mailing these documents.

Rulemaking Requirements

    1. This rule has been determined to be not significant for purposes 
of E.O. 12866.
    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 Office 
of Management and Budget (OMB) Control Number. This regulation contains 
a collection previously approved by OMB under control number 0694-0096.
    3. This rule does not contain policies with Federalism implications 
as that term is defined under E.O. 13132.
    4. The Chief Counsel for Regulations of the Department of Commerce 
has certified to the Chief Counsel for Advocacy of the Small Business 
Administration that this proposed rule, if adopted in final form, would 
not have a significant economic impact on a substantial number of small 
entities.

Economic Impact

    BIS implemented a revised version of its Simplified Network 
Applications Processing System (SNAP-R) in October 2006. The SNAP-R 
system provides a Web based mechanism for parties to submit license 
applications, classification requests, License Exception AGR 
notifications and encryption review requests electronically and for BIS 
to respond electronically to each matter. In October 2008, BIS made use 
of the SNAP-R system mandatory except in five specified circumstances. 
SNAP-R is the vehicle through which BIS receives most of the 
submissions for which SNAP-R is available.
    During the period from January 1, 2009 through May 31, 2009, BIS

[[Page 63687]]

received 11,580 submissions via SNAP-R and 36 submissions via the paper 
application forms. Under existing procedures BIS would send the final 
results for the 11,580 SNAP-R submissions to the submitting party both 
electronically in SNAP-R and on paper. Under this proposed rule, BIS 
would send those final results via SNAP-R only. Final responses in the 
36 instances in which BIS accepted a paper submission would continue to 
receive paper responses under this proposed rule. In addition, during 
the period from January 1, 2009 through May 31, 2009, BIS reopened 246 
matters relating to submissions affected by this rule that previously 
had been considered to be closed. BIS would continue to issue the 
documents announcing the decision in these reopened matters on paper 
because the SNAP-R system currently is incapable of issuing such 
documents.
    The parties who currently receive both a SNAP-R and a paper 
response may fulfill the EAR recordkeeping requirement for these 
documents by either storing the electronic version in appropriate media 
or by storing the paper copy. Under the proposed rule parties who store 
the electronic document could continue doing so without any change. 
Parties who currently store only the paper copy would have to convert 
to electronic storage or would have to print out a paper copy of the 
electronic document and store that copy.
    BIS believes that the burden on parties that would have to change 
their procedures would be negligible. Only parties who submitted an 
application, notification or request electronically are affected by 
this rule. The fact that a party makes an electronic submission is a 
good indication that the party is equipped to store incoming documents 
electronically. In addition, BIS believes that the burden of printing 
out a paper copy of a document and filing it is not substantially 
greater than the burden of routing a paper envelope to the proper 
person, opening the envelope and filing the contents.

Number of Small Entities

    In fiscal year 2008, BIS processed nearly 30,000 transactions that 
would be subject to this rule. BIS does not know the number of small 
entities that would be affected by this rule. BIS does not know the 
size of all of the entities that submit the applications, notifications 
and requests to which this rule applies nor does BIS know which such 
entities currently utilize paper recordkeeping. However, two of the 
criteria under which BIS authorizes paper submissions (lack of access 
to the Internet and no more than one submission in the previous twelve 
months) are likely to remove the smallest of businesses from the impact 
of this rule.

Conclusion

    Regardless of the number of entities affected, the burden that 
would be imposed by the rule is negligible.

List of Subjects

15 CFR Parts 740, 748 and 750

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

15 CFR Part 762

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

    Accordingly, the Export Administration Regulations (15 CFR Parts 
730-774) are proposed to be amended as follows:

PART 740--[AMENDED]

    1. 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 13, 2009, 74 FR 41325 (August 14, 2009).

    2. Section 740.18 is amended by revising the sixth sentence of 
paragraph (c)(5) to read as follows:


Sec.  740.18  Agricultural commodities.

* * * * *
    (c) * * *
    (5) * * * BIS will issue written confirmation electronically in 
SNAP-R or via paper. * * *
* * * * *

PART 748--[AMENDED]

    3. 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 13, 2009, 74 
FR 41325 (August 14, 2009).


Sec.  748.7  [Amended]

    4. Section 748.7 is amended by removing paragraph (c) and 
redesignating paragraph (d) as paragraph (c).

PART 750--[AMENDED]

    5. 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 13, 2009, 74 FR 41325 (August 
14, 2009).

    6. Section 750.7 is amended by removing the final sentence from 
paragraph (a) and by revising paragraph (b) and paragraph (h)(4) to 
read as follows:


Sec.  750.7  Issuance of licenses

* * * * *
    (b) Issuance of a license. BIS may issue a license electronically 
via its Simplified Network Application Processing (SNAP-R) system or 
via paper or both electronically and via paper. Each license has a 
license number that will be shown on the license.
* * * * *
    (h) * * *
    (4) Replacement license. If you have been issued a ``replacement 
license'' (for changes to your original license not covered in 
paragraph (c) of this section), you must retain both the original and 
the replacement license.
* * * * *

PART 762--[AMENDED]

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

    Authority:  50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; 
E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 783; Notice of August 
13, 2009, 74 FR 41325 (August 14, 2009).

    8. Section 762.2 is amended by:
    a. Revising paragraph (a)(1),
    b. Removing the comma and the word ``and'' from the end of 
paragraph (a)(9),
    c. Inserting a semicolon at the end of paragraph (a)(9),
    d. Redesignating paragraph (a)(10) as paragraph (a)(11), and
    e. Adding a new paragraph (a)(10) to read as follows:


Sec.  762.2  Records to be retained.

    (a) * * *
    (1) Export control documents as defined in part 772 of the EAR, 
except parties submitting documents electronically to BIS via the SNAP-
R system are not required to retain copies of documents so submitted;
    * * *
    (10) Notification from BIS of an application being returned without 
action; Notification by BIS of an application being denied; 
Notification by BIS of the results of a commodity

[[Page 63688]]

classification or encryption review request conducted by BIS; and,
* * * * *
    9. Section 762.4 is amended by adding a sentence at the end of the 
section to read as follows:


Sec.  762.4  Original records required.

    * * * With respect to documents that BIS issues to a party in SNAP-
R, either an electronically stored copy in a format that makes the 
document readable with software possessed by that party or a paper 
print out of the complete document is deemed to be an original record 
for purposes of this paragraph.

    Dated: November 30, 2009.
Matthew S. Borman,
Deputy Assistant Secretary for Export Administration.
[FR Doc. E9-28982 Filed 12-3-09; 8:45 am]

BILLING CODE 3510-33-P
