
[Federal Register Volume 76, Number 247 (Friday, December 23, 2011)]
[Proposed Rules]
[Pages 80282-80291]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-32867]


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DEPARTMENT OF COMMERCE

Bureau of Industry and Security

15 CFR Parts 742 and 774

[Docket No. 111020643-1642-01]
RIN 0694-AF42


Revisions to the Export Administration Regulations (EAR): Control 
of Vessels of War and Related Articles the President Determines No 
Longer Warrant Control Under the United States Munitions List (USML)

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

ACTION: Proposed rule.

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SUMMARY: The Bureau of Industry and Security publishes a proposed rule 
that describes how surface vessels of war and related articles that the 
President determines no longer warrant control under Category VI 
(surface vessels of war and special naval equipment) of the United 
States Munitions List (USML) would be controlled under the Commerce 
Control List (CCL) in new Export Control Classification Numbers (ECCNs) 
8A609, 8B609, 8C609, 8D609, and 8E609.
    This rule is one of a planned series of proposed rules that are 
part of the Administration's Export Control Reform Initiative under 
which various types of articles presently controlled on the USML under 
the International Traffic in Arms Regulations (ITAR) would, instead, be 
controlled on the CCL in accordance with the requirements of the Export 
Administration Regulations (EAR), if and after the President determines 
that such articles no longer warrant control on the USML.
    BIS is publishing this proposed rule, on December 23, 2011, in 
conjunction with another proposed rule that describes how submersible 
vessels, oceanographic and associated equipment the President 
determines no longer warrant control under USML Category VI or Category 
XX would be controlled under the CCL in new Export Control 
Classification Numbers (ECCNs) 8A620, 8B620, 8D620, and 8E620. This 
proposed rule also is being published in conjunction with two proposed 
rules of the Department of State, Directorate of Defense Trade 
Controls, that would amend the list of articles controlled by USML 
Categories VI and XX, respectively.

DATES: Comments must be received by February 6, 2012.

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-2011-0044.
     By email directly to publiccomments@bis.doc.gov. Include 
RIN 0694-AF42 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-AF42.

FOR FURTHER INFORMATION CONTACT: Alexander Lopes, Director, Office of 
Nonproliferation and Treaty Compliance, Bureau of Industry and 
Security, U.S. Department of Commerce, Telephone: (202) 482-4875, 
Email: Alexander.Lopes@bis.doc.gov.

SUPPLEMENTARY INFORMATION:

Background

    On July 15, 2011, as part of the Administration's ongoing Export 
Control Reform Initiative, the Bureau of Industry and Security (BIS) 
published a proposed rule (76 FR 41958) (``the July 15 proposed rule'') 
that set forth a framework for how articles the President determines, 
in accordance with section 38(f) of the Arms Export Control Act (AECA) 
(22 U.S.C. 2778(f)), would no longer warrant control on the United 
States Munitions List (USML) and, instead, would be controlled on the 
Commerce Control List (CCL). The July 15 proposed rule also contained a 
proposal by BIS describing how military vehicles and related articles 
in USML Category VII that no longer warrant control under the USML 
would be controlled on the CCL--the military vehicles proposal was the 
first in a series of such proposed rules to be published by BIS.
    On November 7, 2011 (76 FR 68675), and December 6, 2011 (76 FR 
76072), BIS published proposed rules describing, respectively, how 
aircraft and related items, and gas turbine engines and related items, 
determined by the President to no longer warrant control under the USML 
would be controlled on the CCL. In the November 7 proposed rule, BIS 
also made several changes and additions to the framework proposed in 
the July 15 proposed rule.
    BIS plans to publish additional proposed rules describing how 
certain articles that the President determines no longer warrant 
control on the USML (e.g., submersibles, submarines, and related 
articles now controlled by USML Category VI or XX) would be controlled 
on the CCL.
    BIS also plans to publish a proposed rule describing how the new 
controls described in this and similar notices would be implemented, 
such as through the use of ``grandfather'' clauses and additional 
exceptions. The goal of such amendments would be to give exporters 
sufficient time to implement the final versions of such changes and to 
avoid, to the extent possible, situations where transactions would 
require licenses from both the State Department and the Commerce 
Department.
    Following the structure of the July 15 and November 7 proposed 
rules, which describe the ``export control reform initiative 
framework'' for controlling on the CCL articles that the President 
determines no longer warrant control on the USML, this proposed rule 
describes BIS's proposal for how another group of items--various 
surface vessels of war and related articles that are controlled by USML 
Category VI--would be controlled on the CCL. The changes described in 
this proposed rule and the State Department's proposed amendment to 
Category VI of the USML are based on a review of Category VI by the 
Defense Department, which worked with the Departments of State and 
Commerce in preparing the proposed amendments. The review was focused 
on identifying the types of articles that are now controlled by USML 
Category VI that are either: (i) Inherently military and otherwise 
warrant control on the USML, or (ii) if they are a type common to civil 
applications, possess parameters or characteristics that provide a 
critical military or intelligence advantage to the United States, and 
are almost exclusively available from the United States. If an article 
satisfies either or both of those criteria, the article would remain on 
the USML. If an article did not satisfy either criterion, but is 
nonetheless a type of article that is, as a result of differences in 
form and fit, ``specially designed'' for military applications, then it 
is identified in one of the new ECCNs in this proposed rule. Finally, 
if an article does not satisfy either of the two criteria and is not 
found to be ``specially designed'' for military applications, the 
article is not affected by this rule because such items already are not 
on the USML.
    The licensing policies and other EAR-specific controls for such 
items that are also described in this proposed rule

[[Page 80283]]

would enhance our national security by: (i) Allowing for greater 
interoperability with our NATO and other allies while maintaining and 
expanding robust controls that, in some instances, would include 
prohibitions on exports or reexports destined for other countries or 
intended for proscribed end-users and end-uses; (ii) enhancing our 
defense industrial base by, for example, reducing the current 
incentives for foreign companies to design out or avoid U.S.-origin 
ITAR-controlled content, particularly with respect to generic, 
unspecified parts and components; and (iii) permitting the U.S. 
Government to focus its resources on controlling, monitoring, 
investigating, analyzing, and, if need be, prohibiting exports and 
reexports of more significant items to destinations, end users, and end 
uses of greater concern than our NATO allies and other multi-regime 
partners.
    Pursuant to section 38(f) of the AECA, the President shall review 
the USML ``to determine what items, if any, no longer warrant export 
controls under'' the AECA. The President must report the results of the 
review to Congress and wait 30 days before removing any such items from 
the USML. The report must ``describe the nature of any controls to be 
imposed on that item under any other provision of law.'' 22 U.S.C. 
2778(f)(1). This proposed rule describes how certain surface vessels of 
war and related articles in USML Category VI would be controlled by the 
EAR and identified on the CCL, if the President determines that the 
articles no longer warrant control on the USML. The Department of 
Commerce is publishing, in conjunction with this proposed rule on 
December 23, 2011, a proposed rule that will describe how submersible 
vessels, oceanographic and associated equipment that the President 
determines no longer warrant control on the USML Category VI or XX 
would be controlled on the CCL under new ECCNs 8A620, 8B620, 8D620, and 
8E620.
    In the July 15 proposed rule, BIS proposed creating a series of new 
ECCNs to control items that: (i) Would be moved from the USML to the 
CCL or (ii) are listed on the Wassenaar Arrangement on Export Controls 
for Conventional Arms and Dual-Use Goods and Technologies Munitions 
List (Wassenaar Arrangement Munitions List or WAML) and are already 
controlled elsewhere on the CCL. The proposed rule referred to this 
series as the ``600 series'' because the third character in each of the 
new ECCNs would be a ``6.'' The first two characters of the 600 series 
ECCNs serve the same function as described for any other ECCN in Sec.  
738.2 of the EAR. The first character is a digit in the range 0 through 
9 that identifies the Category on the CCL in which the ECCN is located. 
The second character is a letter in the range A through E that 
identifies the product group within a CCL Category. In the 600 series, 
the third character is the number 6. With few exceptions, the final two 
characters identify the WAML category that covers items that are the 
same or similar to items in a particular 600 series ECCN.
    BIS will publish additional Federal Register notices containing 
proposed amendments to the CCL that will describe proposed controls for 
additional categories of articles the President determines no longer 
warrant control under the USML. The State Department will publish, 
concurrently, proposed amendments to the USML that correspond to the 
BIS notices. BIS will also publish proposed rules to further align the 
CCL with the WAML and the Missile Technology Control Regime Equipment, 
Software and Technology Annex.

Modifications to Provisions in the July 15 Proposed Rule

    In addition to the proposals mentioned above, this proposed rule 
would make the following modifications to the July 15 proposed rule:
     Addition of the new Category 8 (600 series) ECCNs to Sec.  
742.6(a)(1).
    These modifications are described in the section ``Scope of this 
Proposed Rule.''
    The comment period for the July 15 Proposed Rule closed on 
September 13, 2011. BIS will consider comments on the July 15 proposals 
only for the specific paragraph, note, and ECCNs referenced above, and 
only within the context of this proposed rule's modifications to them.

Scope of This Proposed Rule

    This proposed rule would create five new 600 series ECCNs in CCL 
Category 8--8A609, 8B609, 8C609, 8D609, and 8E609--that would control 
articles the President determines no longer warrant control under USML 
Category VI. The proposed changes are discussed in more detail, below.

New Category 8 (600 Series) ECCNs

    Certain surface vessels of war and related articles that the 
President determines no longer warrant control in USML Category VI 
would be controlled under proposed new ECCNs 8A609, 8B609, 8C609, 
8D609, and 8E609. These new ECCNs follow the 600 series construct 
identified in the July 15 proposed rule.
    Paragraph .a of ECCN 8A609 would control surface vessels of war 
that are ``specially designed'' for military use, but not enumerated in 
the USML or elsewhere on the CCL. Paragraphs .b through .w would be 
reserved for possible future use. Paragraph .x would consist of parts, 
components, accessories and attachments (including certain unfinished 
products that have reached a stage in manufacturing where they are 
clearly identifiable as commodities controlled by paragraph .x) that 
are ``specially designed'' for a commodity in paragraph .a or a defense 
article in USML Category VI. Paragraph .y would consist of specific 
types of commodities that, if specially designed for a commodity 
subject to control in ECCN 8A609 or a defense article in USML Category 
VI, warrant less strict controls because they have little or no 
military significance. Commodities listed in paragraph .y would be 
subject to antiterrorism (AT Column 1) controls, which currently impose 
a license requirement for five countries. A license also would be 
required, in accordance with the July 15 proposed rule, if commodities 
listed in paragraph .y were destined to the People's Republic of China 
for a military end use as described in Sec.  744.21 of the EAR.
    This proposed rule does not add gas turbine engines for military 
vessels of war to the proposed new ECCN 8A609. Instead, the 
Administration issued a separate proposed rule, on December 6, 
describing the U.S. Government's controls on gas turbine engines and 
related items for military aircraft, ships, and vehicles that no longer 
warrant control under the USML or an existing 018 ECCN on the CCL. 
Similarly, this proposed rule does not address military submersible 
vessels of war, submarines, and related articles that no longer warrant 
control under the USML--BIS will address controls on these items in a 
separate proposed rule.
    ECCN 8B609.a would control test, inspection, and production 
``equipment'' ``specially designed'' for the ``development'' or 
``production'' of surface vessels of war and related commodities 
enumerated in ECCN 8A609 (except for items in 8A609.y) or in USML 
Category VI. Paragraphs .b through .x and paragraphs .y.1 through .y.98 
would be reserved for possible future use.
    ECCN 8C609.a would control materials ``specially designed'' for the 
``development'' or ``production'' of surface vessels of war and related 
commodities enumerated in ECCN 8A609 that are not specified elsewhere 
on the CCL, such as in Category 1, or on the USML. Paragraphs .b 
through .x of

[[Page 80284]]

ECCN 8C609 would be reserved for possible future use. USML subcategory 
XIII(f) would continue to control structural materials ``specifically 
designed, developed, configured, modified, or adapted for defense 
articles,'' such as warships and vessels of war controlled by USML 
subcategory VI(a). The State Department plans to publish a proposed 
rule that would make USML Category XIII(f) a more positive list of 
controlled structural materials. Commerce will publish a corresponding 
proposed rule under which ECCN 8C609 would control any materials 
``specially designed'' for USML Category VI or ECCN 8A609 that would no 
longer be controlled by the revised XIII(f).
    ECCN 8D609.a would control ``software'' ``required'' for the 
``development,'' ``production,'' operation, or maintenance of 
commodities enumerated in 8A609, 8B609, or 8C609. Paragraphs .b through 
.x of ECCN 8D609 would be reserved for possible future use. ECCN 
8D609.y would control specific ``software'' ``specially designed'' for 
the ``development,'' ``production,'' operation, or maintenance of 
commodities enumerated in ECCN 8A609.y, 8B609.y, or 8C609.y.
    ECCN 8E609.a would control ``technology'' ``required'' for the 
``development,'' ``production,'' operation, installation, maintenance, 
repair, or overhaul of items enumerated in ECCN 8A609, 8B609, 8C609, or 
8D609, except for items enumerated in 8A609.y, 8B609.y, 8C609.y, or 
8D609.y. Paragraphs .b through .x of ECCN 8E609 would be reserved for 
possible future use. ECCN 8E609.y would control specific ``technology'' 
``required'' for the ``development,'' ``production,'' operation, 
installation, maintenance, repair, or overhaul of items enumerated in 
ECCN 8A609.y, 8B609.y, 8C609.y, or 8D609.y.
    In addition, ECCNs 8A609, 8B609, 8C609, 8D609, and 8E609 would each 
contain a special paragraph designated ``.y.99.'' Paragraph .y.99 would 
control any item that meets all of following criteria: (i) The item is 
not listed on the CCL; (ii) the item was previously determined to be 
subject to the EAR in an applicable commodity jurisdiction 
determination issued by the U.S. Department of State; and (iii) the 
item would otherwise be controlled under one of these Category 8, 600 
series, ECCNs because, for example, the item was ``specially designed'' 
for a military use. Items in these .y.99 paragraphs would be subject to 
antiterrorism controls.

Corresponding Amendments

    As discussed in further detail below, the July 15 proposed rule 
stated that one reason for control for items classified in the 600 
series is Regional Stability (specifically, RS Column 1). Items 
classified under proposed ECCN 8A609, ECCN 8B609, or ECCN 8C609, other 
than ECCN 8A609.y, 8B609.y, or 8C609.y items, as well as related 
technology and software classified under ECCNs 8D609 and 8E609, would 
be controlled for this reason, among others. Correspondingly, this 
proposed rule would revise Sec.  742.6 of the EAR to apply the RS 
Column 1 licensing policy to commodities classified under ECCN 8A609, 
8B609, 8C609 (except paragraphs .y of those ECCNs), and to related 
software and technology classified under ECCNs 8D609 and 8E609. Note 
that the proposed rule on military aircraft and related items that BIS 
published on November 7 would amend the RS Column 1 licensing policy to 
impose a general policy of denial for ``600 series'' items if the 
destination is subject to a United States arms embargo.

Relationship to the July 15 Proposed Rule

    As referenced above, the purpose of the July 15 proposed rule is to 
establish within the EAR the framework for controlling on the CCL 
articles that the President determines no longer warrant control on the 
USML. To facilitate that goal, the July 15 proposed rule contains 
definitions and concepts that are meant to be applied across 
Categories. However, as BIS undertakes rulemakings to move specific 
types of articles from the USML to the CCL, if and after the President 
determines that such articles no longer warrant control under the USML, 
there may be unforeseen issues or complications that require BIS to 
reexamine those definitions and concepts. The comment period for the 
July 15 proposed rule closed on September 13, 2011. In the November 7 
proposed rule, BIS proposed several changes to those definitions and 
concepts. The comment period for the November 7 proposed rule closed on 
December 22, 2011.
    To the extent that this rule's proposals affect any provision in 
the July 15 proposed rule or the July 15 proposed rule's provisions 
affect this proposed rule, BIS will consider comments on those 
provisions so long as they are within the context of the changes 
proposed in this rule. For example, BIS will consider comments on how 
the movement of Category VI items from the USML to the CCL affects a 
definition, restriction, or provision that was contained in the July 15 
proposed rule. BIS will also consider comments on the impact of a 
definition of a term in the July 15 proposed rule when that term is 
used in this proposed rule. BIS will not consider comments of a general 
nature regarding the July 15 proposed rule that are submitted in 
response to this rulemaking.
    BIS believes that the following provisions of the July 15 proposed 
rule and the November 7 proposed rule on aircraft and related items are 
among those that could affect the items covered by this proposed rule:
     De minimis provisions in Sec.  734.4;
     Restrictions on use of license exceptions in Sec. Sec.  
740.2, 740.10, 740.11, and 740.20;
     Change to national security licensing policy in Sec.  
742.4;
     Requirement to request authorization to use License 
Exception STA (strategic trade authorization) for end items in 600 
series ECCNs and procedures for submitting such requests in Sec. Sec.  
740.2, 740.20, 748.8 and Supp. No. 2 to part 748;
     Addition of 600 series items to Supplement No. 2 to Part 
744--List of Items Subject to the Military End-Use Requirement of Sec.  
744.21; and
     Definitions of terms in Sec.  772.1.
    BIS believes that the following provisions of this proposed rule 
are among those that could affect the provisions of the July 15 and 
November 7 proposed rules:
     Additional 600 series items identified in the RS Column 
licensing policy described in Sec.  742.6.

Effects of This Proposed Rule

    BIS believes that the principal effect of this rule will be to 
provide greater flexibility for exports and reexports to NATO member 
countries and other multiple-regime-member countries of items the 
President determines no longer warrant control on the United States 
Munitions List. This greater flexibility will be in the form of: 
application of the EAR's de minimis threshold principle for items 
constituting less than a de minimis amount of controlled U.S.-origin 
content in foreign made items; availability of license exceptions, 
particularly License Exceptions RPL (servicing and replacement of parts 
and equipment) and STA (strategic trade authorization); elimination of 
the requirements for manufacturing license agreements and technical 
assistance agreements in connection with exports of technology; and a 
reduction in, or elimination of, exporter and manufacturer registration 
requirements and associated registration

[[Page 80285]]

fees. Some of these specific effects are discussed in more detail 
below.

De minimis

    Section 734.3 of the EAR provides, inter alia, that under certain 
conditions items made outside the United States that incorporate items 
subject to the EAR are not subject to the EAR if they do not exceed a 
``de minimis'' percentage of controlled U.S. origin content. Depending 
on the destination, the de minimis percentage can be either 10 percent 
or 25 percent. If the July 15 proposed rule's amendments at Sec.  734.4 
of the EAR are adopted, the new ECCNs 8A609, 8B609, 8C609, 8D609 and 
8E609 proposed in this rule would be subject to the de minimis 
provisions set forth in the July 15 proposed rule, because they would 
be ``600 series'' ECCNs. Foreign-made items incorporating items 
controlled under the new ECCNs would become eligible for de minimis 
treatment at the 10 percent level (i.e., a foreign-made item is not 
subject to the EAR if the value of its U.S.-origin controlled content 
does not exceed 10 percent of foreign-made item's value). The AECA does 
not permit the ITAR to have a de minimis treatment for these USML-
listed items, regardless of the significance or insignificance of the 
item, meaning that items subject to the ITAR remain subject to the ITAR 
when they are incorporated abroad into a foreign-made item, regardless 
of the percentage of U.S. origin content in the foreign-made item. In 
addition, foreign-made items that incorporate any items that are 
currently classified under an 018 ECCN and that are moved to a new 600 
series ECCN would be subject to the EAR if those foreign-made items 
contained more than 10 percent U.S.-origin controlled content, 
regardless of the destination and regardless of the proportion of the 
U.S.-origin controlled content accounted for by the former 018 ECCN 
items.
    Based on the July 15 rule's proposals, foreign-made items that 
contain controlled U.S.-origin content classified under non-600 series 
ECCNs, as well as 600 series ECCNs, would potentially have to be 
evaluated in two stages to determine whether they would qualify for de 
minimis treatment. First, the value of the 600 series ECCN content 
would have to be calculated. If the value of the 600 series ECCN 
content exceeds 10 percent of the value of the foreign-made item, the 
item would not qualify for de minimis treatment and would be subject to 
the EAR. However, if the value of the 600 series ECCN content does not 
exceed 10 percent of the value of the foreign-made item, then the value 
of all of the controlled U.S. origin content (including both non-600 
series and 600 series ECCN content) would have to be calculated to 
determine whether the foreign made item's total U.S. origin controlled 
content exceeds the de minimis percentage (either 10 percent or 25 
percent) applicable to the country of destination. BIS is reviewing 
comments that the public submitted with respect to this proposal and 
plans to publish another proposed rule that addresses these comments 
and other related issues.

Use of License Exceptions

    The July 15 proposed rule would impose certain restrictions on the 
use of license exceptions for items that would be controlled under the 
new 600 series ECCNs on the CCL. For example, proposed Sec.  
740.2(a)(12) would make 600 series items that are destined for a 
country subject to a United States arms embargo ineligible for shipment 
under a license exception, except where authorized by License Exception 
GOV under Sec.  740.11(b)(2)(ii) of the EAR. In addition, the use of 
License Exception GOV for 600 series commodities would be limited to 
situations in which the United States Government is the consignee and 
end user or to situations in which the consignee or end user is the 
government of a country listed in Sec.  740.20(c)(1). With respect to 
License Exception STA, the July 15 proposed rule would (i) limit 
eligibility for ``end items'' in 600 series ECCNs to those end items 
for which a specific request for License Exception STA eligibility 
(filed in conjunction with a license application) has been approved and 
(ii) require that the end item be for ultimate end use by a foreign 
government agency of a type specified in the July 15 proposed rule. The 
July 15 proposed rule also would limit exports of 600 series parts, 
components, accessories, and attachments under License Exception STA 
for ultimate end use by the same set of end users and limit the 
shipment of 600 series items under License Exception STA to 
destinations listed in Sec.  740.20(c)(1).
    BIS believes that, even with the July 15 and November 7 proposed 
restrictions on the use of license exceptions for 600 series items, the 
restrictions on those items currently on the USML would be reduced, 
particularly with respect to exports to NATO members and multiple-
regime member countries, if those items are moved from the USML to 
proposed ECCN 8A609.

Making U.S. Export Controls More Consistent with the Wassenaar 
Arrangement Munitions List Controls

    The Administration has stated, since the beginning of the Export 
Control Reform Initiative, that the reforms will be consistent with the 
obligations of the United States to the multilateral export control 
regimes. Accordingly, the Administration will, in this and subsequent 
proposed rules, exercise its national discretion to implement, clarify, 
and, to the extent feasible, align its controls with those of the 
regimes. For example, the proposed ECCN 8A609 tracks, to the extent 
possible, the numbering structure and text of WAML category 9 
pertaining to surface vessels of war not subject to the ITAR. It also 
implements in 8A609.x the controls in WAML category 16 for forgings, 
castings, and other unfinished products; in 8B609.a the controls in 
WAML category 18 for production equipment; in 8D609 the applicable 
controls in WAML category 21 for software; and in 8E609 the applicable 
controls in WAML category 22 for technology.

Other Effects

    Pursuant to the framework identified in the July 15 proposed rule, 
commodities classified under ECCN 8A609 (other than ECCN 8A609.y), 
along with related test inspection and production equipment, materials, 
software, and technology classified under ECCN 8B609, 8C609, 8D609 or 
8E609 (except items classified under the .y paragraphs of these ECCNs) 
would be subject to the licensing policies that apply to items 
controlled for national security reasons, as described in Sec.  
742.4(b)(1)--specifically, NS Column 1 controls. All commodities in 
ECCN 8A609 (other than those identified in 8A609.y, which are 
controlled for AT Column 1 anti-terrorism reasons only and may also be 
subject to the prohibitions described in Part 744), along with related 
test, inspection and production equipment, materials, software and 
technology classified under ECCN 8B609, 8C609, 8D609 or 8E609 (except 
items classified under the .y paragraphs of these ECCNs), would be 
subject to the regional stability licensing policies set forth in Sec.  
742.6(a)(1)--specifically, RS Column 1.
    The July 15 proposed rule would change Sec.  742.4 to apply a 
general policy of denial to 600 series items for destinations that are 
subject to a United States arms embargo. That policy would apply to all 
items controlled for national security (NS) reasons under this proposed 
rule. The November 7 proposed rule would expand that

[[Page 80286]]

general policy of denial to include 600 series items subject to the 
licensing policies that apply to items controlled for regional 
stability reasons, as described in Sec.  742.6(b)(1)--specifically, RS 
Column 1. While this change might seem redundant for the items affected 
by this proposed rule, it ensures that a general denial policy would 
apply to any 600 series items that are controlled for missile 
technology (MT) and regional stability (RS) reasons, but not for 
national security (NS) reasons (as would be the case for certain items 
affected by the aircraft rule).

Jurisdictional and Classification Status of Items Subject to Previous 
Commodity Jurisdiction Determinations

    The Administration recognizes that some items that would fall 
within the scope of the proposed new ECCNs will have been subject to 
commodity jurisdiction (CJ) determinations issued by the United States 
Department of State. The State Department will have either determined 
that the item was subject to the jurisdiction of the ITAR or that it 
was not. (See 22 CFR Sec. Sec.  120.3 and 120.4). Under this proposed 
rule, items that the State Department determined to be not subject to 
the ITAR and that are not described on the CCL would be subject to the 
AT-only controls of the ``.y.99'' paragraph of a 600 series ECCN if 
they would otherwise be within the scope of the ECCN. Thus, for 
example, ECCN 8A609.x would control any part, component, accessory, or 
attachment not specifically identified in the USML or elsewhere in the 
ECCN if it was ``specially designed'' for a surface vessel of war. 
However, any part, component, accessory or attachment, which is 
determined by CJ not to be subject to the ITAR and is (as defined) 
``specially designed'' for a surface vessel of war, would be controlled 
under 8A609.y.99 if it is not identified elsewhere on the CCL. If the 
item is controlled, either as a matter of law or as the result of a 
subsequent commodity classification (``CCATS'') determination by 
Commerce, under an ECCN that is currently on the CCL (e.g., ECCN 
8A992.f), that ECCN would continue to apply to the item. This general 
approach will, pending public comment, be repeated in subsequent 
proposed rules pertaining to other categories of items.
    If, however, the State Department had made a CJ determination that 
a particular item was subject to the jurisdiction of ITAR but that item 
is not described on the final, implemented version of a revised USML 
category, a new CJ determination would not be required unless there is 
doubt about the application of the new USML category to the item. (See 
22 CFR 120.4). Thus, unless there are doubts about the jurisdictional 
status of a particular item, exporters and reexporters would be 
entitled to rely on the revised USML categories when making 
jurisdictional determinations, notwithstanding past CJ determinations 
that, under the previous version of the USML, the item was ITAR 
controlled.
    Finally, if the State Department had made a CJ determination that a 
particular item was subject to the jurisdiction of the ITAR and that 
item remains in the revised USML, the item would remain subject to the 
jurisdiction of the ITAR.

Section-by-Section Description of the Proposed Changes

     Section 742.6--ECCNs 8A609, 8B609, 8C609, 8D609 and 8E609 
are added to Sec.  742.6(a)(1) to impose an RS Column 1 license 
requirement and licensing policy, including a general policy of denial 
in Section 742.6(b)(1) for applications to export or reexport ``600 
series'' items to destinations that are subject to a United States arms 
embargo.
     Supplement No. 1 to part 774--Adds ECCNs 8A609, 8B609, 
8C609, 8D609 and 8E609.

Request for Comments

    BIS seeks comments on this proposed rule. BIS will consider all 
comments received on or before February 6, 2012. All comments 
(including any personally identifying information or information for 
which a claim of confidentially is asserted either in 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.
    Although the Export Administration Act expired on August 20, 2001, 
the President, through Executive Order 13222 of August 17, 2001, 3 CFR, 
2001 Comp., p. 783 (2002), as extended by the Notice of August 12, 
2011, 76 FR 50661 (August 16, 2011), has continued the Export 
Administration Regulations in effect under the International Emergency 
Economic Powers Act. BIS continues to carry out the provisions of the 
Act, as appropriate and to the extent permitted by law, pursuant to 
Executive Order 13222.

Regulatory Requirements

    1. Executive Orders 13563 and 12866 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distribute impacts, and equity). Executive 
Order 13563 emphasizes the importance of quantifying both costs and 
benefits, of reducing costs, of harmonizing rules, and of promoting 
flexibility. This rule has been designated a ``significant regulatory 
action,'' although not economically significant, under section 3(f) of 
Executive Order 12866. Accordingly, the rule has been reviewed by the 
Office of Management and Budget (OMB).
    2. Notwithstanding any other provision of law, no person is 
required to respond to, nor is subject to a penalty for failure to 
comply with, a collection of information, subject to the requirements 
of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.) (PRA), 
unless that collection of information displays a currently valid OMB 
control number. This proposed rule would affect two approved 
collections: Simplified Network Application Processing + System 
(control number 0694-0088), which includes, among other things, license 
applications, and License Exceptions and Exclusions (0694-0137).
    As stated in the proposed rules published at 76 FR 41958 (July 15, 
2011), 76 FR 68675 (November 7, 2011), 76 FR 76072 (December 6, 2011), 
and 76 FR 76085 (December 6, 2011) and in the proposed rule on 
submersible vessels, oceanographic and associated equipment that is 
being published in conjunction with this proposed rule on December 23, 
2011, BIS believes that the combined effect of all rules to be 
published adding items to EAR that would be removed from the ITAR as 
part of the administration's Export Control Reform Initiative would 
increase the number of license applications to be submitted by 
approximately 16,000 annually, resulting in an increase in burden hours 
of 5,067 (16,000 transactions at 17 minutes each) under control number 
0694-0088.
    Some items formerly on the USML would become eligible for License 
Exception STA under this rule. Other such items may become eligible for 
License Exception STA upon approval of a request submitted in 
conjunction with a license application. As stated in the July 15 and 
November 7 proposed

[[Page 80287]]

rules published by BIS, in the two proposed rules that BIS published on 
December 6, and in the proposed rule on submersible vessels, 
oceanographic and associated equipment that BIS is publishing in 
conjunction with this proposed rule on December 23, 2011, BIS believes 
that the increased use of License Exception STA resulting from the 
combined effect of all rules to be published adding items to EAR that 
would be removed from the ITAR as part of the administration's Export 
Control Reform Initiative would increase the burden associated with 
control number 0694-0137 by about 23,858 hours (20,450 transactions @ 1 
hour and 10 minutes each).
    BIS expects that this increase in burden would be more than offset 
by a reduction in burden hours associated with approved collections 
related to the ITAR. This proposed rule addresses controls on surface 
vessels of war and related parts, components, production equipment, 
materials, software, and technology. The largest impact of the proposed 
rule would be with respect to exporters of parts and components 
because, under the proposed rule, most U.S. and foreign military 
vessels of war currently in service would continue to be subject to the 
ITAR. Because, with few exceptions, the ITAR allows exemptions from 
license requirements only for exports to Canada, most exports to 
integrators for U.S government equipment and most exports of routine 
maintenance parts and components for our NATO and other close allies 
require State Department authorization. In addition, the exports 
necessary to produce parts and components for defense articles in the 
inventories of the United States and its NATO and other close allies 
require State Department authorizations. Under the EAR, as proposed, a 
small number of low level parts would not require a license to most 
destinations. Most other parts, components, accessories, and 
attachments would become eligible for export to NATO and other close 
allies under License Exception STA. Use of License Exception STA 
imposes a paperwork and compliance burden because, for example, 
exporters must furnish information about the item being exported to the 
consignee and obtain from the consignee an acknowledgement and 
commitment to comply with the EAR. It is, however, the Administration's 
understanding that complying with the requirements of STA is likely to 
be less burdensome than applying for licenses. For example, under 
License Exception STA, a single consignee statement can apply to an 
unlimited number of products, need not have an expiration date and need 
not be submitted to the government in advance for approval. Suppliers 
with regular customers can tailor a single statement and assurance to 
match their business relationship rather than applying repeatedly for 
licenses with every purchase order to supply allied and, in some cases, 
U.S forces with routine replacement parts and components.
    Even in situations in which a license would be required under the 
EAR, the burden likely will be reduced compared to the license 
requirement of the ITAR. In particular, license applications for 
exports of technology controlled by ECCN 8E609 are likely to be less 
complex and burdensome than the authorizations required to export ITAR-
controlled technology, i.e., Manufacturing License Agreements and 
Technical Assistance Agreements.
    3. This rule does not contain policies with Federalism implications 
as that term is defined under E.O. 13132.
    4. The Regulatory Flexibility Act (RFA), as amended by the Small 
Business Regulatory Enforcement Fairness Act of 1996 (SBREFA), 5 U.S.C. 
601 et seq., generally requires an agency to prepare a regulatory 
flexibility analysis of any rule subject to the notice and comment 
rulemaking requirements under the Administrative Procedure Act (5 
U.S.C. 553) or any other statute, unless the agency certifies that the 
rule will not have a significant economic impact on a substantial 
number of small entities. Under section 605(b) of the RFA, however, if 
the head of an agency certifies that a rule will not have a significant 
impact on a substantial number of small entities, the statute does not 
require the agency to prepare a regulatory flexibility analysis. 
Pursuant to section 605(b), the Chief Counsel for Regulation, 
Department of Commerce, certifiedto the Chief Counsel for Advocacy, 
Small Business Administration that this proposed rule, if promulgated, 
will not have a significant impact on a substantial number of small 
entities for the reasons explained below. Consequently, BIS has not 
prepared a regulatory flexibility analysis. A summary of the factual 
basis for the certification is provided below.

Number of Small Entities

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

Economic Impact

    This proposed rule is part of the Administration's Export Control 
Reform Initiative. Under that initiative, the United States Munitions 
List (22 CFR part 121) (USML) would be revised to be a ``positive'' 
list, i.e., a list that does not use generic, catch-all controls on any 
part, component, accessory, attachment, or end item that was in any way 
specifically modified for a defense article, regardless of the 
article's military or intelligence significance or non-military 
applications. At the same time, articles that are determined to no 
longer warrant control on the USML would become controlled on the 
Commerce Control List (CCL). Such items, along with certain military 
items that currently are on the CCL, will be identified in specific 
Export Control Classification Numbers (ECCNs) known as the ``600 
series'' ECCNs. In addition, some items currently on the Commerce 
Control List would move from existing ECCNs to the new 600 series 
ECCNs. In practice, the greatest impact of this rule on small entities 
would likely be reduced administrative costs and reduced delay for 
exports of items that are now on the USML but would become subject to 
the EAR. This rule focuses on Category VI articles, which are surface 
vessels of war and related parts, components, production equipment, 
software, and technology. Most operational military vessels of war 
currently in active inventory would remain on the USML. However, parts 
and components, which are more likely to be produced by small 
businesses than are complete military vessels of war, would in many 
cases become subject to the EAR. In addition, officials of the 
Department of State have informed BIS that license applications for 
such parts and components are a high percentage of the license 
applications for USML articles review by that department. Changing the 
jurisdictional status of Category VI items would reduce the burden on 
small entities (and other entities as well) through: (i) Elimination of 
some license requirements, (ii) greater availability of license 
exceptions, (iii) simpler license application procedures, and (iv) 
reduced, or eliminated, registration fees.
    In addition, parts and components controlled under the ITAR remain 
under ITAR control when incorporated into foreign-made items, 
regardless of the significance or insignificance of the item. This 
discourages foreign buyers from incorporating such U.S. content. The 
availability of de minimis treatment under the EAR may reduce the 
incentive for foreign manufacturers to refrain from

[[Page 80288]]

purchasing U.S.-origin parts and components.
    Parts and components identified in ECCN 8A609.y would be designated 
immediately as parts and components that, even if specially designed 
for a military use, have little or no military significance. These 
parts and components, which under the ITAR require a license to nearly 
all destinations, would, under the EAR, require a license to only five 
destinations and, if destined for a military end use, to the People's 
Republic of China.
    Many exports and reexports of the Category VI articles that would 
be placed on the CCL by this rule, particularly parts and components, 
would become eligible for license exceptions that apply to shipments to 
United States Government agencies, shipments valued at less than 
$1,500, parts and components being exported for use as replacement 
parts, temporary exports, and License Exception Strategic Trade 
Authorization (STA), reducing the number of licenses that exporters of 
these items would need. License Exceptions under the EAR would allow 
suppliers to send routine replacement parts and low level parts to NATO 
and other close allies and export control regime partners for use by 
those governments and for use by contractors building equipment for 
those governments or for the United States government without having to 
obtain export licenses. Under License Exception STA, the exporter would 
need to furnish information about the item being exported to the 
consignee and obtain a statement from the consignee that, among other 
things, would commit the consignee to comply with the EAR and other 
applicable U.S. laws. Because such statements and obligations can apply 
to an unlimited number of transactions and have no expiration date, 
they would impose a net reduction in burden on transactions that the 
government routinely approves through the license application process 
that the License Exception STA statements would replace.
    Even for exports and reexports for which a license would be 
required, the process would be simpler and less costly under the EAR. 
When a USML Category VI article is moved to the CCL, the number of 
destinations for which a license is required would remain unchanged. 
However, the burden on the license applicant would decrease because the 
licensing procedure for CCL items is simpler and more flexible than the 
license procedure for UMSL articles.
    Under the USML licensing procedure, an applicant must include a 
purchase order or contract with its application. There is no such 
requirement under the CCL licensing procedure. This difference gives 
the CCL applicant at least two advantages. First, the applicant has a 
way of determining whether the U.S. government will authorize the 
transaction before it enters into potentially lengthy, complex and 
expensive sales presentations or contract negotiations. Under the USML 
procedure, the applicant must caveat all sales presentations with a 
reference to the need for government approval and is more likely to 
engage in substantial effort and expense only to find that the 
government will reject the application. Second, a CCL license applicant 
need not limit its application to the quantity or value of one purchase 
order or contract. It may apply for a license to cover all of its 
expected exports or reexports to a specified consignee over the life of 
a license (normally two years, but may be longer if circumstances 
warrant a longer period), thus reducing the total number of licenses 
for which the applicant must apply.
    In addition, many applicants exporting or reexporting items that 
this rule would transfer from the USML to the CCL would realize cost 
savings through the elimination of some or all registration fees 
currently assessed under the USML's licensing procedure. Currently, 
USML applicants must pay to use the USML licensing procedure even if 
they never actually are authorized to export. Registration fees for 
manufacturers and exporters of articles on the USML start at $2,500 per 
year, increase to $2,750 for organizations applying for one to ten 
licenses per year and further increases to $2,750 plus $250 per license 
application (subject to a maximum of three percent of total application 
value) for those who need to apply for more than ten licenses per year. 
There are no registration or application processing fees for 
applications to export items listed on the CCL. Once the Category VI 
items that are the subject to this rulemaking are moved from the USML 
to the CCL, entities currently applying for licenses from the 
Department of State would find their registration fees reduced if the 
number of USML licenses those entities need declines. If an entity's 
entire product line is moved to the CCL, its ITAR registration and 
registration fee requirement would be eliminated entirely.
    De minimis treatment under the EAR would become available for all 
items that this rule would transfer from the USML to the CCL. Items 
subject to the ITAR remain subject to the ITAR when they are 
incorporated abroad into a foreign-made product regardless of the 
percentage of U.S content in that foreign made product. Foreign-made 
products incorporating items that this rule would move to the CCL would 
be subject to the EAR only if their total controlled U.S.-origin 
content exceeds 10 percent. Because including small amounts of U.S.-
origin content would not subject foreign-made products to the EAR, 
foreign manufacturers would have less incentive to refrain from 
purchasing such U.S.-origin parts and components, a development that 
potentially would mean greater sales for U.S. suppliers, including 
small entities.
    For items currently on the CCL that would be moved from existing 
ECCNs to the new 600 series, license exception availability would be 
narrowed somewhat and the applicable de minimis threshold for foreign-
made products containing those items would in some cases be reduced 
from 25 percent to 10 percent. However, BIS believes that increased 
burden imposed by those actions will be offset substantially by the 
reduction in burden attributable to the moving of items from the USML 
to CCL and the compliance benefits associated with the consolidation of 
all WAML items subject to the EAR in one series of ECCNs.

Conclusion

    BIS is unable to determine the precise number of small entities 
that would be affected by this rule. Based on the facts and conclusions 
set forth above, BIS believes that any burdens imposed by this rule 
would be offset by a reduction in the number of items that would 
require a license, increased opportunities for use of license 
exceptions for exports to certain countries, simpler export license 
applications, reduced or eliminated registration fees and application 
of a de minimis threshold for foreign-made items incorporating U.S.-
origin parts and components, which would reduce the incentive for 
foreign buyers to design out or avoid U.S.-origin content. For these 
reasons, the Chief Counsel for Regulation of the Department of Commerce 
certified to the Chief Counsel for Advocacy of the Small Business 
Administration that this rule, if adopted in final form, would not have 
a significant economic impact on a substantial number of small 
entities.

List of Subjects

15 CFR Part 742

    Exports, Terrorism.

[[Page 80289]]

15 CFR Part 774

    Exports, Reporting and recordkeeping requirements.

    For the reasons stated in the preamble, parts 742 and 774 of the 
Export Administration Regulations (15 CFR parts 730-774) are proposed 
to be amended as follows:

 PART 742--[AMENDED]

    1. The authority citation for 15 CFR part 742 continues to read as 
follows:

    Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; 
22 U.S.C. 3201 et seq.; 42 U.S.C. 2139a; 22 U.S.C. 7201 et seq.; 22 
U.S.C. 7210; Sec. 1503, Pub. L. 108-11, 117 Stat. 559; E.O. 12058, 
43 FR 20947, 3 CFR, 1978 Comp., p. 179; E.O. 12851, 58 FR 33181, 3 
CFR, 1993 Comp., p. 608; E.O. 12938, 59 FR 59099, 3 CFR, 1994 Comp., 
p. 950; E.O. 13026, 61 FR 58767, 3 CFR, 1996 Comp., p. 228; E.O. 
13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 783; Presidential 
Determination 2003-23 of May 7, 2003, 68 FR 26459, May 16, 2003; 
Notice of August 12, 2011, 76 FR 50661 (August 16, 2011); Notice of 
November 9, 2011, 76 FR 70319 (November 10, 2011).
    2. Section 742.6 is amended by revising paragraph (a)(1) to read as 
follows:


Sec.  742.6  Regional stability.

    (a) * * *
    (1) RS Column 1 License Requirements in General. As indicated in 
the CCL and in RS column 1 of the Commerce Country Chart (see 
Supplement No. 1 to part 738 of the EAR), a license is required to all 
destinations, except Canada, for items described on the CCL under ECCNs 
0A521; 0A606 (except 0A606.b and .y); 0B521; 0B606 (except 0B606.y); 
0C521; 0C606 (except 0C606.y); 0D521; 0D606 (except 0D606.y); 0E521; 
0E606 (except 0E606.y); 6A002.a.1, a.2, a.3, .c, or .e; 6A003.b.3, and 
b.4.a; 6A008.j.1; 6A998.b; 6D001 (only ``software'' for the 
``development'' or ``production'' of items in 6A002.a.1, a.2, a.3, .c; 
6A003.b.3 and .b.4; or 6A008.j.1); 6D002 (only ``software'' for the 
``use'' of items in 6A002.a.1, a.2, a.3, .c; 6A003.b.3 and .b.4; or 
6A008.j.1); 6D003.c; 6D991 (only ``software'' for the ``development,'' 
``production,'' or ``use'' of equipment classified under 6A002.e or 
6A998.b); 6E001 (only ``technology'' for ``development'' of items in 
6A002.a.1, a.2, a.3 (except 6A002.a.3.d.2.a and 6A002.a.3.e for lead 
selenide focal plane arrays), and .c or .e, 6A003.b.3 and b.4, or 
6A008.j.1); 6E002 (only ``technology'' for ``production'' of items in 
6A002.a.1, a.2, a.3, .c, or .e, 6A003.b.3 or b.4, or 6A008.j.1); 6E991 
(only ``technology'' for the ``development,'' ``production,'' or 
``use'' of equipment classified under 6A998.b); 6D994; 7A994 (only 
QRS11-00100-100/101 and QRS11-0050-443/569 Micromachined Angular Rate 
Sensors); 7D001 (only ``software'' for ``development'' or 
``production'' of items in 7A001, 7A002, or 7A003); 7E001 (only 
``technology'' for the ``development'' of inertial navigation systems, 
inertial equipment, and specially designed components therefor for 
civil aircraft); 7E002 (only ``technology'' for the ``production'' of 
inertial navigation systems, inertial equipment, and specially designed 
components therefor for civil aircraft); 7E101 (only ``technology'' for 
the ``use'' of inertial navigation systems, inertial equipment, and 
specially designed components for civil aircraft); 8A609 (except 
8A609.y); 8B609 (except 8B609.y); 8C609 (except 8C609.y); 8D609 (except 
software for the ``development,'' ``production,'' operation, or 
maintenance of commodities controlled by 8A609.y, 8B609.y, or 8C609.y); 
8E609 (except ``technology'' for the ``development,'' ``production,'' 
operation, installation, maintenance, repair, or overhaul of 
commodities controlled by 8A609.y, 8B609.y, or 8C609.y); 9A610 (except 
9A610.y); 9A619 (except 9A619.y); 9B610 (except 9B610.y); 9B619 (except 
9B619.y); 9C610 (except 9C610.y); 9C619 (except 9C619.y); 9D610 (except 
software for the ``development,'' ``production,'' operation, 
installation, maintenance, repair, or overhaul of commodities 
controlled by 9A610.y, 9B610.y, or 9C610.y); 9D619 (except software for 
the ``development,'' ``production,'' operation, or maintenance of 
commodities controlled by 9A619.y, 9B619.y, or 9C619.y); 9E610 (except 
``technology'' for the ``development,'' ``production,'' operation, 
installation, maintenance, repair, or overhaul of commodities 
controlled by ECCN 9A610.y, 9B610.y, or 9C610.y); and 9E619 (except 
``technology'' for the ``development,'' ``production'' operation, 
installation, maintenance, repair, or overhaul of commodities 
controlled by ECCN 9A619.y, 9B619.y, or 9C619.y).
* * * * *

PART 774--[AMENDED]

    3. The authority citation for 15 CFR part 774 continues to read as 
follows:

    Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; 
10 U.S.C. 7420; 10 U.S.C. 7430(e); 22 U.S.C. 287c, 22 U.S.C. 3201 et 
seq., 22 U.S.C. 6004; 30 U.S.C. 185(s), 185(u); 42 U.S.C. 2139a; 42 
U.S.C. 6212; 43 U.S.C. 1354; 15 U.S.C. 1824a; 50 U.S.C. app. 5; 22 
U.S.C. 7201 et seq.; 22 U.S.C. 7210; E.O. 13026, 61 FR 58767, 3 CFR, 
1996 Comp., p. 228; E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 
783; Notice of August 12, 2011, 76 FR 50661 (August 16, 2011).
    4. In Supplement No. 1 to part 774 (the Commerce Control List), 
Category 8--Marine, add a new ECCN 8A609 between ECCNs 8A018 and 8A992 
to read as follows:

Supplement No. 1 to Part 774--The Commerce Control List

* * * * *
8A609 Surface vessels of war and related commodities.

License Requirements

    Reason for Control: NS, RS, AT.

------------------------------------------------------------------------
                Control(s)                          Country chart
------------------------------------------------------------------------
NS applies to entire entry except 8A609.y.  NS Column 1.
RS applies to entire entry except 8A609.y.  RS Column 1.
AT applies to entire entry................  AT Column 1.
------------------------------------------------------------------------

License Exceptions

    LVS: $1,500.
    GBS: N/A.
    CIV: N/A.
    STA: Paragraph (c)(2) of License Exception STA (Sec.  740.20(c)(2)) 
of the EAR may not be used for any item in 8A609. Paragraph (c)(1) of 
License Exception STA (Sec.  740.20(c)(1)) may not be used for any 
``end item'' in 8A609, unless determined by BIS to be eligible for 
License Exception STA in accordance with Sec.  740.20(g) (License 
Exception STA eligibility requests for ``600 series'' end items). See 
Sec.  740.20(g) for the procedures to follow if you wish to request new 
STA eligibility for ``end items'' under this ECCN 8A609 as part of an 
export, reexport, or transfer (in-country) license application. ``End 
items'' under this entry that have already been determined to be 
eligible for License Exception STA are listed in Supplement No. 4 to 
part 774 and on the BIS Web site at www.bis.doc.gov. Paragraph (c)(1) 
of License Exception STA (Sec.  740.20(c)(1)) may be used for items in 
8A609.x without the need for a determination described in Sec.  
740.20(g).

List of Items Controlled

    Unit: Items in number; parts, components, accessories and 
attachments in $ value.
    Related Controls: (1) Surface vessels of war and special naval 
equipment, and technical data (including software), and services 
directly related thereto, described in 22 CFR part 121, Category VI, 
Surface Vessels of War and Special Naval Equipment are subject to the

[[Page 80290]]

jurisdiction of the International Traffic in Arms Regulations. (2) See 
ECCN 0A919 for foreign-made ``military commodities'' that incorporate 
more than 10% U.S.-origin ``600 series'' items. (3) For controls on 
diesel engines and electric motors for surface vessels of war subject 
to the EAR, see ECCN 8A992.g. (4) For controls on military gas turbine 
engines and related items for vessels of war, see ECCN 9A619 (as 
published on December 6, 2011, at 76 FR 76072, in a separate proposed 
rule that addresses gas turbine engines for military vehicles, vessels 
of war, and aircraft).
    Related Definitions: N/A.
    Items:
    a. Surface Vessels of war ``specially designed'' for a military use 
and not enumerated in the USML.

    Note: 8A609.a includes: (i) underway replenishment ships, (ii) 
surface vessel and submarine tender and repair ships, (iii) non-
submersible submarine rescue ships, (iv) other auxiliaries (e.g., 
AGDS, AGF, AGM, AGOR, AGOS, AH, AP, ARL, AVB, AVM, and AVT), (v) 
amphibious warfare craft except those that are armed; or (vi) 
unarmored, and unarmed coastal, patrol, roadstead, and Coast Guard 
and other patrol craft with mounts or hard points for firearms of 
.50 caliber or less.

    b. through w. [RESERVED]
    x. ``Parts,'' ``components,'' ``accessories and attachments'' that 
are ``specially designed'' for a commodity enumerated in ECCN 8A609 or 
a defense article enumerated in USML Category VI and not specified 
elsewhere in the CCL or the USML.

    Note 1: Forgings, castings, and other unfinished products, such 
as extrusions and machined bodies, that have reached a stage in 
manufacturing where they are clearly identifiable by material 
composition, geometry, or function as commodities controlled by ECCN 
8A609.x are controlled by ECCN 8A609.x.


    Note 2:  ``Parts,'' ``components,'' ``accessories and 
attachments'' specified in USML subcategory VI(g) are subject to the 
controls of that paragraph. ``Parts,'' ``components,'' ``accessories 
and attachments'' specified in ECCN 8A609.y are subject to the 
controls of that paragraph.

    y. Specific ``parts,'' ``components,'' ``accessories and 
attachments'' ``specially designed'' for a commodity subject to control 
in this ECCN or for a defense article in USML Category VI and not 
elsewhere specified in the USML or the CCL, as follows:
    y.1. Ship service hydraulic and pneumatic systems;
    y.2. Internal communications systems;
    y.3. Filters and filter assemblies for hydraulic, oil and fuel 
systems;
    y.4. Galleys and related equipment;
    y.5. Hydraulic and fuel hoses, straight and unbent lines, fittings, 
clips, couplings, and brackets;
    y.6. Lavatories and sanitary systems;
    y.7. Magnetic compass, magnetic azimuth detector;
    y.8. Medical facilities and related equipment;
    y.9. Potable water storage systems;
    y.10. Filtered and unfiltered panel knobs, indicators, switches, 
buttons, and dials;
    y.11. Emergency lighting;
    y.12. Analog gauges and indicators;
    y.13. Audio selector panels.
    y.14. to y.98 [RESERVED]
    y.99. Commodities not identified on the CCL that (i) have been 
determined, in an applicable commodity jurisdiction determination 
issued by the U.S. Department of State, to be subject to the EAR and 
(ii) would otherwise be controlled elsewhere in ECCN 8A609.
    5. In Supplement No. 1 to part 774 (the Commerce Control List), 
Category 8--Marine, add a new ECCN 8B609 immediately following ECCN 
8B001 to read as follows:

8B609 Test, inspection, and production ``equipment'' and related 
commodities ``specially designed'' for the ``development'' or 
``production'' of commodities enumerated in ECCN 8A609 or USML Category 
VI, as follows.

License Requirements

    Reason for Control: NS, RS, AT.

------------------------------------------------------------------------
                Control(s)                          Country chart
------------------------------------------------------------------------
NS applies to entire entry except 8B609.y.  NS Column 1.
RS applies to entire entry except 8B609.y.  RS Column 1.
AT applies to entire entry................  AT Column 1.
------------------------------------------------------------------------

License Exceptions

    LVS: $1,500.
    GBS: N/A.
    CIV: N/A.
    STA: Paragraph (c)(2) of License Exception STA (Sec.  740.20(c)(2)) 
of the EAR may not be used for any item in 8B609.

List of Items Controlled

    Unit: N/A.
    Related Controls: N/A.
    Related Definitions: N/A.
    Items:
    a. Test, inspection, and production ``equipment'' ``specially 
designed'' for the ``production'' or ``development'' of commodities 
enumerated in ECCN 8A609 (except for 8A609.y) or in USML Category VI, 
and ``parts,'' ``components,'' ``accessories and attachments'' 
``specially designed'' therefor.
    b. through x. [RESERVED]
    y. Specific test, inspection, and production ``equipment'' 
``specially designed'' for the ``production'' or ``development'' of 
commodities enumerated in ECCN 8A609 (except for 8A609.y) or USML 
Category VI and ``parts,'' ``components,'' ``accessories and 
attachments'' ``specially designed'' therefor, as follows:
    y.1. through y.98 [RESERVED]
    y.99. Commodities not identified on the CCL that (i) have been 
determined, in an applicable commodity jurisdiction determination 
issued by the U.S. Department of State, to be subject to the EAR and 
(ii) would otherwise be controlled elsewhere in ECCN 8B609.
    6. In Supplement No. 1 to part 774 (the Commerce Control List), 
Category 8--Marine, add a new ECCN 8C609 immediately following ECCN 
8C001 to read as follows:

8C609 Materials ``specially designed'' for the ``development'' or 
``production'' of commodities controlled by 8A609 not elsewhere 
specified in the CCL or in the USML.

License Requirements

    Reason for Control: NS, RS, AT.

------------------------------------------------------------------------
                Control(s)                          Country chart
------------------------------------------------------------------------
NS applies to entire entry except 8C609.y.  NS Column 1.
RS applies to entire entry except 8C609.y.  RS Column 1.
AT applies to entire entry................  AT Column 1.
------------------------------------------------------------------------

License Exceptions

    LVS: $1,500.
    GBS: N/A.
    CIV: N/A.
    STA: Paragraph (c)(2) of License Exception STA (Sec.  740.20(c)(2)) 
of the EAR may not be used for any item in 8C609.

List of Items Controlled

    Unit: N/A.
    Related Controls: (1) See USML Categories VI and XIII(f) for 
controls on materials specially designed for vessels of war enumerated 
in USML Category VI. (2) See ECCN 0A919 for foreign made ``military 
commodities'' that incorporate more than 10% U.S.-origin ``600 series'' 
items.
    Related Definitions: N/A.
    Items:

[[Page 80291]]

    a. Materials ``specially designed'' for commodities enumerated in 
ECCN 8A609 (except for 8A609.y) not elsewhere specified in the USML or 
the CCL.

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

    b. to .x. [RESERVED]
    y. Specific materials ``specially designed'' for the 
``development'' or ``production'' of commodities enumerated in ECCN 
8A609 (except for 8A609.y), and ``parts,'' ``components,'' 
``accessories and attachments'' ``specially designed'' therefor, as 
follows:
    y.1. through y.98 [RESERVED]
    y.99. Materials not identified on the CCL that (i) have been 
determined, in an applicable commodity jurisdiction determination 
issued by the U.S. Department of State, to be subject to the EAR and 
(ii) would otherwise be controlled elsewhere in ECCN 8C609.
    7. In Supplement No. 1 to part 774 (the Commerce Control List), 
Category 8--Marine, add a new ECCN 8D609 between ECCN 8D002 and 8D992 
to read as follows:

8D609 Software ``specially designed'' for the ``development,'' 
``production,'' operation or maintenance of surface vessels of war and 
related commodities controlled by 8A609, equipment controlled by 8B609, 
or materials controlled by 8C609.

License Requirements

    Reason for Control: NS, RS, AT.

------------------------------------------------------------------------
                Control(s)                          Country chart
------------------------------------------------------------------------
NS applies to entire entry except 8D609.y.  NS Column 1.
RS applies to entire entry except 8D609.y.  RS Column 1.
AT applies to entire entry................  AT Column 1.
------------------------------------------------------------------------

License Exceptions

    CIV: N/A.
    TSR: N/A.
    STA: Paragraph (c)(2) of License Exception STA (Sec.  740.20(c)(2)) 
of the EAR may not be used for any software in 8D609.

List of Items Controlled

    Unit: $ value.
    Related Controls: (1) Software directly related to articles 
enumerated in USML Category VI is controlled under USML Category VI(g). 
(2) See ECCN 0A919 for foreign made ``military commodities'' that 
incorporate more than 10% U.S.-origin ``600 series'' items.
    Related Definitions: N/A.
    Items:
    a. ``Software'' ``specially designed'' for the ``development,'' 
``production,'' operation, or maintenance of commodities controlled by 
ECCN 8A609, ECCN 8B609, or ECCN 8C609 (except for ECCN 8A609.y, 
8B609.y, or 8C609.y).
    b. to x. [RESERVED]
    y. Specific ``software'' ``specially designed'' for the 
``development,'' ``production,'' operation, or maintenance of 
commodities enumerated in ECCN 8A609.y, 8B609.y, or 8C609.y, as 
follows:
    y.1. through y.98 [RESERVED]
    y.99. Software not identified on the CCL that (i) has been 
determined, in an applicable commodity jurisdiction determination 
issued by the U.S. Department of State, to be subject to the EAR and 
(ii) would otherwise be controlled elsewhere in ECCN 8D609.
    8. In Supplement No. 1 to part 774 (the Commerce Control List), 
Category 8--Marine, add a new ECCN 8E609 between ECCN 8E002 and 8E992 
to read as follows:

8E609 ``Technology'' ``required'' for the ``development,'' 
``production,'' operation, installation, maintenance, repair, or 
overhaul of surface vessels of war and related commodities controlled 
by 8A609, equipment controlled by 8B609, materials controlled by 8C609, 
or software controlled by 8D609.

License Requirements

    Reason for Control: NS, RS, AT.

------------------------------------------------------------------------
                Control(s)                          Country chart
------------------------------------------------------------------------
NS applies to entire entry except 8E609.y.  NS Column 1.
RS applies to entire entry except 8E609.y.  RS Column 1.
AT applies to entire entry................  AT Column 1.
------------------------------------------------------------------------

License Exceptions

    CIV: N/A.
    TSR: N/A.
    STA: Paragraph (c)(2) of License Exception STA (Sec.  740.20(c)(2)) 
of the EAR may not be used for any technology in 8E609.

List of Items Controlled

    Unit: N/A.
    Related Controls: (1) Technical data directly related to articles 
enumerated in USML Category VI are controlled under USML Category 
VI(g). (2) See ECCN 0A919 for foreign made ``military commodities'' 
that incorporate more than 10% U.S.-origin ``600 series'' items.
    Related Definitions: N/A.
    Items:
    a. ``Technology'' ``required'' for the ``development,'' 
``production,'' operation, installation, maintenance, repair, or 
overhaul of commodities controlled by ECCN 8A609, 8B609, or 8C609, or 
``software'' controlled by ECCN 8D609, except for ECCN 8A609.y, 
8B609.y, 8C609.y, or 8D609.y.
    b. through x. [RESERVED]
    y. Specific ``technology'' ``required'' for the ``development,'' 
``production,'' operation, installation, maintenance, repair, or 
overhaul of commodities controlled by ECCN 8A609.y, 8B609.y or 8C609.y, 
or ``software'' controlled by ECCN 8D609.y, as follows:
    y.1. through y.98 [RESERVED]
    y.99. ``Technology'' not identified on the CCL that (i) has been 
determined, in an applicable commodity jurisdiction determination 
issued by the U.S. Department of State, to be subject to the EAR and 
(ii) would otherwise be controlled elsewhere in ECCN 8E609.

    Dated: December 16, 2011.
Kevin J. Wolf,
Assistant Secretary for Export Administration.
[FR Doc. 2011-32867 Filed 12-22-11; 8:45 am]
BILLING CODE 3510-33-P


