
[Federal Register Volume 76, Number 247 (Friday, December 23, 2011)]
[Proposed Rules]
[Pages 80291-80302]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-32868]


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DEPARTMENT OF COMMERCE

Bureau of Industry and Security

15 CFR Parts 742 and 774

[Docket No. 110928603-1605-02]
RIN 0694-AF39


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

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

ACTION: Proposed rule.

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SUMMARY: The Bureau of Industry and Security (BIS) publishes this 
proposed rule that describes how submersible vessels, oceanographic 
equipment and related articles that the President determines no longer 
warrant control under Category VI (Vessels of War and Special Naval 
Equipment) or Category XX (Submersible Vessels, Oceanographic and 
Associated

[[Page 80292]]

Equipment) of the United States Munitions List (USML) would be 
controlled under the Commerce Control List (CCL) in new Export Control 
Classification Numbers (ECCNs) 8A620, 8B620, 8D620, and 8E620. In 
addition, this proposed rule would control closed and semi-closed 
circuit (rebreathing) apparatus, engines and propulsion systems for 
submersible vessels, and submarine and torpedo nets, which are 
currently controlled under ECCN 8A018, under new ECCN 8A620. With this 
proposed rule, BIS also would establish a new, unilateral control on 
submersibles ``specially designed'' for cargo transport that are not 
currently subject to USML or CCL controls.
    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 surface 
vessels of war and special naval equipment the President determines no 
longer warrant control under Category VI would be controlled on the CCL 
under new ECCNs 8A609, 8B609, 8C609, 8D609, and 8E609. 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 
Category XX, respectively. In recognition of the significant difference 
between surface vessels of war and submarines, the U.S. Department of 
State, Directorate of Defense Trade Controls, is proposing to move 
submarines and associated equipment from Category VI on the USML to 
Category XX.

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-2011-0045.
     By email directly to publiccomments@bis.doc.gov. Include 
RIN 0694-AF39 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-AF39.

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. With 
this proposed rule, BIS also would establish a new, unilateral control 
on submersibles ``specially designed'' for cargo transport that are not 
currently subject to USML or CCL controls.
    On November 7, 2011 (76 FR 68675), and December 6, 2011 (76 FR 
76072), BIS published proposed rules describing how aircraft and 
related items, and gas turbine engines and related items, respectively, 
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 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 provisions would be to give exporters 
sufficient time to implement each final rule 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 transferring certain USML items to the CCL, this 
proposed rule describes BIS's proposal for how another group of items--
submersible vessels, oceanographic equipment and related articles that 
are controlled by USML Category VI or Category XX--would be controlled 
on the CCL. The changes described in this proposed rule and related 
amendments proposed by the State Department to Categories VI and XX of 
the USML are based on a review of these USML Categories 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 or Category XX 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 does 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 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

[[Page 80293]]

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 submersible vessels, 
oceanographic equipment and related articles currently in USML Category 
VI or Category XX 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 describing how surface vessels of war ``specially designed'' for a 
military use and not enumerated on the USML and related articles that 
the President determines no longer warrant control under Category VI 
would be controlled on the CCL under new ECCNs 8A609, 8B609, 8C609, 
8D609, and 8E609.
    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. However, in 
this proposed rule, the final two characters correspond with the USML 
Category XX, instead of WAML Category 20.
    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:
     Changes to ECCN 8A018, and
     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.'' 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 four new 600 series ECCNs in CCL 
Category 8--8A620, 8B620, 8D620, and 8E620--that would clarify the EAR 
controls that apply to certain submersible vessels and related items 
not enumerated on the USML and also impose EAR controls on harbor 
entrance detection devices and related articles the President 
determines no longer warrant control under USML Category VI. Consistent 
with the regulatory construct identified in the July 15 proposed rule, 
this rule also would move closed and semi-closed circuit (rebreathing) 
apparatus, engines and propulsion systems for submersible vessels, and 
submarine and torpedo nets, which are currently classified under ECCN 
8A018, to the new ECCN 8A620. As part of the proposed changes, ECCN 
8A018, as amended, would cross-reference new ECCN 8A620 and current 
ECCNs that control non-military submersible vehicles, oceanographic and 
associated equipment. As noted in the July 15 proposed rule, moving 
items from 018 ECCNs to the appropriate 600 series ECCNs would 
consolidate the WAML and former USML items into one series of ECCNs.
    The review of USML Categories VI and XX by the Departments of 
Defense, State and Commerce resulted in a determination by the agencies 
that U.S. submarines, certain submersibles, oceanographic equipment and 
related articles controlled on the USML provide a critical military and 
intelligence advantage to the United States with many technologies that 
are exclusively available in the United States. The exclusivity of this 
technology and the need to preserve the tactical and strategic 
superiority of the U.S. submarine force has resulted in very few 
exports of these USML items. In view of these factors, combined with 
the unique and independent nature of U.S. submarine operations and a 
lesser need for interoperability with our NATO and other allies, the 
licensing jurisdiction for submersible vessels, oceanographic equipment 
and related articles currently controlled on the USML will remain 
largely unchanged. Furthermore, unlike other proposed rules that have 
been published as part of the Administration's Export Control Reform 
Initiative, this proposed rule would not affect the licensing 
jurisdiction of ``parts,'' ``components,'' ``accessories and 
attachments'' ``specially designed'' for articles that would continue 
to be controlled under USML Category VI or Category XX--such articles 
would remain controlled on the USML.
    Military submersibles determined by the President to meet the 
criteria for movement from the USML to the CCL include Deep Submergence 
Rescue Vehicles (DSRV) and Deep Submergence Vehicles (DSV) and their 
specially designed components. This proposed rule would include these 
items in new ECCN 8A620. In addition, submersibles that are ``specially 
designed'' for cargo transport, but not currently enumerated on either 
the USML or the CCL, have been determined to warrant control on the CCL 
(e.g., because they are known to have been used in illegal drug 
trafficking activities) and would be included under new ECCN 8A620.
    The proposed changes are discussed in more detail, below.

New Category 8 (600 Series) ECCNs

    Harbor entrance detection devices and related articles that the 
President determines no longer warrant control in USML Category VI 
would be controlled under proposed new ECCNs 8A620, 8B620, 8D620, and 
8E620. In addition, these new ECCNs would control certain submersible 
vessels, oceanographic equipment and related equipment that are not 
controlled under Category XX of

[[Page 80294]]

the USML. With this proposed rule, BIS thus would establish a new, 
unilateral control on submersibles ``specially designed'' for cargo 
transport that are not currently subject to USML or CCL controls. These 
new ECCNs follow the 600 series construct identified in the July 15 
proposed rule.
    Paragraph .a of ECCN 8A620 would control submersible and semi-
submersible vessels ``specially designed'' for a military use, but not 
enumerated on the USML (DSRVs and DSVs). Paragraph .b of ECCN 8A620 
would control submersible and semi-submersible vessels ``specially 
designed'' for cargo transport (submersible and semi-submersible 
vessels of a type known to have been used in illegal drug trafficking 
activities) and ``parts,'' ``components,'' ``accessories and 
attachments'' ``specially designed'' therefor. Paragraph .c of ECCN 
8A620 would control harbor entrance detection devices (magnetic, 
pressure, and acoustic) and controls therefor, not elsewhere specified 
on the USML or the CCL. Paragraph .d of ECCN 8A620 would control 
certain engines and propulsion devices for submersible or semi-
submersible vessels. Paragraphs .e and .f would control submarine and 
torpedo nets and certain closed and semi-closed circuit (rebreathing) 
apparatus, respectively. Paragraphs .g through .w would be reserved for 
possible future use. Paragraph .x would control 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 paragraphs .a and .c through 
.f; however, paragraph .x would not include items ``specially 
designed'' for a defense article in USML Category VI or XX. Paragraph 
.y would consist of specific types of commodities that, if ``specially 
designed'' for a commodity subject to control in ECCN 8A620, 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.
    Unlike previous proposed rules published by BIS that are part of 
the Administration's Export Control Reform Initiative, paragraphs .x 
and .y in new ECCN 8A620 would control only ``parts,'' ``components,'' 
``accessories and attachments'' that are ``specially designed'' for a 
commodity enumerated in ECCN 8A620 and not specified elsewhere in the 
CCL. These paragraphs would not also control ``parts,'' ``components,'' 
``accessories and attachments'' that are ``specially designed'' for a 
defense article on the USML (i.e., a defense article in Category VI or 
Category XX).
    This proposed rule does not add gas turbine engines for submersible 
or semi-submersible vessels to the proposed new ECCN 8A620. Instead, 
the Administration issued a separate proposed rule, on December 6, 2011 
(76 FR 76072), 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 
surface vessels and related equipment that no longer warrant control 
under the USML. BIS is addressing controls on these items in a separate 
proposed rule that is being published in conjunction with this proposed 
rule on December 23, 2011.
    ECCN 8B620.a would control test, inspection, and production 
``equipment'' and related commodities ``specially designed'' for the 
``development'' or ``production'' of commodities enumerated in ECCN 
8A620 (except for items in 8A620.b and .y) and not elsewhere on the CCL 
or in the USML. Paragraph .b of ECCN 8B620 would control test, 
inspection, and production ``equipment'' and related commodities 
``specially designed'' for the ``development'' or ``production'' of 
commodities enumerated in ECCN 8A620.b. Paragraphs .c through .x would 
be reserved for possible future use. ECCN 8B620.y would control 
specific test, inspection, and production ``equipment'' ``specially 
designed'' for the ``production'' or ``development'' of commodities 
enumerated in ECCN 8A620 (except for items in 8A620.y) and ``parts,'' 
``components,'' ``accessories and attachments'' ``specially designed'' 
therefor. However, unlike previous Export Control Reform Initiative 
proposed rules published by BIS, this proposed rule would not include 
in paragraph .y those items that are ``specially designed'' for 
articles on the USML. Since this proposed rule does not list specific 
equipment under paragraph .y, sub-paragraphs .y.1 through y.98 would be 
reserved for possible future use.
    This proposed rule does not add a new ECCN 8C620 to control 
materials, not specified elsewhere in the CCL, that are ``specially 
designed'' for the ``development'' or ``production'' of commodities 
enumerated in ECCN 8A620. In this regard, BIS understands that 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 controlled by USML 
subcategory VI(a) or submersible vessels and related articles 
controlled by Category XX. The State Department plans to publish a 
proposed rule that would make USML subcategory XIII(f) a positive list 
of controlled structural materials.
    ECCN 8D620.a would control ``software'' ``specially designed'' for 
the ``development,'' ``production,'' operation, or maintenance of 
commodities enumerated in 8A620 (except 8A620.b and .y) or 8B620 
(except 8B620.b and .y). Paragraph .b of ECCN 8D620 would control 
``software'' ``specially designed'' for the ``development,'' 
``production,'' operation, or maintenance of commodities enumerated in 
8A620.b or 8B620.b. Paragraphs .c through .x of ECCN 8D620 would be 
reserved for possible future use. ECCN 8D620.y would control specific 
``software'' ``specially designed'' for the ``development,'' 
``production,'' operation, or maintenance of commodities enumerated in 
ECCN 8A620.y or 8B620.y.
    ECCN 8E620.a would control ``technology'' ``required'' for the 
``development,'' ``production,'' operation, installation, maintenance, 
repair, overhaul, or refurbishment of items enumerated in ECCN 8A620 
(except 8A620.y), 8B620 (except 8B620.y), or 8D620 (except 8D620.y). 
Paragraph .b of 8E620 would control ``technology'' ``required'' for the 
``development,'' ``production,'' operation, installation, maintenance, 
repair, overhaul, or refurbishment of items enumerated in ECCN 8A620.b, 
8B620.b or 8D620.b. Paragraphs .c through .x of ECCN 8E620 would be 
reserved for possible future use. ECCN 8E620.y would control specific 
``technology'' ``specially designed'' for the ``development,'' 
``production,'' operation, installation, maintenance, repair, overhaul, 
or refurbishment of items enumerated in ECCN 8A620.y, 8B620.y, or 
8D620.y.
    In addition, ECCNs 8A620, 8B620, 8D620, and 8E620 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

[[Page 80295]]

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 (AT) controls.
    This proposed rule also would affect the items currently controlled 
under ECCN 8A018. Specifically, engines and propulsion systems 
currently controlled under ECCN 8A018.b.1, .b.2, and .b.3 would be 
moved to new ECCN 8A620.d.1, .d.2, and .d.3, respectively. In addition, 
anti-submarine and anti-torpedo nets currently controlled under ECCN 
8A018.b.4 would be moved to new ECCN 8A620.e and closed and semi-closed 
circuit (rebreathing) apparatus would be moved to new ECCN 8A620.f. In 
conjunction with the establishment of the new ECCN 8X620 entries, and 
consistent with the July 15 proposed rule's statement that 018 entries 
would remain in the CCL for a time, but only for cross-reference 
purposes, this rule would amend ECCN 8A018 to remove all language 
except cross references to the new 600 series ECCNs that cover the 
items in the new ECCN 8A620 (i.e., ECCN 8A620.d, .e, and .f).

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 (RS) (specifically, RS Column 1). Items 
classified under proposed ECCN 8A620 or ECCN 8B620, other than ECCN 
8A620.y or ECCN 8B620.y items, as well as related technology and 
software classified under ECCNs 8D620 and 8E620, 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 8A620 and 8B620 (except 
paragraphs .y of those ECCNs), and to related software and technology 
classified under ECCNs 8D620 and 8E620. 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 
categories of items 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 
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 and Category XX 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 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 this proposed rule would have little effect, in 
practical terms, on exports and reexports of the items included in new 
ECCNs 8A620, 8B620, 8D620, or 8E620 that the President determines no 
longer warrant control on the USML. Unlike the previous proposed rules 
published by BIS that are part of the Administration's Export Control 
Reform Initiative and would add 600 series ECCNs to control articles 
the President determines no longer warrant control under the USML, this 
proposed rule would affect only exports and reexports of items 
enumerated in ECCN 8A620, ``specially designed'' ``parts,'' 
``components,'' ``accessories and attachments'' therefor (as indicated 
in ECCN 8A620.x or .y), and related items described in ECCN 8B620, 
8D620, or 8E620. This rule would not affect the licensing jurisdiction 
for ``parts,'' ``components,'' ``accessories and attachments'' 
``specially designed'' for articles that would continue to be 
controlled under USML Category VI or Category XX--such articles would 
remain controlled on the USML. Furthermore, based the licensing history 
for the items affected by this rule, BIS anticipates receiving an 
average of less than one license application per year for each type of 
item (e.g., the items described in ECCN 8A620, including those that 
currently are controlled under ECCN 8A018).
    In terms of specific EAR requirements, this rule would make 
additional items eligible for de minimis consideration under the EAR 
(i.e., ``specially designed'' ``parts,'' ``components,'' ``accessories 
and attachments'' for items enumerated in ECCN 8A620.a, .b, or .c, as 
indicated in ECCN 8A620.x or .y--de minimis consideration currently is 
available for the ECCN 8A018 items that would be moved to ECCN 8A620.d, 
.e, or .f). However, items ``specially designed'' for articles that 
would continue to be controlled under USML Category VI or Category XX 
also would remain controlled on the USML. In addition, there will be 
greater flexibility for certain 600 series ECCN items (i.e., items 
enumerated in ECCN 8A620.a, .b, or .c) with respect to the availability 
of certain license exceptions, such as License Exceptions GOV and STA. 
Some of these specific effects are discussed in more detail below. The

[[Page 80296]]

actual impact of these changes is likely to be negligible in light of 
the fact that BIS anticipates receiving only a limited number of 
license applications for such items.

De minimis

    The July 15 proposed rule would impose certain unique de minimis 
requirements on items controlled under the new 600 series ECCNs. 
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 8A620, 8B620, 8D620 and 8E620 
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 in 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, for de minimis 
purposes, if the value of its U.S.-origin controlled content does not 
exceed 10 percent of foreign-made item's value). In contrast, the AECA 
does not permit the ITAR to have a de minimis treatment for USML-listed 
items, regardless of the significance or insignificance of the U.S.-
origin content or the percentage of U.S.-origin content in the foreign-
made item (i.e., USML-listed items remain subject to the ITAR when they 
are incorporated abroad into a foreign-made item, regardless of either 
of these factors). 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.

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. 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 8A620. BIS also 
believes that, in practice, the movement of items from an 018 ECCN to a 
new 600 series ECCN (e.g., engines and propulsion systems for 
submersible vessels from 8A018.b.1, b.2, and .b.3 to 8A620.d.1, .d.2, 
and .d.3, respectively, submarine and torpedo nets from 8A018.b.4 to 
8A620.e, and closed and semi-closed circuit (rebreathing) apparatus 
from 8A018.a to 8A620.f) would have little effect on license exception 
availability for those items. However, BIS is aware of two situations 
(the use of License Exceptions GOV and STA) in which movement of items 
from an 018 ECCN to a new 600 series ECCN could, in practice, impose 
greater limits on the use of license exceptions than currently is the 
case.
    First, the July 15 proposed rule would limit the use of License 
Exception GOV for 600 series commodities 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). Currently, closed and semi-closed circuit 
(rebreathing) apparatus classified under ECCN 8A018.a, engines and 
propulsion systems classified under 8A018.b.1, b.2, or .b.3 and 
submarine and torpedo nets classified under ECCN 8A018.b.4, may be 
exported under any provision of License Exception GOV to any 
destination authorized by that provision if all of the conditions of 
that provision are met and nothing else in the EAR precludes such 
shipment.
    Second, the July 15 proposed rule would: (i) Limit the use of 
License Exception STA 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. Neither 
restriction currently applies to the use of License Exception STA for 
commodities classified under ECCN 8A018.a or .b, but both would apply 
to closed and semi-closed circuit (rebreathing) apparatus currently 
controlled under 8A018.a and submarine and torpedo nets currently 
controlled under ECCN 8A018.b.4. In addition, the July 15 proposed rule 
would limit the shipment of 600 series items under License Exception 
STA to destinations listed in Sec.  740.20(c)(1). Currently, the 
commodities classified under ECCN 8A018.a or .b (which would be moved 
to ECCN 8A620 by this proposed rule) may be shipped under License 
Exception STA to destinations listed in Sec.  740.20(c)(1) or (c)(2).

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 8A620 tracks, to the extent 
possible, the numbering structure and text of WAML category 9 
pertaining to submersible vessels not subject to the ITAR. It also 
implements in 8A620.x the controls in WAML category 16 for forgings, 
castings, and other unfinished products; in 8B620.a the controls in 
WAML category 18 for production equipment; in 8D620 the applicable 
controls in WAML category 21 for software; and in 8E620 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 8A620 (other than ECCN 8A620.b and 
.y), along with related test inspection and production equipment, 
software, and technology classified under ECCN 8B620, 8D620 or 8E620 
(except items classified under the .b and .y paragraphs of these 
ECCNs), would be subject to the licensing policies that apply to items 
controlled for national security (NS) reasons, as described in Sec.  
742.4(b)(1)--specifically, NS Column 1 controls. In addition, all 
commodities in ECCN 8A620 (other than those identified in 8A620.y, 
which are controlled for AT Column 1 anti-terrorism reasons only and 
may also be subject to the

[[Page 80297]]

prohibitions described in Part 744), along with related test, 
inspection and production equipment, software and technology classified 
under ECCN 8B620, 8D620 or 8E620 (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 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 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 
8A620.x would control any part, component, accessory, or attachment 
``specially designed'' for a commodity enumerated in ECCN 8A620 that is 
not specified elsewhere on the CCL (in this regard, note that 8A620.x 
would not control items ``specially designed'' for an article 
identified on the USML). However, any part, component, accessory or 
attachment that is determined by CJ not to be subject to the ITAR and 
is (as defined) ``specially designed'' for a submersible or semi-
submersible vessel or other commodity controlled by ECCN 8A620 would be 
controlled under 8A620.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 8A620, 8B620, 8D620 and 8E620 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--ECCNs 8A620, 8B620, 8D620 
and 8E620 would be added to Supplement No. 1 to part 774. ECCN 8A018 
would be amended to remove all language except cross references to 
engines and propulsion systems for submersible vessels, submarine and 
torpedo nets, and closed and semi-closed circuit (rebreathing) 
apparatus that would be moved from ECCN 8A018 to proposed new ECCN 
8A620 under paragraphs .d, .e, and .f, respectively.

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

[[Page 80298]]

applications, and License Exceptions and Exclusions (0694-0137).
    As stated in the proposed rules published at 76 FR 41958 (July 15, 
2011), 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 military surface vessels and related 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 rules published by BIS, in the two proposed rules 
that BIS published on December 6, and in the proposed rule on military 
surface vessels and related 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 does not expect that these changes would result in a measurable 
increase in burden with respect to the items affected by this proposed 
rule (i.e., the items that would be moved from the 018 ECCNs to the new 
600 series ECCNs and the items that would be included in the new 600 
series ECCNs because the President determines such items no longer 
warrant control under the USML). The reason for this is that the export 
and reexport trade in the items that would be controlled under new ECCN 
8A620, 8B620, 8D620, or 8E620 is very limited. In fact, BIS anticipates 
receiving an average of less than one license application per year for 
each type of item controlled under these ECCNs.
    Similarly, BIS does not expect that the addition to new ECCNs 
8A620, 8B620, 8D620, and 8E620 of items that the President determines 
no longer warrant control under the USML would result in a measurable 
decrease in burden, given the very limited volume of export and 
reexport trade in such items. Furthermore, unlike the previous proposed 
rules published by BIS that are part of the Administration's Export 
Control Reform Initiative, this proposed rule would reduce burden hours 
only with respect to exports and reexports of certain items enumerated 
in ECCN 8A620 (specifically ECCN 8A620.a, .b, and .c), ``specially 
designed'' ``parts,'' ``components,'' ``accessories and attachments'' 
therefore (as indicated in ECCN 8A620.x or .y), and related items 
described in ECCN 8B620, 8D620, or 8E620. This proposed rule would not 
affect the licensing jurisdiction for ``parts,'' ``components,'' 
``accessories and attachments'' ``specially designed'' for articles 
that would continue to be controlled under USML Category VI or Category 
XX--such articles would remain controlled on the USML. Therefore, the 
reduction in burden hours that would result from this proposed rule 
would be significantly less than in the previous Export Control Reform 
Initiative proposed rules published by BIS.
    In conclusion, due to the very limited volume of export and 
reexport trade in the items that would be affected by this proposed 
rule, BIS does not expect the proposed amendments described therein to 
result in a measurable change in burden.
    3. This rule does not contain policies with Federalism implications 
as that term is defined under E.O. 13132.
    4. The Regulatory Flexibility Act (RFA), as amended by the Small 
Business Regulatory Enforcement Fairness Act of 1996 (SBREFA), 5 U.S.C. 
601 et seq., generally requires an agency to prepare a regulatory 
flexibility analysis of any rule subject to the notice and comment 
rulemaking requirements under the Administrative Procedure Act (5 
U.S.C. 553) or any other statute, unless the agency certifies that the 
rule will not have a significant economic impact on a substantial 
number of small entities. Under section 605(b) of the RFA, however, if 
the head of an agency certifies that a rule will not have a significant 
impact on a substantial number of small entities, the statute does not 
require the agency to prepare a regulatory flexibility analysis. 
Pursuant to section 605(b), the Chief Counsel for Regulation, 
Department of Commerce, certified to the Chief Counsel for Advocacy, 
Small Business Administration that 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.
    This rule addresses certain submersible and semi-submersible 
vessels currently enumerated in USML Category XX (i.e., Deep 
Submergence Rescue Vehicles (DSRV) and Deep Submergence Vehicles 
(DSV)), certain submersible and semi-submersible vessels ``specially 
designed'' for cargo transport (i.e., vessels not currently enumerated 
on either the USML or the CCL, but determined to warrant control on the 
CCL, because they are known to have been used in illegal drug 
trafficking activities), items currently controlled under ECCN 8A018 
(i.e., closed and semi-closed circuit (rebreathing) apparatus, engines 
and propulsion systems for submersible and semi-submersible vessels, 
and submarine and torpedo nets), and certain articles currently 
enumerated in USML Category VI (i.e., harbor entrance detection devices 
and related articles).

[[Page 80299]]

    BIS does not anticipate that the changes described in this proposed 
rule would have a measurable impact on small entities. This is because 
the export and reexport trade in the items that would be controlled 
under new ECCN 8A620, 8B620, 8D620, or 8E620 is very limited. In 
addition, this proposed rule would not affect the licensing 
jurisdiction for ``parts,'' ``components,'' ``accessories and 
attachments'' ``specially designed'' for articles that would continue 
to be controlled under USML Category VI or Category XX. In contrast to 
the other proposed rules that BIS has published as part of the 
Administration's Export Control Reform Initiative, such articles would 
remain controlled on the USML. In fact, based on the licensing history 
of the items that would be affected by this proposed rule, BIS 
anticipates receiving an average of less than one license application 
per year for each type of item controlled under these new 600 series 
ECCNs.
    Although BIS anticipates that the changes that would be made by 
this proposed rule would not have a measurable impact on the burden on 
small entities, changing the jurisdictional status of certain Category 
VI and Category XX articles would, potentially, 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.
    For example, parts and components identified in ECCN 8A620.y would 
be designated immediately as parts and components that, even if 
specially designed for a military use, have little or no military 
significance (in this regard, note that ECCN 8A620.y would control only 
parts or components ``specially designed'' for items that would be 
controlled by ECCN 8A620.a through .f--not parts and components 
``specially designed'' for articles enumerated on the USML). Those 
parts and components identified in proposed ECCN 8A620.y that currently 
require a license under the ITAR 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.
    Certain exports and reexports of the Category VI and Category XX 
articles that would be placed on the CCL by this rule 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. 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 or Category XX 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 that 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.
    For items currently on the CCL that would be moved from existing 
ECCNs to the new 600 series ECCNs (i.e., the items currently controlled 
under ECCN 8A018), 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, similar to the changes affecting the 
USML Category VI and Category XX articles described above, BIS 
anticipates that these changes would have little impact on the burden 
on small entities in light of the extremely limited number of exports 
and reexports involving the items currently controlled under ECCN 
8A018.

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 anticipates that none of the changes proposed by 
this rule would likely have a measurable impact on the burden on small 
entities, due to the limited number of exports and reexports involving 
the items that would be affected by this proposed rule. However, 
although BIS anticipates that the changes that would be made by this 
proposed rule would not have a measurable impact on the burden on small 
entities, changing the jurisdictional status of certain Category VI and 
Category XX articles would, potentially, reduce the burden on small 
entities by reducing 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.

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:

[[Page 80300]]

 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); 8A620 (except 8A620.y); 8B609 (except 8B609.y); 8B620 (except 
8B620.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); 8D620 (except 
software for the ``development,'' ``production,'' operation, or 
maintenance of commodities controlled by 8A620.y or 8B620.y); 8E609 
(except ``technology'' for the ``development,'' ``production,'' 
operation, installation, maintenance, repair, overhaul, or 
refurbishment of commodities controlled by 8A609.y, 8B609.y, or 
8C609.y); 8E620 (except ``technology'' for the ``development,'' 
``production,'' operation, installation, maintenance, repair, overhaul, 
or refurbishment of commodities controlled by 8A620.y or 8B620.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, overhaul, or 
refurbishment of commodities controlled by ECCN 9A610.y, 9B610.y, or 
9C610.y); and 9E619 (except ``technology'' for the ``development,'' 
``production'' operation, installation, maintenance, repair, overhaul, 
or refurbishment 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, ECCN 8A018 is revised to read as follows:

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

* * * * *
8A018 Items on the Wassenaar Arrangement Munitions List.

    No items currently are in this ECCN. See ECCN 8A620 for engines and 
propulsion systems for submersible vessels, submarine and torpedo nets, 
closed and semi-closed circuit (rebreathing) apparatus, and specially 
designed components therefor that, immediately prior to [Insert 
effective date of final rule that moves these items], were classified 
under ECCN 8A018. See ECCNs 8A001, 8A002 and 8A992 for controls on non-
military submersible vehicles, oceanographic and associated equipment.
    5. In Supplement No. 1 to part 774 (the Commerce Control List), 
Category 8--Marine, add a new ECCN 8A620 between ECCNs 8A018 and 8A992 
to read as follows:
8A620 Submersible vessels, oceanographic and associated equipment.

License Requirements

    Reason for Control: NS, RS, AT.

 
------------------------------------------------------------------------
                Control(s)                          Country chart
------------------------------------------------------------------------
NS applies to entire entry except 8A620.b   NS Column 1.
 and .y.
RS applies to entire entry except 8A620.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 8A620. Paragraph (c)(1) of 
License Exception STA (Sec.  740.20(c)(1)) may not be used for any 
``end item'' in 8A620, 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 8A620 as part

[[Page 80301]]

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 
8A620.x without the need for a determination described in Sec.  
740.20(g).

List of Items Controlled

    Unit: Equipment in number; parts, components, accessories and 
attachments in $ value.
    Related Controls: (1) Submersible vessels, oceanographic and 
associated equipment, and technical data (including software), and 
services directly related thereto, described in 22 CFR part 121, 
Category XX, Submersible Vessels, Oceanographic and Associated 
Equipment, are subject to the jurisdiction of the International Traffic 
in Arms Regulations (ITAR). Parts, components, accessories, and 
attachments ``specially designed'' for defense articles in USML 
Category XX are controlled under USML sub-category XX(c). (2) See ECCN 
0A919 for foreign-made ``military commodities'' that incorporate more 
than 10% U.S.-origin ``600 series'' items. (3) For controls on non-
military submersible vehicles, oceanographic and associated equipment, 
see ECCNs 8A001, 8A002, and 8A992.
    Related Definitions: N/A.
    Items:
    a. Submersible and semi-submersible vessels ``specially designed'' 
for a military use and not enumerated in the USML.

    Note: 8A620.a includes Deep Submergence Rescue Vehicles (DSRV) 
and Deep Submergence Vehicles (DSV).

    b. Submersible and semi-submersible vessels ``specially designed'' 
for cargo transport and ``parts,'' ``components,'' ``accessories and 
attachments'' ``specially designed'' therefor.
    c. Harbor entrance detection devices (magnetic, pressure, and 
acoustic) and controls therefor, not elsewhere specified on the USML or 
the CCL.
    d. Engines and propulsion systems, as follows:
    d.1. Diesel engines of 1,500 hp and over with rotary speed of 700 
rpm or over ``specially designed'' for submarines;
    d.2. Electric motors ``specially designed'' for submarines and 
having all of the following:
    d.2.a. Power output of more than 1,000 hp;
    d.2.b. Quick reversing;
    d.2.c. Liquid cooled; and
    d.2.d. Totally enclosed.
    d.3. Non-magnetic diesel engines with a power output of 50 hp or 
more and either of the following:
    d.3.a. Non-magnetic content exceeding 25% of total weight; or
    d.3.b. Non-magnetic parts other than crankcase, block, head, 
pistons, covers, end plates, valve facings, gaskets, and fuel, 
lubrication and other supply lines.

    Note: Other propulsion systems not specified in ECCN 8A620.d or 
elsewhere on the CCL (see Related Controls paragraph for this ECCN) 
and ``specially designed'' for an article controlled by USML 
Category XX are controlled by USML XX(b) or (c).

    e. Submarine nets and torpedo nets.
    f. Closed and semi-closed circuit (rebreathing) apparatus specially 
designed for military use and not enumerated elsewhere in the CCL or in 
the USML, and specially designed components for use in the conversion 
of open-circuit apparatus to military use.
    g. through w. [RESERVED]
    x. ``Parts,'' ``components,'' ``accessories and attachments'' that 
are ``specially designed'' for a commodity enumerated in ECCN 8A620 
(except for 8A620.b) and not specified elsewhere in the CCL.

    Note 1: Forgings, castings, and other unfinished products, such 
as extrusions and machined bodies, that have reached a stage in 
manufacturing where they are clearly identifiable by material 
composition, geometry, or function as commodities controlled by ECCN 
8A620.x are controlled by ECCN 8A620.x.


    Note 2: ``Parts,'' ``components,'' ``accessories and 
attachments'' specified in ECCN 8A620.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 and not elsewhere specified in 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. Atmosphere control and monitoring equipment;
    y.15. Environmental control and monitoring equipment;
    y.16. Trash handling systems;
    y.17. Mooring, towing and dry docking equipment;
    y.18. Anchoring systems;
    y.19. Material corrosion and fouling control systems;
    y.20. Damage control equipment.
    y.21. 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 8A620
    6. In Supplement No. 1 to part 774 (the Commerce Control List), 
Category 8--Marine, add a new ECCN 8B620 immediately following ECCN 
8B001 to read as follows:

8B620 Test, inspection, and production ``equipment'' and related 
commodities ``specially designed'' for the ``development'' or 
``production'' of commodities enumerated in ECCN 8A620.

License Requirements

    Reason for Control: NS, RS, AT.

------------------------------------------------------------------------
                Control(s)                          Country chart
------------------------------------------------------------------------
NS applies to entire entry except 8B620.b   NS Column 1.
 and .y.
RS applies to entire entry except 8B620.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 8B620.

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 8A620 (except for 8A620.b and .y) and ``parts,'' 
``components,'' ``accessories and attachments'' ``specially designed'' 
therefor.

[[Page 80302]]

    b. Test, inspection, and production ``equipment'' ``specially 
designed'' for the ``production'' or ``development'' of commodities 
enumerated in ECCN 8A620.b and ``parts,'' ``components,'' ``accessories 
and attachments'' ``specially designed'' therefor.
    c. through x. [RESERVED]
    y. Specific test, inspection, and production ``equipment'' 
``specially designed'' for the ``production'' or ``development'' of 
commodities enumerated in ECCN 8A620 (except for 8A620.y) 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 8B620.
    7. In Supplement No. 1 to part 774 (the Commerce Control List), 
Category 8--Marine, add a new ECCN 8D620 between ECCN 8D002 and 8D992 
to read as follows:

8D620 Software ``specially designed'' for the ``development,'' 
``production,'' operation or maintenance of submersible vessels, 
oceanographic and associated equipment controlled by 8A620 or equipment 
controlled by 8B620.

License Requirements

    Reason for Control: NS, RS, AT.

------------------------------------------------------------------------
                Control(s)                          Country chart
------------------------------------------------------------------------
NS applies to entire entry except 8D620.b   NS Column 1.
 and .y.
RS applies to entire entry except 8D620.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 8D620.

List of Items Controlled

    Unit: $ value.
    Related Controls: (1) Software directly related to articles 
enumerated in USML Category XX is controlled under USML Category XX(d). 
(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 8A620 or ECCN 8B620 (except for ECCN 8A620.b and .y or 8B620.b and 
.y).
    b. ``Software'' ``specially designed'' for the ``development,'' 
``production,'' operation, or maintenance of commodities controlled by 
ECCN 8A620.b or ECCN 8B620.b.
    c. to x. [RESERVED]
    y. Specific ``software'' ``specially designed'' for the 
``development,'' ``production,'' operation, or maintenance of 
commodities enumerated in ECCN 8A620.y or 8B620.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 8D620.
    8. In Supplement No. 1 to part 774 (the Commerce Control List), 
Category 8--Marine, add a new ECCN 8E620 between ECCN 8E002 and 8E992 
to read as follows:

8E620 ``Technology'' ``required'' for the ``development,'' 
``production,'' operation, installation, maintenance, repair, overhaul, 
or refurbishment of submersible vessels, oceanographic and associated 
equipment controlled by 8A620, equipment controlled by 8B620, or 
software controlled by 8D620.

License Requirements

    Reason for Control: NS, RS, AT.

------------------------------------------------------------------------
                Control(s)                          Country chart
------------------------------------------------------------------------
NS applies to entire entry except 8E620.b   NS Column 1.
 and .y.
RS applies to entire entry except 8E620.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 8E620.

List of Items Controlled

    Unit: N/A.
    Related Controls: (1) Technical data directly related to articles 
enumerated in USML Category XX are controlled under USML Category 
XX(d). (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, overhaul, 
or refurbishment of commodities controlled by ECCN 8A620 or 8B620 or 
``software'' controlled by ECCN 8D620, except for ECCN 8A620.b and .y, 
8B620.b and .y, or 8D620.b and .y.
    b. ``Technology'' ``required'' for the ``development,'' 
``production,'' operation, installation, maintenance, repair, overhaul, 
or refurbishment of commodities controlled by ECCN 8A620.b or 8B620.b 
or ``software'' controlled by ECCN 8D620.b.
    c. through x. [RESERVED]
    y. Specific ``technology'' ``specially designed'' for the 
``development,'' ``production,'' operation, installation, maintenance, 
repair, overhaul, or refurbishment of commodities controlled by ECCN 
8A620.y or 8B620.y or ``software'' controlled by ECCN 8D620.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 8E620.

    Dated: December 16, 2011.
Kevin J. Wolf,
Assistant Secretary for Export Administration.
[FR Doc. 2011-32868 Filed 12-22-11; 8:45 am]
BILLING CODE 3510-33-P


