
[Federal Register Volume 88, Number 155 (Monday, August 14, 2023)]
[Rules and Regulations]
[Pages 54875-54877]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-17243]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF COMMERCE

Bureau of Industry and Security

15 CFR Parts 738 and 742

[Docket No. 230807-0186]
RIN 0694-AJ25


Expansion of Nuclear Nonproliferation Controls on the People's 
Republic of China and Macau

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

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: In response to the People's Republic of China's (China) 
military modernization efforts, military-civil fusion strategy, and 
expansion of its nuclear forces, the Bureau of Industry and Security 
(BIS) is amending the Export Administration Regulations (EAR) by adding 
additional nuclear nonproliferation controls on China and Macau. This 
change specifically applies to items controlled for Nuclear 
Nonproliferation (NP) column 2 reasons for control. These controls 
enhance U.S. Government efforts to monitor the export of these items 
and to ensure they are only being used in peaceful activities such as 
commercial nuclear power generation, medical developments, production 
of or use in medicine, and non-military industries.

DATES: This rule is effective August 11, 2023.

FOR FURTHER INFORMATION CONTACT: Steven Clagett, Director, Nuclear and 
Missile Technology Controls Division, tel. (202) 482-1641 or email 
[email protected].

SUPPLEMENTARY INFORMATION: 

Background

Existing Nuclear Nonproliferation Export Controls

    The multilateral Nuclear Suppliers Group (NSG) comprises nuclear 
supplier countries that seek to contribute to the nonproliferation of 
nuclear weapons through the implementation of two sets of guidelines 
for nuclear exports and nuclear-related exports. The first set of NSG 
guidelines applies to exports of nuclear material, equipment, and 
technology generally subject to the export licensing jurisdiction of 
the Nuclear Regulatory Commission (NRC) and the Department of Energy. 
The second set of NSG guidelines applies to exports of nuclear-related 
dual-use items, which are subject to the Export Administration 
Regulations (EAR) (15 CFR parts 730-774), administered by the 
Department of Commerce, Bureau of Industry and Security (BIS). Such 
items are listed on the Commerce Control List (CCL) (supplement no. 1 
to part 774) and controlled for nuclear nonproliferation column 1 (NP1) 
reasons (see Sec.  742.3(a)(1)). Items controlled for NP1 reasons 
require a license to all destinations except NSG member countries 
listed in Country Group A:4 (see supplement no. 1 to part 740).
    In addition to implementing the multilateral NP1 controls, BIS 
controls certain additional items unilaterally for nuclear 
nonproliferation reasons. Such items are listed on the CCL and 
controlled for nuclear nonproliferation column 2 (NP2) reasons (see 
Sec.  742.3(a)(2)). These items require a license when destined to 
Country Group D:2 (supplement no. 1 to part 738) countries, and with 
this rule, to the People's Republic of China (China) or Macau. (Note: 
Effective December 23, 2020, BIS removed Hong Kong as a separate 
destination under the EAR; accordingly, licensing requirements for 
China apply to all exports and reexports to, as well as transfers 
within, Hong Kong (see 85 FR 83765)). Items controlled for NP2 reasons 
are listed in Export Control Classification Numbers (ECCNs) 1A290, 
1C298, 2A290, 2A291, 2D290, 2E001, 2E002, and 2E290. Items controlled 
under these ECCNs include, for example, depleted uranium, graphite and 
deuterium for non-nuclear end use, and generators and other equipment 
for nuclear plants. Deuterium and graphite for nuclear end use is 
subject to NRC export licensing jurisdiction pursuant to 10 CFR part 
110.

Nuclear Nonproliferation Export Controls Applicable to China and Macau 
Prior to This Rule

    Although China is a NSG member country, it is not listed in Country 
Group A:4 (supplement no. 1 to part 740). Accordingly, a license is 
required, as specified on the Commerce Country Chart (supplement no. 1 
to part 738), for items controlled for NP1 reasons to China. Likewise, 
a license is required for items controlled for NP1 reasons to Macau, a 
special administrative region of China. Prior to this rule, neither 
China nor Macau were subject to NP2 reasons for control. However, 
pursuant to Sec.  744.21, some items controlled for NP2 reasons and 
listed in supplement no. 2 to part 744 require a license when destined 
to a `military end use' or a `military end user' in China.
    In addition to list-based license requirements for nuclear-related 
dual-use items, BIS implements end use and end user controls to 
restrict the export, reexport, and transfer (in-country) of items to or 
within China and Macau for nuclear nonproliferation and certain 
maritime nuclear propulsion reasons. Pursuant to Sec.  744.2 of the 
EAR, a license is required for the export, reexport, or transfer (in-
country) to or within China and Macau when there is ``knowledge'' (as 
that term is defined in part 772 of the EAR) that the item will be used 
directly or indirectly in nuclear explosive activities, unsafeguarded 
nuclear activities, or safeguarded or unsafeguarded nuclear fuel cycle 
activities. In addition, pursuant to Sec.  744.5 of the EAR, a license 
is required for the export, reexport, or transfer (in-country) to or 
within China and Macau when there is ``knowledge'' the item is for use 
in a maritime nuclear propulsion project. These provisions are not 
affected by this final rule.

Recent U.S. Government Reaction to and Analysis of Chinese Nuclear 
Activities

    BIS has added entities in China to the Entity List for reasons 
related to military modernization and nuclear weapons. As one example, 
on June 5, 2020, BIS added to the Entity List ten entities

[[Page 54876]]

owned by, operated by, or directly affiliated with the Chinese Academy 
of Engineering Physics (CAEP), which is the technology complex 
responsible for the research, development and testing of China's 
nuclear weapons and has been listed on the Entity List since June 30, 
1997. See 85 FR 34495. Also, on August 14, 2019, BIS added four Chinese 
entities, China General Nuclear Power Group, China General Nuclear 
Power Corporation (CGNPC), China Nuclear Power Technology Research 
Institute Co. Ltd., and Suzhou Nuclear Power Research Institute Co. 
Ltd., because each of these four Chinese entities has engaged in or 
enabled efforts to acquire advanced U.S. nuclear technology and 
material for diversion to military uses in China. See 84 FR 40237. The 
Entity List restricts the export, reexport, or transfer (in-country) of 
all items subject to the EAR to these entities. License applications 
involving such entities are reviewed with a presumption of denial.
    BIS has continued to take action to address escalating concerns 
about China's nuclear activities. On October 7, 2022, BIS implemented 
restrictions on the export of certain advanced computing items to China 
and imposed additional restrictions on certain entities on the Entity 
List. Four of those entities were determined to be involved with 
supercomputers in China that are believed to be used in nuclear 
explosive activities. See 87 FR 62186, at 62187. The October 7 rule 
specifically noted a U.S. intelligence community assessment that China 
``will continue the most rapid expansion and platform diversification 
of its nuclear arsenal in its history, intending to at least double the 
size of its nuclear stockpile during the next decade and to field a 
nuclear triad and is building a larger and increasingly capable nuclear 
missile force that is more survivable, more diverse, and on higher 
alert than in the past, including nuclear missile systems designed to 
manage regional escalation and ensure an intercontinental second-strike 
capability.'' Id. (internal quotations marks omitted). The restrictions 
imposed in that rule were intended to ``protect U.S. national security 
and foreign policy interests by restricting [China's] access to 
advanced computing for its military modernization, including nuclear 
weapons development . . .'' Id. at 62186.
    According to the United States Department of Defense (DoD) report, 
Military and Security Developments Involving the People's Republic of 
China also known as the China Military Power Report, published on 
November 29, 2022 (see https://www.defense.gov/CMPR/), China has a 
decade-long target to modernize, diversify, and expand its nuclear 
forces as well as a long-term military-civil fusion strategy. China's 
continued nuclear expansion and military-civil fusion strategy pose a 
concern to global and regional stability. In light of China's 
objectives to build an integrated national strategic system by 
developing and acquiring advanced dual-use items for military purposes, 
fusing its defense industrial base with its civilian technology 
industrial base, building military requirements into civilian 
infrastructure, and leveraging civilian construction for military 
purposes, BIS has determined it is necessary to enhance nuclear 
nonproliferation export controls.

Expansion of Nuclear Nonproliferation Export Controls on the People's 
Republic of China and Macau

    In this final rule, BIS is expanding the scope of nuclear-related 
export controls applicable to China and Macau. This change is necessary 
to protect U.S. national security and foreign policy interests by 
imposing a license requirement to China and Macau on items that could 
contribute to nuclear activities of concern. These controls are being 
put in place to further allow the U.S. Government to monitor the export 
of these items to assure that they are only being used in peaceful 
activities such as commercial nuclear power generation, medical 
developments, production of or use in medicine, and non-military 
related industries. The specific regulatory changes are detailed below.
    For purposes of the EAR, this rule does not change the status of 
Macau; it will continue to be treated as a separate destination from 
China. According to the U.S. Department of State's fact sheet, U.S. 
Relations with Macau, Bilateral Relations Fact Sheet of June 1, 2021 
(see https://www.state.gov/u-s-relationswith-macau/), Macau has been a 
Special Administrative Region of China since 1999, when it was returned 
to Chinese sovereignty from Portuguese administration; therefore, its 
foreign relations and defense are the responsibility of China. China 
grants Macau limited autonomy in economic and commercial relations. 
U.S. policy toward Macau is grounded in the U.S. Macau Policy Act of 
1999 and reflects U.S. support for Macau's autonomy under the ``One 
Country, Two Systems'' framework established in Macau's Basic Law. 
Because of Macau's position as a Special Administrative Region of 
China, and the potential risk of diversion of items subject to the EAR 
from Macau to China, this rule adds Macau as a destination to which a 
license will be required to prevent the diversion to China of items 
determined to be critical to protecting U.S. national security and 
foreign policy interests.

Part 738

    This final rule applies NP2 reasons for control to China and Macau 
in the Commerce Country Chart (supplement no. 1 to part 738). This 
imposes a license requirement for NP2 controlled items destined for 
China or Macau.

Part 742

    As a conforming change, this final rule adds China and Macau to 
Sec.  742.3(a)(2) to impose the license requirements on the NP2 
controlled items. License applications for items controlled for NP2 
reasons to China and Macau will be reviewed in accordance with the 
license review policies set forth in Sec.  742.3(b)(3) and (4) of the 
EAR. BIS is also using this rule to revise the language of paragraph 
(a)(2) to ensure its clarity.
    Another U.S. Government agency is putting forward a nuclear export-
related action as well. The NRC is publishing a separate notice of 
issuance of an order affecting general licenses for exports of special 
nuclear material, source material, and deuterium for nuclear end use to 
China issued under 10 CFR 110.21, 110.22, and 110.24, respectively.

Saving Clause

    For the changes being made in this final rule, shipments of items 
removed from eligibility for a License Exception or export, reexport, 
or transfer (in-country) without a license (NLR) as a result of this 
regulatory action that were en route aboard a carrier to a port of 
export, reexport, or transfer (in-country), on August 11, 2023, 
pursuant to actual orders for export, reexport, or transfer (in-
country) to or within a foreign destination, may proceed to that 
destination under the previous eligibility for a License Exception or 
export, reexport, or transfer (in-country) without a license (NLR), 
provided the export, reexport, or transfer (in-country) is completed no 
later than on September 11, 2023.

Export Control Reform Act of 2018

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

[[Page 54877]]

Rulemaking Requirements

    1. Executive Orders 13563 and 12866 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, 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 final rule has been determined to be significant 
under Executive Order 12866.
    2. Notwithstanding any other provision of law, no person may be 
required to respond to or be subject to a penalty for failure to comply 
with a collection of information, subject to the requirements of the 
Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.) (PRA), unless 
that collection of information displays a currently valid Office of 
Management and Budget (OMB) Control Number. This regulation involves a 
collection currently approved by OMB under control number 0694-0088, 
Simplified Network Application Processing System. This collection 
includes, among other things, license applications, and carries a 
burden estimate of 29.4 minutes for a manual or electronic submission 
for a total burden estimate of 31,919 hours. BIS expects an increase of 
588 burden hours for this collection.
    3. This rule does not contain policies with federalism implications 
as that term is defined under Executive Order 13132.
    4. Pursuant to section 1762 of the Export Control Reform Act of 
2018, this action is exempt from the Administrative Procedure Act (5 
U.S.C. 553) requirements for notice of proposed rulemaking, opportunity 
for public participation, and delay in effective date. The Department 
of Commerce finds that there is good cause under 5 U.S.C. 553(b)(B) to 
waive the provisions of the Administrative Procedure Act requiring 
prior notice and the opportunity for public comment because they are 
unnecessary. This rule does not alter any right, obligation or 
prohibition that applies to any person under the EAR. Because neither 
the Administrative Procedure Act nor any other law requires that notice 
of proposed rulemaking and an opportunity for public comment be given 
for this rule, the analytical requirements of the Regulatory 
Flexibility Act (5 U.S.C. 601 et seq.) are not applicable. Accordingly, 
no Final Regulatory Flexibility Analysis is required and none has been 
prepared.

List of Subjects

15 CFR Part 738

    Exports.

15 CFR Part 742

    Exports and Terrorism.

    Accordingly, the Export Administration Regulations (15 CFR parts 
738 and 742) are amended as follows:

PART 738--COMMERCE CONTROL LIST OVERVIEW AND THE COUNTRY CHART

0
1. The authority citation for 15 CFR part 738 continues to read as 
follows:

    Authority: 50 U.S.C. 4801-4852; 50 U.S.C. 4601 et seq.; 50 
U.S.C. 1701 et seq.; 10 U.S.C. 8720; 10 U.S.C. 8730(e); 22 U.S.C. 
287c; 22 U.S.C. 2151 note; 22 U.S.C. 3201 et seq.; 22 U.S.C. 6004; 
42 U.S.C. 2139a; 15 U.S.C. 1824; 50 U.S.C. 4305; 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.

0
2. In Supplement no. 1 to part 738--Commerce Country Chart, the table 
is amended by adding an entry under the column NP2 for China and Macau. 
The revision reads as follows:

Supplement No. 1 to Part 738--Commerce Country Chart

                                                                                      [Reason for Control]
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                              Chemical & biological         Nuclear          National       Missile       Regional        Firearms         Crime control         Anti- terrorism
                                                     weapons           Nonproliferation      security         tech        stability      convention --------------------------------------------
                 Countries                 ---------------------------------------------------------------------------------------------------------
                                              CB 1     CB 2     CB 3     NP 1     NP 2     NS 1     NS 2      MT 1      RS 1     RS 2       FC 1       CC 1     CC 2     CC 3     AT 1     AT 2
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
 
                                                                                          * * * * * * *
China.....................................       X        X        X        X        X        X        X          X        X        X   ...........       X   .......       X   .......  .......
 
                                                                                          * * * * * * *
Macau.....................................       X        X        X        X        X        X        X          X        X        X   ...........       X   .......       X   .......  .......
 
                                                                                          * * * * * * *
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
 * * * * * * *

* * * * *

PART 742--CONTROL POLICY--CCL BASED CONTROLS

0
3. The authority citation for 15 CFR part 742 continues to read as 
follows:

    Authority: 50 U.S.C. 4801-4852; 50 U.S.C. 4601 et seq.; 50 
U.S.C. 1701 et seq.; 22 U.S.C. 3201 et seq.; 42 U.S.C. 2139a; 22 
U.S.C. 7201 et seq.; 22 U.S.C. 7210; 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, 68 FR 26459, 3 CFR, 2004 
Comp., p. 320; Notice of November 8, 2022, 87 FR 68015 (November 10, 
2022).


0
4. Section 742.3 is amended by revising paragraph (a)(2) to read as 
follows:


Sec.  742.3  Nuclear nonproliferation.

    (a) * * *
    (2) If NP Column 2 of the Country Chart (supplement no. 1 to part 
738 of the EAR) is indicated in the applicable ECCN, a license is 
required when the item is destined to a Country Group D:2 (see 
supplement no. 1 to part 740 of the EAR) country, China (the People's 
Republic of), or Macau.
* * * * *

Thea D. Rozman Kendler,
Assistant Secretary for Export Administration.
[FR Doc. 2023-17243 Filed 8-11-23; 8:45 am]
BILLING CODE 3510-33-P


