``development,'' or ``production'' of items classified under ``600
series'' Product Group A, B or C ECCNs. For consistency, BIS is making
clarifying changes to the proposed language to ensure greater
understanding of the scope of the provision. BIS received no public
comments on these amendments to the military end use definition, and
this final rule adopts the July 15 (framework) rule's proposal without
substantive change.

B. China Military End-Use Control

    In the June 21 (transition) rule, BIS proposed to make all ``600
series'' items subject to the China Military End Use provision set
forth in Sec.  744.21 through a new paragraph (a)(2), which provided a
general prohibition on exports to China of ``600 series'' items without
a license. One commenter to the June 21 (transition) rule stated that
this amendment would create an unnecessary burden for ``600 series''
paragraph .y items and that .y items should only be restricted for
export to China if they are intended for a military end use. In
addition, the commenter said that there is no need to restate the
denial policy for non-.y ``600 series'' items because this is currently
reflected in Sec.  742.6 (Regional Stability).
    BIS does not agree with this recommendation, and is adopting the
June 21 (transition) rule addition of paragraph (a)(2) without change.
``600 series'' items were previously on the USML or the WAML and
therefore are

presumptively for a military end use. Accordingly, BIS is imposing
under Sec.  744.21 a license requirement for all ``600 series'' items,
including paragraph .y items, destined for China. Paragraph .y items
are ``specially designed'' ``parts,'' ``components,'' ``accessories,''
and ``attachments'' for defense articles on the USML or for other
military items (i.e., ``600 series'' items), and the definition of
``military end use'' in Sec.  744.21 includes incorporation into a
military item. The commenter's concerns regarding an unnecessary burden
on paragraph .y items is outweighed by the national security need for a
license requirement. As to the commenter's concern regarding restating
the denial policy with respect to other ``600 series'' items, paragraph
(a)(2) does not do this. Other ``600 series'' items are subject to
multiple reasons for control on the CCL as well as to end-use and end-
user controls, and different licensing review policies may apply.
    After interagency review, BIS is amending the proposed text in
Sec.  744.21(f) removing references to ``Product Group A, B or C.''
This change is intended to clarify the intent of the July 15
(framework) rule, which was to maintain the scope of current policy
with respect to defense articles that will remain on the USML or
defense articles that will transfer to the CCL as ``600 series'' items.

XV. Part 746--Embargoes and Other Special Controls

A. Iraq

    The July 15 (framework) rule proposed to revise paragraph (b)(2) of
Sec.  746.3 (Iraq) of the EAR to make ``600 series'' items, which are
arms or arms-related, subject to the Iraq arms embargo provisions. No
comments were received on this provision. This final rule revises that
proposal by specifying that license applications for the export,
reexport, or transfer to the Government of Iraq of ``600 series'' items
will be subject to the review policies set forth for such items in
Sec. Sec.  742.4(b) and 742.6(b) of the EAR to cross reference the
review policies set forth in part 742 elsewhere in this rule.

B. UN Embargoes

    In the July 23, 2012 final rule on Export and Reexport Controls to
Rwanda and United Nations Sanctions Under the Export Administration
Regulations (77 FR 42973), BIS amended Sec.  746.1 to limit the use of
license exceptions to countries subject to a United Nations Security
Council arms embargo. The July 15 (framework) rule and the June 21
(transition) rule proposed restrictions in Sec.  740.2(a)(12) on
license exceptions for ``600 series'' items destined to countries
subject to a U.S. arms embargo (a list that includes countries subject
to United Nations Security Council arms embargoes). One commenter
recommended that BIS make available license exceptions in addition to
GOV for items being sent to countries subject to United Nations
Security Council arms embargoes as implemented under the EAR. The
commenter stated in support of the recommendation that some
circumstances in which controls related to arms embargoes could be
superseded by license exceptions was contemplated in a proposed
amendment to paragraph (b)(3)(vi) (General Prohibition Three--Foreign-
Produced Direct Product Reexports) of Sec.  736.2 set forth in the June
21 (transition) rule.
    BIS does not agree with the commenter's reasoning and is not
adopting the recommendation. Part 746, as stated in Sec.  746.1(a), is
the focal point for all the EAR requirements for transactions involving
sanctioned and embargoed countries. Thus, the availability of license
exceptions to those countries is governed primarily by the provisions
in part 746. This rule does amend Sec.  746.1 to clarify that the
availability of license exceptions for Iraq, North Korea, and Iran will
continue in effect as set forth in Sec.  746.3 (Iraq), Sec.  746.4
(North Korea), and Sec.  746.7 (Iran) rather than being governed by the
more general restrictions being implemented in Sec.  746.1.

XVI. Part 748--Applications and Documentation

A. Classification Requests To Confirm That Items Are Not ``Specially
Designed''

    In response to public comments received regarding the scope of the
proposed definition of ``specially designed'' in the June 19 (specially
designed) rule, this final rule adds a new paragraph (e) to Sec.  748.3
(Classification requests, advisory opinions, and encryption
registrations) to establish a process whereby the public may submit
classification requests to confirm that a ``part,'' ``component,''
``accessory,'' ``attachment,'' or ``software'' is not ``specially
designed.'' This new paragraph describes this process and identifies
the criteria that must be met and the review criteria that will be used
by the Departments of Commerce, State and Defense. A consensus
determination of these three agencies is required to confirm that a
``part,'' ``component,'' ``accessory,'' ``attachment,'' or
``software,'' is not ``specially designed'' based on this new
paragraph. The policy objective of this new provision is to replicate
in the EAR the practice that the State and Defense Departments have
adopted with respect to their consideration of commodity jurisdiction
requests. Thus, the new paragraph (e) maintains the status quo with
respect to the government's consideration of the control status of
items that may be within the scope of a ``600 series'' ECCN or other
specially designed catch-all provision that might have once seemed to
have been within the scope of one of the ITAR's catch-all provisions.
In other words, if the State Department would have issued a commodity
jurisdiction determination that an item was not within the scope of one
of the USML's catch-all provisions and was not otherwise subject to the
ITAR, then the Commerce Department, after interagency consensus, would
issue a similar classification determination that the same item was not
within the scope of a ``600 series'' ECCN.

B. Unique Submission Requirements

1. License Exception STA Eligibility Requests for ``600 Series'' Items
    The July 15 (framework) rule proposed a new paragraph (g) to Sec.
740.20 in License Exception STA that identified the requirements and
process that would be used by license applicants to request License
Exception STA eligibility for ``600 series'' ``end items.'' The public
comments regarding License Exception STA were generally favorable, but
some commenters made suggestions for how the process could be improved
or simplified for these requests.
    Three commenters recommended that BIS allow applicants to submit
License Exception STA eligibility requests either on their own or with
an application for the export of the requested item. In the July 15
(framework) rule, BIS proposed that License Exception STA eligibility
requests could only be submitted at the time of a license application
to minimize the potential of a large number of submissions at one time.
However, as the review of the USML Categories has been completed and
the revised USML Categories and corresponding ``600 series'' ECCNs have
been published in proposed form, BIS, along with the Departments of
Defense and State, has determined that the universe of ``600 series''
``end items'' that require a prior review from the U.S. Government
should be limited to ECCNs 8A609.a (vessels), 0A606.a (vehicles), and
9A610.a (aircraft); only ECCN 9A610.a is included in this final rule

and BIS will create ECCNs 8A609.a and 0A606.a in future final rules.
All other ``600 series'' ``end items'' will be automatically eligible
for License Exception STA, although the exporter must still ensure that
the item and other aspects of the transaction are not restricted under
Sec.  740.2 and the transaction meets the applicable terms and
conditions of License Exception STA. There will nonetheless still be
restrictions on the use of License Exception STA for various types of
software and technology, as described below.
    Given this much smaller universe of ``600 series'' ``end items''
that will require the submission of License Exception STA eligibility
requests, BIS accepts the commenter's recommendation to allow the
public to submit License Exception STA eligibility requests at any time
and will no longer require such requests to be submitted at the time of
a license application requesting authorization for an export, reexport,
or transfer (in-country). However, to assist in the tracking and
efficient interagency review of such requests, these License Exception
STA eligibility requests must be submitted via the BIS Simplified
Network Application Process--Redesign (SNAP-R) system unless BIS
authorizes submission via the BIS-748-P Multipurpose Application form.
Accordingly, this final rule revises Sec.  748.1(d) to add License
Exception STA eligibility requests to the list of applications that
must be submitted via SNAP-R unless BIS authorizes paper submissions.
In SNAP-R and on the BIS-748-P, a request for License Exception STA
eligibility will be submitted as an export license application, but in
the future these requests will be filed electronically as a separate
work item type in SNAP-R. This will occur once the SNAP-R system is
revised to accommodate STA eligibility requests as a separate work item
type. These changes are limited to the process that will be used in
SNAP-R for submitting License Exception STA eligibility requests. The
types of information required to be submitted will be the same as that
proposed in the July 15 (framework) rule.
    Upon reflection, BIS has determined that the July 15 (framework)
rule's proposal to list the ``600 series'' end items approved for STA
in a newly proposed Supplement No. 4 to part 774 would be unduly
complex. As noted above, the end items in only three ECCNs will require
a specific determination to be eligible for License Exception STA.
Given this small number, BIS believes that readers of the regulations
will find it easier to identify the approved end items if they are
listed in their respective ECCNs rather than in a separate supplement.
Accordingly, such end items will be listed in the ECCNs under which
they are classified. To avoid a break in the series of supplements to
part 774, in this final rule, Supplement No. 4 to part 774 contains a
description of the order of review of the CCL as discussed below.
    This final rule also makes some conforming changes in Supplement
No. 2 to part 748 (Unique Application and Submission Requirements)
under the new paragraph (w) (License Exception STA eligibility requests
for ``600 series'' end items) to conform to BIS's decision not to add a
new Supplement No. 4 to part 774. This final rule revises the first
three sentences of paragraph (w) to specify that to submit an STA
eligibility request the applicant must mark an (X) in the ``Export''
box in Block 5 (Type of Application); mark an (X) in the ``Other'' box
and insert the phrase ``STA request'' in Block 6 (Documents submitted
with Application); and include the specific ``600 Series'' ECCN in
Block 22 (ECCN). This final rule also removes the reference to
Supplement No. 4 to part 774 and adds a reference to the ``600 series''
ECCN where such end items determined to be STA eligible through this
new process would be identified on the CCL. Also to add greater
specificity, this final rule uses the term ``end item'' for purposes of
paragraph (w).
    This rule also adds two sentences to paragraph (w) to clarify that
if an applicant cannot provide some of the information described under
paragraph (w), the U.S. Government will still evaluate the request.
This new text also clarifies that the U.S. Government will use
resources and information that may only be available to the U.S.
Government in evaluating License Exception STA eligibility requests, as
a way to encourage applicants that even if they feel that they may not
have information in certain areas that the U.S. Government will also
use its resources and expertise in evaluating these requests. However,
this new text also clarifies that when submitting such requests
applicants should provide as much information as they can based on the
criteria noted in paragraph (w) to assist the U.S. Government in
evaluating these License Exception STA eligibility requests. Lastly,
for the changes to paragraph (w), this final rule is removing the term
``otherwise'' before the phrase ``or is available in countries that are
not regime partners or close allies.'' The term otherwise was not
needed to convey the intended meaning of the sentence, so BIS removed
it.
    One commenter recommended that the timeline for the review of
License Exception STA eligibility requests should be similar to those
set forth by Sec.  740.17(b)(2) for ENC classifications, where a
determination would be made thirty days after the submission of the
request. BIS does not accept this recommendation because these ``STA
requests'' are not the same as requests for ENC classification, which
consists more of a technical review. The STA eligibility requests
involve not only a technical review of the end item but also a broader
policy review to determine whether such end items should be eligible
for License Exception STA. These ``STA requests'' are not part of a
license application requesting an authorization for an export, reexport
or in-country transfer. However, BIS has determined using the timelines
set forth in Executive Order 12981 and Sec.  750.4, as was proposed in
the July 15 (framework) rule, is the best approach to establish clear
guidelines for the timeline for the interagency reviews conducted by
the Departments of Commerce, State and Defense.
    One commenter requested ``ECCN entry'' be changed to ``end item''
in Sec.  740.20(g)(5)(i) because BIS is not making the entire ECCN
eligible, but only a specific end item. BIS does not accept this change
because in certain cases BIS may approve an ECCN entry for License
Exception STA eligibility, but in other cases the end item approved for
STA eligibility may be more narrowly defined. Therefore, BIS is not
changing the ``ECCN entry'' as requested, but is adding ``or end item''
to add greater specificity. This will clarify that when BIS publishes
final rules adding License Exception STA eligibility to the EAR for
``600 series'' end items, it may be done at the higher (i.e., more
general description) ECCN level or specific end item level (e.g., a
specific model number).
    Two other commenters requested BIS allow the STA eligibility
requests to cover the entire ECCN subject to the request versus the
specific end item in the request. BIS is not making the requested
changes. As noted, the STA eligibility requests are not limited to a
specific model and can be requested at the ECCN level or ECCN ``items''
paragraph level. However, BIS anticipates that initially the end items
that are determined to be eligible for License Exception STA under the
Sec.  740.20(g) process will likely be at the specific end item level.
Over time as the U.S. Government has an opportunity to review more of
these requests, it may be

possible that broader descriptions can be developed and authorized for
License Exception STA. However, to protect U.S. national security
interests a review of the end items classified in ECCN 9A610.a must be
made by the U.S. Government prior to any of those end items being
determined to be eligible for License Exception STA.
    Two commenters requested BIS provide applicants with an opportunity
to participate in unclassified interagency discussions on their License
Exception STA eligibility requests similar to the opportunity to
participate in open sessions of interagency discussions associated with
the interagency licensing review process. BIS does not need to make any
regulatory changes to address this comment. Requesters who submit ``STA
requests'' under Sec.  740.20(g) are participating in the review
process in an important way. Therefore, such requesters are encouraged
to submit any information that they believe would be relevant to the
U.S. Government review of the License Exception STA eligibility
requests. In reviewing and evaluating such requests, if BIS or one of
the other departments has a question regarding what was submitted, a
representative from BIS will likely contact the applicant through SNAP-
R to request an answer to the specific question or request additional
information. This process is similar to the typical level of applicant
participation that occurs in the license application review process, so
BIS is not making any additional changes to the EAR or internal license
review processes of the U.S. Government to create a greater role for
the applicant in the interagency review process for License Exception
STA eligibility requests.
    One commenter requested BIS allow an extension of the review period
for STA eligibility if agreed to by the applicant. This commenter
suggested this could be implemented in Sec.  750.4(f) (Procedures for
processing license applications) by allowing for an additional review
period of 10 calendar days, with an extension if agreed to by the
applicant. BIS is not accepting this change because the License
Exception STA eligibility requests and the license applications
requesting an authorization for an export, reexport or in-country
transfer are no longer going to be linked in this final rule, so the
concern with the License Exception STA timeline interfering with the
timeline for the review of the license application is no longer an
issue.
    One commenter thought it would be useful to provide further clarity
on the proposed ``STA eligibility'' review process, and its precise
relationship to the ACEP licensing process. If it is the intent to
review STA eligibility requests in tandem with the ACEP licensing
review process, this commenter is concerned whether such a review would
provide adequate administrative due process. As noted above, the
License Exception STA eligibility requests will not be reviewed in
tandem with the license application review process, so this concern is
already addressed. In addition, as described in Sec.  740.20(g), in the
event that STA eligibility is denied, exporters are able to seek
reconsideration of the denial and are encouraged to provide any
additional information supporting their request. Further, a denial of
STA eligibility does not preclude an exporter from applying for a
license for the same export.
    One commenter requested that BIS mandate applicants who receive a
notification from BIS authorizing the use of License Exception STA for
specific end items to share such determinations with other parties. BIS
does not accept this change. Applicants who receive an approval may
share that notification, but BIS does not believe that mandating that
party to share the notification received from BIS is warranted. BIS
will communicate such determinations based on an amendment to the EAR
as described in Sec.  740.20(g)(5)(i). BIS believes this combination of
a voluntary sharing approach followed by a regulatory change to inform
the public is the best approach.
2. License Application for a ``600 Series'' Item That Is Equivalent to
a Transaction Previously Approved Under a State License or Other
Approval
    This final rule is making changes to Supplements Nos. 1 (Item
Appendix, and BIS-748P-B: End-User Appendix; Multipurpose Application
Instructions) and 2 (Unique Application and Submission Requirements) to
part 748 to allow for the consideration of previous State licenses or
other approvals that are equivalent to a new license application for a
``600 series'' item. These changes are being made to address a comment
regarding how previous ITAR licenses or other approvals could be
considered as part of the EAR license review process. Other changes
included in this final rule address the use of ITAR licenses and other
approvals that remain valid (see Section III.C above).
    One comment requested BIS create an ID code in SNAP-R to
automatically convert ITAR agreements to BIS licenses. Another
commenter suggested implementing an amendment capability as it relates
to licenses. BIS does not accept the suggested change to create an ID
code in SNAP-R that would allow applicants for ``600 series'' items to
automatically transfer previous ITAR agreements (e.g., MLA or TAA) to a
BIS license because of technical limitations in the SNAP-R and the
importance of reviewing these new proposed exports, reexports, and
transfers (in-country) that will be made under the EAR licenses being
applied for at the time of the new applications.
    However, BIS does agree that an export, reexport or in-country
transfer previously authorized under an ITAR license or other approval
(e.g., MLA or TAA) may be relevant to the review of a subsequent EAR
license application if the transaction in question is equivalent to the
transaction previously authorized. Therefore, BIS is making a change
that was not proposed previously in the July 15 (framework) rule to
revise the license application process to provide guidance to
applicants on how to have a previous State license or other authority
be considered as part of the license review process for a ``600
series'' item.
    To implement this change, BIS is revising the instruction in
Supplement No. 1 to part 748 (BIS-748P, BIS-748P-A: Item Appendix, and
BIS-748P-B: End-User Appendix; Multipurpose Application Instructions)
to create a process in SNAP-R for applicants to input a State license
or other approval number in Block 24. The ITAR license or other
approval number will alert BIS and the other U.S. Government agencies
reviewing a particular ``600 series'' application that the new
application is equivalent to a previous State license or other
approval.
    Only those license applications where the particulars (e.g., the
description of the item, the purchaser, ultimate consignee and end-
user(s)) are the same in both the EAR license application and the
previously issued ITAR authorization, will receive full consideration
under this paragraph. In some instances, review under this paragraph
may result in a quicker processing time. The State license number or
other identifier, such as a MLA or TAA identifier, must be included in
Block 24 of the BIS license application, as noted above. Lastly, this
final rule is adding a Note to paragraph (x) to clarify license
applications submitted under paragraph (x) will still be reviewed on
their own merits and in accordance with license review procedures and
timelines identified in part 750.
    BIS agrees with the second commenter who suggested an amendment
capability for licenses

would improve the efficiency of the EAR licensing process as the
current EAR does not allow for amendments to licenses. Amendments to
licenses are addressed with the submission of a replacement license
when a change needs to be made to a previously authorized license for a
change not described in Sec.  750.7(c) in accordance with the
instructions contained in Supplement No. 1 to part 748 of the EAR,
Block 11. At this time, BIS is not able to implement a process in this
final rule to allow for amending of existing EAR licenses. However, BIS
intends to reconsider this idea once the single licensing form is
developed and the export control IT system has greater flexibility to
address such changes, including creating an efficient process for
allowing license holders to submit such requests for changes to a
license and allowing for identification and efficient tracking of such
changes. These types of improvements in the IT system will better
ensure relevant U.S. Government enforcement officials can identify such
approved changes to verify compliance with approved amended licenses.

XVII. Part 750--Application Processing, Issuance, and Denial

    In the June 21 (transition) rule, BIS proposed revising Sec.  750.4
to address Congressional notification for the export of ``600 Series
Major Defense Equipment'' and revising Sec.  750.7 to extend the
validity period of BIS licenses and permit shipment to and among
multiple end users. These proposals, public comments thereto, and final
decisions are discussed in more detail below.

A. Calculating Processing Times

    As proposed in the June 21 (transition) rule, this rule amends
Sec.  750.4(b) to add the congressional notification process associated
with requests to export ``600 Series Major Defense Equipment'' to the
list of actions not included in license application processing time
calculations.

B. Shipment to Approved End Users

    BIS licenses generally designate one ultimate consignee and may
have many designated end users. DDTC authorizations may designate
multiple foreign end users. The June 21 (transition) rule proposed to
revise Sec.  750.7(c) explicitly to allow direct shipments to approved
end users on an export or reexport license if those end users are
listed by name and location on such license. BIS received no comments
that directly referred to this proposed revision, but one commenter
expressed concern that EAR licenses would afford less flexibility than
ITAR agreements, which may allow shipments among approved end users
outside the United States in addition to direct shipment to approved
end users from the United States. BIS acknowledges that this is a valid
concern; therefore, this rule amends proposed Sec.  750.7(c)(1)(ix) by
allowing direct export, reexport and transfer (in-country) to and among
approved end users provided they are listed by name and location on
such license and that the license does not contain any conditions that
cannot be complied with by the end user, and by removing a proposed
restriction on exports and reexports to unlisted end users. This rule
also makes conforming changes to Sec.  758.5.

C. Extended Validity

    Current ITAR licenses are generally valid for four years.
Agreements under the ITAR may be valid as long as ten years. Prior to
the effective date of this rule, BIS licenses were generally valid for
two years. In order to harmonize the EAR with the ITAR, the June 21
(transition) rule proposed to revise Sec.  750.7(g) to extend the
validity period of BIS licenses issued hereafter from two years to four
years, with some exceptions, unless otherwise specified on the license.
    Three commenters expressed support for this extension, and none
expressed opposition to it. However, one commenter suggested a default
ten-year validity period for replacing an ITAR agreement. BIS does not
accept the suggested revision, but BIS notes that exporters may request
an extended validity period pursuant to Sec.  750.7(g)(1) beyond four
years. Such requests will be reviewed on a case-by-case basis. Grounds
for requesting extension would include having had agreements on similar
matters previously approved by the Department of State for a longer
period. BIS believes that setting up a new process for a default
validity period would restrict the flexibility of the reviewing
agencies without significantly lessening the burden on the applicant,
as the same information would have to be supplied under a default
process as will be required for a license application and request for
extended validity.

D. Specificity on Application

    Three commenters asserted that BIS's proposed licensing process is
more burdensome than DDTC licensing because the ITAR allows identifying
general categories rather than parsing out each part covered by an
application. BIS believes that most general categories of items
transitioning from the USML will fall into general categories in the
EAR as well, such as the .x paragraphs of the ``600 series'' ECCNs.
Therefore, the burden should be comparable. For example, if a
collection of parts specially designed for a military aircraft were
formerly controlled under USML Category VIII(h) and were not identified
in the revised USML Category VIII(h), then they would be controlled
under ECCN 9A610.x. BIS does not and would not generally expect more
detail on a BIS license application in this regard than what DDTC would
generally expect on one of its license applications.

XVIII. Part 756--Appeals

    This final rule adopts the position described in the July 15
(framework) rule that STA eligibility decisions cannot be appealed
through part 756. BIS is maintaining this position for the reasons set
forth in that rule, i.e., that the decision to grant STA eligibility is
a foreign policy determination and because consensus is required among
the considering agencies to do so. In addition, exporters should keep
in mind that a denial of STA eligibility does not preclude the exporter
from submitting a license application for the same transaction. This
rule amends the regulatory text proposed in the July 15 (framework)
rule to remove ambiguity about its scope.

XIX. Part 758--Export Clearance Requirements

A. AES Filing Regardless of Value, Except for .y Items

    The June 21 (transition) rule proposed to revise Sec.  758.1 to
require that information on all exports of ``600 series'' items be
filed in AES regardless of value or destination. Six commenters opposed
this requirement. They cited difficulties in separating ``600 series''
items from other CCL items in their internal systems, and stated that
applying different clearance requirements for items eligible for the
same license exceptions was confusing. BIS did not accept these
suggestions. Due to the nature of ``600 series'' items as items
specially designed for military applications or end items, the U.S.
Government needs to retain a degree of visibility into the movement of
these items. This final rule adopts the amendment to Sec.  758.1 from
the proposed rule, except with respect to .y items, which is discussed
further below.
    Three commenters requested that .y items not be subject to as
stringent requirements. BIS agrees, given the lesser military
significance of .y items. To lessen the AES requirements on .y

items, BIS has removed .y items from the mandate to file in AES for all
exports. Thus, the AES filing requirement for .y items would be the
same for all other AT-only controlled items on the CCL.
    The June 21 (transition) rule proposed to revise Sec.  758.1 to
require AES filing for all exports under License Exception Strategic
Trade Authorization (STA), regardless of value, to enable the U.S.
Government to obtain information about low-value shipments of these
items. That rule also proposed to revise Sec.  758.2 to preclude the
option of post-departure filing for exports of ``600 series'' items
because this option is not permitted for ITAR-controlled exports now,
and the rule proposed removing the option of post-departure filing for
License Exception STA and Authorization VEU because the nature of these
authorizations requires pre-departure filing of this information to
ensure compliance with their terms and conditions. These proposals are
adopted in this final rule.

B. Furnishing of ECCNs to Consignees

    Section 758.6 requires that exports of items on the CCL be
accompanied by a Destination Control Statement (DCS) identifying the
items as subject to the EAR. Given the nature of the ``600 series''
items and requirements related to them, additional information
identifying ``600 series'' items is necessary. The June 21 (transition)
rule proposed to revise Sec.  758.6 to require a more specific DCS for
``600 series'' items, which would require exporters to identify in the
text of the DCS the ECCNs of all ``600 series'' items being exported to
ensure that consignees are aware that they are participating in a
transaction that includes such items.
    BIS received comments on this proposal requesting that BIS not
change the DCS, as it is pre-printed on certain export control
documents, so tailoring it to different shipments is burdensome. Taking
these views into account, but in continued recognition of the need to
identify ``600 series'' items to consignees and national authorities,
BIS has revised Sec.  758.6 to require that the ECCN for each ``600
series'' item being shipped be provided on the same documents on which
the DCS is required, but not in the text of the DCS itself. This rule
requires that the ECCN for each ``600 series'' item must be entered on
the invoice and on the bill of lading, air waybill, or another export
control document that accompanies the shipment from its point of origin
in the United States to the ultimate consignee or end user abroad. This
final rule does not change the text of the DCS requirement; it merely
adds a new ``[g]eneral requirement'' heading to the previously existing
requirement.
    BIS received one comment that requested that BIS require the ECCN
for all items, not just ``600 series'' items, in the DCS to assist
foreign parties in classification. BIS recognizes the value to foreign
parties of requiring exporters to furnish the ECCN for all items
shipped. However, this rule's purpose is to revise the EAR to allow the
transition of the ``600 series'' from the ITAR to the EAR. Therefore,
BIS does not accept this recommendation as it is outside the scope of
this final rule. BIS does, however, urge exporters to advise foreign
parties to the transaction of the ECCNs of all exported items.
    BIS received eight comments requesting that it not require the
inclusion of the ECCN for ``600 series'' items in the DCS. These
commenters argued that there would be substantial burden in revising
their information technology (IT) and compliance systems to insert the
ECCN into the DCS and further burden in maintaining a separate DCS for
``600 series'' items. Consistent with the discussion above, BIS agrees
with commenters that the burden of including ECCNs in the DCS paragraph
outweighs the value of notifying national authorities, consignees, and
other parties of ECCNs via that statement. Therefore, BIS has
determined that the ECCN must be included on the export control
documents in a manner that will allow national authorities, consignees,
and others who review those documents to quickly and easily determine
the ECCN of each ``600 series'' item in a shipment, but will not
require changes to the DCS paragraph. This will alert those interested
parties to the export control classification of the ``600 series''
items and facilitate their determination of what controls are
applicable to the particular ``600 series'' items. Allowing exporters
flexibility in the placement of the ECCNs on the documents will allow
each exporter to minimize the regulatory burden by adopting practices
that fit most easily with its systems while helping to protect U.S.
national security interests.
    Two commenters noted that the ECCN is already included in most
export control documents, so inclusion in the DCS was unnecessary. BIS
accepts this recommendation to the extent that it suggested that the
ECCN requirement be removed from the DCS paragraph and applied to
``export control documents'' more generally and notes that exporters
will have flexibility as to how to include the ECCN on ``export control
documents.'' This flexibility should minimize the impact of this
requirement for those exporters that already include the ECCN on their
export control documents.
    Five commenters suggested that BIS substitute written notification
to consignees of 600-series status as a condition of license exception
use. BIS does not accept this recommendation. License Exception STA
already requires written notification of the ECCN as a condition of
use, and this requirement will continue to apply with the addition of
the ``600 series'' items to the CCL. Inclusion of the ECCN on the
export control documents is desirable because it provides notice of the
ECCN to parties in addition to the Ultimate Consignee, including
freight forwarders and national authorities. It also assists U.S.
Customs and Border Protection agents with an opportunity to conduct
compliance checks to ensure that the information on the export control
documents matches the electronic export information in AES.
    One commenter suggested requiring the ECCN in the business
agreements, such as contracts, that the parties enter into in
connection with an export transaction. BIS does not accept this
suggestion. While this may represent a good compliance practice, BIS
does not deem it appropriate to dictate what terms must be included in
the parties' commercial agreements. BIS does not generally see the
agreements, and they do not travel with the items during shipment. As
noted above, several of the goals served by the inclusion of the ECCN
on the ``export control documents'' are served by the fact that the
documents travel with the items.
    One commenter stated that including the ECCN in the DCS would not
raise awareness by foreign parties of the need for compliance with US
export controls. BIS does not agree with this comment. Including the
ECCN on the ``export control documents'' will increase the ability of
foreign parties and national authorities to determine the relevant
export controls. Additionally, requiring exporters and reexporters
provide the ECCN is intended to improve compliance by ensuring that
recipients of the items have a basis for determining license
requirements.

C. Removal of Obsolete References in Revised Text

    In part 758, this rule removes references in revised text to the
Shipper's Export Declaration or SED, because this form no longer
exists.

XX. Part 762--Recordkeeping

    The July 15 (framework) rule and the June 21 (transition) rule both
proposed

revising Sec.  762.2 to reference new recordkeeping requirements. The
July 15 (framework) rule proposed to add references to Sec.  743.4, for
Conventional Arms Reporting, and Sec.  740.20(g), for License Exception
STA eligibility requests for ``600 series'' end items. Descriptions of
the underlying requirements are found in Sections XIII.A and XVI.B.1
above, respectively. As described in Section XI.F above, the June 21
(transition) rule proposed to add a requirement to Sec.  740.20, note
to paragraph (c)(1), that parties abroad must have been identified on a
license or other approval issued by either BIS or DDTC prior to
receiving ``600 series'' items under License Exception STA; this rule
adds paragraph (b)(51) to conform to that requirement. The June 21
(transition) rule also proposed to add references to Sec.
740.11(b)(2)(iii) and (iv) (as described in Section XI.D of this rule),
for exports made for or on behalf of a department or agency of the U.S.
Government or at the direction of the Department of Defense. This rule
adopts the proposed revisions to four paragraphs in Sec.  762.2 to
reference the additional records to be maintained in Sec. Sec.  743.4,
740.20(g), and 740.11(b)(2)(iii) and (iv) and adds a reference to the
existing recordkeeping requirement in Sec.  740.9(a)(3), for temporary
exports of technology. Lastly, the rule adds two new paragraphs to
reference the ``specially designed'' definition in Sec.  772.2
(described below in Section XXIII) and a note to paragraph (c)(1) of
Sec.  740.20 of the EAR (described below in Section XXIV.C.5).
    BIS received two comments related to the recordkeeping references
in response to the July 15 (framework) rule. One comment states that
the addition of the reference to Sec.  743.4, for Conventional Arms
Reporting, is premature, because no items are currently subject to the
reporting requirement. BIS does not accept this recommendation. This
rule provides the framework for the ``600 series'' within the EAR. It
creates a reporting requirement for items listed on the Wassenaar
Arrangement Munitions List and the UN Register of Conventional Arms.
Therefore, a reference to that reporting requirement in Sec.  762.2
(Records to be retained) is appropriate. One comment states that the
government should not depend on the recipients of its responses to
License Exception STA eligibility requests to maintain records of those
responses. BIS notes that although responses are transmitted through
SNAP-R, SNAP-R is not intended to be a recordkeeping archive.
Therefore, BIS does not accept this recommendation, and this final rule
will require that any person who submits a License Exception STA
eligibility request to maintain records of such a request in accordance
with the new provisions added to part 762.
    Lastly, as a result of proposals made in the June 19 (specially
designed) rule, in this final rule, BIS is adding a new paragraph
(b)(50) to Sec.  762.2 as a conforming change to notify the public that
if they rely on the paragraph (b)(4), (b)(5), or (b)(6) exclusions of
the ``specially designed'' definition that the documentation related to
such release must be retained in accordance with part 762
(Recordkeeping) of the EAR. One public comment in response to the June
19 (specially designed) rule raised concern that the documentation
requirements referenced in the note to paragraphs (b)(4) and (b)(5)
could be overlooked and suggested BIS add a reference to Sec.  762.2.
BIS agreed with the commenter's suggestion and is adding this change to
the final rule, along with other changes to the recordkeeping
requirements referenced above. As described in more detail below in
Section XXIII.A, paragraph (b)(6) is a new ``development'' based
exclusion that is being added to the definition of ``specially
designed'' in this final rule. Because the paragraph (b)(6) exclusion
is also a ``development'' based exclusion similar to (b)(4) and (b)(5)
that includes the same types of documentation requirements, BIS is also
adding a reference to paragraph (b)(6) to Sec.  762.2 in this final
rule.

XXI. Part 764--Foreign-Produced Direct Products and Denial Orders

    Because of the expansion of the provisions at Sec.  736.2(b)(3) to
include ``600 series'' items, the June 21 (transition) rule proposed to
remove the penultimate paragraph in Supplement No. 1 to part 764. That
penultimate paragraph states that the standard denial order ``does not
prohibit any export, reexport, or other transaction subject to the EAR
where the only items involved that are subject to the EAR are the
foreign-produced direct product of U.S.-origin technology.'' One
commenter objected to removing this paragraph on the grounds that
foreign parties may be unaware that their foreign-made items are
subject to the EAR. BIS does not agree with the commenter's concern.
Under General Prohibition 4 of the EAR, Sec.  736.2(b)(4), a party is
responsible for ensuring that its transactions involving a denied
person do not violate the terms of the applicable denial order. BIS
also notes that the current standard denial order includes foreign-made
items containing above a de minimis level of U.S. content. In
transactions involving a denied person, foreign parties thus already
need to determine whether foreign-made items are subject to the EAR.
This rule adopts the provision as it was proposed.

XXII. Part 770--Interpretations

    The November 7 (aircraft) rule proposed to remove Interpretation 9
from part 770. As discussed below, paragraph (b)(3) of the ``specially
designed'' definition being revised in this final rule is intended to
capture the scope of Section 17(c) of the Export Administration Act of
1979, as implemented in the note to USML Category VIII(h) and
Interpretation 9 to part 770 of the EAR, and apply it to the remainder
of the USML and CCL. This means that any part, component, accessory, or
attachment that was specifically designed or modified for a military
aircraft but that would not be controlled under USML Category VIII(h)
as a result of the note to USML Category VIII, would not be controlled
by ECCN 9A610.x which controls such items if ``specially designed'' for
a military aircraft and not elsewhere enumerated. Therefore,
Interpretation 9 is no longer needed in the EAR and is being removed in
this final rule.
    This final rule is also removing Interpretation 10 from part 770.
This revision was not previously proposed, but the interpretation's
description of differing Commerce and State jurisdiction is out of date
and no longer accurate and conflicts with the structural changes
adopted in this final rule. Therefore, the interpretation is removed as
a conforming change.

XXIII. Part 772--Definitions (Including Specially Designed)

A. ``Specially Designed'' Definition

    In conjunction with the Department of State, BIS published a
proposed definition of ``specially designed'' on June 19, 2012 (77 FR
36409). The definition proposed in that rule took into account public
comments received in response to an earlier proposed definition in the
July 15 (framework) rule, and would create, insofar as practicable, a
common definition of ``specially designed'' for use under the CCL and
the USML. As seen in the July 15 (framework) rule, the definition of
``specially designed'' proposed in the June 19 (specially designed)
rule adopted a catch and release approach because the agencies found
that it was easier to describe what the term did not or should not
include rather than what it does include. Thus, paragraph (a) of the
definition proposed in the June 19

(specially designed) rule contained three broad bases for items to be
``specially designed''--the catch. If an item were caught by at least
one of the three bases in paragraph (a), then paragraph (b) contained
five exceptions to that item's being ``specially designed''--the
release.
    The catch-and-release construct must be robust enough to capture
all items that may warrant being controlled as ``specially designed.''
In order to protect U.S. national security interests, the paragraph (a)
catch must be broad in scope. If paragraph (a) overreaches in certain
cases, that can be tolerated to some degree, but as much as possible
paragraph (b) of the definition tries to release those ``parts,''
``components,'' ``accessories,'' ``attachments,'' and ``software'' that
do not warrant being treated as ``specially designed.'' However, it is
important for protecting U.S. national security interests that only
those ``parts,'' ``components, ``accessories,'' ``attachments,'' and
``software'' that the U.S. Government has determined in all cases do
not warrant being controlled as ``specially designed'' are released
under paragraph (b). BIS received 31 comments in response to the
proposed definition of ``specially designed'' contained in the June 19
rule. Most commenters felt the proposed definition in the June 19 rule
was a significant improvement over the July 15 (framework) rule
proposal, but many expressed concerns about complexity, ambiguity of
some of the terms used, and treatment of items that have undergone
minor modifications in form or fit (more specific description of these
comments and BIS's responses to them are addressed further herein). One
commenter asserted that BIS should have prepared a regulatory
flexibility analysis of the effect of the proposed definition instead
of having Commerce's Chief Counsel for Regulations certify that the
change would not have a significant impact on a substantial number of
small entities, but this assertion was not supported by any specific
information on the economic impact of adopting the proposed definition.
BIS continues to believe that defining the term ``specially designed''
in the EAR, rather than leaving it undefined outside the MTCR context,
helps all businesses by reducing uncertainty about how to classify
their items. Small and medium-sized exporters who may not have export
counsel or the resources available to obtain such assistance are less
likely to need assistance to comply with a defined term than an
undefined term. In addition, some commenters argued that a ``natural''
definition for the term already exists and that establishing a
regulatory definition that would apply to all uses of ``specially
designed'' needlessly complicates a ``straightforward'' and ``easily-
understood'' term. From extensive reviews of license applications,
discussions with BIS's Technical Advisory Committee members, and the
diverse comments received from the public, BIS has concluded that
organizations within similar industries have been and are continuing to
apply wide-ranging interpretations of ``specially designed.'' Some
organizations have obtained commodity jurisdiction (CJ) determinations
from the Department of State for a specific item and have then
extrapolated the determination to similar items across multiple product
lines despite potential differences in fact patterns, while others have
limited the scope of CJs from applying to other product lines. They
have applied the lessons learned from such cases to their application
of ``specially designed.''
    Some organizations have applied the Missile Technology Control
Regime (MTCR) definition of ``specially designed'' to all of their
items, while other organizations have limited the applicability of the
MTCR definition to items controlled for MT reasons only. Still other
organizations have interpreted the text of Sec.  120.3(a)(ii) of the
ITAR to mean that if an item has any performance equivalent to a non-
controlled item, even if some modification has been made that
differentiates the item from a non-controlled item, then the item at
issue is not subject to the ITAR or, by implication, caught under the
``specially designed'' description of an ECCN. Some have made this
interpretation despite the parenthetical in Sec.  120.3(a)(ii)
describing performance equivalent as ``defined by form, fit and
function'' (emphasis added). On the other hand, many organizations
treat any item that has been slightly modified in fit or form for a
controlled item as ``specially designed,'' even if the modifications
made are insignificant.
    Two public comments even raised meeting minutes from a 1975 meeting
of the Coordinating Committee on Export Controls (COCOM), which helps
demonstrate the length of time for which the interpretation of
``specially designed'' has been an issue. These commenters referred to
these 1975 meeting minutes to support their position that an exclusive
use based interpretation of ``specially designed'' is warranted.
However, given COCOM ceased to exist on March 31, 1994, the minutes are
not instructive for purposes of this final definition of ``specially
designed.'' In addition, as identified in the June 19 (specially
designed) rule, a single definition based on exclusive use would not be
adequate to protect U.S. national security interests or to account for
the variety of ways in which the term ``specially designed'' is used
under the EAR.
    It is clear to BIS and other agencies involved in export controls
that there is no ``natural'' definition or interpretation of
``specially designed,'' and that this has led to competitive
disparities for similarly situated organizations. Consequently, a
single regulatory definition of ``specially designed'' is warranted. A
single regulatory definition is the only way in which to adequately
address the various and inconsistent interpretations of the term that
are discussed above and is the clearest path for protecting U.S.
national security interests and ensuring the U.S. Government is meeting
its multilateral regime commitments. The United States has national
discretion to establish a definition that is consistent with
multilateral regime commitments, and this definition meets that
requirement. However, while finalizing a definition of ``specially
designed'' with this rule, BIS and its interagency partners share the
goal of reducing the use of ``specially designed'' to describe
controlled items and intend to work to do so through the multilateral
regimes and through the Advanced Notice of Proposed Rulemaking
published on June 19, 2012 (77 FR 36419) (``June 19 ANPRM''), which is
one of the first steps in that process.
    The public comment period closed on the June 19 ANPRM on September
17, 2012. BIS received four comments in response to the ANPRM. Two
public commenters noted the challenges and difficulties that would
arise in trying to enumerate all of the components that would warrant
control as ``specially designed'' components. Both commenters also
noted that given the progress that has already been made in developing
a suitable definition of ``specially designed'' under ECR, it is
preferable to continue with the track of adopting a single ``specially
designed'' definition for use under the EAR and the ITAR, informed by
the public comments received in response to the June 19 (specially
designed) rule.
    The other two commenters were more optimistic about the feasibility
of enumerating ``specially designed'' components. The third commenter
in particular made a number of suggestions for how the ``specially
designed'' components controlled in Category 5--

Part II (``Information Security'') could be enumerated, which BIS is
still evaluating. The fourth commenter was quite supportive of the
concept of enumerating ``specially designed'' components, but did not
provide specific examples for how to describe the enumerated
components, except to restate a comment that this commenter also
submitted in response to the June 19 (specially designed) rule, which
was to use the term ``required'' in place of ``specially designed.''
    As noted above, BIS and its interagency partners will continue to
evaluate these comments and, consistent with the goal of ECR of trying
to make the control lists as ``positive'' as possible, will continue to
evaluate where ``components'' can be enumerated on the CCL and the USML
and, where possible, to enumerate such ``components.'' However, the
limited response to the June 19 ANPRM and the two commenters who
specifically indicated the challenges and difficulties they perceived
in relying on such an approach to enumerating ``specially designed''
``components'' further reinforces BIS's assessment regarding the need
for the use of the term ``specially designed'' in particular under the
.x and .y paragraphs that will play such an important role in the ``600
series'' being added to the CCL, in addition to the other uses of
``specially designed'' on the CCL outside of the ``600 series.''
    These comments also further reinforce BIS's assessment that the
``specially designed'' definition included in this final rule, which
was further refined based on the comments received in response to the
June 19 (specially designed) rule, would make a significant step
forward toward resolving this long-standing issue under U.S. export
controls. BIS believes adopting this definition of ``specially
designed'' is the most feasible approach to defining the controls for
``specially designed'' ``components'' in the vast majority of cases on
the CCL where ``specially designed'' is used as part of the control
parameter. However, BIS will continue to evaluate the comments received
in response to the June 19 ANPRM and where feasible develop proposals
for enumerating or describing certain ``components'' on the CCL.
    The Departments of Defense, State, Commerce, Homeland Security, and
Justice reviewed all comments in preparing the ``specially designed''
definition for this final rule. BIS understands that this
implementation will change, and possibly increase, the number of items
previously treated as ``specially designed;'' and thus controlled
items. Adopting the definition in this rule is, however, necessary to
eliminate the various and inconsistent interpretations, establish a
level playing field for organizations, and appropriately reflect the
national security and foreign policy concerns of the United States. In
addition, the possible increase would likely be for those organizations
noted above that were interpreting ``specially designed'' based on
misperceptions of the perceived ``natural'' meaning of ``specially
designed,'' which likely were not consistent with U.S. law and policy
in regards to how the U.S. Government has interpreted ``specially
designed.'' In certain cases, the public may have relied on U.S.
Government interpretations for what was not ``specially designed''
through the CJ or commodity classification automated tracking system
(CCATS) processes and for these items determined not to be ``specially
designed,'' the final definition includes changes to preserve those
legacy determinations made through previous CJs and CCATS under certain
limitations. A discussion of the comments and changes made to the June
19 (specially designed) rule are addressed below.
1. Introductory Text to the Definition of ``Specially Designed''
    The June 19 proposed definition included introductory text that
outlined the sequential analysis that would be followed in evaluating
the ``specially designed'' definition. Several commenters that
supported the definition indicated the linear process outlined for
reviewing the definition was helpful and an improvement. These
commenters agreed the structure of the definition would lend itself to
a decision tree process where the public could answer a series of yes/
no questions that would ultimately result in a consistent
interpretation regarding what is and what is not ``specially
designed.'' Going off this theme, some commenters also suggested
developing formal decision trees and other regulatory guidance to
assist the public in understanding and applying the ``specially
designed'' definition. Other commenters suggested simplifying some of
the introductory text because it was redundant with other portions of
the definition.
    BIS addressed these comments by significantly simplifying (and thus
expanding) the introductory text to the definition. The introductory
text in the ``specially designed'' definition in this final rule simply
states that when applying this definition, follow the sequential
analysis set forth in the definition. However, to address those
commenters who thought additional guidance would be helpful, the
introductory text will now include a cross reference to direct the
public for additional guidance on the order of review of ``specially
designed,'' including how the review of the term relates to the larger
CCL in a new Supplement No. 4 to part 774--Commerce Control List Order
of Review, that is also being implemented in this final rule.
    BIS created Supplement No. 4 to part 774 to allow for more detail
to be provided regarding the steps to be followed in applying the
``specially designed'' definition and also how and when the public
should review the ``specially designed'' definition in the larger
review of the CCL. BIS added this guidance as a new supplement to part
774 because other supplements, such as Supplements No. 2 and No. 3 also
provide guidance on interpreting the CCL. BIS's decision to add this
new Supplement No. 4 also took into account the widespread use of
``specially designed'' on the CCL and in the new ``600 series'' in
deciding that additional guidance is warranted on the appropriate order
of review. In addition to the new supplement, BIS is also developing
outreach materials to be used on the BIS Web site and outreach seminars
to further public understanding of the ``specially designed''
definition added to the EAR in this final rule, along with the larger
order of review for the CCL. The ``specially designed'' definition will
play a key role in ECR. BIS and DDTC are committed to ensuring the
public will have the necessary support and training materials available
through the targeted outreach program BIS and State are developing to
ensure the public is able to understand and use the new ``specially
designed'' definition effectively.
2. Paragraph (a)--Identifying ``Specially Designed'' Items
    Under the ``catch'' provisions of the proposed June 19 definition,
one must determine if, as a result of ``development'' activities, an
item meets the scope of any one of paragraphs (a)(1), (a)(2), or
(a)(3). Under paragraph (a)(1), an item is caught if, as a result of
``development,'' it has properties ``peculiarly responsible for''
achieving or exceeding the performance levels, characteristics, or
functions described in the relevant ECCN or USML paragraph. Paragraph
(a)(1) would apply to all commodities, including materials, as well as
software; the paragraph does not, however, generally apply to

technology. Controlled technology is generally identified by the
already-defined term ``required'' and the General Technology Note in
Supplement No. 2 to part 774 rather than the term ``specially
designed.'' The scope of items controlled under paragraphs (a)(2) and
(a)(3) would be more limited, but the scope of control arguably would
be broader than paragraph (a)(1). Under paragraph (a)(2), a ``part'' or
``component'' would be caught if, as a result of ``development,'' it is
necessary for an enumerated or referenced commodity or defense article
to function as designed. Under paragraph (a)(3), an accessory or
attachment would be caught if, as a result of ``development,'' it would
be used with an enumerated or referenced commodity or defense article
to enhance its usefulness or effectiveness.
    In response to paragraph (a), commenters were generally supportive
of the ``peculiarly responsible'' standard in paragraph (a)(1), and
some commenters advocated using this same standard in paragraph (a)(2).
Other commenters recommended inserting text that paragraph (a)(2) only
applies to ``application specific'' ``parts'' and ``components'' or
those having the performance levels that are the bases for control.
Also, one commenter supported the MTCR's ``exclusive use'' standard to
be used for all ``specially designed'' references, regardless of
whether MT controls are implicated. Another commenter recommended
creating an AT control only for components subject to a catch-all
control. BIS does not accept these recommendations as they are
inadequate to protect U.S. national security interests or to account
for the variety of ways in which the term ``specially designed'' is
used under the EAR.
    For purposes of determining when a ``part'' or ``component'' is
``specially designed,'' an item may be controlled for reasons other
than the level of technical sophistication or contribution to enabling
a component or end item to reach the parameters identified in an ECCN
or USML paragraph. For example, a particular ``part'' may not be
considered sophisticated in and of itself, but it may be essential to
the repair or continued operation of a ``component'' or ``end item''
that is technically sophisticated or described on the CCL or USML. BIS
believes that it is necessary to extend the ``catch'' of the
``specially designed'' definition to reach these less sophisticated
``parts'' or ``components'' that warrant control for national security
or foreign policy reasons. In addition, BIS believes that a peculiarly
responsible standard solely used to determine what ``parts'' and
``components'' are ``caught'' under ``specially designed'' would
present too much room for subjectivity in terms of when a ``part'' or
``component'' would meet the peculiarly responsible standard.
    BIS needs a definition that is clear and objective such that if ten
people were provided with the same set of facts, they would
consistently make the same determination whether a ``part'' or
``component'' was ``caught'' under ``specially designed.'' The
peculiarly responsible standard is a good indicator for what is special
and warrants control under ``specially designed'' which is why the
(a)(1) criterion is included in this final rule. However, the
peculiarly responsible standard should not be the sole criterion for
what ``parts,'' ``components,'' ``accessories,'' ``attachments'' or
``software'' would be ``caught'' under ``specially designed.'' Because
of its utility in identifying ``specially designed'' items, in
particular for end items and material, BIS has maintained the
``peculiarly responsible'' standard in proposed paragraph (a)(1) and
only made minor conforming edits to (a)(1) based on other changes
described further below.
    Additional commenters requested clarification, with respect to
paragraph (a)(2), on interpreting the terms ``necessary'' and ``to
function as designed.'' For example, commenters questioned whether
anti-lock brake systems or airbag systems modified for vehicles in USML
Category VII would be necessary for the vehicles to function as
designed. Similarly, some commenters presented concerns for determining
when an accessory or attachment enhances the usefulness or
effectiveness under paragraph (a)(3), while other commenters stated
that the text in (a)(3) would simply repeat the definition of
``accessory'' and ``attachment.'' To address these concerns, one
commenter recommended that paragraph (a)(3) be removed and that
paragraph (a)(2) be revised to read as follows: ``is a `part,'
`component,' `accessory,' or `attachment' used in or with commodities
enumerated on the CCL or the USML.''
    BIS agrees that the wording proposed in paragraph (a)(2) presents
ambiguity for fact patterns like the two items described above. BIS
also concurs that paragraph (a)(3) unnecessarily repeats text from
already-defined terms. Consequently, with this final rule, BIS is
eliminating paragraph (a)(3) and moving ``accessories'' and
``attachments'' to a revised paragraph (a)(2), that catches ``parts,''
``components,'' ``accessories,'' ``attachments'' or ``software'' ``for
use in or with a commodity or defense article enumerated or otherwise
described on the CCL or the USML.'' BIS believes that this change
enhances clarity and furthers the intent of paragraph (a)(2), and the
proposed (but now eliminated) paragraph (a)(3), to be a broad
``catch.'' This simplified approach will catch any ``part,''
``component,'' ``accessory,'' ``attachment'' or ``software'' that is in
any way for use in or with (regardless of the perceived insignificance)
a commodity or defense article enumerated or otherwise described on the
CCL or USML. While this change will result in more ``parts,''
``components,'' ``accessories,'' ``attachments'' and ``software'' being
caught under paragraph (a)(2) than the June 19 proposal, the release
provisions in paragraph (b) will likely be applicable for many of the
``parts,'' ``components,'' ``accessories,'' ``attachments'' and
``software'' that would not otherwise have been previously caught by
the draft paragraph (a) in the June 19 proposal.
    BIS is also amending paragraph (a)(2) to include ``software'' with
``parts,'' ``components,'' ``accessories,'' and ``attachments'' in this
final rule. One commenter expressed concerns that ``software'' would be
caught under paragraph (a) but not released under paragraph (b), which
could potentially catch more ``software'' than intended. BIS shares
this concern, and is including ``software'' within the release
provisions of paragraph (b) in this final rule.
    One commenter contended it was unfair that if its ``part'' or
``component'' was excluded under paragraph (a)(1) for the ``part'' or
``component'' to then potentially get caught under ``specially
designed'' on the basis of the broader paragraph (a)(2). This comment
misses the point that both the catch provisions of paragraph (a) and
the release portions of paragraph (b) are intended to work together to
identify those items that warrant being ``specially designed.'' Viewing
one paragraph of the definition in isolation misses the larger
objectives of the definition, which is to ensure that the appropriate
items are classified as ``specially designed'' based on answering a
series of simple yes/no questions. Paragraph (b) discussed below is
structured in a similar way as paragraph (a) where the public should
review each paragraph of (b) to determine whether a particular ``part''
``component,'' ``accessory'' or ``attachment'' or ``software'' is
``specially designed.'' One distinction between paragraph (a) and (b)
is that once exporters determined their ``part,''

``component,'' ``accessory,'' ``attachment,'' or ``software'' is
excluded on the basis of any paragraph under (b), no further review of
the definition of ``specially designed'' will be necessary.
3. Changes to Note to Paragraph (a)(1)
    Several commenters indicated the Note to paragraph (a)(1) was a
very good addition to the ``specially designed'' definition in the June
19 (specially designed) rule. However, BIS decided based on some of the
comments received that appeared to misunderstand the relationship
between paragraphs (a)(1) and (a)(2) that providing an example of an
end item or material in the Note to paragraph (a)(1) (demonstrating the
applicability and inapplicability of the peculiarly responsible
standard) would be more helpful than a component example. Therefore,
BIS is replacing the component example of ECCN 2B207.a with an end item
example based on ECCN 1A007. The intent of the Note to paragraph (a)(1)
is not changing. This final rule is only adding the ECCN 1A007 example
because it better reflects the items that will most likely be captured
under the (a)(1) criteria and helps to avoid the confusion certain
commenters were having in understanding the relationship between
paragraphs (a)(1) and (a)(2). Specifically, the Note intends to make
clear that ``parts'' or ``components'' not meeting the ``peculiarly
responsible'' standard of paragraph (a)(1) may still be caught under
the broader controls of paragraph (a)(2).
4. Paragraph (b)--Excluding Items Caught Under Paragraph (a) From
``Specially Designed''
    The June 19 definition of ``specially designed'' proposed five
exclusions under paragraph (b) for ``parts,'' ``components,''
``accessories,'' and ``attachments'' that would otherwise be caught as
``specially designed'' under paragraph (a). The release portion of the
definition plays an important role in the definition and as noted above
works together with paragraph (a) to refine the set of ``parts,''
``components,'' ``accessories'' and attachments'' that get ``caught''
under ``specially designed.'' As discussed above, BIS is expanding
paragraph (b) to allow software to be eligible for these exclusions
with the exception of paragraph (b)(2) which is specific to certain
``parts'' and minor components specified in that paragraph. Below is a
description of the proposed paragraph (b) exclusions, the comments
received, and the changes made to the exclusions in this final rule.
5. Paragraph (b)(1)--Resolving Potential Jurisdictional Conflicts and
Determining Order of Review
    Under the June 19 proposal, paragraph (b)(1) would clarify that a
``part,'' ``component,'' ``accessory,'' or ``attachment'' enumerated on
the USML is excluded from the definition of ``specially designed''
within any ECCN on the CCL. In response to proposed paragraph (b)(1),
one commenter stated the provision avoids jurisdictional disagreements,
while another commenter stated that the provision was redundant and
thus added confusion. An additional commenter expressed concerns of a
conflict or overlap between proposed Category VIII(h)(1) and proposed
ECCN 9A610.y. BIS does not agree that there is a conflict or overlap
between proposed Category VIII(h)(1) and proposed ECCN 9A610.y.
    BIS agrees that proposed paragraph (b)(1) is redundant, but it was
included to remind readers that any ``part,'' ``component,''
``accessory,'' or ``attachment'' enumerated on the USML is subject to
the ITAR. No further review of the catch-all provisions (or other
provisions) of the CCL or the EAR definition of ``specially designed''
is necessary. To streamline the definition of ``specially designed,''
BIS is removing the text in paragraph (b)(1) proposed in the June 19
(specially designed) rule and addressing jurisdictional issues and the
order of review in the new Supplement No. 4 to part 774, which was
discussed above.
    Several commenters requested guidance regarding how items subject
to past CJs or CCATS determinations would be treated under the
``specially designed'' definition. Specifically, whether a CJ
determination ruled that an item was not subject to the ITAR or a CCATS
where an item that was subject to the EAR was not classified as a
``specially designed'' item would be treated for purposes of the
``specially designed'' definition. These commenters suggested a
grandfathering provision be added to address such past U.S. Government
CJ and CCATS determinations.
    In addition to addressing these legacy CJs and CCATS, some
commenters suggested that although the paragraph (b) exclusions would
exclude many of the types of items that should be excluded from
``specially designed'' ultimately either a broadening of some of the
paragraph (b) exclusions was needed or, alternatively, some type of
U.S. Government review mechanism needed to be created to allow for some
discretion in terms of perceived insignificant items that may get
``caught'' under paragraph (a) of the ``specially designed''
definition, but not warrant control as a ``specially designed'' item.
As discussed below, BIS is making additional changes to broaden the
scope of some of the paragraph (b) exclusions and is making certain
changes in this final rule to improve the clarity of these exclusions
based on the comments received.
    This final rule is also revising the definition proposed in the
June 19 (specially designed) rule by adding a new paragraph (b)(1) to
address the treatment of past CJ and CCATS determinations. In the case
of a CJ determination where an item was determined to not be subject to
the ITAR and the CJ determination indicated a classification on the CCL
other than as a ``specially designed'' item, such items would remain
under that classification and not be ``caught'' under the ``specially
designed'' definition. Paragraph (b)(1) would release such ``parts,''
``components,'' accessories,'' ``attachments,'' and ``software.'' This
grandfathering provision is added because in these fact-specific cases
the U.S. Government has already reviewed the specialness of a
particular ``part,'' ``component,'' accessory,'' ``attachment,'' or
``software'' and made a determination that such an item is not
``specially designed.'' Therefore, such items do not warrant being
``caught'' under the ``specially designed'' definition and can be
released under paragraph (b)(1) that is being added in this final rule.
Under the November 7 (aircraft) rule, BIS proposed a similar
grandfathering provision under the .y.99 concept for items determined
to be EAR99 in past CJs or CCATS determinations and for items
classified under other ECCNs. Such classifications would be
grandfathered in. After further review of the public comments, BIS has
decided a better and simpler approach is to address issues related to
past CJ and CCATS determinations in the definition of ``specially
designed'' itself under the new paragraph (b)(1).
    The paragraph (b)(1) exclusion grandfathering is based on past CJ
determinations that indicated that the classification of the ``part,''
``component,'' ``accessory,'' ``attachment,'' or ``software'' on the
CCL was in a ECCN paragraph that does not use ``specially designed.''
BIS is aware that in certain cases a CJ may have been issued that did
not include a recommendation regarding the appropriate CCL
classification, but a subsequent CCATS determination provided the
classification. In such cases, a resubmission of the CCATS may be made
under the new process

identified in Sec.  748.3(e), which is also included in this final
rule, as was discussed above (see Section XVI.A.). Provided there is a
consensus interagency agreement with the original CCATS determination
that such an item is not ``specially designed,'' such an item would not
be caught under ``specially designed'' and would be released under the
new paragraph (b)(1) exclusion added in this final rule. The
grandfather requests made pursuant to Sec.  748.3(e) should include the
original CCATS number, as described above.
    The new paragraph (b)(1) exclusion is also forward looking.
Paragraph (b)(1) provides a U.S. Government review mechanism for those
``parts,'' ``components,'' ``accessories,'' ``attachments,'' or
``software'' where a person believes such a ``part,'' ``component,''
``accessory,'' ``attachment,'' or ``software'' is so insignificant or
minor that it should not be considered ``specially designed.'' This new
paragraph (b)(1) acknowledges that there are additional ``parts,''
``components,'' accessories,'' ``attachments,'' or ``software,'' that
may warrant also being released from ``specially designed'' because of
their perceived insignificance to the functioning of the item, but in
order to protect U.S. national security interests, the U.S. Government,
through a consensus determination of the Departments of Commerce, State
and Defense, may make such determinations, either through the CJ
process or the new CCATS interagency process outlined in Sec.
748.3(e). The new paragraph (b)(1) is not a new idea. It is, in effect,
merely the codification for classification determinations of the
current practice with respect to the State and Defense Departments'
consideration of commodity jurisdiction requests.
6. Paragraph (b)(2)--Parts Common Across All Product Lines That Should
Be Excluded From ``Specially Designed''
    The June 19 proposed definition of ``specially designed'' included
an exception for single, unassembled ``parts'' commonly used in
multiple types of commodities not enumerated on the USML or the CCL,
with illustrative lists provided for threaded fasteners, other
fasteners, and basic hardware. The preamble of the proposed rule noted
that minor components were intentionally excluded from the scope of
paragraph (b)(2).
    Commenters generally supported the concept of paragraph (b)(2), but
some requested that the scope of paragraph (b)(2) be expanded to
include minor components and to supplement the illustrative lists to
specify more ``parts'' or ``components'' that could be released under
paragraph (b)(2). In addition, some commenters requested that BIS
confirm that variations in form or fit would not exclude a ``part''
from qualifying for the exclusion in paragraph (b)(2) and that BIS
clarify the phrases ``single unassembled'' and ``multiple types of
commodities.''
    With this final rule, BIS is confirming that variations in form or
fit do not exclude parts or minor components from qualifying for
paragraph (b)(2) and is thus adding the phrase ``regardless of form or
fit'' to that paragraph to make the intent of the exclusion more
explicit. Moreover, BIS concurs with the concerns regarding ambiguity
of ``single unassembled'' and ``multiple types of commodities.'' BIS
agrees with the commenters that using the phrase ``single unassembled''
is redundant since that phrase is already captured in the definition of
``part.'' With respect to ``multiple types of commodities,'' the intent
was to provide an exception in (b)(2) for ``parts'' that are common
across different products, such as aircraft and vehicles. ``Multiple
types of commodities'' was not meant to apply to ``parts'' common
across different models of aircraft only or different versions of
vehicles only. To improve clarity, BIS is removing both ``single
unassembled'' and ``multiple types of commodities'' from (b)(2) in this
final rule.
    While BIS did not intend for paragraph (b)(2) to include minor
components, it appears that the June 19 proposal included at least one
minor component--nut plates. After reviewing the public comments, BIS
has decided to retain nut plates and allow certain minor components to
qualify for (b)(2). However, BIS is also reducing the scope of (b)(2)
by removing the terms ``other fasteners'' and ``basic hardware.'' The
``parts'' that were proposed to be described under ``other fasteners''
and ``basic hardware'' will now be positively listed and will no longer
constitute an illustrative list. Based on the public comments, BIS does
not believe that ``basic hardware'' provides enough clarity and that it
could be construed more broadly than intended. Therefore, these changes
result in making paragraph (b)(2) a positive list, with the exception
of the illustrative list for threaded fasteners.
    These changes to (b)(2) allow for greater flexibility in terms of
allowing certain minor components to be released, which was requested
in several of the comments. These changes also ensure the ``parts'' and
minor ``components'' released under the paragraph (b)(2) exclusion will
stay within clearly defined parameters. This will ensure that any
release from ``specially designed'' under paragraph (b)(2) will be
consistent with U.S. national security interests by not allowing any
other ``parts'' or other minor ``components'' to be released under
paragraph (b)(2) than those noted in paragraph (b)(2). As noted above,
there will be ``parts'' or other minor ``components,'' that will not be
released on the basis of paragraph (b)(2). This does not mean such
``parts'' or ``components'' are necessarily ``specially designed''
because another paragraph (b) exclusion may potentially release such
``parts'' or other minor ``components.'' In addition, ``components,''
``accessories,'' ``attachments,'' or ``software'' that are not eligible
for the paragraph (b)(2) exclusion may potentially be released under
another paragraph (b) exclusion. If not, and they are caught by
paragraph (a), then they would be ``specially designed'' and controlled
under the relevant ECCNs.
7. Paragraphs (b)(3)--(b)(6)--How the Exclusions Work Together
    Before getting into the discussion of the paragraph (b)(3) comments
and provisions implemented in this final rule, it is important that the
public understand how proposed paragraphs (b)(3), (b)(4) and (b)(5)
work together. Having a better understanding of how these three
exclusion paragraphs work together will help the public better
understand the intent and scope of these three exclusion paragraphs, as
well as the new paragraph (b)(6), discussed below, which was not
contained in the June 19 (specially designed) proposed rule but is
being added in this rule to simplify the application of paragraph
(b)(4) . Paragraph (b)(6) is another example of a ``development''
exclusion similar to paragraphs (b)(4) and (b)(5) discussed here in
relation to paragraph (b)(3). The June 19 (specially designed) rule
definition included paragraphs (b)(3), (b)(4) and (b)(5). Each of these
paragraph (b) exclusions would play an important and distinct role in
the release portion of the ``specially designed'' definition. Some
commenters seemed to have issues regarding understanding the role of
these three different paragraphs and conceptually how they would work
together to achieve the policy objectives of releasing certain
``parts,'' ``components,'' ``accessories,'' ``attachments,'' or
``software.''
    The important thing to remember is that paragraph (b)(3) is the
``production'' exclusion. There is thus no need to know the original
``development'' history of the ``part,'' ``component,''

``accessory,'' ``attachment,'' or ``software'' to rely on the paragraph
(b)(3) exclusion. The paragraph (b)(3) exclusion recognizes that once a
``part,'' component,'' ``accessory,'' ``attachment,'' or ``software''
is used in the ``production'' of an EAR99 item or an item described on
the CCL that is only controlled for AT-reasons that is not in a `catch-
all' paragraph, such a ``part,'' ``component,'' accessory,''
``attachment,'' or ``software'' regardless of its original
``development'' history or its original significance has crossed over
into broader commercial applicability and would no longer warrant
control as ``specially designed.''
    This paragraph basically adopts the concept in the note to USML
Category VIII (the ``17(c) note'') and the carve-outs in USML
Categories XI(c) and XII(e) that preclude an electronic, fire control,
or other part, component, accessory or attachment that was once
specifically designed or modified for a defense article from being ITAR
controlled if it has entered into ``normal commercial use.'' BIS does
not want its catch-all provisions pertaining to parts, components,
accessories, and attachments to be more restrictive than the comparable
provisions in the USML. Thus, for example, if an aircraft part would
not be ITAR controlled as a result of the note in USML Category VIII,
the part would not be controlled by 9A610.x as a result of the
application of the definition of ``specially designed.'' Moreover, the
policy in ITAR Sec.  120.3(a) states that items designed or modified
for military applications should not be ITAR controlled if they have
predominant civil applications or performance equivalents to those of
an article used in civil applications. To the extent an item meeting
these standards nonetheless warrants control, the U.S. Government has
an obligation to positively identify it on the USML or in a particular
ECCN. If it does not, then such items should not be captured within the
scope of a ``specially designed'' catch-all provision. Paragraph (b)(3)
accomplishes this already existing ITAR policy in the EAR and applies
it across the CCL. It is, thus, not a new idea, but merely a
consolidation of existing control concepts in one definition.
    Unlike in paragraph (b)(3), in order to rely on either paragraphs
(b)(4) and (b)(5), and also the new paragraph (b)(6) described below,
the ``development'' history is important and must be known. The
paragraphs (b)(4) and (b)(5), and also the new paragraph (b)(6),
exclusions release certain ``parts,'' ``components,'' ``accessories,''
``attachments,'' and ``software'' if the person has ``knowledge'' of
the ``development'' history and that meets the stated criteria in
paragraphs (b)(4) or (b)(5). In summary, paragraph (b)(3) is the
``production'' exclusion. Paragraphs (b)(4) and (b)(5), and also the
new paragraph (b)(6) described below, are the ``development''
exclusions.
    Some commenters noted concerns that applying paragraphs (b)(4) and
(b)(5) for items that are decades old may be difficult because the
original development history may no longer be known. If the original
``development'' history is no longer known, then a person could not
rely on the paragraphs (b)(4) or (b)(5) exclusion or the new paragraph
(b)(6) being added in this final rule. However, if the ``part,''
``component,'' ``accessory,'' ``attachment'' or ``software'' was truly
``developed'' for use in the ``production'' of those lower level items
or for no particular purpose, the chances are good that the ``part,''
``component,'' ``accessory,'' ``attachment,'' or ``software,'' would
have subsequently been used in the ``production'' of an item that would
meet the criteria of paragraph (b)(3), in which case the ``part,''
``component,'' ``accessory,'' ``attachment,'' or ``software'' would be
excluded from ``specially designed'' on the basis of paragraph (b)(3)
regardless of the original ``development'' history. Again, paragraphs
(b)(4) and (b)(5) are not new ideas. Central to the existing ITAR and
EAR export control structures is the concept that an item is not
``specially designed'' for a controlled item if it was deliberately
made for use in both controlled and uncontrolled applications, i.e., a
``dual-use'' item. The primary difference between the current concept
and this new definition is that one must now be able to prove the
design intent through contemporary documentation in order to be able to
rely upon this release part of the mechanism. Without such
documentation, parts and components that are used in or with controlled
items and that do not otherwise meet one of the release provisions of
paragraph (b) are ``specially designed'' items. BIS understands from
the public comments that this is a more aggressive control stance than
many perceive to be the case today. BIS nonetheless believes that it is
better for the national security and other objectives of the reform
effort in that it controls the items the U.S. Governments wants to
control and creates more reliable, predictable rules that are easier to
comply with.
8. Paragraph (b)(3) (i.e., the ``Production'' Exclusion)--Releasing
Commodities and Software Equivalent to Existing Commodities and
Software Used in the ``Production'' of Items That Are Not on the USML
or CCL or Controlled for AT Reasons Only
    In the June 19 (specially designed) rule, BIS proposed an exclusion
under paragraph (b)(3) for ``parts,'' ``components,'' ``accessories,''
or ``attachments'' ``caught'' under paragraph (a) if such items have
the same form, fit, and performance capabilities as a ``part,''
``component,'' ``accessory,'' or ``attachment'' used in or with a
commodity that (i) is or was in ``production'' and (ii) is either not
enumerated on the USML or CCL, or is described in an ECCN controlled
only for AT reasons. Additionally, while proposed paragraph (b)(3)
requires the same form, fit, and performance capabilities, BIS can also
confirm that paragraph (b)(3) does not require a design intent analysis
and eliminates any concern that market fluctuations resulting in more
sales to military applications in some years but not others could lead
to an item's having its classification status changed as a result.
    The most prevalent comment submitted in response to proposed
paragraph (b)(3) was that the paragraph was too narrow by requiring the
same form, fit, and performance capability for it to apply. Commenters
recommended various changes, including allowing ``minor'' changes in
fit, certain changes in form, or only requiring the same performance
capability. One commenter recommended that only certain types of
changes in fit be allowed, and the commenter specified that those
changes should be allowed for mounting, control values on electronic
parts, or cosmetic changes. Other commenters requested clarification on
specific instances of changes in form or fit, such as for conversion
from British imperial units to metric units or changes to mounting
brackets. Additionally, should the same form, fit, and performance
capability be required, some commenters requested that BIS create a
process to release items caught by ``specially designed'' if changes in
form or fit are found to be insignificant, which BIS has accepted, but
addressed the requested change under the discussion of revised
paragraph (b)(1) above instead of here. Commenters also suggested that
commodities previously determined under a CJ to be subject to the EAR
should remain under EAR jurisdiction and not revert back to the ITAR
under a ``specially designed'' control in the USML. BIS has also
accepted this

change, but addressed the requested change under the discussion of
revised paragraph (b)(1) and new Sec.  748.3(e) CCATS process above
instead of here.
    The June 19 proposed paragraph (b)(3) follows the same construct as
Sec.  120.3 of the ITAR in requiring the same form, fit, and
performance capabilities. BIS used the criteria of the same form, fit,
and performance capabilities because one change to a specific ``part''
or ``component'' may be deemed to be minor or insignificant; however,
the same change to the same ``part'' for a different ``component'' or
end item may not be minor or insignificant. Consequently, BIS and its
interagency partners do not agree with the comments that allowing a
subjective significance test for changes made to any ``part,''
``component,'' ``accessory,'' or ``attachment'' would be appropriate in
the context of the paragraph (b)(3) exclusion.
    However, BIS and its interagency partners agree that there is a way
to allow for certain changes in form and fit within the scope of the
paragraph (b)(3) exclusion, while not opening the door of subjectivity
that was at the core of the original rationale for requiring the same
form, fit and performance capabilities. BIS is revising the
introductory text of the paragraph (b)(3) exclusion to specify the
commodity or software must have the same function, performance
capabilities and the same or `equivalent' form and fit as a commodity
or software used in or with an item that is in ``production'' that
meets the criteria of paragraph (b)(3)(ii). The inclusion of
`equivalent' form and fit addresses the public comments in this area
and provides relief for insignificant or minor changes in form or fit,
while still keeping this exclusion within the carefully drawn bounds of
what was originally intended in the June 19 (specially designed) rule.
Such permissible changes in fit must be clearly identified to ensure no
change in form or fit that may affect U.S. national security interests
is released under paragraph (b)(3). The revised paragraph (b)(3) in
this final rule addresses the comments in this area, while keeping
consistent with the larger objectives BIS intends for the ``specially
designed'' definition.
9. Revised Note to Paragraph (b)(3) and New Notes 2 and 3 to Paragraph
(b)(3)
    As a result of changes BIS is making to paragraph (b)(3) in this
final rule to address the comments, BIS found it necessary to also make
changes to the Note to paragraph (b)(3) included in the June 19
(specially designed) rule, and to add two notes to paragraph (b)(3).
These two additional notes will further bound the paragraph (b)(3)
exclusion to ensure the exclusion is not interpreted more broadly than
intended.
    The original Note to paragraph (b)(3) included in the June 19
proposal is being redesignated as Note 1 to paragraph (b)(3) in this
final rule. Some public comments requested additional guidance
regarding the applicability of the Note to paragraph (b)(1) included in
the June 19 (specially designed) rule proposal. BIS acknowledges that
additional guidance should be provided regarding the applicability of
the proposed Note to paragraph (b)(1). BIS is also including additional
text to the Note to paragraph (b)(1) to describe the difference between
development activities for ``feature enhancements'' versus those that
``change the basic performance or capability'' to address these
comments requesting additional clarification. Specifically, this final
rule is adding the phrase ``such as those that would result in
enhancements or improvements only in the reliability or maintainability
of the commodity (e.g., an increased mean time between failure
(MTBF))'' after the phrase ```development' activities'' to further
clarify the types of commodities or software that may be subject to
subsequent ``development'' activities, but still stay within the scope
of the paragraph (b)(3) exclusion.
    BIS is adding a new Note 2 to paragraph (b)(3) to define the term
`equivalent' for purposes of the limited form and fit changes that are
being allowed under the revised paragraph (b)(3) in this final rule.
This new note will clarify that with respect to a commodity,
`equivalent' means that its form has been modified solely for fit
purposes. As noted above, to allow for certain changes in form and fit
to be permissible within the scope of the paragraph (b)(3) exclusion,
it is important that the permissible form and fit changes be clearly
defined. This new note will ensure the paragraph (b)(3) exclusion is
not interpreted more broadly than is intended by BIS and also aid the
public's understanding.
    At the suggestion of commenters, BIS is also adding a new Note 3 to
paragraph (b)(3) to define form, fit, performance capabilities and
function for commodities and software in the context of the paragraph
(b)(3) exclusion. Because form, fit, and performance capability are
important terms used in the paragraph (b)(3) exclusion and have been
referenced widely under the ITAR, BIS is adopting the explanatory text
of the ITAR from the Note to Sec.  120.4 of the ITAR, subject to slight
revisions to make the definitions specific to the EAR. This explanatory
text is being added as a new Note 3 to paragraph (b)(3) in this final
rule. This new note will provide additional guidance to the public on
how to interpret changes in form, fit, performance capabilities and
function in the context of the paragraph (b)(3) exclusion.
    BIS is also making additional changes to the text of paragraph
(b)(3) to improve the clarity of what was proposed in the June 19
(specially designed) rule and to address the expansion of paragraph
(b)(3) to include ``software.'' Because software is being included in
the paragraph (b) release, BIS is revising the introductory text of
paragraph (b)(3) to add two references to ``software.'' Also, for the
paragraph (b)(3)(ii) criteria, BIS is replacing ``enumerated'' with
``described'' in relation to an ECCN controlled only for AT reasons
because the use of `enumerated' in that context conflicts with the
definition of the term in Note 1, as was noted in the public comments.
    Commenters also suggested deleting the reference to ``production''
and removing the reference to paragraph (b)(3) in Note 1 to the
definition as proposed in the June 19 (specially designed) rule. BIS
does not accept this recommendation. BIS is maintaining the reference
to ``production'' as (b)(3) is intended to address equivalence to
existing items already in ``production,'' as opposed to those in
``development.'' Also, BIS is maintaining the reference to AT controls
in (b)(3) of Note 1, because some AT controls have ``specially
designed'' in their descriptions. BIS is removing the reference to
``enumerated'' because the public found this aspect of paragraph
(b)(3)(ii) and its relationship to Note 1 unnecessarily complicated.
This change will improve clarity and simplify applying the definition.
    Lastly, in evaluating whether the paragraph (b)(3) exclusion or any
of the other paragraph (b) exclusions is broad enough in scope, it is
important to review the specific paragraph (b) exclusion, such as
paragraph (b)(3), in light of the other paragraph (b) exclusions
included in this final rule. In the case of paragraph (b)(3), it is
particularly important to also consider the revised paragraph (b)(1)
described above that is creating a `release' process whereby the public
may submit additional ``parts,'' ``components,'' ``accessories,'' and
``attachments'' for reconsideration when they believe the changes in
form or fit would make them no longer eligible for the paragraph (b)(3)
exclusion, but still believe such items should be treated as
insignificant or minor and therefore not warrant

being ``specially designed.'' This revised and slightly expanded
paragraph (b)(3), working with the additional potential `release' under
paragraph (b)(1) through the CJ process or the CCATS process described
in Sec.  748.3(e), addresses the public comments in regards to the
paragraph (b)(3) exclusion being unnecessarily limited in scope.
10. Paragraphs (b)(4) and (b)(5), and the New Paragraph (b)(6) (i.e.,
the ``Development'' Exclusions)--Incorporating Intent During the
Development Phase for Consideration of Whether To Exclude Certain
Commodities From ``Specially Designed''
    To address the concern that a first use of a ``part'' or
``component'' could result in the part or component being considered
``specially designed,'' BIS incorporated aspects of design intent into
proposed paragraphs (b)(4) and (b)(5) and the new paragraph (b)(6)
being added in this final rule. As noted above in the discussion on the
relationship among paragraphs (b)(3), (b)(4) and (b)(5), and the new
paragraph (b)(6), paragraphs (b)(4) and (b)(5) and the new paragraph
(b)(6) are the ``development'' exclusions. Under the June 19 proposal,
paragraph (b)(4) would exclude ``parts,'' ``components,''
``accessories,'' and ``attachments'' if they were or are being
developed with a reasonable expectation of (i) use in or with
commodities described on the CCL and commodities not enumerated on the
CCL or USML, or (ii) use in or with commodities not enumerated on the
CCL or USML. Paragraph (b)(5) would exclude ``parts,'' ``components,''
``accessories,'' and ``attachments'' that are developed for no
particular application.
    Some commenters mistakenly believed that paragraphs (b)(4) and
(b)(5) depend on predominant market share of the item, while other
commenters correctly understood that (b)(4) and (b)(5) were not
dependent on predominant market share, but requested confirmation that
their understanding was correct. BIS can confirm that market share does
not have an impact on the applicability of paragraphs (b)(4) and
(b)(5). Paragraphs (b)(4) and (b)(5) are rather dependent on intent
during the ``development'' of the item. By definition, market share
cannot be an issue because at the time of its ``development'' the item
had not yet been released to the market. Likewise, an evolving market
(e.g., shift from primarily civilian customers to military customers)
following release of the ``part,'' ``component,'' ``accessory,''
``attachment'' or ``software'' does not change the earlier
determination made during the time of ``development.'' This approach
essentially adopts the policy of Sec.  120.3 of the ITAR that the
``intended use of the article * * * after its export (i.e., for a
military or civilian purpose) is not relevant in determining whether
the article'' is subject to controls. Thus, again, BIS is not
introducing a new concept in export control law, but rather applying
more broadly in the EAR for classification purposes and in one
definition a concept that is already in the ITAR's statement of policy
regarding the types of unspecified items that warrant control for
export. In other words, the jurisdictional and classification status of
an item should be set at its production and development stages and not
affected by how it is later used. If something is so significant that
it warrants control regardless of the intention of the designer, then
it is the U.S. Government's obligation to positively list that item on
the USML or the CCL.
    ``Knowledge'' of the original design intent must be demonstrated,
however, by documents contemporaneous with ``development,'' in their
totality, as required under the Note to proposed paragraphs (b)(4) and
(b)(5), which is now becoming Note to paragraphs (b)(4), (b)(5) and
(b)(6) in this final rule as described below. Thus, for a reseller,
laboratory, or other non-manufacturer to rely upon (b)(4) or (b)(5) or
the new paragraph (b)(6) in determining that the item is not
``specially designed,'' such party must examine the source of
``development'' for documentation or have some other reliable source
regarding the original ``development'' history. This requirement does
not increase the burden common to compliance practices today. It is
possible, though, for a non-manufacturer or any other party to use the
exclusions under new paragraph (b)(1), or paragraphs (b)(2) or (b)(3),
as discussed above, without having to rely on paragraphs (b)(4) or
(b)(5) or the new paragraph (b)(6), which do require ``knowledge'' of
the original design intent based on the totality of documentation
contemporaneous with the ``development'' to demonstrate the criteria in
exclusion paragraphs (b)(4) or (b)(5) or the new paragraph (b)(6).
    With respect to (b)(4), BIS also received additional comments
requesting clarification of the term ``reasonable expectation,'' as
well as replacing ``described'' with ``enumerated'' in (b)(4)(i),
replacing ``commodities'' with ``end items'' in (b)(4)(i), replacing
``use'' with ``ultimate use'' in both (b)(4)(i) and (b)(4)(ii), and
adding ``both'' to (b)(4)(i). To clarify ``reasonable expectation,''
BIS has decided to replace the phrase with the term ``knowledge,''
which is already defined in part 772 of the EAR. By adopting the
already defined term ``knowledge'' for paragraph (b)(4), the release
portion of the definition of specially designed will establish a more
objective standard that will be more easily understood by the public.
In developing the ``specially designed'' definition BIS has tried to
rely as much as possible on established EAR terms and concepts. The
public has generally been quite supportive of this approach of relying
on established concepts and terms as much as possible in developing the
``specially designed'' definition. Adopting the term ``knowledge'' for
paragraph (b)(4) and the new paragraph (b)(6) in this final rule is
another example of simplifying the ``specially designed'' definition,
while also establishing a more objective definition by relying on
established terms and concepts under the EAR. BIS does not accept
replacing ``described,'' ``commodities,'' or ``use'' as those
recommendations would make the paragraph (b)(4) exclusion too narrow.
BIS did not accept the recommendation to add ``both'' to (b)(4)(i), but
BIS is adding the term ``also'' to (b)(4)(ii) in this final rule. BIS
is making this change to make the relationship between (b)(4)(i) and
(ii) more explicit in terms of the criteria that must be met for a
``part,'' ``component,'' ``accessory, ``attachment,'' or ``software''
to be excluded on the basis of the paragraph (b)(4) exclusion.
    For paragraph (b)(5), for the same rationale noted above for the
changes to paragraph (b)(4), BIS, in this final rule, is also replacing
``reasonable expectation'' with ``knowledge.'' Because ``knowledge'' is
now going to be included in the paragraph (b)(5) exclusion, BIS is also
deleting the proposed Note to paragraph (b)(5). BIS is making this
change because including the explanation of the definition of
``knowledge'' from the June 19 (specially designed) rule would be
redundant given ``knowledge'' is already a defined term in part 772.
    As a clarification to what was proposed in the June 19 (specially
designed) rule, BIS is making some additional changes to the wording of
the paragraph (b)(5) exclusion. These changes do not change the scope
of the exclusion proposed on June 19, but clarify what is being
excluded from ``specially designed'' on the basis of paragraph (b)(5).
First, after the word ``developed,'' BIS is adding the phrase ``as a
general purpose commodity.'' BIS is also adding an ``i.e.,'' in this
final rule

after that new phrase to specify that a general purpose commodity is
one that was or is being ``developed'' with no ``knowledge'' of
intended use in a particular commodity or type of commodity.
    In this final rule, BIS is removing the phrase ``particular
application'' from what was proposed (b)(5) in the June 19 (specially
designed) rule and replacing it with ``particular commodity'' because
commenters expressed concerns with the use of ``application,'' and BIS
believes that using ``commodity'' will ensure maintaining the
appropriate scope of (b)(5) and enhance clarity. In addition, to
further address the public comments in this area in terms of adding
greater specificity, BIS is adding a second qualifier with the phrase
``or type of commodity'' in this final rule. BIS is adding two
illustrative examples for a particular commodity by adding the examples
of an F/A-18 or HMMWV. For example, if the person has ``knowledge'' a
component was or is being developed for a F-18 or other military
aircraft, such a commodity is not a general purpose commodity and
therefore could not be excluded from ``specially designed'' on the
basis of paragraph (b)(5). BIS is also adding two illustrative examples
for ``a type of commodity'' by including the examples of an aircraft
and machine tool. For example, if the person has ``knowledge'' a part
was or is being developed for an aircraft, such a commodity is not a
general purpose commodity and therefore could not be excluded from
``specially designed'' on the basis of paragraph (b)(5).
    BIS is adding a new paragraph (b)(6) in this final rule that will
release from ``specially designed'' ``parts,'' ``components,''
``accessories,'' ``attachments, and ``software'' where there is
``knowledge'' that it would be for use in or with commodities or
software described in an ECCN controlled for AT-only reasons and also
EAR99 commodities or software. This paragraph (b)(6) exclusion that is
being added in this final rule will also release from ``specially
designed'' those ``parts,'' ``components,'' ``accessories,''
``attachments'' and ``software'' where the item was or is being
developed with ``knowledge'' that it would be exclusively for use in or
with EAR99 commodities or software.
    By adding the (b)(6) exclusion, BIS can simplify the application of
paragraph (b)(4), including aligning it more closely with the structure
and terminology used in paragraph (b)(3), along with addressing those
scenarios where there is ``knowledge'' that the ``part,''
``component,'' ``accessory,'' ``attachment,'' or ``software'' was
developed for use in or with commodities or software ECCNs controlled
for AT-only reasons and EAR99 or exclusively for use in or with EAR99
commodities or software. BIS believes having a separate paragraph
(b)(6) exclusion to release such ``parts,'' ``components,''
``accessories,'' ``attachments,'' and ``software,'' will be easier to
understand than trying to fit this exclusion within the scope of
paragraph (b)(4). Finally, for the Note to paragraphs (b)(4) and
(b)(5), one commenter stated that the recordkeeping requirement could
be overlooked, and another commenter requested that military
specifications be included as an example of documentation to establish
the elements of (b)(4) or (b)(5). BIS is also updating the title of
this note to reflect the new paragraph (b)(6) exclusion being added to
the definition in this final rule. The revised note is Note to
paragraphs (b)(4), (b)(5) and (b)(6). To address the concern of
overlooking recordkeeping requirements, BIS is inserting a reference to
the ``specially designed'' recordkeeping requirement in Sec.  762.2
(Records to be maintained) under a new paragraph (b)(50) as described
below. BIS does not accept, however, the recommendation to add military
specifications to the note. Generally, military specifications are not
determinative of jurisdiction and are just one factor for
consideration. Thus, they do not warrant inclusion in the illustrative
list of contemporaneous documentation included in that note.
11. Implementation of Definition of ``Specially Designed''
    Like the rest of this final rule, this definition of ``specially
designed'' will become effective as of October 15, 2013. Some
commenters asked that BIS phase and test the implementation for ``600
series'' items only. BIS does not accept this recommendation. In order
to ensure consistency with the multilateral regimes and reduce further
complexity, BIS is adopting this definition of ``specially designed''
for all uses of the term on the CCL. Because this definition is an
important concept under the EAR, BIS will work to conduct outreach and
develop tools to help the public's review and use of the term. The
Department of State has indicated it also intends to conduct similar
outreach with the public for the use of the term under the ITAR.

B. Other Definitions

    BIS proposed adding or revising several definitions to part 772 of
the EAR under ECR. These definitions will aid in aligning the CCL with
the USML by adopting common definitions for terms used in the CCL and
the USML where possible. In total, this final rule adds or revises
fifteen CCL terms. Specifically, this final rule adds twelve
definitions to the EAR: ``600 series,'' ``600 Series Major Defense
Equipment,'' ``accessories,'' ``attachments,'' ``build-to-print
technology,'' ``component,'' ``end item,'' ``equipment,''
``facilities,'' ``material,'' ``part'' and ``systems.'' This final rule
also revises three definitions currently in the EAR: ``military
commodity,'' ``dual use,'' and ``specially designed.''
    New or revised definitions for these terms were proposed in one or
more of three rules published under ECR: the July 15 (framework) rule;
the November 7 (aircraft) rule; and the June 19 (specially designed)
rule. Definitions of ``end item,'' ``accessories and attachments,'' and
``specially designed'' originally were proposed in the July 15
(framework) rule and were re-proposed in revised form in the June 19
(specially designed) rule. The term ``600 Series Major Defense
Equipment'' was not previously proposed as a definition; however, the
concept was introduced in the June 21 (transition) rule and several
commenters requested that it be included as a definition in part 772 of
the EAR. As described in the June 21 (transition) rule, the definition
addresses items for which notification would be required to Congress
prior to approval of certain high-value exports. This rule also revises
the term ``dual use'' as a conforming change, although the change was
not previously proposed.
1. 600 Series
    This final rule adopts the definition of ``600 series'' that was
proposed in the July 15 (framework) rule without any substantive
changes, except to remove a reference to the Commerce Munitions List, a
phrase used in several of the proposed rules that has been removed to
avoid confusion regarding whether the ``600 series'' is part of the
CCL. BIS did not receive any comments on the definition of 600 series.
2. 600 Series Major Defense Equipment
    This rule adopts a definition of ``600 Series Major Defense
Equipment'' that includes all of the elements that were in the proposed
Major Defense Equipment section of the June 21 (transition) rule, but
adds an element, limiting ``600 Series Major Defense Equipment'' to
items contained in specified ``600 series'' ECCN paragraphs. BIS did
not receive any comments on the definition of Major Defense Equipment.

3. Component
    This final rule adopts the definition of ``component'' that was
proposed in the July 15 (framework) rule without any changes.
    One commenter suggested removing the example of ``battery'' from
the ``component'' definition because of potential ambiguity regarding
whether a battery would be considered a ``component'' or an ``end
item.'' Specifically, the commenter questioned whether an item, such as
a car battery that can put out an electrical charge whether it is
incorporated into an automobile or not, would cause ambiguity regarding
whether it is an ``end item'' or a ``component.'' BIS is not changing
the example of the ``battery'' in the definition of ``component.'' The
revised ``end item'' definition that was proposed in the June 19
(specially designed) rule also addressed this comment regarding the
reference to a car battery in the example of ``component.'' BIS
believes the primary reason for the commenter's confusion was the use
of the term ``stand-alone'' in the ``end item'' definition that was
proposed in the July 15 (framework) rule. The re-proposed ``end item''
definition included in the June 19 (specially designed) rule addressed
this issue by removing the term ``stand-alone.'' This change to the
definition of ``end item'' also addressed the comment here by resolving
any potential perceived ambiguity regarding whether a ``component,''
such as car battery, would be an ``end item.''
    Two commenters suggested that the definition of ``component''
improperly equates ``components'' and assemblies. The commenters noted
that ``components'' and assemblies should be distinct terms, as such,
the definition of ``component'' should be limited to items that are not
subject to disassembly. BIS does not agree with the commenter's
suggestion. During drafting of the July 15 (framework) rule, members of
BIS's Technical Advisory Committees (TACs) advised BIS that assemblies
should be within the scope of the ``component'' definition. Based on
the guidance provided by BIS's TACs and the U.S. Government's own
analysis, BIS stated in the ``component'' definition that, for purposes
of the definition, an assembly and a ``component'' are the same. At
this time, given only two commenters raised this issue, and BIS's TACs,
which comprise representatives from various industries, advised taking
BIS's proposed approach, BIS will not incorporate the suggestion
because information from the TACs suggested that a number of industries
involved in exporting treat assemblies as components and therefore the
``component'' definition should reflect this.
    In addition, BIS does not agree that the criteria provided by one
of the commenters for distinguishing between an assembly and a
``component'' would be sufficient. The criteria provided by the
commenter would likely result in inadvertent decontrols of
``components'' on the CCL where a case could be made that the item in
question is an assembly and not a ``component.'' The term ``component''
is used extensively on the CCL and the term ``assembly'' much less so,
so taking this commenter's approach would likely have far reaching
impacts on the scope of the CCL, which likely would be inconsistent
with U.S. Government multilateral regime commitments to control certain
components. As noted in the BIS response to the next comment, the U.S.
Government intends to discuss with the Wassenaar Arrangement four
entries in which the terms ``components'' and ``assemblies'' are used
in the same ECCN. The U.S. Government may reevaluate this issue after
those discussions are complete.
    One commenter noted the need to update the headings and
descriptions of certain items enumerated on the CCL. The commenter
noted as an example that ECCN 9A003, which currently controls
previously undefined ``specially designed assemblies and components''
should be changed to reflect the new definitions of ``components'' and
``parts.'' BIS has already taken steps to address this comment with the
development of another ECR rule, Revisions to the Export Administration
Regulations (EAR) to Make the Commerce Control List (CCL) Clearer. This
rule is referred to as the (CCL Clean-up) rule. It will implement
changes that published in a proposed rulemaking also entitled Revisions
to the Export Administration Regulations (EAR) To Make the Commerce
Control List (CCL) Clearer (77 FR 71214, November 29, 2012). In the
(CCL Clean-up) rule, BIS will make a number of changes to the CCL to
incorporate the terms ``parts'' and ``components'' in specific ECCNs
and to address other issues such as the use of both ``assemblies'' and
``components'' in a number of ECCNs to conform to the definitions of
``parts'' and ``components'' added in this final rule. These changes in
the way ``parts'' and ``components'' are used on the CCL will ensure
that no changes are made to the status quo in terms of how the U.S.
Government interprets these ECCNs.
    One commenter asked for clarification as to whether ``software''
can also be considered a ``component.'' BIS is clarifying here that the
definition of ``components'' does not include ``software.''
``Software'' is defined separately under part 772 of the EAR.
    One commenter provided an alternative definition of ``components''
that would remove the discussion of ``major components'' and ``minor
components.'' This commenter thought these proposed changes would add
clarity and better distinguish ``components'' from ``accessories and
attachments.'' BIS is not incorporating this suggestion. The references
to major components and minor components that were proposed in the July
15 (framework) rule provide additional specificity regarding what is a
``component.'' This additional text identifying the two types of
components (i.e., major components and minor components) does not
create ambiguity regarding what is a ``component'' and what is an
``accessory'' or an ``attachment.'' In addition, although the terms
``minor component'' and ``major component'' are not widely used on the
CCL, BIS intends over time and in conjunction with the multilateral
export control regimes to use these ancillary terms of the
``component'' definition to further refine the scope of certain ECCNs.
4. Equipment
    In response to the comments received on the July 15 (framework)
rule, this rule changes the definition of ``equipment'' from that
definition that was proposed in the July 15 (framework) rule. The new
definition of ``equipment'' being adopted by BIS is consistent with the
definition of ``equipment'' proposed by DDTC in its November 28, 2012
proposed rule regarding Category XI (77 FR 70958).
    One commenter contended that there is no need to separate the
``equipment'' definition from the ``end item'' definition. The
commenter noted that the term ``equipment'' is mentioned in the ``end
item'' definition and is treated no differently from an ``end item.''
Accordingly, the commenter suggested that breaking ``equipment'' out as
a separate definition adds confusion rather than clarity, and
recommended that it be folded into the ``end item'' definition. BIS
does not incorporate the suggestion because ``equipment'' is a sub-set
of ``end items,'' but not all ``end items'' would meet the
``equipment'' definition. Similar to the relationship between the
broader term ``item'' and narrower terms of ``commodity,''
``software,'' and ``technology,'' the

relationship between the broader term ``equipment'' and ``end items''
is not mutually exclusive. The term ``equipment'' is used extensively
on the CCL and is used in the ``600 series,'' including in the ECCNs
added with this final rule. In addition, the term ``equipment'' is used
extensively on the multilateral export control regime control lists,
including the Wassenaar Arrangement Munitions List (WAML). Therefore,
BIS has determined that adding a definition for this term is warranted
and will assist the public in understanding the meaning of this term
when used on the CCL.
    One commenter suggested replacing the phrase ``assembled for a
specific purpose'' with the phrase ``gathered, collected or compiled
for a specific purpose'' to avoid confusion about whether sets of tools
or devices are assemblies or equipment. BIS does not agree with this
suggestion. However, to clarify any confusion about the difference
between ``component'' and ``equipment,'' this rule changed the
definition of ``equipment'' to be a ``combination of parts, components,
accessories, attachments, firmware, or software that operate together
to perform a specialized function of an end item or system.'' BIS
believes that this change to the definition of ``equipment'' clarifies
any confusion raised by the proposed definition.
    For example, a laser device incorporated into a cutting saw that
allows the operator to precisely line up the cut would be a
``component.'' A laser device that is assembled for the purpose of
allowing a person to determine a straight line on a wall to hang a
picture is an example of a laser device that would be ``equipment.''
The definitions of ``component'' and ``equipment'' added to the EAR
with this final rule are clear enough in scope to allow the public to
make such distinctions.
5. Facilities
    This final rule adopts the definition of ``facilities'' that was
proposed in the July 15 (framework) rule without any changes.
    One commenter suggested removing the phrase ``a particular
purpose'' from the definition of ``facilities,'' and replacing it with
the more specific phrase, ``the particular purpose stated in the export
control item using the term `facilities.' '' BIS agrees with the
commenter's general assumption regarding how controls on ``facilities''
are typically worded under the EAR, but the purpose of the definition
of ``facilities'' in part 772 is not intended to impose controls on any
particular type of facility. The further identification of the types of
``facilities'' subject to control is in the particular ECCN entries and
does not need to be referenced in the definition of ``facilities'' in
part 772. In the context of ECCNs or other controls under the EAR, such
as end use controls that use the term ``facilities,'' those controls
will specify the types of ``facilities'' that are subject to control.
Therefore, no additional text is needed in the definition to clarify
the type of ``particular purpose'' that is controlled for an ECCN or
other EAR control that uses the term ``facilities.''
6. Material
    This final rule adopts the definition of ``material'' that was
proposed in the July 15 (framework) rule, with a minor non-substantive
change to ensure that the definition conforms to the definitions of
``accessories'' and ``attachments'' being added to part 772 in this
final rule and discussed below. This conforming change separates the
terms ``accessories and attachments'' into two distinct terms,
``accessories'' and ``attachments,'' as was proposed in the June 19
(specially designed) rule.
    One commenter identified certain Product Group C ECCNs in CCL
Category 1 controlled for Nuclear Nonproliferation (NP) reasons that
were perceived to be inconsistent with the proposed ``material''
definition because they extend NP controls to certain end items,
components, accessories, attachments, parts, software, systems,
equipment, or facilities. BIS addresses this comment in this final rule
by adding a sentence to the end of the definition making clear that
material classified as a Product Group C ECCN remains classified as
that ECCN even if the material can be identified as an ``end item,''