[Federal Register Volume 88, Number 126 (Monday, July 3, 2023)]
[Rules and Regulations]
[Pages 42615-42619]
[FR Doc No: 2023-13736]

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DEPARTMENT OF COMMERCE

Bureau of Industry and Security

15 CFR Part 713

[Docket No.<PHONE_NUMBER>]
RIN 0694-AI54

Chemical Weapons Convention Regulations: Reducing the
Concentration Level Above Which Mixtures Containing Schedule 2A
Chemicals Are Subject to Declaration and Reporting Requirements

AGENCY: Bureau of Industry and Security, Commerce.

ACTION: Final rule.

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SUMMARY: The Bureau of Industry and Security (BIS) is publishing this
final rule to amend the Chemical Weapons Convention Regulations (CWCR)
to reduce the concentration threshold level above which mixtures
containing a Schedule 2A chemical are subject to the declaration
requirements that apply to Schedule 2A chemical production, processing
and consumption under the Chemical Weapons Convention (CWC). This final
rule also amends the CWCR to reduce the concentration threshold level
above which mixtures containing a Schedule 2A chemical are subject to
the declaration and reporting requirements that apply to exports and
imports of Schedule 2A chemicals under the CWC. These regulatory
amendments bring the CWCR into further alignment with guidelines
adopted by the Organization for the Prohibition of Chemical Weapons
(OPCW) Conference of the States Parties (CSP), which established a low
concentration limit for Schedule 2A chemicals.

DATES: This rule is effective July 3, 2023.

FOR FURTHER INFORMATION CONTACT: For questions on the CWCR requirements
that apply to Schedule 2 chemicals (which include Schedule 2A ``Toxic
Chemicals'' and Schedule 2B ``Precursors''), contact Erica Sunyog,
Treaty Compliance Division, Office of Nonproliferation and Treaty
Compliance, Bureau of Industry and Security, U.S. Department of
Commerce, Phone:<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION:

Background

    The Convention on the Prohibition of the Development, Production,
Stockpiling and Use of Chemical Weapons and on Their Destruction (also
known as the Chemical Weapons Convention and, hereinafter, ``CWC'' or
``Convention''), which entered into force on April 29, 1997, is an
international arms control treaty that aims to eliminate an entire
category of weapons of mass destruction by prohibiting the development,
production, acquisition, stockpiling, retention, transfer or use of
chemical weapons by States Parties (i.e., the countries that have
ratified or acceded to the CWC). Under the CWC, States Parties have
agreed to destroy any stockpiles of chemical weapons that they may
hold, any chemical weapons production facilities that they own or
possess, and any chemical weapons that they abandoned on the territory
of other States Parties. The CWC established the OPCW to achieve the
object and purpose of the Convention, to ensure the implementation of
its provisions (including those pertaining to international
verification of compliance), and to provide a forum for consultation
and cooperation among the CWC States Parties. All CWC States Parties
are members of the OPCW.
    Under the CWC, States Parties have agreed to implement a
comprehensive data declaration, notification, and inspection regime to
provide transparency and to verify that relevant facilities are not
engaged in activities prohibited under the CWC. Article VI of the CWC
and the CWC's Verification Annex set out declaration, notification, and
inspection requirements for three categories of scheduled chemicals
(Schedule 1, Schedule 2, and Schedule 3 chemicals) and for unscheduled
discrete organic chemicals (i.e., carbon compounds other than oxides,
sulfides, and metal carbonates that are not listed in Schedule 1,
Schedule 2, or Schedule 3) when produced, processed, or consumed in
excess of certain thresholds. The Verification Requirements for
Schedule 2 (including Schedule 2A) chemicals are specified in Part VII
of the Verification Annex (``Schedule 2 Regime'').
    The CWC's Annex on Chemicals identifies the criteria for listing
chemicals in Schedule 1, Schedule 2, or Schedule 3, and lists the
specific chemicals included on each Schedule. There are three Schedule
2A chemicals listed in the Annex on Chemicals:
    (1) Amiton: 0,0-Diethyl S-[2-(diethylamino)ethyl] phosphorothiolate
and corresponding alkylated or protonated salts (78-53-5);
    (2) PFIB: 1,1,3,3,3-Pentafluoro-2-(trifluoromethyl)-1-propene (382-
21-8); and
    (3) BZ: 3-Quinuclidinyl benzilate (6581-06-2).
    As stated in the guidelines pertaining to Schedule 2 chemicals that
are set forth in the CWC's Annex on Chemicals, the inclusion of these
three chemicals on Schedule 2A reflects a determination by the CWC
States Parties that these chemicals pose ``a significant risk to the
object and purpose of the Convention'' due to their ``lethal or
incapacitating toxicity'' and that they are ``not produced in large
commercial quantities for purposes not prohibited'' under the CWC. Two
of the three chemicals (Amiton and BZ) are defense articles subject to
the International Traffic in Arms Regulations (ITAR) (22 CFR parts 120-
130), which include registration, recordkeeping, and export and
reexport licensing requirements that are administered by the Department
of State. The third chemical (PFIB) is a waste product from the
production of fluoromonomers, which are unscheduled discrete organic
chemicals under the CWC. PFIB (including mixtures with concentrations
well under 10%) is specified on the Commerce Control List (CCL), supp.
no. 1 to part 774 of the Export Administration Regulations (EAR) and
thereby subject to export license requirements administered by BIS.
According to export data collected by BIS, exports of PFIB are minimal.
    The provisions of the CWC that affect commercial activities
involving scheduled chemicals are implemented, pursuant to the Chemical
Weapons Convention Implementation Act of 1998 (CWCIA) (22 U.S.C. 6701
et seq.) and Executive Order 13128 (64 FR 34703, June 28, 1999), by the
CWCR (15 CFR parts 710-722) and the EAR (15 CFR 742.18 and part 745).
BIS administers both the CWCR and the EAR. BIS maintains the list of
Schedule 2A chemicals in the CWCR (supplement no. 1 to part 713) and
the EAR (supplement no. 1 to part 745). BIS also administers

the declaration, reporting, notification, and verification
requirements, including those for Schedule 2A chemicals, that are
described in parts 713 and 716 of the CWCR.
    The Regime for Schedule 2 Chemicals and Facilities Related to such
Chemicals (CWC Verification Annex, Part VII), provides in paragraph 5
that declarations ``are generally not required for mixtures containing
a low concentration of a Schedule 2 chemical'' and are only required in
accordance with guidelines approved by the Conference of the States
Parties to the Convention ``in cases where the ease of recovery from
the mixture of the Schedule 2 chemical and its total weight are deemed
to pose a risk to the object and purpose of [the] Convention.'' Prior
to the approval of such guidelines, the CWCIA was enacted (in October
1998) and the CWCR were implemented (on December 30, 1999). The CWCIA
prohibits the imposition of routine inspection or reporting
requirements pertaining to mixtures containing a Schedule 2 chemical if
the concentration of the Schedule 2 chemical in the mixture is less
than 10 percent (see 22 U.S.C. Chapter 75, section 6742(a)(1)). Prior
to the issuance of this rule, the CWCR required that the calculation of
the quantity of any single Schedule 2 chemical that was produced,
processed, or consumed also include the quantities produced, processed
or consumed in mixtures when the concentration of the Schedule 2
chemical in the mixture was 30% or more by volume or by weight,
whichever yielded the lesser percentage (15 CFR 713.2(a)(3)).
    Nearly ten years following the enactment of the CWCIA, at the
Fourteenth Session of the CSP (November 30-December 4, 2009), the
States Parties adopted guidelines regarding low-concentration limits,
detailed in document ``Decision C-14/DEC.4'' (``OPCW Guidelines''), for
Schedule 2A chemicals. These guidelines provide that declarations are
not required under Part VII of the Verification Annex for a chemical
mixture containing a Schedule 2A chemical, if the concentration of the
Schedule 2A chemical in the mixture is:
    (1) 1% or less; or
    (2) More than 1%, but less than or equal to 10%, provided that the
annual amount of the Schedule 2A chemical produced, processed or
consumed is less than the relevant verification threshold, which is ten
times the relevant declaration threshold.
    This final rule accordingly amends part 713 of the CWCR by reducing
the concentration threshold level above which mixtures containing a
Schedule 2A chemical are counted toward the declaration and reporting
requirements described in the CWCR. This change makes the Schedule 2A
mixture concentration threshold consistent with the OPCW Guidelines,
subject to the constraint imposed by the 10% low concentration
threshold limit allowed under the CWCIA. Specifically, this final rule
amends the CWCR to replace the previous low concentration threshold for
mixtures containing a Schedule 2A chemical (i.e., a concentration of
30% or more, by volume or weight) with a low concentration threshold of
10% or more. This rule modifies only the declaration requirements under
the CWCR for mixtures containing Schedule 2A chemicals; it does not
modify the declaration requirements for any other chemicals or any
requirements applicable to the three Schedule 2A chemicals under either
the EAR or ITAR.

Amendments to Section 713.2 of the CWCR--Annual Declaration
Requirements for Plant Sites That Produce, Process or Consume Schedule
2 Chemicals in Excess of Specified Thresholds

    Section 713.2 of the CWCR requires submission of a declaration from
a plant site if one or more plants at that site produced, processed or
consumed a Schedule 2 chemical during any of the three previous
calendar years, or anticipate doing so in the next calendar year, in
excess of the declaration threshold (i.e., the quantity specified for
that Schedule 2 chemical in Sec.  713.2(a)(1)(i)(A)(1) through (3) of
the CWCR). Since the low concentration threshold for Schedule 2A
chemicals now differs from the low concentration threshold for Schedule
2B chemicals, this rule revises the text of the current Sec.
713.2(a)(3)(i) and adds paragraphs (a)(3)(i)(A), specific to Schedule
2A chemicals, and (a)(3)(i)(B), specific to Schedule 2B chemicals.
Section 713.2(a)(3)(i)(A) reduces the low concentration threshold for
the declaration requirements that apply to mixtures containing a
Schedule 2A chemical from a concentration of 30% or more of the
Schedule 2A chemical by volume or weight, whichever formula yields the
lesser percentage, to a concentration of 10% or more of the Schedule 2A
chemical by volume or weight, whichever yields the lesser percentage.
To distinguish the low concentration threshold for Schedule 2B
chemicals, which remains unchanged, from the new low concentration
threshold for Schedule 2A chemicals, the low concentration threshold
for the declaration requirements that apply to the production,
processing or consumption of mixtures containing a Schedule 2B chemical
is separately described in Sec.  713.2(a)(3)(i)(B) of the CWCR and
remains at a concentration of 30% or more by volume or weight,
whichever formula yields the lesser percentage.
    This rule also makes conforming changes to Sec.  713.2(a)(3)(ii)
and (iii) of the CWCR to reflect the change described above in the low
concentration threshold for mixtures containing Schedule 2A chemicals.
In addition, this rule adds Notes 1 through 4 to Sec.  713.2(a)(3).
Notes 1 and 2 provide examples of how to determine declaration and
reporting requirements for mixtures containing a Schedule 2A chemical.
Notes 3 and 4 contain updated versions of examples that were previously
included in Sec.  713.2(a)(3)(iii). These examples are included as
Notes because their purpose is to clarify the application of the
regulatory requirements described in Sec.  713.2(a)(3).

Amendments to Section 713.3 of the CWCR--Annual Declaration and
Reporting Requirements for Exports and Imports of Schedule 2 Chemicals

    Section 713.3 of the CWCR requires the submission of declarations
and/or reports of exports and imports of Schedule 2 chemicals from
declared plant sites, undeclared plant sites, and trading companies,
along with any other persons subject to the CWCR, if such entities or
persons exported or imported a Schedule 2 chemical in a quantity above
the applicable threshold level, including amounts in mixtures above the
specified low concentration level. Since the low concentration
threshold for Schedule 2A chemicals now differs from the low
concentration threshold for Schedule 2B chemicals, this rule revises
the text of the current Sec.  713.3(b)(2) and adds paragraphs
(b)(2)(i)(A), specific to Schedule 2A chemicals, and (b)(2)(i)(B),
specific to Schedule 2B chemicals. Section 713.3(b)(2)(i)(A) reduces
the low concentration threshold for the declaration and reporting
requirements that apply to exports and imports of mixtures containing a
Schedule 2A chemical from a concentration of 30% or more of the
Schedule 2A chemical by volume or weight, whichever formula yields the
lesser percentage, to a concentration of 10% or more of the Schedule 2A
chemical by volume or weight, whichever formula yields the lesser
percentage. To distinguish the low concentration threshold for Schedule
2B chemicals, which remains

unchanged, from the new low concentration threshold for Schedule 2A
chemicals, the low concentration threshold for the declaration and
reporting requirements that apply to exports and imports of mixtures
containing a Schedule 2B chemical is separately described in Sec.
713.3(b)(2)(i)(B) of the CWCR and remains at a concentration of 30% or
more by volume or weight, whichever formula yields the lesser
percentage.
    This final rule revises Notes 1 and 2 to Sec.  713.3(b)(2) and,
consistent with the amendments described OPCW guidelines, adds Sec.
713.3(b)(2)(ii) and (iii) to include, respectively, the information
that was previously contained in these two notes. As revised, the notes
provide examples of how to determine declaration and reporting
requirements for exports and imports of mixtures containing a Schedule
2A chemical. New Sec.  713.3(b)(2)(ii) clarifies how to count the
amount of a Schedule 2 chemical in a mixture (i.e., the quantity of
each Schedule 2A or Schedule 2B chemical in a mixture must be counted,
separately; however, the total weight of the mixture must not be
counted). New Sec.  713.3(b)(2)(iii) includes a general reference to
the low concentration threshold levels that are now described in Sec.
713.3(b)(2)(i). It also clarifies that the Schedule 2A and Schedule 2B
low concentration thresholds set forth in Sec.  713.3(b)(2)(i) apply
only for declaration and reporting purposes under the CWCR and not for
other purposes (e.g., determining whether the export of a mixture
requires an End-Use Certificate or a license per the relevant
provisions in the EAR or the ITAR).

Rulemaking Requirements

    1. Executive Orders 13563 and 12866 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including: potential economic, environmental, public
health and safety effects; distributive impacts; and equity). Executive
Order 13563 emphasizes the importance of quantifying both costs and
benefits and of reducing costs, harmonizing rules and promoting
flexibility. This final rule has been determined to be not significant
for purposes of Executive Order 12866.
    2. Notwithstanding any other provision of law, no person is
required to respond to, nor shall any person be subject to a penalty
for failure to comply with, a collection of information subject to the
requirements of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et
seq.) (PRA), unless that collection of information displays a currently
valid Office of Management and Budget (OMB) Control Number. Although
this rule amends the CWCR to reduce the low concentration threshold for
mixtures containing Schedule 2A chemicals for purposes of the
applicable declaration and reporting requirements and, in so doing,
indirectly affects the burden imposed by certain Schedule 2A chemical
requirements in the EAR, BIS believes that the overall increases in
burdens associated with the following information collections will be
minimal:
     OMB control number 0694-0091 (Chemical Weapons Convention
Declaration and Report Handbook and Forms & Chemical Weapons Convention
Regulations (CWCR))--this collection includes all Schedule 1, Schedule
2, Schedule 3, and unscheduled discrete organic chemical CWCR
declarations, reports, notifications, and on-site inspections of
chemical facilities and carries a total burden estimate of 15,815, of
which an estimated 762 hours pertain to the Schedule 2 (i.e., both
Schedule 2A and Schedule 2B) declaration regime and 12,117 pertain to
inspections across all (i.e., Schedule 1, Schedule 2, Schedule 3, and
unscheduled discrete organic chemical) facilities;
     OMB control number 0694-0117 (Chemical Weapons Convention
Provisions of the Export Administration Regulations (EAR))--this
collection includes Schedule 1 chemical advance notifications and
annual reports, Schedule 3 chemical End-Use Certificates, and exports
of ``technology'' to produce certain Schedule 2 and Schedule 3
chemicals and carries a total burden estimate of 53 hours.
    BIS does not expect the burden hours associated with these
collections to change. This rule changes the declaration requirements
only for mixtures containing between 10 and 30 percent of three
chemicals with extremely limited commercial applications. Two of the
three chemicals at issue (i.e., the chemical Amiton: 0,0 Diethyl S-[2-
(diethylamino) ethyl] phosphorothiolate and corresponding alkylated or
protonated salts and the chemical BZ: 3- Quinuclidinyl benzilate) are
defense articles subject to the export licensing jurisdiction of the
Department of State under the ITAR. Manufacturers, exporters, and
temporary importers of these items are therefore required to register
under the ITAR (22 CFR122.1) and are subject to recordkeeping
obligations under the ITAR including maintenance of records concerning
the manufacture, acquisition, and disposition of defense articles (22
CFR 122.5). This final rule does not impose a significant additional
burden on companies that produce or export Amiton and BZ because the
companies are already required to maintain sufficient records to comply
with their recordkeeping obligations under ITAR. The third chemical
(the chemical PFIB: 1,1,3,3,3-Pentafluoro-2(trifluoromethyl)- 1-
propene) is a byproduct of fluoromonomer production. Producers of
fluoromonomers are already subject to the CWC declaration and
inspection requirements for unscheduled discrete organic chemicals,
which include regular, thorough site inspections under the procedures
set out in Part IX of the Verification Annex to the CWC and implemented
in part 715 of the CWCR. Consequently, BIS anticipates that this rule
will impose few, if any, new reporting obligations on any U.S. company.
These changes to the burden hours are within the bounds of the existing
estimates.
    Additional information regarding these collections of information,
including all background materials, can be found at https://www.reginfo.gov/public/do/PRAMain and using the search function to
enter either the title of the collection or the OMB Control Number.
    3. This rule does not contain policies with federalism implications
as that term is defined in Executive Order 13132.
    4. The provisions of the Administrative Procedure Act (5 U.S.C.
553) (APA), requiring notice of proposed rulemaking, the opportunity
for public participation and a delay in effective date, are waived for
good cause as unnecessary and contrary to the public interest (see 5
U.S.C. 553(b)(B)). A delay of this rulemaking to provide an opportunity
for public comment is unnecessary because this rule implements, to the
extent permitted by the CWCIA, a treaty obligation. Specifically,
paragraph 5 of Part VII of the CWC Verification Annex provides for
declarations to be provided in accordance with guidelines adopted by
the CSP regarding low-concentration mixtures of Schedule 2 chemicals.
CSP Decision C-14/DEC.4 adopted such guidelines, which provide a low
concentration limit of 1% for Schedule 2A chemicals, or 10% provided
that the annual amount produced of the Schedule 2A chemical does not
exceed certain specified thresholds. The decision adopting the
guidelines further called for the States Parties, in accordance with
their domestic legal

processes, to implement the guidelines as soon as practicable.
    Similarly, a delay of this rulemaking to provide notice and
opportunity for public comment would be contrary to the public
interest, as would a 30-day delay in effective date. In light of U.S.
obligations under the CWC, this rule serves the public interest by
implementing without further delay the OPCW guidelines under U.S.
domestic law.
    Because a notice of proposed rulemaking and an opportunity for
public comment are not required to be given for this rule by the APA or
any other law, the analytical requirements of the Regulatory
Flexibility Act (5 U.S.C. 601 et seq.) are not applicable. Accordingly,
no regulatory flexibility analysis is required, and none has been
prepared.

List of Subjects

15 CFR Part 713

    Chemicals, Exports, Foreign trade, Imports, Reporting and
recordkeeping requirements.

    For the reasons stated in the preamble, part 713 of the Chemical
Weapons Convention Regulations (15 CFR parts 710-722) is amended as
follows:

PART 713--ACTIVITIES INVOLVING SCHEDULE 2 CHEMICALS

0
1. The authority citation for 15 CFR part 713 continues to read as
follows:

    Authority:  22 U.S.C. 6701 et seq.; 50 U.S.C. 1601 et seq.; 50
U.S.C. 1701 et seq.; E.O. 12938, 59 FR 59099, 3 CFR, 1994 Comp., p.
950, as amended by E.O. 13094, 63 FR 40803, 3 CFR, 1998 Comp., p.
200; E.O. 13128, 64 FR 36703, 3 CFR 1999 Comp., p. 199.

0
2. Amend Sec.  713.2 by revising paragraph (a)(3) to read as follows:

Sec.  713.2  Annual declaration requirements for plant sites that
produce, process or consume Schedule 2 chemicals in excess of specified
thresholds.

    (a) * * *
    (3) Mixtures containing a Schedule 2 chemical--(i) Mixtures that
must be counted. When determining the total quantity of a Schedule 2
chemical produced, processed or consumed at a plant on your plant site,
you must count the quantity of each Schedule 2 chemical in a mixture,
in the following circumstances:
    (A) Schedule 2A chemicals in mixtures. The concentration of each
Schedule 2A chemical in the mixture is 10% or more by volume or weight,
whichever yields the lesser percentage;
    (B) Schedule 2B chemicals in mixtures. The concentration of each
Schedule 2B chemical in the mixture is 30% or more by volume or weight,
whichever yields the lesser percentage.
    (ii) How to count the quantity of each Schedule 2 chemical in a
mixture. You must count, separately, the quantity of each Schedule 2A
or Schedule 2B chemical in a mixture when determining the total
quantity of a Schedule 2 chemical produced, processed or consumed at a
plant on your plant site. Do not count the total weight of a mixture.
    (iii) Determining declaration requirements for production,
processing and consumption. If the total quantity of a Schedule 2
chemical produced, processed or consumed at a plant on your plant site,
including mixtures that contain 10% or more concentration of a Schedule
2A chemical or 30% or more concentration of a Schedule 2B chemical,
exceeds the applicable declaration threshold set forth in paragraphs
(a)(1)(i)(A)(1) through (3) of this section, you have a declaration
requirement and must separately declare each Schedule 2A or Schedule 2B
chemical.

    Note 1 to Sec.  713.2(a)(3)--Example:  If, during the past
calendar year, a plant on your plant site produced, processed, or
consumed a mixture containing 130 kilograms of PFIB with a
concentration of 12%, the total amount of PFIB produced, processed,
or consumed at that plant for CWCR purposes would be 130 kilograms,
which exceeds the declaration threshold of 100 kilograms for that
Schedule 2A chemical. Consequently, you must declare 130 kilograms
of production, processing, or consumption of PFIB at that plant site
during the past calendar year.

    Note 2 to Sec.  713.2(a)(3)--Example:  If, during the past
calendar year, a plant on your plant site produced, processed, or
consumed a mixture containing 130 kilograms of PFIB with a
concentration of 8%, the total amount of PFIB produced, processed,
or consumed at that plant for CWCR purposes would be 0 kilograms,
which would not trigger a declaration requirement. This outcome is
based on the fact that the concentration of PFIB in the mixture is
less than 10% and, for CWCR purposes would not have to be
``counted.''

    Note 3 to Sec.  713.2(a)(3)--Example:  If, during the past
calendar year, a plant on your plant site produced a mixture
containing 300 kilograms of thiodiglycol with a concentration of 32%
and also produced 800 kilograms of pure thiodiglycol, the total
amount of thiodiglycol produced at that plant for CWCR purposes
would be 1,100 kilograms, which exceeds the declaration threshold of
1 metric ton for that Schedule 2B chemical. Consequently, you must
declare production of thiodiglycol at that plant site during the
past calendar year.

    Note 4 to Sec.  713.2(a)(3)--Example:  If, during the past
calendar year, a plant on your plant site processed a mixture
containing 300 kilograms of thiodiglycol with a concentration of 25%
and also processed 800 kilograms of pure thiodiglycol, the total
amount of thiodiglycol processed at that plant for CWCR purposes
would be 800 kilograms and would not trigger a declaration
requirement. This outcome is based on the fact that the
concentration of thiodiglycol in the mixture is less than 30% and,
therefore, would not have to be ``counted'' and added to the 800
kilograms of pure thiodiglycol processed at that plant during the
past calendar year.

* * * * *

0
3. Amend Sec.  713.3 by revising paragraph (b)(2) to read as follows:

Sec.  713.3  Annual declaration and reporting requirements for exports
and imports of Schedule 2 chemicals.

* * * * *
    (b) * * *
    (2) Mixtures containing a Schedule 2 chemical--(i) Mixtures that
must be counted. The quantity of each Schedule 2 chemical contained in
a mixture must be counted for the declaration or reporting of an export
or import, in the following circumstances:
    (A) Schedule 2A chemicals in mixtures. The concentration of each
Schedule 2A chemical in the mixture is 10% or more by volume or weight,
whichever yields the lesser percentage;
    (B) Schedule 2B chemicals in mixtures. The concentration of each
Schedule 2B chemical in the mixture is 30% or more by volume or weight,
whichever yields the lesser percentage.
    (ii) How to count the quantity of each Schedule 2 chemical in a
mixture. You must count, separately, the quantity of each Schedule 2A
or Schedule 2B chemical in a mixture when determining the total
quantity of a Schedule 2 chemical that was exported from or imported to
a declared plant site, or individually exported or imported, above the
applicable threshold set forth in paragraphs (b)(1)(i) through (iii) of
this section. Do not count the total weight of a mixture.
    (iii) Mixture concentration thresholds apply only for declaration
and reporting purposes. The concentration thresholds for Schedule 2A
and Schedule 2B chemical mixtures set forth in paragraph (b)(2)(i) of
this section apply only for the declaration and reporting purposes
described in the CWCR. These thresholds do not apply for purposes of
determining whether the export of your mixture to a non-State Party
requires an End-Use Certificate. Nor do they apply for purposes of
determining whether you need to obtain an export license from BIS (see
Sec.  742.2, Sec.  742.18 and

Sec.  745.2 of the Export Administration Regulations (15 CFR parts 730
through 774)) or from the Department of State (see the International
Traffic in Arms Regulations (22 CFR parts 120 through 130)).

    Note 1 to Sec.  713.3(b)(2)--Example:  If, during the past
calendar year, your plant site exported or imported a mixture
containing 3 kilograms of Amiton with a concentration of 12%, the
total amount of Amiton exported or imported for CWCR purposes is 3
kilograms, which exceeds the declaration threshold of 1 kilogram for
that Schedule 2A chemical. Consequently, you must declare 3
kilograms of export or import at that plant site during the past
calendar year.

    Note 2 to Sec.  713.2(b)(2)--Example:  If, during the past
calendar year, your plant site exported or imported a mixture
containing 3 kilograms of Amiton with a concentration of 8%, the
total amount of Amiton exported or imported for CWCR purposes would
be 0 kilograms and would not trigger a declaration requirement. This
outcome is based on the fact that the concentration of Amiton in the
mixture is less than 10% and, therefore, would not have to be
``counted.''

* * * * *

Matthew S. Borman,
Deputy Assistant Secretary for Export Administration.
[FR Doc. 2023-13736 Filed 6-30-23; 8:45 am]
BILLING CODE 3510-33-P


[Federal Register Volume 75, Number 11 (Tuesday, January 19, 2010)]
[Notices]
[Pages 2897-2899]
[FR Doc No: 2010-798]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61319; File No. SR-FINRA-2009-093]

Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Notice of Filing of Proposed Rule Change To Repeal
NASD Rule 2450 (Installment or Partial Sales), NASD Interpretive
Material 2830-2 (``IM-2830-2'') (Maintaining the Public Offering Price)
and Incorporated NYSE Rule 413 (Uniform Forms) as Part of the Process
of Developing a Consolidated FINRA Rulebook

January 8, 2010.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on December 23, 2009, Financial Industry Regulatory Authority, Inc.
(``FINRA'') (f/k/a National Association of Securities Dealers, Inc.
(``NASD'')) filed with the Securities and Exchange Commission (``SEC''
or ``Commission'') the proposed rule change as described in Items I,
II, and III below, which Items have been prepared by FINRA. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    FINRA is proposing to repeal NASD Rule 2450 (Installment or Partial
Sales), NASD Interpretive Material 2830-2 (``IM-2830-2'') (Maintaining
the Public Offering Price), and Incorporated NYSE Rule 413 (Uniform
Forms), as part of the process of developing a consolidated FINRA
rulebook.
    The text of the proposed rule change is available on FINRA's Web
site at http://www.finra.org, at the principal office of FINRA and at
the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, FINRA included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. FINRA has prepared summaries, set forth in sections A,
B, and C below, of the most significant aspects of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

1. Purpose
    As part of the process of developing a new consolidated rulebook
(``Consolidated FINRA Rulebook''),\3\ FINRA is proposing to repeal NASD
Rule 2450 (Installment or Partial Sales), NASD IM-2830-2 (Maintaining
the Public Offering Price), and Incorporated NYSE Rule 413 (Uniform
Forms) to eliminate duplicative and unnecessary rules and remove
outdated provisions from the Consolidated FINRA Rulebook.
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    \3\ The current FINRA rulebook consists of (1) FINRA Rules; (2)
NASD Rules; and (3) rules incorporated from NYSE (``Incorporated
NYSE Rules'') (together, the NASD Rules and Incorporated NYSE Rules
are referred to as the ``Transitional Rulebook''). While the NASD
Rules generally apply to all FINRA members, the Incorporated NYSE
Rules apply only to those members of FINRA that are also members of
the NYSE (``Dual Members''). The FINRA Rules apply to all FINRA
members, unless such rules have a more limited application by their
terms. For more information about the rulebook consolidation
process, see Information Notice, March 12, 2008 (Rulebook
Consolidation Process).
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NASD Rule 2450 (Installment or Partial Sales)
    NASD Rule 2450 prohibits any arrangement whereby the customer of a
member submits partial or installment payments for the purchase of a
security with the following exceptions: (1) If a member is acting as
agent or broker in such transaction, then the member must immediately
make an actual purchase of the security for the account of the
customer, and immediately take possession or control of the security
and maintain possession or control of the security as long as the
member is under the obligation to deliver the security to the customer;
(2) if a member is acting as principal in such transaction, the member
must, at the time of the transaction, own such security and maintain
possession or control of the security as long as the member is under
the obligation to deliver the security to the customer; and (3) where
the provisions of Regulation T,\4\ if applicable to the member, are
satisfied.
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    \4\ Federal Reserve Board, Regulation T (Credit by Brokers and
Dealers), 12 CFR 220 et seq.
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    The rule also prohibits the member, whether acting as principal or
agent, in connection with any installment or partial sales transaction,
from making any agreement with the customer whereby the member would be
allowed to pledge or hypothecate any security involved in such
transaction for any

amount in excess of the indebtedness of the customer to such member.
    Section 220.8 of Regulation T permits the purchase of a security in
the cash account predicated on either (1) there being sufficient funds
in the account; or (2) the member accepting in good faith the
customer's agreement that full cash payment will be made.\5\ The rule
further stipulates that payment must be made within a specified payment
period.\6\ Regulation T also allows the purchase of a security in a
margin account, whereby a customer must deposit an initial requirement,
based upon the amount of the transaction, within the specified payment
period.
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    \5\ See Regulation T 220.8(a)(1).
    \6\ According to Section 220.2 of Regulation T, payment period
``means the number of business days in the standard securities
settlement cycle in the United States, as defined in paragraph (a)
of SEC Rule 15c6-1 (17 CFR 240.15c6-1(a)), plus two business days.''
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    FINRA proposes to repeal NASD Rule 2450 in light of the explicit
provisions in Regulation T requiring the deposit of sufficient funds
within the specified payment period. FINRA also believes the
hypothecation prohibition in NASD Rule 2450 would no longer be relevant
because it is predicated on a partial or installment payment under the
rule.
NASD IM-2830-2 (Maintaining the Public Offering Price)
    Section 22(d) of the Investment Company Act generally prohibits a
registered investment company, its principal underwriter, or a dealer
from selling the fund's shares at a price other than the current public
offering price described in the prospectus. As a general matter, this
means that a broker-dealer must sell shares of a mutual fund to
investors at the fund's current net asset value, plus any applicable
sales load. Section 22(d) excepts from this prohibition sales to the
fund itself, the fund's principal underwriter or another dealer.
    In the 1950s, FINRA adopted an interpretation of Section 22(d) and
NASD Rule 2420,\7\ now codified as NASD IM-2830-2, that requires
members to sell mutual funds at the public offering price not only to
investors, but also to any non-member broker or dealer. NASD IM-2830-2
provides examples of transactions that would violate this prohibition.
At the time NASD IM-2830-2 was adopted, some broker-dealers doing
business with the public were not NASD members. Accordingly, it was
possible for member firms to sell shares of mutual funds to non-member
broker-dealers at a price below the current public offering price
because of the exception in Section 22(d) for sales to other dealers.
However, these kinds of transactions were inconsistent with the
requirement under NASD Rule 2420 that transactions with non-member
firms be on the same terms as transactions with the public.
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    \7\ NASD Rule 2420 imposes various restrictions on dealings with
non-member brokers and dealers, including prohibiting a member from
dealing with any non-member broker or dealer except at the same
prices, for the same commissions or fees, and on the same terms and
conditions as the member firm offers to the general public. NASD
Rule 2420 will be addressed as part of a separate phase of the
rulebook consolidation process.
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    Since the adoption of NASD IM-2830-2, the laws governing broker-
dealers have changed, and today virtually all broker-dealers doing
business with the public are FINRA members. In addition, NASD IM-2830-2
largely duplicates the requirement in Section 22(d) to sell mutual fund
shares to investors at the current public offering price. As a result,
FINRA believes NASD IM-2830-2 no longer serves any useful purpose, and
proposes not to incorporate its content into the Consolidated FINRA
Rulebook.
Incorporated NYSE Rule 413
    Incorporated NYSE Rule 413 requires members to adopt such uniform
forms as the NYSE may prescribe to facilitate the orderly flow of
transactions within the financial community. This provision was adopted
in 1973 to apply to forms generally, including membership forms.
    The FINRA By-Laws contain several provisions by which FINRA may
prescribe processes for members' activities, including the use of
uniform forms.\8\ Accordingly, FINRA proposes to repeal Incorporated
NYSE Rule 413 in light of these provisions.
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    \8\ See, e.g., the following provisions of the FINRA By-Laws:
Article IV, Section 1 (providing that FINRA may prescribe the
process for application for FINRA membership); Article IV, Section 8
(providing that FINRA may prescribe the process for members to
advise FINRA regarding branch offices, including the opening,
closing, relocation, change in designated supervisor, or change in
designated activities of any branch office); Article V, Section 2
(providing that FINRA may prescribe the process for application for
registration by registered representatives and associated persons);
and Article V, Section 3 (providing that FINRA may prescribe the
process for members' notification of termination of registered
persons). In addition, FINRA has issued for comment proposed FINRA
Rule 4540 governing information and data reporting and filing
requirements. See Regulatory Notice 09-02 (January 2009). (FINRA
Requests Comment on Proposed Consolidated FINRA Rule Governing
Information and Data Reporting and Filing Requirements).
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    FINRA will announce the implementation date of the proposed rule
change in a Regulatory Notice to be published no later than 90 days
following Commission approval. The implementation date will be no later
than 180 days following Commission approval.
2. Statutory Basis
    FINRA believes that the proposed rule change is consistent with the
provisions of Section 15A(b)(6) of the Act,\9\ which requires, among
other things, that FINRA rules must be designed to prevent fraudulent
and manipulative acts and practices, to promote just and equitable
principles of trade, and, in general, to protect investors and the
public interest. FINRA believes that the proposed rule change will
further these requirements by eliminating duplicative and unnecessary
rules and advancing the development of a more efficient and effective
Consolidated FINRA Rulebook.
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    \9\ 15 U.S.C. 78o-3(b)(6).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    FINRA does not believe that the proposed rule change will result in
any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants or Others

    Written comments were neither solicited nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action

    Within 35 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
    (A) by order approve such proposed rule change, or
    (B) institute proceedings to determine whether the proposed rule
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or

     Send an e-mail to<EMAIL_ADDRESS>Please include
File Number SR-FINRA-2009-093 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.

All submissions should refer to File Number SR-FINRA-2009-093. This
file number should be included on the subject line if e-mail is used.
To help the Commission process and review your comments more
efficiently, please use only one method. The Commission will post all
comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission,\10\, all subsequent
amendments, all written statements with respect to the proposed rule
change that are filed with the Commission, and all written
communications relating to the proposed rule change between the
Commission and any person, other than those that may be withheld from
the public in accordance with the provisions of 5 U.S.C. 552, will be
available for inspection and copying in the Commission's Public
Reference Room, 100 F Street, NE., Washington, DC 20549, on official
business days between the hours of 10 a.m. and 3 p.m. Copies of the
filing also will be available for inspection and copying at the
principal office of FINRA. All comments received will be posted without
change; the Commission does not edit personal identifying information
from submissions. You should submit only information that you wish to
make available publicly. All submissions should refer to File Number
SR-FINRA-2009-093 and should be submitted on or before February 9,
2010.
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    \10\ The text of the proposed rule change is available on the
Commission's Web site at http://www.sec.gov/.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-798 Filed 1-15-10; 8:45 am]
BILLING CODE 8011-01-P