[Federal Register Volume 85, Number 15 (Thursday, January 23, 2020)]
[Rules and Regulations]
[Pages 4136-4188]
[FR Doc No: 2020-00573]

Vol. 85

Thursday,

No. 15

January 23, 2020

Part IV

Department of Commerce

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 Bureau of Industry and Security

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15 CFR Parts 732, 734, 736, et al.

 Control of Firearms, Guns, Ammunition and Related Articles the
President Determines No Longer Warrant Control Under the United States
Munitions List (USML); Final Rule

Federal Register / Vol. 85 , No. 15 / Thursday, January 23, 2020 /
Rules and Regulations

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DEPARTMENT OF COMMERCE

Bureau of Industry and Security

15 CFR Parts 732, 734, 736, 740, 742, 743, 744, 746, 748, 758, 762,
772, and 774

[Docket No.<PHONE_NUMBER>]
RIN 0694-AF47

Control of Firearms, Guns, Ammunition and Related Articles the
President Determines No Longer Warrant Control Under the United States
Munitions List (USML)

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

ACTION: Final rule.

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SUMMARY: On May 24, 2018, the Department of Commerce published a
proposed rule in conjunction with a Department of State proposed rule
to revise Categories I (firearms, close assault weapons and combat
shotguns), II (guns and armaments), and III (ammunition/ordnance) of
the USML and transfer items that no longer warrant control on the USML
to the Commerce Control List (CCL). This final rule responds to and
adopts changes based on the comments received on the Commerce proposed
rule and is being published simultaneously with a final rule by the
Department of State that will revise Categories I, II, and III of the
USML to describe more precisely the articles warranting continued
control on that list. These revisions complete the initial review of
the USML that the Department of State began in 2011 and the conforming
changes made to the EAR to control these items not warranting control
under the International Traffic in Arms Regulations (ITAR).

DATES: This rule is effective March 9, 2020.

FOR FURTHER INFORMATION CONTACT: Steven Clagett, Office of
Nonproliferation Controls and Treaty Compliance, Nuclear and Missile
Technology Controls Division, tel.<PHONE_NUMBER> or email
<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

Background

    On May 24, 2018, the Department of Commerce (referred to henceforth
as ``the Department'') published the proposed rule, Control of
Firearms, Guns, Ammunition and Related Articles the President
Determines No Longer Warrant Control Under the United States Munitions
List (USML) (83 FR 24166) (referred to henceforth as the ``Commerce May
24 rule'') in conjunction with a Department of State proposed rule to
revise Categories I, II, and III of the USML (referred to henceforth as
the ``State May 24 rule''). The Department of Commerce is issuing this
final rule that describes how articles the President determines no
longer warrant control under USML Category I--Firearms, Close Assault
Weapons and Combat Shotguns; Category II--Guns and Armament; and
Category III--Ammunition/Ordnance will be controlled on the CCL of the
Export Administration Regulations (EAR) and is being published in
conjunction with a final rule on Categories I, II, and III from the
Department of State, Directorate of Defense Trade Controls (DDTC),
completing the initial review of the USML that began in 2011 and making
conforming changes to the EAR to control these items on the Commerce
Control List (CCL).
    The changes described in this final rule and in the State
Department's companion final rule on Categories I, II, and III of the
USML are based on a thorough interagency review of those categories,
after which the Department of State concluded that the items added to
the CCL in this final rule do not provide a critical military or
intelligence advantage to the United States and, in the case of
firearms, do not have an inherently military function. The Departments
of Defense, State, and Commerce have, therefore, determined that the
EAR is the appropriate source of authority to control these firearms,
ammunition, and other articles previously controlled under Categories
I-III of the USML. There is a significant worldwide market for items in
connection with civil and recreational activities such as hunting,
marksmanship, competitive shooting, and other non-military activities.
    This final rule does not deregulate the transferred items. BIS will
require authorization to export or reexport to any country a firearm or
other weapon that is being moved from the USML to the CCL by this final
rule, including releases of related technology and software to foreign
persons in the United States. Rather than decontrolling firearms and
other items, in publishing this final rule, BIS, working with the
Departments of Defense and State, is continuing to ensure that
appropriate regulatory oversight will be exercised over exports,
reexports, and transfers (in- country) of these items while reducing
the procedural burdens and costs of export compliance on the U.S.
firearms industry and allowing the U.S. Government to make better use
of its export control resources.
    Certain software and technology capable of producing firearms when
posted on the internet under specified circumstances is being
controlled under this final rule in order to protect important U.S.
national security and foreign policy interests; however, communication
of ideas regarding such software or technology is freely permitted.
Moreover, nothing in this final rule prohibits U.S. persons within the
United States from acquiring firearms of any type--there are other laws
and regulations that control the acquisition of firearms in the U.S.

Structure of 600 Series

    BIS has created Export Control Classification Numbers (ECCNs),
referred to as the ``600 series,'' to control items that will be
removed from the USML and controlled under the CCL, or items from the
Wassenaar Arrangement on Export Controls for Conventional Arms and Dual
Use Goods and Technologies Munitions List (Wassenaar Arrangement
Munitions List or WAML) that are already controlled elsewhere on the
CCL.
    These ECCNs are referred to as the ``600 series'' because the third
character in each of the new ECCNs is ``6.'' The first two characters
of the ``600 series'' ECCNs serve the same function as any other ECCN
as described in Sec.  738.2 of the EAR. The first character is a digit
in the range 0 through 9 that identifies the Category on the CCL in
which the ECCN is located. The second character is a letter in the
range A through E that identifies the product group within a CCL
Category. With few exceptions, the final two characters identify the
WAML category that covers items that are the same or similar to items
in a particular ``600 series'' ECCN. Category II of the USML and
category ML2 of the WAML cover large caliber guns and other military
weapons such as: Howitzers, cannon, mortars, anti-tank weapons,
projectile launchers, military flame throwers, and recoilless rifles.
    Items that are currently controlled in Category II of the USML will
be controlled on the CCL under four new ``600 series'' ECCNs. Placement
of the items currently in USML Category II into the CCL's 600 series is
consistent with existing BIS practice of using 600 series ECCNs to
control items of a military nature.
    Items currently controlled in Categories I and III of the USML will
be controlled in new ECCNs in which the third character is a ``5.''
These items are not appropriate for 600 series control because, for the
most part, they have

civil, recreational, law enforcement, or other non-military
applications. As with 600 series ECCNs, the first character represents
the CCL category, the second character represents the product group,
and the final two characters represent the WAML category that covers
items that are the same or similar to items in the ECCN.

Relation to USMIL

    Pursuant to section 38(a)(1) of the Arms Export Control Act (AECA),
all defense articles controlled for export or import, or that are
subject to brokering controls, are part of the USML under the AECA. All
references to the USML in this final rule are to the list of defense
articles that are controlled for purposes of export, temporary import,
or brokering pursuant to the ITAR, 22 CFR parts 120 through 130, and
not to the list of AECA defense articles on the United States Munitions
Import List (USMIL) that are controlled by the Bureau of Alcohol,
Tobacco, Firearms and Explosives (ATF) for purposes of permanent import
under its regulations at 27 CFR part 447. All defense articles
described in the USMIL or the USML are subject to the brokering
controls administered by the U.S. Department of State in part 129 of
the ITAR. The transfer of defense articles from the ITAR's USML to the
EAR's CCL for purposes of export controls does not affect the list of
defense articles controlled on the USMIL under section 38 of the AECA,
22 U.S.C. 2778, for purposes of permanent import or brokering controls.

Overview

    For the Commerce May 24 rule, BIS received nearly 3,000 comments
and posted 1,540 unique comments and 135 bulk comments, which were
representative of issues raised by 1,256 commenters. BIS appreciates
the constructive comments it received to improve the Commerce May 24
rule and incorporated changes where appropriate. BIS also received many
comments that were outside the scope of the Commerce May 24 rule and
thus that are not addressed here. The Commerce May 24 rule and this
final rule address U.S. export controls. BIS does not regulate the
domestic sale or use of firearms in the United States, or the transfer
of firearms or related software or technology between U.S. persons
within the United States.
    BIS reviews the comments it received in the preamble to this final
rule in three parts. First, BIS describes the comments of general
applicability. Then, it describes the comments received on specific
proposed provisions included in the Commerce May 24 rule. Finally, this
final rule describes the changes being adopted from the proposed rule
and revisions being made to what was proposed in the Commerce May 24
rule. As this final rule is being published in conjunction with the
companion Department of State rule, the preamble may also reference the
State Department's analysis related to these changes.

Comments of General Applicability

USML Review Criteria

    Comment 1: Multiple commenters took issue with the proposed
transfer from the USML to the CCL of weapons that the Department of
State determined, in conjunction with its interagency partners
(including BIS), are not inherently for military end use, citing the
fact that military and law enforcement personnel regularly use them.
Many commenters asserted that being commercially available is not a
good indicator of whether these weapons merit the oversight of the
Department of State. In addition, several commenters disputed that the
U.S. market should be the basis for assessing the commercial
availability of firearms, as this is not the market to which the
proposed rule would be directed. Many commenters also asserted that
semi-automatic weapons should not be seen as just another product to be
promoted, bought, and sold like washing machines or any other consumer
product. Commenters supportive of the rule, however, agreed that export
controls of commercial firearms and ammunition which are not inherently
military, have no critical military or intelligence advantage, and have
predominant commercial applications correctly belong under the EAR.
    BIS response: The fact that a military uses a specific piece of
hardware is not a dispositive factor when determining whether it has an
inherently military function. Given that the majority of the items
referenced in these comments that will transfer to the CCL through this
final rule are widely available in retail outlets in the United States
and abroad, and widely utilized by the general public in the United
States, it is reasonable for the Department of State to determine that
they do not serve an inherently military function, absent specific
characteristics that provide military users with significantly enhanced
utility, such as automatic weapons, sound suppressors, and high
capacity magazines.
    With respect to revisions of Categories I-III, the review was
focused on identifying the defense articles that are now controlled on
the USML that are either (i) inherently military and otherwise warrant
control on the USML or (ii) if of a type common to non-military
firearms applications, possess parameters or characteristics that
provide a critical military or intelligence advantage to the United
States. If a defense article satisfies one or both of those criteria,
it remained on the USML. For example, while the U.S. military supplies
some of its service members with sidearms for military use, a sidearm
also has many uses outside of the military, such that its function is
not inherently military and therefore a sidearm does not warrant
control on the USML. Alternatively, squad automatic weapons do not
generally have such non-military uses and will remain controlled on the
USML. Any single non-military use, however, does not negate such a
weapon's inherently military function.
    BIS notes that the scope of items ``subject to the EAR,'' includes
basic commercial items, dual-use items, and military items not
warranting ITAR control. The EAR control structure is well-suited to
control this range of items, and BIS has particular historical
expertise in controlling dual-use items. The Departments of State and
Commerce also recognize that there are variations in commercial
availability of firearms, but these variations do not overcome the
Department of State's assessment that the subject firearms do not
provide a critical military or intelligence advantage such that they
warrant control under the ITAR. In addition, all exports of firearms
are subject to the laws of the importing country, and the U.S.
Government does not issue licenses for exporters to ship firearms to
countries where the end use is illegal.
    Comment 2: Many commenters asserted that many semi-automatic rifles
are easily converted to fully automatic firearms and for this reason
semi-automatic firearms and the parts and components needed to do this
should be retained on the USML.
    BIS response: BIS agrees that certain components may be used to
convert a semi-automatic firearm into a fully automatic firearm. A
fully automatic weapon is subject to the ITAR. The component(s) needed
to turn a semi-automatic into a fully automatic are also retained on
the USML. Therefore, the export of the component needed to turn the
semi-automatic into a fully automatic would require an ITAR license or
other approval. In addition, if the ITAR component was incorporated
into the semi-automatic firearm, the now automatic weapon would be

regulated by the ITAR as an automatic weapon and because of the
inclusion of the ITAR component within the firearm. To address exports
of semi-automatic firearms intended to be made automatic with a
foreign-origin component that was not subject to the ITAR, BIS as a
result of this comment has revised Sec.  740.2 in this final rule to
restrict the use of EAR license exceptions involving these components
or parts, as described below in the regulatory changes made in this
final rule.

Commerce's Mission and the Regulation of Firearms

    Comment 3: Many commenters expressed concerns about the role and
function of BIS regarding the items that are transferred from the USML
to the CCL. Some commenters expressed concerns that BIS has neither the
appropriate resources nor the appropriate expertise or mission to
process associated applications for exports of firearms. Several
commenters asserted BIS is not set up for the proper vetting of those
parties in export transactions to ensure that they are not acting as
middlemen for terrorists or other subversive entities that will use
them against our troops or our allies or, even worse, civilian
populations. Several other commenters asserted that BIS's enforcement
office, with no staff in Latin America, Africa, or many other parts of
the world, is not equipped to take the same level of preventive
measures for end-use controls. Many commenters asserted that the
transfer of these firearms to Commerce control is inconsistent with the
statutory framework enacted by Congress to regulate the export of arms.
    BIS response: The mission of BIS is to advance U.S. national
security, foreign policy, and economic objectives by ensuring an
effective export control and treaty compliance system and promoting
continued U.S. strategic technology leadership. BIS controls many items
on the CCL that implement U.S. commitments to the Wassenaar Arrangement
and other multilateral regimes related to national security. These
controls are supplemented by U.S. controls on additional items as well
as broad catch-all controls targeting end uses and end users of
concern.
    BIS licenses are subject to an interagency review process that
includes review by the Departments of State, Defense, and Energy, which
allows BIS to supplement its technical expertise with that of its
interagency partners on matters of national security, foreign policy,
regional stability, and national defense. The interagency review
process for Commerce licenses is specified in Executive Order 12981 and
in part 750 of the EAR. The well-established and transparent
interagency review process (including specifying the timelines for each
step of the review process) ensures that a variety of perspectives and
expertise from these U.S. Government agencies are able to inform the
Commerce license review process to ensure only those exports that are
consistent with U.S. export control interests will be approved. BIS
also emphasizes that it has flexibility in how it approves licenses and
can include additional safeguards as may be warranted. The interagency
review process also helps to inform how licenses are approved.
    BIS has decades of experience licensing firearms and related items
that has prepared it well for licensing these additional firearms and
related items that this final rule moves to the CCL. BIS is also
prepared because of its experiences with licensing other items that
have moved from the USML to the CCL, including such sensitive items as
components ``specially designed'' for use in military aircraft, and
certain ``spacecraft,'' including satellites, and space vehicles. In
addition, BIS estimates that existing staff will be able to manage the
anticipated increased workload of approximately 6,000 additional
license applications.
    In addition to its experience in the licensing arena, BIS has
substantial law enforcement experience. BIS's Export Enforcement (EE)
is a dedicated law enforcement organization recognized for its
expertise, professionalism, integrity, and accomplishments. EE
accomplishes its mission through preventive and investigative
enforcement activities and then, pursuing appropriate criminal and
administrative sanctions against export violators. EE works with the
Department of Justice to impose criminal sanctions for violations,
including incarceration and fines, and with the Office of Chief Counsel
for Industry and Security to impose civil fines and denials of export
privileges. EE also works closely with other federal law enforcement
agencies, including the Federal Bureau of Investigation and the
Department of Homeland Security, when conducting investigations or
preventative actions.
    EE has Export Control Officers (ECOs) in offices that cover
different regions of the world and are not limited to the specific
country in which the EE personnel are located. The ECOs are
supplemented by other personnel who engage in enforcement-related
activities. For example, BIS regularly sends BIS enforcement agents on
temporary duty assignments overseas under the Sentinel Program where
they go to areas not easily covered by existing ECOs. BIS also works
with certain foreign governments on enforcement as well as
transshipment issues. In conducting pre-license checks or post shipment
verifications, BIS also uses the resources the Department has with
various Foreign Commercial Service (FCS) officers that are located at
embassies and consulates around the world. Upon BIS's request,
Department of State Foreign Service Officers at embassies and
consulates often assist BIS with pre-license checks when the FCS is not
present.
    BIS has resources it and the other agencies use to identify parties
of concern to transactions, not all of which are public. The
information BIS and other agencies use to vet licenses and transactions
is not static and is being continuously improved to better target and
exclude entities or individuals that should not be receiving items
subject to the EAR.
    BIS also notes that this final rule imposes a requirement to file
Electronic Export Information (EEI) in Automated Export System (AES)
for nearly all exports of firearms being moved to the CCL. The EAR
includes robust recordkeeping requirements that have been enhanced
further for the firearms being moved to the CCL. BIS can and does on a
regular basis contact parties to a transaction to request all records
related to a particular export or reexport or series of exports or
reexports. These record requests may also involve in-person visits from
representatives of EE.
    BIS does not agree that the controls will be inconsistent with the
statutory framework enacted by Congress to regulate the export of
firearms. The firearms that warrant ITAR control will continue to be
subject to the AECA and its requirements as applicable. The firearms
not warranting ITAR control that this final rule will control under the
EAR will be subject to the Export Control Reform Act of 2018 (ECRA) (50
U.S.C. 4801-4852). For example, BIS has regulated long barrel shotguns
(a type of firearm) under the statutory framework enacted by Congress
in the earlier Export Administration Act (EAA) and now under ECRA. The
same will be true for the firearms that this final rule adds to the
CCL. Congress stated that one of the purposes of ECRA is ``[t]o control
the release of items for use in--(i) the proliferation of . . .
conventional weapons; (ii) the acquisition of destabilizing numbers or
types of conventional weapons; (iii) acts of terrorism . . .'' 50
U.S.C. 4811(2)(A).
    Comment 4: One commenter asserted that BIS does not have resources
to enforce export controls, even before the

addition of 30,000 firearms export licenses as a result of this rule
predicted by the Commerce May 24 rule.
    BIS response: BIS clarifies here that the reference to 30,000
licenses in the Commerce May 24 rule represented the increase as a
result of the total USML to CCL review process, not solely the USML
Categories I-III items. The estimate of 10,000 licenses is the number
of anticipated State licenses that will be impacted by the transfer to
Commerce in the Commerce May 24 rule. The larger 30,000 number was
included for context for the overall USML to CCL review process and its
implementation. As noted in the response to Comment 3 above, BIS
estimates the transfer resulting in approximately 6,000 license
applications. BIS has invested considerable effort in assessing the
increased licensing and enforcement responsibilities that will be
incurred following publication of this final rule and has determined
that it is within its means and resources to effectively administer the
subject export controls.

The Effect of the Shift in Regulatory Jurisdiction of Certain Firearms

    Comment 5: Several commenters asserted that reducing regulations on
firearms and ammunition is dangerous. One commenter asserted that
moving firearms to the CCL where they would be subject to loosened
controls seems inconsistent with enhancing national security. Another
commenter asserted that as even the National Rifle Association (NRA)
has acknowledged, ``items on the USML controlled under ITAR are
generally treated more strictly, whereas regulation under the CCL is
more flexible.'' Many commenters asserted that the proposal weakens
controls over semi-automatic assault weapons including AR-15s and AK-
47s, 50 caliber sniper rifles, and high-capacity ammunition magazines.
    BIS response: The EAR control structure is more flexible and will
reduce the burden on the regulated, but the items will still be
controlled. For example, the EAR is a more flexible control structure
because it does not require a purchase order for a license. This is
more efficient and flexible than the ITAR but does not undermine U.S.
national security. The applicant still needs to specify the parties to
the license, end use, and items to be authorized, but not having to
present a purchase order allows a more flexible licensing arrangement.
The ability under the EAR to create country-based license exceptions,
e.g., License Exception Strategic Trade Authorization (STA), is another
example. License Exception STA will only be available for the .x parts
and components under 0A501, but this is another example of the more
flexible EAR control structure. In other words, greater flexibility
under the EAR does not mean decontrol.
    Further, having the ITAR control items that are in commercial use
and do not have an inherent military function does not help promote
U.S. national security, because it takes time and resources away from
the Department of State that could be better used to focus on items
that do warrant ITAR control. BIS has decades of experience in
regulating dual-use items, including long barreled shotguns controlled
under 0A984 and certain chemicals and toxins that have commercial
applications, but are controlled for chemical and biological weapons
reasons, e.g., ricin and sarin gas. See, e.g., 50 U.S.C. 4811(2)(A)(i)
(stating that one of the policies of ECRA is to control the
proliferation of weapons of mass destruction). BIS also has a proven
track record for licensing and enforcing the controls for other items
that have moved from USML to the CCL.
    BIS further clarifies that the AK-47 automatic firearm and any
other automatic firearm are retained on the USML. The semi-automatic
firearms this rule adds to the CCL will require a U.S. Government
authorization for export.
    Comment 6: One commenter noted that according to the State May 24
rule, ``The Department of Commerce estimates that 4,000 of the 10,000
licenses that were required by the [State] Department will be eligible
for license exceptions or otherwise not require a separate license
under the EAR.'' The commenter noted that the Commerce May 24 rule
clarifies, ``The other 4,000 applicants may use license exceptions
under the EAR or the ``no license required'' designation, so these
applicants would not be required to submit license applications under
the EAR.'' The commenter asserted that ``while it recognizes that other
forms of oversight may be available, this dramatic difference in the
number of licenses raises our concern.''
    BIS response: This comment on the meaning of the 4,000 Department
of State licenses that will not require a license under the EAR creates
a good opportunity for BIS to clarify how the EAR controls are
structured. Under the EAR, an exporter does not have a right to export.
If the EAR does not impose a license requirement or some other
prohibition, the exporter may proceed under the No License Required
(NLR) designation. The NLR designation may be available for certain
0x5zz.y exports, but otherwise all other exports will require a U.S.
Government authorization. Therefore, the reference to 6,000 being
authorized under licenses and 4,000 under license exceptions and a
small subset as NLR, is not a dramatic change. When BIS imposes a
license requirement under the EAR, this means the exporter will need to
meet all of the applicable requirements of a license exception, or
obtain a license from BIS to proceed with the export. The license
exceptions or portions of license exceptions that will be available for
these items moved to the CCL, including some of the new requirements
and limitations added, will be sufficient to protect U.S. export
control interests.

3D Printing of Firearms

    Comment 7: Three-dimensional (3D) printing is a type of additive
manufacturing based on the principle of combining numerous, extremely
thin layers of a physical material (including plastics, metals, and
even living cells) in a controlled build process and joining them to
gradually build up a physical, three-dimensional object. Computer
controlled manufacturing may be either subtractive or additive.
Subtractive manufacturing includes traditional manufacturing methods
such as turning, grinding or milling, where metal or other material is
removed from the base shape to form the final product. For example, you
take a steel block and remove material until it becomes the final item.
In additive manufacturing, which is often referred to as 3D printing,
material such as metal or plastic is laid down in very thin layers one
upon the other fusing together until the final net shape is achieved.
In both instances, the adding or removing of the material is controlled
by a computer without human intervention. 3D printers utilize
electronic digital files to process the materials into a physical
object, and these files can be distributed over the internet. A 3D
printer or computer numerically-controlled (CNC) equipment uses
Computer Aided Manufacturing (CAM) files in G-code or AMF format as
executable code to produce certain items. There are currently
technological limitations for the effectiveness of 3D printing of
firearms, but the concept has been demonstrated and the ability to
manufacture commercially viable firearms is inevitable given the
increasing improvements of 3D printing equipment and 3D printing
materials. Congress directed that the export control system under ECRA
is intended to have ``the flexibility to be adapted to address new
threats in the future,'' and this final rule implements that
instruction. 50 U.S.C. 4811(8).

    Technology and software are required for 3D printing of firearms
and are critical for the 3D printing manufacturing process. Publicly
posting such technology and software online without restriction creates
the risk that foreign persons and countries, including countries of
concern, will be able to obtain technology and software for 3D printing
of firearms. In the absence of controls on the export, reexport, or in-
country transfer of such technology and software, such items could be
easily used in the proliferation of conventional weapons, the
acquisition of destabilizing numbers of such weapons, or for acts of
terrorism. As noted earlier, Congress expressly directed that ECRA
should be used to address these risks. 50 U.S.C. 4811(2)(A).
    Like 3D printing, CNC milling or machining is an automated
manufacturing process controlled by technology and software. CNC
milling/turning/grinding are all subtractive manufacturing processes in
which the computerized equipment removes layers of material from a
base--known as the workpiece or the blank--to produce a manufactured
part or item. As with 3D printing, the posting online of CNC technology
and software needed to create working firearms creates export control
concerns.
    Under the ITAR, the unrestricted public dissemination of technical
data (as defined in section 120.10 of the ITAR) in a manner that allows
access by foreign persons--including through the internet--is an export
requiring appropriate authorization. For purposes of the CCL, Commerce
has historically taken the approach (with limited exceptions) that
material is not subject to export control if it has been ``published''
within the meaning of 15 CFR 734.7, including through posting on the
internet. The proposed rules published by the Departments of State and
Commerce took these differences in the ITAR and EAR control structures
into account, and the Commerce proposed rule acknowledged these
differences to ensure commenters had an opportunity to fully take these
differences into account when submitting their comments on the Commerce
rule. See page 24167 of the Commerce May 24 rule and 15 CFR 734.7.
    Comments on the Commerce proposed rule reflected the commenters'
understanding of these differences between the ITAR and EAR control
structures. BIS received many comments expressing concerns about 3D
printing of firearms and whether appropriate controls would be in place
under the EAR. It also received a small number of commenters that
supported the part 734 criteria. The commenters critical of the part
734 criteria provided the following input:
    (1) Part 734 criteria should be changed to regulate 3D printing,
even if the information would otherwise be publicly available. These
commenters were concerned that the application of the part 734 criteria
appears to give rise to the possibility of widespread and openly
sanctioned circulation of open source, non-proprietary instructions for
using computer-aided design (CAD) files to produce operable firearms
via 3D-printing technology, or text files to produce such firearms via
CNC milling of the firearms. Commenters requested BIS to weigh the fact
that the part 734 criteria would make posting on the internet of ECCN
0E501 technology (e.g., 3D printer specs) for the production of an ECCN
0A501 firearm publicly available information that is no longer subject
to the EAR.
    (2) Allowing 3D-printed gun technology and software to be posted
freely online for use with 3D printers will make it easier to obtain
firearms in the U.S. and abroad. These commenters were concerned that
the combination of internet dissemination and do-it-yourself 3D
production is problematic because the government would have no
oversight of the producer, the end use or the end user of the firearm.
Other commenters in this area were greatly concerned about the
perceived loss of controls on 3D gun-printing plans, which these
commenters asserted has increasingly assisted bad actors in enhancing
their capabilities to inflict atrocities around the world. Several
commenters cited Defense Distributed v. Department of State, a lawsuit
filed in the U.S. District Court for the Western District of Texas and
appealed to the U.S. Court of Appeals for the Fifth Circuit,, in
support of the State Department's decision to restrict the 3D printing
of firearms under the ITAR (i.e., requiring appropriate authorization
under the ITAR prior to allowing unrestricted posting on the internet).
    (3) Unregulated 3D printing would undermine U.S. efforts, as well
as governments overseas, to vet parties obtaining firearms, and to
track 3D printed firearms. These commenters noted that with access to
3D printing machines and plans on how to build a gun, anyone could
circumvent U.S. laws that seek to prevent known criminals from
obtaining U.S. firearms. Other commenters in this area were
particularly concerned that these changes would result in an increase
in the number of untraceable firearms in circulation because as 3D
printing technology becomes more widely available, the likelihood that
it may be used to construct operable firearms that are exempt from
serialization requirements would increase.
    (4) The transfer of control of these items to the CCL would
undermine longstanding U.S. efforts to counter proliferation of small
arms in the world. Commenters in this area noted that they couldn't
understand how allowing untraceable 3D printing of firearms would serve
U.S.-recognized goals to combat illicit trafficking of firearms.
Commenters in this area also noted that the United States is the
world's largest donor, as the commenter understands it, to helping
countries build their ability to trace weapons, secure weapons
stockpiles, and to destroy those stocks when warranted. However,
according to the commenter, this transfer of authority to Commerce
appears to open the door to unfettered 3D printing of firearms, which
threatens to undermine nearly all those efforts.
    One commenter asserted that the proposed changes may result in
increased circulation of plans for non-automatic weapons produced by 3D
printing technology, and this may be at odds with the Wassenaar
Arrangement.
    A small number of commenters supported the application of the
criteria in part 734 and emphasized that the information is so widely
available in various formats that trying to control it would not be
practical or warranted. One commenter noted that America boasts
hundreds of millions of privately-owned firearms and has produced
countless books, magazine articles, videos, websites, and online forums
that exhaustively detail firearm technology and use. Thus, this
commenter asserted it is difficult to imagine any information about the
design, development, production, manufacturing, and use of firearms
that is not already within the public domain and this same information
is commonly available overseas. Other commenters that supported the
part 734 criteria asserted that they had concerns generally over their
First Amendment rights being possibly violated unless the criteria in
part 734 applied equally to information posted online. These commenters
requested an end to any harassing or censorship of firearm instructors
within the U.S., as well as bloggers, writers, and those posting online
guides or tutorials discussing technology about defense items because
these activities seem to be a clear violation of the First Amendment
right to free speech. Given the foreign policy and national security
interests at stake, Commerce believes that the restrictions imposed by
this rule

are appropriately tailored. Commerce is also aware of, and has taken
into account, the constitutional and statutory concerns raised by the
plaintiffs in the Defense Distributed case and by the plaintiffs in
Washington v. Dep't of State, No. 2:18-cv-01115-RSL (W.D. Wash.).
Commerce also notes that it has received correspondence from members of
Congress concerning the issues raised in Defense Distributed.
    BIS response: The Commerce May 24 proposed rule addressed the
application of part 734, including Sec.  734.7, for items (specifically
for certain information and software) proposed for transfer from USML
Categories I-III (see 83 FR 24167). These criteria support the free
exchange of public information and, as a general matter, do not warrant
being changed. However, the concerns commenters raised about the
specific application of part 734 criteria to 3D printing of firearms
suggests that modification to the proposed controls is warranted.
    With the transfer of certain firearms from the USML to the CCL,
rifles, pistols, revolvers and related parts and components will fall
within ECCN 0A501, and BIS will be responsible for their licensing.
This transfer adds to Commerce's existing licensing jurisdiction over
most shotguns and shotgun shells as well as optical sighting devices.
The items that remain on the ITAR include fully automatic and selective
fire weapons, weapons for caseless ammunitions, silencers and certain
high capacity (50 rounds or greater) magazines, and certain military-
specific ammunition such as tracers.
    BIS recognizes that several commenters, including a large number of
private citizens, expressed concern over global access to 3D printing
technology and software with the transfer of certain firearms to the
CCL. BIS also recognizes that several commenters and plaintiffs in
Washington v. Dep't of State raised concerns about risks to public
safety related to domestic access to 3D printing technology and
software. BIS shares the concerns raised over the possibility of
widespread and unchecked availability of the software and technology
internationally, the lack of government visibility into production and
use, and the potential damage to U.S. counter proliferation efforts. In
this final rule, BIS addresses the concerns raised about 3D printing of
firearms by making certain technology and software capable of producing
firearms subject to the EAR when posted on the internet under specified
circumstances. This control will help ensure that U.S. national
security and foreign policy interests are not undermined by foreign
persons' access to firearms production technology. Although the
Department of State determined that such technology and software do not
warrant continued control under the USML, maintaining controls over
such exports under the EAR remains in the national security and foreign
policy interests of the United States, as described below. As noted in
other places in the Commerce final rule, the movement of items from the
USML is not a decontrol, and appropriate controls must be in place to
protect U.S. national security and foreign policy interests, such as by
maintaining Commerce licensing authority over certain technology and
software capable of producing firearms subject to the EAR when posted
on the internet under specified circumstances as described in this
final rule. And although the domestic transfer of commodities is
outside the purview of BIS jurisdiction, the concerns related to the
unrestricted posting of CAD files on the internet, more accurately
described in this final rule as CAM files, have been addressed in this
final rule and nothing in this final rule affects existing federal or
state laws that pertain to the manufacture, possession, use, or
commercial sale of firearms.
    BIS provides more information about the specific changes below
under the Description of Regulatory Changes under the heading Revision
of ``Published.''
    BIS does not agree with the commenter that stated that the part 734
criteria are at odds with the Wassenaar Arrangement. As described both
in the proposed rule and this final rule, part 734 remains consistent
with the Wassenaar Arrangement. BIS's changes in this final rule,
however, ultimately addressed this commenter's concern.
    In response to commenters who favored the part 734 criteria as
outlined in the proposed rule, BIS notes that information regarding
firearms, including information for production of firearms, is often
widely available, and nothing described below would restrict persons
from publishing books or magazines, such as those that could be found
in a local public library, and that the changes made to part 734
described below are limited to addressing a specific fact pattern
(posting on the internet of certain types of files) that warrants U.S.
Government oversight to ensure unrestricted releases are not being made
to persons of concern outside the United States or to foreign persons
in the United States. BIS also took into account these commenters'
support for the part 734 criteria and their First Amendment concerns
but did not adopt the approach that they advocated. Given concerns
regarding First Amendment restrictions the control is appropriately
tailored to only impact technology and software in an electronic
format, such as AMF or G-code, that is ready for direct insertion into
a computer numerically controlled machine tool, additive manufacturing
equipment to produce the firearm frame or receiver or complete firearm.
This technology and software are functional in nature, having the
capability to cause a machine to use physical materials to produce a
firearm frame or receiver or complete firearm. Limitations on the
dissemination of such functional technology and software do not violate
the right to free expression under the First Amendment. Nor does the
final rule violate the right to keep and bear arms under the Second
Amendment. The rule does not prohibit U.S. persons within the United
States from acquiring firearms of any type; indeed, nothing in this
rule prohibits persons within the United States from developing,
discussing, or transferring by hand or mail (e.g., by the U.S. Postal
Service or a common carrier) CAM files related to 3D-printing
technology and software. The domestic transfer of commodities is
outside of the scope of BIS jurisdiction and would be within the
purview of domestic law. The release of controlled technology in the
United States would only be regulated to the extent it would constitute
a deemed export (i.e., release to a foreign person). This means
transfers between U.S. persons within the United States are not
regulated under the EAR so long as there is no release to a foreign
national. The ITAR takes a similar approach. BIS's approach in using
targeted changes is not intended to otherwise change the other criteria
in part 734 that these commenters assert they strongly support.
    In response to the comments received on the proposed rule, BIS has
reflected on the need to take into account various interests in
regulating technology and software for the 3D printing of firearms. At
the time of the proposed rule, BIS believed that its existing framework
struck the appropriate approach in providing for national security and
foreign policy control of firearms that would transfer to the CCL.
Since that time, BIS has had considerable time to review the comments
related to 3D printing of firearms. Although the military usefulness of
3D printed firearms is not significant, there are other U.S. national
security and foreign policy interests, as described by commenters, in
regulating the unlimited

access to certain files for the 3D printing of firearms that the
framework of BIS regulations as described in the proposed rule did not
adequately address. As the State Department noted in the Defense
Distributed litigation, unrestricted export of such files abroad could
have a potential detrimental effect on aspects of U.S national security
and foreign policy, including by undercutting efforts to combat the
illicit trafficking of firearms or possession of firearms by hostile
parties or dangerous organizations, as well as other efforts to assist
other countries in protecting domestic and international security. BIS
believes this potential detrimental effect on U.S. national security
and foreign policy warrants the control of the export of certain files
for the 3D printing of firearms set forth in this rule.
    At the same time, BIS recognizes that there is a longstanding
tradition to encourage the free exchange of ideas as already
acknowledged in BIS regulations, such as in 15 CFR 734.7. The agency
takes seriously its responsibility to regulate judiciously, seeking to
assert jurisdiction only as needed and consistent with its statutory
authority. As set forth in the Export Control Reform Act of 2018, 50
U.S.C. 4801-4852, Commerce's policy is to use export control only to
the extent necessary to restrict the export of items that would make a
``significant contribution to the military potential of another country
. . . which would prove detrimental to the national security of the
United States'' or ``further significantly the foreign policy of the
United States or to fulfill its declared international obligations.''
50 U.S.C. 4811(1)(A)-(B). Further, Commerce must ensure that its
controls are ``tailored to focus on those core technologies and other
items that are capable of being used to pose a serious national
security threat to the United States.'' 50 U.S.C. 4811(2)(G).
    Because of the national security and foreign policy risks
associated with the unlimited access and unrestricted production of 3D
printed firearms, BIS is offering a tailored approach, consistent with
its statutory obligations, that places restriction on the posting on
the internet of files for the printing of certain firearms and their
critical elements. As set forth in Sec.  734.7(c) in this final rule,
only technology or software for the complete firearm, its frame, or its
receiver are subject to BIS licensing requirements, aligning BIS
controls with existing statutory concepts set forth in the definition
of ``firearm'' under the Gun Control Act (GCA), 18 U.S.C. 921(a)(3).
Recognizing that libraries and academic institutions within the United
States may already carry books or other materials related to firearms
manufacturing, BIS does not seek to regulate this existing landscape of
activity for the items transferred from the USML to CCL, consistent
with its treatment of firearms it controlled on the CCL prior to this
final rule. Instead, since the harm identified with unrestricted
dissemination has been tied to the easy and untraceable distribution in
electronic format that the internet provides, BIS has crafted its rule
to regulate dissemination in this space as it poses a significant risk
to U.S. national security and foreign policy.
    As a result, Commerce has reached the conclusion that U.S. national
security and foreign policy necessitate that BIS maintain controls over
the 3D printing of firearms when such software and technology is posted
on the internet. The potential for the ease of access to the software
and technology, undetectable means of production, and potential to
inflict harm on U.S. persons and allies abroad present a grave concern
for the United States. Without regulatory oversight, U.S. foreign
relations and national security interests could be seriously
compromised. For these reasons, this final rule provides that
technology and software ready for insertion into an automated
manufacturing tool that makes use of the software or technology to
produce a firearm frame, receiver, or complete firearm is subject to
the EAR, consistent with the regulation of such software and technology
when previously controlled under the USML.

Vetting Transaction Parties and Monitoring Exports

    Comment 8: Many commenters were concerned about a possible
reduction in the monitoring of the end users of exported firearms and
publicly available information about this monitoring. These commenters
asserted that public reporting of Blue Lantern information is mandatory
and there are readily available statistics about the results. Some
commenters requested that if the proposed rules move forward, the BIS
program be strengthened to address the need to monitor the end users of
exported firearms.
    BIS response: BIS does not publish end-user monitoring information
in the same format as the Department of State, but the same type of
information is available publicly from BIS. The new ECRA maintains an
annual reporting requirement to Congress that provides an additional
layer of transparency. Specifically, under Section 1765(a)(6) of ECRA,
the Secretary of Commerce shall submit a report to Congress that
includes a summary of export enforcement actions, including of actions
taken to implement end-use monitoring of dual-use, military, and other
items subject to the EAR. BIS already has practices in place to
continuously evaluate its end-use monitoring program and to improve it
as opportunities to do so are identified. BIS intends to continue those
efforts for the firearms that are moved to the CCL with this final
rule.

Registration Requirement for Screening

    Comment 9: Several commenters expressed concerns that BIS will not
have access to the same databases and background information that the
Department of State uses to evaluate license applications since the EAR
does not require registration. These commenters asserted that not
including a registration requirement will deprive regulators of an
important source of information and decrease transparency and reporting
regarding gun exports. Some commenters recommended removing or limiting
the registration fee for manufacturers but keeping the requirement for
registration. Another commenter suggested waiving the fee for
manufacturers who do not, in reality, export these items.
    BIS response: BIS, along with the Department of State, considered
these concerns and determined that the interagency license review
process maintains appropriate oversight of the items at issue. BIS's
export licensing requirements and process are calibrated both to the
sensitivity of the item and the proposed destination. Additionally, all
requests for export licenses for firearms remain subject to interagency
review, including by the Department of State.
    BIS does not need the information included in the ITAR registration
requirement to regulate those items under the EAR. To apply for a
license under the EAR, the applicant is required to create a free
account in BIS's online submission system called SNAP-R. The SNAP-R
account includes basic information about the exporter. In addition,
each party identified on the license application is reviewed. The
requirements to file EEI in AES is another important way that BIS
obtains information needed to effectively track exports.
    BIS agrees that if there were a registration requirement, removing
or limiting the fee for registration would ease the burden on small
businesses and individuals. However, as noted above, BIS does not
believe that the information included in the registration requirements
is necessary for BIS to

effectively license and enforce the EAR. Therefore, registration
requirements, even if they are free, would impose an unnecessary burden
on individuals, small companies, and manufacturers.

Brokering

    Comment 10: Many commenters asserted that the proposed changes to
USML Categories I-III would mean that brokers of semi-automatic weapons
and related ammunition will be exempt from registration and licensing
that is currently triggered by their inclusion as defense articles on
the USML. Other commenters correctly understood that State would
continue to impose brokering controls for items which moved to the CCL
that are also listed on the USMIL. One of these commenters asserted
that they are pleased to see that the State May 24 rule attempts to
maintain effective oversight of arms brokers by ensuring that brokers
must register with the Department of State and seek a license. This
commenter asserted that these provisions are critical in helping
mitigate illegal arms trafficking to major conflict zones and
transnational criminal organizations.
    BIS response: BIS clarifies that the Department of State in its May
24 rule and its final rule retains brokering controls for items which
are now listed on the CCL that are also listed on USMIL. BIS directs
the public to review the State final rule for information on the
brokering controls under the ITAR. The Department of State in its
companion rule noted it does not intend to impose a double licensing
requirement for individuals undertaking activities on behalf of another
to facilitate a transaction that will require licensing by the
Department of Commerce. In practical terms, this means the vast
majority of exporters who only export firearms on the CCL directly from
the U.S. or reexport U.S.-origin firearms on the CCL are not
``brokers'' and will not have to register with DDTC.

Congressional Oversight

    Comment 11: Multiple commenters expressed concerns that this final
rule would reduce congressional oversight of arms transfers because BIS
does not have to notify Congress of firearms sales in excess of $1
million, as the Department of State does. These commenters asserted
that: (1) Congress needs to be able to review these types of firearms
sales to ensure large risky exports do not proceed; (2) Congress has
played an important role in stopping several risky firearms sales
because of the congressional notification requirement (commenters
provided examples of sales from 2017 to Turkey and the Philippines that
they asserted were blocked by Congress); (3) congressional
notifications are a valuable tool for the public to be able to see when
large firearms sales are being proposed; and (4) certain members of
Congress have asserted their concern that not including a congressional
notification requirement under the EAR would be counter to
congressional intent.
    BIS response: The Department of State in its companion rule also
acknowledges those concerns and notes that those firearms that the U.S.
Government deemed through the interagency review process to warrant
continued control under the ITAR as defense articles will remain
subject to congressional notification requirements in conformity with
section 36 of the AECA and Executive Order 13637. In this response, BIS
also puts the congressional notification issue into context under the
EAR and the statutes that the regulations implement for items ``subject
to the EAR.''
    BIS notes that at the time of publication of the Commerce May 24
rule, the Export Administration Act (EAA) did not include a
congressional notification requirement for firearms, nor did any other
statute that the EAR implements for firearms. Therefore, BIS did not
include a congressional notification requirement because it did not
want to prejudge congressional intent in this area. On August 13, 2018,
the President signed the National Defense Authorization Act for Fiscal
Year 2018, which included ECRA. Congress did not include in ECRA any
requirements for congressional notification for firearms and related
items exports. Therefore, BIS is not including a congressional
notification requirement in the final rule.

Overseas Trafficking, Proliferation, and Diversion of Firearms

    Comment 12: Multiple commenters expressed a general concern that
the transfer to the CCL increases the risk of overseas trafficking,
proliferation, or diversion. Multiple commenters also expressed
concerns about the BIS end-use monitoring (EUM) capabilities and the
impact the companion Department of State rule has on the Department of
State's EUM programs. Many commenters asserted that the decision to
relax controls on the export of firearms will make it easier for
terrorists to obtain the same dangerous firearms that have been used in
mass shootings in the United States. Many commenters also asserted that
these firearms are weapons of choice for criminal organizations,
narcotics traffickers, and gun traffickers, and making it easier for
them to get firearms will make their activities worse and further fuel
armed conflict abroad.
    BIS response: This final rule does not deregulate the export of
firearms. All firearms and major components being transferred to the
CCL will continue to require a U.S. Government authorization. Further,
BIS has both a robust EUM program and a law enforcement division
sufficiently capable of monitoring foreign recipients' compliance with
their obligations regarding the transfer, use, and protection of items
on the CCL. Additionally, the Federal Bureau of Investigation and the
Department of Homeland Security will continue to investigate and
enforce civil and criminal violations of the export control laws as
appropriate.
    BIS does not agree that moving these firearms to the CCL will mean
less oversight to prevent gun trafficking. Exporting these firearms
will require a U.S. Government authorization. The EAR also includes a
robust set of end-use and end-user controls that will supplement the
CCL based license requirements. Similar to the ITAR, BIS will impose
appropriate conditions as needed on authorizations or not approve
certain transactions if there is a concern over risk of diversion. BIS
also will maintain a robust end-use verification program for the
firearms and other items moved to the CCL from USML Categories I-III.
In addition, most firearms will require submission of a license, and
the license review policies would lead to a denial for exports to
terrorists. The EAR also includes sections in part 744, e.g., Sec.
744.14 for Foreign Terrorist Organizations (FTO), that impose
additional restrictive license requirements and license review policies
for terrorists identified under certain designations on the Department
of Treasury's Specially Designated Nationals (SDN) list. This is
significant because it excludes the use of any EAR license exceptions;
imposes a license requirement for all items subject to the EAR,
including the firearms being moved to the CCL; and acts as an
additional safeguard for transactions involving EAR items located
outside the U.S. that the Department of Treasury controls are not able
to reach.
    BIS included provisions in the Commerce May 24 rule and in this
final rule to address this issue by including a presumption of denial
license review policy under the regional stability reason for control
for these types of end users. Specifically, in this final rule, the
license review policy in Sec.  742.6(b)(1)(ii)

is a policy of denial when there is reason to believe the transaction
involves criminal organizations, rebel groups, street gangs, or other
similar groups or individuals, that may be disruptive to regional
stability, including within individual countries.
    Comment 13: One commenter, a human rights organization, asserted
that ``it has for many years called attention to the risks associated
with untrammeled export of small arms and light weapons around the
world.'' This commenter asserted that ``these arms have been associated
with the deployment of child soldiers and the rise of insurgent
groups.'' This commenter also asserted that ``these firearms are easier
to divert than larger weapons and often end up in the illicit market.''
    BIS response: BIS does not agree that there is anything in the EAR
that will make the possibility of diversion any greater than it was
under the ITAR. These concerns of diversion are taken into
consideration by the export control system and underlie the basis for
some of the agency's controls. BIS also notes that the U.S. Government
continuously monitors the export control system to determine where the
most likely points of diversion are and takes actions to prevent
potential diversion points by using existing license review policies,
rescinding or revoking prior authorizations, or imposing new license
requirements or other prohibitions.

Impact on Foreign Law Enforcement

    Comment 14: One commenter expressed concern that foreign law
enforcement personnel in particular are at risk of having the firearms
and ammunition that would be transferred to the CCL used against them.
Another commenter asserted that moving these firearms to the CCL will
make it hard for foreign law enforcement to counter gun trafficking.
    BIS response: These assertions are mitigated by the fact that, as
stated previously: (1) These articles remain subject to BIS's EUM
programs that vet potential end users of concern, and (2) applications
for firearms and ammunition licenses will be approved only if the end
use is permitted under the laws and supervision of the importing
country.
    BIS notes that this final rule is consistent with U.S. multilateral
commitments, e.g., to the Wassenaar Arrangement and the United Nations
for conventional arms reporting. The support documentation requirements
are consistent with Organization of American States (OAS) requirements
to require an import certificate issued by the importing country. This
support document requirement applies to other countries that also
impose a requirement for an import certificate prior to allowing an
import of a firearm, permitting these other countries to better control
the flow of firearms coming into their countries. In addition, U.S. law
enforcement agencies, including BIS's Office of Export Enforcement,
also coordinate with law enforcement agencies outside the U.S., as was
referenced above in the BIS response to Comment 3. The area of
preventing illegal transshipments is a good example of where various
countries have worked together, including law enforcement agencies,
regulators, and policy makers, to come up with standards and protocols
to reduce illegal transshipments, and this work will continue.

Human Rights Issues

    Comment 15: A number of commenters suggested the proposed rule, if
made final, may have a negative impact on human rights in foreign
countries. BIS also received many comments asserting ``it is now
recognized that rape and sexual assault are systematically used as
weapons of war in conflicts around the world.'' One of these commenters
asserted that ``in interviews with women and girls who have survived
sexual violence during conflict, a very high number of their stories
include descriptions of the torture they endured at the point of a gun.
Although the particular models of firearms involved are seldom
identified, there is no doubt that a military-style weapon contributed
to gross violations of their human rights.'' Many commenters asserted
that even after a conflict has officially ended, the weapons left
behind are used all too often by perpetrators of domestic violence.
    BIS response: BIS will use its resources and expertise in this area
to vet parties involved in transactions subject to the EAR for human
rights concerns. Similarly, as part of the aforementioned continuing
interagency review of export licenses for firearms, the Departments of
State and Defense will remain active in the interagency review process
of determining how an item is controlled and will review export license
applications on a case-by-case basis for national security and foreign
policy reasons, including the prevention of human rights abuses. As
stated previously in this final rule and in the companion rule
published by the Department of State, the Department of State will
continue vetting potential end users when reviewing Commerce licenses,
to help prevent human rights abuses.
    BIS does not anticipate authorizing exports of firearms to regions
involved in active conflicts because of the presumption of denial
license review policy for regional stability. Commerce on its licenses
as well as in its license exceptions includes certain requirements and
conditions to ensure subsequent disposition or use of the item will
continue to be in accordance with U.S. export control interests. These
requirements are enhanced by the EAR end-use controls in part 744,
which in many cases apply to transfers (in-country). Ultimately, the
issue raised by this commenter is one of the reasons why the license
review process is done in a careful and deliberative way to ensure as
much as possible that the items authorized for export will not
subsequently be used in ways not in accordance with the regulations, as
well as larger U.S. national security and foreign policy interests.

Effect on Other Countries

    Comment 16: Some commenters asserted moving these firearms to the
CCL would increase the likelihood for greater destabilization and
conflict worldwide as well as for these weapons to be trafficked back
into the U.S. for nefarious uses here. Some commenters asserted that
``military-style semi-automatic rifles and their ammunition, are
weapons of choice for criminal organizations in Mexico and other Latin
American countries that are responsible for most of the increasing and
record levels of homicides in those countries.'' These commenters
asserted that this will only send more asylum seekers fleeing to U.S.
borders.
    BIS response: BIS does not agree that the transfer of items to the
CCL would increase the likelihood of greater destabilization and
conflict worldwide, or specifically in Mexico or other Latin American
countries. As described above, each foreign government decides what
firearms may be imported into its country. In addition, as noted above,
these items will be controlled for regional stability, so each license
application will be reviewed to evaluate whether the export of these
firearms may contribute to destabilizing that foreign country or other
regional stability concerns.

U.S. Nationals and Interests Overseas

    Comment 17: Some commenters asserted that this change in licensing
jurisdiction could lead to an unfortunate future situation where our
own combat troops face troublemakers armed with American-made weaponry.

    BIS response: The U.S. export control system, whether that is the
export controls implemented under the EAR or the ITAR, is focused on
protecting U.S. national security and foreign policy interests.
Effective controls are in place under the EAR to ensure as much as
possible that items subject to EAR do not endanger U.S. troops, U.S.
nationals, or other U.S. interests is one of the key objectives of EAR
controls. This final rule is intended to ensure that items being moved
to the EAR will not endanger U.S. interests. BIS, as well as the
Department of State, works to ensure that diversions do not occur, but
it is a concern not unique to firearms moved to the CCL, and something
the U.S. export control system is designed to counter.

Consistency With U.S. Multilateral Commitments

    Comment 18: Other commenters suggested that this rule contravenes
international commitments the United States has made through mechanisms
such as the Wassenaar Arrangement. One commenter asserted that the U.S.
has already alienated many of our allies, and this rule change will
further aggravate relations by pushing more firearms into their
countries.
    BIS response: The transfer of the concerned items to the CCL does
not contravene U.S. international commitments, as the U.S. Government
will continue to apply a high level of control to these items and
require U.S. Government authorization for all exports of firearms and
major components. Further, the controls being implemented under the EAR
with this final rule are consistent with U.S. multilateral commitments,
e.g., to the Wassenaar Arrangement, the United Nations, and the OAS.
BIS notes that foreign governments decide what items may be imported
into their countries and how such items will be regulated within that
country. Regardless of the U.S. export control system, an exporter must
still meet the requirements of an importing country and if the
importing country does not allow the importation of these items or
requires certain requirements to be met, those foreign regulatory or
other legal parameters set the parameters and scope for what may be
imported, who may use such items, and for what end uses.

Reporting Requirement for Political Contributions and Fees to the EAR
To Prevent Corruption in the Arms Trade

    Comment 19: One commenter asserted that the transfer of certain
Categories I-III items from ITAR to EAR control will mean the loss of
the reporting requirements outlined in 22 CFR part 130. This commenter
asserted that part 130 requires exporters to report payment of certain
political contributions, fees, and commissions related to the sale of
defense articles and services to the armed forces of a foreign country
or international organization to the DDTC and because the EAR does not
have the same type of reporting requirement, this may result in
increased corruption in arms sales. The same commenter asserted that
``in many countries around the world, corruption is rampant within
their arms procurement systems, as foreign officials seek to steal
funds from their national budgets for their personal gain,'' so not
including a reporting requirement in the EAR may make the corruption
worse. The same commenter asserted that under the Commerce May 24 rule,
BIS would limit its ability to obtain useful information on U.S.
defense companies and prosecute bribery.
    BIS response: BIS does not agree with these assertions. The Foreign
Corrupt Practices Act (FCPA) already prohibits this type of corruption
activity and provides a robust regulatory scheme. FCPA applies to all
items subject to the EAR, including items that will be moved from the
USML to the CCL. Therefore, imposing a separate reporting requirement
is not needed under the EAR to prevent this type of illegal activity.
BIS highlights here in the preamble of this final rule that any party
involved in a transaction ``subject to the EAR'' must also follow any
other applicable U.S. laws, including the FCPA. Questions on the FCPA
should be directed to the Department of Justice and the U.S. Securities
and Exchange Commission (SEC).

Commenters Asserting Burdens Will Be Reduced (for Purposes of E.O.
13771)

    Comment 20: A firearms trade association commenter asserted that
``it has reviewed the proposed rule thoroughly with its membership . .
. and most members have told it that the final versions of the rules
would eventually be beneficial because they would significantly reduce
the overall burden and cost of complying with controls on the export of
commercial firearms and ammunition.'' This trade association noted that
``[a]ll who responded told us that there would be an initial short-term
increase in burden and cost because of the need to re-classify
thousands of commodity, software, and technology line items and SKUs
affected by the new rules, but that the long-term regulatory burden
reduction would significantly outweigh the short-term need to adjust
internal compliance programs and practices.'' One firearms industry
trade association commenter noted that most of ``its members,
particularly the small- and medium-sized companies, believe that the
changes will be economically beneficial for them because the eventual
regulatory simplification and cost reductions will allow them to
consider exporting when they might not have otherwise.'' Additionally,
many small independent gunsmiths commented about the disproportionate
negative impact the costs of ITAR compliance had on their businesses.
Several commenters asserted that by moving such items to the EAR, many
domestic manufacturers who do not export would be relieved of the
significant financial burden of registering under the ITAR. One trade
association commenter asserted that the costs for their members would
be reduced because under the Commerce system, there are no fees to
apply for licenses. This commenter also asserted that their burdens
would be reduced because the Commerce license application forms are
vastly simpler compared to the Department of State license application
forms.
    One commenter asserted that ``one of the benefits under the EAR
will be that controls on less sensitive and widely available basic
parts, components, and technology are more tailored and allow for less
burdensome trade with close allies through license exceptions.'' This
same commenter also asserted that ``sales with regular customers can be
combined in to fewer license applications, thus reducing overall
paperwork to achieve the same policy objectives.''
    One trade association commenter asserted that these changes ``will
lead to growth for U.S. companies, more jobs in the United States, and
related economic benefits for the cities and states where the members
reside while accomplishing the same national security and foreign
policy objectives they have always had.'' One commenter asserted that
the items being moved to the CCL are manufactured in many parts of the
world and that by engaging more with the world, U.S. firearms
manufacturers will improve their knowledge and capability. One
commenter that identified himself as a U.K. citizen, who often travels
to the U.S. and visits sporting goods stores, asserted that the price
of certain items, e.g., cartridge cases and bullets, are less than half
the price charged in the U.K. The commenter asserted, ``fix this and
U.S. manufacturers will see a significant increase in demand from U.K.
based firearms owners.''

    BIS response: BIS agrees that the Commerce May 24 rule would reduce
the overall regulatory burden of complying with U.S. export controls,
including through regulatory simplification and cost reductions that
may allow certain persons, e.g., small independent gunsmiths, to
consider exporting when they might not have otherwise because of the
economic burden of complying with the ITAR. One of the strengths of the
EAR control structure is its focused approach on exports without unduly
burdening persons that are not a party to an export transaction. Not
requiring domestic manufacturers to register with BIS is a good example
of the more focused EAR controls. The fact that BIS does not charge a
registration fee to be able to apply for a Commerce license is another
financial benefit.
    The EAR is a more tailored control structure, and this more
flexible control structure will reduce burdens and create more
opportunities to export. One of the key benefits of the more flexible
Commerce licensing processes is the ability for applicants to combine
multiple transactions on license applications for sales to regular
customers. Because BIS does not require a purchase order, the overall
number of licenses an exporter may need to submit is reduced.
    The changes included in this final rule may lead to increased sales
opportunities for U.S. exporters and related economic benefits for the
United States, while also accomplishing the same national security and
foreign policy objectives of the U.S. export control system. Because of
the more flexible EAR control structure, parties outside the U.S. may
want to purchase more items, such as ECCN 0A501.x parts or components
that were previously avoided because of no de minimis eligibility under
the ITAR. This rule might also lead to increased export activity
because parties outside the U.S. may import more U.S. origin firearms
because of the more flexible Commerce licenses that do not require a
purchase order. Importantly, any additional exports that may occur are
the same types of exports that would have been otherwise approved under
the ITAR.
    As asserted by some of the commenters, the changes made by this
final rule may help to foster innovation in the United States by
encouraging collaboration with companies outside the United States, and
this may lead to better U.S. products. They may also encourage more
people to be interested in purchasing items from the United States.

Commenters Asserting Burdens Will Not Be Reduced (for Purposes of E.O.
13771)

    Comment 21: One anonymous commenter asserted that moving these
items to the CCL would create a small cost-savings for its company in
registration and licensing fees, but the commenter did not see a
demonstrated equivalent in terms of paperwork reduction or real time
savings. This commenter asserted that the issue for small companies
having to pay the registration fees due to their manufacturing
activities is better resolved by changing the definition of
manufacturer to add a minimum size requirement. The same commenter
asserted that the EAR does not include a concept of defense services
and the technology controls are more narrowly focused and apply in
limited contexts as compared to the ITAR, and this change represents an
improvement in terms of the commenter's ability to share information
needed for marketing firearms and for repairing them internationally.
However, this commenter asserted that the same result could be achieved
via amendment to the ITAR. The same commenter asserted that ``the
improvements and savings are quantified using the 43.8 minutes for BIS
application vs. the 60 minutes for DDTC application and that this
metric provides no meaningful data from which to extrapolate total
process savings or if any is really generated.'' This commenter also
asserted that other additional burdens proposed in the Commerce May 24
rule also need to be accounted for, e.g., increasing the quantity and
type of data elements which will be required for AES filing. The same
commenter asserted that there will be burdens and expenses of
transition related to reclassification of all products, re-training of
all employees, and advanced training needed for compliance personnel.
The commenter acknowledged that it understands this burden is
considered short term; however, the commenter asserted that the
benefits of moving these items to the CCL still has not been adequately
explained to justify these short-term burdens. This same commenter
asserted that other than utilizing a different application form and the
change in the agency receiving applications, it has not been
demonstrated exactly what, if any, process improvement this represents.
    BIS response: While this commenter did not anticipate significant
cost or burden reduction from the transition to the EAR, most other
commenters addressing these issues anticipated more significant
benefits. The reform effort is not intended to make the ITAR the same
as the EAR; this would not be warranted because the more restrictive
ITAR controls are needed to regulate items such as fighter aircraft,
submarines, and intercontinental ballistic missiles. BIS agrees that
the more focused EAR technology controls will ease burdens, but still
appropriately control technology for these items.
    BIS does not agree with the assertion that the way the cost savings
were calculated in the Commerce May 24 rule provided no meaningful data
to extrapolate total process savings. Many commenters asserted that
they believed their burden would be reduced by moving these items to
the CCL. This commenter is correct that other commenters expressed
concerns about individuals being required to file EEI in AES for
exports under License Exception BAG of their personally owned firearms,
and concerns about including the serial number, make, model number, and
caliber of firearms in the EEI in AES. However, this final rule
significantly reduces these burdens. For example, this final rule
requires the U.S. Customs and Border Protection (CBP) Certification of
Registration Form 4457, a form already being used by exporters.
Therefore, there will be no additional burden because BIS will be
requiring information already submitted by exporters to CBP for other
reasons. For licensed exports, BIS also eliminated the requirement to
file those additional data elements, except for temporary exports or
when the Commerce license includes a condition requiring it, similar to
the approach Department of State takes with provisos on its licenses.
    BIS acknowledges that there will be some short-term adjustment
costs. BIS also acknowledges that the EAR is a more complex control
structure because with greater flexibility there is a need for
additional nuances in the control structure. BIS disagrees that the
rationale for the transition was not clearly demonstrated in the
Commerce May 24 rule.
    BIS appreciates this same commenter highlighting a key point of
commonality. The commenter is correct that the Commerce license
applications will continue to be reviewed by the Departments of State
and Defense. This well-established interagency review process specified
in both Executive Order 12981 and in the EAR helps to protect U.S.
export control interests and ensures that a diversity of interests and
agency expertise is being used to review license applications. BIS
disagrees that the only difference is a different application. For
example, the fact that

an applicant does not require a purchase order under the EAR to apply
for a license allows for more companies to compete for business
opportunities.

Licensing Costs

    Comment 22: Many commenters asserted that the Commerce May 24 rule
would transfer the cost of reviewing applications and processing
licenses from gun manufacturers to taxpayers. Many commenters also
asserted that with respect to firearms exports, taxpayers and the
public at large should be concerned about pressures to cut corners that
could result in authorization of irresponsible transfers of firearms,
because BIS will not be charging fees for licensing.
    BIS response: By statute, Congress prohibits BIS from imposing fees
for any license application, authorization or other requests. This
prohibition applies for submissions in connections with all items
subject the EAR and is not specific to the firearms industry. BIS has
effectively licensed items for several decades based on the fee free
license construct that was included in the Commerce May 24 rule and in
this final rule.

Comments Specific to the Regulatory Text

Inclusion in the ``600 Series''

    Comment 23: One commenter requested BIS include semi-automatic
firearms and related items in the ``600 series'' instead of in 0x5zz
ECCNs.
    BIS response: BIS does not agree. As was stated in the Commerce May
24 rule and discussed above in response to the comments, the semi-
automatic firearms this final rule adds to ECCN 0A501.a have a
significant worldwide market in connection with civil and recreational
activities such as hunting, marksmanship, competitive shooting, and
other non-military activities. For these reasons, the movement of
firearms and ammunition from USML Category I and III, similar to the
civilian spacecraft and related items moved from the USML and
controlled on the CCL under 0x515 ECCNs, do not warrant being
controlled under the ``600 series.''

New ECCN 0A501: Firearms and Related Commodities

    Comment 24: One commenter identified an inconsistency between the
Commerce May 24 rule in the ``Related Controls'' paragraph that stated
magazines with a ``capacity of 50 rounds or greater'' are ``subject to
the ITAR.'' However, the proposed USML Category I(h)(1) referenced only
magazines and drums with a ``capacity greater than 50 rounds.''
    BIS response: This final rule corrects the EAR text to make it
clear that magazines with a ``capacity of greater than 50 rounds'' are
subject to the ITAR.
    Comment 25: One commenter asserted there had been past issues of
interpretation under the ITAR for what was meant by ``complete breech
mechanism'' and therefore the commenter recommended defining the term
under the EAR.
    BIS response: BIS accepts the change to include a definition of
``complete breech mechanisms.'' This final rule will add a definition
for ``complete breech mechanisms'' to part 772 and will add double
quotation marks around the term where it is used in ECCNs 0A501 and
0A502.
    Comment 26: One commenter took issue with the use of the term
``assault weapons'' or ``close assault weapons.'' This commenter
asserted that the terms should be defined, or not used. This commenter
requested the term ``semi-automatic'' rifles, pistols, or other firearm
be used instead.
    BIS response: BIS agrees and has removed the term ``assault
weapons'' in this final rule and instead uses the term ``semi-
automatic,'' which better aligns with the terms used in the control
parameters.
    Comment 27: One commenter recommended BIS define ``firearm'' in
harmonization with the USML.
    BIS response: BIS does not agree the term ``firearm'' needs to be
defined in the EAR. The term ``firearms'' is used in this final rule
with additional technical parameters or ECCN identifiers, e.g.,
0A501.a, that will enable identification of these firearms. BIS does
not believe the use of the term ``firearms'' will create confusion with
the USML or the USMIL.
    Comment 28: One commenter noted an inconsistency in the way
calibers are described in the control lists under the Commerce May 24
rule. In USML Categories I and II, firearms and guns are described as
``caliber .50 inclusive (12.7 mm)'' and ``greater than .50 caliber
(12.7 mm),'' respectively. In new ECCN 0A501, firearms are described in
``items'' paragraph .a and .b as ``of caliber less than or equal to .50
inches (12.7 mm)'' and ``with a caliber greater than .50 inches (12.7
mm) but less than or equal to .72 inches (18.0 mm),'' respectively.
This commenter asserted that the caliber terms not being aligned
between the control lists could cause confusion and misinterpretation
of the controls between the USML and CCL, particularly in regard to the
ammunition controls which follow the respective firearm controls.
    BIS response: BIS notes that the intent of this final rule is to
transfer those items previously controlled under Categories I-III that
no longer warrant ITAR control, to the respective ECCNs as created
under this rule to the CCL by using long-accepted industry standards of
``caliber'' as the defining delineation between ammunition types. BIS
made changes in this final rule to use the appropriate text in this
final rule to be consistent with the text used in the USML, so that .50
caliber ammunition and .50 caliber firearms will transition into their
proper 0x5zz ECCNs. For example ECCN 0A501, includes all non-automatic
and semi-automatic ``.50 caliber (12.7mm) and less'' firearms under
``items'' paragraph .a.
    Comment 29: One commenter was concerned that with the proposed
description of caliber in inches in ECCN 0A501, ammunition for .50
caliber Browning Machine Guns (``50 BMG'') would be controlled under
both 0A505 and USML Category III creating overlapping controls.
    BIS response: BIS clarifies in this final rule that ECCN 0A501
includes all non-automatic and semi-automatic ``equal to .50 caliber
(12.7mm) and less'' firearms under ``items'' paragraph .a. Therefore,
this final rule also would not control the 50 BMG under ECCN 0A501.a.
However, the corresponding ammunition which is used in a number of non-
automatic and semi-automatic firearms will be controlled under 0A505.a,
when not linked or belted.
    Comment 30: Some commenters requested BIS revise Note 3 to 0A501 so
that the definition of antique firearms is aligned with the Wassenaar
Arrangement controls or alternatively that the date threshold in the
definition of antique firearm in Note 3 be changed from 1890 to 1898 to
align with the ITAR's exemption.
    BIS response: BIS does not agree. Because this rule focuses on the
export of firearms, it uses the year 1890 so that the United States
remains consistent with its international export control commitments
under the Wassenaar Arrangement, which uses 1890 as the cutoff year to
identify many firearms and armaments that are not on the control list.
    Comment 31: One commenter requested that BIS clarify where
combination firearms would be controlled, noting that neither ECCN
0A501 (firearms) nor ECCN 0A502 (shotguns) refer to firearms that are a
combination of shotgun and rifle, i.e., that have two barrels.
    BIS response: BIS agrees, and in this final rule adds a note to
clarify that combination firearms are controlled

under ECCN 0A501.a. This final rule also adds a note under ECCN 0A502
to specify that all shotguns and ``shot-pistols'' are controlled
identically.
    Comment 32: One commenter sought clarification on the
classification of detachable magazines for ECCN 0A501 firearms with a
capacity of less than or equal to 16 rounds. The commenter asserted
that ECCN 0A501.d explicitly lists magazines with a capacity of greater
than 16 rounds, but it was not clear whether magazines with a lesser
capacity are designated as EAR99 or controlled under 0A501.x.
    BIS response: BIS agrees, and this final rule adds a new note to
paragraph .d to clarify that magazines with a capacity of 16 rounds or
less are classified under ECCN 0A501.x.
    Comment 33: One commenter asserted that as currently proposed,
paragraph .x would apply to parts and components specially designed for
a commodity classified anywhere on the USML. This commenter recommended
revising as follows: ``Parts'' and ``components'' that are ``specially
designed'' for a commodity classified under paragraphs .a through .c of
this entry or USML Category I and not elsewhere specified on the USML
or CCL.
    BIS response: BIS does not agree that a change is needed. Because
some of the parts and components controlled under ECCN 0A501.x may be
for firearms incorporated into a fully automatic firearm that is
incorporated into a military vehicle (a USML Category VII commodity),
the broader reference to the USML is more appropriate. The USML Order
of Review and CCL Order of Review will ensure that only those parts and
components intended to be classified under ECCN 0A501.x will be
classified under this ``items'' paragraph.
    Comment 34: One commenter requested revising paragraph 0A501.y by
replacing the period at the end of the paragraph with the phrase
``including'' or ``as follows:'' In order to clarify whether .y is
limited to the enumerated .y paragraphs, or itself is a control
paragraph in which items can be controlled.
    BIS response: BIS clarifies that the .y listings are exhaustive,
and to be classified in a .y paragraph, the item needs to meet the
identified description and the definition of ``specially designed.''
    Comment 35: One commenter requested clarification of whether the .y
paragraph itself serves as a catch-all for ``parts,'' ``components,''
``accessories,'' and ``attachments.'' For example, a set of fiber-optic
sights for a pistol are not ``iron sights'' as listed in .y.3, but may
be a ``specially designed'' ``attachment.''
    BIS response: BIS agrees that the introductory text of ECCN 0A501.y
needs to be revised to clarify that the ``parts,'' ``components,''
``accessories,'' and ``attachments'' ``specially designed'' therefor
for the .y items are also controlled in the .y paragraphs. This final
rule makes this change. BIS had previously made this same correction to
the other .y paragraphs on the CCL to ensure, for example, that
``specially designed'' parts used in ``specially designed'' galleys
classified under ECCN 9A610.y for military aircraft, would not be
controlled in 9A610.x.
    Comment 36: One commenter asserted that ECCN 0A501.y contains three
types of commodities that have been officially determined to be EAR99
for many years: (i) .y.2--scope mounts and accessory rails; (ii) .y.3--
iron sights; and (iii) .y.4--sling swivels. This commenter requested
that the parts in .y paragraphs .y.2, .y.3, and .y.4 be removed from
ECCN 0A501 and a note be added to confirm that they remain EAR99 items.
    BIS response: BIS does not accept this change because it only works
if the past CJs covered those items and all variants. Paragraph (b)(1)
of ``specially designed'' and General Order No. 5 would not be
applicable to those items not included within the scope of a CJ--
meaning an item may get pulled up into .x. Therefore, to address this
issue definitively this final rule keeps these items as .y items.

License Exception LVS

    Comment 37: BIS received a number of comments on License Exception
LVS eligibility. Some commenters supported its availability, though one
commenter suggested that wholesale value rather than actual value
should be used while another commenter requested higher value shipments
should be authorized to Canada. One commenter recommended pegging the
LVS dollar value to inflation to allow for incremental increases to
match price increases over time. One commenter requested that Canada
should have all of its LVS eligibility specified in its own LVS
paragraph in the ECCN, distinguishing Canada's eligibility from other
Country Group B countries. Some commenters raised concerns related to
License Exception LVS availability, asserting that it would not curb
risky exports of pistol grips and magazine clips valued at $500, that
it is possible for companies or individuals to export many low-value
items in one shipment without a U.S. license, and that it could fuel
gun violence in Mexico and Central America. One commenter requested
reducing the LVS eligibility under ECCN 0A501 from $500 to $100, and
reducing further the commodities that would be eligible.
    BIS response: BIS agrees that License Exception LVS will be
particularly useful for the firearms industry for low value shipments
and believes that the license exception is properly scoped in the
dollar value used and the scope of availability for the reasons
outlined in the Commerce May 24 rule. BIS emphasizes as specified in
the name of the license exception itself, this license exception is
limited to low value shipments. This includes the total quantity for
consolidated shipments, even if a shipper was consolidating several
shipments. BIS also notes that an exporter is limited to twelve orders
per year to the same consignee. The terms of License Exception LVS also
strictly prohibit the splitting of orders to try to evade the
applicable LVS dollar value. In addition, if there are questions
whether an exporter has stayed within the required scope of LVS, EE can
require exporters to hand over all the required recordkeeping documents
related to a transaction under License Exception LVS to identify
whether there has been a violation of the EAR. LVS is not currently
linked to inflation, but the public may at any time make
recommendations for changes to the regulations, including suggestions
for revising the LVS dollar values in an ECCN.
    BIS notes that only countries identified in Country Group B are
eligible to receive commodities under License Exception LVS. These are
countries that the U.S. Government does not have export control
concerns with for purposes of the commodities that are eligible to be
authorized under License Exception LVS. More sensitive commodities,
such as firearms and some key components, are excluded from License
Exception LVS. As noted in the Commerce May 24 rule, the ITAR has a
similar type of exemption. Relatedly, BIS does not believe Canada-
specific provisions are necessary in the License Exception LVS
paragraph of ECCN 0A501 to specify all LVS eligibility for Canada in
one stand-alone paragraph. First, it would deviate from how LVS is
described in other ECCNs. Second, there is the potential that an
exporter may get confused and believe LVS is available for other
Country Group B countries because the same commodities were identified
in more than one LVS paragraph.
    Finally, it is important to note that the importing country will
also have its own requirements for imports and

domestic sale and use, including for commodities such as pistol grips.
While someone like a jeweler or other craftsman in the U.S. (e.g., a
hobbyist who enjoys engraving pistol grips with western cowboy motifs)
could use License Exception LVS, it would not be available for larger
transactions, such as someone wanting to export to a retail store in a
foreign country.

New ECCN 0A502: Shotguns and Certain Related Commodities

    Comment 38: One commenter requested revising the heading of ECCN
0A502 to specify the parts and components enumerated in the heading are
shotgun parts and components.
    BIS response: BIS agrees, and this final rule revises the heading
to specify that parts and components enumerated in the heading of ECCN
0A502 are shotgun ``parts'' and ``components.'' BIS also makes one
other change to address the issue of clarity raised by this commenter.
This final rule adds a note to ECCN 0A501 to specify that ``shot-
pistols'' will be controlled as shotguns.
    Comment 39: One commenter requested that rather than having the
items controlled contained in the ECCN heading, BIS should enumerate
the shotguns in separate ``items'' paragraphs that track with the
different reasons for control for the different size shotguns in the
``items'' paragraph to ease the compliance burden for exporting these
shotguns.
    BIS response: BIS does not agree. The license requirement section
in this final rule is already consistent with the current control text,
applying CC Column 2 and CC Column 3 as appropriate depending on the
destination. BIS already uses this structure for long barreled
shotguns, which this final rule moves to ECCN 0A502.
    Comment 40: One commenter requested that the final rule define
antique shotguns in ECCN 0A502 to capture those guns made ``in or
before 1898,'' consistent with the definition of antique rifles and
handguns in the Gun Control Act of 1968.
    BIS response: BIS agrees, and this final rule adds a new Note 1 to
0A502 specifying that shotguns made in or before 1898 are considered
antique shotguns and designated as EAR99.
    Comment 41: One commenter requested BIS clarify the control status
of accessories of optics, e.g., sunshades or other anti[hyphen]glare
devices.
    BIS response: BIS clarifies that sunshades or other anti-glare
devices if not enumerated or otherwise described in ECCN 0A502 or any
other ECCN are designated as EAR99.
    Comment 42: One commenter requested that the description in the
``Related Controls'' paragraph of ECCN 0A502 be made consistent with
how such shotguns are referred to in the revised USML Category I.
    BIS response: BIS agrees, and this final rule removes the phrase
``combat shotguns'' wherever it appears in ECCN 0A502, including in the
``Related Controls'' paragraph. BIS in this final rule also removes
references to ``combat shotguns'' in ECCN 0A505.
    Comment 43: One commenter requested in order to have consistent
controls and exceptions for similar commodities, that BIS allow the use
of License Exception LVS for ECCN 0A502 parts and components to the
same extent proposed for 0A501, e.g., for shotgun trigger mechanisms,
magazines, and magazine extensions.
    BIS response: BIS agrees, and in this final rule revises the LVS
paragraph in the License Exceptions section of ECCN 0A502 to add LVS
eligibility of $500 for the same types of parts and components for ECCN
0A502 shotguns that are available for LVS under 0A501. Complete
shotguns will continue to be excluded.
    Comment 44: One commenter asserted that to facilitate the use of
License Exception LVS, the ECCN 0A502 heading should be changed to
``Shotguns and related commodities (See List of Items controlled) . .
.'' and then under the ``List of Items Controlled'' parts and
components should be enumerated to include ``complete trigger
mechanisms,'' ``magazines,'' and ``magazine extension tubes.''
    BIS response: BIS does not agree. BIS in this final rule continues
to enumerate ``parts'' and ``components'' in the heading, but in the
interest of clarity it also includes the specific eligible commodities
in the LVS paragraph.

New ECCN 0A504: Optical Sighting Devices and Certain Related
Commodities

    Comment 45: One commenter asserted that the proposed Note 1 to
0A504.f states that ``0A504.f does not control laser boresighting
devices that must be placed in the bore or chamber to provide a
reference for aligning the firearms sights.'' This commenter asserted
there are a variety of boresighting devices that are placed over the
muzzle of the barrel instead of inside the bore or chamber and perform
the same function as those described in the note. For these reasons,
the commenter requested that this Note be revised to read as follows:
``0A504.f does not control laser boresighting devices that provide a
reference for aligning the firearms sights. This includes any laser
boresighting device, regardless of how it attaches to the firearm
(e.g., boresights that fit over the muzzle of the barrel), which
performs the same function.''
    BIS response: BIS does not agree. Revising Note 1 to 0A504.f would
make it difficult to distinguish between what the commenter is
proposing and a laser pointer. The note included in this final rule
makes it clear that those commodities that are placed inside a bore or
chamber would preclude its subsequent use as or with a firearm.
    Comment 46: One commenter requested License Exception LVS should be
made available for ECCN 0A504.g commodities that are similarly
insignificant as those commodities eligible in ECCN 0A501.
    BIS response: BIS agrees, and this final rule includes License
Exception LVS eligibility for ``parts'' and ``components'' classified
under ECCN 0A504.g.

New ECCN 0A505: Ammunition and Certain Related Commodities

    Comment 47: One commenter recommended revising ECCN 0A505.a to
include ammunition for firearms controlled in USML Category I that may
not otherwise be captured by adding the phrase ``or USML Category I''
to clarify that ammunition for these type of firearms is also
controlled under ECCN 0A505.a.
    BIS response: BIS agrees, and this final rule incorporates the
suggested text to clarify that ammunition for firearms in both ECCN
0A501 and USML Category I will be controlled under 0A505.a, provided it
is not enumerated elsewhere in 0A505 or in USML Category III.
    Comment 48: One commenter requested BIS revise ECCN 0A505 to
include a note similar to the Note to 0A018.b to specify that dummy
ammunition is designated EAR99.
    BIS response: BIS agrees, and this final rule adds a Note 4 to
0A505 to specify that all dummy and blank (unless linked or belted)
ammunition, not incorporating a lethal or non-lethal projectile(s) is
designated EAR99.
    Comment 49: One commenter asserted that there are several magazine
manufacturers in the U.S. producing magazines of greater than 50 rounds
that would benefit from also having their magazine moved to the CCL.
This commenter asserted that limiting this magazine capacity to 50
rounds or less does not protect any special U.S. or allied military
advantage, but magazines

of greater than 50 rounds are commonly found and manufactured
worldwide.
    BIS response: BIS does not agree. Magazines with a capacity of 50
rounds or less are appropriate on the CCL, and magazines greater than
50 rounds warrant ITAR control.
    Comment 50: One trade association commenter noted that proposed
ECCN 0A505 included an allowance for License Exception LVS of $100 for
0A505.x ``parts'' and ``components,'' but that firearm parts and
components under 0A501 have an LVS allowance of $500. This commenter
asserted that its members feel this is an inconsistency in the
treatment of related commodities. The commenter asserted that in recent
years, costs related to ammunition components have been increasing,
with the largest increases affecting larger caliber cartridges. This
commenter asserted that the ``$100 limit on LVS will be quickly met
with small amounts of components, making this exception not as useful
as intended.'' Another commenter asserted that the ITAR allows for $500
per shipment, so $100 net under EAR would be more restrictive than ITAR
exemption.
    BIS response: While the ITAR does not have an exemption for exports
of ammunition parts and components, BIS agrees, and this final rule
raises the LVS dollar value from $100 to $500 for ECCN 0A505.

New ECCN 0A602: Guns and Armament

    Comment 51: One commenter suggested revising ECCN 0A606 to clearly
identify engines for self-propelled guns and howitzers as controlled
therein rather than in 0A602.
    BIS response: BIS notes that the USML Order of Review and CCL Order
of Review would likely already address this. However, this final rule
adds a Related Controls paragraph (3) and a new note to ECCN 0A602.x to
clarify the appropriate classification, but it does not add such a note
to ECCN 0A606.

New ECCN 0B501: Test, Inspection and Production Equipment for Firearms

    Comment 52: One commenter requested guidance on what is the
definition of production equipment under ECCN 0B501.e. This commenter
asserted that it has ``many hobbyist customers who would not qualify as
a gunsmith let alone as a manufacturer and tools and equipment designed
for hobbyists are quite different than manufacturing equipment . . .
yet we have a concern these tools will be included in 0B501.e because
even the hobbyist is `producing' a firearms part.''
    BIS response: The term ``production'' is a defined term in part
772. ``Production'' means all production stages, such as: Product
engineering, manufacture, integration, assembly (mounting), inspection,
testing, and quality assurance. Part 772 also includes a definition of
``production equipment'' that includes tooling, templates, jigs,
mandrels, moulds, dies, fixtures, alignment mechanisms, test equipment,
other machinery and components therefor, limited to those specially
designed or modified for ``development'' or for one or more phases of
``production.'' The definition of ``production equipment'' in part 772
applies only in the Missile Technology Control Regime context, but for
purposes of this comment, the definition of ``production'' and the
definition of ``production equipment'' provides the needed guidance.
BIS also emphasizes that the person using the production equipment does
not change the classification of the production equipment. Importantly,
domestic use--that is use of production equipment in the United
States--does not implicate export controls.
    Comment 53: One commenter requested BIS ensure there were no gaps
for the production equipment controls on the CCL for USML Category I
items as well as Category III items.
    BIS response: BIS agrees. To ensure there are no gaps in production
equipment for USML Category I, this final rule expands ECCN 0B501.e to
include all production equipment ``specially designed'' for USML
Category I items. It also expands ECCN 0B505.a to include all
production equipment ``specially designed'' for USML Category III
items.

New ECCN 0B602: Test, Inspection and Production Equipment for Certain
Guns and Armament

    Comment 54: One commenter requested adding examples of specific
tooling that would be controlled under ECCN 0B602, such as a note
including ECCN 0B602 boresights and units made specifically for testing
purposes.
    BIS response: BIS does not agree to this addition. As described
above, part 772 defines ``production'' and ``production equipment,'' so
these existing definitions already address this comment.

New ECCN 0E501: Technology for Firearms and Certain Related Items

    Comment 55: One commenter requested BIS clarify how ``technology''
is defined for 0E501 and whether shooting chronographs or empty brass
cartridge annealing machines are included in the definition of
``technology.''
    BIS response: BIS clarifies that the definition of ``technology''
in part 772 applies to ECCN 0E501 and any other Product Group E ECCNs
on the CCL, including the other Product Group E ECCNs this final rule
adds, e.g., 0E505. In addition, BIS clarifies that shooting
chronographs or empty brass cartridge annealing machines are end items
and generally designated EAR99. Therefore, the examples given fall
outside the Commerce definition of ``technology.''
    Comment 56: BIS received a number of comments on the concept of
``defense services,'' including concerns about the lack of defense
services controls under the EAR, the potential loss of U.S. Government
oversight on many types of defense services, and concerns about
firearms training being provided to foreign security forces without
U.S. Government approval. There were also concerns raised about the
ability of U.S. companies to provide a wide range of assistance and
training to foreign persons without sufficient U.S. oversight and a
suggestion that the definition of ``technology'' be expanded to capture
these defense-service type activities, such as private security
contractor training of foreign police with firearms. One commenter
asserted that ``the proposed rule could also create an unfortunate
scenario where U.S. private security contractors are able to provide
services to foreign security units or militias that are otherwise
prohibited from receiving training through U.S. foreign security aid.''
    BIS response: BIS clarifies that defense services is specific to
the ITAR, but the EAR maintains controls related to exports, reexports,
and in-country transfers of commodities, software, and technology in a
number of ways. For example, a U.S. person is prohibited from engaging
in exports, reexports, or in-country transfers related to certain end
uses (as specified in Sec.  744.6) or a ``knowing'' violation (as
specified in Sec. Sec.  764.2(e) and 736.2(b)(10)). In addition, as
part of providing a service, a person must determine whether there will
be an export, reexport, or in-country transfer of any commodities,
software, or technology requiring an EAR authorization. Accordingly,
although the EAR generally does not control services directly, the EAR
is still highly effective at protecting U.S. export control interests
implicated by the supply of services in connection with exports,
reexports, or in-country transfers. The effectiveness comes by
controlling the technology--e.g., ``technology'' for how to produce a
firearm. The release of technology is the key nexus where providing a
service crosses over into a transaction that is

subject to the EAR and that merits control. In most cases, the analysis
will focus on whether any technology that is subject to the EAR will be
released as part of providing the service. The release of technology
moved from USML Categories I-III will require a U.S. Government
authorization, except for 0E602 technology being exported to Canada
which may be exported No Licensed Required (``NLR'').
    For example, providing design and development assistance, testing,
and production assistance on firearms and ammunition to foreign persons
would be a release of ``technology'' subject to the EAR and require an
EAR authorization, unless the information being released fully met the
criteria in part 734 for exclusion from the EAR. The EAR requirements
would apply if the technology was being exported. The EAR requirements
would also apply if the technology was being released in the United
States to a foreign national as a deemed export, including technology
released through training.
    BIS cautions against assuming that no U.S. Government authorization
is required to provide training to foreign security forces. Providing
military training of foreign units and forces would still be a defense
service regulated by the ITAR. Questions on whether a specific service
may be a defense service should be directed to the Department of State.
For purposes of the EAR, as described above, the question centers on
whether any items that are subject to the EAR are provided as part of
that service, and if such items are related to firearms, then U.S.
Government authorization will be required.
    BIS notes that if an item, such as the firearms moved to the CCL in
this final rule, is being exported under the Foreign Military Sales
(FMS) program, those items are not ``subject to the EAR''--meaning the
EAR would not apply and for purposes of the AECA those items being
exported under an FMS letter of offer and acceptance are defense
articles subject to State Department controls under 22 U.S.C. 2794(3)
for the specific transaction. BIS also notes that for non-FMS U.S.
foreign security aid, the granting U.S. organization can include
provisos as needed as part of the aid agreement that imposes any
necessary restrictions the aid granting U.S. agency believes is
warranted. In addition, BIS through the licensing process can impose
conditions as warranted on licenses to ensure consistency with other
requirements as needed. As noted above, the Department of State is a
licensing review agency for Commerce licenses and can advise on
Commerce export licenses as warranted if additional conditions may be
needed in furtherance of a direct commercial sale as part of U.S.
foreign security aid.
    Comment 57: One commenter asserted that because of the narrowness
of the definition of ``required,'' it ``means companies may be able to
provide a wide range of training activities, design and development
assistance, testing, and production assistance on firearms and
ammunition to foreign persons without sufficient scrutiny and
oversight.''
    BIS response: BIS does not agree. The term ``required'' is an EAR
defined term and is a well understood concept used on the control lists
of the multilateral export control regimes. The EAR has effectively
controlled ``technology'' for various other sensitive and sometimes
lethal items using the existing definition and concept of ``required.''
    Comment 58: One commenter asserted that ``in 2016, U.S.
registration for firearms manufacturing activities was deemed so
important that DDTC issued specific guidance providing that a broad
range of activities (e.g., use of any special tooling or equipment
upgrading in order to improve the capability of assembled or repaired
firearms, and rechambering firearms through machining, cutting, or
drilling) constitute ``manufacturing'' and required registration.''
This commenter asserted it was concerned because this 2016 guidance
will not apply to Category I-III items moving to the CCL.
    BIS response: BIS clarifies that individuals have been able to
lawfully make their own firearms in the United States, but not for
reselling. ATF licenses domestic manufacturers. The types of
gunsmithing services described by this commenter are not considered
``production'' under the EAR.

Revision to ECCN 0A018

    Comment 59: Some commenters requested removing ECCN 0A018 and
transferring those commodities to 0A505, so all commercial firearms,
ammunition, and related items could be in one of the series of new
0x5zz ECCNs and not be left behind in legacy xY018 entries. The
commenter suggested that once the items in the proposed ECCN 0A018.b
are moved to 0A505, and controlled in the same manner, then 0A018 could
be removed. Another commenter requested the commodities classified in
ECCN 0A018.b for ``specially designed'' components should be controlled
under 0A505.x. The commenter also requested that the decontrol note in
ECCNs 0A018.b be transferred to 0A505 so that the current EAR99 status
of such items is maintained.
    BIS response: BIS agrees with these requested changes. This final
rule removes the items controlled under ECCN 0A018 and adds these
commodities to 0A505 but retains the heading of ECCN 0A018 and adds a
cross reference to ECCN 0A505. This final rule removes the commodities
controlled under ECCN 0A018, because this final rule controls these
commodities under 0A505.d or .x. As conforming changes, this final rule
removes ECCN 0E018, because 0E505 is broad enough to control this
technology and revises the heading of ECCN 0A988 to remove an outdated
reference to ECCN 0A018.d.1. ECCN 0A018.d paragraph is reserved in
0A018, so this reference in 0A988 should have been updated in an
earlier rule.
    BIS clarifies that the control parameters of ECCN 0A505.x in this
final rule are broad enough to control commodities classified in ECCN
0A018.b for ``specially designed'' components controlled under 0A505.x.
without further revisions. This final rule adds a Note 4 to ECCN 0A505
to address the commenters' request related to the decontrol note in
0A018.

Conforming Change to General Order No. 5

    Comment 60: One commenter requested that licenses already granted
under the ITAR should be grandfathered for all outstanding
transactions.
    BIS response: BIS clarifies here that this was already addressed
with the revisions proposed in the Commerce May 24 rule for General
Order No. 5, which adds 0x5zz ECCNs to General Order No. 5 and will be
adopted in this final rule. The current General Order No. 5 includes
grandfathering provisions and allows for applying for Commerce licenses
once a final rule is published, but not yet effective.

Revisions to Regional Stability Licensing Policy for Firearms and
Ammunition

    Comment 61: Several commenters raised concerns that laws against
the provision of arms where certain human rights abuses are of concern
may not apply to the 0x5zz ECCNs and that the role of the Bureau of
Democracy, Human Rights, and Labor (DRL) at the Department of State
would be diminished. One commenter asserted that the Department of
State would no longer have a statutory basis for vetoing a proposed
sale on human rights grounds for firearms, guns, ammunition, and
related parts that move to the CCL.
    BIS response: As described above, BIS disagrees with the assertion
that there

will be less focus on protecting human rights under the EAR. This final
rule will control these items for Regional Stability and the license
review policy specifies that human rights concerns are considered as
part of the license review process. As referenced above, the Department
of State is a license review agency for Commerce licenses, and the
existing E.O. 12981 and EAR provide that other license review agencies
have 30 days for review of Commerce license applications. E.O. 12981
does not specify what parts of those other agencies must review a
Commerce license application, but the Department of State has
discretion to ensure that DRL receives and reviews Commerce licenses.
    This final rule includes a license review policy for regional
stability to indicate license applications will also take into
consideration human rights concerns, which can be a basis for denial.
BIS also notes that there is a presumption of denial policy for license
applications involving narcotics traffickers, criminal organizations,
and terrorists because of their frequent involvement in human rights
abuses, as well as other regional stability concerns.

Crime Control and Detection License Review Policy

    The Commerce May 24 rule did not propose changes to the crime
control and detection license review policy in part 742, but commenters
made recommendations in this area that are described and responded to
below.
    Comment 62: One commenter recommended that ``in order to bring the
proposed regulations into alignment with provisions of the Foreign
Assistance Act [22 U.S.C. 2304(a)(2), which makes explicit reference to
crime control equipment under the aegis of the (expired) Export
Administration Act], ECCN 0A501.a should be controlled for crime
control.''
    One commenter requested that BIS provide the police profession a
greater, better-defined role in the evaluation of firearm export
license applications and possibly form a technical advisory committee
(TAC). Another commenter requested that licensing officials should
consider the effect of proposed exports on local communities, public
safety, peace officer safety, crime control, and control of civil
disturbances to assure that the rule of law is not impaired by firearm
exports.
    One commenter asserted that highly destructive weapons should not
be exported to civilians. This commenter recommended ``a maximum limit
on firepower exported to civilians. Firearms with a muzzle energy
higher than 5,000 Joules should be barred from export to non-government
end-users.''
    BIS response: BIS notes that the NS 1 and FC 1 license requirement
included in this final rule for ECCN 0A501.a, as well as ECCN 0A501.b,
will ensure U.S. multilateral commitments are met. In addition, the RS
1 license requirement and license review policies is revised in this
final rule to further address the types of human rights concerns, as
well as imposing a presumption of denial license review policies for
certain types of end users of concern, such as narcotics traffickers,
will ensure U.S. export control interests are protected and that
exports are not approved that would otherwise not be consistent with
the Foreign Assistance Act. As was discussed above, the U.S. Government
agency granting aid to a foreign country will also have the ability to
impose certain provisos as part of that foreign assistance agreement,
and all exports made under the FMS programs are authorized by the
Department of State. As warranted, there is nothing that will preclude
BIS from consulting with other agencies of the U.S. Government
regarding a particular license application.
    BIS agrees that getting regular input from the police profession
and those with expertise from the private sector will be beneficial but
notes that this can be accomplished through BIS's existing TACs rather
than through the creation of a new TAC. BIS notes that agency rules are
regularly reviewed by BIS's EE as well as other agencies with law
enforcement components.
    BIS does not agree that an outright prohibition is needed to
protect U.S. national security and foreign policy interests under the
EAR. Imposing such a worldwide prohibition would be more restrictive
than how these firearms were regulated under the ITAR and would impose
significant burdens on the U.S. firearms industry that may result in
significant U.S. job losses in the firearms and related industries. BIS
appreciates the time and thought that went into the detailed suggested
change, but an outright prohibition was not contemplated in the
Commerce May 24 rule, would arbitrarily single out one industry for
more restrictive control and is not needed to protect U.S. export
control interests, as those interests can be served through the
regulatory regime set forth in the EAR.

License Exception TMP

    Comment 63: One commenter requested increasing the number of items
allowed for temporary export under Sec.  740.9(a)(5) to 100 per
shipment to more closely align with commercial expectations and
practices. Another commenter asserted that larger film productions such
as war movies, will oftentimes require well beyond 75 firearms.
    BIS response: BIS does not agree with expanding Sec.  740.9(a)(5)
of TMP to allow for 100 firearms per shipment or to address a
particular type of export. The exhibition and demonstration
authorization under paragraph (a)(5) of License Exception TMP is
intended to provide for a sufficient quantity of firearms, and if an
exporter needs a larger quantity, e.g., 100 or even 1,000 firearms for
exhibition or demonstration, that the exporter may apply for a license
to authorize the export. BIS maintains the status quo for how large
temporary shipments of firearms are handled under the ITAR, which is
through a licensing process that allows BIS to include any additional
conditions to ensure the export will not be diverted.
    Comment 64: BIS received comments requesting modifications to
License Exception TMP, including to allow for the use of License
Exception TMP (Sec.  740.9) under paragraph (a)(10) to transfer
firearms to affiliates, such as a foreign parent or subsidiary; to
allow TMP paragraph (b)(1) to be used to authorize temporary import and
subsequent export of items moving in transit through the United States;
and to allow for temporary importation for a period of one year. BIS
also received a comment requesting extensions of temporary imports
imported under paragraph (b)(5) to not be more restrictive than the
ITAR.
    BIS response: BIS does not accept these changes. Under this final
rule, an exporter may apply for a license to authorize these same types
of exports of firearms to affiliates. In addition, BIS notes that
License Exception STA is available for parts and components, e.g.,