[Federal Register Volume 77, Number 85 (Wednesday, May 2, 2012)]
[Proposed Rules]
[Pages 25932-25944]
[FR Doc No: 2012-10456]

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

DEPARTMENT OF COMMERCE

Bureau of Industry and Security

15 CFR Parts 742 and 774

[Docket No. 120105018-2011-01]
RIN 0694-AF53

Revisions to the Export Administration Regulations (EAR): Control
of Energetic Materials and Related Articles That the President
Determines No Longer Warrant Control Under the United States Munitions
List (USML)

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

ACTION: Proposed rule.

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

SUMMARY: The Bureau of Industry and Security (BIS) publishes this
proposed rule describing how energetic materials and related articles
that the President determines no longer warrant control under Category
V (Explosives and Energetic Materials, Propellants, Incendiary Agents
and Their Constituents) of the United States Munitions List (USML)
would be controlled under the Commerce Control List (CCL) in new Export
Control Classification Numbers (ECCNs) 1B608, 1C608, 1D608, and 1E608.
If implemented, this proposed rule would also control under ECCN 1C111
some of the aluminum powder and hydrazine and derivatives thereof that
are now controlled under Category V of the USML. This proposed rule
also would control equipment for the ``production'' of explosives and
solid propellants, currently controlled under ECCN 1B018.a, and related
``software,'' currently controlled under ECCN 1D018, under new ECCNs
1B608 and 1D608, respectively. In addition, this proposed rule would
control commercial charges and devices containing energetic materials,
which are currently controlled under ECCN 1C018, under new ECCN 1C608.
This is one of a planned series of proposed rules describing how
various types of articles that the President determines, as part of the
Administration's Export Control Reform Initiative, no longer warrant
control on the USML, under the International Traffic in Arms
Regulations (ITAR), would be controlled on the CCL in accordance with
the requirements of the Export Administration Regulations (EAR). This
proposed rule is being published in conjunction with a proposed rule
from the Department of State, Directorate of Defense Trade Controls,
which would amend the list of articles controlled by USML Category V.

DATES: Comments must be received by June 18, 2012.

ADDRESSES: You may submit comments by any of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov.
The identification number for this rulemaking is BIS-2012-0008.
     By email directly to<EMAIL_ADDRESS>Include
RIN 0694-AF53 in the subject line.
     By mail or delivery to Regulatory Policy Division, Bureau
of Industry and Security, U.S. Department of Commerce, Room 2099B, 14th
Street and Pennsylvania Avenue NW., Washington, DC 20230. Refer to RIN
0694-AF53.

FOR FURTHER INFORMATION CONTACT: Michael Rithmire, Office of National
Security and Technology Transfer Controls, Bureau of Industry and
Security, U.S. Department of Commerce, Telephone:<PHONE_NUMBER>,
Email<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

Background

    On July 15, 2011, as part of the Administration's ongoing Export
Control Reform Initiative, the Bureau of Industry and Security (BIS)
published a proposed rule (76 FR 41958) (herein ``the July 15 proposed
rule'') that set forth a framework for how articles, which the
President determines in accordance with section 38(f) of the Arms
Export Control Act (AECA) (22 U.S.C. 2778(f)) would no longer warrant
control on the United States Munitions List (USML), would be controlled
on the Commerce Control List (CCL) in Supplement No. 1 to Part 774 of
the Export Administration Regulations (EAR). On November 7, 2011 (76 FR
68675) (herein ``the November 7 proposed rule''), BIS published a rule
proposing several changes to the framework initially proposed in the
July 15 rule.
    Following the structure of the July 15 and November 7 proposed
rules, this proposed rule describes BIS's proposal for controlling some
energetic materials and related articles, which currently are
controlled by USML Category V under the International Traffic in Arms
Regulations (ITAR), under the EAR and its CCL in new Export Control
Classification Numbers (ECCNs) 1B608, 1C608, 1D608 and 1E608, and
current ECCN 1C111. The changes described in this proposed rule and the
State Department's proposed companion rule on Category V of the USML
are based on a review of this USML Category by the Defense Department,
which worked with the Departments of State and Commerce in preparing
the proposed

rules. That review focused on identifying the types of articles that
are now controlled by USML Category V that are either: (i) Inherently
military and otherwise warrant control on the USML; or (ii) common to
civil applications, possessing parameters or characteristics that
provide a critical military or intelligence advantage to the United
States, and almost exclusively available from the United States. If an
article satisfies either or both of these criteria, the article remains
on the USML. If an article does not satisfy either criterion, but is
determined, nonetheless, to be a type of article that is now on the
corresponding USML or the Munitions List of the Wassenaar Arrangement
on Export Controls for Conventional Arms and Dual-Use Goods and
Technologies (Wassenaar Arrangement Munitions List or WAML), then it
has been identified in one of the new ECCNs in this proposed rule. The
license requirements, licensing policies, and other EAR-specific
controls for such items, as described in this proposed rule, would,
when considered in the context of the other proposed amendments to the
USML and the CCL, enhance national security by: (i) Allowing for
greater interoperability with NATO and other allies while maintaining
and expanding robust controls that, in some instances, include
prohibitions on exports or reexports destined for other countries or
intended for proscribed end-users and end-uses; (ii) enhancing the U.S.
defense industrial base by, for example, reducing the current
incentives for foreign companies to design out or avoid U.S.-origin
ITAR-controlled content, particularly with respect to generic,
unspecified parts and components; and (iii) permitting the U.S.
Government to focus its resources on controlling, monitoring,
investigating, analyzing, and, if need be, prohibiting exports and
reexports of more significant items to destinations, end users, and end
uses of greater concern than NATO allies and other multi-regime
partners.
    Pursuant to section 38(f) of the AECA, the President shall review
the USML ``to determine what items, if any, no longer warrant export
controls under'' the AECA. The President must report the results of the
review to Congress and wait 30 days before removing any such items from
the USML. The report must ``describe the nature of any controls to be
imposed on that item under any other provision of law.'' 22 U.S.C.
2778(f)(1).
    In the July 15 proposed rule, BIS proposed creating a series of new
ECCNs to control items that: (i) would be moved from the USML to the
CCL or (ii) are listed on the Wassenaar Arrangement Munitions List and
are already controlled elsewhere on the CCL. That proposed rule
referred to this new series as the ``600 series'' because the third
character in each of the new ECCNs would be a ``6.'' The first two
characters of the 600 series ECCNs serve the same function as described
for any other ECCN in Sec.  738.2 of the EAR. The first character is a
digit in the range 0 through 9 that identifies the Category on the CCL
in which the ECCN is located. The second character is a letter in the
range A through E that identifies the product group within a CCL
Category. In the 600 series, the third character is the number 6. With
few exceptions, the final two characters identify the WAML Category
that covers items that are the same or similar to items in a particular
600 series ECCN.
    This proposed rule describes how some energetic materials and
related articles currently in USML Category V would be controlled by
the EAR and identified on the CCL, if the President determines that the
articles no longer warrant control on the USML. Specifically, this
proposed rule would create four new 600 series ECCNs in CCL Category 1
(ECCNs 1B608, 1C608, 1D608, and 1E608). ECCN 1B608 would cover
``equipment,'' not elsewhere specified on the CCL or the USML, that is
``specially designed'' for commodities in ECCN 1C608 or articles in
USML Category V. ECCN 1C608 would cover energetic materials and related
commodities not listed elsewhere in USML Category V or the CCL. ECCN
1D608 would cover ``software'' ``specially designed'' for commodities
controlled by 1B608 or 1C608; and ECCN 1E608 would cover ``technology''
``required'' for ``equipment'' controlled in 1B608 or materials
controlled by 1C608. Additionally, the rule would amend current ECCN
1C111 to describe the EAR controls that would apply to aluminum powder
and hydrazine and derivatives thereof the President determines no
longer warrant control under USML Category V.
    BIS will publish additional Federal Register notices containing
proposed amendments to the CCL that will describe proposed controls for
additional categories of articles the President determines no longer
warrant control under the USML. The State Department will publish,
concurrently, proposed amendments to the USML that correspond to the
BIS notices. BIS will also publish proposed rules to further align the
CCL with the WAML and the Missile Technology Control Regime Equipment,
Software and Technology Annex.

Detailed Description of Changes Proposed by This Rule

    This proposed rule would create four new 600 series ECCNs in CCL
Category 1 (ECCNs 1B608, 1C608, 1D608, and 1E608) and amend current
ECCN 1C111 to describe the EAR controls that would apply to energetic
materials and related items the President determines no longer warrant
control under USML Category V. In addition, consistent with the
regulatory construct identified in the July 15 proposed rule (i.e., to
move items from 018 ECCNs to the appropriate 600 series ECCNs in order
to consolidate the WAML and former USML items into one series of
ECCNs), this rule would move ``equipment'' for the ``production'' of
explosives and solid propellants, currently classified under ECCN
1B018.a, and related ``software,'' currently classified under ECCN
1D018, to new ECCNs 1B608 and 1D608, respectively. Similarly, this rule
would move commercial charges and devices containing energetic
materials, which are currently classified under ECCN 1C018, to new ECCN
1C608 (except for chlorine trifluoride, which is not on the WAML and
would be controlled under ECCN 1C111.a.3.f). In a corresponding change,
this rule would remove ECCN 1C238, which controls chlorine trifluoride,
from the CCL as it would no longer be necessary.
    These proposed changes are discussed in more detail, below.

New ECCN 1B608 (``Equipment'' ``Specially Designed'' for Commodities in
ECCN 1C608 or USML Category V) and ECCN 1B018 Amended

    Paragraph .a of ECCN 1B608 would control test, inspection, and
production ``equipment'' not specified elsewhere on the CCL or the USML
that is ``specially designed'' for the ``production'' of energetic
materials and related commodities controlled by proposed new ECCN 1C608
or USML Category V. This ``equipment'' would include items currently
controlled under ECCN 1B018.a.2 or .a.3. Paragraph .b of ECCN 1B608
would control complete installations not specified elsewhere on the CCL
or the USML (including complete installations currently controlled
under ECCN 1B018.a.1) that are ``specially designed'' for the
``production'' of energetic materials and related commodities
controlled by proposed new ECCN 1C608 or USML Category V. Paragraph .c
of ECCN 1B608 would control environmental test facilities that are
``specially designed'' for the certification, qualification, or

testing of items controlled by proposed new ECCN 1C608 or USML Category
V. Paragraphs .d through .w would be reserved for possible future use.
Paragraph .x would control ``parts,'' ``components,'' and ``accessories
and attachments'' (including certain unfinished products that have
reached a stage in manufacturing where they are clearly identifiable as
commodities controlled by paragraph .x) that are ``specially designed''
for a commodity controlled under paragraph .a, .b, or .c of ECCN 1B608
and not specified elsewhere on the CCL or the USML. These ``parts,''
``components,'' and ``accessories and attachments'' would include
``specially designed'' ``parts'' and ``components'' currently
controlled under ECCN 1B018.a.4. Incorporating ECCN 1B018.a items into
new ECCN 1B608 is consistent with the regulatory construct identified
in the July 15 proposed rule, under which WAML items in 018 ECCNs will
be consolidated with former USML items into 600 series ECCNs--ECCN
1B018, as amended, would cross reference ECCN 1B608, and ECCN 1B018.a
would be removed and reserved. Paragraph .y of ECCN 1B608 would control
specific test, inspection, and production ``equipment'' ``specially
designed'' for the ``production'' or ``development'' of commodities
controlled by ECCN 1B608 or a defense article in USML Category V, and
``parts,'' ``components,'' and ``accessories and attachments''
``specially designed'' therefor. Because this proposed rule does not
list specific equipment under paragraph .y, sub-paragraphs .y.1 through
.y.98 would be reserved for possible future use.

New ECCN 1C608 (Energetic Materials and Related Commodities Not Listed
Elsewhere in USML Category V or the CCL) and ECCN 1C018 Amended

    ECCN 1C608.a would control single base, double base, and triple
base propellants having nitrocellulose with a nitrogen content greater
than 12.6 percent in the form of either: (i) Sheetstock or carpet rolls
or (ii) grains with a diameter greater than 0.10 inches. Paragraphs .b
through .m of ECCN 1C608 would control commercial charges and devices,
containing energetic materials, that are now controlled under ECCN
1C018.b through .m--as is currently the case with ECCN 1C018.i, ECCN
1C608.i would be reserved. However, a Note following 1C608.m would
indicate that chlorine trifluoride, which is currently controlled under
ECCNs 1C018.m and 1C238, would be controlled under ECCN 1C111.a.3.f
only, and not under new ECCN 1C608. Incorporating ECCN 1C018 items into
new ECCN 1C608 is consistent with the regulatory construct identified
in the July 15 proposed rule, under which WAML items in 018 ECCNs will
be consolidated with former USML items into 600 series ECCNs. ECCN
1C018, as amended, would cross-reference ECCN 1C608 and current ECCNs
that control commercial charges and devices containing energetic
materials. ECCN 1C608.n would control any explosives, propellants,
oxidizers, pyrotechnics, fuels, binders, or additives that are
``specially designed'' for military application and are not listed
elsewhere in the CCL or the USML. Paragraphs .o through .y would be
reserved for possible future use.

New ECCN 1D608 (``Software'' ``Specially Designed'' for Commodities
Controlled by 1B608 or 1C608) and ECCN 1D018 Amended

    ECCN 1D608.a would control ``software'' ``specially designed'' for
the ``development,'' ``production,'' operation, or maintenance of
commodities controlled by proposed new ECCN 1B608 or 1C608. This
``software'' would include ``software,'' currently controlled by ECCN
1D018, for ``equipment'' described in ECCN 1B018.a. Incorporating ECCN
1D018 ``software'' for ECCN 1B018.a items into new ECCN 1D608 is
consistent with the regulatory construct identified in the July 15
proposed rule, under which WAML items in 018 ECCNs will be consolidated
with former USML items into 600 series ECCNs--ECCN 1D018, as amended,
would cross-reference ECCN 1D608. Paragraphs .b through .x of ECCN
1D608 would be reserved for possible future use. Paragraph .y of ECCN
1D608 would control ``software'' ``specially designed'' for the
``development,'' ``production,'' operation, or maintenance of
commodities controlled by proposed ECCN 1B608.y. Because this proposed
rule does not list specific ``software'' under paragraph .y, sub-
paragraphs .y.1 through .y.98 would be reserved for possible future
use.

New ECCN 1E608 (``Technology'' ``Required'' for ``Equipment''
Controlled in 1B608 or Materials Controlled by 1C608)

    ECCN 1E608.a would control ``technology'' ``required'' for the
``development,'' ``production,'' operation, installation, maintenance,
repair, overhaul, or refurbishment of items controlled by ECCN 1B608 or
1C608. This ``technology'' would include ``technology,'' currently
controlled by ECCN 1E001, for ``equipment'' currently described in ECCN
1B018.a--accordingly, ECCN 1E001 would be amended to exclude both
``technology'' for current 1B018.a items that would be moved to ECCN
1B608 and ``technology'' for 1C608 items and to cross reference ECCN
1E608 (the proposed amendments to ECCN 1E001 are described in more
detail, below). Paragraph .b of 1E608 would control ``technology'' for
the ``development'' or ``production'' of nitrocellulose with a nitrogen
content over 12.6 percent and at rates greater than 2000 pounds per
hour. Paragraph .c of 1E608 would control ``technology'' for the
``development'' or ``production'' of nitrate esters (e.g.,
nitroglycerine) at rates greater than 2000 pounds per hour. Paragraph
.y of 1E608 would control specific ``technology'' ``required'' for the
``development,'' ``production,'' operation, installation, maintenance,
repair, overhaul or refurbishing of commodities controlled by ECCN
1B608.y or ``software'' controlled by ECCN 1D608.y. Because this
proposed rule does not list specific ``technology'' under paragraph .y,
sub-paragraphs .y.1 through .y.98 would be reserved for possible future
use.

Inclusion of ``.y.99'' Paragraphs in 600 Series ECCNs

    Proposed new ECCNs 1B608, 1D608, and 1E608 would also contain a
paragraph ``.y.99'' that would control any item that meets all of
following criteria: (i) The item is not listed on the CCL; (ii) the
item was previously determined to be subject to the EAR in an
applicable commodity jurisdiction determination issued by the U.S.
Department of State; and (iii) the item would otherwise be controlled
under one of these Category 1, 600 series, ECCNs because, for example,
the item was ``specially designed'' for a military use. Items in these
.y.99 paragraphs would be subject to antiterrorism (AT Column 1)
controls only.

Applicable Controls for New 600 Series ECCNs

    ECCN 1B608, 1C608, 1D608, and 1E608 items (except for items in ECCN
1B608.y, 1D608.y, or 1E608.y--1C608.y is reserved) would be subject to
national security (NS Column 1), regional stability (RS Column 1), and
antiterrorism (AT Column 1) controls.
    In addition, missile technology (MT Column 1) controls would apply
to: equipment controlled by ECCN 1B608 that is ``specially designed''
for the ``production'' of rocket propellants; oxidizers or mixtures
controlled under ECCN 1C608.m; ``software'' in ECCN 1D608 that is
``specially designed'' for oxidizers or mixtures controlled under

ECCN 1C608.m; and ``technology'' in ECCN 1E608 that is ``required'' for
oxidizers or mixtures controlled under ECCN 1C608.m.
    Under ECCN 1B018.a, ``equipment'' for the ``production'' of
military explosives and solid propellants is controlled for national
security, regional stability, antiterrorism and United Nations reasons.
In addition, such ``equipment'' that is for the ``production'' of
rocket propellants, is controlled for missile technology reasons. Under
ECCN 1C018, commercial charges and devices containing energetic
materials are controlled for national security, antiterrorism and
United Nations reasons, and items classified under ECCN 1C018.m are
also controlled for missile technology reasons. Items moving to
proposed ECCN 1B608 and to proposed 1C608 would no longer be controlled
for United Nations reasons, although they would retain their other
current reasons for control. Controlling these items for United Nations
reasons is unnecessary in light of the November 7 proposed rule's
amendment to the RS Column 1 licensing policy, which stated that there
would be a general policy of denial for ``600 series'' items if the
destination is subject to a United States arms embargo. A list of such
destinations is identified in proposed section 740.2(a)(12), published
in the November 7 proposed rule.

ECCN 1C111 Amended and ECCN 1C238 Removed

    This proposed rule would amend ECCN 1C111 by adding under 1C111.a
and 1C111.d, respectively, aluminum powder and hydrazine and
derivatives thereof, which the President determines no longer warrant
control under USML Category V. These items would be added to ECCN 1C111
because they possess characteristics that are more similar to the
propellants, and constituent chemicals therefor, that are controlled
under ECCN 1C111 than the energetic materials that would be controlled
under proposed ECCN 1C608. Like the items currently controlled under
ECCN 1C111, these additional items would be subject to missile
technology (MT Column 1) controls and anti-terrorism (AT Column 1)
controls. In addition, this proposed rule would amend the Related
Controls paragraph in ECCN 1C111 to indicate that ECCN 1C608 controls
oxidizers that are composed of fluorine (and also other halogens,
oxygen, or nitrogen), except for chlorine trifluoride, which would be
controlled under ECCN 1C111.a.3.f.
    Chlorine trifluoride currently is controlled under both ECCNs
1C018.m and 1C238--ECCN 1C018.m controls chlorine trifluoride for
missile technology (MT Column 1), regional stability (RS Column 1), and
anti-terrorism (AT Column 1) reasons, while ECCN 1C238 controls
chlorine trifluoride for nuclear nonproliferation (NP Column 1) and
anti-terrorism (AT Column 1) reasons. This proposed rule would remove
chlorine trifluoride from ECCNs 1C018.m and 1C238 and control it under
ECCN 1C111.a.3.f only, rather than also controlling it under ECCN
1C608.m, because chlorine trifluoride is not on the WAML and,
consequently, is not subject to national security (NS) controls.
Accordingly, this proposed rule would amend ECCN 1C111 to control
chlorine trifluoride under ECCN 1C111.a.3.f for nuclear
nonproliferation (NP Column 1) reasons, in addition to the MT and AT
reasons for control that currently apply under this ECCN. Regional
stability (RS Column 1) controls would no longer apply to chlorine
trifluoride, because such controls would be redundant in view of the
fact that they apply to the same group of destinations as missile
technology controls (i.e., both RS Column 1 and MT Column 1 apply to
all destinations, except for Canada). Because ECCN 1C238 currently
controls chlorine trifluoride only, this ECCN would be removed from the
CCL.

ECCN 1E001 Amended

    This proposed rule would amend ECCN 1E001 by revising the ECCN
heading to exclude ``technology'' for items that, with this proposed
rule, would be controlled under proposed new ECCN 1B608 or 1C608 and by
amending the Related Controls paragraph in the List of Items Controlled
to include a reference to proposed new ECCN 1E608. In addition, this
rule proposes to amend the nuclear nonproliferation (NP) controls
paragraph in the License Requirements section of ECCN 1E001 to include
``technology'' for ECCN 1C111 items controlled for NP reasons (i.e.,
chlorine trifluoride in ECCN 1C111.a.3.f). As a result of this change
and the addition of chlorine trifluoride to ECCN 1C111, as described
above, ``technology'' for the ``development'' or ``production'' of
chlorine trifluoride (ClF3) would be controlled under ECCN
1E001 for missile technology (MT Column 1), nuclear nonproliferation
(NP Column 1), and anti-terrorism (AT Column 1) reasons.
    In addition, this proposed rule would amend the reference to ECCN
1E002.g, in the Related Controls paragraph of ECCN 1E001, to address
control libraries (parametric technical databases) specially designed
or modified to enable equipment to perform the functions of equipment
controlled under either 1A004.c (Nuclear, biological and chemical (NBC)
detection systems) or 1A004.d (Equipment for detecting or identifying
explosives residues)--currently, only 1A004.c equipment is referenced.
Adding 1A004.d as a cross reference corrects an inadvertent but non-
substantive omission in the EAR as ECCN 1E002.g refers to both 1A004.c
and 1A004.d.

ECCN 1E101 Amended

    This proposed rule would amend the License Requirements section of
ECCN 1E101, consistent with the ``technology'' controls of the Nuclear
Suppliers Group (NSG), to apply nuclear nonproliferation (NP Column 1)
controls to ``use'' ``technology'' for ECCN 1C111 items controlled for
NP reasons (i.e., chlorine trifluoride in ECCN 1C111.a.3.f). As a
result of this change, ``use'' ``technology'' for chlorine trifluoride
would be controlled for nuclear nonproliferation (NP Column 1), missile
technology (MT Column 1), and anti-terrorism (AT Column 1) reasons
under ECCN 1E101. This change is consistent with the proposal in this
rule to remove chlorine trifluoride from ECCNs 1C018.m and 1C238 and
control chlorine trifluoride exclusively under ECCN 1C111.a.3.f.
Currently, ``use'' ``technology'' for chlorine trifluoride is
controlled under ECCN 1E201 for nuclear nonproliferation (NP Column 1)
and anti-terrorism (AT Column 1) reasons, only. As described below,
this rule would amend ECCN 1E201 to remove ``use'' ``technology'' for
chlorine trifluoride.

ECCN 1E201 Amended

    ECCN 1E201 currently controls ``use'' ``technology'' for chlorine
trifluoride for nuclear nonproliferation (NP Column 1) and anti-
terrorism (AT Column 1) reasons. This proposed rule would amend ECCN
1E201 by revising the ECCN heading to remove ``technology'' for ECCN
1C238 items (i.e., chlorine trifluoride), consistent with the ECCN
1C111 and 1E101 changes described above, whereby chlorine trifluoride
would be controlled under ECCN 1C111.a.3.f, only, and ECCN 1E101 would
be amended to control ``use'' ``technology'' for chlorine trifluoride.

Corresponding Amendments

    To implement the regional stability controls that apply to the four
new 600 series ECCNs noted above, this proposed rule would revise Sec.
742.6 of the EAR to apply the RS Column 1 licensing policy to
commodities

classified under ECCN 1B608 (except 1B608.y) and 1C608 and to related
``software'' and ``technology'' classified under ECCNs 1D608 and 1E608
(except 1D608.y and 1E608.y), respectively.

Relationship to the July 15 and November 7 Proposed Rules

    As referenced above, the purpose of the July 15 proposed rule was
to set up the framework to support the transfer of items that the
President determines no longer warrant control on the USML from the
USML to the CCL. To facilitate that goal, the July 15 proposed rule
contained definitions and concepts that were meant to be applied across
categories. However, as BIS undertakes rulemakings to move specific
categories of items from the USML to the CCL, there may be unforeseen
issues or complications that may require BIS to reexamine those
definitions and concepts. The comment period for the July 15 proposed
rule closed on September 13, 2011. In the November 7 proposed rule, BIS
proposed several changes to those definitions and concepts. The comment
period for the November 7 proposed rule closed on December 22, 2011.
    To the extent that this rule's proposals affect any provision in
either of those proposed rules or any provision in either of those
proposed rules affect this proposed rule, BIS will consider comments on
those provisions so long as they are within the context of the changes
proposed in this rule.
    BIS believes that the following aspects of the July 15 proposed
rule and the November 7 proposed rule are among those that could affect
this proposed rule:
     De minimis provisions in Sec.  734.4;
     Restrictions on use of license exceptions in Sec. Sec.
740.2, 740.10, 740.11, and 740.20;
     Change to national security licensing policy in Sec.
742.4;
     Addition of 600 series items to Supplement No. 2 to Part
744--List of Items Subject to the Military End-Use Requirement of Sec.
744.21; and
     Definitions of terms in Sec.  772.1.
    BIS believes that the following provisions of this proposed rule
are among those that could affect the provisions of the July 15 and
November 7 proposed rules:
     Additional 600 series items identified in the RS Column
licensing policy described in Sec.  742.6.

Effects of This Proposed Rule

    BIS believes that the principal effect of this rule, when
considered in the context of the other similar proposed rules being
published as part of the Export Control Reform Initiative, will be to
provide greater flexibility for exports and reexports to NATO member
countries and other multiple-regime-member countries of items the
President determines no longer warrant control on the USML. This
greater flexibility would be in the form of: application of the EAR's
de minimis threshold principle for items constituting less than a de
minimis amount of controlled U.S.-origin content in foreign made items;
availability of license exceptions, particularly License Exceptions
``Servicing and Replacement of Parts and Equipment'' (RPL) and
``Strategic Trade Authorization'' (STA); elimination of the
requirements for manufacturing license agreements and technical
assistance agreements in connection with exports of technology; and a
reduction in, or elimination of, exporter and manufacturer registration
requirements and associated registration fees. Some of these specific
effects are discussed in more detail below.

De Minimis

    The July 15 proposed rule would impose certain unique de minimis
requirements on items controlled under the new 600 series ECCNs.
Section 734.3 of the EAR provides, inter alia, that, under certain
conditions, items made outside the United States that incorporate items
subject to the EAR are not subject to the EAR if they do not exceed a
``de minimis'' percentage of controlled U.S. origin content. Depending
on the destination, the de minimis percentage can be either 10 percent
or 25 percent. If the July 15 proposed rule's amendments at Sec.  734.4
of the EAR are adopted, the new ECCNs 1B608, 1C608, 1D608, and 1E608
proposed in this rule would be subject to the de minimis provisions set
forth in the July 15 proposed rule. Foreign-made items incorporating
items controlled under the new ECCNs would become eligible for de
minimis treatment at the 10 percent level (i.e., a foreign-made item is
not subject to the EAR, for de minimis purposes, if the value of its
U.S.-origin controlled content does not exceed 10 percent of foreign-
made item's value). In contrast, the AECA does not permit the ITAR to
have a de minimis treatment for USML-listed items, regardless of the
significance or insignificance of the U.S.-origin content or the
percentage of U.S.-origin content in the foreign-made item (i.e., USML-
listed items remain subject to the ITAR when they are incorporated
abroad into a foreign-made item, regardless of either of these
factors). In addition, foreign-made items that incorporate any items
that are currently classified under an 018 ECCN (e.g., ECCNs 1B018.a,
1C018, and 1D018) and that are moved to a new 600 series ECCN (e.g.,
ECCNs 1B608, 1C608, and 1D608, respectively) would be subject to the
EAR if those foreign-made items contained more than 10 percent U.S.-
origin controlled content, regardless of the destination and regardless
of the proportion of the U.S.-origin controlled content accounted for
by the former 018 ECCN items.

Use of License Exceptions

    The July 15 proposed rule would impose certain restrictions on the
use of license exceptions for items that would be controlled under the
new 600 series ECCNs on the CCL. For example, proposed Sec.
740.2(a)(12) would make 600 series items that are destined for a
country subject to a United States arms embargo ineligible for shipment
under a license exception, except where authorized by License Exception
GOV under Sec.  740.11(b)(2)(ii) of the EAR. BIS believes that, even
with the July 15 and November 7 proposed restrictions on the use of
license exceptions for 600 series items, the restrictions on those
items currently on the USML would be reduced, particularly with respect
to exports to NATO members and multiple-regime member countries, if
those items are moved from the USML to proposed ECCN 1B608 or 1C608.
BIS also believes that, in practice, the movement of items from a 018
ECCN to a new 600 series ECCN (e.g., ``equipment'' for the
``production'' of military explosives and solid propellants from ECCN
1B018.a to new ECCN 1B608 and commercial charges and devices containing
energetic materials from ECCN 1C018.b through .m to new ECCN 1C608.b
through .m, respectively) would have little effect on license exception
availability for those items. However, BIS is aware of two situations
(the use of License Exceptions GOV and STA) in which movement of items
from a 018 ECCN to a new 600 series ECCN could, in practice, impose
greater limits on the use of license exceptions than currently is the
case.
    First, the July 15 proposed rule would limit the use of License
Exception GOV for 600 series commodities to situations in which the
United States Government is the consignee and end user or to situations
in which the consignee or end user is the government of a country
listed in Sec.  740.20(c)(1). Currently, ``production'' and test
``equipment'' not subject to MT controls under ECCN 1B018.a and
commercial charges and devices containing energetic materials
classified under ECCN 1C018.b through .l may be exported under any
provision of License Exception GOV to any

destination authorized by that provision if all of the conditions of
that provision are met and nothing else in the EAR precludes such
shipment.
    Second, the July 15 proposed rule would: (i) limit the use of
License Exception STA for ``end items'' in 600 series ECCNs to those
end items for which a specific request for License Exception STA
eligibility (filed in conjunction with a license application) has been
approved; and (ii) require that the end item be for ultimate end use by
a foreign government agency of a type specified in the July 15 proposed
rule. The July 15 proposed rule also would limit exports of 600 series
parts, components, accessories, and attachments under License Exception
STA for ultimate end use by the same set of end users. Neither the end-
item restriction nor the restriction applicable to parts, components,
accessories, and attachments currently applies to the use of License
Exception STA for ``production'' and test ``equipment'' not subject to
MT controls under ECCN 1B018.a and for commodities classified under
ECCN 1C018.b through .l, but the latter restriction would apply to
these items under new ECCNs 1B608 and 1C608, respectively. In addition,
the July 15 proposed rule would limit the shipment of 600 series items
under License Exception STA to destinations listed in Sec.
740.20(c)(1). Currently, ECCN 1B018.a ``production'' and test
``equipment'' (which would be moved to ECCN 1B608 by this proposed
rule) that is not MT-controlled and commodities classified under ECCN
1C018.b through .l (which would be moved to ECCN 1C608.b through .l,
respectively, by this proposed rule) may be shipped under License
Exception STA to destinations listed in Sec.  740.20(c)(1) or (c)(2).
    In addition, this proposed rule provides that a license exception
eligibility request would not have to be submitted for STA-eligible
items controlled under new ECCN 1B608 or 1C608. As proposed in the July
15 rule, the use of License Exception STA for ``end items'' in 600
series ECCNs would be prohibited, unless a specific request for License
Exception STA eligibility has been submitted to, and approved by, BIS.
    Items controlled under new ECCN 1B608 or 1C608 (except those
controlled for MT reasons) would be eligible for License Exception LVS
(limited value shipments) up to a value of $1,500. Note that for items
previously classified under ECCN 1B018 that would, under this proposal,
be classified under ECCN 1B608, the threshold for LVS availability
would drop from $3,000 to $1,500 with this proposed change (and
increase from $0 to $1,500 for Rwanda). For items previously classified
under ECCN 1C018 that would, under this proposal, be classified under
ECCN 1C608, the threshold for LVS availability would drop from $3,000
to $1,500 (and LVS would become available for Rwanda). Items controlled
under new ECCN 1B608 (except those controlled for MT reasons) also
would be eligible for License Exceptions TMP (temporary exports), and
RPL (servicing and replacement parts).

Making U.S. Export Controls More Consistent With the Wassenaar
Arrangement Munitions List Controls

    Since the beginning of the Export Control Reform Initiative, the
Administration has stated that the reforms will be consistent with the
United States' obligations to the multilateral export control regimes.
Accordingly, the Administration will, in this and subsequent proposed
rules, exercise its national discretion to implement, clarify, and, to
the extent feasible, align its controls with those of the regimes. For
example, proposed ECCNs 1B608, 1D608, and 1E608 implement, to the
extent possible, the controls in WAML Category 18 for production
equipment, the controls in WAML Category 21 for software, and the
controls in WAML Category 22 for technology, while proposed ECCN 1C608
implements, to the extent possible and to the extent that such items
would not be controlled on the USML, the controls in WAML Category 8.

Other Effects: National Security and Regional Stability Controls

    Pursuant to the framework identified in the July 15 proposed rule,
energetic materials and related commodities classified under ECCN 1C608
and related test, inspection and production equipment, software and
technology classified under ECCN 1B608, 1D608 or 1E608, respectively
(except items classified under the .y paragraphs of these ECCNs), would
be subject to the licensing policies that apply to items controlled for
national security (NS) reasons, as described in Sec.  742.4(b)(1)--
specifically, NS Column 1 controls. In addition, all commodities in
ECCN 1C608, along with related test, inspection and production
equipment, software and technology classified under ECCN 1B608, 1D608
or 1E608, respectively (except items classified under the .y paragraphs
of these ECCNs), would be subject to the regional stability licensing
policies set forth in Sec.  742.6(a)(1)--specifically, RS Column 1.
Consistent with this policy, this proposed rule would revise Sec.
742.6 of the EAR to apply the RS Column 1 licensing policy to
commodities classified under ECCN 1B608 (except 1B608.y) and 1C608 and
to related ``software'' and ``technology'' classified under ECCNs 1D608
and 1E608 (except 1D608.y and 1E608.y).
    The July 15 proposed rule would amend Sec.  742.4 to apply a
general policy of denial to 600 series items for destinations that are
subject to a United States arms embargo. That policy would apply to all
items controlled for national security (NS) reasons under this proposed
rule. The November 7 proposed rule would expand that general policy of
denial to include 600 series items subject to the licensing policies
that apply to items controlled for regional stability reasons, as
described in Sec.  742.6(b)(1)--specifically, RS Column 1. While this
change might seem redundant for the items affected by this proposed
rule, it ensures that a general denial policy would apply to any 600
series items that are controlled for missile technology (MT) and
regional stability (RS) reasons, but not for national security (NS)
reasons (as would be the case for certain items affected by the
aircraft rule).

Section-by-Section Description of the Proposed Changes

     Section 742.6--ECCNs 1B608, 1C608, 1D608, and 1E608 are
added to Sec.  742.6(a)(1) to impose an RS Column 1 license requirement
and licensing policy, including a general policy of denial in Section
742.6(b)(1) for applications to export or reexport ``600 series'' items
to destinations that are subject to a United States arms embargo.
     Supplement No. 1 to part 774--ECCNs 1B608, 1C608, 1D608,
and 1E608 are added to Supplement No. 1 to part 774. ECCN 1B018 is
amended to remove and reserve 1B018.a and to cross reference
``production'' and test ``equipment'' that would be moved from 1B018.a
to proposed new ECCN 1B608. ECCN 1C018 is amended to remove all
language except cross references to commercial charges and devices
containing energetic materials that would be moved from ECCN 1C018 to
proposed new ECCN 1C608 under paragraphs .b through .m, respectively.
ECCN 1C111 is amended to add certain aluminum powder and hydrazine and
derivatives thereof. ECCN 1D018 is amended to remove ``software'' for
ECCN 1B018.a ``production'' and test ``equipment'' and to cross
reference such equipment in proposed new ECCN 1D608. ECCN 1E001 is
amended to remove ``technology'' for 1B018.a items that would be moved
to proposed new

ECCN 1B608 and to cross reference such ``technology'' in proposed new
ECCN 1E608.

Request for Comments

    BIS seeks comments on this proposed rule. BIS will consider all
comments received on or before June 18, 2012. All comments (including
any personally identifying information or information for which a claim
of confidentially is asserted either in those comments or their
transmittal emails) will be made available for public inspection and
copying. Parties who wish to comment anonymously may do so by
submitting their comments via Regulations.gov, leaving the fields that
would identify the commenter blank and including no identifying
information in the comment itself.
    Although the Export Administration Act expired on August 20, 2001,
the President, through Executive Order 13222 of August 17, 2001, 3 CFR,
2001 Comp., p. 783 (2002), as extended by the Notice of August 12,
2011, 76 FR 50661 (August 16, 2011), has continued the Export
Administration Regulations in effect under the International Emergency
Economic Powers Act. BIS continues to carry out the provisions of the
Export Administration Act, as appropriate and to the extent permitted
by law, pursuant to Executive Order 13222.

Rulemaking Requirements

    1. Executive Orders 13563 and 12866 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distribute impacts, and equity). Executive
Order 13563 emphasizes the importance of quantifying both costs and
benefits, of reducing costs, of harmonizing rules, and of promoting
flexibility. This rule has been designated a ``significant regulatory
action,'' although not economically significant, under section 3(f) of
Executive Order 12866. Accordingly, the rule has been reviewed by the
Office of Management and Budget (OMB).
    2. Notwithstanding any other provision of law, no person is
required to respond to, nor is subject to a penalty for failure to
comply with, a collection of information, subject to the requirements
of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.) (PRA),
unless that collection of information displays a currently valid OMB
control number. This proposed rule would affect two approved
collections: Simplified Network Application Processing + System
(control number 0694-0088), which includes, among other things, license
applications, and License Exceptions and Exclusions (0694-0137).
    As stated in the July 15, 2011, proposed rule (76 FR 41958), BIS
believes that the combined effect of all rules to be published adding
items to the EAR that would be removed from the ITAR as part of the
administration's Export Control Reform Initiative would increase the
number of license applications to be submitted by approximately 16,000
annually, resulting in an increase in burden hours of 5,067 (16,000
transactions at 17 minutes each) under control number 0694-0088.
    Some items formerly on the USML would become eligible for License
Exception STA under this rule. As specified in the STA eligibility
paragraphs for 1B608 and 1C608, such items would not need a
determination of eligibility per Sec.  740.20(g) of the EAR. As stated
in the July 15 proposed rule, BIS believes that the increased use of
License Exception STA resulting from the combined effect of all rules
to be published adding items to EAR that would be removed from the ITAR
as part of the administration's Export Control Reform Initiative would
increase the burden associated with control number 0694-0137 by about
23,858 hours (20,450 transactions at 1 hour and 10 minutes each).
    BIS expects that this increase in burden would be more than offset
by a reduction in burden hours associated with approved collections
related to the ITAR. This proposed rule addresses controls on energetic
materials and related parts, components, production equipment,
software, and technology. The largest impact of the proposed rule would
be with respect to exporters of parts and components because, under the
proposed rule, most U.S. and foreign energetic materials and associated
equipment would continue to be subject to the ITAR. Because, with few
exceptions, the ITAR allows exemptions from license requirements only
for exports to Canada, most exports to integrators for U.S Government
equipment and most exports of routine maintenance parts and components
for NATO and other close allies require State Department authorization.
In addition, the exports necessary to produce parts and components for
defense articles in the inventories of the United States and its NATO
and other close allies require State Department authorizations. Under
the EAR, as proposed, a small number of low-level parts would not
require a license to most destinations. Most other parts, components,
accessories, and attachments would become eligible for export to NATO
and other close allies under License Exception STA. Use of License
Exception STA imposes a paperwork and compliance burden because, for
example, exporters must furnish information about the item being
exported to the consignee and obtain from the consignee an
acknowledgement and commitment to comply with the EAR. It is, however,
the Administration's understanding that complying with the requirements
of STA is likely to be less burdensome than applying for licenses. For
example, under License Exception STA, a single consignee statement can
apply to an unlimited number of products, need not have an expiration
date and need not be submitted to the government in advance for
approval. Suppliers with regular customers can tailor a single
statement and assurance to match their business relationship rather
than applying repeatedly for licenses with every purchase order to
supply allied and, in some cases, U.S. forces with routine replacement
parts and components.
    Even in situations in which a license would be required under the
EAR, the burden likely will be reduced compared to the license
requirement of the ITAR. In particular, license applications for
exports of technology controlled by ECCN 1E608 are likely to be less
complex and burdensome than the authorizations required to export ITAR-
controlled technology, i.e., Manufacturing License Agreements and
Technical Assistance Agreements.
    3. This rule does not contain policies with Federalism implications
as that term is defined under E.O. 13132.
    4. The Regulatory Flexibility Act (RFA), as amended by the Small
Business Regulatory Enforcement Fairness Act of 1996 (SBREFA), 5 U.S.C.
601 et seq., generally requires an agency to prepare an initial
regulatory flexibility analysis (IRFA) for any rule subject to the
notice and comment rulemaking requirements under the Administrative
Procedure Act (5 U.S.C. 553) or any other statute, unless the agency
certifies that the rule will not have a significant economic impact on
a substantial number of small entities. Under section 605(b) of the
RFA, however, if the head of an agency certifies that a rule will not
have a significant impact on a substantial number of small entities,
the RFA does not require the agency to prepare a regulatory flexibility
analysis. Pursuant to section 605(b), the Chief Counsel for Regulation,
Department of Commerce,

certified to the Chief Counsel for Advocacy, Small Business
Administration that this proposed rule, if promulgated, will not have a
significant impact on a substantial number of small entities.

Number of Small Entities

    The Bureau of Industry and Security (BIS) does not collect data on
the size of entities that apply for and are issued export licenses.
Although BIS is unable to estimate the exact number of small entities
that would be affected by this rule, it acknowledges that this rule
would affect some unknown number.

Economic Impact

    This proposed rule is part of the Administration's Export Control
Reform Initiative. Under that initiative, the United States Munitions
List (22 CFR part 121) (USML) will be revised to be a ``positive''
list, i.e., a list that does not use generic, catch-all controls on any
part, component, accessory, attachment, or end item that was in any way
specifically modified for a defense article, regardless of the
article's military or intelligence significance or non-military
applications. At the same time, articles that are determined to no
longer warrant control on the USML will become controlled on the
Commerce Control List (CCL). Such items, along with certain military
items that currently are on the CCL, will be identified in specific
Export Control Classification Numbers (ECCNs) known as the ``600
series'' ECCNs. In addition, some items currently on the CCL will move
from existing ECCNs to the new 600 series ECCNs.
    This rule addresses certain energetic materials and related
articles currently enumerated in USML Category V (Explosives and
Energetic Materials, Propellants, Incendiary Agents and Their
Constituents) and items currently controlled under ECCN 1B018.a
(Equipment for the Production of Military Explosives and Solid
Propellants), ECCN 1C018 (Commercial Charges and Devices Containing
Energetic Materials on the Wassenaar Arrangement Munitions List), ECCN
1D018 (``Software'' for Equipment Controlled by ECCN 1B018.a), and ECCN
1E001 (``Technology'' for the ``Development'' or ``Production'' of
Items Controlled by ECCN 1B018.a). Most energetic materials and
associated equipment would remain on the USML. However, parts and
components, which are more likely to be produced by small businesses
than are energetic materials and related production equipment, would in
many cases become subject to the EAR. In addition, officials of the
Department of State have informed BIS that license applications for
such parts and components are a high percentage of the license
applications for USML articles reviewed by that department. Changing
the jurisdictional status of certain Category V items would reduce the
burden on small entities (and other entities as well) through: (i)
elimination of some license requirements; (ii) greater availability of
license exceptions; (iii) simpler license application procedures; and
(iv) reduced or eliminated registration fees.
    In addition, parts and components that are controlled under the
ITAR remain under ITAR control when incorporated into foreign-made
items, regardless of the significance or insignificance of the item.
This discourages foreign buyers from incorporating such U.S. content.
The availability of de minimis treatment under the EAR, for those items
that would no longer be controlled under the ITAR, may reduce the
disincentive for foreign manufacturers to purchase U.S.-origin parts
and components.
    Many exports and reexports of the Category V articles that would be
placed on the CCL by this rule, particularly parts and components,
would become eligible for license exceptions that apply to shipments to
U.S. Government agencies, parts and components being exported for use
as replacement parts, temporary exports, and License Exception
Strategic Trade Authorization (STA), reducing the number of licenses
that exporters of these items would need. License Exceptions under the
EAR would allow suppliers to send routine replacement parts and low
level parts to NATO and other close allies and export control regime
partners for use by those governments and for use by contractors
building equipment for those governments or for the U.S. Government
without having to obtain export licenses. Under License Exception STA,
the exporter would need to furnish information about the item being
exported to the consignee and obtain a statement from the consignee
that, among other things, would commit the consignee to comply with the
EAR and other applicable U.S. laws. Because such statements and
obligations can apply to an unlimited number of transactions and have
no expiration date, they would create a net reduction in burden on
transactions that the government routinely approves through the license
application process that the License Exception STA statements would
replace.
    Even for exports and reexports for which a license would be
required, the process would be simpler and less costly under the EAR.
When a USML Category V article is moved to the CCL, the number of
destinations for which a license is required would remain unchanged.
However, the burden on the license applicant would decrease because the
licensing procedure for CCL items is simpler and more flexible that the
license procedure for USML articles.
    Under the USML licensing procedure, an applicant must include a
purchase order or contract with its application. There is no such
requirement under the CCL licensing procedure. This difference gives
the CCL applicant at least two advantages. First, the applicant has a
way to determine whether the U.S. government will authorize the
transaction before it enters into potentially lengthy, complex and
expensive sales presentations or contract negotiations. Under the USML
procedure, the applicant must caveat all sales presentations with a
reference to the need for government approval, and is more likely to
engage in substantial effort and expense only to find that the
government will reject the application. Second, a CCL license applicant
need not limit its application to the quantity or value of one purchase
order or contract. It may apply for a license to cover all of its
expected exports or reexports to a specified consignee over the life of
a license (normally two years, but may be longer if circumstances
warrant a longer period), thus reducing the total number of licenses
for which the applicant must apply.
    In addition, many applicants exporting or reexporting items that
this rule proposes to transfer from the USML to the CCL would realize
cost savings through the elimination of some or all registration fees
currently assessed under the USML's licensing procedure. Currently,
USML applicants must pay to use the USML licensing procedure even if
they never actually are authorized to export. Registration fees for
manufacturers and exporters of articles on the USML start at $2,500 per
year, increase to $2,750 for organizations applying for one to ten
licenses per year and further increases to $2,750 plus $250 per license
application (subject to a maximum of three percent of total application
value) for those who need to apply for more than ten licenses per year.
Conversely, there are no registration or application processing fees
for applications to export items listed on the CCL. Once the Category V
items that are the subject to this rulemaking are removed from the USML
and added to the CCL, entities currently applying for licenses from the
Department of State would find their registration fees reduced if the
number

of USML licenses those entities need declines. If an entity's entire
product line is moved to the CCL, its ITAR registration and
registration fee requirement would be eliminated.
    De minimis treatment under the EAR would become available for all
items that this rule proposes to transfer from the USML to the CCL.
Items subject to the ITAR will remain subject to the ITAR when they are
incorporated abroad into a foreign-made product regardless of the
percentage of U.S content in that foreign-made product. However,
foreign-made products incorporating items that this rule would move to
the CCL would be subject to the EAR only if their total controlled
U.S.-origin content exceeds 10 percent. Because including small amounts
of U.S.-origin content would not subject foreign-made products to the
EAR, foreign manufacturers would have less incentive to refrain from
purchasing such U.S.-origin parts and components, a development that
potentially would mean greater sales for U.S. suppliers, including
small entities.
    For items currently on the CCL that would be moved from existing
ECCNs to the new 600 series, license exception availability would be
narrowed somewhat and the applicable de minimis threshold for foreign-
made products containing those items would in some cases be reduced
from 25 percent to 10 percent. However, BIS believes that any increased
burden imposed by those actions would be offset substantially by the
reduction in burden attributable to the moving of items from the USML
to CCL and the compliance benefits associated with the consolidation of
all WAML items subject to the EAR in one series of ECCNs. These changes
also would reduce the burden on small entities by resolving actual and
potential jurisdictional uncertainty with respect to items that are
related to articles enumerated in USML Category V.

Conclusion

    BIS is unable to determine the precise number of small entities
that would be affected by this rule. Based on the facts and conclusions
set forth above, BIS believes that any burdens imposed by this rule
would be offset by a reduction in the number of items that would
require a license, increased opportunities for use of license
exceptions for exports to certain countries, simpler export license
applications, reduced or eliminated registration fees, and application
of a de minimis threshold for foreign-made items incorporating U.S.-
origin parts and components, which would reduce the incentive for
foreign buyers to design out or avoid U.S.-origin content. For these
reasons, the Chief Counsel for Regulation of the Department of Commerce
certified to the Chief Counsel for Advocacy of the Small Business
Administration that this rule, if adopted in final form, would not have
a significant economic impact on a substantial number of small
entities. Accordingly, no IRFA is required, and none has been prepared.

List of Subjects

15 CFR Part 742

    Exports, Terrorism.

15 CFR Part 774

    Exports, Reporting and recordkeeping requirements.

    For the reasons stated in the preamble, parts 742 and 774 of the
Export Administration Regulations (15 CFR parts 730-774) are proposed
to be amended as follows:

15 CFR PART 742--[AMENDED]

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

    Authority:  50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.;
22 U.S.C. 3201 et seq.; 42 U.S.C. 2139a; 22 U.S.C. 7201 et seq.; 22
U.S.C. 7210; Sec 1503, Pub. L. 108-11, 117 Stat. 559; E.O. 12058, 43
FR 20947, 3 CFR, 1978 Comp., p. 179; E.O. 12851, 58 FR 33181, 3 CFR,
1993 Comp., p. 608; E.O. 12938, 59 FR 59099, 3 CFR, 1994 Comp., p.
950; E.O. 13026, 61 FR 58767, 3 CFR, 1996 Comp., p. 228; E.O. 13222,
66 FR 44025, 3 CFR, 2001 Comp., p. 783; Presidential Determination
2003-23 of May 7, 2003, 68 FR 26459, May 16, 2003; Notice of August
12, 2011, 76 FR 50661 (August 16, 2011); Notice of November 9, 2011,
76 FR 70319 (November 10, 2011).

    2. Section 742.6 is amended by revising paragraph (a)(1) to read as
follows:

Sec.  742.6  Regional stability.

    (a) * * *
    (1) RS Column 1 License Requirements in General. As indicated in
the CCL and in RS column 1 of the Commerce Country Chart (see
Supplement No. 1 to part 738 of the EAR), a license is required to all
destinations, except Canada, for items described on the CCL under ECCNs
0A521; 0A601 (except 0A601.y); 0A602 (except 0A602.y); 0A606 (except
0A606.b and .y); 0B521; 0B601; 0B602; 0B606 (except 0B606.y); 0C521;
0C606 (except 0C606.y); 0D521; 0D602; 0D606 (except 0D606.y); 0E521;
0E601; 0E602; 0E606 (except 0E606.y); 1A607 (except 1A607.y); 1B607
(except 1B607.y); 1B608 (except 1B608.y); 1C607; 1C608; 1D607 (except
1D607.y); 1D608 (except 1D608.y); 1E607 (except 1E607.y); 1E608 (except
1E608.y); 6A002.a.1, a.2, a.3, .c, or .e; 6A003.b.3, and b.4.a;
6A008.j.1; 6A998.b; 6D001 (only ``software'' for the ``development'' or
``production'' of items in 6A002.a.1, a.2, a.3, .c; 6A003.b.3 and .b.4;
or 6A008.j.1); 6D002 (only ``software'' for the ``use'' of items in
6A002.a.1, a.2, a.3, .c; 6A003.b.3 and .b.4; or 6A008.j.1); 6D003.c;
6D991 (only ``software'' for the ``development,'' ``production,'' or
``use'' of equipment classified under 6A002.e or 6A998.b); 6E001 (only
``technology'' for ``development'' of items in 6A002.a.1, a.2, a.3
(except 6A002.a.3.d.2.a and 6A002.a.3.e for lead selenide focal plane
arrays), and .c or .e, 6A003.b.3 and b.4, or 6A008.j.1); 6E002 (only
``technology'' for ``production'' of items in 6A002.a.1, a.2, a.3, .c,
or .e, 6A003.b.3 or b.4, or 6A008.j.1); 6E991 (only ``technology'' for
the ``development,'' ``production,'' or ``use'' of equipment classified
under 6A998.b); 6D994; 7A994 (only QRS11-00100-100/101 and QRS11-0050-
443/569 Micromachined Angular Rate Sensors); 7D001 (only ``software''
for ``development'' or ``production'' of items in 7A001, 7A002, or
7A003); 7E001 (only ``technology'' for the ``development'' of inertial
navigation systems, inertial equipment, and specially designed
components therefor for civil aircraft); 7E002 (only ``technology'' for
the ``production'' of inertial navigation systems, inertial equipment,
and specially designed components therefor for civil aircraft); 7E101
(only ``technology'' for the ``use'' of inertial navigation systems,
inertial equipment, and specially designed components for civil
aircraft); 8A609 (except 8A609.y); 8A620 (except 8A620.y); 8B609
(except 8B609.y); 8B620 (except 8B620.y); 8C609 (except 8C609.y); 8D609
(except software for the ``development,'' ``production,'' operation, or
maintenance of commodities controlled by 8A609.y, 8B609.y, or 8C609.y);
8D620 (except software for the ``development,'' ``production,''
operation, or maintenance of commodities controlled by 8A620.y or
8B620.y); 8E609 (except ``technology'' for the ``development,''
``production,'' operation, installation, maintenance, repair, overhaul,
or refurbishment of commodities controlled by 8A609.y, 8B609.y, or
8C609.y); 8E620 (except ``technology'' for the ``development,''
``production,'' operation, installation, maintenance, repair, overhaul,
or refurbishment of commodities controlled by 8A620.y or 8B620.y);
9A610 (except 9A610.y); 9A619 (except 9A619.y); 9B610 (except 9B610.y);
9B619 (except 9B619.y);

9C610 (except 9C610.y); 9C619 (except 9C619.y); 9D610 (except software
for the ``development,'' ``production,'' operation, installation,
maintenance, repair, or overhaul of commodities controlled by 9A610.y,
9B610.y, or 9C610.y); 9D619 (except software for the ``development,''
``production,'' operation, or maintenance of commodities controlled by
9A619.y, 9B619.y, or 9C619.y); 9E610 (except ``technology'' for the
``development,'' ``production,'' operation, installation, maintenance,
repair, overhaul, or refurbishment of commodities controlled by ECCN
9A610.y, 9B610.y, or 9C610.y); and 9E619 (except ``technology'' for the
``development,'' ``production'' operation, installation, maintenance,
repair, overhaul, or refurbishment of commodities controlled by ECCN
9A619.y, 9B619.y, or 9C619.y).
* * * * *

PART 774--[AMENDED]

    3. The authority citation for 15 CFR part 774 continues to read as
follows:

    Authority:  50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.;
10 U.S.C. 7420; 10 U.S.C. 7430(e); 22 U.S.C. 287c, 22 U.S.C. 3201 et
seq., 22 U.S.C. 6004; 30 U.S.C. 185(s), 185(u); 42 U.S.C. 2139a; 42
U.S.C. 6212; 43 U.S.C. 1354; 15 U.S.C. 1824a; 50 U.S.C. app. 5; 22
U.S.C. 7201 et seq.; 22 U.S.C. 7210; E.O. 13026, 61 FR 58767, 3 CFR,
1996 Comp., p. 228; E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., p.
783; Notice of August 12, 2011, 76 FR 50661 (August 16, 2011).

    4. In Supplement No. 1 to part 774 (the Commerce Control List),
Category 1--Special Materials and Related Equipment, Chemicals,
``Microorganisms,'' and ``Toxins,'' ECCN 1B018 is amended in the List
of Items Controlled by revising the ``Related Controls'' paragraph and
by removing and reserving paragraph .a to read as follows:

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

* * * * *
1B018 Equipment on the Wassenaar Arrangement Munitions List.
* * * * *

List of Items Controlled

Unit: * * *
Related Controls: See ECCN 1B608.a, .b, and .x for items that,
immediately prior to [effective date of final rule], were classified
under 1B018.a.
Related Definitions: * * *
Items:
    a. [RESERVED]
    b. * * *

    5. In Supplement No. 1 to part 774 (the Commerce Control List),
Category 1--Special Materials and Related Equipment, Chemicals,
``Microorganisms,'' and ``Toxins,'' add a new ECCN 1B608 between ECCNs
1B233 and 1B999 to read as follows:

1B608 Test, Inspection, and Production ``Equipment'' and Related
Commodities ``Specially Designed'' for the ``Development'' or
``Production'' of Commodities Enumerated in ECCN 1C608 or USML
Category V.

License Requirements

Reason for Control: NS, RS, MT, AT

                Control(s)                          Country chart

NS applies to entire entry, except 1B608.y  NS Column 1
RS applies to entire entry, except 1B608.y  RS Column 1
MT applies to equipment ``specially         MT Column 1
 designed'' for the ``production'' of
 rocket propellants.
AT applies to entire entry................  AT Column 1

License Exceptions

LVS: $1500
GBS: N/A
CIV: N/A
STA: (1) Paragraph (c)(2) of License Exception STA (Sec.
740.20(c)(2) of the EAR) may not be used for any item in 1B608. (2)
Paragraph (c)(1) of License Exception STA (Sec.  740.20(c)(1)) may
be used for items in 1B608 without the need for a determination
described in Sec.  740.20(g). (3) STA is not available for
``equipment'' for the ``production'' of MT-controlled rocket
propellants.

List of Items Controlled

Unit: End items in number; parts, component, accessories and
attachments in $ value.
Related Controls: Defense articles that are enumerated in USML
Category V, and technical data (including software) directly related
thereto, are subject to the ITAR.
Related Definitions: N/A
Items:

    a. ``Equipment'' not elsewhere specified in the CCL or the USML
``specially designed'' for the ``production'' of items controlled by
ECCN 1C608 or USML Category V.

    Note:  ECCN 1C608.a. includes: (1) Continuous nitrators; (2)
dehydration presses; (3) cutting machines for the sizing of extruded
propellants; (4) sweetie barrels (tumblers) 6 feet or more in
diameter and having over 500 pounds product capacity; (5) convection
current converters for the conversion of materials listed in USML
Category V(c)(2); and (6) extrusion presses for the extrusion of
small arms, cannon and rocket propellants.

    b. Complete installations not elsewhere specified in the CCL or
the USML ``specially designed'' for the ``production'' of items
controlled by ECCN 1C608 or USML Category V.
    c. Environmental test facilities ``specially designed'' for the
certification, qualification, or testing of items controlled by ECCN
1C608 or USML Category V.
    d. through w. [RESERVED]
    x. ``Parts,'' ``components,'' ``accessories and attachments''
that are ``specially designed'' for a commodity subject to control
in this ECCN or a defense article in USML Category V and not
elsewhere specified on the USML or the CCL.

    Note 1: Forgings, castings, and other unfinished products, such
as extrusions and machined bodies, that have reached a stage in
manufacturing where they are clearly identifiable by material
composition, geometry, or function as commodities controlled by ECCN
1B608.x are controlled by ECCN 1B608.x.

    y. Specific test, inspection, and production ``equipment''
``specially designed'' for the ``production'' or ``development'' of
commodities controlled by this ECCN 1B608 or a defense article in
USML Category V, and ``parts,'' ``components,'' ``accessories and
attachments'' ``specially designed'' therefor, as follows:
    y.1 through y. 98. [RESERVED]
    y.99. Commodities not identified on the CCL that (i) have been
determined, in an applicable commodity jurisdiction determination
issued by the U.S. Department of State, to be subject to the EAR and
(ii) would otherwise be controlled elsewhere in ECCN 1B608.

    6. In Supplement No. 1 to part 774 (the Commerce Control List),
Category 1--Special Materials and Related Equipment, Chemicals,
``Microorganisms,'' and ``Toxins,'' ECCN 1C018 is amended to read as
follows:

1C018 Commercial Charges and Devices Containing Energetic Materials
on the Wassenaar Arrangement Munitions List and Certain Chemicals.
    No items currently are in this ECCN. (1) See ECCN 1C608.b.
through .m for items that, immediately prior to [effective date of
final rule], were classified under 1C018.b through .m. (2) See ECCNs
1C011, 1C111, and 1C239 for additional controlled energetic
materials, including chlorine trifluoride (ClF3), which
is controlled under ECCN 1C111.a.3.f. (3) See ECCN 1A008 for shaped
charges, detonating cord, and cutters and severing tools.

    7. In Supplement No. 1 to part 774 (the Commerce Control List),
Category 1--Special Materials and Related Equipment, Chemicals,
``Microorganisms,'' and ``Toxins,'' revise ECCN 1C111 to read as
follows:

1C111 Propellants and constituent chemicals for propellants, other
than those specified in 1C011, as follows (see List of Items
Controlled).

License Requirements

Reason for Control: MT, NP, AT

                Control(s)                          Country chart

MT applies to entire entry................  MT Column 1
NP applies to 1C111.a.3.f only............  NP Column 1
AT applies to entire entry................  AT Column 1

License Exceptions

LVS: N/A
GBS: N/A
CIV: N/A

List of Items Controlled

Unit: Kilograms
Related Controls: (1) See USML Category V(e)(7) for controls on HTPB
(hydroxyl terminated polybutadiene) with a hydroxyl functionality
equal to or greater than 2.2 and less than or equal to 2.4, a
hydroxyl value of less than 0.77 meq/g, and a viscosity at 30 [deg]C
of less than 47 poise (CAS  69102-90-5). (2) See USML
Category V(f)(3) for controls on ferrocene derivatives, including
butacene. (3) See ECCN 1C608 for controls on oxidizers that are
composed of fluorine and also other halogens, oxygen, or nitrogen,
except for chlorine trifluoride, which is controlled under this ECCN
1C111.a.3.f. (4) See ECCN 1C011.b for controls on boron and boron
alloys.
Related Definitions: Particle size is the mean particle diameter on
a weight basis. Particle size must be determined through the use of
best industrial practices and the controls may not be undermined by
the addition of larger or smaller sized material to shift the mean
diameter.
Items:
    a. Propulsive substances:
    a.1. Aluminum powder as follows:
    a.1.a. Spherical aluminium powder not controlled by 1C111.a.1.b.
with particles of uniform diameter of less than 200 micrometer and
an aluminum content of 97% by weight or more, if at least 10 percent
of the total weight is made up of particles of less than 63
micrometer, according to ISO 2591:1988 or national equivalents such
as JIS Z8820.
    a.1.b. Aluminum powder with all of the following:
    a.1.b.1. Greater than 99% purity;
    a.1.b.2. Greater than 50% of the particles being spheroidal, or
produced by a gas atomization process using an inert gas such as
nitrogen; and
    a.1.b.3. Particle size less than 60 microns.

    Technical Note:  A particle size of 63 micrometer (ISO R-565)
corresponds to 250 mesh (Tyler) or 230 mesh (ASTM standard E-11).

    a.2. Metal fuels, other than that controlled by the U.S.
Munitions List, in particle sizes of less than 60 x 10-6
m (60 micrometers), whether spherical, atomized, spheroidal, flaked
or ground, as follows:
    a.2.a. Consisting of 97% by weight or more of any of the
following:
    a.2.a.1. Zirconium;
    a.2.a.2. Beryllium;
    a.2.a.3. Magnesium; or
    a.2.a.4. Alloys of the metals specified by a.2.a.1 to a.2.a.3
above.
    a.2.b. [RESERVED]

    Technical Note: The natural content of hafnium in the zirconium
(typically 2% to 7%) is counted with the zirconium.

    a.3. Oxidizer substances usable in liquid propellant rocket
engines, as follows:
    a.3.a. Dinitrogen trioxide;
    a.3.b. Nitrogendioxide/dinitrogen tetroxide;
    a.3.c. Dinitrogen pentoxide;
    a.3.d. Mixed oxides of nitrogen (MON);
    a.3.e. Inhibited red fuming nitric acid (IRFNA);
    a.3.f. Chlorine trifluoride (ClF3).

    Technical Note:  Mixed oxides of nitrogen (MON) are solutions of
nitric oxide (NO) in dinitrogen tetroxide/nitrogen dioxide
(N2O4/NO2) that can be used in
missile systems. There are a range of compositions that can be
denoted as MONi or MONij, where i and j are integers representing
the percentage of nitric oxide in the mixture (e.g., MON3 contains
3% nitric oxide, MON25 25% nitric oxide. An upper limit is MON40,
40% by weight).

    b. Polymeric substances:
    b.1. Carboxy--terminated polybutadiene (including carboxyl--
terminated polybutadiene) (CTPB);
    b.2. Hydroxy--terminated polybutadiene (including hydroxyl--
terminated polybutadiene) (HTPB);
    b.3. Polybutadiene acrylic acid (PBAA);
    b.4. Polybutadiene acrylic acid acrylonitrile (PBAN);
    b.5. Polytetrahydrofuran polyethylene glycol (TPEG).

    Technical Note:  Polytetrahydrofuran polyethylene glycol (TPEG)
is a block copolymer of poly 1,4 Butanediol and polyethylene glycol
(PEG).

    c. Other propellant energetic materials, additives, or agents:
    c.1. [RESERVED]
    c.2. Triethylene glycol dinitrate (TEGDN);
    c.3. 2 Nitrodiphenylamine (2-NDPA);
    c.4. Trimethylolethane trinitrate (TMETN);
    c.5. Diethylene glycol dinitrate (DEGDN).
    d. Hydrazine and derivatives as follows:
    d.1. Hydrazine (C.A.S.  302-01-2) in concentrations of
70% or more;
    d.2. Monomethyl hydrazine (MMH) (C.A.S.  60-34-4);
    d.3. Symmetrical dimethyl hydrazine (SDMH) (C.A.S.
540-73-8);
    d.4. Unsymmetrical dimethyl hydrazine (UDMH) (C.A.S.
57-14-7);
    d.5. Trimethylhydrazine (C.A.S.  1741-01-1);
    d.6. Tetramethylhydrazine (C.A.S.  6415-12-9);
    d.7. N,N diallylhydrazine;
    d.8. Allylhydrazine (C.A.S.  7422-78-8);
    d.9. Ethylene dihydrazine;
    d.10. Monomethylhydrazine dinitrate;
    d.11. Unsymmetrical dimethylhydrazine nitrate;
    d.12. Dimethylhydrazinium azide;
    d.13. Hydrazinium azide (C.A.S.  14546-44-2);
    d.14. Hydrazinium dinitrate;
    d.15. Diimido oxalic acid dihydrazine (C.A.S.  3457-37-
2);
    d.16. 2-hydroxyethylhydrazine nitrate (HEHN);
    d.17. Hydrazinium diperchlorate (C.A.S. 13812-39-0);
    d.18. Methylhydrazine nitrate (MHN);
    d.19. Diethylhydrazine nitrate (DEHN);
    d.20. 3,6-dihydrazino tetrazine nitrate (DHTN), also referred to
as 1,4-dihydrazine nitrate.

Supplement No. 1 to part 774 [Amended]

    8. In Supplement No. 1 to part 774 (the Commerce Control List),
Category 1--Special Materials and Related Equipment, Chemicals,
``Microorganisms,'' and ``Toxins,'' ECCN 1C238 is removed.
    9. In Supplement No. 1 to part 774 (the Commerce Control List),
Category 1--Special Materials and Related Equipment, Chemicals,
``Microorganisms,'' and ``Toxins,'' add a new ECCN 1C608 between ECCNs
1C395 and 1C980 to read as follows:

1C608 Energetic materials and related commodities.

License Requirements

Reason for Control: NS, RS, MT, AT

                Control(s)                          Country chart

NS applies to entire entry................  NS Column 1
RS applies to entire entry................  RS Column 1
MT applies to 1C608.m.....................  MT Column 1
AT applies to entire entry................  AT Column 1

License Exceptions

LVS: $1500
GBS: N/A
CIV: N/A
STA: (1) Paragraph (c)(2) of License Exception STA (Sec.
740.20(c)(2) of the EAR) may not be used for any item in 1C608. (2)
Paragraph (c)(1) of License Exception STA (Sec.  740.20(c)(1)) may
be used for items in 1C608 without the need for a determination
described in Sec.  740.20(g).

List of Items Controlled

Unit: End items in number; parts, component, accessories and
attachments in $ value.
Related Controls: (1) The EAR does not control devices or charges
containing materials controlled by USML subparagraphs V(c)(6), V(h),
or V(i). The USML controls devices containing such materials. (2)
The USML in Categories III, IV, or V controls devices and charges in
this entry if they contain materials controlled by Category V (other
than slurries) and such materials can be easily extracted without
destroying the device or charge. (3) See also explosives and other
items enumerated in ECCNs 1A006, 1A007, 1A008, 1C011, 1C111, 1C239,
and 1C992.
Related Definitions: For purposes of this entry, the term
``controlled materials'' means controlled energetic materials
enumerated in ECCNs 1C011, 1C111, 1C239, 1C608, or USML Category V.

Items:

    a. Single base, double base, and triple base propellants having
nitrocellulose with nitrogen content greater than 12.6% in the form
of either:
    a.1. Sheetstock or carpet rolls; or
    a.2. Grains with diameter greater than 0.10 inches.

    Note:  This entry does not control propellant grains used in
shotgun shells, small arms cartridges, or rifle cartridges.

    Note:  Sheetstock is propellant that has been manufactured in
the form of a sheet suitable for further processing. A carpet roll
is propellant that has been manufactured as a sheet, often cut to a
desired width, and subsequently rolled up (like a carpet).

    Note:  Single base is propellant which consists mostly of
nitrocellulose. Double base propellants consist mostly of
nitrocellulose and nitroglycerine. Triple base consists mostly of
nitrocellulose, nitroglycerine, and nitroguanidine. Such propellants
contain other materials, such as resins or stabilizers, that could
include carbon, salts, burn rate modifiers, nitrodiphenylamine, wax,
polyethylene glycol (PEG), polyglycol adipate (PGA).

    b. Shock tubes containing greater than 0.064 kg per meter (300
grains per foot), but not more than 0.1 kg per meter (470 grains per
foot) of controlled materials.
    c. Cartridge power devices containing greater than 0.70 kg, but
not more than 1.0 kg of controlled materials.
    d. Detonators (electric or nonelectric) and ``specially
designed'' assemblies therefor containing greater than 0.01 kg, but
not more than 0.1 kg of controlled materials.
    e. Igniters not controlled by USML Categories III or IV that
contain greater than 0.01 kg, but not more than 0.1 kg of controlled
materials.
    f. Oil well cartridges containing greater than 0.015 kg, but not
more than 0.1 kg of controlled materials.
    g. Commercial cast or pressed boosters containing greater than
1.0 kg, but not more than 5.0 kg of controlled materials.
    h. Commercial prefabricated slurries and emulsions containing
greater than 10 kg and less than or equal to thirty-five percent by
weight of USML controlled materials.
    i. [RESERVED]
    j. Pyrotechnic devices ``specially designed'' for commercial
purposes (e.g., theatrical stages, motion picture special effects,
and fireworks displays), and containing greater than 3.0 kg, but not
more than 5.0 kg of controlled materials.
    k. Other commercial explosive devices or charges ``specially
designed'' for commercial applications, not controlled by 1C608.c
through .g above, containing greater than 1.0 kg, but not more than
5.0 kg of controlled materials.
    l. Propyleneimine (2 methylaziridine) (C.A.S.  75-55-
8).
    m. Any oxidizer or mixture thereof that is a compound composed
of fluorine and one or more of the following: Other halogens,
oxygen, or nitrogen.

    Note 1 to 1C111.m:  Nitrogen trifluoride (NF3) in a
gaseous state is controlled by ECCN 1C992 and not by 1C608.

    Note 2 to 1C111.m:  Chlorine trifluoride (ClF3) is
controlled under ECCN 1C111.a.3.f and not under ECCN 1C608.

    Note 3 to 1C111.m:  Oxygen difluoride (OF2) is
controlled under USML Category V.d.10 (see 22 CFR 121.1) and not
under ECCN 1C608.

    Note to 1C111.l and .m:  If a chemical in paragraphs .l or .m of
1C608 is incorporated into a commercial charge or device described
in paragraphs .c through .k of ECCN 1C608 or in 1C992, the
classification of the commercial charge or device applies to the
item.

    n. Any explosive, propellants, oxidizers, pyrotechnics, fuels,
binders, or additives, ``specially designed'' for military
application not listed elsewhere in USML Category V or the CCL.
    o. through y. [RESERVED]

    10. In Supplement No. 1 to part 774 (the Commerce Control List),
Category 1--Special Materials and Related Equipment, Chemicals,
``Microorganisms,'' and ``Toxins,'' ECCN 1D018 is amended by revising
the ECCN heading and by revising the ``Related Controls'' paragraph in
the List of Items Controlled to read as follows:

1D018 ``Software'' specially designed or modified for the
``development,'' ``production,'' or ``use'' of items controlled by
1B018.b.
* * * * *

List of Items Controlled

Unit: * * *
Related Controls: (1) See Sec.  746.8(b)(1) for additional BIS
licensing requirements for Rwanda concerning this entry. (2) See
ECCN 1D608 for ``software'' for items classified under ECCN 1B608
that, immediately prior to [Insert effective date of final rule],
were classified under 1B018.a.
Related Definitions: * * *
Items: * * *

    11. In Supplement No. 1 to part 774 (the Commerce Control List),
Category 1--Special Materials and Related Equipment, Chemicals,
``Microorganisms,'' and ``Toxins,'' add a new ECCN 1D608 between ECCNs
1D390 and 1D993 to read as follows:

1D608 ``Software'' ``specially designed'' for the ``development,''
``production,'' operation, or maintenance of commodities controlled
by 1B608 or 1C608.

License Requirements

Reason for Control: NS, RS, MT, AT

                Control(s)                          Country chart

NS applies to entire entry, except 1D608.y  NS Column 1
RS applies to entire entry, except 1D608.y  RS Column 1
MT applies to software ``specially          MT Column 1
 designed'' for 1C608.m.
AT applies to entire entry................  AT Column 1

License Exceptions

CIV: N/A
TSR: N/A
STA: Paragraph (c)(2) of License Exception STA (Sec.  740.20(c)(2)
of the EAR) may not be used for any item in 1D608.

List of Items Controlled

Unit: N/A
Related Controls: (1) Software directly related to articles
enumerated in USML Categories III, IV or V are subject to the
controls of those USML Categories, respectively. (2) See ECCN 0A919
for foreign-made ``military commodities'' that incorporate more than
10% U.S.-origin ``600 series'' items.
Related Definitions: N/A
Items:
    a. ``Software'' ``specially designed'' for the ``development,''
``production,'' operation, or maintenance of commodities controlled
by ECCN 1B608 or 1C608.
    b. through x. [RESERVED]
    y. Specific ``software'' ``specially designed'' for the
``development,'' ``production,'' operation, or maintenance of
commodities controlled by ECCN 1B608.y, as follows:
    y.1 through y.98. [RESERVED]
    y.99. ``Software'' not identified on the CCL that (i) has been
determined, in an applicable commodity jurisdiction determination
issued by the U.S. Department of State, to be subject to the EAR and
(ii) would otherwise be controlled elsewhere in ECCN 1D608.

    12. In Supplement No. 1 to part 774 (the Commerce Control List),
Category 1--Special Materials and Related Equipment, Chemicals,
``Microorganisms,'' and ``Toxins,'' ECCN 1E001 is amended by revising
the ECCN heading, by revising the NP controls paragraph in the License
Requirements section, and by revising the ``Related Controls''
paragraph in the List of Items Controlled to read as follows:
1E001 ``Technology'' According to the General Technology Note for
the ``Development'' or ``Production'' of Items Controlled by
1A001.b, 1A001.c, 1A002, 1A003, 1A004, 1A005, 1A006.b, 1A007, 1A008,
1A101, 1B (except 1B608 or 1B999), or 1C (except 1C355, 1C608, 1C980
to 1C984, 1C988, 1C990, 1C991, 1C995 to 1C999).

License Requirements

Reason for Control: * * *

                Control(s)                          Country chart

                                * * * * *
NP applies to ``technology'' for items      NP Column 1
 controlled by 1A002, 1A007, 1B001, 1B101,
 1B201, 1B225 to 1B233, 1C002, 1C010,
 1C111, 1C116, 1C202, 1C210, 1C216, 1C225
 to 1C237, 1C239, or 1C240 for NP reasons.

                                * * * * *

License Requirements Note: * * *

License Exceptions

* * * * *

List of Items Controlled

Unit: * * *
Related Controls: (1) Also see ECCNs 1E101, 1E201, and 1E202. (2)
See ECCN 1E608 for ``technology'' for items classified under ECCN
1B608 or 1C608 that, immediately prior to [effective date of final
rule], were classified under 1B018.a or 1C018.b through .m (note
that ECCN 1E001 controls ``development'' and ``production''
``technology'' for chlorine trifluoride controlled by ECCN
1C111.a.3.f--see ECCN 1E101 for controls on ``use'' ``technology''
for chlorine trifluoride). (3) See ECCN 1E002.g for control
libraries (parametric technical databases) specially designed or
modified to enable equipment to perform the functions of equipment
controlled under 1A004.c (Nuclear, biological and chemical (NBC)
detection systems) or 1A004.d (Equipment for detecting or
identifying explosives residues). (4) ``Technology'' for lithium
isotope separation (see related ECCN 1B233) and ``technology'' for
items described in ECCN 1C012 are subject to the export licensing
authority of the Nuclear Regulatory Commission (see 10 CFR part
110). (5) ``Technology'' for items described in ECCN 1A102 is
subject to the export licensing authority of the U.S. Department of
State, Directorate of Defense Trade Controls (see 22 CFR part 121).
Related Definitions: * * *
Items: * * *

    13. In Supplement No. 1 to part 774 (the Commerce Control List),
Category 1--Special Materials and Related Equipment, Chemicals,
``Microorganisms,'' and ``Toxins,'' ECCN 1E101 is amended by revising
the ECCN heading and by revising the License Requirements section to
read as follows:

1E101 ``Technology'', in accordance with the General Technology
Note, for the ``use'' of commodities and software controlled by
1A101, 1A102, 1B001, 1B101, 1B102, 1B115 to 1B119, 1C001, 1C007,
1C011, 1C101, 1C107, 1C111, 1C116, 1C117, 1C118, 1D001, 1D101, or
1D103.

License Requirements

Reason for Control: MT, NP, AT

                Control(s)                          Country chart

MT applies to entire entry................  MT Column 1
NP applies to ``technology'' for items      NP Column 1
 controlled by 1B001, 1B101, 1C111, 1C116,
 1D001, or 1D101 for NP reasons.
AT applies to entire entry................  AT Column 1

* * * * *
    14. In Supplement No. 1 to part 774 (the Commerce Control List),
Category 1--Special Materials and Related Equipment, Chemicals,
``Microorganisms,'' and ``Toxins,'' ECCN 1E201 is amended by revising
the ECCN heading to read as follows:

1E201 ``Technology'' according to the General Technology Note for
the ``use'' of items controlled by 1A002, 1A007, 1A202, 1A225 to
1A227, 1B201, 1B225 to 1B232, 1B233.b, 1C002.b.3 and b.4, 1C010.a,
1C010.b, 1C010.e.1, 1C202, 1C210, 1C216, 1C225 to 1C237, 1C239,
1C240 or 1D201.
* * * * *
    15. In Supplement No. 1 to part 774 (the Commerce Control List),
Category 1--Special Materials and Related Equipment, Chemicals,
``Microorganisms,'' and ``Toxins,'' add a new ECCN 1E608 between ECCNs
1E355 and 1E994 to read as follows:

1E608 ``Technology'' ``required'' for the ``development,''
``production,'' operation, installation, maintenance, repair,
overhaul or refurbishing of equipment controlled in 1B608 or
materials controlled by 1C608.

License Requirements

Reason for Control: NS, RS, MT, AT

                Control(s)                          Country chart

NS applies to entire entry, except 1E608.y  NS Column 1
RS applies to entire entry, except 1E608.y  RS Column 1
MT applies to technology ``required'' for   MT Column 1
 1C608.m.
AT applies to entire entry................  AT Column 1

License Exceptions

CIV: N/A
TSR: N/A
STA: Paragraph (c)(2) of License Exception STA (Sec.  740.20(c)(2))
of the EAR may not be used for any item in 1E608.

List of Items Controlled

Unit: $ value
Related Controls: (1) Technical data directly related to articles
enumerated in USML Categories III, IV, or V are subject to the
controls of those USML Categories, respectively. (2) ``Technology''
for chlorine trifluoride is controlled under ECCNs 1E001
(``development'' and ``production'') and 1E101 (``use'').
Related Definitions: N/A
Items:

    a. ``Technology'' ``required'' for the ``development,''
``production,'' operation, installation, maintenance, repair,
overhaul, or refurbishing of material controlled by ECCN 1B608 or
1C608.
    b. ``Technology'' for the ``development'' or ``production'' of
nitrocellulose with nitrogen content over 12.6% and at rates greater
than 2000 pounds per hour.
    c. ``Technology'' for the ``development'' or ``production'' of
nitrate esters (e.g., nitroglycerine) at rates greater than 2000
pounds per hour.
    d. through x. [RESERVED]
    y. Specific ``technology'' ``required'' for the ``development,''
``production,'' operation, installation, maintenance, repair,
overhaul or refurbishing of commodities controlled by ECCN 1B608.y
or ``software'' controlled by ECCN 1D608.y, as follows:
    y.1 through y.98. [RESERVED]
    y.99. ``Technology'' not identified on the CCL that (i) has been
determined, in an applicable commodity jurisdiction determination
issued by the U.S. Department of State, to be subject to the EAR and
(ii) would otherwise be controlled elsewhere in ECCN 1E608.

    Dated: April 13, 2012.
Kevin J. Wolf,
Assistant Secretary for Export Administration.
[FR Doc. 2012-10456 Filed 5-1-12; 8:45 am]
BILLING CODE 3510-33-P


  SEQ CHAPTER \h \r 1

DATA EVALAUATION RECORDS (DER) for Estimated Drinking Water
Concentrations in the Environment

MEMORANDUM						July 2, 2004

SUBJECT:		PROPYLENE GLYCOL AND DIPROPYLENE GLYCOL: Estimated Drinking
Water Concentrations

TO:			Connie Welch, chief

			Regulatory Management Branch II

			Antimicrobials Division (7510C)

FROM:		A. Najm Shamim, Ph.D., Chemist

			Regulatory Management Branch II

			Antimicrobials Division (7510C)

					And

			Faruque Khan, Environmental Fate Sceintist

			Environmental Fate and Effects Divison, Branch ERB V

SUMMARY

		Background:

		This DER outlines the assessment of estimated environmental
concentrations of Propylene Glycol and, if applicable for Dipropylene
Glycol,  for their possible use as an active or an inert  in
agricultural settings (fungicidal use).

Label search shows that Diporpylene Glycol has no agricultural
applications as an active or as an inert ; Propylene Glycol, however, is
used as inert in of the products (Quintec) for fungicidal application on
Cherry, Grapes and Hops (preharvest setting).

Application Rates of Quintec: 1) For cherries, a maximum of five
applications are made, and cumulatively (for all five applications), the
toal amount of quintec used is 35 fluid ounces/acre  (approximately 2.2
lbs/acre; 2) For grapes, a maximum of five applications are made and
cumulatively the total amount of Quintec  is not exceeded from 33 fluid
ounces/acre  ( approximately 2.1 lbs/acre) and 3) for Hops, no more than
four applications of Quintec are made and the amounts of the product are
not exceeded from 33 fluid ounces/acre (approximately 2.2 lbs/acre). For
all thre pre-harvest crops, a maximum of 6.4 lbs/acre of the product
Quintec is applied.

The physical and related environmental fate properties of Propylene
Glycol were obtained from published open literature. Table I oultines
these, and for comparision purposes, the properties of Dipropylene
Glycol and Triethylene Glycol (TEG) are also listed in Table I

					Table I

Triethylene Glycol	Propylene Glycol	Dipropylene Glycol

v.p. : 1.32 x 10-2 mm Hg1	v.p: 0.129 mm Hg1	v.p: 3.19 x10-2 mm Hg1

log Kow = -1.75	Log Kow = -0.92	Log Kow = -1.07

Solubility: highly miscible	Solubility: highly miscible	Solubility:
highly miscible

Does not hydrolyze	Does not hydrolyze	Does not hydrolyze

Koc = 10	Koc = low2	Koc= 6

Does not photolyze (> 290 nm, no absorbance)	Does not photolyze (> 290
nm, no absorbance	Does not photolyze (> 290 nm, no absorbance)

Henry  Constant: 3.1 x10-11 atm m3/mole 1	Henry Constant:1.31x10-10 atm
m3/mole 1	Hnery Constant:3.88x10-9 atm m3/mole 1

BCF: Not reported	BCF: <1	BCF: Not reported

Estimated half life in air: 11 hours3	Estimated half life in air: 32
hours3	Estimated half life in air:13 hours3

Biodegradation: aerobic(fresh water): 7 to 11 days(river-die away test)
Biodegradation: aerobic: 4 days; anaerobic: 9 days	Does not biodegrade
as fast as Triethylene or propylene glycols (river die-away test)4

Highly mobile (weak binding with soils)	Highly mobile (weak binding with
soils)	Highly mobile(weak binding with soils)

Notes: 1. At 25 o C;  2) No data available; 3) measured against the
hydroxy radical reaction.

	A comparison of the three glycols indicate: 1) their physical/chemical
properties and fate chemistries are very similar to each other; 2) All
three of them do not hydrolyze as these do not contain hydrolyzable
groups All three are highly miscible with water and also are  highly
mobile in soils and hence have potential of surface and ground water
contamination concerns; 3) All three have short half lives in air ( 11
to 32 hours);4) All of them have low Kow  and hence are not likely to
bioaccumulate in aquatic organisms (fish etc.); 5) degradation pathway
for triethylene glycol and propylene glycol appears to be biodegradation
aerobically and anaerobically with a maximum half life of 4 days for
propylene glycol and 7 days for triethylene glycol and maximum half life
of 11 days for triethylene glycol and 9 days for propylene glycol; for
dipropylene glycol biodegradation data is inconclusive in terms of half
lives; however, it does appear to biodegrade more slowly than the other
two glycols.

Key Assumptions for the Application of FIRST ( FQPA Index Resorvior
Screening Tool) to estimate the concentrations of Propylene glycol at
the intake of a community water system  and SCI-GRO to estimate the
concentrations of Propylene Glycol in ground water and drinking water
resources (shallow ground water and surface water) are as follows: 1)
For Qunitec use as a fungicide a high end application rate of 10
lbs/acre was assumed; 2) in the absence of soil data on Propylene
Glycol, data on inoclum on sludge was applied and uncertainty factor of
3x was assumed; 3) it is also assumed that mineralization of Propylene
Glycol is attained in 28 days; hence assumed soil metabolism will be 28
x 3(uncertainty factor) = 84 days; 4) it is also assumed that no more
than 10% of the Propylene glycol is removed from the wastewater
treatment plants and enter into the house-hold drinking water; 5) No
value is assigned in literature for Koc for propylene glycol, assume Koc
= 10 (same as triethylene glycol) and for dipropylene glycol Koc = 6

	Because of highly miscibility of TEG in water and its hydrolytic
stability (abiotic conditions) and high mobility in water, the Agency
estimated the concentration of TEG in surface and ground water by using
some assumptive parameters. FIRST and SCI GRO were used to calculate
these concentrations. Since the in put parameters used were on the
conservative sides, the EEC’s found were to be lower than the level of
concern for TEG; we are applying the same approach for the propylene and
dipropylene glycols to estimate the EECs in water.  Table II outlines
the Input Parameters for Propylene Glycol.

					Table II

				     Propylene Glycol

Input Parameters for Propylene Glycol for FIRST Program For Preharvest
Crops of Cherries, Grapes, and Hops.

Parameter	Scenario #1

Application Rate	1 lb/acre

Soil Koc	10

Water solubility	100,000

Hydrolysis	Stable

Aq. Photolysis	Stable

Soil Metabolism T1/2 (days)	84

Aquatic Aerobic  metabolism T1/2 (days)	4

Anaerobic Aq. Metabolism T/12 (days)	9

No of applications	1

% Crop Area Covered 	87

Outputs: 1) Untreated Water Concentrations of Propylene Glycol
(micrograms/liter, ppb) at the peak day (Acute) concentration = 887.538
ppb and 2) Untreated Water Concentrations ( in ppb) at the annualized
average (chronic) = 11.068 ppb

For Ground Water Screening by use of SCI-GRO, the concentrations of
Propylene Glycol in the ground water = 107 ppb

					Table III

				    DiPropylene Glycol

		In Put Parameters for Dipropylene Glycol for FIRST Program

Parameter	Scenario #1

Application Rate	10  lbs/acre

Soil Koc	6

Water solubility	100,000

Hydrolysis	Stable

Aq. Photolysis	Stable

Soil Metabolism T1/2 (days	84

Aerobic Aq. Metabolism : T/12 (days)	20

OutPuts for Dipropylene Glycol, using the parameters listed in Table III
would be: 1) Untreated Water Concentration of Diproylene Glycol ( in
micrograms/liter, ppb): peak day (acute conc: 900.469 ppb; 2) annualized
average (chronic): 52.177 ppb

For Ground Water Screening by use of SCI-GRO, the concentrations of
Dipropylene Glycol in the ground water = 153 ppb