[Federal Register Volume 79, Number 92 (Tuesday, May 13, 2014)]
[Rules and Regulations]
[Pages 27417-27443]
[FR Doc No: 2014-10807]

Vol. 79

Tuesday,

No. 92

May 13, 2014

Part III

Department of Commerce

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Bureau of Industry and Security

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

 Revisions to the Export Administration Regulations (EAR): Control of
Spacecraft Systems and Related Items the President Determines No Longer
Warrant Control Under the United States Munitions List (USML); Final
Rule

Federal Register / Vol. 79, No. 92 / Tuesday, May 13, 2014 / Rules
and Regulations

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DEPARTMENT OF COMMERCE

Bureau of Industry and Security

15 CFR Parts 732, 734, 736, 740, 742, 744, 748, 758, 772, 774

[Docket No. 130110030-3740-02]
RIN 0694-AF87

Revisions to the Export Administration Regulations (EAR): Control
of Spacecraft Systems and Related Items the President Determines No
Longer Warrant Control Under the United States Munitions List (USML)

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

ACTION: Interim final rule with request for comments.

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SUMMARY: This interim final rule adds controls to the Export
Administration Regulations (EAR) for spacecraft and related items that
the President has determined no longer warrant control under United
States Munitions List (USML) Category XV--spacecraft and related items.
New Export Control Classification Numbers (ECCNs) 9A515, 9B515, 9D515,
and 9E515 created by this rule and existing ECCNs on the Commerce
Control List (CCL) will control such items. This rule also revises
various sections of the EAR to provide the proper level of control for
the new ECCNs.
    This rule is being published in conjunction with the publication of
a Department of State, Directorate of Defense Trade Controls rule
revising USML Category XV to control those articles the President has
determined warrant control on the USML. Both rules are part of the
President's Export Control Reform Initiative. The revisions in this
final rule are also part of Commerce's retrospective regulatory review
plan under Executive Order (EO) 13563 (see the SUPPLEMENTARY
INFORMATION for availability of the plan). This rule is being published
as an interim final rule because the Departments of Commerce and State
acknowledge that additional internal analysis of and industry input
regarding the control threshold for various aspects of the amendments
is warranted, particularly with respect to civil and commercial remote
sensing satellites and civil and commercial space flight-related items.
The Departments did not want to wait until this review is done to
publish this rule in final form because of the substantial national and
economic security benefits that will flow from the various amendments
to the controls on satellites and related items.

DATES: Effective Date: This rule is effective June 27, 2014 except for
amendatory instruction 8, which is effective July 1, 2014, and
amendatory instructions 28-47, 49-50, 52, and 54, which are effective
November 10, 2014.
    Comment Date: Comments must be received by November 10, 2014.

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-2013-0012.
     By email directly to<EMAIL_ADDRESS>Include
RIN 0694-AF87 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-AF87.

FOR FURTHER INFORMATION CONTACT: For questions about the ECCNs included
in this rule, contact Dennis Krepp, Office of National Security and
Technology Transfer Controls, Bureau of Industry and Security, U.S.
Department of Commerce, Telephone:<PHONE_NUMBER>, email:
<EMAIL_ADDRESS>For general questions about the regulatory
changes pertaining to satellites, spacecraft, and related items,
contact Robert Monjay, Regulatory Policy Division, Office of Exporter
Services, Bureau of Industry and Security, at<PHONE_NUMBER> or
<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

Background

    The Bureau of Industry and Security (BIS) is publishing this
interim final rule with request for comments as part of the
Administration's Export Control Reform (ECR) Initiative. President
Obama directed the Administration in August 2009 to conduct a broad-
based review of the U.S. export control system to identify additional
ways to enhance national security. In April 2010, then-Secretary of
Defense Robert M. Gates, describing the initial results of that effort,
explained that fundamental reform of the U.S. export control system is
necessary to enhance our national security. The implementation of ECR
includes amending the International Traffic in Arms Regulations (ITAR)
and its U.S. Munitions List (USML) so that they control only those
items that provide the United States with a critical military or
intelligence advantage or otherwise warrant such controls, and amending
the Export Administration Regulations (EAR) to control the formerly
ITAR-controlled items that do not warrant the controls of the ITAR.
    On January 2, 2013, President Obama signed the National Defense
Authorization Act for Fiscal Year 2013 (``2013 NDAA'') (Pub. L. 112-
239). Section 1261 of the 2013 NDAA amended Section 1513 of the Strom
Thurmond National Defense Authorization Act for Fiscal Year 1999
(``1999 NDAA'') by striking the requirement that all satellites and
related items be subject to the export control jurisdiction of the
ITAR. The 2013 NDAA authorized the President, pursuant to section 38(f)
of the Arms Export Control Act (AECA) (22 U.S.C. 2778(f)), to review
Category XV of the USML ``to determine what items, if any, no longer
warrant export controls under'' the AECA. On May 24, 2013, the
Department of State, Directorate of Defense Trade Controls (DDTC)
published a proposed rule, Amendment to the International Traffic in
Arms Regulations: Revision of U.S. Munitions List Category XV and
Definition of ``Defense Service'' (78 FR 31444) (herein ``the companion
proposed DDTC rule'') setting forth the proposed revised USML Category
XV. On the same day, BIS published a companion proposed rule, Export
Administration Regulations (EAR): Control of Spacecraft Systems and
Related Items the President Determines No Longer Warrant Control Under
the United States Munitions List (USML) (78 FR 31431) (herein ``the May
24 (spacecraft) rule''), describing the revisions to the EAR required
to exercise control over those spacecraft and related items no longer
listed in USML Category XV and setting forth the proposed 9x515 ECCNs.
    This interim final rule implements the proposal of the May 24
(spacecraft) rule to create four new 9x515 ECCNs in CCL Category 9
(ECCNs 9A515, 9B515, 9D515, and 9E515) to describe the EAR controls
over items the President determines no longer warrant control under
USML Category XV and that are not otherwise within the scope of an
existing ECCN. New ECCN 9A515 applies to spacecraft, ground stations,
and ``specially designed'' parts, components, accessories and
attachments. New ECCN 9B515 applies to related test, inspection and
production equipment and the ``specially designed'' parts and
components. New ECCN 9D515 applies to related software. New ECCN 9E515
applies to related technology.
    This rule also makes a number of conforming changes to the EAR and
existing ECCNs to implement the creation of the 9x515 ECCNs and the
appropriate controls on the export of

those items. In several existing ECCNs, BIS added or revised the
related controls to provide cross references to relevant paragraphs in
the revised Category XV or the new 9x515 ECCNs. The sections below set
out the issues identified in the public comments to the May 24
(spacecraft) rule and describe BIS responses to those comments and
changes from the proposed text.
    This rule will be implemented in two stages. On the first effective
date, 45 days following the publication of this interim final rule, the
controls on radiation-hardened microelectronic circuits in Category
XV(d) will be deleted from the USML, and microelectronic circuits will
be removed from USML Category XV(e). In addition, the ITAR controls on
software and technical data directly related to such microelectronic
circuits will be removed from USML XV(f). The EAR will simultaneously
create ECCNs 9A515.d and .e to control radiation-hardened
microelectronic circuits, and 9D515.d and .e and 9E515.d and .e, to
control software and technology specially designed for or required for
such radiation-hardened microelectronic circuits. All changes in the
EAR outside the CCL needed to give effect to these new controls will
also become effective 45 days following the publication of this interim
final rule. The reason for the 45-day period is explained in response
to public comment 38 below.
    On the second effective date, 180 days following the publication of
this final rule, the remainder of USML Category XV will be revised. The
remaining changes in this rule will then become effective, including
the revisions to several non-9x515 ECCNs, the rest of ECCN 9A515 to
provide the controls in paragraphs .a, .b, .x and .y, adding ECCN
9B515, and the rest of ECCNs 9D515 and 9E515 to control software and
technology specially designed for or required for the remaining items
that become subject to the controls of the 9x515 ECCN simultaneously
with the amendments to the rest of USML XV.
    This interim final rule requests public comment on the changes to
the EAR implemented in this rule and the continued applicability of
USML Category XV of the ITAR to commercial and civil spacecraft. In
particular, BIS seeks comments on the continued application of USML
controls to civil and commercial communications satellites, civil and
commercial remote sensing satellites, commercial space launch vehicles,
human spaceflight and academic or scientific satellites and other
spacecraft. BIS would like to study if controls can and should be
revised to allow continued control of spacecraft with uniquely military
or intelligence related capabilities on the USML, while allowing most,
if not all, civil, commercial and scientific spacecraft to be shifted
to the CCL. In addition, BIS seeks comments on any other aspect of this
interim final rule and, in particular, whether the new controls
described in this interim final rule are clear and, if not, how they
could be revised to help ensure understanding of and compliance with
the controls. DDTC will accept comments on paragraphs (a)(7) and
(e)(11) of USML Category XV and ITAR Sec.  124.15, as described in its
interim final rule amending USML Category XV. Any revisions made by
DDTC to the ITAR as a result of those comments may necessitate further
revisions to the EAR, including to the new license documentation
requirements for the export of satellites for launch, described in the
new paragraph (y) of Supplement No. 2 to Part 748.
    As required by Executive Order (EO) 13563, BIS intends to review
this rule's impact on the licensing burden on exporters. Commerce's
full plan is available at: http://open.commerce.gov/news/2011/08/23/commerce-plan-analysis-existing-rules. Data are routinely collected,
including through the comments to be submitted, and new information and
results from AES data on an ongoing basis. These results and data have
been, and will continue to form, the basis for ongoing reviews of the
rule and assessments of various aspects of the rule. As part of its
plan for retrospective analysis under EO 13563, BIS intends to conduct
periodic reviews of this rule and to modify, or repeal, aspects of this
rule, as appropriate, and after public notice and comment. With regard
to a number of aspects of this rule, assessments and refinements will
be made on an ongoing basis. This is particularly the case with regard
to possible modifications that will be considered based on public
comments described above.

Response to Comments

    BIS received thirty-eight public comments on the May 24
(spacecraft) rule before the close of the public comment period on July
8, 2013. The following is a summary of those comments, along with BIS's
responses and descriptions of all changes from the May 24 (spacecraft)
rule. The comments are organized by topic, with similar comments
grouped together under the same heading. BIS is referring to the new
ECCNs 9A515, 9B515, 9D515 and 9E515 collectively as 9x515. In the May
24 (spacecraft) rule, BIS referred to these proposed ECCNs as the ``500
series,'' and many comments refer to the ``500 series.''

General Comments

    Comment #1: Twenty commenters expressed overall support for the May
24 (spacecraft) rule.
    Response to Comment #1: BIS is pleased with the overwhelmingly
positive response to the concept of moving commercial, scientific,
weather and other less sensitive spacecraft and parts and components,
and related software and technology, from the USML to the CCL in order
to accomplish the national and economic security objectives of this
part of the Export Control Reform effort.
    Comment #2: One commenter requested that BIS review the effective
date of the entire rule to determine if a six month delayed effective
date is necessary to ensure proper implementation of the new regime by
the U.S. licensing agencies and the effected industry.
    Response to Comment #2: BIS has determined that, in general, a six-
month period is required to allow exporters, reexporters and other
parties sufficient time to study the new rules, to reclassify their
products, and to update their compliance systems for transitioning
``spacecraft'' and related items. However, as discussed in detail below
in the response to comments regarding radiation-hardened
microelectronic circuits, controls on such items will transition from
the USML to CCL on June 27, 2014. Therefore, this interim final rule
contains two effective dates to accommodate the interests of the two
different industries in a manner that does not compromise the national
security, foreign policy, and other objectives of these controls.
    Comment #3: Three commenters asked BIS to address how this final
rule and the DDTC final rule for USML Category XV, published in tandem
with this rule, will apply to items previously exported from the United
States.
    Response to Comment #3: This interim final rule applies to all
items subject to the EAR on the date this rule becomes effective,
regardless of their geographic location or when they were originally
exported. The transition plan for items moving from the USML to the CCL
as part of Export Control Reform was described in final rules published
by BIS and DDTC on April 16, 2013; 78 FR 22660 (Revisions to the Export
Administration Regulations: Initial Implementation of Export Control
Reform) and 78 FR 22740 (Amendment to the International Traffic in Arms
Regulations: Initial Implementation of Export Control Reform). These
rules

contain a description of how items are controlled during the transition
period. Any item subject to the EAR, including under these new
regulations, must comply with the EAR for all subsequent exports,
reexports and transfers (in-country) beginning on the date the change
becomes effective. Any foreign parties who wish to reexport or
retransfer items transitioned to a 9x515 or other ECCN should
reclassify their items and comply with the EAR by the time the change
becomes effective. If the reexport or retransfer is authorized under an
active DDTC license, and the party wishes to engage in the transaction
under the EAR, they should review the ITAR Initial Implementation of
Export Control Reform at 78 FR 22747 or contact DDTC for further
guidance.
    Comment #4: One commenter claimed that most companies will not
avoid future DDTC licensing fees because one or more products will
remain on the USML.
    Response to Comment #4: BIS agrees that some companies involved in
the satellite industry will now have items subject to both the EAR and
the ITAR. However, BIS believes that many companies will now only have
items subject to the EAR and others' items will remain wholly subject
to the ITAR. It is not the purpose of the Export Control Reform effort
to remove all items from the control of the ITAR or EAR merely for the
sake of changing controls. Rather, the purpose is to apply the right
level of control to items of different sensitivities based on national
security and foreign policy considerations. In general, items that
warrant essentially worldwide controls with few exceptions and that
otherwise warrant the controls of the ITAR for the reasons described in
the preamble are in USML Category XV. Other items pertaining to
satellites and other spacecraft that do not warrant control on the
ITAR, but that nonetheless warrant or are required to be controlled,
will become subject to the EAR. The structure of the EAR allows for
more tailored controls. Less sensitive items can be controlled
differently to different destinations under different circumstances.
    Comment #5: Two commenters recommended a formal interagency review
process for continued revision of USML Category XV and the transition
of items to the 9x515 ECCNs.
    Response to Comment #5: BIS agrees that a formal interagency review
process for continued revision of USML Category XV and the transition
of items to the 9x515 ECCNs is warranted. BIS and DDTC are publishing
their respective rules as interim final rules because both acknowledge
that several parts of the new regulations warrant additional and,
indeed, continued review based on evolving technologies and commercial
applications for what were once exclusively military or intelligence
applications. In particular, BIS, DDTC, and the other relevant agencies
will continue to study the interim final controls on remote sensing
satellites to determine whether additional revisions are warranted. BIS
and DDTC acknowledge that, as published, the ITAR will continue to
control some satellites that have civil or commercial application. BIS
and DDTC may or may not determine that additional revisions are
warranted to these and the other controls in these interim final rules.
They will publish a final rule taking into account public comments
received, within six months of the effective date of this rule. The
Departments of State, Commerce, and Defense will also announce
separately their plans to re-create the Space Technology Working Group
in order to establish a regular process for discussing with industry
developments in space-related technologies and applications.
    Comment #6: One commenter suggested that BIS revise 15 CFR
732.2(b)(1) to read: ``If your technology or software is publicly
available and therefore outside the scope of the EAR, you may proceed
with the export or reexport.'' The commenter argues that deletion of
the phrase ``if you are not a U.S. person subject to General
Prohibition Seven'' would be consistent with all other parts of the
EAR, which treat publicly available information as outside the scope of
the EAR and with the proposed revisions to 22 CFR 120.9 that ``defense
service'' means furnishing of assistance using ``other than public
domain information'' in the companion proposed DDTC rule.
    Response to Comment #6: BIS does not accept this comment because it
is outside the scope of the May 24 (spacecraft) rule and, in any event,
the concern is unwarranted. By definition, technology or software that
is publicly available is not subject to the EAR. See Sec.  734.3(b)(3)
of the EAR. Additionally, General Prohibition No. 7 imposes
restrictions on all U.S. persons engaged in prohibited activities
regardless of whether any technology involved is publicly available.
Therefore, the removal of the reference to General Prohibition No. 7
would be misleading.
    Comment #7: One commenter argued that only half of the countries
listed in Country Group D:5 are labeled in 22 CFR 126.1 as subject to
arms embargoes (10 U.N. embargoes plus three unilateral--Burma, China,
Sudan). The commenter argues that, therefore, the restrictions on
exports to the countries listed in Country Group D:5 in the EAR May 24
(spacecraft) rule are more restrictive than apparently intended,
identifying the proposed revisions to Sec. Sec.  734.4, 736.2(b)(3),
740.2(a)(12), 740.9(a), 740.10(a)(3)(viii) and (b)(3)(i)(F),
742.4(b)(1)(ii), and 742.6(b)(1).
    Response to Comment #7: BIS does not accept the change suggested by
the commenter. Country Group D:5 accurately reflects the countries
currently identified in Sec.  126.1 of the ITAR as being subject to a
U.S. arms embargo. BIS will review all license applications for export
to destinations in Country Group D:5 consistent with the applicable
U.S. arms embargo policy for that destination set forth in Sec.  126.1
of the ITAR. This means, for example, that if the State Department
would deny a license to export a USML Category XV item to a country in
the ITAR's Sec.  126.1 then the Commerce Department would deny a
license to export a 9A515 item to the same country, all other facts
being the same. If the State Department would have approved the
license, then the Commerce Department would approve the license, all
other facts being the same.

De Minimis Comments

    Comment #8: One commenter suggested revising the de minimis level
for foreign-made commercial satellites or components containing 9A515
parts and components so that the foreign-made satellites could be
reexported to the People's Republic of China (PRC) without a license as
not subject to the EAR if they contained 25% or less U.S.-origin
controlled content.
    Response to Comment #8: BIS rejects the change suggested by the
commenter. BIS has determined that the 2013 NDAA authorizing the
removal of ``spacecraft'' and related items from the USML mandates that
de minimis treatment is not available for any 9A515 items incorporated
into ``spacecraft'' reexported to the PRC. Even if BIS had the
discretion under the 2013 NDAA to allow 25% de minimis treatment for
reexports to the PRC, BIS has determined that it is in the national
security and foreign policy interests of the United States to maintain
the 0% de minimis treatment for 9A515 items with respect to their
export and reexport to the PRC, in whole or as part of foreign-made
systems and other items.

Licensing Requirements and Licensing Policy Comments

    Comment #9: One commenter suggested that BIS should ensure dual
licensing is not required.
    Response to Comment #9: As part of the review of USML Category XV
and the public comments, BIS has worked diligently to avoid the
potential for dual license requirements. However, in the event that a
dual license requirement does arise, as part of the initial
implementation of Export Control Reform, BIS and DDTC created new
regulatory mechanisms to allow DDTC to license items subject to the EAR
when used in or with defense articles on the USML. See Sec.  734.3(e)
of the EAR and Sec.  120.5(b) of the ITAR.
    Additionally, as described above, to address the potential for dual
licensing, the revised USML Category XV and the 9x515 controls have
been revised, through the addition of a note to USML Category XV and to
9A515 to allow the incorporation of USML items into spacecraft
controlled in 9A515 without the resultant satellite's being subject to
the ITAR.
    Comment #10: One commenter requested that BIS clarify the on-orbit
satellite registration transfer licensing requirements. For example,
are license requirements based on purchaser's place of incorporation or
ownership?
    Response to Comment #10: BIS controls, within the definition of
``reexport'' the transfer of registration of a satellite or operational
control over a satellite from a party resident in one country to a
party resident in another country. For transfers to corporations,
licensing will be based on the country of residency of the corporation,
such as the country of incorporation or the country of its primary
place of business. See Sec.  772.1 of the EAR. BIS appreciates that
this part of the definition, which has not been applied since
satellites were transferred to the control of the State Department in
1999, will require refinement as new business patterns are presented.
BIS encourages the public to submit comments while this rule is an
interim final rule to help clarify the scope of the licensing and other
obligations with such transactions.
    Comment #11: One commenter asked BIS to clarify the phrase
``destined to a country'' in the context of license requirements for
the export and reexport of ``spacecraft.'' Specifically, the requester
asked if an export is only to the end-user country, or whether it would
include the country of any party in temporary contact with the item
while it is transiting one of these countries. The requester also
asked, if a commercial communications satellite incorporating a U.S.
component controlled under 9A515.x were to transit through, be handled
by a national of (e.g., in a transport container), or be launched from
a country listed in Group D:5, would a de minimis rule of 0% be
applicable?
    Response to Comment #11: The EAR generally imposes licenses
requirements based on the country of ultimate destination. With the
exception of those countries identified in General Prohibition 8 (Sec.
736.2(b)(8) of the EAR), transiting a country en-route to the ultimate
destination is not a licensable event. However, under the EAR,
``spacecraft'' have two potential countries of ultimate destination,
the country where a space launch occurs and the country that will have
control over the ``spacecraft'' after launch. The 0% de minimis
threshold for D:5 countries applies to both the country of launch and
the country of control.
    Comment #12: One commenter stated that the last sentence of
proposed Sec.  742.6(b)(1) set out a policy of denial for 9x515 items
to the PRC that is more restrictive than the case-by-case review for
licenses for ``600 series'' items to the PRC and stated that treating
the 9x515 items more restrictively than the ``600 series'' with respect
to licensing policy to the PRC is inconsistent with the reasoning for
treating 9x515 more liberally than ``600 series'' in other respects,
such as License Exception Strategic Trade Authorization (STA)
restrictions to other countries.
    Response to Comment #12: BIS has determined that the 2013 NDAA
authorizing the removal of ``spacecraft'' and related items from the
USML mandates a policy of denial for export licenses of 9x515 items to
the PRC. BIS has adopted such a policy of denial with regard to
National Security controls in Sec.  742.4(b)(1)(iii) and with regard to
Regional Stability controls in Sec.  742.6(b)(1). As described in Sec.
742.4(b)(1)(ii) and Sec.  742.6(b)(1) exports of both 9x515 and ``600
series'' items destined to countries in Country Group D:5, including
the PRC, will be reviewed consistent with the review policies set forth
in Sec.  126.1 of the ITAR for U.S. arms embargos.
    Comment #13: One commenter stated that it is inappropriate for BIS
to adopt a policy of denial for exports to countries subject to arms
embargoes (such as the PRC) of 9x515 items, which include many items
that are commercial items with no military or intelligence
applications.
    Response to Comment #13: BIS has determined that the 2013 NDAA
authorizing the removal of ``spacecraft'' and related items from the
USML mandates a policy of denial for export licenses of 9x515 items to
the PRC, North Korea, and any country that is a state sponsor of
terrorism. Therefore, BIS has adopted a policy of denial for such items
to these destinations. Further, BIS has determined that the 2013 NDAA
mandates a presumption of denial for the export of 9x515 items to any
country with respect to which the United States maintains a
comprehensive arms embargo. To give effect to the United States arms
embargoes, BIS will review all 9x515 licenses consistent with the
United States arms embargo policies set forth in Sec.  126.1 of the
ITAR.
    Comment #14: One commenter stated that Sec.  750.7(i) of the EAR
provides that a foreign entity is not bound by the prior STA Consignee
Statement and Destination Control Statement associated with 9x515 and
``600 series'' items when retransferring or reexporting the items under
the authority of de minimis after integration into a larger assembly or
as a result of an additional applicable license exception, providing
examples of License Exception Additional Permissive Reexports (LE APR
at Sec.  740.16) and License Exception Temporary Imports, Exports and
Reexports (LE TMP at Sec.  740.9).
    Response to Comment #14: Section 750.7(i) of the EAR is a provision
that allows an exporter who obtained an individually validated licenses
from BIS to no longer be bound by the license conditions attached to
that authorization in the event that the EAR has been amended to either
authorize the transaction on the license under a license exception or
to remove the license requirement from that transaction. It has no
effect in the absence of a license.
    Additionally, for an export under License Exception STA to be
valid, all parties must ensure compliance with all the requirements of
License Exception STA, including those attested to in the Prior
Consignee Statement. Further, any foreign-origin item incorporating US
origin 9x515 or ``600 series'' content will always be subject to the 0%
de minimis threshold for shipments to countries in Country Group D:5
and will require a license for any such shipments.
    Comment #15: One commenter asked BIS to create a streamlined export
licensing process for programs (such as insurance) that typically
include multiple parties, or are in multiple countries with multiple
third-country nationals and dual nationals.
    Response to Comment #15: BIS licensing processes and procedures are

described in Part 748 of the EAR, and applications are submitted
through the SNAP-R application on the BIS Web site. One aspect of the
reform effort that is outside the scope of this rule but relevant to
the comment is that BIS has the authority to generally structure
licenses in a flexible manner to accommodate both applicant's issues as
well as the national security, foreign policy, and other reasons the
items at issue warranted control. BIS thus encourages the commenter to
contact the relevant licensing officer to discuss issues regarding the
structuring of any particular license applications the commenter has in
mind.
    Comment #16: One commenter recommended that BIS create a CCL
licensing practice or policy by which a satellite manufacturer or
operator could obtain a single cradle-to-grave program license that
would cover all manufacturer-client interactions, beginning with
marketing and sales activities and including contract discussions,
delivery negotiations, and on-orbit support. Even if a separate license
for launch services would also be required, a single license covering
all other activities would be invaluable.
    Response to Comment #16: BIS agrees that having a single program
under one license is a desirable outcome for compliance purposes. If an
applicant can define the total activity that is subject to EAR--namely,
the end users, end uses, destinations, and specific items at issue in
the program at issue--BIS generally has the authority and capability to
approve such transactions under a single license. With respect to
marketing and sales activities that may occur without a specific
license, the commenter should review License Exception Technology and
Software Unrestricted (TSU) (Sec.  740.13).

License Exceptions

    Comment #17: One commenter suggested deleting Sec.  740.2(a)(7) to
allow the use of license exceptions for the export of ``space-
qualified'' items that had remained subject to the EAR.
    Response to Comment #17: BIS accepts the change suggested by the
commenter. Section 740.2(a)(7) was a limitation on the use of license
exceptions for certain ``space-qualified'' items that remained subject
to the EAR following the transfer of jurisdiction for satellites and
related items to DDTC. With the revision to USML Category XV, BIS has
determined that it is inconsistent with the purpose of the new controls
and the availability of certain license exceptions, to continue to
prohibit the use of license exceptions for ``space-qualified'' items
controlled in other ECCNs. To determine which license exceptions are
available for each ECCN, please review the specific ECCN and Part 740
of the EAR.
    Comment #18: One commenter suggested revising proposed Sec.
740.2(a)(17) to allow License Exception STA for technology described in
proposed 9E515.b.
    Response to Comment #18: BIS does not accept the change suggested
by the commenter. BIS has revised 9E515 to clarify the technology
controlled in paragraph .b. Section 740.2(a)(17) still prohibits the
use of License Exception STA for the technology described in 9E515.b
(and 9E515.d and .e with respect to radiation-hardened microelectronic
circuits), but the universe of technology described has been revised so
that it is more clear.
    Comment #19: One commenter suggested allowing a license exception
for ``deemed exports'' for amateur radio satellite design and
construction to allow the free exchange of ideas, software, and other
activities pertaining to amateur radio satellite design and
construction with foreign nationals who are citizens of nations listed
in the License Exception STA Country List.
    Response to Comment #19: Security concerns resulting from the
deemed export of technology in 9E515.b that led to the restriction on
STA eligibility do not depend on the commercial nature of the
transactions. Therefore, BIS does not accept the change suggested by
the commenter.
    Comment #20: One commenter noted that the ITAR contains a specific
exemption for the export by U.S. institutions of higher learning of
satellites for fundamental research purposes under Sec.  123.16(b)(10),
which has not been incorporated into the proposed EAR 500 series.
    Response to Comment #20: BIS accepts the change suggested by the
commenter and has created a new paragraph (e) in License Exception
Aircraft and Vessels (AVS) to recreate the scope of ITAR Sec.
123.16(b)(10) in the EAR in a manner consistent with the structure of
the EAR and the less sensitive nature of the items that have moved from
USML Category XV. The new Sec.  740.15(e) allows the export of
``spacecraft'' and other commodities controlled in 9A515 by accredited
institutions of higher learning in the United States to countries that
are members of NATO (see Sec.  120.31 of the ITAR), European Space
Agency or the European Union, or are major non-NATO allies (see Sec.
120.32 of the ITAR), and other countries that are not subject to
embargoes, when fabricated only for the purpose of fundamental
research. This rule also changes the name of License Exception AVS to
``Aircraft, Vessels, and Spacecraft.''
    Comment #21: Two commenters stated that multiple provisions in the
ITAR that are essential to university-based research have not been
carried over to the EAR, including 22 CFR 123.16, 22 CFR 125.4(b)(7),
and 22 CFR 125.4(b)(9).
    Response to Comment #21: The commenters' assertions are not
completely correct. Certain ITAR license exemptions identified by the
commenter have preexisting parallel provisions in the EAR. For
exemptions found in ITAR Sec.  125.4(b)(7), the commenter should review
License Exception TMP at Sec.  740.9(b)(3). For those found in ITAR
Sec.  125.4(b)(9), the commenter should review License Exception TMP at
Sec.  740.9(a)(1) and License Exception GOV at Sec.  740.11(b). As
detailed above in the response to Comment 20, ITAR Sec.
123.16(b)(10) has been replicated in the EAR in the new paragraph (e)
of License Exception AVS (Sec.  740.15). Additionally, License
Exception STA at Sec.  740.20 does authorize many of the transactions
authorized under ITAR Sec.  123.16(b)(10) and the other exemptions. If,
upon further review, the commenter identifies transactions that would
be exempt from an individual licensing requirement in the ITAR that
would not be for the same transaction involving items that have become
subject to the EAR, all other facts being equal, then it should inform
BIS of such information.
    Comment #22: Two commenters stated that the utility of license
exceptions in the EAR will be significantly limited for any items or
technologies that are subject to control for MT reasons, including
portions of the 9x515 ECCNs created by this rule. The commenters
requested that BIS consider ways that the EAR can be adjusted to
prevent items that are transferred to the CCL from creating more of a
licensing burden than they were under the ITAR.
    Response to Comment #22: BIS has determined that certain uses of
MT-controlled items in ``spacecraft'' meet the criteria for the
applicability of license exceptions and is revising Sec.
740.2(a)(5)(i) to allow the use of license exceptions for certain MT-
controlled items when exported as part of a ``spacecraft'' or in
quantities appropriate for replacement parts. BIS is also adding 7A105,
for certain GPS systems that were previously ITAR controlled, and
9A515, for certain spacecraft, related items, radiation hardened
microelectronic circuits and parts, components, accessories and

attachments that were previously ITAR controlled, to the list of ECCNs
that are eligible for the use of certain license exceptions for MT
items. BIS is prohibited by statute from further amending licensing
obligations for items that are MT controlled.
    Comment #23: Two commenters stated that License Exception STA
should apply to all of 9D515 and 9E515.
    Response to Comment #23: BIS does not accept the change suggested
by the commenter. Certain software, listed in 9D515.b (to be effective
on November 10, 2014), .d, and .e, is excluded from STA eligibility
based on the national security concerns related to the export of the
referenced software. Similarly, the technology in 9E515.b (to be
effective on November 10, 2014), .d, and .e is excluded from STA
eligibility based on the national security concerns related to that
technology. The commenter should nonetheless review the revisions to
9D515 and 9E515 that clarify the scope of the STA exclusions from the
ECCNs.
    Comment #24: One commenter suggested that BIS allow small- and
medium-sized companies the ability to quickly support new startups and
ventures with companies in countries authorized as destinations in
License Exception STA in paragraphs (c)(1) and (2).
    Response to Comment #24: License Exception STA is not authorized to
Country Group A:6 (the countries authorized in paragraph (c)(2) of
License Exception STA) for any 9x515 items. However, License Exception
STA is available for exports to countries in Country Group A:5 (the
countries authorized in paragraph (c)(1) of License Exception STA) for
most of the items controlled in 9A515, 9D515 and 9E515, and all the
items controlled in 9B515.
    Certain specific ``spacecraft,'' controlled in 9A515.a, that
provide space-based logistics, assembly or servicing to another
spacecraft are excluded from automatic eligibility for License
Exception STA. To use License Exception STA for these ``spacecraft,''
the exporter must submit a request to BIS, in accordance with Sec.
740.20(g) (License Exception STA eligibility requests for certain 9x515
and ``600 series'' end items), for a determination by BIS that the item
is eligible for License Exception STA. This rule revises Sec.
740.20(g) to add the specific 9A515.a ``spacecraft'' to the list of
items authorized for determination under that paragraph and revises the
heading to include a reference to 9x515.
    Comment #25: One commenter noted that the ITAR includes a license
exemption in Sec.  125.4(b)(7), allowing the return of technical data
to the original source of import, and requested that it be brought to
the EAR.
    Response to Comment #25: The exports authorized by Sec.
125.4(b)(7) of the ITAR will generally be authorized by License
Exception TMP Sec.  740.9(b)(3) for items subject to the EAR. It is
comparable in that it allows the return of items to the country of
origin, except for Cuba, if the original items had not been enhanced.
This license exception does not allow the dissemination of technology
that has been revised, or in any way improved, while in the United
States. Such actions create U.S.-origin technology, which would be
subject to the EAR and may require a license for export. If the
commenter can identify a transaction where License Exception TMP is
more restrictive than ITAR Sec.  125.4(b)(7), then it should let BIS
know.

General Comments Related to ECCN 9A515

    Comment #26: Two commenters requested the insertion of a note to
9x515 that would make clear that non-U.S. origin items described in the
ECCNs that are transferred to the United States would not be subject to
the EAR, and therefore would not require a license in order to be re-
transferred outside the United States.
    Response to Comment #26: BIS does not accept the changed suggested
by the commenter. All items in the United States, not otherwise
excluded from BIS jurisdiction, are subject to the EAR, whether U.S.-
origin or foreign origin. However, License Exception TMP (Sec.
740.9(b)(3)) does allow the return of items to their country of origin
if unaltered while in the U.S. In addition, the export from the United
States of a wholly foreign-made item does not mean that subsequent
reexports of that item are subject to the EAR. See 15 CFR 734.3(a).
    Comment #27: One commenter noted that 9A515 was drafted using
catch-all phrases similar to the unrevised USML Category XV and
suggested that BIS redraft 9A515 so that it used only positive
controls, similar to the revised USML Category XV.
    Response to Comment #27: BIS does not accept the change suggested
by the commenter. As with the ``600 series'' ECCNs created to
accomplish the rewrites of the other USML Categories, the 9x515 ECCNs
necessarily include catch-all provisions to ensure continuity of
control over all items removed from the USML. This is necessary because
USML Category XV used catch-all phrases for its controls. Thus, the
reform effort will result in more positive controls on the USML, while
maintaining catch-all controls on the CCL. As described in previous
Federal Register notices, BIS believes the negative aspects of catch-
all controls have been ameliorated through the creation of a relatively
objective definition of ``specially designed.''
    Comment #28: One commenter asked if the new 9x515 ECCNs include
only items that are transferred from the USML to the CCL, or if they
also include items previously covered by other ECCNs (such as for
example 9A004.b.) or items designated EAR99.
    Response to Comment #28: BIS's goal in drafting the 9x515 ECCNs is
that they would control no more items than that were either (i)
formerly controlled in USML XV that are no longer described in the
revised USML XV or (ii) within the scope of the former 9A004.b, and
that they would not control items (i) within the scope of existing
``space-qualified'' ECCNs or (ii) that are star trackers in 7A004 and
7A104. BIS believes that its decision to change the catch-all control
parameter in 9A515.x from ``space-qualified'' to ``specially designed''
removes the uncertainty that EAR99 items would move up to 9A515.x
through successful testing for use in space. BIS is unaware of any item
that was properly determined to be subject to the EAR and as an EAR99
item that would be within the scope of 9A515.x or any other 9x515 ECCN
paragraph. If the commenter believes otherwise, then he should notify
BIS of the issue either during the interim period of this final rule or
through the commodity classification process described in EAR Sec.
748.3.
    Comment #29: Two commenters requested that BIS separate out purely
commercial items and subject them to lesser controls.
    Response to Comment #29: Controls are based on the national
security and foreign policy concerns associated with a particular item
and are imposed at the levels that are warranted. Merely because
something is commercial does not mean control is not warranted. Even
purely commercial satellites provide a significant functionality that
warrants significant control. Specifically, any satellite can, by
virtue of its position in orbit above the earth, provide a platform
with a global reach and the potential to carry alternative payloads
that may have direct national security implications. Additionally, the
technology related to the workings of commercial satellites provide the
majority of the technology necessary to allow other countries to
establish a space presence of significant concern as described in the
report the Departments of Defense and State

provided to Congress in 2012 regarding controls on spacecraft. See
Departments of Defense and State ``Final Report,'' required by section
1248 of the National Defense Authorization Act of Fiscal Year 2010,
available at http://www.defense.gov/home/features/2011/0111_nsss/docs/1248_Report_Space_Export_Control.pdf (the ``1248 Report'').
    Comment #30: One commenter requested that BIS change the reasons
for control on 9A515 from NS1 and RS1 to NS2 and RS2.
    Response to Comment #30: BIS accepts the change suggested by the
commenter for the new microelectronic circuit control described in
9A515.e. ECCN 9A515.e has an RS2 reason for control because it is for
lower level radiation tolerant microelectronic circuits that do not
raise the same national security concerns and do not require the same
global license requirement as other space related items. The remainder
of 9A515, except the new .y paragraph, has NS1 and RS1 reasons for
control.

Comments Related to Spacecraft in 9A515.a

    Comment #31: Two commenters suggested that ``spacecraft''
controlled in 9A515.a should remain ``subject to the EAR'' even if they
incorporate a defense article listed on the USML.
    Response to Comment #31: BIS accepts the change suggested by the
commenter and has added a heading note at the top of the Items
paragraph of 9A515 to state that ``spacecraft'' and other items
described in 9A515 remain subject to the EAR even if defense articles
described on the USML are incorporated into the items, unless they take
on the characteristics described in Category XV(a) of the USML. The
note also states that in all other cases, defense articles described on
the USML are subject to the ITAR. DDTC has added a corresponding note
to its revised USML XV. This note in 9A515 provides readers with a
summary of the note on the ITAR excluding these integral and
incorporated defense articles from the USML. As this represents a
departure from the standard ITAR ``see-through'' rule, it is
appropriate to call it to the reader's attention.
    The 1999 NDAA mandates certain special export controls on the
export of satellites and the performance of certain activities
associated with the launch of a U.S.-origin satellite in a foreign
country. The 2013 NDAA requires that the President provide for end-use
monitoring of satellites and related items transferred from the USML to
the CCL. As a result of the changes to Category XV in response to
public comment, certain end item satellites may not be subject to ITAR
licensing for the export of those satellites, including when exported
for launch. Therefore, DDTC has revised Sec.  124.15 of the ITAR, which
implements the 1999 NDAA mandate, to clarify which special export
controls apply only to satellites and related items subject to the ITAR
and which controls apply to all satellites and related items regardless
of jurisdiction.
    Mirroring these revisions to Sec.  124.15 of the ITAR, BIS created
new export license application requirements, consistent with the 1999
NDAA mandate and implementing the 2013 NDAA mandate, for satellites
subject to the EAR. In Supplement No. 2 to Part 748, BIS added a
paragraph (y) to describe the requirement, from the 1999 NDAA, for a
Department of Defense approved technology control plan and a National
Security Agency approved encryption control plan, or evidence of
ongoing discussions to obtain approved plans, and evidence of
arrangements for the Department of Defense to provide monitoring, to be
provided to BIS with the application for an export license for a
satellite.
    The 1999 NDAA only mandates special export controls for licenses to
export a satellite to a country that is not a member of the North
Atlantic Treaty Organization (NATO) or a major non-NATO ally of the
United States. However, in furtherance of the national security and
foreign policy interests of the United States, BIS has the discretion
to require evidence of compliance with special export control
requirements in connection with licenses to export satellites or
spacecraft subject to the EAR to a country that is a member of NATO or
is a major non-NATO ally. Accordingly, paragraph (y)(2) of Supplement
No. 2 to Part 748 states that a license application to export a
satellite controlled by ECCN 9A515.a to such countries must include (i)
a technology transfer control plan approved by the Department of
Defense and an encryption technology control plan approved by the
National Security Agency, or documentation from the Department of
Defense that such plans are not required; and (ii) evidence of
arrangements with the Department of Defense for monitoring of the
launch or documentation from the Department of Defense that such
monitoring is not required.
    Regardless of a satellite's or spacecraft's jurisdictional status,
ownership, or origin, the ITAR controls as a ``defense service'' the
furnishing of assistance (including training) by a U.S. person to a
foreign person directly related to (a) the integration of a satellite
or spacecraft to a launch vehicle or (b) launch failure analyses. See
22 CFR 121.1, USML XV(f).
    Comment #32: Two commenters suggested that BIS control sub-orbital
spacecraft that are ``reusable launch vehicles'' and designed to carry
humans on-board and any ``specially designed'' carrier aircraft in
9A515. The commenters also suggested adopting definitions for
``suborbital rockets'' and ``reusable launch vehicles'' from the
Federal Aviation Administration, Commercial Space Transportation
regulations at 14 CFR 401.5.
    Response to Comment #32: BIS is controlling in 9A515.a all
``spacecraft'' no longer listed on USML XV(a). The revised USML
Category XV(a) does not list ``spacecraft'' ``specially designed'' for
human habitation that do not incorporate propulsion and navigation
systems. Therefore, these items are controlled in 9A515.a. All launch
platforms and launch vehicles remain subject to the ITAR.
    BIS recognizes that commercial spaceflight and specifically, sub-
orbital commercial space flight, is a significant emerging industry and
that these activities are being regulated by the Federal Aviation
Administration as commercial activities. However, the technology that
is at the heart of the ability to put a commercial vehicle into space
and return to earth is often the same technology that would allow the
delivery of weapons of mass destruction and other activities that
present significant national security concerns. At this time, BIS is
unable to draw a line between the commercial applications of these
capacities and the inherently military potential of launch and reentry
that would warrant their controls on the CCL. Therefore, these systems
will remain on the USML, regardless of their potential commercial
applications. BIS recognizes that the continued control of spacecraft
with commercial applications on the USML is a significant issue for
industry and that more work is required to further refine the controls
in this area. The U.S. Government has committed to continue to review
the issue and, to the extent further revisions to the controls in this
rule are warranted, BIS will make them in coordination with the
Department of State.
    Comment #33: One commenter stated that Servicing Mission Extension
Vehicles do not appear on the USML but are also not listed specifically
in the Note to 9A515.a.
    Response to Comment #33: Servicing Mission Extension Vehicles, to
the extent that they incorporate a

propulsion and guidance system, are listed on the revised USML Category
XV at (a)(4) and thus are not ``subject to the EAR.'' Servicing Mission
Extension Vehicles, and other ``spacecraft'' that provide space-based
logistics, assembly or servicing of any spacecraft (e.g., refueling),
which do not have integrated propulsion, beyond attitude control, are
``subject to the EAR'' and controlled in 9A515, but are not immediately
eligible for License Exception STA.
    Comment #34: Two commenters suggested adding the phrase
``satellites not otherwise enumerated in USML Category XV'' to the note
to 9A515.a, to make clear that any satellites not specifically listed
under USML Category XV are covered under 9A515.a.
    Response to Comment #34: The suggested phrase is included in the
control text of 9A515.a. Thus, BIS has determined that it is
unnecessary to add it to the note as well.
    Comment #35: One commenter suggested adding the words ``or
controlled by 9A004'' in 9A515.a after the phrase ``not enumerated in
USML Category XV'' to clarify that the International Space Station
(ISS) and other items controlled in 9A004 are not controlled in 9A515.
    Response to Comment #35: BIS accepts the change suggested by the
commenter in principle and has added the words ``or described in
9A004'' to the description of items controlled in 9A515.a. This
excludes all items described in 9A004 from 9A515.a. As the ISS is not
controlled in 9A515.a, the parts, components, accessories and
attachments ``specially designed'' for the ISS are not controlled in
9A515.x.
    Comment #36: One commenter suggested revising the MT paragraph in
9A515 to read: ``MT applies to 9A515.d when also described in
3A101.a.''
    Response to Comment #36: BIS does not adopt this suggestion because
quoting the Missile Technology Control Regime (MTCR) text is more
precise.
    Comment #37: One commenter suggested defining the term ``usable''
in the MT paragraphs for 3A001.a.1.a and 9A515 d. to reference a
specific characteristic of to refer to a standard.
    Response to Comment #37: BIS acknowledges that the phrase ``when
usable in missiles for protecting missiles against nuclear effects
(e.g. Electromagnetic Pulse (EMP), X-rays, combined blast and thermal
effects)'' can be difficult to apply in certain circumstances. However,
this is the multilaterally agreed MTCR text, and BIS has determined
that by providing a reference to a specific standard, the United States
would be deviating from its regime commitments. If an exporter has
particular issues warranting clarification, then it should submit an
advisory opinion request under Sec.  748.3(c).

Comments Related to 9A515.d and 9A515.e

    Comment #38: Six commenters requested that items described in USML
Category XV(d) be transitioned to 9A515 on the date of publication of
this final rule.
    Response to Comment #38: BIS agrees on the need to accelerate
implementation of the transition of the radiation-hardened
microelectronic circuits from the USML to the CCL. Microelectronic
circuit development has advanced to a stage where manufacturers are
concerned that the next generation of purely commercial microelectronic
circuits may meet or exceed the parameters listed in USML Category
XV(d). It is necessary to quickly transition these items to the CCL to
avoid requiring that these commercial manufacturers register with DDTC
and obtain ITAR licenses for the development of these items. In the
final rule revising Category XV, DDTC has provided that the effective
date for the deletion of USML Category XV(d), microelectronic circuits
controlled by XV(e), and directly related technical data and software
controlled by XV(f), will be 45 days following the publication of the
final rule, the minimum period permitted for a major regulatory action.
Therefore, BIS has also provided that this rule will transition those
items to 9A515.d, 9A515.e, 9D515.d, 9D515.e, 9E515.d, and 9E515.e,
respectively, 45 days following the publication of the final rule, on
June 27, 2014.
    Comment #39: One commenter asked BIS to clarify Notes 2 and 3 to
9A515.d to state which microelectronic circuits are intended to be
controlled under 3A001 as opposed to 9A515.x.
    Response to Comment #39: BIS has revised the controls on
microelectronic circuits that fall below the threshold described in
9A515.d. BIS has created a new paragraph .e that controls certain
microelectronic circuits that are ``specially designed'' for defense
articles controlled by USML Category XV or items controlled by 9A515
and meet two technical parameters (1) a total dose >=1 x 10\5\ Rads
(Si) (1 x 10\3\ Gy(Si)) and <5 x 10\5\ Rads (Si) (5 x 10\3\ Gy(Si)) and
(2) a single event effect (SEE) (i.e., single event latchup (SEL),
single event burnout (SEB), or single event gate rupture (SEGR))
immunity to a linear energy transfer (LET) >=80 MeV-cm\2\/mg. BIS has
also excluded all microelectronic circuits from 9A515.x. Therefore,
microelectronic circuits that meet the control criteria of either
9A515.d or 9A515.e are the only microelectronic circuits controlled in
9A515. All other microelectronic circuits subject to the EAR will be
controlled based on their technical parameters in the appropriate ECCN
or designated as EAR99 items.
    Comment #40: One commenter asked that BIS insert into Note 1 of
9A515.d a statement adopting the longstanding definition of ``ASIC''
put forward by the JEDEC Solid State Technology Association--namely
that an ASIC is ``an integrated circuit developed and produced for a
specific application or functions and for a single customer.''
    Response to Comment #40: BIS accepts the commenter's suggestion to
provide a definition of ASIC or application specific integrated
circuits. In Note 1 to 9A515.d and .e, BIS has included the phrase
``integrated circuits developed and produced for a specific application
or function'' following the term ASIC to provide definition to the
term. BIS does not accept the commenter's suggestion that the term ASIC
be limited to items produced for a single customer. Such language could
lead to unintended drops in controls. Additionally, this Note 1 to
9A515.d and the new .e is a reference to the USML control in USML
Category XI(c). Items are controlled on the USML if described therein,
regardless of whether they are also within the scope of a particular
ECCN. This note has no substantive effect on items that are controlled
as ASICs on the USML. It is merely a cross reference inserted for the
convenience of the exporter.
    Comment #41: One commenter noted that the fourth and fifth
technical parameters contained within 9A515.d differ from the fourth
and fifth technical parameters contained within the prior USML Category
XV(d). The commenter asks why those changes have been made, and whether
there is any need for them. The commenter suggests that the five
technical parameters contained within USML Category XV(d) should be
replicated exactly in 9A515.d.
    Response to Comment #41: The comment is correct that the words of
the fourth and fifth technical parameters contained within 9A515.d are
slightly different from those in prior USML Category XV(d). These
controls have been updated and clarified, so BIS does not accept the
request to revert to the previous controls. Anything that did not meet
previous USML Category XV(d) controls will not be captured by the new
9A515.d parameters.
    Comment #42: One commenter noted that some items currently listed
under

other CCL ECCNs (e.g., 3A001) contain microelectronic circuits that
have all of the specifications listed under 9A515.d. The commenter asks
whether the microelectronic circuits meeting the described
specifications that are currently controlled under other ECCNs will be
moved into 9A515.d.
    Response to Comment #42: Microelectronic circuits are controlled in
9A515.d when they meet or exceed the five technical parameters
described in the subparagraph and are ``specially designed'' for a
defense article, a 600 series item, or an item in 9A515. The criteria
in 3A001.a are also controlled in 9A515.d. However, 9A515.d describes a
higher level of technical parameters than 3A001.a. Therefore, if a
microelectronic circuit meets or exceeds the same three criteria in
9A515.d, but does not meet or exceed the remaining two 9A515.d
criteria, then 3A001.a will apply. However, all items controlled in
9A515.d were previously subject to the ITAR pursuant to USML Category
XV(d). Therefore, nothing described in 9A515.d could have been properly
classified as 3A001.a. Moving forward, under the Order of Review (see
Sec.  774, Supplement No. 4), exporters must review the 9x515 ECCNs and
``600 series'' prior to reviewing other ECCNs. Therefore, if an item is
described in 9A515.d, or the new 9A515.e, it will be controlled in
those paragraphs, even if it also meets the technical parameters in
3A001 or any other ECCN.

Comments Related to 9A515.x

    Comment #43: One commenter requested that BIS not apply NS1 and RS1
reasons for control to 9A515.x.
    Response to Comment #43: BIS does not accept the change suggested
by the commenter. The items controlled in 9A515.x are ``specially
designed'' for spacecraft and space applications, and thus raise
national security and foreign policy concerns. Therefore, the U.S.
Government will require visibility into the export of these items.
Applying NS1 and RS1 reasons for control requires world-wide licensing,
other than exports to Canada. Allowing the use of License Exception STA
for most items to our 36 closest allies and partners provides
significantly more record of the transactions than allowing No License
Required (NLR) shipments.
    Comment #44: Two commenters stated that the 9A515.x control
parameter should be ``specially designed.''
    Response to Comment #44: BIS accepts the change suggested by the
commenter. BIS agrees that the use of the control parameter ``space-
qualified'' in 9A515.x was potentially confusing and has changed it to
``specially designed.'' The structure of 9A515.x will now track the
structure of all ``600 series'' entries, in that, with small
exceptions, it will be a catch-all control for all parts, components,
accessories, and attachments ``specially designed'' for items in 9A515
or USML Category XV and not themselves controlled in USML Category XV.
The exceptions pertain to (i) microelectronic circuits, (ii) star
trackers in 7A004 and 7A104, and (iii) already existing multilateral
controls on ``space-qualified'' items controlled elsewhere in the CCL.
    Comment #45: One commenter asked whether 9A515.x will capture all
spacecraft ``parts,'' ``components,'' ``accessories,'' and
``attachments'' not controlled under paragraph (e) of USML Category XV
or listed under other specific ECCNs above, or will other ECCNs that
currently control spacecraft components (e.g., 7A004 or 7A104) continue
to do so. Specifically, the commenter requested clarification on which
ECCN will control the solar concentrators, power conditioners and/or
controllers, bearing and power transfer assemblies, deployment
hardware/systems for solar arrays, ``space-qualified'' star trackers
and ``space-qualified'' gyro-astro compasses currently controlled under
Category XV(e). The commenter also stated that delineating which items
are controlled by each of these ECCNs would help satellite component
manufacturers understand which controls apply to their products.
    Response to Comment #45: BIS has clarified 9A515.x in this final
rule so that the star trackers (except the star tracker specified in
USML Category XV(e)) and gyro-astro compasses controlled in 7A004 and
7A104 are not controlled in 9A515.x. All other ``parts,''
``components,'' ``accessories,'' or ``attachments'' that are specially
designed for items in USML Category XV or 9A515 are controlled in
9A515.x unless listed on the ITAR, identified in another paragraph of
9A515, are a microelectronic circuit, or are controlled in one of the
``space-qualified'' ECCNs that are specifically excluded. BIS is
unaware of any items that will be controlled by 9A515.x that were not
previously controlled under USML Category XV(e). If the commenter is
aware of such items, then it should provide a comment to BIS during the
interim period of this rule or submit a classification request pursuant
to EAR section 748.3.
    Comment #46: One commenter asked BIS to confirm that space-related
products that are currently designated with a specific ECCN or are
designated EAR99, will not be moved to either the USML, 9x515, or a
``600 series'' ECCN. The comment requested that BIS include a specific
statement to that effect, or if not true, include a grandfathering
clause for such items already in inventory.
    Response to Comment #46: Other than with respect to 9A004.b items
that BIS is moving to 9A515, BIS is unaware of any items that will be
controlled by 9A515 that were not previously controlled under USML
Category XV. If the commenter is aware of such items, then it should
provide a comment to BIS during the interim period of this rule or
submit a classification request pursuant to EAR Sec.  748.3.
    Comment #47: Six commenters asked if, when a commercial-off-the-
shelf (COTS) or other EAR99 item is successfully tested for operation
in space, it becomes space-qualified with repercussions for the
manufacturer, even though the original part may have been EAR99 and has
not been modified.
    Response to Comment #47: BIS believes that the other ECCNs that
will continue to use ``space-qualified'' as the control parameter do
not raise the same concerns for controlling otherwise EAR99 items on
the basis of testing, as they are not catch-all controls. Additionally,
this comment assumes that the qualification through testing of a single
item will cause items other than the one tested to become space-
qualified. As the note indicates, qualification through successful
testing only applies to the actual unit tested.
    Comment #48: One commenter stated that BIS should exclude building
block electronic components that would qualify for exclusion from
specially designed, even if they are individually tested or create a
new ECCN for Space-Qualified Basic Building Block Electrical/Electronic
Components with AT only controls.
    Response to Comment #48: As noted above, BIS has revised 9A515.x in
this final rule to use ``specially designed'' instead of ``space-
qualified'' as the control parameter. To the extent that the item at
issue is a microelectronic circuit, it will only be controlled in 9A515
if it meets the .d or .e control parameters. All other electronic
components will be controlled by .x, regardless of significance, if
``specially designed'' for a 9A515 or USML Category XV item and not
listed on the USML or one of the other ECCNs described in 9A515.x. The
commenter should also review the procedures in EAR section 748.3(e)
that allows one to petition BIS for removal of an item otherwise within
the scope of 9A515.x and the re-designation of the item as a 9A515.y
item.

    Comment #49: One commenter suggested deleting 6A002.e from the list
of ``space-qualified'' ECCN carved out of 9A515.x.
    Response to Comment #49: BIS accepts the change suggested by the
commenter. This paragraph was previously removed from the EAR.

Comments Related to the Application of ``Space-Qualified''

    Comment #50: One commenter stated that the note to the proposed EAR
definition of ``space-qualified'' providing that the terms `designed'
and `manufactured' in this definition are synonymous with ``specially
designed'' is confusing. The purpose may have been to be sure that all
``catch-all'' components being removed from USML Category XV are
covered by 9A515, but 9A515.x use of ``space-qualified,'' rather than
``specially designed,'' seems to make the Note unnecessary for this
purpose.
    Response to Comment #50: Although the comments related to the use
of ``space-qualified'' are no longer relevant to 9A515.x because the
paragraph will not use ``space-qualified,'' they are nonetheless
relevant to other uses of ``space-qualified'' in the EAR.
    The note to the definition of ``space-qualified'' that states that
the terms `designed' and `manufactured' are synonymous with the
definition of ``specially designed'' allows exporters to apply the
newly defined term ``specially designed'' rather than force exporters
to apply two new undefined terms `designed' and `manufactured.' This
note prevents exporters from having to determine for themselves what,
if any, difference exists between `designed' and `manufactured' and the
term ``specially designed.''
    Comment #51: One commenter suggested to change ``or'' to ``and'' in
the ``space-qualified'' definition. The modified definition would read:
``. . . an article is ``space-qualified'' if it is designed,
manufactured, and qualified through successful testing, for operation
at altitudes greater than . . .'' Another commenter suggested revising
the second note to state that ``specially designed'' is synonymous with
the phrase ``designed, manufactured, or qualified through successful
testing,'' which would have the same effect.
    Response to Comment #51: BIS does not accept these suggested
changes for two reasons. First, this definition was agreed to as part
of the 2012 amendments to the Wassenaar Arrangement on Export Controls
for Conventional Arms and Dual-Use Goods and Technologies (Wassenaar
Arrangement), and the internationally agreed on language is
incorporated into the EAR. Second, such a change would significantly
reduce the scope of the space-qualified definition and result in less
sensitive items not being controlled. An item may become space-
qualified in two ways, if either (1) intentional steps were taken in
the design and manufacture of the item to make it suitable for use in
space, or (2) due to inconsistencies in the manufacturing process that
cause variations in quality that result in only a subset of the
production run to be suitable for use in space, individual items are
qualified through testing.
    Comment #52: Two commenters stated that the use of ``or'' in
``Designed, manufactured, or qualified through successful testing''
seems to contradict the second note, which intends to exclude parts and
components which have not been ``specially designed.'' Conversely, the
first note excludes items that are not individually tested. As
radiation testing is destructive, industry practice is to test
radiation tolerance on lot samples and not on the actual parts to be
used on the spacecraft. The note would result in excluding from being
``space-qualified,'' parts determined to be radiation tolerant as a
result of being of the same lot as samples successfully tested as
radiation tolerant.
    Response to Comment #52: BIS does not accept the changes suggested
by the commenter. The existing definition in the EAR is identical to
the definition that was adopted by the Wassenaar Arrangement. However,
Commerce will keep in mind these comments when considering future
modifications, if necessary, to the multilateral regime definition.
    Comment #53: Four commenters asked BIS to establish parameters for
testing that qualifies an item as ``space-qualified.''
    Response to Comment #53: The concern raised by the commenters is
largely resolved by the change in .x to apply ``specially designed''
instead of ``space-qualified'' as the control parameter and creation of
new 9A515.d and .e. Clarification of the use of the new ``space-
qualified'' definition in the existing CCL entries should be resolved
multilaterally as part of the WA process.
    Comment #54: One commenter suggested that ``space-qualified''
should incorporate both the catch and release of ``specially
designed.''
    Response to Comment #54: The designed or manufactured prong of
``space-qualified'' is synonymous with ``specially designed'' per the
second note to the definition of ``space-qualified,'' and thus includes
both the catch and release provisions of the definition of ``specially
designed.'' The qualified through successful testing prong of ``space-
qualified'' operates independently of the designed or manufactured
prong, and does not incorporate the ``specially designed'' release
provisions.
    Comment #55: One commenter asked BIS to confirm that the ``space-
qualified'' criterion applies only to items that have been designed,
manufactured or qualified through successful testing performed at U.S.
premises or using U.S. technologies.
    Response to Comment #55: For such entries, the ``testing'' element
is not limited to testing done in the United States or using U.S.-
origin technology. Other clarifications or revisions to ``space-
qualified'' will need to be part of the multilateral regime
discussions.
    Comment #56: One commenter states that items should only be
``space-qualified'' if certified by the manufacturer. The commenter
suggested that BIS add the following note ``For purposes of this
definition, ``qualified'' must be evidenced by an explicit rating or
certification to operate at altitudes greater than 100 km above the
Earth. Thus, any device certified by the manufacturer to be operative
at altitudes greater than 100 km is ``qualified through successful
testing,'' and any device not certified by the manufacturer to be
operative at altitudes greater than 100 km is not ``qualified through
successful testing,'' regardless of any testing performed by any party.
    Response to Comment #56: BIS does not accept the change suggested
by the commenter. The purpose of qualification through testing in the
``space qualified'' definition is to control those items identified
through testing to meet the requirements necessary to perform in space.
It is not relevant what entity conducts the testing.
    Comment #57: One commenter asked whether the note to the ``space-
qualified'' definition means that each component must be tested
separately to be ``space-qualified.'' For example, if only one of four
identical components is successfully tested and thus qualified, would
the four identical components be then all ``space-qualified'' or will
only the one successfully tested be ``space-qualified''?
    Response to Comment #57: For items qualified through testing, only
items actually tested are ``space-qualified.'' If an item is ``space-
qualified'' as a result of design or manufacture, testing is not
relevant.
    Comment #58: Two commenters asked whether the definition of
``space-qualified'' allowed the ``exclusion'' for prior determination
through a

commodity jurisdiction (CJ) determination or interagency-cleared
commodity classification (CCATS) pursuant to Sec.  748.3(e) in
paragraph (b)(1) of the ``specially designed'' definition. If not, the
commenters stated that a part that has been previously determined to
be, for instance, EAR99 through a Commodity Jurisdiction could see its
classification become 9A915.x by virtue of meeting the criteria of
``space-qualified,'' i.e. qualified through successful testing, for
operations at altitudes greater than 100km above the surface of the
Earth, even though the design, performances, and testing flow of this
part are the same that had been previously reviewed by the U.S.
Government during the CJ or CCATS process.
    Response to Comment #58: As noted in Response to Comment
45, BIS has revised 9A515.x in this final rule to remove the
``space-qualified'' control parameter, replacing it with ``specially
designed.''
    Comment #59: Three commenters stated that testing should only apply
to the item tested.
    Response to Comment #59: As stated in the first note to the
``space-qualified'' definition, only the item tested is qualified
through testing. However, if an item is ``space-qualified'' as a result
of design or manufacture, testing is not relevant.
    Comment #60: Items are identified as ``space-qualified'' as a
marker for high reliability and the level of control should not be
increased to 9A515.x based on that criteria.
    Response to Comment #60: As noted in Response to Comment
45, BIS has revised 9A515.x to remove the ``space-qualified''
control parameter, replacing it with ``specially designed.''
    Comment #61: One comment asked why the proposed rules only refer to
categories 3, 6, and 9 in the ``space-qualified'' definition and what
that means regarding the other categories of EAR.
    Response to Comment #61: The term ``space-qualified'' only appears
in ECCNs in categories 3, 6 and 9 of the Commerce Control List and the
convention for Wassenaar Arrangement defined terms is to identify the
categories in which they are used, if not common throughout the control
list. As ``space-qualified'' is no longer the control parameter in
9A515.x, category 9 is removed from this list.
    Comment #62: One commenter requested that BIS clarify how
``required'' applies to items with only a ``space qualified'' control
parameter, particularly when qualified through testing.
    Response to Comment #62: BIS has revised 9A515.x in this final rule
to remove the ``space-qualified'' control parameter, replacing it with
``specially designed.'' Therefore, it is no longer necessary to
determine how 9E515 controls apply to items that are controlled as
``space-qualified'' by virtue of testing.

Comments Related to 9A515.y

    Comment #63: Two commenters suggested that BIS create a .y
paragraph for items that only warrant AT control, including certain
``space-qualified'' basic building block electronic components.
    Response to Comment #63: BIS accepts the suggestion to create a .y
paragraph with an AT reason for control and prohibition on the export
to China. Unlike the .y paragraphs in many of the ``600 series'' ECCNs,
9A515.y will not initially be a list of items. Rather, the control
parameter will be ``[i]tems described in 9A515.x that have been
identified in an interagency-cleared commodity classification (CCATS)
pursuant to Sec.  748.3(e).'' The reason for control on the .y
paragraph, as with the other .y paragraphs in the ``600 series'' ECCNs,
is Anti-Terrorism Column 1 (AT). Additionally, as with the other .y
paragraphs, export to China is prohibited and Sec.  744.21(a)(2) is
amended to add a prohibition of the export of all items described in
9A515.y to China.
    At the time of publication, no items are designated within the .y
control. BIS will accept requests to designate 9A515.x items under
Sec.  784.3(e) as .y upon publication of this rule, but will not begin
populating any .y controls until on or after the effective date of this
rule.

Comments Related to 9B515

    Comment #64: One commenter requested that BIS clarify the
classification of encryption simulators used to test COMSEC encryptors
when installed on a foreign manufactured satellite.
    Response to Comment #64: Encryptors that are ``specially designed''
for spacecraft will be controlled in 9A515.x to the extent they are
commodities or in 9D515 to the extent they are software. The simulators
to test those items will not be controlled in a 9x515 ECCN. BIS has
revised 9B515.a and .b so that the controls on test, inspection and
production equipment controlled in 9B515.a and the equipment, cells and
stands for testing, analysis and fault isolation in 9B515.b only apply
to items ``specially designed'' for items in 9A515.a or USML Category
XV paragraphs (a) or (e). Therefore, simulators for testing a part,
component, accessory or attachment controlled in 9A515.x are not
controlled in 9B515.
    Comment #65: One commenter has stated that it is unclear why the
(10-4) Torr technical threshold has been included in
9B515.c. In general, the development of more advanced satellite designs
has led to increases in design life, a feature that requires more
demanding testing standards and more advanced testing equipment to
validate these designs. It is, therefore, plausible that commercially
available environmental test chambers could approach this threshold due
to natural competitive pressures and the general interest among both
satellite manufacturers and their customers in developing more reliable
spacecraft. Unless there is a specific reason for the inclusion of this
threshold, the commenter recommends that this control be removed.
    Response to Comment #65: BIS accepts the changes suggested in this
comment, in part. The control for the Torr technical threshold is
currently in 1B018.b and it is deleted by this rule. The intent is to
control chambers for ``spacecraft.'' The chambers will only be
controlled in 9B515.c if ``specially designed'' for commodities
enumerated in 9A515.a or USML Category XV(a).

Comments Related to 9D515

    Comment #66: One commenter requested the addition of a note to
9D515 that clarifies the jurisdiction of software common to both USML
and CCL satellites. The note should state that if software is not
specially designed or modified for a satellite controlled under the
USML, it is subject to the EAR and controlled under this ECCN.
    Response to Comment #66: BIS does not accept the changes suggested
by the commenter. Software is ITAR controlled if it meets the
definition of Sec.  120.10 of the ITAR (i.e., it is ``required'' for
one of the functions listed in 120.10) and is also, per USML Category
XV(f), ``directly related'' to a USML Category XV spacecraft or other
defense article in USML XV. Software that is completely common to ITAR
and EAR items would not meet this threshold. Thus, the requested note
is not necessary.

Comments Related to 9E515

    Comment #67: Ten commenters requested that BIS apply controls on
the technology for the three defined terms ``development,''
``production,'' and ``use'' and not apply control to technology on the
six disjunctive elements of the defined term ``use,''

namely operation, installation, maintenance, repair, overhaul and
refurbishing. Two of the commenters further noted that technical data
and technical assistance required for any one of the disjunctive
elements of use does not fit within the Part 772 definition of
technology as a threshold matter due to the use of the defined terms
``development,'' ``production'' and ``use.'' Additionally, one
commenter noted that the expansion of technology controls to include
operation, installation, maintenance, or repair activities in
connection with 9x515 and ``600 series'' items is in contradiction to
the approach DDTC appears to be taking in revising the ITAR definition
of defense services and the potential revision of the definition of
technical data.
    Response to Comment #67: BIS adopted controls on elements of the
defined term ``use'' for the ``600 series'' technology ECCNs, and
proposed such controls for 9E515 to maintain continuity of control over
the technical data and defense services for the items transitioning to
the CCL that was controlled on the ITAR. Controls on the technology
required for each of the listed disjunctive elements in each technology
ECCN are appropriate to retain the necessary level of control
consistent with the national security interests of the United States.
Specifically with regard to 9E515, this was also done to conform to the
1248 Report and to identify for Congress where all items controlled in
USML Category XV are controlled on the CCL.
    In response to these comments, BIS, in consultation with other
departments and agencies of the U.S. Government, has reviewed the use
of various combinations of the disjunctive elements, operation,
installation, maintenance, repair, overhaul and refurbishing, and
determined that for most 9E515 technology, export controls on the
technology for the operation and maintenance of those items are not
necessary. BIS has also determined that all technology controls on the
ground stations described in 9A515.b are unnecessary. Therefore, BIS
has revised 9E515.a to exclude technology for items controlled in
9A515.b, 9A515.d, 9A515.e, and removed the words operation and
maintenance. BIS also added a parenthetical following the word repair
to make it clear that repair includes any on-orbit anomaly resolution
and analysis when it goes beyond established procedures.
    Comment #68: Five commenters suggested that 9E515 be revised to
clarify any potential overlap between 9E515.a and 9E515.b.
    Response to Comment #68: BIS has reviewed and revised 9E515 to
clarify the difference between the technologies controlled in each
paragraph, as described in Response to Comment 67.
    Comment #69: Several commenters asked BIS and DDTC to confirm that
various types of telemetry--i.e., communications to and from satellites
and other spacecraft, whether on the ground, in the air, or in space--
are not subject to the ITAR or the EAR, or, if so, to exclude them from
the controls over satellite and spacecraft technology and technical
data in USML Categories XV(f) and 9E515.
    Response to Comment #69: Based on a review of the comments and the
types of information pertaining to satellites and spacecraft that
warrant control, BIS and DDTC have determined to codify existing policy
within the regulations that data transmitted to or from a satellite or
spacecraft, whether real or simulated, should not be subject to the
ITAR and should not fall within the scope of the EAR's definition of
``technology,'' if it is limited to information about the health,
operational status, or function of, or raw sensor output from, the
spacecraft, spacecraft payload, or its associated subsystems or
components. Such information is often referred to as housekeeping data.
In addition, the act of processing such telemetry data--i.e.,
converting raw data into engineering units or readable products--or
encrypting it does not, in and of itself, cause the telemetry data to
become subject to the ITAR or to ECCN 9E515. To implement this
determination, DDTC has added a note to USML Category XV(f) that such
information is not subject to the ITAR, and BIS has added a note to
9E515 that such information, to the extent it would be subject to the
EAR, is not within the scope of information captured within the
definition of ``technology'' in the EAR.
    These notes do not indicate that other types of technical data, as
defined in ITAR Sec.  120.10, directly related to USML Category XV
items and other types of technology, as defined in EAR Sec.  772.1,
required for 9A515 items are no longer controlled. In addition, the
notes to USML Category XV(f) and 9E515 do not change the ITAR-control
status of classified information directly related to defense articles
and defense services on the U.S. Munitions List and 600-series items
subject to the EAR, as well as information covered by an invention
secrecy order. ``Classified,'' for these purposes, means that which is
classified pursuant to Executive Order 13526, predecessor or successor
order, or to the corresponding classification rules of another
government or international organization.
    Comment #70: One commenter suggested that BIS delete the quotation
marks around the term ``technology'' in 9E515 because these alterations
would create a different definition for the term than the one that
currently exists in the EAR.
    Response to Comment #70: BIS does not accept the changes suggested
by the commenter. BIS has denominated the technology that is
appropriate for control given the national security concerns relevant
to the various items controlled in the 9x515 ECCNs. BIS will be
undertaking a larger project to review the technology definitions and
controls in the EAR and to harmonize, where appropriate, the technology
controls with those in the ITAR.
    Comment #71: One commenter requested that BIS address how the terms
installation, maintenance, repair, overhaul or refurbishing will apply
to technology for items controlled in 9A515.a, end-item spacecraft. For
example, would data provided to satellite operators for post-launch
operations (e.g., orbit-raising) meet this definition? The commenter
noted that the terms installation, maintenance, repair, overhaul or
refurbishing seem to apply only to the ground control systems
controlled under 9A515.b. The commenter requested that BIS revise 9E515
so that installation, maintenance, repair, overhaul or refurbishing
technology are only controlled for ground control systems listed under
9A515.b, ``equipment'' controlled by 9B515, and ``software'' controlled
by 9D515.
    Response to Comment #71: As detailed in Response to Comment
69, BIS has revised 9E515.a so that it now controls technology
``required'' for the ``development,'' ``production,'' installation,
repair (including on-orbit anomaly resolution and analysis beyond
established procedures), overhaul or refurbishing of commodities
controlled by 9A515 (except 9A515.d. or .e), 9B515, or ``software''
controlled by 9D515.a. 9E515.b now controls technology ``required'' for
the ``development,'' ``production,'' e.g., failure analysis and anomaly
resolution of software controlled by 9D515.b. One of the revisions to
9E515.a also makes clear that the control of repair technology includes
on-orbit anomaly resolution and analysis, beyond established
procedures. However, standard post-launch operations (e.g., orbit-
raising), orbit maintenance and other movement of the spacecraft on-
orbit do not fall within the controlled technology. If an exporter has
any

question whether certain specific information is technology for an item
in 9A515.a, BIS recommends that the exporter submit a classification
request to BIS and this will be a fact-based inquiry.
    Comment #72: One commenter suggested that export licensing
requirements should only focus on the export of hardware, such as
amateur radio satellite subsystems or complete amateur radio
satellites, and not on technology related to that hardware.
    Response to Comment #72: BIS does not accept the change suggested
by the commenter. Technology for commodities and software is often just
as significant, and is sometimes even more significant, than the
commodities derived from the technology. Teaching other countries how
to design, develop or produce these items imparts the capacity to
create the items domestically. Therefore, BIS continues to maintain
controls on technology. However, BIS has reviewed 9E515 and, as
discussed in Response to Comment 69, has excluded controls on
operation and maintenance technology for most items and expanded the
scope of technology eligible for License Exception STA.
    Comment #73: One commenter stated that this rule should do more to
unburden university research and teaching regarding space technology.
    Response to Comment #73: BIS understands that compliance with
export controls in the university context can be complex and
appreciates all the efforts by colleges and universities to vigilantly
maintain compliance with the EAR and the ITAR. Although export controls
are required on the basis of national security concerns arising from
the potential proliferation of these items, BIS notes that classroom
instruction is often not subject to the EAR. See Sec.  734.9 of the
EAR.
    Comment #74: Four commenters stated that BIS should not attach
license conditions to technology transfer licenses that are similar to
the current DDTC TAA provisos.
    Response to Comment #74: Licensing decisions and the license
conditions attached to specific licenses are driven by the national
security implications of the specific transaction under consideration.
Specific license conditions are not set out in the regulations and,
therefore, discussion of the appropriateness in any situation of any
individual license condition is not germane to this regulatory
revision.
    Comment #75: Three commenters requested that BIS exclude controls
on operation technology, because it is already exempt from the ITAR
under Sec.  125.4(b)(5).
    Response to Comment #75: BIS has revised 9E515.a so that it no
longer includes controls on technology merely for operation.
    Comment #76: One commenter requested that, in the event that BIS
decides that ``operation'' data should be controlled under 9E515.a, an
exception for basic operations, maintenance, and training information
similar to the one provided by Sec.  125.4(b)(5) of the ITAR should be
added in a note to the paragraph.
    Response to Comment #76: BIS has revised 9E515 and .a no longer
includes controls on technology for operation. However, when the EAR do
control operation technology, License Exception TSU (Sec.  740.13)
provides comparable authority for the export of operation and other
basic technology with a legally exported item.
    Comment #77: One commenter suggested that there is an overlap
between the controls on technology for production, which includes the
integration stage, and technology for installation and asked if
``installation'' in this ECCN has the same definition as in the
definition of ``defense service'' proposed in the companion proposed
DDTC rule.
    Response to Comment #77: BIS recognizes that there is some
conceptual overlap between the integration stage controlled as
production technology and installation technology. There is also
conceptual overlap between various stages of development and production
technology and certain technology involved in the repair, overhaul, or
refurbishing or items. At this time, all controlled technology for
9x515 items has the same level of control, so whether a particular
piece of information is required for production or only for
installation is academic. As noted above, BIS intends to engage in a
review of technology controls and to coordinate with DDTC to harmonize
technology controls between the EAR and the ITAR.
    Comment #78: Three commenters suggested that development and
production technology should be in 9E515.a.
    Response to Comment #78: BIS accepts the change suggested by the
commenters, except for development and production technology for
radiation-hardened microelectronic circuits controlled in 9A515.d or
9A515.e. Due to the sensitive nature of radiation hardening technology,
it was necessary to continue to exclude all technology related to the
radiation hardened and radiation tolerant microelectronic circuits in
9A515.d and .e from STA eligibility, including the technology for the
development or production of these items.
    Comment #79: Three commenters requested that controls on technology
for the design verification, quality control and manufacturability be
moved to 9E515.a, and not be subject to licensing in the same way as
production and development technology.
    Response to Comment #79: BIS has revised 9E515 to no longer use the
terms design verification, quality control and manufacturability. These
were undefined terms which may have caused confusion and which became
unnecessary once 9E515 was revised.
    Comment #80: Two commenters suggested that BIS develop a definition
for manufacturability to distinguish it from development and production
technology, exclude it from the controls on development and production
technology in 9A515.a, and retain the control in 9E515.b.
    Response to Comment #80: BIS has revised 9E515 so that it no longer
uses the term ``manufacturability'' to avoid any confusion.
    Comment #81: Two commenters suggested that BIS clarify its
definition of ``build-to-print'' technology and some of the elements in
Proposed 9E515.b, with which it appears to conflict.
    Response to Comment #81: BIS has revised 9E515 so that it no longer
uses the term build-to-print to enhance clarity and avoid any
confusion.
    Comment #82: One commenter suggested that BIS create a 9E515.y
paragraph to control low-level technology.
    Response to Comment #82: As discussed above in response to comment
63, BIS did accept a comment to create a 9A515.y paragraph for
items that are ``specially designed'' for items in 9A515 or USML
Category XV that the U.S. Government determines do not warrant control
in 9A515.x. As also discussed above, BIS will continue to review
technology controlled by 9E515 to determine whether lower levels of
controls on some types of space-related technologies are warranted.
    Comment #83: Five commenters expressed support for keeping the
passenger and participant spaceflight experience EAR99.
    Response to Comment #83: BIS agrees that export controls on the
passenger and participant spaceflight experience are not necessary and
has revised the note to 9E515, now Note 2 to 9E515, to clarify the
scope of the technology related to the passenger and participant

spaceflight experience, which is not subject to the ITAR or the EAR.

Comments Related to the International Space Station (ISS)

    Comment #84: One commenter suggested that BIS delete the Related
Control Note 6 in 9A004 and move ISS technology from the USML to 9E001
and 9E002.
    Response to Comment #84: BIS accepts the change suggested by the
commenter and revises all of the Related Control Notes to 9A004 and the
text of the List of Items Controlled paragraph. The USML has been
revised to exclude the ISS and all specially designed parts and
components therefor. See USML Category XV, note to paragraph (a)(12).
Therefore, the ISS will remain controlled in 9A004.a and the parts,
components, accessories and attachments ``specially designed'' for the
ISS will be controlled in a new 9A004.x. The result of this exclusion
on the ITAR is also to remove the technology directly related to the
ISS and its specially designed parts and components from the USML to
the CCL. The technology controls for 9A004 are 9E001 for development
technology and 9E002 for production technology.
    Comment #85: One commenter suggested that BIS revise 9A004 Related
Controls (4) by deleting ``and related articles'' and ``and 9B515.''
    Response to Comment #85: As discussed above in the response to
comment 84, BIS has revised all of the Related Control
paragraphs in 9A004, and this comment is no longer relevant.

Comments Related to Other ECCNs

    Comment #86: One commenter asked if BIS intends to remove the
related controls 3 and 4 from 3A001.
    Response to Comment #86: BIS did not propose any changes to related
controls 3 and 4 in 3A001 and does not make any changes in this rule.
    Comment #87: One commenter suggested that BIS edit several ECCNs
paragraphs in 3A001, 3A002, 3A101, 3D001, 3D101, 3E001, 5A001, 6A002,
7A004, 7A104, 9A004 and 9A116 to identify potential overlaps with the
USML or 9A515 and remove references to the USML or 9A515 from the
related control paragraphs in those ECCNs.
    Response to Comment #87: BIS does not accept the changes suggested
by the commenter. BIS uses the convention of identifying related
controls, including potentially overlapping controls, in the related
controls paragraph and not in each ECCN paragraph. The order of review
directs parties classifying an item to review USML before reviewing the
CCL and to review the 9x515 ECCNs before reviewing any other ECCNs.
Therefore, when the USML describes an item, it is controlled on the
USML, and when 9A515 describes an item, it is controlled in 9A515, even
if also described in another ECCN.
    Comment #88: One commenter suggested that BIS revise the MT reason
for control paragraph in 3A001 and 9A515.
    Response to Comment #88: BIS does not accept the change suggested
by the commenter. Quoting the MTCR text is more precise.
    Comment #89: One commenter suggested that BIS revise the List of
Items Controlled paragraph in 3A001 and the heading to 3D101.
    Response to Comment #89: BIS does not accept the change suggested
by the commenter because it is outside the scope of the May 24
(spacecraft) rule.
    Comment #90: One commenter suggested that BIS revised 6A002 by
deleting Related Control paragraph (1).
    Response to Comment #90: BIS does not accept the change suggested
by the commenter. In addition to controls in USML Category XV on
certain ``space-qualified'' optics, many of the image intensifiers and
focal plane arrays described in Related Control paragraph (1) are
controlled in USML Category XII and will be addressed when that
paragraph is revised. Additionally, items that are ``specially
designed'' for military use will be controlled on the USML or in the
``600 series'' in most circumstances.
    Comment #91: One commenter suggested that BIS delete Related
Controls (2) in 6A004.
    Response to Comment #91: BIS acknowledges the commenter's support
for this proposed revision, which appeared in the May 24 (spacecraft)
rule, and has implemented the change in this final rule.
    Comment #92: One commenter suggested that BIS revise 7A005 by
deleting the License Requirements reference that these items are
subject to DDTC export licensing authority, and revising the related
controls paragraph.
    Response to Comment #92: BIS does not accept the suggested change
by the commenter because it is outside the scope of the May 24
(spacecraft) rule. Major revisions to the controls on GPS will be
addressed in the revisions of USML Category XII and the companion EAR
``600 series'' ECCNs. Additionally, this ECCN is currently subject to
the ITAR and is licensed for export by DDTC.
    Comment #93: One commenter suggested that BIS revise 7A105 to read:
``Receiving equipment for Global Navigation Satellite Systems (GNSS)
(e.g., GPS, GLONASS or Galileo), designed or modified for airborne
applications and capable of providing navigation information at speeds
in excess of 600 m/s (1,165 nautical miles/hour). MT applies to entire
entry. MT Column 1. Related Controls: See also USML Category XV(c) and
7A005.'' (To conform with MTCR 11.A.3.b.1).
    Response to Comment #93: BIS accepts the changes suggested by the
commenter. Although revisions to USML controls on GPS items will be
addressed in revisions of USML Category XII, the revised USML Category
XV has removed paragraph XV(c)(2). The GPS described in that paragraph
therefore moves to the CCL. Because 7A105 describes the MTCR control on
that type of GPS and GPS is not specifically related to spacecraft, it
will be controlled in 7A105 and not within 9A515. The text of 7A105 is
revised to match the current MTCR text, as accurately described in the
comment and to add control for ``specially designed'' parts and
components as well. The reasons for control will be Missile Technology
(MT) and Anti-Terrorism (AT) and a license will be required for all
destinations other than Canada.

Export Administration Act

    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 amended by Executive Order 13637 of March
8, 2013, 78 FR 16129 (March 13, 2013) and as extended by the Notice of
August 8, 2013, 78, 2013, 78 FR 49107 (August 12, 2013), 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 as amended
by Executive Order 13637.

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 rule affects 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).
    BIS believes that the effect of adding items to the EAR that would
be removed from the ITAR as a result of this rule as part of the
administration's Export Control Reform Initiative would increase the
number of license applications to be submitted to BIS by approximately
1,500 annually, resulting in an increase in burden hours of 425 (1,500
transactions at 17 minutes each) under control number 0694-0088.
    Most ``spacecraft'' and ground control systems, ``space-qualified''
``parts,'' ``components,'' ``accessories'' and ``attachments,'' and
related ``software'' and ``technology'' formerly on the USML would
become eligible for License Exception STA under this rule. BIS believes
that the increased use of License Exception STA resulting from the
effect of adding items to the EAR that would be removed from the ITAR
as a result of this rule as part of the Administration's Export Control
Reform Initiative would increase the burden associated with control
number 0694-0137 by about 2,258 hours (1,935 transactions @ 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. The largest impact of the
rule would likely apply to exporters of parts, components, accessories,
and attachments specifically designed or modified for satellite and
other ``spacecraft'' items that would have been approved for export
under the ITAR pursuant to a license for export to NATO allies and
regime partners. Because, with few exceptions, the ITAR allows
exemptions from license requirements only for certain exports to
Canada, most exports of such parts, even when destined to NATO and
other allied countries, require specific State Department
authorization. Under the EAR, as included in this rule, such ``parts''
and ``components'' would become eligible for export to countries that
are NATO and other multi-regime 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. However, the
Administration understands that complying with the burdens of STA is
likely less burdensome than applying for licenses or other approval
from the State Department. 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 reliable customers in countries
that are close allies or members of export control regimes or both.
    Even in situations in which a license would be required under the
EAR, the burden is likely to be reduced compared to the license
requirement of the ITAR. In particular, license applications for
exports of ``technology'' controlled by 9E515 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 a regulatory
flexibility analysis of 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 statute does not
require the agency to prepare a regulatory flexibility analysis.
Pursuant to section 605(b), the Chief Counsel for Regulation,
Department of Commerce, submitted a memorandum to the Chief Counsel for
Advocacy, Small Business Administration, certifying that this rule will
not have a significant impact on a substantial number of small
entities. A summary of the factual basis for this certification
follows.
    5. To the extent that any changes to the EAR made by this
rulemaking are outside the scope of the logical outgrowth of the
changes proposed in the May 24 (spacecraft) rule and the public
comments received on that rule, the provisions of the Administrative
Procedure Act (5 U.S.C. 553) requiring notice of proposed rulemaking
and the opportunity for public comment are waived for good cause as it
is contrary to the public interest. (5 U.S.C. 553(b)(B)). BIS
implements the new provisions in section paragraph (y) in Supplement
No. 2 to Part 748 in this rule to protect U.S. national security or
foreign policy interests by preventing the unauthorized export of
satellites and unauthorized release of technology related to satellites
and launch vehicles. Executive Order 13222 as amended by Executive
Order 13637, promulgated, in part, pursuant to Sec.  203 of the
International Emergency Economic Powers Act (50 U.S.C. 1702), declares
the unrestricted access of foreign parties to U.S. goods and technology
to constitute an unusual and extraordinary threat to the national
security, foreign policy, and economy of the United States and declares
a national emergency with respect to that threat BIS continues to carry
out the provisions of the Export Administration Act pursuant to this
emergency authority. Additionally, the Congress of the United States
has declared that it is in the national security interests of the
United States that satellites be subject to the same export controls
that apply to munitions. (Section 1511(5) of the 1999 NDAA). Further,
Congress has conditioned the removal of satellites from the USML on a
determination that the removal of such satellites is in the national
security interests of the United States. (Section 1261(b)(1) of the
2013 NDAA). The provisions in paragraph (y) in Supplement No. 2 to Part
748 are implemented to prevent the export of technology related to
satellite launches by unauthorized persons. Without this provision, BIS
would lack sufficient information to ensure that the exporter has
complied with the statutory requirements for the foreign launch of
U.S.-origin satellites and related technology that could be released in
a manner that is inconsistent with the U.S. national interest. If BIS
cannot

confirm that the required approvals from DOD and NSA and that the
appropriate monitoring has been arranged, BIS will not be able to
ensure that U.S. national security concerns are appropriately addressed
in relation to the export. For this reason, BIS finds good cause to
waive prior notice and opportunity for public comment.

Number of Small Entities

    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 rule is part of the Administration's Export Control Reform
Initiative. Under that initiative, the USML (22 CFR part 121) would 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 would
become controlled on the CCL. ``Spacecraft'' and related items so
designated will be identified in specific ECCNs known as the 9x515
ECCNs. In practice, the greatest impact of this rule on small entities
would likely be reduced administrative costs and reduced delay for
exports of items that are now on the USML but would become subject to
the EAR.
    Many ``spacecraft'' and specific parts and components would remain
on the USML. However, ``parts,'' ``components,'' ``accessories,'' and
``attachments'' for such ``equipment'' would be included on the CCL
unless expressly enumerated on the USML. Such ``parts'' and
``components'' are more likely to be produced by small businesses than
complete ``spacecraft,'' which would in many cases become subject to
the EAR. Moreover, officials at 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. The changes in this rule will not result
in the decontrol of such items, but will reduce administrative and
collateral regulatory burdens by, for example, allowing for the use of
License Exception STA for exports to NATO and other multi-regime allied
countries.
    Thus, changing the jurisdictional status of certain Category XV
articles would reduce the burden on small entities (and other entities
as well) through: Elimination of some license requirements, greater
availability of license exceptions, simplification of license
application procedures, and reduction (or elimination) of registration
fees. In addition, parts and components controlled under the ITAR
remain under ITAR control when incorporated into foreign-made items,
regardless of the significance or insignificance of the item,
discouraging foreign buyers from incorporating such U.S. content.
    Exporters and reexporters of the Category XV articles, particularly
``parts'' and ``components,'' that would be placed on the CCL by this
rule would need fewer licenses because their transactions would become
eligible for license exceptions that apply to shipments to United
States Government agencies, shipments valued at less than $1,500,
``parts'' and ``components'' being exported for use as replacement
parts, temporary exports, and License Exception Strategic Trade
Authorization (STA). License Exceptions under the EAR would allow
suppliers to send routine parts and low level parts to NATO and other
export control regime partner countries 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 impose 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 in which a license would be
required, the process would be simpler and less costly under the EAR
than under the USML. When a USML Category XV article moves 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 than 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 of determining 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 will need to caveat all sales presentations
with a reference to the need for government approval, and is more
likely to have 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 particular consignee over the
life of a license (normally four years, but may be longer if
circumstances warrant a longer period), reducing the total number of
licenses for which the applicant must apply.
    In addition, many applicants, who are exporting or reexporting
items that this rule would 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 $2,250 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.
    There are no registration costs or application processing fees for
applications to export items listed on the CCL. Once the Category XV
articles that are the subject of this rulemaking are added to the CCL
and removed from the USML, 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, then its ITAR
registration and registration fee requirement would be eliminated, and
it would no longer incur that expense.
    De minimis treatment under the EAR would also become available for
all items that this rule would transfer from

the USML to the CCL, except for items destined to embargoed
destinations in Country Group D:5. Items subject to the ITAR 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. Foreign-made products that incorporate 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 25 percent for most
destinations. 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 avoid such U.S.-origin
``parts'' and ``components,'' a development that potentially would mean
greater sales for U.S. suppliers, including small entities.

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 the 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.
    BIS did not receive any comments regarding the economic impacts of
this rule. As a result, a final regulatory flexibility analysis was not
required and one was not prepared.

List of Subjects

15 CFR Parts 732, 734, 740, 744, 748 and 758

    Administrative practice and procedure, Exports, Reporting and
recordkeeping requirements.

15 CFR Parts 736 and 772

    Exports.

15 CFR Parts 742 and 774

    Exports, Reporting and recordkeeping requirements.

    Accordingly, the Export Administration Regulations (15 CFR Parts
730-774) are amended as follows:

PART 732--[AMENDED]

0
1. The authority citation for 15 CFR part 732 continues to read as
follows:

    Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.;
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 8, 2013, 78 FR
49107 (August 12, 2013).

0
2. Supplement No. 3 to part 732 is amended by revising paragraphs
(b)13. and (b)14. to read as follows:

SUPPLEMENT NO. 3 TO PART 732--BIS'S ``KNOW YOUR CUSTOMER'' GUIDANCE AND
RED FLAGS

* * * * *
    (b) * * *
    13. You receive an order for ``parts'' or ``components'' for an
end item in 9x515 or the ``600 series.'' The requested ``parts'' or
``components'' may be eligible for License Exception STA, another
authorization, or may not require a destination-based license
requirement for the country in question. However, the requested
``parts'' or ``components'' would be sufficient to service one
hundred of the 9x515 or ``600 series'' end items, but you ``know''
the country does not have those types of end items or only has two
of those end items.
    14. The customer indicates or the facts pertaining to the
proposed export suggest that a 9x515 or ``600 series'' item may be
reexported to a destination listed in Country Group D:5 (see
Supplement No. 1 to part 740 of the EAR).

PART 734--[AMENDED]

0
3. The authority citation for 15 CFR part 734 continues to read as
follows:

    Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.;
E.O. 12938, 59 FR 59099, 3 CFR, 1994 Comp., p. 950; E.O. 13020, 61
FR 54079, 3 CFR, 1996 Comp., p. 219; E.O. 13026, 61 FR 58767, 3 CFR,
1996 Comp., p. 228; E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., p.
783; E.O. 13637 of March 8, 2013, 78 FR 16129 (March 13, 2013);
Notice of August 8, 2013, 78 FR 49107 (August 12, 2013); Notice of
November 7, 2013, 78 FR 67289 (November 12, 2013).

0
4. Section 734.4 is amended by revising paragraph (a)(6) to read as
follows:

Sec.  734.4  De minimis U.S. content.

    (a) * * *
    (6) ``600 series.''
    (i) There is no de minimis level for foreign-made items that
incorporate U.S.-origin 9x515 or ``600 series'' items enumerated or
otherwise described in paragraphs .a through .x of a 9x515 or ``600
series'' ECCN when destined for a country listed in Country Group
D:5 of Supplement No. 1 to part 740 of the EAR.
    (ii) There is no de minimis level for foreign-made items that
incorporate U.S.-origin 9x515 or ``600 series'' .y items when
destined for a country listed in Country Group E:1 of Supplement No.
1 to part 740 of the EAR or for the People's Republic of China
(PRC).
* * * * *

PART 736--[AMENDED]

0
5. The authority citation for 15 CFR part 736 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. 2151 note; E.O. 12938, 59 FR 59099, 3 CFR, 1994 Comp., p.
950; E.O. 13020, 61 FR 54079, 3 CFR, 1996 Comp., p. 219; E.O. 13026,
61 FR 58767, 3 CFR, 1996 Comp., p. 228; E.O. 13222, 66 FR 44025, 3
CFR, 2001 Comp., p. 783; E.O. 13338, 69 FR 26751, 3 CFR, 2004 Comp.,
p. 168; Notice of May 7, 2013, 78 FR 27301 (May 9, 2013); Notice of
August 8, 2013, 78 FR 49107 (August 12, 2013); Notice of November 7,
2013, 78 FR 67289 (November 12, 2013).

0
6. Section 736.2 is amended by revising paragraphs (b)(3)(iii) through
(v) to read as follows:

Sec.  736.2  General prohibitions and determination of applicability.

* * * * *
    (b) * * *
    (3) * * *
    (iii) Additional country scope of prohibition for 9x515 or ``600
series'' items. You may not, except as provided in paragraphs (b)(3)(v)
or (vi) of this section, reexport or export from abroad without a
license any ``600 series'' item subject to the scope of this General
Prohibition Three to a destination in Country Groups D:1, D:3, D:4, D:5
or E:1 (see Supplement No. 1 to part 740 of the EAR). You may not,
except as provided in paragraphs (b)(3)(v) or (vi) of this section,
reexport or export from abroad without a license any 9x515 item subject
to the scope of this General Prohibition Three to a destination in
Country Groups D:5 or E:1 (see Supplement No. 1 to part 740 of the
EAR).
    (iv) Product scope of 9x515 and ``600 series'' items subject to
this prohibition. This General Prohibition Three applies if a 9x515 or
``600 series'' item meets either of the following conditions:
    (A) Conditions defining direct product of ``technology'' or
``software'' for 9x515 and ``600 series'' items. Foreign-made 9x515 and
``600 series'' items are subject to this General Prohibition Three if