[Federal Register: September 5, 2008 (Volume 73, Number 173)]
[Notices]
[Page 51863-51867]
[DOCID:fr05se08-86]

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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 28372; 812-13357-01]

John Hancock Income Securities Trust, et al.; Notice of
Application

August 29, 2008.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of application under section 6(c) of the Investment
Company Act of 1940 (``Act'') for an exemption from section 19(b) of
the Act and rule 19b-1 under the Act.

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SUMMARY OF APPLICATION: Applicants request an order to permit certain
closed-end investment companies to make periodic distributions of long-
term capital gains with respect to their outstanding common stock as
frequently as twelve times each year, and as frequently as
distributions are specified by or in accordance with the terms of any
outstanding preferred stock that such investment companies may issue.

APPLICANTS: John Hancock Income Securities Trust, John Hancock
Investors Trust, John Hancock Patriot Premium Dividend Fund II, John
Hancock Preferred Income Fund, John Hancock Preferred Income Fund II,
John Hancock Preferred Income Fund III, John Hancock Tax-Advantaged
Dividend Income Fund, John Hancock Tax-Advantaged Global Shareholder
Yield Fund (the ``Funds'') and John Hancock Advisers, LLC (the
``Adviser'').
    Filing Dates: January 18, 2007, March 5, 2007, June 1, 2007,
October 30, 2007 and July 18, 2008.
    Hearing or Notification of Hearing: An order granting the
application will be issued unless the Commission orders a hearing.
Interested persons may request a hearing by writing to the Commission's
Secretary and serving applicants with a copy of the request, personally
or by mail. Hearing requests should be received by the Commission by
5:30 p.m. on September 23, 2008, and should be accompanied by proof of
service on applicants, in the form of an affidavit or, for lawyers, a
certificate of service. Hearing requests should state the nature of the
writer's interest, the reason for the request, and the issues
contested. Persons who wish to be notified of a hearing may request
notification by writing to the Commission's Secretary.

ADDRESSES: Secretary, Securities and Exchange Commission, 100 F Street,
NE., Washington, DC 20549-1090; applicants, 601 Congress Street,
Boston, MA 02210-2805.

FOR FURTHER INFORMATION CONTACT: Wendy Friedlander, Senior Counsel, at
(202) 551-6837, or James M. Curtis, Branch Chief, at<PHONE_NUMBER>
(Division of Investment Management, Office of Chief Counsel).

SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application may be obtained for a fee at the
Commission's Public Reference Room, 100 F Street, NE., Washington, DC
20549-1520 (telephone<PHONE_NUMBER>).

Applicants' Representations

    1. Each Fund is a registered closed-end management investment
company organized as a Massachusetts business trust.\1\ The Funds are
authorized to issue common stock and preferred stock. Applicants
believe that the investors in the common stock of the

Funds may prefer an investment vehicle that provides a steady cash flow
by making regular or monthly distributions. In May or June 2008, each
Fund that had issued preferred stock redeemed all outstanding preferred
stock. In the future, however, the Funds may issue preferred stock
again.
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    \1\ Applicants request that any order issued granting the relief
requested in the application also apply to any closed-end investment
company that in the future: (a) is advised by the Adviser (including
any successor in interest) or by any entity controlling, controlled
by, or under common control (within the meaning of section 2(a)(9)
of the Act) with the Adviser; and (b) complies with the terms and
conditions of the requested order. A successor in interest is
limited to entities that result from a reorganization into another
jurisdiction or a change in the type of business organization.
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    2. The Adviser is registered under the Investment Advisers Act of
1940 and is responsible for the overall management of the Funds. The
Adviser is a wholly-owned subsidiary of John Hancock Financial
Services, Inc., a subsidiary of Manulife Financial Corporation.
    3. Applicants represent that prior to relying on the requested
order, the Board of Trustees (the ``Board'') of each Fund, including a
majority of the members of each of the Boards who are not ``interested
persons'' of each Fund as defined in section 2(a)(19) of the Act (the
``Independent Trustees''), shall have requested and considered, and the
Adviser shall have provided, information regarding the purpose and
terms of a proposed distribution policy, the likely effects of such
policy on the respective Fund's long-term total return (in relation to
market price and net asset value (``NAV'') per common share) and the
relationship between the Fund's distribution rate on its common shares
under the policy and the Fund's total return on NAV per share.
Applicants state that the Independent Trustees of each Fund shall also
consider what conflicts of interest the Adviser and the affiliated
persons of the Adviser and each Fund might have with respect to the
adoption or implementation of such policy. Applicants further state
that after considering such information the Board, including the
Independent Trustees, of each Fund shall approve a distribution policy
and related plan with respect to each Fund's common shares (a ``Plan'')
and shall determine that such policy and Plan are consistent with the
relevant Fund's investment objectives and in the best interests of such
Fund's common stockholders.
    4. Applicants state that the purpose of each proposed Plan would be
to permit the relevant Fund to distribute to its respective common
stockholders, over the course of each year, through periodic
distributions as nearly equal as practicable and any required special
distributions, an amount closely approximating the total taxable income
of the Fund during such year and, if so determined by its Board, all or
a portion of the returns of capital paid by portfolio companies to the
Fund during such year. Applicants represent that each Fund would
distribute to its respective common stockholders a fixed monthly
percentage or amount under its proposed Plan, which percentage or
amount may be adjusted from time to time. Applicants state that the
minimum annual distribution rate with respect to a Fund's common shares
under each Plan would be independent of the Fund's performance during
any particular period but would be expected to correlate with the
Fund's performance over time. Applicants explain that each distribution
on the common stock would be at the stated rate then in effect, except
for extraordinary distributions and potential increases or decreases in
the final distribution periods in light of the Fund's performance for
the entire calendar year and to enable the Fund to comply with the
distribution requirements of subchapter M of the Internal Revenue Code
of 1986 (the ``Code'') for the calendar year. Applicants expect that
over time the NAV distribution rate with respect to a Fund's common
shares will approximately equal that Fund's total return on NAV.
    5. Applicants represent that, prior to the implementation of a
Plan, the Board of each Fund shall adopt policies and procedures under
rule 38a-1 under the Act that are reasonably designed to ensure that
all notices sent to stockholders with distributions under the Plan
(``Notices'') comply with condition II below, and that all other
written communications by a Fund or its agents regarding distributions
under the Plan include the disclosure required by condition III below.
Applicants state that the Board of each Fund also will adopt policies
and procedures that require the Fund to keep records that demonstrate
the Fund's compliance with all of the conditions of the requested order
and that are necessary for each Fund to form the basis for, or
demonstrate the calculation of, the amounts disclosed in its Notices.

Applicants' Legal Analysis

    1. Section 19(b) generally makes it unlawful for any registered
investment company to make long-term capital gains distributions more
than once each year. Rule 19b-1 limits the number of capital gains
dividends, as defined in section 852(b)(3)(C) of the Code
(``distributions''), that a fund may make with respect to any one
taxable year to one, plus a supplemental ``clean up'' distribution made
pursuant to section 855 of the Code not exceeding 10% of the total
amount distributed for the year, plus one additional capital gain
dividend made in whole or in part to avoid the excise tax under section
4982 of the Code.
    2. Section 6(c) provides that the Commission may, by order upon
application, conditionally or unconditionally exempt any person,
security, or transaction, or any class or classes of persons,
securities or transactions, from any provision of the Act, if and to
the extent that the exemption is necessary or appropriate in the public
interest and consistent with the protection of investors and the
purposes fairly intended by the policy and provisions of the Act.
    3. Applicants state that the one of the concerns underlying section
19(b) and rule 19b-1 is that stockholders might be unable to
differentiate between regular distributions of capital gains and
distributions of investment income. Applicants state, however, that
rule 19a-1 effectively addresses this concern by requiring that a
separate statement showing the sources of a distribution (e.g.,
estimated net income, net short-term capital gains, net long-term
capital gains and/or return of capital) accompany any distributions (or
the confirmation of the reinvestment of distributions) estimated to be
sourced in part from capital gains or capital. Applicants state that
the same information also is included annual reports to stockholders
and on its IRS Form 1099-DIV, which is sent to each common and
preferred stockholder who received distributions during the year.
    4. Applicants further state that each Fund will make the additional
disclosures required by the conditions set forth below, and each of
them will adopt compliance policies and procedures in accordance with
rule 38a-1 to ensure that all required Notices and disclosures are sent
to stockholders. Applicants argue that by providing the information
required by section 19(a) and rule 19a-1, and by complying with the
procedures that will be adopted under each Plan and the conditions
listed below, each Fund will ensure that each Fund's stockholders are
provided sufficient information to understand that their periodic
distributions are not tied to the Fund's net investment income (which
for this purpose is the Fund's taxable income other than from capital
gains) and realized capital gains to date, and may not represent yield
or investment return. Applicants also state that compliance with each
Fund's compliance procedures and condition III set forth below will
ensure that prospective stockholders and third parties are provided
with the same information. Accordingly, applicants assert that
continuing to subject the Funds to section 19(b) and rule 19b-1 would
afford stockholders no extra protection.

    5. Applicants note that section 19(b) and rule 19b-1 also were
intended to prevent certain improper sales practices including, in
particular, the practice of urging an investor to purchase stock of a
fund on the basis of an upcoming capital gains dividend (``selling the
dividend''), where the dividend would result in an immediate
corresponding reduction in NAV and would be in effect a taxable return
of the investor's capital. Applicants assert that the ``selling the
dividend'' concern should not apply to closed-end investment companies,
which do not continuously distribute shares. According to applicants,
if the underlying concern extends to secondary market purchases of
stock of closed-end funds that are subject to a large upcoming capital
gains distribution, adoption of a Plan actually helps minimize the
concern by avoiding, through periodic distributions, any buildup of
large end-of-the-year distributions.
    6. Applicants also note that common stock of closed-end funds that
invest primarily in equity securities often trades in the marketplace
at a discount to the fund's NAV. Applicants believe that this discount
may be reduced for closed-end funds that pay relatively frequent
dividends on their common stock at a consistent rate, whether or not
those dividends contain an element of long-term capital gain.
    7. Applicants assert that the application of rule 19b-1 to a Plan
actually could have an undesirable influence on portfolio management
decisions. Applicants state that, in the absence of an exemption from
rule 19b-1, the implementation of a Plan imposes pressure on management
(i) not to realize any net long-term capital gains until the point in
the year that the fund can pay all of its remaining distributions in
accordance with rule 19b-1, and (ii) not to realize any long-term
capital gains during any particular year in excess of the amount of the
aggregate pay-out for the year (since as a practical matter excess
gains must be distributed and accordingly would not be available to
satisfy pay-out requirements in following years), notwithstanding that
purely investment considerations might favor realization of long-term
gains at different times or in different amounts. Applicants thus
assert that the limitation on the number of capital gains distributions
that a fund may make with respect to any one year imposed by rule 19b-
1, may prevent the efficient operation of a Plan whenever that fund's
realized net long-term capital gains in any year exceed the total of
the periodic distributions that may include such capital gains under
the rule.
    8. In addition, Applicants assert that rule 19b-1 may cause fixed
regular periodic distributions under a Plan to be funded with returns
of capital \2\ (to the extent net investment income and realized short-
term capital gains are insufficient to fund the distribution), even
though realized net long-term capital gains otherwise could be
available. To distribute all of a fund's long-term capital gains within
the limits in rule 19b-1, a fund may be required to make total
distributions in excess of the annual amount called for by its Plan, or
to retain and pay taxes on the excess amount. Applicants thus assert
that the requested order would minimize these effects of rule 19b-1 by
enabling the Funds to realize long-term capital gains as often as
investment considerations dictate without fear of violating rule 19b-1.
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    \2\ Returns of capital as used in the application means return
of capital for financial accounting purposes and not for tax
accounting purposes.
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    9. Applicants state that Revenue Ruling 89-81 under the Code
requires that a fund that has both common stock and preferred stock
outstanding designate the types of income, e.g., investment income and
capital gains, in the same proportion as the total distributions
distributed to each class for the tax year. To satisfy the
proportionate designation requirements of Revenue Ruling 89-81,
whenever a fund has realized a long-term capital gain with respect to a
given tax year, the fund must designate the required proportionate
share of such capital gain to be included in common and preferred stock
dividends. Applicants state that although rule 19b-1 allows a fund some
flexibility with respect to the frequency of capital gains
distributions, a fund might use all of the exceptions available under
the rule for a tax year and still need to distribute additional capital
gains allocated to the preferred stock to comply with Revenue Ruling
89-81.
    10. Applicants assert that the potential abuses addressed by
section 19(b) and rule 19b-1 do not arise with respect to preferred
stock issued by a closed-end fund. Applicants assert that such
distributions are fixed or determined in periodic auctions by reference
to short-term interest rates rather than by reference to performance of
the issuer and Revenue Ruling 89-81 determines the proportion of such
distributions that are comprised of the long-term capital gains.
    11. Applicants also submit that the ``selling the dividend''
concern is not applicable to preferred stock, which entitles a holder
to no more than a periodic dividend at a fixed rate or the rate
determined by the market, and, like a debt security, is priced based
upon its liquidation value, credit quality, and frequency of payment.
Applicants state that investors buy preferred shares for the purpose of
receiving payments at the frequency bargained for, and do not expect
the liquidation value of their shares to change.
    12. Applicants request an order under section 6(c) granting an
exemption from the provisions of section 19(b) and rule 19b-1 to permit
each Fund's common stock to distribute periodic capital gains dividends
(as defined in section 852(b)(3)(C) of the Code) as often as monthly in
any one taxable year in respect of its common stock and as often as
specified by or determined in accordance with the terms thereof in
respect of its preferred stock.\3\
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    \3\ Applicants state that a future fund that relies on the
requested order will satisfy each of the representations in the
appilcation except that such representations will be made in respect
of actions by the board of directors of such future fund and will be
made at a future time.
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Applicants' Conditions

    Applicants agree that, with respect to each Fund seeking to rely on
the order, the order will be subject to the following conditions:
    I. Compliance Review and Reporting. The Fund's chief compliance
officer will: (a) Report to the fund Board, no less frequently than
once every three months or at the next regularly scheduled quarterly
board meeting, whether (i) the Fund and the Adviser have complied with
the conditions to the requested order, and (ii) a Material Compliance
Matter, as defined in rule 38a-1(e)(2), has occurred with respect to
compliance with such conditions; and (b) review the adequacy of the
policies and procedures adopted by the Fund no less frequently than
annually.

II. Disclosures To Fund Stockholders

    A. Each Notice to the holders of a Fund's common stock, in addition
to the information required by section 19(a) and rule 19a-1:
    1. Will provide, in a tabular or graphical format:
    (a) The amount of the distribution, on a per common share basis,
together with the amounts of such distribution amount, on a per common
share basis and as a percentage of such distribution amount, from
estimated: (A) Net investment income; (B) net realized short-term
capital gains; (C) net realized long-term capital gains; and (D) return
of capital or other capital source;

    (b) the fiscal year-to-date cumulative amount of distributions, on
a per common share basis, together with the amounts of such cumulative
amount, on a per common share basis and as a percentage of such
cumulative amount of distributions, from estimated: (A) Net investment
income; (B) net realized short-term capital gains; (C) net realized
long-term capital gains; and (D) return of capital or other capital
source;
    (c) the average annual total return in relation to the change in
NAV for the 5-year period (or, if the Fund's history of operations is
less than five years, the time period commencing immediately following
the Fund's first public offering) ending on the last day of the month
prior to the most recent distribution declaration date compared to the
current fiscal period's annualized distribution rate expressed as a
percentage of NAV as of the last day of the month prior to the most
recent distribution declaration date; and
    (d) the cumulative total return in relation to the change in NAV
from the last completed fiscal year to the last day of the month prior
to the most recent distribution declaration date compared to the fiscal
year-to-date cumulative distribution rate expressed as a percentage of
NAV as of the last day of the month prior to the most recent
distribution declaration date.
    Such disclosure shall be made in a type size at least as large and
as prominent as the estimate of the sources of the current
distribution; and
    2. will include the following disclosure:
    (a) ``You should not draw any conclusions about the Fund's
investment performance from the amount of this distribution or from the
terms of the fund's Plan'';
    (b) ``The Fund estimates that it has distributed more than its
income and net realized capital gains; therefore, a portion of your
distribution may be a return of capital. A return of capital may occur
for example, when some or all of the money that you invested in the
Fund is paid back to you. A return of capital distribution does not
necessarily reflect the Fund's investment performance and should not be
confused with `yield' or `income' ''; and
    (c) ``The amounts and sources of distributions reported in this
Notice are only estimates and are not being provided for tax reporting
purposes. The actual amounts and sources of the amounts for [accounting
and] tax reporting purposes will depend upon the Fund's investment
experience during the remainder of its fiscal year and may be subject
to changes based on tax regulations. The Fund will send you a Form
1099-DIV for the calendar year that will tell you how to report these
distributions for federal income tax purposes.''
    Such disclosure shall be made in a type size at least as large as
and as prominent as any other information in the Notice and placed on
the same page in close proximity to the amount and the sources of the
distribution.
    B. On the inside front cover of each report to stockholders under
rule 30e-1 under the Act, the Fund will:
    1. Describe the terms of the Plan (including the fixed amount or
fixed percentage of the distributions and the frequency of the
distributions);
    2. include the disclosure required by condition II.A.2.a above;
    3. state, if applicable, that the Plan provides that the Board may
amend or terminate the Plan at any time without prior notice to Fund
stockholders; and
    4. describe any reasonably foreseeable circumstances that might
cause the Fund to terminate the Plan and any reasonably foreseeable
consequences of such termination.
    C. Each report provided to stockholders under rule 30e-1 and each
prospectus filed with the Commission on Form N-2 under the Act, will
provide the Fund's total return in relation to changes in NAV in the
financial highlights table and in any discussion about the Fund's total
return.

III. Disclosure to Stockholders, Prospective Stockholders and Third
Parties:

    A. Each Fund will include the information contained in the relevant
Notice, including the disclosure required by condition II.A.2 above, in
any written communication (other than a Form 1099) about the Plan or
distributions under the Plan by the Fund, or agents that the Fund has
authorized to make such communication on the Fund's behalf, to any Fund
common stockholder, prospective common stockholder or third-party
information provider;
    B. Each Fund will issue, contemporaneously with the issuance of any
Notice, a press release containing the information in the Notice and
will file with the Commission the information contained in such Notice,
including the disclosure required by condition II.A.2 above, as an
exhibit to its next filed Form N-CSR; and
    C. Each Fund will post prominently a statement on its (or its
adviser's) Web site containing the information in each Notice,
including the disclosure required by condition II.A.2 above, and will
maintain such information on such Web site for at least 24 months.
    IV. Delivery of 19(a) Notices to Beneficial Owners: If a broker,
dealer, bank or other person (``financial intermediary'') holds common
stock issued by a Fund in nominee name, or otherwise, on behalf of a
beneficial owner, the Fund: (a) Will request that the financial
intermediary, or its agent, forward the Notice to all beneficial owners
of the Fund's shares held through such financial intermediary; (b) will
provide, in a timely manner, to the financial intermediary, or its
agent, enough copies of the Notice assembled in the form and at the
place that the financial intermediary, or its agent, reasonably
requests to facilitate the financial intermediary's sending of the
Notice to each beneficial owner of the Fund's common stock; and (c)
upon the request of any financial intermediary, or its agent, that
receives copies of the Notice, will pay the financial intermediary, or
its agent, the reasonable expenses of sending the Notice to such
beneficial owners.
    V. Additional Board Determinations for Funds Whose Stock Trades at
a Premium: If:
    A. a Fund's common stock has traded on the exchange that it
primarily trades on at the time in question at an average premium to
NAV equal to or greater than 10%, as determined on the basis of the
average of the discount or premium to NAV of the Fund's common stock as
of the close of each trading day over a 12-week rolling period (each
such 12-week rolling period ending on the last trading day of each
week); and
    B. the Fund's annualized distribution rate for such 12-week rolling
period, expressed as a percentage of NAV as of the ending date of such
12-week rolling period, is greater than the Fund's average annual total
return in relation to the change in NAV over the 2-year period ending
on the last day of such 12-week rolling period; then:
    1. At the earlier of the next regularly scheduled meeting or within
four months of the last day of such 12-week rolling period, the Board
including a majority of the Independent Trustees:
    (a) Will request and evaluate, and the Adviser will furnish, such
information as may be reasonably necessary to make an informed
determination of whether the Plan should be continued or continued
after amendment;
    (b) will determine whether continuation, or continuation after
amendment, of the Plan is consistent with the Fund's investment
objective(s) and policies and in the best interests of the Fund and its
stockholders, after considering the information in condition V.B.1.a
above; including, without limitation:

    (1) Whether the Plan is accomplishing its purpose(s);
    (2) the reasonably foreseeable effects of the Plan on the Fund's
long-term total return in relation to the market price and NAV of the
Fund's common stock; and
    (3) the Fund's current distribution rate, as described in condition
V.B above, compared to the Fund's average annual total return over the
2-year period, as described in condition V.B, or such longer period as
the Board deems appropriate; and
    (c) based upon that determination, will approve or disapprove the
continuation, or continuation after amendment, of the Plan; and
    2. The Board will record the information considered by it and the
basis for its approval or disapproval of the continuation, or
continuation after amendment, of the Plan in its meeting minutes, which
must be made and preserved for a period of not less than six years from
the date of such meeting, the first two years in an easily accessible
place.
    VI. Public Offerings: The Fund will not make a public offering of
the Fund's common stock other than:
    A. A rights offering below net asset value to holders of the Fund's
common stock;
    B. an offering in connection with a dividend reinvestment plan,
merger, consolidation, acquisition, spin-off or reorganization of the
Fund; or
    C. an offering other than an offering described in conditions VI.A
and VI.B above, unless, with respect to such other offering:
    1. the Fund's average annual distribution rate for the six months
ending on the last day of the month ended immediately prior to the most
recent distribution declaration date,\4\ expressed as a percentage of
NAV per share as of such date, is no more than 1 percentage point
greater than the Fund's average annual total return for the 5-year
period ending on such date; \5\ and
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    \4\ If the fund has been in operation fewer than two years, the
measured period will be immediately following the fund's first
public offering.
    \5\ If the fund has been in operation fewer than five years, the
measured period will be immediately following the fund's first
public offering.
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    2. the transmittal letter accompanying any registration statement
filed with the Commission in connection with such offering discloses
that the Fund has received an order under section 19(b) to permit it to
make periodic distributions of long-term capital gains with respect to
its common stock as frequently as twelve times each year, and as
frequently as distributions are specified in accordance with the terms
of any outstanding preferred stock that such Fund may issue.
    VII. Amendments to Rule 19b-1: The requested relief will expire on
the effective date of any amendment to rule 19b-1 that provides relief
permitting certain closed-end investment companies to make periodic
distributions of long-term capital gains with respect to their
outstanding common stock as frequently as twelve times each year.

    For the Commission, by the Division of Investment Management,
under delegated authority.
Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-20614 Filed 9-4-08; 8:45 am]

BILLING CODE 8010-01-P


[Federal Register Volume 87, Number 156 (Monday, August 15, 2022)]
[Rules and Regulations]
[Pages 49979-49986]
[FR Doc No: 2022-17125]

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DEPARTMENT OF COMMERCE

Bureau of Industry and Security

15 CFR Parts 772 and 774

[Docket No.<PHONE_NUMBER>]
RIN 0694-AH91

Implementation of Certain 2021 Wassenaar Arrangement Decisions on
Four Section 1758 Technologies

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

ACTION: Interim final rule, with request for comments.

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SUMMARY: The Bureau of Industry and Security (BIS) maintains, as part
of its Export Administration Regulations (EAR), the Commerce Control
List (CCL), which identifies certain items subject to Department of
Commerce (Commerce) jurisdiction. Commerce is revising the CCL, as well
as corresponding parts of the EAR, to implement controls on four
technologies. These changes reflect certain controls decided by
governments participating in the Wassenaar Arrangement on Export
Controls for Conventional Arms and Dual-Use Goods and Technologies (WA)
at the December 2021 WA Plenary meeting. These four technologies meet
the criteria of Section 1758 of the Export Control Reform Act (ECRA)
pertaining to emerging and foundational technologies. Accordingly, BIS
is accelerating their publication in this interim final rule and will
publish the remaining WA-agreed controls in a later rule. These
technologies are two substrates of ultra-wide bandgap semiconductors
(Gallium Oxide (Ga2O3)

and diamond), Electronic Computer Aided Design (ECAD) software
specially designed for the development of integrated circuits with any
Gate-All-Around Field-Effect Transistor (GAAFET) structure, and
pressure gain combustion (PGC) technology for the production and
development of gas turbine engine components or systems.

DATES:
    Effective dates: This rule is effective August 15, 2022, except for
instruction 5, concerning the addition of Export Control Classification
Number (ECCN) 3D006, which is effective October 14, 2022.
    Comment due date: Comments regarding the implementation of ECCN
3D006 must be received by BIS no later than September 14, 2022.

ADDRESSES: Comments on this rule related to the implementation of ECCN
3D006 on the Commerce Control List may be submitted to the Federal
rulemaking portal (www.regulations.gov). The regulations.gov ID for
this rule is: BIS-2022-0006. Please refer to RIN 0694-AH91 in all
comments.
    All filers using the portal should use the name of the person or
entity submitting the comments as the name of their files, in
accordance with the instructions below. Anyone submitting business
confidential information should clearly identify the business
confidential portion at the time of submission, file a statement
justifying nondisclosure and referring to the specific legal authority
claimed, and also provide a non-confidential version of the submission.
    For comments submitted electronically containing business
confidential information, the file name of the business confidential
version should begin with the characters ``BC.'' Any page containing
business confidential information must be clearly marked ``BUSINESS
CONFIDENTIAL'' on the top of that page. The corresponding non-
confidential version of those comments must be clearly marked
``PUBLIC.'' The file name of the non-confidential version should begin
with the character ``P.'' Any submissions with file names that do not
begin with either a ``BC'' or a ``P'' will be assumed to be public and
will be made publicly available through https://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: For general questions, contact Sharron
Cook, Office of Exporter Services, Bureau of Industry and Security,
U.S. Department of Commerce at<PHONE_NUMBER> or by email:
[email protected].
    For technical questions contact:
    Category 3: Carlos Monroy at<PHONE_NUMBER> or
[email protected].
    Category 9: John Varesi at<PHONE_NUMBER> or [email protected].

SUPPLEMENTARY INFORMATION:

Background

Identification of Section 1758 Technologies

    As part of the National Defense Authorization Act (NDAA) for Fiscal
Year 2019 (Pub. L. 115-232), Congress enacted the Export Control Reform
Act of 2018 (ECRA) (50 U.S.C. 4801-4852). Section 1758 of ECRA (50
U.S.C. 4817) authorizes BIS to establish appropriate controls on the
export, reexport, or transfer (in-country) of emerging and foundational
technologies that are essential to the national security of the United
States (Section 1758 technologies). See Commerce Control List: Proposed
Controls on Certain Marine Toxins; Request for Comments (87 FR 31195,
May 23, 2022) (stating that BIS will characterize all technologies
identified pursuant to Section 1758 of ECRA as ``Section 1758
technologies'').
    This interim final rule adds four technologies to the CCL,
supplement no. 1 to part 774, as Section 1758 technologies. These
technologies were decided upon by governments participating in the WA
for addition to the WA's List of Dual-Use Goods and Technologies during
the December 2021 WA Plenary meeting. The WA advocates implementation
of effective export controls on strategic items with the objective of
improving regional and international security and stability. Of the
items regarding which decisions were reached in December 2021, four
meet the requirements that apply to Section 1758 technologies. Namely,
they were identified in a regular ongoing interagency process that is
informed by multiple sources (e.g., WA Participating States, industry,
Federal technical advisory committees, and Federal Government agencies)
and are essential to the national security of the United States. As
such, early implementation in the EAR of the December 2021 WA Plenary
meeting decisions regarding these four ``Section 1758 technologies'' is
warranted. BIS will amend the EAR to implement the remaining decisions
reached at the December 2021 WA Plenary meeting in a separate rule.
    BIS has determined that two substrates of ultra-wide bandgap
semiconductors (Ga2O3 and diamond), ECAD software
specially designed for the development of integrated circuits with any
GAAFET structure, and pressure gain combustion technology for the
production and development of gas turbine engine components or systems,
are Section 1758 technologies. This interim final rule revises the CCL
as well as corresponding parts of the EAR to implement controls on
these four technologies by revising five ECCNs and adding one new ECCN,
as follows:
     Revises ECCNs: 3C001.d-.f, 3C005.a and .b, 3C006, and
3E003 for two substrates (Ga2O3 and diamond) of
ultra-wide bandgap semiconductors; and 9E003.a.2.e for PGC technology.
     New ECCN: 3D006 for Software for ECAD for the development
of Integrated Circuits (ICs) with GAAFET.

Substrates of Ultra-Wide Bandgap Semiconductors

    Gallium Nitride (GaN) and Silicon Carbide (SiC) are the leading
materials for the production of sophisticated microwave or millimeter
wave devices controlled under ECCN 3A001.b or high-power semiconductor
devices controlled under ECCNs 3A001.g and 3A001.h on the CCL. In
addition to GaN and SiC, materials such as Ga2O3
and diamond have a strong potential for use in military applications
and are being developed to be used to fabricate more sophisticated
devices than those produced using GaN or SiC. The devices made from
Ga2O3 or diamond are expected to work under more
severe conditions, such as higher voltage or higher temperature, than
the devices made from GaN or SiC. Substrates made from GaN or SiC are
controlled under ECCNs 3C001, 3C005, and 3C006, and related
technologies other than those controlled under ECCN 3E001 are covered
by ECCN 3E003. Because of their significant military potential, with
this rule, BIS adds these technologies--Ga2O3 and
diamond--as Section 1758 technologies to the CCL in the ECCNs
3C001.d-.f, 3C005.a and .b, and 3C006.
    Specifically, this rule adds to ECCN 3C001 new paragraphs .e for
Ga2O3 and .f for diamond, and amends ECCN 3C005
by adding Ga2O3 and diamond to ECCN 3C005
paragraphs .a and .b, respectively. In conforming changes, it also
amends ECCN 3C001.c by removing the word ``or'', amends the Note to
3C001.d by adding the chemical names for all of the relevant chemical
formulas, and amends the heading of ECCN 3C006 by adding
Ga2O3 and diamond and the chemical formulas for
the existing listed chemicals. ECCN 3E003 is amended by removing the
phrase ``films of'' from 3E003.d, by adding the chemical formulas for
the existing listed chemicals in 3E003.d-.f, and by adding paragraph
3E003.h to control

``technology'' for the ``development'' or ``production'' of substrates
of Ga2O3 for electronic components.
``Technology'' for the ``development'' or ``production'' of substrates
of diamond is already listed in 3E003.d.
    Commodities specified in ECCN 3C001 paragraphs .c and .f, ECCN
3C005 paragraphs .a and .b, and ECCN 3C006 require a license for
national security (NS) and antiterrorism (AT) reasons, respectively,
for countries with an ``X'' listed in columns NS:2 or AT:1 on the
Commerce Country Chart in supplement no. 1 to part 738 of the EAR. The
development and production technology for these commodities is
classified under ECCN 3E003 and requires a license for NS and AT
reasons, respectively, to countries with an ``X'' listed in columns
NS:1 or AT:1 on the Commerce Country Chart. A license exception (see
part 740 of the EAR) may authorize a transaction that otherwise would
require a license.

Software for ECAD for the Development of ICs With GAAFET

    Electronic Computer-Aided Design (ECAD) is a category of software
tools used for designing, analyzing, optimizing, and validating the
performance of integrated circuits or printed circuit boards. ECAD
software is used by the military and aerospace defense industries for
designing complex integrated circuits, Field-Programmable Gate Arrays
(FPGAs), Application Specific Integrated Circuits (ASICs), and
electronic systems. ECAD software solutions enabled a successful design
phase of the first Gate-All-Around transistor System-on-Chip test chip.
    A common use of ECAD software is to link the various stages
involved in progressing smoothly from the Register Transfer Level (RTL)
design stage to the logic design stage, then finally to the physical
design stage, which results in Geometrical Database Standard II
(GDSII). RTL is a model of a digital circuit defined in terms of the
flow of digital signals and logical operations down to the level of
individual flip-flops, i.e., a device that stores a single bit (binary
digit) of data. GDSII is the database standard format for describing
integrated circuit layout artwork. It is used to contain all
information describing the integrated circuit's layout artwork in a
standardized database format that may be shared with foundries for
transferring artwork between different tools or for building
photomasks. ECAD software with a complete RTL-to-GDSII design solution
includes proprietary design planning, power optimization, physical
synthesis, clock tree synthesis, and routing for logical and physical
design implementations throughout the design flow.
    Gate-All-Around transistor technology approaches are key to scaling
to 3 nanometer and below technology nodes. The gate completely
encircles the semiconductor electronic conduction channel and thus
provides good gate control and scalability of the electrostatics to
allow high ratios of on and off leakage currents and minimization of
random dopant fluctuations. A thin electronic conducting channel is
used to enable gate control of the electric field in the transistor
channel preventing short-channel punch through. The backside gate
combined with minimization of random doping effect enable scalability
to smaller technology nodes. The multiple channels provide higher
current capability. The lower parasitic capacitances enable 50 percent
faster chip operation compared to bulk technologies. Faster, less
bulky, energy efficient, and radiation-hardened integrated circuits
would advance many commercial as well as military applications,
including defense and communication satellites.
    ECAD software is often offered in modules that support the
requirements of circuit designers as well as the production
prerequisites supplied by foundries. ECAD software is not distinguished
by the type or architecture of integrated circuit, but by the
capabilities that enable design, analysis, optimization, validation,
and verification of the advanced circuitry of specific transistor
types. Thus, some ECAD software may be particularly suited to
efficiently design complex GAAFET circuits. As proprietary information
could be involved, the ``specially designed'' requirements of the
control can be difficult to ascertain in specific ECAD software.
    Consequently, with this rule, BIS is controlling this technology as
Section 1758 technology by adding new ECCN 3D006 to the CCL to control
ECAD ``software'' ``specially designed'' for the ``development'' of
integrated circuits having any GAAFET structure and meeting the
parameters set forth in ECCN 3D006. Such software must be either
``specially designed'' for implementing RTL to GDSII or an equivalent
standard or ``specially designed'' for optimization of power or timing
rules.
    ECCN 3D006 will also include a new technical note that defines
ECAD, RTL, and GDSII. ECAD software tools are designed to incorporate
and work with the different process design kits (PDKs) from each
foundry, which include specifications for that foundry's transistor
architecture. The new control applies to an ECAD software tool when it
is specially designed as described in 3D006, whether it is exported
with a PDK or separately.
    ECAD software controlled under new ECCN 3D006 requires a license
for NS and AT reasons, respectively, for countries with an ``X'' listed
in columns NS:2 or AT:1 on the Commerce Country Chart. A license
exception (see part 740 of the EAR), such as License Exception
Strategic Trade Authorization (STA) may authorize a transaction that
otherwise would require a license.
    BIS seeks public comment and input to determine what specific ECAD
features are particularly suited to design GAAFET circuits to ensure
that the U.S. Government effectively implements this new control. In
particular, the U.S. Government is seeking public comment and input
from industry regarding the scope of the license requirement as well as
input to assist in the interagency review of license applications to
export such software. BIS is particularly interested in description of
software features or functions that assists the designer to optimize
interconnects, synthesis, placements & routes, multi-corner multi-mode,
timing/clock-tree, power and thermal, or signal integrity necessary for
GAAFET circuits. For example, there may be a highly efficient auto-
routing program or type of simulator or schematic editor/engine or
waveform display that allows designers to rapidly modify a simulated
circuit and assess what effect the change has on the output.
Additionally, public comment may inform the U.S. Government in the
development of future WA proposals that could revise the control text
of 3D006.
    In addition, BIS's Technical Advisory Committees recommended that
industry has the opportunity to submit public comments regarding the
implementation of ECCN 3D006 control, i.e., license requirements
applied, license exception eligibility, notes that may clarify the
scope of the control, as well as recommendations to overcome compliance
difficulties and recommendations for future revisions of the control
text as the software undergoes technological advancements. Therefore,
there is a 60-day delayed effective date for the addition of 3D006 to
the CCL and a 30-day comment period with respect to the implementation
of this control.

Pressure Gain Combustion (PGC)

    PGC technology is a technology with the potential to increase gas
turbine

engine efficiency by more than 10%. PGC technology has extensive
potential to impact terrestrial systems, as well as aerospace
applications such as rockets and hypersonic systems.
    While conventional gas turbine engines undergo steady, subsonic
combustion, resulting in a total pressure loss, PGC utilizes multiple
physical phenomena, including resonant pulsed combustion, constant
volume combustion, and detonation, to cause a rise in effective
pressure across the combustor, while consuming the same amount of fuel
as the constant pressure combustor. This PGC technology, which results
in a pressure gain across the combustor, relies on the Humphrey (or
Atkinson) cycles and has great potential as a means of achieving higher
efficiency in gas turbine power systems. The two main advantages of
utilizing PGC in a gas turbine engine are: (1) it reduces the
essentially unsteady nature of the combustion cycle, resulting in an
increase in thermodynamic efficiency, and (2) due to the pressure
increase in the combustor, it allows fewer stages in the compressor,
resulting in a more compact engine.
    While BIS has not identified any engines currently in production
using PGC, there is substantial ongoing research regarding potential
production. In part because increased fuel efficiency and the potential
for a more compact engine provide military advantages such as a longer
loiter time and easier packaging. PGC-based propulsion systems for
rockets, space launch vehicles, missiles, and military gas turbine
engines, and technology directly related thereto, are already defense
articles described on the U.S. Munitions List (USML). However, it is
increasingly likely that commercial industrial gas turbine engines will
be produced with PGC technology, which will likely be controlled on the
CCL as Section 1758 technology.
    This rule adds paragraph 9E003.a.2.e to control development and
production technology for combustors utilizing `pressure gain
combustion' that are not described on the USML and adds a technical
note to define `pressure gain combustion.' Technology controlled under
ECCN 9E003.a.2.e requires a license for NS and AT reasons,
respectively, for countries with an ``X'' listed in columns NS:1 or
AT:1 on the Commerce Country Chart. A license exception (see part 740
of the EAR) may authorize a transaction that otherwise would require a
license.

Saving Clause (Applicable to the Items Apart From 3D006 Software)

    Shipments of items removed from license exception eligibility or
eligibility for export, reexport, or transfer (in-country) without a
license as a result of this regulatory action that were on dock for
loading, on lighter, laden aboard an exporting carrier, or en route
aboard a carrier to a port of export, on August 30, 2022, pursuant to
actual orders for exports, reexports, and transfers (in-country) to a
foreign destination, may proceed to that destination under the previous
license exception eligibility or without a license so long as they have
been exported, reexported, or transferred (in-country) before September
14, 2022. Any such items not actually exported, reexported, or
transferred (in-country) before midnight, on September 14, 2022,
require a license in accordance with this interim final rule.

Saving Clause for 3D006 Software

    Shipments of items removed from license exception eligibility or
eligibility for export, reexport or transfer (in-country) without a
license as a result of this regulatory action that were on dock for
loading, on lighter, laden aboard an exporting carrier, or en route
aboard a carrier to a port of export, on October 14, 2022, pursuant to
actual orders for exports, reexports, and transfers (in-country) to a
foreign destination, may proceed to that destination under the previous
license exception eligibility or without a license so long as they have
been exported, reexported, or transferred (in-country) before November
14, 2022. Any such items not actually exported, reexported, or
transferred (in-country) before midnight, on November 14, 2022, require
a license in accordance with this interim final rule.

Export Control Reform Act of 2018

    On August 13, 2018, the President signed into law the John S.
McCain National Defense Authorization Act for Fiscal Year 2019, which
included the ECRA, 50 U.S.C. Sections 4801-4852. ECRA provides the
legal basis for BIS's principal authorities and serves as the authority
under which BIS issues this rule.

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 and distributive impacts and equity).
Executive Order 13563 emphasizes the importance of quantifying both
costs and benefits and of reducing costs, harmonizing rules, and
promoting flexibility. This interim final rule has been designated a
``significant regulatory action'' under section 3(f) of Executive Order
12866. This rule does not contain policies with federalism implications
as that term is defined under Executive Order 13132.
    2. Notwithstanding any other provision of law, no person is
required to respond to, nor shall any person be subject to a penalty
for failure to comply with, a collection of information subject to the
requirements of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et
seq.) (PRA), unless that collection of information displays a currently
valid Office of Management and Budget (OMB) Control Number. Although
this rule makes important changes to the EAR for items controlled for
national security reasons, BIS believes that the overall increases in
burdens and costs for the following collections fall will be minimal
and fall within the already approved amounts for the following
collections.
    0694-0137 ``License Exceptions and Exclusions,'' which carries a
burden-hour estimate average of 1.5 hours per submission (Note:
submissions for License Exceptions are rarely required);
    0694-0096 ``Five Year Records Retention Period,'' which carries a
burden-hour estimate of less than 1 minute; and
    0607-0152 ``Automated Export System (AES) Program,'' which carries
a burden-hour estimate of 3 minutes per electronic submission.
    0694-0088, ``Simplified Network Application Processing System,''
which carries a burden- hour estimate of 29.4 minutes for a manual or
electronic submission.
    3. Pursuant to Section 1762 of the ECRA (50 U.S.C. 4821), this
action is exempt from the Administrative Procedure Act (APA) (5 U.S.C.
553) requirements for notice of proposed rulemaking, opportunity for
public participation and delay in effective date. However, on the
recommendation of BIS's Technical Advisory Committees, there is a 30-
day comment period on the implementation of the control on ECCN 3D006
and a 60-day delayed effective date with respect to the addition of
ECCN 3D006 to the Commerce Control List.

List of Subjects

15 CFR Part 772

    Exports.

15 CFR Part 774

    Exports, Reporting and recordkeeping requirements, Terrorism.

    Accordingly, parts 772 and 774 of the Export Administration
Regulations (15 CFR parts 730-774) are amended as follows:

PART 772--DEFINITIONS OF TERMS

0
1. The authority citation for part 772 continues to read as follows:

    Authority:  50 U.S.C. 4801-4852; 50 U.S.C. 4601 et seq.; 50
U.S.C. 1701 et seq.; E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., p.
783.

0
2. Section 772.1 is amended by adding Gate-All-Around Field-Effect
Transistor (``GAAFET'') in alphabetical order to read as follows:

Sec.  772.1   Definitions of terms as used in the Export Administration
Regulations (EAR).

* * * * *
    Gate-All-Around Field-Effect Transistor (``GAAFET''). (Cat 3)--A
device having a single or multiple semiconductor conduction channel
element(s) with a common gate structure that surrounds and controls
current in all of the semiconductor conduction channel elements. (Note:
This definition includes nanosheet or nanowire field-effect and
surrounding gate transistors and other ``GAAFET'' semiconductor channel
element structures.)
* * * * *

PART 774--THE COMMERCE CONTROL LIST

0
3. The authority citation for part 774 continues to read as follows:

    Authority:  50 U.S.C. 4801-4852; 50 U.S.C. 4601 et seq.; 50
U.S.C. 1701 et seq.; 10 U.S.C. 8720; 10 U.S.C. 8730(e); 22 U.S.C.
287c, 22 U.S.C. 3201 et seq.; 22 U.S.C. 6004; 42 U.S.C. 2139a; 15
U.S.C. 1824; 50 U.S.C. 4305; 22 U.S.C. 7201 et seq.; 22 U.S.C. 7210;
E.O. 13026, 61 FR 58767, 3 CFR, 1996 Comp., p. 228; E.O. 13222, 66
FR 44025, 3 CFR, 2001 Comp., p. 783.

0
4. In supplement no. 1 to part 774, Category 3, ECCN 3C001, 3C005, and
3C006 are revised to read as follows:

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

* * * * *
3C001 Hetero-epitaxial materials consisting of a ``substrate'' having
stacked epitaxially grown multiple layers of any of the following (see
List of Items Controlled).

License Requirements

    Reason for Control: NS, AT

                                            Country chart (See Supp. No.
                Control(s)                         1 to part 738)

NS applies to entire entry................  NS Column 2.
AT applies to entire entry................  AT Column 1.
AT applies to entire entry................  AT Column 1.

List Based License Exceptions (See Part 740 for a Description of All
License Exceptions)

LVS: $3,000
GBS: N/A

List of Items Controlled

Related Controls: This entry does not control equipment or material
whose functionality has been unalterably disabled.
Related Definitions: N/A
Items:

    a. Silicon (Si);
    b. Germanium (Ge);
    c. Silicon Carbide (SiC);
    d. ``III/V compounds'' of gallium or indium;
    Note: 3C001.d does not apply to a ``substrate'' having one or more
P-type epitaxial layers of Gallium Nitride (GaN), Indium Gallium
Nitride (InGaN), Aluminum Gallium Nitride (AlGaN), Indium Aluminum
Nitride (InAlN), Indium Aluminum Gallium Nitride (InAlGaN), Gallium
Phosphide (GaP), Gallium Arsenide (GaAs), Aluminum Gallium Arsenide
(AlGaAs), Indium Phosphide (InP), Indium Gallium Phosphide (InGaP),
Aluminum Indium Phosphide (AlInP), or Indium Gallium Phosphide
(InGaAlP), independent of the sequence of the elements, except if the
P-type epitaxial layer is between N-type layers.
    e. Gallium Oxide (Ga2O3); or
    f. Diamond.
* * * * *
3C005 High resistivity materials as follows (See List of Items
Controlled).

License Requirements

    Reason for Control: NS, AT

                                            Country chart (See Supp. No.
                Control(s)                         1 to part 738)

NS applies to entire entry................  NS Column 2.
AT applies to entire entry................  AT Column 1.

List Based License Exceptions (See Part 740 for a Description of All
License Exceptions)

LVS: $3,000
GBS: Yes

List of Items Controlled

Related Controls: See ECCN 3E001 for related development and production
technology, and ECCN 3B991.b.1.b for related production equipment.
Related Definition: N/A
Items:

    a. Silicon Carbide (SiC), Gallium Nitride (GaN), Aluminum Nitride
(AlN), Aluminum Gallium Nitride (AlGaN), Gallium Oxide
(Ga2O3), or diamond semiconductor ``substrates'',
or ingots, boules, or other preforms of those materials, having
resistivities greater than 10,000 ohm-cm at 20 [deg]C;
    b. Polycrystalline ``substrates'' or polycrystalline ceramic
``substrates'', having resistivities greater than 10,000 ohm-cm at 20
[deg]C and having at least one non-epitaxial single-crystal layer of
Silicon (Si), Silicon Carbide (SiC), Gallium Nitride (GaN), Aluminum
Nitride (AlN), Aluminum Gallium Nitride (AlGaN), Gallium Oxide
(Ga2O3), or diamond on the surface of the
``substrate''.

3C006 Materials, not specified by 3C001, consisting of a ``substrate''
specified by 3C005 with at least one epitaxial layer of Silicon Carbide
(SiC), Gallium Nitride (GaN), Aluminum Nitride (AlN), Aluminum Gallium
Nitride (AlGaN), Gallium Oxide (Ga[bdi2]O[bdi3]) or diamond.

License Requirements

    Reason for Control: NS, AT

                                            Country chart (See Supp. No.
                Control(s)                         1 to part 738)

NS applies to entire entry................  NS Column 2.
AT applies to entire entry................  AT Column 1.

List Based License Exceptions (See Part 740 for a Description of All
License Exceptions)

LVS: $3,000
GBS: Yes

List of Items Controlled

Related Controls: See ECCN 3D001 for related ``development'' or
``production'' ``software'', ECCN 3E001 for related ``development'' and
``production'' ``technology'', and ECCN 3B991.b.1.b for related
``production'' equipment.
Related Definition: N/A
Items:

    The list of items controlled is contained in the ECCN heading.

0
5. Effective October 14, 2022, in supplement no. 1 to part 774,
Category 3, ECCN 3D006 is added after 3D005 to read as follows:

3D006 `Electronic Computer-Aided Design' (`ECAD') ``software''
``specially designed'' for the ``development'' of integrated circuits
having any ``Gate-All-Around Field-Effect Transistor'' (``GAAFET'')
structure, and having any of the following (see List of Items
Controlled).

License Requirements

    Reason for Control: NS, AT

                                            Country chart (See Supp. No.
                Control(s)                         1 to part 738)

NS applies to entire entry................  NS Column 2.
AT applies to entire entry................  AT Column 1.

List Based License Exceptions (See Part 740 for a Description of All
License Exceptions)

TSR: N/A

List of Items Controlled

Related Controls: N/A
Related Definitions: N/A
Items:

    a. ``Specially designed'' for implementing `Register Transfer
Level' (`RTL') to `Geometrical Database Standard II' (`GDSII') or
equivalent standard; or
    b. ``Specially designed'' for optimization of power or timing
rules.
    Technical Notes:
    1. `Electronic Computer-Aided Design' (`ECAD') is a category of
``software'' tools used for designing, analyzing, optimizing, and
validating the performance of an integrated circuit or printed circuit
board.
    2. `Register Transfer Level' (`RTL') is a design abstraction which
models a synchronous digital circuit in terms of the flow of digital
signals between hardware registers and the logical operations performed
on those signals.
    3. `Geometrical Database Standard II' (`GDSII') is a database file
format for data exchange of integrated circuit or integrated circuit
layout artwork.

0
6. In supplement no. 1 to part 774, Category 3, ECCN 3E003 is revised
to read as follows:

3E003 Other ``technology'' for the ``development'' or ``production'' of
the following (see List of Items Controlled).

License Requirements

    Reason for Control: NS, AT

                                            Country chart (See Supp. No.
                Control(s)                         1 to part 738)

NS applies to entire entry................  NS Column 1.
AT applies to entire entry................  AT Column 1.

List Based License Exceptions (See Part 740 for a Description of All
License Exceptions)

TSR: Yes, except .f and .g

List of Items Controlled

Related Controls: See 3E001 for Silicon-On-Insulation (SOI) technology
for the ``development'' or ``production'' related to radiation
hardening of integrated circuits.
Related Definitions: N/A
Items:

    a. Vacuum microelectronic devices;
    b. Hetero-structure semiconductor electronic devices such as high
electron mobility transistors (HEMT), hetero-bipolar transistors (HBT),
quantum well and super lattice devices;
    Note: 3E003.b does not control ``technology'' for high electron
mobility transistors (HEMT) operating at frequencies lower than 31.8
GHz and hetero-junction bipolar transistors (HBT) operating at
frequencies lower than 31.8 GHz.
    c. ``Superconductive'' electronic devices;
    d. Substrates of diamond for electronic components;
    e. Substrates of Silicon-On-Insulator (SOI) for integrated circuits
in which the insulator is Silicon Dioxide (SiO2);
    f. Substrates of Silicon Carbide (SiC) for electronic components;
    g. ``Vacuum electronic devices'' operating at frequencies of 31.8
GHz or higher;
    h. Substrates of Gallium Oxide (Ga2O3) for
electronic components.

0
7. In supplement no. 1 to part 774, Category 9, ECCN 9E003 is revised
to read as follows:

9E003 Other ``technology'' as follows (see List of Items Controlled).

License Requirements

    Reason for Control: NS, SI, AT

                                            Country chart (See Supp. No.
                Control(s)                         1 to part 738)

NS applies to entire entry................  NS Column 1.
SI applies to 9E003.a.1 through a.8, .h,    See Sec.   742.14 of the EAR
 .i, and .k.                                 for additional information.
AT applies to entire entry................  AT Column 1.

Reporting Requirements

    See Sec.  743.1 of the EAR for reporting requirements for exports
under License Exceptions and Validated End-User authorizations.

List Based License Exceptions (See Part 740 for a Description of All
License Exceptions)

TSR: N/A

Special Conditions for STA

STA: License Exception STA may not be used to ship or transmit any
technology in 9E003.a.1, 9E003.a.2 to a.5, 9E003.a.8, or 9E003.h to any
of the destinations listed in Country Group A:6 (See supplement No.1 to
part 740 of the EAR).

List of Items Controlled

Related Controls: (1) Hot section ``technology'' ``specifically
designed,'' modified, or equipped for military uses or purposes, or
developed principally with U.S. Department of Defense funding, is
``subject to the ITAR'' (see 22 CFR parts 120 through 130). (2)
``Technology'' is subject to the EAR when actually applied to a
commercial ``aircraft'' engine program. Exporters may seek to establish
commercial application either on a case-by-case basis through
submission of documentation demonstrating application to a commercial
program in requesting an export license from the Department Commerce in
respect to a specific export, or in the case of use for broad
categories of ``aircraft,'' engines, ``parts'' or ``components,'' a
commodity jurisdiction determination from the Department of State.
Related Definitions: N/A
Items:

    a. ``Technology'' ``required'' for the ``development'' or
``production'' of any of the following gas turbine engine ``parts,''
``components'' or systems:
    a.1. Gas turbine blades, vanes or ``tip shrouds'', made from
Directionally Solidified (DS) or Single Crystal (SC) alloys and having
(in the 001 Miller Index Direction) a stress-rupture life exceeding 400
hours at 1,273 K (1,000[deg]C) at a stress of 200 MPa, based on the
average property values;
    Technical Note: For the purposes of 9E003.a.1, stress-rupture life
testing is typically conducted on a test specimen.
    a.2. Combustors having any of the following:
    a.2.a. `Thermally decoupled liners' designed to operate at
`combustor exit temperature' exceeding 1,883 K (1,610[deg]C);
    a.2.b. Non-metallic liners;

    a.2.c. Non-metallic shells;
    a.2. d. Liners designed to operate at `combustor exit temperature'
exceeding 1,883 K (1,610[deg]C) and having holes that meet the
parameters specified by 9E003.c; or
    a.2.e. Utilizing `pressure gain combustion';
    Technical Note: In `pressure gain combustion' the bulk average
stagnation pressure at the combustor outlet is greater than the bulk
average stagnation pressure at the combustor inlet due primarily to the
combustion process, when the engine is running in a ``steady state
mode'' of operation.
    Note: The ``required'' ``technology'' for holes in 9E003.a.2 is
limited to the derivation of the geometry and location of the holes.
    Technical Notes:
    1. `Thermally decoupled liners' are liners that feature at least a
support structure designed to carry mechanical loads and a combustion
facing structure designed to protect the support structure from the
heat of combustion. The combustion facing structure and support
structure have independent thermal displacement (mechanical
displacement due to thermal load) with respect to one another, i.e.,
they are thermally decoupled.
    2. `Combustor exit temperature' is the bulk average gas path total
(stagnation) temperature between the combustor exit plane and the
leading edge of the turbine inlet guide vane (i.e., measured at engine
station T40 as defined in SAE ARP 755A) when the engine is running in a
``steady state mode'' of operation at the certificated maximum
continuous operating temperature.
    N.B.: See 9E003.c for ``technology'' ``required'' for manufacturing
cooling holes.
    a.3. ``Parts'' or ``components,'' that are any of the following:
    a.3.a. Manufactured from organic ``composite'' materials designed
to operate above 588 K (315 [deg]C);
    a.3.b. Manufactured from any of the following:
    a.3.b.1. Metal ``matrix'' ``composites'' reinforced by any of the
following:
    a.3.b.1.a. Materials controlled by 1C007;
    a.3.b.1.b. ``Fibrous or filamentary materials'' specified by 1C010;
or
    a.3.b.1.c. Aluminides specified by 1C002.a; or
    a.3.b.2. Ceramic ``matrix'' ``composites'' specified by 1C007; or
    a.3.c. Stators, vanes, blades, tip seals (shrouds), rotating
blings, rotating blisks or `splitter ducts', that are all of the
following:
    a.3.c.1. Not specified in 9E003.a.3.a;
    a.3.c.2. Designed for compressors or fans; and
    a.3.c.3. Manufactured from material controlled by 1C010.e with
resins controlled by 1C008;
    Technical Note: A `splitter duct' performs the initial separation
of the air-mass flow between the bypass and core sections of the
engine.
    a.4. Uncooled turbine blades, vanes or ``tip shrouds'' designed to
operate at a `gas path temperature' of 1,373 K (1,100 [deg]C) or more;
    a.5. Cooled turbine blades, vanes or ``tip-shrouds'', other than
those described in 9E003.a.1, designed to operate at a `gas path
temperature' of 1,693 K (1,420 [deg]C) or more;
    Technical Note: `Gas path temperature' is the bulk average gas path
total (stagnation) temperature at the leading-edge plane of the turbine
component when the engine is running in a ``steady state mode'' of
operation at the certificated or specified maximum continuous operating
temperature.
    a.6. Airfoil-to-disk blade combinations using solid state joining;
    a.7. [Reserved]
    a.8. `Damage tolerant' gas turbine engine rotor ``parts'' or
``components'' using powder metallurgy materials controlled by 1C002.b;
or
    Technical Note: `Damage tolerant' ``parts'' and ``components'' are
designed using methodology and substantiation to predict and limit
crack growth.
    a.9. [Reserved]
    N.B.: For ``FADEC systems'', see 9E003.h.
    a.10. [Reserved]
    N.B.: For adjustable flow path geometry, see 9E003.i.
    a.11. `Fan blades' having all of the following:
    a.11.a. 20% or more of the total volume being one or more closed
cavities containing vacuum or gas only; and
    a.11.b. One or more closed cavities having a volume of 5 cm\3\ or
larger;
    Technical Note: For the purposes of 9E003.a.11, a `fan blade' is
the airfoil portion of the rotating stage or stages, which provide both
compressor and bypass flow in a gas turbine engine.
    b. ``Technology'' ``required'' for the ``development'' or
``production'' of any of the following:
    b.1. Wind tunnel aero-models equipped with non-intrusive sensors
capable of transmitting data from the sensors to the data acquisition
system; or
    b.2. ``Composite'' propeller blades or prop-fans, capable of
absorbing more than 2,000 kW at flight speeds exceeding Mach 0.55;
    c. ``Technology'' ``required'' for manufacturing cooling holes, in
gas turbine engine ``parts'' or ``components'' incorporating any of the
``technologies'' specified by 9E003.a.1, 9E003.a.2 or 9E003.a.5, and
having any of the following:
    c.1. Having all of the following:
    c.1.a. Minimum `cross-sectional area' less than 0.45 mm\2\;
    c.1.b. `Hole shape ratio' greater than 4.52; and
    c.1.c. `Incidence angle' equal to or less than 25[deg]; or
    c.2. Having all of the following:
    c.2.a. Minimum `cross-sectional area' less than 0.12 mm\2\;
    c.2.b. `Hole shape ratio' greater than 5.65; and
    c.2.c. `Incidence angle' more than 25[deg];
    Note: 9E003.c does not apply to ``technology'' for manufacturing
constant radius cylindrical holes that are straight through and enter
and exit on the external surfaces of the component.
    Technical Notes:
    1. For the purposes of 9E003.c, the `cross-sectional area' is the
area of the hole in the plane perpendicular to the hole axis.
    2. For the purposes of 9E003.c, `hole shape ratio' is the nominal
length of the axis of the hole divided by the square root of its
minimum 'cross-sectional area'.
    3. For the purposes of 9E003.c, `incidence angle' is the acute
angle measured between the plane tangential to the airfoil surface and
the hole axis at the point where the hole axis enters the airfoil
surface.
    4. Methods for manufacturing holes in 9E003.c include ``laser''
beam machining, water jet machining, Electro-Chemical Machining (ECM)
or Electrical Discharge Machining (EDM).
    d. ``Technology'' ``required'' for the ``development'' or
``production'' of helicopter power transfer systems or tilt rotor or
tilt wing ``aircraft'' power transfer systems;
    e. ``Technology'' for the ``development'' or ``production'' of
reciprocating diesel engine ground vehicle propulsion systems having
all of the following:
    e.1. `Box volume' of 1.2 m\3\ or less;
    e.2. An overall power output of more than 750 kW based on 80/1269/
EEC, ISO 2534 or national equivalents; and
    e.3. Power density of more than 700 kW/m\3\ of `box volume';
    Technical Note: `Box volume' is the product of three perpendicular
dimensions measured in the following way:
    Length: The length of the crankshaft from front flange to flywheel
face;
    Width: The widest of any of the following:
    a. The outside dimension from valve cover to valve cover;

    b. The dimensions of the outside edges of the cylinder heads; or
    c. The diameter of the flywheel housing;
    Height: The largest of any of the following:
    a. The dimension of the crankshaft center-line to the top plane of
the valve cover (or cylinder head) plus twice the stroke; or
    b. The diameter of the flywheel housing.
    f. ``Technology'' ``required'' for the ``production'' of
``specially designed'' ``parts'' or ``components'' for high output
diesel engines, as follows:
    f.1. ``Technology'' ``required'' for the ``production'' of engine
systems having all of the following ``parts'' and ``components''
employing ceramics materials controlled by 1C007:
    f.1.a Cylinder liners;
    f.1.b. Pistons;
    f.1.c. Cylinder heads; and
    f.1.d. One or more other ``part'' or ``component'' (including
exhaust ports, turbochargers, valve guides, valve assemblies or
insulated fuel injectors);
    f.2. ``Technology'' ``required'' for the ``production'' of
turbocharger systems with single-stage compressors and having all of
the following:
    f.2.a. Operating at pressure ratios of 4:1 or higher;
    f.2.b. Mass flow in the range from 30 to 130 kg per minute; and
    f.2.c. Variable flow area capability within the compressor or
turbine sections;
    f.3. ``Technology'' ``required'' for the ``production'' of fuel
injection systems with a ``specially designed'' multifuel (e.g., diesel
or jet fuel) capability covering a viscosity range from diesel fuel
(2.5 cSt at 310.8 K (37.8 [deg]C)) down to gasoline fuel (0.5 cSt at
310.8 K (37.8 [deg]C)) and having all of the following:
    f.3.a. Injection amount in excess of 230 mm\3\ per injection per
cylinder; and
    f.3.b. Electronic control features ``specially designed'' for
switching governor characteristics automatically depending on fuel
property to provide the same torque characteristics by using the
appropriate sensors;
    g. ``Technology'' ``required'' for the ``development'' or
``production'' of `high output diesel engines' for solid, gas phase or
liquid film (or combinations thereof) cylinder wall lubrication and
permitting operation to temperatures exceeding 723 K (450 [deg]C),
measured on the cylinder wall at the top limit of travel of the top
ring of the piston;
    Technical Note: `High output diesel engines' are diesel engines
with a specified brake mean effective pressure of 1.8 MPa or more at a
speed of 2,300 r.p.m., provided the rated speed is 2,300 r.p.m. or
more.
    h. ``Technology'' for gas turbine engine ``FADEC systems'' as
follows:
    h.1. ``Development'' ``technology'' for deriving the functional
requirements for the ``parts'' or ``components'' necessary for the
``FADEC system'' to regulate engine thrust or shaft power (e.g.,
feedback sensor time constants and accuracies, fuel valve slew rate);
    h.2. ``Development'' or ``production'' ``technology'' for control
and diagnostic ``parts'' or ``components'' unique to the ``FADEC
system'' and used to regulate engine thrust or shaft power;
    h.3. ``Development'' ``technology'' for the control law algorithms,
including ``source code'', unique to the ``FADEC system'' and used to
regulate engine thrust or shaft power;
    Note: 9E003.h does not apply to technical data related to engine-
``aircraft'' integration required by civil aviation authorities of one
or more Wassenaar Arrangement Participating States (See supplement No.
1 to part 743 of the EAR) to be published for general airline use
(e.g., installation manuals, operating instructions, instructions for
continued airworthiness) or interface functions (e.g., input/output
processing, airframe thrust or shaft power demand).
    i. ``Technology'' for adjustable flow path systems designed to
maintain engine stability for gas generator turbines, fan or power
turbines, or propelling nozzles, as follows:
    i.1. ``Development'' ``technology'' for deriving the functional
requirements for the ``parts'' or ``components'' that maintain engine
stability;
    i.2. ``Development'' or ``production'' ``technology'' for ``parts''
or ``components'' unique to the adjustable flow path system and that
maintain engine stability;
    i.3. ``Development'' ``technology'' for the control law algorithms,
including ``source code'', unique to the adjustable flow path system
and that maintain engine stability;
    Note: 9E003.i does not apply to ``technology'' for any of the
following:
    a. Inlet guide vanes;
    b. Variable pitch fans or prop-fans;
    c. Variable compressor vanes;
    d. Compressor bleed valves; or
    e. Adjustable flow path geometry for reverse thrust.
    j. ``Technology'' ``required'' for the ``development'' of wing-
folding systems designed for fixed-wing ``aircraft'' powered by gas
turbine engines.
    N.B.: For ``technology'' ``required'' for the ``development'' of
wing-folding systems designed for fixed-wing ``aircraft'' specified in
USML Category VIII (a), see USML Category VIII (i).
    k. ``Technology'' not otherwise controlled in 9E003.a.1 through
a.8, a.10, and .h and used in the ``development'', ``production'', or
overhaul of hot section ``parts'' or ``components'' of civil
derivatives of military engines controlled on the U.S. Munitions List.

Thea D. Rozman Kendler,
Assistant Secretary for Export Administration.
[FR Doc. 2022-17125 Filed 8-12-22; 8:45 am]
BILLING CODE P


[Federal Register Volume 82, Number 155 (Monday, August 14, 2017)]
[Notices]
[Page 37853]
[FR Doc No: 2017-17088]

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

DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

Combined Notice of Filings #2

    Take notice that the Commission received the following electric
corporate filings:

    Docket Numbers: EC17-155-000.
    Applicants: Bayshore Solar C, LLC.
    Description: Application for Authorization Under Section 203 of the
Federal Power Act, Request for Expedited Consideration and Confidential
Treatment of Bayshore Solar C, LLC.
    Filed Date: 8/8/17.
    Accession Number: 20170808-5071.
    Comments Due: 5 p.m. ET 8/29/17.

    Take notice that the Commission received the following electric
rate filings:

    Docket Numbers: ER12-162-018; ER10-2611-020; ER11-2044-023; ER11-
3876-022; ER13-1266-015; ER15-2211-012.
    Applicants: Bishop Hill Energy II LLC, CalEnergy, LLC, Cordova
Energy Company LLC, MidAmerican Energy Company, MidAmerican Energy
Services, LLC, Saranac Power Partners, L.P.
    Description: Notice of Non-Material Change in Status of Bishop Hill
Energy II LLC, et al.
    Filed Date: 8/8/17.
    Accession Number: 20170808-5089.
    Comments Due: 5 p.m. ET 8/29/17.

    Docket Numbers: ER17-2260-000.
    Applicants: Midcontinent Independent System Operator, Inc.
    Description: Sec.  205(d) Rate Filing: 2017-08-08_SA# 1927 IPL-
ITCMW 3rd Revised LGIA (P001) to be effective 8/2/2017.
    Filed Date: 8/8/17.
    Accession Number: 20170808-5069.
    Comments Due: 5 p.m. ET 8/29/17.

    Docket Numbers: ER17-2261-000.
    Applicants: Southern California Edison Company.
    Description: Sec.  205(d) Rate Filing: LGIA Antelope Expansion 2
LLC Antelope Solar 2 Project SA No. 195 TOT762 to be effective 8/9/
2017.
    Filed Date: 8/8/17.
    Accession Number: 20170808-5084.
    Comments Due: 5 p.m. ET 8/29/17.

    Docket Numbers: ER17-2262-000.
    Applicants: PJM Interconnection, L.L.C.
    Description: Tariff Cancellation: Notice of Cancellation of
Original Service Agreement No. 4097, Queue No. AA1-019 to be effective
9/25/2017.
    Filed Date: 8/8/17.
    Accession Number: 20170808-5108.
    Comments Due: 5 p.m. ET 8/29/17.

    Docket Numbers: ER17-2263-000.
    Applicants: California Independent System Operator Corporation.
    Description: Compliance filing: 2017-08-08 Petition for Tariff
Waiver--Availability Assessment of Hours 2018 to be effective N/A.
    Filed Date: 8/8/17.
    Accession Number: 20170808-5142.
    Comments Due: 5 p.m. ET 8/29/17.

    Take notice that the Commission received the following qualifying
facility filings:

    Docket Numbers: QF17-1274-000.
    Applicants: Shaw Industries Group, Inc.
    Description: Form 556 of Shaw Industries Group, Inc.
    Filed Date: 8/7/17.
    Accession Number: 20170807-5122.
    Comments Due: None Applicable.

    The filings are accessible in the Commission's eLibrary system by
clicking on the links or querying the docket number.
    Any person desiring to intervene or protest in any of the above
proceedings must file in accordance with Rules 211 and 214 of the
Commission's Regulations (18 CFR 385.211 and 385.214) on or before 5:00
p.m. Eastern time on the specified comment date. Protests may be
considered, but intervention is necessary to become a party to the
proceeding.
    eFiling is encouraged. More detailed information relating to filing
requirements, interventions, protests, service, and qualifying
facilities filings can be found at: http://www.ferc.gov/docs-filing/efiling/filing-req.pdf. For other information, call<PHONE_NUMBER>
(toll free). For TTY, call<PHONE_NUMBER>.

    Dated: August 8, 2017.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
[FR Doc. 2017-17088 Filed 8-11-17; 8:45 am]
 BILLING CODE 6717-01-P


RULE 806. 	EMISSION REDUCTION CREDITS
            (Adopted 4/17/1997, revised 8/25/2016)

A.	Applicability

	This rule shall apply to any person seeking to register emission reductions of affected pollutants as Emission Reduction Credits for use as offsets pursuant to Rule 804, Offsets.

B.	Exemptions

	None.

C.	Definitions

	See Rules 102, Definitions, and Rule 801, New Source Review  -  Definitions and General Requirements, for definitions.

D. 	Requirements  -  Eligibility of Emission Reductions

      1.	Emission Reduction Credits shall be allowed for actual emission reductions which have been demonstrated to the satisfaction of the Control Officer to be real, surplus, permanent, quantifiable, and enforceable and which meet the requirements of these Rules and Regulations.

      2.	Emission reductions shall meet all requirements specified in Rule 804.D for sources which provide emission offsets and all requirements of this rule to be eligible for registration as offsets. Emission Reduction Credits shall not be allowed for emission reductions occurring in another district or for Outer Continental Shelf Sources for which the District is not the corresponding onshore area.

      3.	Emission reductions which occur prior to the Control Officer's determination that the application for the Emission Reduction Credit is complete shall not be eligible as Emission Reduction Credits.

      4.	Emission reductions for Toxic Air Contaminants shall be eligible for Emission Reduction Credits only as the appropriate criteria pollutant.

      5.	Emission Reduction Credits shall be subject to all requirements of the Environmental Protection Agency prior to use.

      6.	Withdrawal of an application by an applicant shall result in the cancellation of the application. Any resubmittal shall be evaluated using a baseline calculated as of the date of application completeness.

      7.	Department of Defense Credits: Emission reduction credits recognized though a memorandum of agreement between the Board and the Department of Defense shall be registered pursuant to this rule in order to be used as Emission Reduction Credits.

            a.	The applicant shall be subject to and comply with the requirements of Section F (Application Procedures), G (Source Register), H.1 (Certificates), J (Use), K (Moratoriums) and L (Fees) of this rule. The applicant shall file an application to register such Emission Reduction Credits pursuant to Section F.1 within 90 days after the date of adoption of this rule.

            b.	Notwithstanding any other provisions of these Rules, Emission Reduction Credits held by the Department of Defense that were created pursuant to a memorandum of agreement between the Board and the Department of Defense shall:
                  1)	Be used solely for a single stationary source whose activities have a standard industrial classification code for national defense or space research and technology;

                  2)	Not be transferable;

                  3)	Not be subject to Reasonably Available Control Technology discounting upon use; and

                  4)	After use, may be re-registered for the full original value, as Emission Reduction Credits pursuant to Section G and be used in accordance with this rule.

E. 	Requirements  -  Emission Reduction Discounts

      Emission reductions that result from a shutdown or a reduction in throughput shall be discounted by the greater of the following:

      1.	The amount of the emission reductions that could be controlled by the application of the best available control technology applicable on the date the application to register emission reduction credits is deemed complete if:

            a.	The actual emission reductions are greater than 25 pounds per day, and

            b.	There is no reasonably available control technology for the emission unit.

      2.	Twenty (20) percent.

F. 	Requirements  -  Emission Reduction Credit Application Procedures

      1.	Application Form and Completeness: The Application Form and Completeness procedures of Rule 208, Action on Applications  -  Time Limits, shall apply to the submission of applications for Emission Reduction Credits. An application for an Emission Reduction Credit shall include an application for an Authority to Construct or to cancel or revise the Permit to Operate for the source providing the emission reduction. For purposes of processing, the application for the Emission Reduction Credit and the application for the modification to the Authority to Construct or cancellation or revision of the Permit to Operate shall be considered one application.

      2.	Source Tests: The Control Officer may require source test results, continuous emission monitoring, production records, fuel use records and any other information necessary to evaluate an application. All source testing shall be conducted in accordance with District-approved protocols.

      3.	Preliminary Decision: After an application has been deemed complete, the Control Officer shall analyze the application based on applicable federal, state, and local control strategies and the requirements of these Rules and Regulations. Such analysis shall be completed within 120 days after a determination that the application is complete.

      4.	Publication and Public Comment: Within 10 days of any preliminary decision pursuant to F.3, above, which proposes to allow the registration of emissions which exceed the emission reduction thresholds specified in Table 1, below, the Control Officer shall publish in at least one newspaper of general circulation throughout the District a public notice stating the preliminary decision of the Control Officer, noting how pertinent information can be obtained, and inviting written public comment for a 30-day period following the date of publication. The notice shall identify the applicant and the quantity of emission reductions requested as Emission Reduction Credits.
            Table 1: Public Notice Thresholds for Emission Reduction Credit Approvals

                                   Pollutant
                      Proposed Emission Reduction Credit
                                (Tons per Year)
PM10
Carbon Monoxide
All Nonattainment pollutants (except CO and PM10)
All Attainment pollutants (except CO and PM10)
                                      15
                                      25
                                      10
                                      20

      5.	Decision

      	Within 180 days after the applicant submits a complete application pursuant to F.1, above, and after considering all comments received pursuant to F.4, above, the Control Officer shall reach a decision and notify the applicant. If the Control Officer approves the application for Emission Reduction Credits, the Control Officer shall:

            a.	Approve a Decision of Issuance that approves the emission reduction credits subject to appropriate conditions;

            b.	Issue an Authority to Construct permit or, for sources which are providing emission reductions due to being shutdown, the Control Officer shall cancel the Permit to Operate; and

            c.	Publish a notice of that decision in accord with the provisions of F.4, above, if the amount of the approved Emission Reduction Credit exceeds any threshold set forth in Table 1.

      6.	Appeals

            a.	The applicant may appeal the Control Officer's decision to the Hearing Board within 30 days after receipt of the Control Officer's decision.

            b.	Within 30 days of any decision to issue an Emission Reduction Credit, any aggrieved person who, in person or through a representative, appeared, submitted written testimony, or otherwise participated in the action before the District, may request the Hearing Board to hold a public hearing to determine whether the Emission Reduction Credit application was properly issued.

            c.	Any appeal shall follow the procedures for filing petitions set forth in Regulation V, Hearing Board, and pay fees set forth in Schedule F.12 of Rule 210, Fees, that apply to appeals of permit decisions.

      7.	Modification/Cancellation of Permit to Operate

            Prior to the issuance of any Certificate or entry in the Source Register of any Emission Reduction Credit, the applicant shall modify the Permit to Operate or, for emission reduction due to shutdowns, the Permit to Operate shall be cancelled or revised, for the source providing the emission reduction.

G.	Requirements  -  Source Register

	Upon the Control Officer's determination to approve an Emission Reduction Credit and the issuance or cancellation of the Permit to Operate for the source providing the emission reduction, the Control Officer shall register such Emission Reduction Credit in the Source Register. The Source Register shall provide the name of the owner(s), amount and type of pollutant qualified as Emission Reduction Credits, the date of registration, the location of the source supplying the emission reduction, and any other information deemed necessary by the Control Officer. The Emission Reduction Credits shall be registered until cancelled or nullified by operation of law.

H.	Requirements  -  Emission Reduction Certificates

      1.	Upon registration in the Source Register, the Control Officer shall issue a Certificate evidencing all approved reductions of emissions of pollutants to the owner or owners of the emissions source. Certificates evidencing ownership of approved reductions shall not constitute instruments, securities or any other form of property.

      2.	Emission Reduction Credits shall be valid for a period of 5 years from the date of registration. Such credits may be renewed if all requirements of these Rules and Regulations are met and an application for renewal is submitted to the District prior to expiration. The application shall be on a form approved by the Control Officer and shall be accompanied by a filing fee pursuant to item 1 of Schedule F of Rule 210, Fees. Failure to timely file an application for renewal may result in the termination of the Emission Reduction Credit.

I.	Requirements  -  Transfers

      1.	Transfer of all or any portion of an Emission Reduction Credit shall be in writing and signed by the transferor in a form authorized by law. Involuntary transfers shall conform to the requirements of Health and Safety Code section 40711. The instrument shall be filed with the District within 30 days of signing and shall specify or be accompanied by the following:

            a.	The amount and type of Emission Reduction Credits transferred;

            b.	A copy of the current Emission Reduction Credit Certificate which is to be cancelled or modified and reissued by the District;

            c. 	An application on a form prescribed by the Control Officer requesting the issuance of a new Emission Reduction Credit Certificate; and

            d.	The cost, in dollars per ton of each pollutant, paid for the purchase of the Emission Reduction Credit.

      2.	A filing fee as specified in item 1 of Schedule F of Rule 210, Fees, shall accompany any application for transfer an Emission Reduction Credit.

      3.	No transfer shall be effective until the required written notice, fee for transfer, and any other delinquent fees due to the District are paid.

      4.	Upon filing a copy of the instrument of transfer, application and fee for transfer, and all delinquent fees with the District, the transfer shall be complete and the title so transferred shall vest in the transferee. A new Certificate shall be issued to the transferee and the last previous original Certificate shall be cancelled or modified as necessary. The new Certificate and cancelled or modified Certificate shall be recorded in the Source Register.

J.	Requirements  -  Use of Emission Reduction Credits

      An Emission Reduction Credit may be used by the owner to provide offsets required by these Rules and Regulations to the extent allowed by state and federal law. An Emission Reduction Credit shall qualify as an offset upon surrender of the Certificate to the District subject to the requirements of these Rules and Regulations. Such Emission Reduction Credit shall be used in a manner consistent with the Certificate and in accordance with all other requirements of these Rules and Regulations at the time of use, including the applicable offset ratio.

K.	Requirements  -  Moratorium on Registered Emission Reduction Credits

      If the Control Officer determines that additional mandatory emission reductions will be necessary to attain an ambient air quality standard, the Control Officer may declare a full or partial moratorium on the use of emission reduction credits, after opportunity for public comment which complies with the notice requirements of Section F.4. Such a moratorium shall be lifted after the Control Officer determines that the District's air quality attainment plan demonstrates attainment of such standards.

L.	Requirements  -  Fees
      	Processing of applications for Emission Reduction Credits shall be subject to the Cost Reimbursement provisions of Rule 210, Fees.