Country Groups D:1, D:4, or D:5 that is not also specified in Country
Groups A:5 or A:6. This expanded license requirement is warranted
because of the potential diversion concern for these activities of
concern in or with Macau or a destination specified in Country Group
D:5. However, for destinations to or within destinations not specified
in Country Group D:5 (except Macau), license applications will
generally be reviewed under a presumption of approval license review
policy under Sec.  742.6(b)(10) paragraph (b)(10)(ii) (License review
policy for paragraph (a)(6)(iii)). See section C.4 for fuller
description of the license review policies that will be applicable to
these destinations referenced in this paragraph.
    This AC/S IFR also adds a cross reference in the RS control in ECCN
3A090 to see Sec.  742.6(a)(6)(iii) of the EAR.
    E. Addition of Note 3 to 3A090 and adding Related Controls cross
references from related ECCNs.
    This AC/S IFR, as a conforming change for the addition of Note 3 to
3A090, adds a Related Controls reference to Note 3 to 3A090 in ECCNs
3A001.z, 3A090, 4A003.z, 4A004.z, 4A005.z, 4A090, 5A002.z, 5A004.z,
5A992.z, 5D002.z, or 5D992.z.
2. Addition of License Exception Notified Advanced Computing (NAC) for
Consumer-Grade ICs With AI Capabilities
    In Sec.  740.8, which prior to the effective date of this rule was
reserved, this AC/S IFR adds new license exception NAC. This license
exception is for ICs under ECCN 3A090.b (i.e., ICs designed or marketed
for use in datacenters) and non-datacenter ICs under 3A090.a (i.e., ICs
not designed or marketed for use in datacenters and that do have a
`total processing performance' of 4800 or more). NAC is available for
exports, reexports, and transfers in or within Country Groups D:1, D:4,
or D:5 with different requirements applicable to Macau and destinations
specified in Country Group D:5. The purpose of the notification
process, which is only required for exports and reexports to Macau or
destinations specified in Country Group D:5, is to provide BIS and its
interagency export controls partners the opportunity to evaluate the
national security risk posed by ICs that fall within this parameter.
    This license exception as specified under the paragraph (a)
(Eligibility requirements) will authorize export, reexport, and
transfer (in-country) of any item classified in ECCNs 3A090, 4A090,
3A001.z, 4A003.z, 4A004.z, 4A005.z, 5A002.z, 5A004.z, 5A992.z, 5D002.z,
or 5D992.z, except for items designed or marketed for use in a
datacenter and meeting the parameters of 3A090.a. License Exception NAC
authorizes exports, reexports, or transfers (in-country) to any
destination specified in Country Groups D:1, D:4, or D:5, provided the
applicable criteria specified under paragraphs (a) and (b) are met. For
exports and reexports to Macau or destinations specified in Country
Group D:5, in addition to meeting the criteria under paragraphs (a) and
(b), the notification requirements under paragraph (c) of License
Exception NAC must all be met. The notification requirement does not
apply to exports or reexports to any destination specified in Country
Groups D:1 or D:4 (other than Macau or destinations also specified in
Country Group D:5) nor does it apply to transfers (in-country) to any
destination.
    Paragraph (a)(1) (Written purchase order) requires that any export
or reexport authorized under License Exception NAC must be made
pursuant to a written purchase order, except for commercial samples
which are not subject to this purchase order requirement. Written
purchase orders are not required for transfers (in-country). Exports,
reexports, or transfers (in-country) to or within any other destination
identified under Country Groups D:1, D:4, or D:5 are authorized under
License Exception NAC, provided the applicable criteria under
paragraphs (a) and (b) are met.
    Paragraph (a)(2) (Notification to BIS) specifies that for exports
or reexports to Macau or a destination specified in Country Group D:5,
you must notify BIS prior to exporting or reexporting, according to the
procedures set forth in paragraph (c) of License Exception NAC.
Paragraph (a)(2) specifies that if you intend to engage in multiple
exports or reexports after the signing of the purchase order, you need
only notify BIS prior to the first export or reexport. Paragraph (a)(2)
is not required for transfers (in-country) within Macau or a
destination specified in Country Group D:5.
    Paragraph (b) (Restrictions) apply to all exports, reexports, or
transfers (in-country) authorized under License Exception NAC.
Paragraph (b)(1) (Prohibited end uses and end users) specifies that
License Exception NAC is not able to overcome any part 744 or 746
license requirements, except for a license required under Sec.
744.23(a)(3) for reexports or exports to any destination other than
those specified in Country Groups D:1, D:4, or D:5 (excluding any
destination also specified in Country Groups A:5 or A:6) for an entity
that is headquartered in, or whose ultimate parent company is
headquartered in, either Macau or a destination specified in Country
Group D:5. The restriction under paragraph (b)(2) (`Military end use'
or `military end user') specifies that no exports, reexports, or
transfers (in-country) may be made under License Exception NAC to or
for a `military end use' as defined in Sec.  744.21(f) or `military end
user' as defined in defined in Sec.  744.21(g). This `military end use'
or `military end use' restriction applies to a broader country scope
than those prohibited under Sec. Sec.  744.17 and 744.21.
    Paragraph (c) (Prior notification procedures) specifies the
notification requirements that must be followed prior to making any
export or reexport to Macau or a destination specified in Country Group
D:5 under License Exception NAC. Paragraph (c)(1) (Procedures)
specifies the requirement to make this notification prior to using
License Exception NAC as well as what Blocks need to be completed in
SNAP-R for submitting a notification request. You do not need to submit
a commodity classification determination from BIS with your
notification, but doing so will be helpful in limiting any concerns
associated with the technical nature of the item because BIS will
already be familiar with the item's performance characteristics if it
has conducted a classification review.
    Paragraph (c)(2) (Action by BIS) specifies that BIS intends during
the 25-calendar day review period to review the notification together
with the other export control agencies. Paragraph (c)(3) (Status of
pending NAC notification requests) describes the process for entities
to follow in BIS's System for Tracking Export License Applications
(STELA) (https://snapr.bis.doc.gov/stela) to obtain the status of a
pending NAC notification or verify the status in BIS's Simplified
Network Applications Processing Redesign (SNAP-R) System. Paragraph
(c)(3) also specifies that if no objection to a NAC notification is
raised, STELA will, on the twenty-fifth calendar day following the date
of registration, provide a confirmation of that fact and a NAC
confirmation number to be submitted in AES. Paragraph (c)(3) also
indicates that if the NAC notification is not approved, on the twenty-
fifth calendar day following

the date of registration, STELA will provide you with confirmation if
you cannot use License Exception NAC.
    BIS intends to post an announcement on the BIS website once
entities may submit License Exception NAC notifications with the goal
that License Exception NAC requests may be submitted prior to the
effective date of this rule.
    This AC/S IFR, as a conforming change for the addition of License
Exception NAC, adds a NAC paragraph to the List-Based License Exception
section under ECCNs 3A001.z, 3A090, 4A003.z, 4A004.z, 4A005.z, 4A090,
5A002.z, 5A004.z, 5A992.z, 5D002.z, and 5D992.z.
3. Replacing Criteria for Any Other Item on CCL That Meet or Exceed the
Performance Parameters of 3A090 or 4A090 by Positively Identifying
Those ECCNs and Adopting .z Paragraphs
    The October 7 IFR under Sec.  742.6(a)(6), along with other
provisions in the October 7 IFR, used the criteria ``or identified
elsewhere on the CCL that meet or exceed the performance parameters of
ECCNs 3A090 or 4A090.'' As described above, commenters on the October 7
IFR raised significant concerns that this type of catch-all text
deviated from the common structure of the CCL under supplement no. 1 to
part 774 of the EAR, would be burdensome and possibly unimplementable
for many exporters, reexporters, and transferors, and would lead to
confusion regarding the appropriate classification and control of items
on the CCL. Commenters strongly encouraged BIS to adopt a more
conventional approach to implementing these changes by either adding
new ECCNs to control those additional items that would otherwise meet
or exceed the performance parameters of ECCNs 3A090 or 4A090, or by
identifying a positive list of additional ECCNs that may warrant this
additional control on the CCL and then creating separate ``items''
level paragraphs in each of these respective ECCNs.
    After reviewing the concerns raised by the commenters, BIS agrees
that a more conventional structure is needed for imposing this aspect
of the October 7 IFR. Accordingly, BIS is identifying a positive list
of the nine additional ECCNs for which BIS has determined also have
performance characteristics or functions that meet or exceed the
performance parameters of ECCNs 3A090 or 4A090 and is adding a new
``items'' level paragraph in the List of Items Controlled section of
each of these nine ECCNs by adding .z paragraphs to each. This AC/S IFR
makes several changes to the EAR to implement this important change to
the October 7 IFR. For ease of reference these changes are described
here under four types of changes: (1) adding .z paragraphs to nine
ECCNs; (2) revising Related Controls for 3A090, 3A991, 4A090, 4A994 and
the nine ECCNs to cross reference each other to assist with
classification; (3) making other EAR conforming changes needed because
of the addition of .z paragraphs; and (4) changing export clearance
requirements to increase transparency of .z, 3A090, and 4A090
shipments.
    A. Adding .z paragraphs to nine ECCNs.
    This final rule revises nine ECCNs 3A001, 4A003, 4A004, 4A005,
5A002, 5A004, 5A992, 5D002, and 5D992 to address overlapping controls
with ECCNs 3A090, 4A090, 3A991.p and 4A994.l by adding .z paragraphs to
each of these nine ECCNs. These changes are intended to make it easier
for exporters, reexporters, and transferors to identify these items
subject to controls added in the October 7 IFR and to more easily
distinguish these items from other items controlled under these same
nine ECCNs. Each .z paragraph uses the same structure, but there are
differences in the .z paragraphs because the overlapping controls with
3A090 and 4A090, as well as 3A991.p and 4A994.l, are not the same for
each of the nine ECCNs. Despite the differences in the text used for
each .z paragraph, the commonality in the paragraphs' structure should
assist understanding. Some of the .z paragraphs are limited to one
paragraph, but others such as ECCN 5A002 have several paragraphs under
the .z paragraph. BIS is adopting the .z structure because no ECCN
currently has a .z ``items'' level paragraph. Similar to the structure
used with the .x and .y paragraphs for the ``600 series,'' 9x515, and
0x5zz ECCNs, using a common ``items'' paragraph designation will make
it easier for exporters, reexporters, and transferors to identify these
items, as well as for the U.S. Government to identify these items under
these nine ECCNs.
    For each ECCN this rule revises to add a .z paragraph, this rule
reserves the items level paragraph from where the items paragraph ended
prior to this AC/S IFR becoming effective up through paragraph .y. For
example under ECCN 5A002, this rule revises 5A002 to reserve paragraphs
.f through .y. This rule does the same in each of the other eight ECCNs
that are being revised to add the .z paragraphs, but depending on how
many items paragraphs each ECCN had before the effective date of this
AC/S IFR, different paragraphs are reserved.
    BIS includes as an illustrative example some of the .z paragraphs
from ECCN 5A002 that this AC/S IFR adds. The introductory text of the
5A002.z paragraph identifies ``Other commodities, as follows'' and then
includes additional control parameters to identify these .z
commodities. ECCN 5A002, because of the complexity of the ECCN and the
overlapping controls with 3A090 and 4A090, has several .z subparagraphs
that are tied to the other ``items'' paragraphs in 5A002. For example,
5A002.z.1 controls commodities that are described in 5A002.a and that
also meet or exceed the performance parameters in 3A090 or 4A090.
Similarly, 5A002.z.2 controls commodities that are described in 5A002.b
and that also meet or exceed the performance parameters in 3A090 or
4A090. Some of the other relevant ECCNs have a simpler and shorter
structure and may be limited to a single .z paragraph. However,
regardless of how many .z paragraphs are added, each .z paragraph
functions the same way because it references an item that is described
elsewhere in the same ECCN that also meets or exceeds the performance
parameters in 3A090, 4A090, 3A991.p, or 4A994.l, as applicable and
specified in the respective .z paragraph. By classifying these items in
their own .z paragraph, it will be easier for exporters, reexporters,
and transferors to identify these items and the additional controls and
other restrictions that are applicable to them.
    In ECCN 3A001, this AC/S IFR reserves paragraphs j. through y. and
adds paragraphs z.1 through .4 to the ``items'' paragraph in the List
of Items Controlled section and makes the following conforming changes
by adding certain 3A001.z items to the NS1, RS1, MT1 and NP1 Controls
paragraphs and adding a RS control that applies to items controlled by
3A001.z for destinations specified in Country Groups D:1, D:4, or D:5.
This AC/S IFR adds 3A001.z to the exclusion on using License Exception
LVS.
    In ECCN 4A003, this AC/S IFR reserves paragraphs h. through y. and
adds paragraphs .z.1 through .z.4 in the List of Items Controlled
section and makes a corresponding change to the Reason for Control
section by adding a RS control for items controlled by 4A003.z for
destinations specified in Country Groups D:1, D:4, or D:5. This AC/S
IFR adds 4A003.z to the exclusion on using License Exception LVS. This
AC/S IFR also adds a new Note to List Based License Exception in ECCN
4A003 to specify that the related equipment specified under ECCN
4A003.g, z.2, or z.4 are eligible for

License Exception GBS if three conditions are met. The related
equipment must be exported, reexported, or transferred (in-country) as
part of a computer system, the computer system must either be
designated as NLR or eligible for License Exception APP, and the
related equipment must be eligible for License Exception APP.
    In ECCN 4A004, this AC/S IFR reserves paragraphs d. through y. and
adds paragraph .z in the List of Items Controlled section and makes a
corresponding change to the Reasons for Control section by adding a RS
control that applies to items controlled by 4A004.z (1) for
destinations specified in Country Groups D:1, D:4, or D:5 that are not
also specified in Country Groups A:5 or A:6 and (2) to or with any
destination not specified in Country Groups D:1, D:4, or D:5 when the
export, reexport or transfer (in-country) includes an ultimate
consignee or end user headquartered in a destination in Country Groups
D:1, D:4, or D:5 that is not also specified in Country Groups A:5 or
A:6. This AC/S IFR adds 4A004.z to the exclusion on using License
Exception LVS.
    In ECCN 4A005, this AC/S IFR revises the heading to add the
parenthetical phrase ``(see List of Items Controlled).'' This AC/S IFR
revises the phrase that referenced ``[T]he list of items controlled is
contained in the ECCN heading'' in the ``Items'' paragraph in the List
of Items Controlled section to add the phrase ``except for the
commodities controlled under 4A005.z.'' This rule reserves paragraphs
a. through .y, adds paragraph .z, and makes a corresponding change to
the Reasons for Control section to add a RS control that applies to
items controlled by 4A005.z for destinations specified in Country
Groups D:1, D:4, or D:5 that are not also specified in Country Groups
A:5 or A:6. This AC/S IFR also adds 4A005.z to the exclusion on using
License Exception ACE.
    BIS notes that although the general restriction on the use of
license exceptions under Sec.  740.2(a)(9)(ii) and the terms and
conditions of certain list-based license exceptions, such as LVS or
GBS, or the terms of License Exception STA, would preclude the use of
these EAR license exceptions for destinations specified in Country
Groups D:1, D:4, or D:5, that are not also specified in Country Groups
A:5 or A:6, that this AC/S IFR as an additional safeguard still adds
exclusions for the new .z paragraphs for these ECCNs as an additional
reminder to exporters, reexporters, and transferors that these license
exceptions are not available for .z items for these destinations.
    In ECCN 5A002, this AC/S IFR reserves paragraphs f. through y. and
adds paragraphs .z.1 through .5 in the List of Items Controlled section
and makes the following conforming changes by adding a RS control that
applies to items controlled by 5A002.z for destinations specified in
Country Groups D:1, D:4, or D:5 that are not also specified in Country
Groups A:5 or A:6. This AC/S IFR also adds 5A002.z to the exclusion on
using License Exceptions LVS and ENC.
    In ECCN 5A992, this AC/S IFR reserves paragraphs d. through y. and
adds paragraphs .z.1 and .2 in the List of Items Controlled section and
makes a corresponding change to the Reasons for Control section by
revising the RS control that applies for 5A992.z items destined to or
within destinations specified in Country Groups D:1, D:4, or D:5 that
are not also specified in Country Groups A:5 or A:6.
    In ECCN 5A004, this AC/S IFR reserves paragraphs c. through y. and
adds paragraphs .z.1 and .2 in the List of Items Controlled section and
makes the following conforming change by adding a RS control that
applies to items controlled by 5A004.z for destinations specified in
Country Groups D:1, D:4, or D:5 that are not also specified in Country
Groups A:5 or A:6. This AC/S IFR also adds 5A004.z to the exclusion on
using License Exceptions LVS and ENC.
    In ECCN 5D002, this AC/S IFR reserves paragraphs e. through y. and
adds paragraphs .z.1 through .9 in the List of Items Controlled section
and makes the following conforming change by adding a RS control that
applies to items controlled by 5D002.z for destinations specified in
Country Groups D:1, D:4, or D:5 that are not also specified in Country
Groups A:5 or A:6. This AC/S IFR also adds 5D002.z to the exclusion on
using License Exception ENC.
    In ECCN 5D992, this AC/S IFR reserves paragraphs d. through y. and
adds paragraph .z in the List of Items Controlled section and makes a
corresponding change to the Reasons for Control section by revising the
RS control that applies for destinations specified in Country Groups
D:1, D:4, or D:5 that are not also specified in Country Groups A:5 or
A:6.
    B. Revising Related Controls for 3A090, 4A090, 5E001, and the Nine
ECCNs to cross reference each other to assist with classification.
    BIS includes Related Controls paragraphs in the List of Items
Controlled section of ECCNs to alert persons classifying items of
related controls that may be applicable. This rule revises the Related
Controls paragraphs in ECCNs 3A090 and 4A090 to add references to the
nine ECCNs that this final rule adds .z paragraphs to, as applicable.
Because the cross over that is being addressed is not identical for
each of these nine ECCNs with .z paragraphs added, the revisions to the
Related Controls paragraphs are not identical in all cases.
    In ECCN 3A001, this AC/S IFR adds a reference to see also ECCN
3A090.
    In ECCN 3A090, this AC/S IFR adds a reference to see also 3A001.z,
5A002.z, 5A004.z, 5A992.z, 5D002.z, and 5D992.z.
    In ECCN 3A991, this AC/S IFR adds a reference to see also ECCNs
5A002.z, 5A004.z, and 5A992.z.
    In ECCN 4A003, this AC/S IFR adds a reference to see also ECCN
4A090.
    In ECCN 4A004, this AC/S IFR adds a reference to see also ECCN
4A090.
    In ECCN 4A005, this AC/S IFR adds a reference to see also ECCN
4A090.
    In ECCN 4A090, this AC/S IFR adds a reference to see also ECCNs
4A003.z, 4A004.z, 4A005.z, 5A002.z, 5A004.z, 5A992.z, 5D002.z, and
5D992.z.
    In ECCN 4A994, this AC/S IFR adds a reference to see also ECCNs
4A003.z, 4A004.z, 4A005.z, 5A002.z, 5A004.z, and 5A992.z.
    In ECCN 5A002, this AC/S IFR adds a reference to see also ECCNs
3A090 and 4A090.
    In ECCN 5A004, this AC/S IFR adds a reference to see also ECCNs
3A090 and 4A090.
    In ECCN 5A992, this AC/S IFR adds a reference to see also ECCNs
3A090 and 4A090.
    In ECCN 5D002, this AC/S IFR adds a reference to see also ECCNs
3D001.z and 4D001.z.
    In ECCN 5D992, this AC/S IFR adds a reference to see also ECCNs
3D001.z and 4D001.z.
    In ECCN 5E001, this AC/S IFR adds a reference to see also ECCN
3A001.z.
    C. Other EAR conforming changes needed because of addition of .z
paragraphs.
    This AC/S IFR makes various changes to other ECCNs and other parts
of the EAR to make conforming changes where needed as a result of the
addition of the .z items paragraphs to the nine ECCNs 3A001, 4A003,
4A004, 4A005, 5A002, 5A004, 5A992, 5D002, and 5D992.
    These changes are made to ensure that certain provisions that
currently apply for other items controlled under these nine ECCNs are
not narrowed or expanded as a result of the addition of the .z
paragraphs. In other cases, specific ``items'' paragraphs from these

nine ECCNs are identified in other provisions where in certain cases,
it was needed to also add in references to ensure the same provisions
will apply to the .z paragraphs. Because some of the nine ECCNs include
ECCNs, such as 5A002 and 5D002, which are referenced in various other
provisions of the EAR, this AC/S IFR needed to make various conforming
changes to these other ECCNs and parts of the EAR. Although this
appears to be extensive revision, the intent in most cases is to ensure
that the scope of the controls prior to this AC/S IFR generally does
not change. The changes are described below in the order they appear in
the EAR.

Conforming Changes in Part 734

    In Sec.  734.4(b)(2), this AC/S IFR removes ECCNs 5A992.c and
5D992.c and adds in their place ECCNs 5A992 and 5D992. These
requirements are intended to apply to the entire ECCNs, so these
changes are needed to account for the addition of .z to 5A992 and
5D992.
    In Sec.  734.9(h)(1)(i)(B)(2) and (h)(1)(ii)(B)(2), this AC/S IFR
revises these two paragraphs to remove the phrase ``elsewhere on the
CCL and meets the performance parameters in 3A090 or 4A090'' and adds a
more specific reference to ``meeting the performance parameters in
ECCNs 3A001.z, 4A003.z, 4A004.z, 4A005.z, 5A002.z, 5A004.z, or
5A992.z.'' By adding this more specific reference tied to the new .z
paragraphs, this AC/S IFR will make it easier for foreign manufacturers
to comply with this aspect of the Advanced Computing Foreign Direct
Product (FDP) rule and to more easily apply the de minimis provisions.

Conforming Changes in Part 740

    In Sec.  740.2 Restrictions on all License Exceptions, this AC/S
IFR revises the general restriction on the use of license exceptions
under paragraph (a)(9)(ii), which will now be paragraph (a)(9)(ii)(B)
because of the revisions made in this SME IFR, to remove the phrase
``elsewhere on the CCL which meets or exceeds the performance
parameters in ECCNs 3A090 or 4A090'' and adds in its place the more
specific reference to ``specified in ECCNs 3A001.z; 3D001 (for
``software'' for commodities controlled by 3A001.z, 3A090), 3E001 (for
``technology'' for commodities controlled by 3A001.z); 4A003.z;
4A004.z; 4A005.z; 4D001 (for ``software'' for commodities controlled by
4A003.z, 4A004.z, and 4A005.z); 4E001 (for ``technology'' for
commodities controlled by 4A003.z, 4A004.z, and 4A005.z); 5A002.z;
5A004.z; 5A992.z; 5D002.z; 5D992.z; 5E002 (for ``technology'' for
commodities controlled by 5A002.z or 5A004.z); ``software'' specified
by 5D002 (for 5A002.z or 5A004.z commodities); 5E992 (for
``technology'' for commodities controlled by 5A992.z or ``software''
controlled by 5D992.z).'' By adding this more specific reference tied
to the new .z paragraphs, this AC/S IFR will make it easier for
exporters, reexporters, and transferors to know when this general
restriction will apply on the use of license exceptions. In the
introductory text of paragraph (a)(9)(ii), this AC/S IFR adds a
reference to new License Exception NAC by adding the phrase ``NAC,
under the provisions of Sec.  740.8.''
    In addition to amending Sec.  740.2(a)(9) to prohibit the use of
license exceptions for certain ECCNs, including those with a .z
paragraph, BIS also notes restrictions for certain license exceptions
as a reminder for exporters. In Sec.  740.7 Computers (APP), this AC/S
IFR adds a reference to 4A003.z.2 or z.4 after the reference to 4A003.g
in paragraph (b)(1) to remind exporters that this restriction on the
use of License Exception APP will also apply when a commodity that is
described in 4A003.g is controlled under 4A003.z.2 or .z.4.
    In Sec.  740.16 Additional permissive reexports (APR), this AC/S
IFR revises paragraphs (a)(2) and (b)(2)(ii) to add a reference to
3A001.z to ensure that the restrictions under 3A001.b.2 or b.3 will
continue to apply when a commodity described under one of those two
``items'' paragraphs is controlled under 3A001.z.
    In Sec.  740.17 Encryption Commodities, Software and Technology
(ENC), this AC/S IFR makes several conforming changes to ensure the
intended scope of this license exception is not changed as a result of
the addition of the .z ``items'' paragraphs:
    Under the fifth sentence of the introductory text to Sec.  740.17,
this AC/S IFR removes the reference to 5A992.c and 5D992.c and adds in
its place a reference to 5A992 and 5D992.
    Under paragraph (b)(1) to Sec.  740.17, this AC/S IFR adds a
reference after 5A002.a to 5A002.z.1 and removes the reference to
5A992.c and 5D992.c and adds in its place a reference to 5A992 and
5D992. BIS could have added a reference to 5D992.z, but because ECCN
5D992 only includes ``items'' paragraphs .c and .z, it was simpler to
add a reference to 5D992.
    Under paragraph (b)(2)(i)(D) to Sec.  740.17, this AC/S IFR after
5A002.c adds a reference to 5A002.z.3 to ensure the intended scope of
this provision is not changed as a result of the addition of the .z
``items'' paragraph.
    Under the Note to paragraph (b)(2) to Sec.  740.17, this AC/S IFR
adds after ECCN 5A002.b a reference to 5A002.z.2 and after 5D002.b a
reference to 5D002.z.5 to ensure the intended scope of this provision
is not changed as a result of the addition of the .z ``items''
paragraph.
    Under (b)(3) introductory text to Sec.  740.17, this AC/S IFR
removes 5A992.c and 5D992.c and adds in their place references to 5A992
and 5D992. BIS could have added a reference to 5D992.z, but because
ECCN 5D992 only includes ``items'' paragraphs .c and .z, it was simpler
to add a reference to 5D992.
    Under (b)(3)(i) introductory text to Sec.  740.17, this AC/S IFR
after 5A002.a adds a reference to 5A002.z.1 to ensure the intended
scope of this provision is not changed as a result of the addition of
the .z ``items'' paragraph.
    Under paragraph (b)(3)(iii)(B) to Sec.  740.17, this AC/S IFR after
5D002.a.3.b adds a reference to 5D002.z.4, and after 5D002.c.3.b adds a
reference to 5D002.z.9 to ensure the intended scope of this provision
is not changed as a result of the addition of the .z ``items''
paragraph.
    Under paragraph (b)(3)(iv) to Sec.  740.17, this AC/S IFR after
5A002.b adds a reference to 5A002.z.2, and after 5D002.b adds a
reference to 5D002.z.5 to ensure the intended scope of this provision
is not changed as a result of the addition of the .z ``items''
paragraph.
    Under paragraph (e)(3) second sentence to Sec.  740.17, this AC/S
IFR removes the reference to 5A992.c and 5D992.c and adds in its place
a reference to 5A992 and 5D992. BIS could have added a reference to
5D992.z, but because ECCN 5D992 only includes ``items'' paragraphs .c
and .z, it was simpler to add a reference to 5D992.
    Under paragraph (f)(1) to Sec.  740.17, this AC/S IFR adds after
5A004.a a reference to 5A004.z.1 and z.2, after 5D002.a.3.a a reference
to 5D002.z.3 and z.8 to ensure the intended scope of this provision is
not changed as a result of the addition of the .z ``items'' paragraph.

Conforming Changes in Parts 742, 746, and 748

    In Sec.  742.6 Regional stability, this AC/S IFR revises paragraph
(a)(6)(i), to remove the phrases beginning with ``5A992 (that meet or
exceed the performance parameters of ECCNs 3A090 or 4A090)'' and
``5D992 (that meet or exceed the performance parameters of ECCNs 3A090
or 4A090).'' Also in paragraph (a)(6)(iii), this AC/S IFR removes the
phrase ``elsewhere on the CCL that meet or exceed the performance
parameters of ECCNs

3A090 or 4A090'' and in its place references the nine .z ECCNs
``3A001.z, 4A003.z, 4A004.z, 4A005.z, 5A002.z, 5A004.z, 5A992.z,
5D002.z, or 5D992.z.'' As noted and requested by several commenters,
having a positive listing of relevant ECCNs will significantly ease the
burden on exporters, reexporters, and transferors and the controls will
be easier to implement.
    In Sec.  746.8 Sanctions against Russia and Belarus, this AC/S IFR
adds .c after 5A992 and 5D992. This AC/S IFR makes this change to
ensure that 5A992.z and 5D992.z commodities and software will not be
within the scope of this exclusion.
    In Sec.  742.15 (Encryption items), this AC/S IFR revises the third
sentence of paragraph (a)(1) to remove the .c after 5A992.c and 5D992.c
to ensure the scope of requirement is not changed by the addition of
5A992.z and 5D992.z.
    In Sec.  746.10 `Luxury Goods' Sanctions Against Russia and Belarus
and Russian and Belarusian Oligarchs and Malign Actors, this AC/S IFR
adds .c after 5A992 and 5D992. This AC/S IFR makes this change to
ensure that 5A992.z and 5D992.z commodities and software will not be
within the scope of this exclusion.
    In supplement no. 7 to part 748--Authorization Validated End-User
(VEU): List of Validated End-Users, Respective Items Eligible For
Export, Reexport And Transfer, And Eligible Destinations, this AC/S IFR
revises the VEU entry for ``Advanced Micro Devices China, Inc.'' in
China to remove the reference to 4A003 and add in its place the more
specific reference to 4A003.b through .g to ensure that the currently
approved scope of this VEU entry does not change because of the
addition of 4A003.z. In addition, this AC/S IFR revises the entry for
``Shanghai Huahong Grace Semiconductor Manufacturing Corporation'' in
China to remove the reference to 5A002 and add in its place the more
specific reference to 5A002.a through .e; remove the reference to 5A004
and add in its place a more specific reference to 5A004.a through .b;
and remove 5A992 and adds in its place a reference to 5A992.c. Also in
supplement no. 7 to part 748, this AC/S IFR revises the heading of the
supplement to add the parenthetical phrase ``(in-country)'' after the
term ``transfer'' for clarity on the scope of the VEU authorizations
under this supplement and for consistency with other EAR the
provisions, such as the definition of ``transfer (in-country).''

Conforming Changes to Sec. Sec.  770.2 and 772.1

    In Sec.  770.2 Item interpretations, this AC/S IFR after 4A003.g
adds a reference to 4A003.z.2 and .z.4 in paragraph (l)(2) to ensure
the intended scope of this provision is not changed as a result of the
addition of the .z ``items'' paragraph.
    In Sec.  772.1 Definitions of terms as used in the Export
Administration Regulations (EAR), this AC/S IFR revises Note 1 to the
term ``specially designed,'' to add the parenthetical phrase ``(except
for .z)'' after ECCNs 5A992 and 5D992 to ensure the intended scope of
this provision is not changed as a result of the addition of the .z
``items'' paragraph.
    In ECCNs 3D001, 3E001, 4D001, 4E001, 5D002 5E002, and 5E992, this
AC/S IFR revises the License Requirement section of each of these nine
ECCNs to add related ``software'' and ``technology'' controls for the
new .z items added to the nine ECCNs 3A001, 4A003, 4A004, 4A005, 5A002,
5A004, 5A992, 5D002, and 5D992 to impose the same license requirements
on the related ``software'' and ``technology'' as applies to the .z
commodities this AC/S IFR adds.

Conforming Changes to the CCL

    In ECCN 3D001, this AC/S IFR revises the TSR paragraph in the List
Based License Exceptions section to add after ECCN 3A001.b.8 a
reference to 3A001.z to ensure the intended scope of this provision is
not changed as a result of the addition of the .z ``items'' paragraph.
    In ECCN 3E001, this AC/S IFR revises the TSR paragraph in the List
Based License Exceptions section to add after ECCNs 3A001.b.8,
3A001.e.4, 3A001.b.2, and 3A001.b.3 references to 3A001.z after each of
these items paragraphs to ensure the intended scope of this provision
is not changed as a result of the addition of the .z ``items''
paragraph. Also in ECCN 3E001 under the Special Conditions for STA
section, this AC/S IFR adds after ECCN 3A001.b.2 and .b.3 a reference
to 3A001.z to ensure the intended scope of this provision is not
changed as a result of the addition of the .z ``items'' paragraph. Also
in Note 2 in the ``items'' paragraph in the List of Items Controlled
section, this rule adds after 3A001.a.3 and .14 a reference to 3A001.z
to ensure the intended scope of this provision is not changed as a
result of the addition of the .z ``items'' paragraph.
    In Note 3 to Category 4--Computers, this AC/S IFR after 5A002.a
adds a reference to 5A002.z.1 and z.6, and after 5A004.b adds a
reference to 5A004.z; after 5D002.c.3 adds references to 5D002.z.6,
5D002.z.8, and z.9. These changes are made to ensure the intended scope
of this provision is not changed as a result of the addition of the .z
``items'' paragraph.
    In the Technical Note paragraph 2 in the TECHNICAL NOTE ON
``ADJUSTED PEAK PERFORMANCE'' (``APP'') at the end Category 4--
Computers, this AC/S IFR after 4A003.c adds a reference to 4A003.z.1
and z.3 to ensure the intended scope of this provision is not changed
as a result of the addition of the .z ``items'' paragraph.
    In Note 3 to Category 5--Telecommunications and ``Information
Security'' Part 1--Telecommunications, this AC/S IFR after 5A002.a adds
a reference to 5A002.z.1 and z.6; after 5A004.b adds a reference to
5A004.z; after 5D002.c.1 adds a reference to 5D002.z.6; and after
5D002.c.3 adds a reference to 5D002.z.8 and z.9 to ensure the intended
scope of this note is not changed as a result of the addition of the .z
``items'' paragraph.
    In Note 3 (Cryptography Note) to Category 5--Telecommunications and
``Information Security'' Part 2--``Information Security,'' to ensure
the intended scope of this note is not changed as a result of the
addition of the .z ``items'' paragraph, this AC/S IFR after 5D002.a.1
adds 5D002.z.1; after 5D002.b adds 5D002.z.5; and after 5D002.c.1 adds
5D002.z.6 . In addition, under the N.B. to Note 3 (Cryptography Note),
this AC/S IFR removes 5A992.c and 5D992.c and adds in their place 5A992
and 5D992. BIS could have added a reference to 5A992.z and 5D992.z, but
because ECCNs 5A992 and 5D992 only include ``items'' paragraphs .c and
.z, it was simpler to add references to 5A992 and 5D992.
    In ECCN 5B002 under ``items'' paragraph .b in the List of Items
Controlled section, this AC/S IFR after 5D002.a adds a reference to
5D002.z.1 through z.4 and after 5D002.c adds a reference to 5D002.z.6
through z.9 to ensure the intended scope of this provision is not
changed as a result of the addition of the .z ``items'' paragraph.
    In ECCN 5E002, this AC/S IFR under ``items'' paragraph a in the
List of Items Controlled section after 5D002.a adds a reference to
5D002.z.1 through .z.3, and after 5D002.c adds a reference to 5D002.z.6
through .z.8. Also in the Note to 5E002.a, this AC/S IFR after
5D002.a.3.b adds a reference to 5D002.z.4; and after 5D002.c.3.b adds a
reference to 5D002.z.9. Lastly under `items'' paragraph b in the List
of Items Controlled section, this AC/S IFR after 5A002.b adds a
reference to 5A002.z.2. All of these changes are made to ECCN 5E002 to
ensure the intended scope of

these provisions is not changed as a result of the addition of the .z
``items'' paragraph.
    In ECCN 5E992, this AC/S IFR revises ``items'' paragraph b in the
List of Items Controlled section to remove 5D992.c and add in its place
5D992. BIS could have added a reference to 5D992.z, but because ECCN
5D992 only includes an ``items'' paragraph .c and .z, it was simpler to
add a reference to 5D992.
    In ECCN 9A004, this AC/S IFR under ``items'' paragraph d in the
List of Items Controlled section, after 3A001.b.1.a.4 adds a reference
to 3A001.z (if also described in 3A001.b.1.a.4), after 5A002.c adds a
reference to 5A002.z.3, and after 5A002.e adds a reference to 5A002.z.5
and z.10 to ensure the intended scope of these provisions is not
changed as a result of the addition of the .z ``items'' paragraph.
    In ECCN 9A515 under Note 2 to 9A515.d and .e, this AC/S IFR after
3A001.a adds a reference to 3A001.z to ensure the intended scope of
this note is not changed as a result of the addition of the .z
``items'' paragraph. In addition, under ``items'' paragraph x.4 in the
List of Items Controlled section, this rule after 3A001.e.4 adds a
reference to 3A001.z, after 3A001.b.4 adds a reference to 3A001.z; and
under ``items'' paragraph x.6 after 3A001.b.8 adds a reference to
3A001.z. All of these changes to ECCN 9A515 are made to ensure the
intended scope of these provisions is not changed as a result of the
addition of the .z ``items'' paragraph.

Conforming Changes to Supp. No. 6 to Part 774

    In supplement no. 6 to part 774--Sensitive List, this AC/S IFR
revises paragraphs: (3)(i) to add after 3A001.b.2 the parenthetical
phrase ``(including those described under 3A001.b.2 that are controlled
by 3A001.z)''; (3)(ii) to add after 3A001.b.3 the parenthetical phrase
``(including those described under 3A001.b.3 that are controlled by
3A001.z);'' (3)(iv) to add after 3A001.b.3 the phrase ``equipment
described under 3A001.b.2 or 3A001.b.3 that are controlled under
3A001.z'' and after 3A002.g.1 to add the phrase ``and equipment
described under 3A002.g.2 that are controlled under 3A002.z;'' and
lastly under (3)(v) after 3A001.b.3, adds the phrase ``equipment
described under 3A001.b.2 or 3A001.b.3 that are controlled under
3A001.z'' and after 3A002.g.1 adds the phrase ``and equipment described
under 3A002.g.2 that are controlled under 3A002.z.'' All of these
changes to the Sensitive List are made to ensure the intended scope of
these provisions is not changed as a result of the addition of the .z
``items'' paragraph.
    D. Export clearance changes to increase transparency of .z, 3A090,
and 4A090 shipments.
    i. Identification of .z items in AES. The identification of items
under .z paragraphs will assist exporters, reexporters, and transferors
by having a distinct classification of these items under these nine
ECCNs, which will assist companies in reducing their compliance burdens
and keeping better track of these items. For all shipments to China,
regardless of dollar value, an Electronic Export Information (EEI)
filing is required in AES for any items classified under an ECCN on the
CCL pursuant to the requirement under Sec.  758.1(b)(10), which
includes the nine ECCNs that this rule adds .z paragraphs to, unless
authorized under License Exception GOV under Sec.  740.11. The
mandatory EEI filing requirement in AES is important for transparency
into which CCL items are being shipped to China. However,
classification information filed in AES is at the ECCN level and does
not include the ``items'' level classification. One exception to this
practice is in the case of end-item firearms for exporters who wish to
use the EEI filing in AES as the method for submitting conventional
arms reporting to BIS instead of submitting separate reports to BIS.
They do so by entering the items level classification as the first text
to appear in the Commodity description block in the EEI filing in AES.
    The benefit for exporters would be undermined if they are not
allowed to identify in the EEI filing in AES the .z items level
classification because their shipments to a destination specified in
Country Groups D:1, D:4, or D:5, excluding any destination also
specified in Country Groups A:5 or A:6, could potentially be stopped if
someone from the U.S. Government had questions as to whether, for
example, the item was classified under ECCN 5A002.a or under 5A002.z.
The U.S. Government also has an interest in being able to easily
identify the .z items in the EEI filing data in AES. The solution to
this problem, to benefit both exporters and the U.S. Government, BIS
applies the successful model that has been used for identifying end-
item firearms in the EEI data in AES by adopting a similar type of
requirement for these .z paragraphs for EEI filings in AES. In Sec.
758.1 (The Electronic Export Information (EEI) Filing to the Automated
Export System (AES)), this rule adds a new paragraph (g)(5) (Exports of
.z items that meet or exceed the performance parameters of ECCN 3A090
or 4A090). New paragraph (g)(5) imposes a requirement for identifying
.z items by ``items'' level classification in the EEI filing in AES.
New paragraph (g)(5) specifies that for any export of .z items
controlled under ECCNs 3A001, 4A003, 4A004, 4A005, 5A002, 5A004, 5A992,
5D002, or 5D992 in addition to any other required data for the
associated EEI filing, the EEI filer must include the items paragraph
classification (i.e., .z), when applicable, for ECCNs 3A001.z, 4A003.z,
4A004.z, 4A005.z, 5A002.z, 5A004.z, or 5A992.z, 5D002.z, or 5D992.z. as
the first text to appear in the Commodity description block in the EEI
filing in AES.
    ii. Identification of 3A090, 4A090, and .z commodities on the
commercial invoice. In Sec.  758.6, this AC/S IFR revises paragraph
(a)(2) to expand the list of ECCNs that an exporter must incorporate as
an integral part of the commercial invoice. Prior to this final rule
becoming effective, this requirement was limited to ECCN(s) for any
9x515 or ``600 series'' ``items'' being shipped (i.e., exported in
tangible form). This AC/S IFR adds 3A090 and 4A090, and the seven
commodity .z ECCNs 3A001.z, 4A003.z, 4A004.z, 4A005.z, 5A002.z,
5A004.z, and 5A992.z, to the requirement. This AC/S IFR does not add
ECCNs 5D002.z and 5D992.z to Sec.  758.6 because these exports would
typically be done in an intangible format. However, even when EEI is
not required to be filed in AES for an intangible export, BIS still
encourages exporters, as a good compliance practice, to identify the .z
classification for ECCN 5D002.z and 5D992.z on the commercial invoice
when applicable. For the nine ECCNs with a .z paragraph, the
requirement to include the classification only applies to commodities
classified under the .z paragraphs. If the commodity is classified
under any other items paragraph in one of those nine .z ECCNs, then the
requirement under Sec.  758.6(a)(2) is not applicable. This AC/S IFR
also specifies that the requirement for identifying ECCN 3A090 includes
identifying the commodity as either 3A090.a or .b.
    BIS is adding this additional export clearance requirement to
increase the transparency of these items for entities receiving these
items overseas. In particular, with the foreign direct product rules
from the October 7 IFR also tied to these ECCNs, it will assist foreign
manufacturers and other parties to be able to more easily identify when
they receive a 3A090, 4A090, or a 3A001.z, 4A003.z, 4A004.z, 4A005.z,
5A002.z, 5A004.z, or 5A992.z ECCN item. BIS is aware that companies
outside the United States have

requested in the past on several occasions that BIS broaden the
requirement under Sec.  758.6(a)(2) to require additional ECCNs to be
included on the commercial invoice to assist them and reduce their
burden. There were also a significant number of comments in response to
the October 7 IFR that expressed concern that the burdens being imposed
in particular on reexporters may lead to a designing out of U.S.-origin
content, so broadening this requirement for U.S. exporters to assist
foreign manufacturers is a tangible way that BIS can reduce the burden
on reexporters, while at the same time helping to improve the
effectiveness of the October 7 IFR by ensuring greater transparency for
these items. BIS does not anticipate any change in the burden for
exporters as a result of this expanded requirement.
4. Expansion of RS License Requirements, and Adoption of Additional
Presumption of Approval License Review Policy With Certain Exclusions
That Will Be Presumption of Denial
    A. Expansion of RS license requirement from China and Macau to
include Country Groups D:1, D:4, and D:5.
    In Sec.  742.6 Regional stability, the AC/S IFR revises paragraph
(a)(6) (RS requirement that applies to advanced computing and
semiconductor manufacturing items) to reflect the expanded scope of
this paragraph for certain items. BIS is revising paragraph (a)(6)(i)
to remove references to 3A090 and 4A090 and the associated software and
technology, adding .z items created by this AC/S IFR, and imposing a
license requirement for these items under new paragraph (a)(6)(iii)
(Exports, reexports, transfers (in-country) to or within destinations
specified in Country Groups D:1, D:4, and D:5, excluding destinations
also specified in Country Groups A:5 or A:6). This AC/S IFR adds these
items under a separate paragraph (a)(6)(iii) because of the expanded
country scope of destinations in Country Groups D:1, D:4, and D:5 that
are not also specified in Country Groups A:5 or A:6, which will apply
to these items. The broader country scope license requirement for these
items identified under paragraph (a)(6)(iii) is warranted to address
diversion concerns from these destinations specified in Country Groups
D:1, D:4, and D:5 (excluding destinations also specified in Country
Groups A:5 or A:6) to China and Macau. BIS notes that these additional
countries are members of Country Group D:1, D:4, or D:5 because of
concerns related to national security or missile technology
proliferation, or as countries subject to a U.S. arms embargo,
respectively. A fuller description of the national security concerns
that led to these changes can be found in section C of this rule,
including a description of the different license review policies that
apply to some of these additional Country Group D:1, D:4, or D:5
destinations compared to China and Macau. See section C.4 for the
description of the license review policies.
    Also, in Sec.  742.6(a)(6), the AC/S IFR removes Sec.
742.6(a)(6)(ii) (Deemed exports) and redesignates that paragraph as
(a)(6)(iv), as described further below under Section C.3.B. In
addition, this AC/S IFR removes the former license requirement under
paragraph (a)(6)(i) that applied to exports from abroad originating in
either China or Macau, and adds that under paragraph (a)(6)(ii),
including adding references to the .z items this AC/S IFR adds to the
EAR, consistent with Sec.  734.9(h)(1)(i)(B)(1) and (h)(2)(ii) of the
EAR. This AC/S IFR redesignates this text also under paragraph
(a)(6)(ii) because BIS is not expanding the country scope of the FDP
rules under Sec.  734.9(h)(1)(i)(B)(1) and (h)(2)(ii) of the EAR. This
AC/S IFR also removes paragraph (a)(6)(ii) (which this SME IFR
redesignated as (a)(6)(iii) and this AC/S IFR redesignates as
(a)(6)(iv)), as described further below under section C.3.B). Also, in
Sec.  742.6, this rule redesignates the introductory text of paragraph
(b)(10) (Advanced computing and semiconductor manufacturing items) as
new paragraph (b)(10)(i) (License review policy for paragraphs
(a)(6)(i) and (ii)) to specify the license review policy that applies
to those two new paragraphs. This AC/S IFR specified that such license
applications will be reviewed consistent with license review policies
in Sec.  744.23(d) of the EAR, except applications will be reviewed on
a case-by-case basis if no license would be required under part 744 of
the EAR rule.
    This AC/S IFR also adds a new paragraph (b)(10)(ii) (License review
policy for paragraph (a)(6)(iii)) to specify license applications for
items specified in paragraph (a)(6)(iii) to or within destinations not
specified in Country Group D:5 (except Macau) will be reviewed on a
presumption of approval basis, unless the export, reexport, or transfer
(in-country) is to an entity headquartered in or whose ultimate parent
company is headquartered in, either Macau or a destination specified in
Country Group D:5, in which case license applications will be reviewed
under a presumption of denial. This AC/S IFR also specifies that
license applications for items to or within Macau or destinations
specified in Country Group D:5 for items specified in paragraph
(a)(6)(iii) will be reviewed under a presumption of denial.
    In conformity to the changes described above, this AC/S IFR also
revises ECCNs 3A001, 3D001, 3E001, 4A003, 4A004, 4A005, 5A002, 5A004,
and 5D002 to add a RS license requirement and a reference to
destinations specified in Country Groups D:1, D:4, or D:5 (excluding
destinations specified in Country Groups A:5 or A:6). Similarly, the RS
license requirement in ECCNs 3A090, 4A090, 5A992, and 5D992 is revised
to remove the reference to ``China and Macau'' and to add in its place
a reference to destinations specified in Country Groups D:1, D:4, or
D:5 (excluding destinations specified in Country Groups A:5 or A:6).
    B. Exclusion of deemed exports and deemed reexports.
    This AC/S IFR removes Sec.  742.6(a)(6)(iii) that, prior to the
effective date of this SME IFR, specified that deemed exports and
deemed reexports were excluded from the license requirements under
paragraph (a)(6) and redesignates this paragraph as paragraph
(a)(6)(iv). See section D question 4 for specific public comments BIS
is seeking on the application of deemed exports and deemed reexports.
5. Clarifications for ``U.S. Person'' End Use Control
    A. Clarification of the scope of ``U.S. persons'' activities
controlled under Sec.  744.6(c)(2) with the addition of new paragraph
(c)(3).
    This AC/S IFR revises paragraphs (c)(2)(i) and (ii) to broaden the
country scope of those controls from Macau and China to apply to Macau
and destinations specified in Country Group D:5 when you know the item
will be used in the ``development'' or ``production'' of ICs at a
facility of an entity headquartered in or whose ultimate parent company
is headquartered in, either Macau or a destination specified in Country
Group D:5.
    This AC/S IFR also adds a paragraph (c)(3) (Scope of activities of
``U.S. persons'' that require a license under Sec.  744.6(c)(2) of the
EAR) to clarify the scope of activities that are caught under Sec.
744.6(c)(2)(i) through (iii). This clarification, partially codifying
previously issued guidance from BIS through Frequently Asked Questions
for the October 7 IFR, addresses questions received regarding the types
of activities of ``U.S. persons'' that are intended to be

caught and are subject to the paragraph (c)(2)(i) through (iii) license
requirements. This AC/IFR adds paragraph (c)(3)(i) to specify that the
``U.S. persons'' controls in Sec.  744.6(c)(2) apply to persons who
meet the criteria under paragraph (c)(3)(i)(A), (B), or (C).
    The persons subject to the license requirements under paragraph
(c)(3)(i)(A) are ``U.S. persons'' that authorize the shipment,
transmittal, or transfer (in-country) of items not subject to the EAR,
under paragraph (c)(3)(i)(B) are ``U.S. persons'' that conduct the
delivery, by shipment, transmittal, or transfer in-country, of items
not subject to the EAR, and under paragraph (c)(3)(i)(C) are ``U.S.
person'' that service, including maintaining, repairing, overhauling,
or refurbishing items not subject to the EAR.
    This AC/S IFR also adds paragraph (c)(3)(ii) (Due diligence) to
illustrate the type of due diligence that should be undertaken when
reviewing a transaction for purposes of Sec.  744.6(c)(2)(i) through
(iii). ``U.S. persons'' should conduct due diligence to determine
whether the end use for the item not subject to the EAR involves the
``development'' or ``production'' of ``advanced-node integrated
circuits versus other legacy ICs.'' Paragraph (c)(3)(ii) provides
examples of what appropriate due diligence may include, including
guidance for how to resolve potential red flags.
    Lastly, this AC/S IFR adds a new paragraph (d)(1) (Exclusion of
certain administrative and clerical activities and information
otherwise excluded), which includes adding new paragraph (d)(1)(i)
(Exclusion of Certain administrative and clerical activities) to
specify the types of ``U.S. person'' activities that are excluded from
the controls in Sec.  744.6. This AC/S IFR also adds new paragraph
(d)(1)(ii) that clarifies that the scope of Sec.  744.6(c)(2) does not
include information or software that would otherwise be excluded from
the EAR based on the exclusion criteria under part 734, e.g., under
Sec.  734.7 Published and Sec.  734.8 ``Technology'' or ``software''
that arises during, or results from, fundamental research. This AC/S
IFR also adds paragraph (d)(1)(iii) to add an exclusion of law
enforcement and intelligence operations of the U.S. Government to
specify the ``U.S. persons'' criteria in Sec.  744.6(c)(2)(i)-(iii) do
not extend to ``U.S. persons'' conducting law enforcement and
intelligence operations of the U.S. Government.
    B. Addition of guidance for submitting license applications for
``U.S. persons'' activities.
    In supplement no. 2 to part 748--Unique Application and Submission
Requirements, this rule adds a new paragraph (s) (``U.S. person''
support activities that require a license under Sec.  744.6), to
provide guidance on how to apply for a license application for ``U.S.
person'' activities that require a license application under Sec.
744.6. The guidance, codifying and expanding upon previously issued BIS
Frequently Asked Questions on this issue, is under new paragraph (s).
The provision specifies that applicants should use the reexport
designation on the SNAP-R form and in the ``Additional Information''
section of the license application, they should note that a license is
required for the transaction under Sec.  744.6 of the EAR. The guidance
also specifies that in the special purpose field, the applicant should
describe the specific activity the ``U.S. person'' is engaged in that
requires a license. In addition, the guidance specifies the applicant
should provide the ECCN of the technology or item or, if unknown, use
EAR99 (regardless of whether the items are subject to the EAR), as well
as a complete explanation of the activity in supplemental
documentation.
    In Sec.  748.8 (Unique application and submission requirements),
this rule makes a conforming change to add a new paragraph (d) (U.S.
person support activities that require a license under Sec.  744.6).
This rule also, as additional conforming changes with the existing
supplement no. 2 to part 748, adds paragraphs (s) (Exports of firearms
and certain shotguns temporarily in the United States); (t) (``600
Series Major Defense Equipment''); and (z) (Semiautomatic firearms
controlled under ECCN 0A501.a). Paragraphs (s), (t), and (z) were
included in supplement no. 2 to part 748, but were inadvertently
omitted from the text in Sec.  748.8, so this rule corrects that
oversight.
6. Expansion of Sec.  744.23 To Add Two Additional End-Use license
Requirements
    A. Addition of end-use control for Macau and D:5 headquartered
(headquartered in or whose ultimate parent company is headquartered in
Macau or Country Group D:5), companies when located outside of D:1,
D:4, or D:5.
    In Sec.  744.23 ``Supercomputer'' and semiconductor manufacturing
end use, this rule expands the scope of the end-use controls under this
section by adding two new end-use controls. First, this AC/S IFR adds
under paragraph (a)(3)(i) a new advanced computing end-use control
which will apply to any item subject to the EAR and specified in ECCN
3A001.z, 3A090, 4A003.z, 4A004.z, 4A005.z, 4A090, 5A002.z, 5A004.z,
5A992.z, 5D002.z, or 5D992.z. A license will be required under
paragraph (a)(3)(i) for the export, reexport, or transfer (in-country)
to or within any destination not specified in Country Groups D:1, D:4,
or D:5 (excluding any destination also specified in Country Groups A:5
or A:6) of commodities identified in ECCNs 3A001.z, 3A090, 4A003.z,
4A004.z, 4A005.z, 4A090, 5A002.z, 5A004.z, 5A992.z, or 5D002.z, or
5D992.z when the exporter, reexporter, or transferor has ``knowledge''
at the time of the export, reexport, or transfer (in-country) that item
is destined for any entity that is headquartered in, or whose ultimate
parent company is headquartered in, either Macau or a destination
specified in Country Group D:5. This additional end-use control is
needed to ensure that the national security objectives of the October 7
IFR and this AC/S IFR are not undermined by Macau, PRC or other Country
Group D:5 entities setting up cloud or data servers in other countries
to allow these headquartered companies of concern to continue to train
their AI models in ways that would be contrary to U.S. national
security interests. This expanded end-use control is intended to target
entities of concern, such as a PRC-headquartered cloud or data server
provider located outside of China in a destination other than Country
Groups D:1, D:4, or D:5, excluding any destination also specified in
Country Groups A:5 or A:6. The license requirements under this end-use
control apply to destinations in Country Group A:5 and A:6 and any
other destination not specified in Country Groups D:1, D:4, or D:5.
    B. Addition of end-use control for ``production'' of advanced
computing items in any destination worldwide when using certain direct
products exported from Macau or a destination specified in Country
Group.
    This AC/S IFR adds an additional end-use control for the items
identified under paragraph (a)(3)(ii) to specify an end-use control
applies to any ``technology'' subject to the EAR and specified in ECCN
3E001 (for 3A090) ``technology'' when the technology meets all of the
following: the technology is developed by an entity headquartered in or
whose ultimate parent company is headquartered in, either Macau or a
destination specified in Country Group D:5; the technology is subject
to the EAR pursuant to the FDP rule in Sec.  734.9(h)(1)(i)(B)(1) and
(h)(2)(ii) of the EAR; and the technology is for the reexport or
transfer (in-country) from or within Macau or a

destination specified in Country Group D:5to any destination worldwide
of 3E001. The FDP rule requirement highlighted above is intended to
better ensure the intent of these two FDP rules are not able to be
circumvented by trying to conduct these types of activities outside of
Macau or destinations specified in Country Group D:5 by entities
headquartered in, or whose ultimate parent company is headquartered in,
either Macau or a destination specified in Country Group D:5.
    C. Expansion of Country Scope to conform to broader country scope
included in this AC/S IFR.
    This AC/S IFR as a conforming change also revises paragraphs
(a)(1)(ii)(A) and (B) and (a)(2)(i) and (ii) to remove China and add in
its place the broader country scope of Macau and any destination
specified in Country Group D:5.
    D. Revision of Supercomputer end-use control.
    This AC/S IFR revises paragraph (a)(1)(ii)(A) and (B) to broaden
the destination scope of the supercomputer end-use control by replacing
``China or Macau'' with ``Macau or a destination specified in Country
Group D:5.''
7. Addition of ECCNs 3A991.p .z, 4A994.l, or .z to License Exception
CCD
    In Sec.  740.19 Consumer communications devices (CCD), this final
rule adds a new paragraph (b)(17) to add commodities described under
3A991.p or 4A994.l, as commodities eligible for License Exception CCD.
ECCNs 3A991.p and 4A994.l were not included in the October 7 IFR. BIS
determined it is warranted to add these commodities as eligible
commodities under License exception CCD because these ECCNs are for
low-level items and are in line with other items identified as eligible
for License Exception CCD. This AC/S IFR as a conforming change also
revises paragraph (b)(16) to remove the period and add a semi-colon and
the word ``and'' after the semi-colon to reflect the addition of new
paragraph (b)(17).
8. Broadening the Country Scope of the Advanced Computing FDP Rule
    In Sec.  734.9(h) (Advanced computing FDP rule), this AC/S IFR
broadens the country scope of the advanced computing FDP rule by
revising paragraph (h)(2) (Destination or end use scope of the advanced
computing FDP rule). Specifically, BIS revises paragraphs (h)(2)(i) and
(ii) by removing ``PRC or Macau'' and adding in its place a
``destination specified in Country Groups D:1, D:4, or D:5, excluding
any destination also specified in Country Groups A:5 or A:6.'' Under
revised paragraph (h)(2)(i) the country scope also extends worldwide
when the ``direct product'' is to or for an entity headquartered in or
whose ultimate parent company is headquartered in, either Macau or a
destination specified in Country Groups D:5. This AC/IFR also adds a
new Note to paragraph (h)(2) to clarify that the requirements apply
when any of these headquartered in or whose ultimate parent company is
headquartered in, companies are a party to the transaction involving
the foreign-produced item, e.g., as a ``purchaser,'' ``intermediate
consignee,'' ``ultimate consignee,'' or ``end-user.'' Additional
corrections and clarifications to this section are described in Section
C.11.A of this rule.
9. Clarification That Model Certificate May Be Used for All Foreign
Direct Product (FDP) Rules
    In supplement no. 1 to part 734--Model Certification for Purposes
of Advanced Computing FDP rule, this AC/S IFR revises the heading to
Model Certification for Purposes of the FDP rules, and revises
paragraph (a) of that supplement to clarify that the model
certification may be used for any of the FDP rules under Sec.  734.9.
This AC/S IFR revises paragraph (a) to clarify that the model
certificate may be provided by any entity in a supply chain or to an
exporter, reexporter, or transferor of the item. In addition, this rule
adds an example to improve public understanding that the model
certification may flow more than one way (forward or backwards) in a
supply chain.
    This AC/S IFR also revises paragraph (b) (model criteria), to
revise the introductory text of paragraph (b) and the text of paragraph
(b)(2) to make the model certification applicable for any of the FDP
rules under Sec.  734.9. New paragraphs (b)(2)(i) through (ix) to
provide model criteria for any of the FDP rules that is applicable to
their scenario.
    This AC/S IFR removes paragraph (b)(3) because the substance of
paragraph (b)(3) is already addressed under paragraph (b)(2).
    This AC/S IFR also redesignates paragraph (b)(4) as (3) and revises
the newly redesignated paragraph to make a conforming edit to add the
phrase ``or exporter(s), reexporter(s), or transferor(s)'' to clarify
that the model certification can flow in either direction in a supply
chain. This AC/S IFR also revises Note 1 to paragraph (b) to clarify
that the model certification can flow from the exporter, reexporter, or
transferor to another entity in the supply chain or may flow the other
way from a consignee back to an exporter, reexporter, or transferor in
the supply chain. The purpose of the model certification is to enhance
awareness of the potential applicability of the FDP rules in supply
chains, so there is flexibility for how entities use the model
certification between different entities involved in supply chains to
help achieve that objective.
10. Changes To Enhance and Assist With Compliance
    A. Addition of five new red flags to assist with compliance.
    In supplement no. 3 to part 732--BIS's ``Know Your Customer''
Guidance and Red Flags, this AC/S IFR adds five new red flags that are
intended to provide additional compliance guidance to assist exporters,
reexporters, and transferors as part of their compliance programs for
the October 7 IFR. Several commenters on the October 7 IFR requested
BIS add red flags to the EAR that have applicability for the types of
transactions involving items from the October 7 IFR, similar to what
was done when the ``600 series'' military items were moved to the EAR
under Export Control Reform. BIS agreed with the commenters and adds
five new red flags to assist exporters, reexports, and transfers
identify potential red flags.
    New red flag 15 identifies a scenario where, prior to the October 7
IFR, a customer's website or other marketing materials indicated that
the company had advertised or otherwise indicated its capability for
``developing'' or ``producing'' ``advanced-node integrated circuits.''
This type of activity would raise a red flag and require additional due
diligence.
    New red flag 16 is a variant of some of the red flags regarding a
mismatch between what a customer says an item would be used for, and
the item's traditional use. New red flag 16 provides a similar type of
example but makes it specific to items intended for the ``development''
or ``production'' of ``advanced-node integrated circuits.''
    New red flag 17 identifies a scenario where the customer is
``known'' to ``develop'' or ``produce'' items for companies located in
Macau or a destination specified in Country Group D:5 that are involved
with supercomputers, which would also trigger a red flag under the EAR.
This type of scenario may be indicative that the items that are being
``developed'' or ``produced'' may be for use in supercomputers and
warrants additional due diligence.

    New red flag 18 addresses how exporters, reexporters, or
transferors should evaluate anticipated future capabilities, which was
another issue about which commenters sought additional compliance
guidance, in particular the end-use controls under Sec.
744.23(a)(2)(i), (ii), or (iii), which have been redesignated as
paragraph (a)(1)(i)(A) and (B) and (a)(2)(i) in this SME IFR. New red
flag 18 specifies that in scenarios where a customer has indicated
intent to ``develop'' or ``produce'' supercomputers or integrated
circuits in Macau or a destination specified in Country Group D:5 in
the future that would otherwise be restricted under Sec.
744.23(a)(2)(i), (ii), or (iii), redesignated as paragraphs
(a)(1)(i)(A) and (B) and (a)(2)(i), raises a red flag under the EAR.
    New red flag 19 addresses how semiconductor fabrication facilities
can identify when they receive an order from a destination in Country
Groups D:1, D:4, or D:5 or worldwide from an entity headquartered in or
whose ultimate parent company is headquartered in, either Macau or a
destination specified in Country Group D:5 where the item to be
produced is likely a ``direct product'' that will be subject to the EAR
under Sec.  734.9(h). Red flag 19 is part of BIS's efforts to provide
guidance to semiconductor fabrication facilities trying to develop
enhanced FDP guidance for recognizing ``direct products.''
Specifically, BIS is adding this new red flag 19 to better assist any
semiconductor fabrication facility that is or will be producing, for a
company headquartered in or whose ultimate parent company is
headquartered in, either Macau or a destination specified in Country
Group D:5 an IC, or a computer, ``electronic assembly,'' or
``component'' that incorporates an IC that meets certain specified
criteria under Sec.  734.9(h)(1)(i)(B)(2) and (h)(1)(ii)(B)(2) that
there is a high degree of likelihood (``knowledge'') that the ``direct
product'' that is or will be ``produced'' is within the product scope
of Sec.  734.9(h). This criteria specifies that if the item that is or
will be produced is an IC, or a computer, ``electronic assembly,'' or
``component'' that incorporates more than 50 billion transistors and
high-bandwidth memory (HBM), it raises a red flag that there is a high
degree of likelihood that a license is required under the EAR for
reexport or export from abroad of that ``direct product'' if destined
to any destination in Country Groups D:1, D:4, or D:5 excluding
destinations also specified in Country Groups A:5 or A:6 unless the red
flag is resolved. BIS emphasizes here in this AC/S IFR that red flag 19
is only applicable if the entity has ``knowledge'' the criteria of the
red flag 19 are met. If the entity does not have ``knowledge'' that the
transaction would otherwise meet the criteria under red flag 19, then
this red flag is not applicable.
    A reexporter or transferor may take additional steps as part of
their compliance program to attempt to resolve the red flag, e.g.,
obtaining additional information from the entity requesting the item to
be produced, in order to determine whether the item being produced is
outside the scope of Sec.  734.9(h)(1)(i)(B)(2) and (h)(1)(ii)(B)(2).
The addition of red flag 19 in this rule includes adding a Technical
note to (b)19, which will provide technical guidance on how to
calculate the red flag criteria under red flag 19. A reexporter or
transferor may also submit a license to BIS to ask for assistance in
determining whether the foreign item to be produced, is subject to the
EAR as a ``direct product'' on the basis of the Sec.  734.9(h), but BIS
encourages semiconductor fabrication facilities to try to resolve these
red flags themselves before applying for a license. Direct products
that are subject to the EAR under paragraphs (h)(1)(i)(B)(2) and
(h)(1)(ii)(B)(2) of Sec.  734.9 require a license under the EAR for
reexport or export from abroad of that direct product if destined to
any destination specified in Country Groups D:1, D:4 or D:5 that is not
also specified in Country Groups A:5 or A:6. BIS notes that this red
flag 19 can be overcome with positive ``knowledge'' of the
classification of the item that is or will be produced, provided the
semiconductor fabrication facility has positively determined that the
item that is or will be produced is not an item identified under
paragraph (h)(1)(i)(B)(2) or (h)(1)(ii)(B)(2), then that foreign made
product is not subject to the EAR on the basis of Sec.  734.9(h).
    BIS is also interested in soliciting additional public comments in
this area of identifying ways to assist semiconductor fabrication
facility compliance in recognizing ``direct products.'' See section D
of this rule for the additional comments BIS is interested in receiving
in this area.
11. Changes To Minimize the Impact on Supply Chains--Adoption of TGL--
Advanced Computing Items
    In supplement no. 1 to part 736--General Orders, this AC/S IFR,
revises paragraph (d) (General Order No. 4) to add a new paragraph
(d)(2) (TGL--Advanced computing items). The new TGL for advanced
computing items will overcome the license requirements specified in
Sec.  742.6(a)(6)(iii), provided the terms and conditions under
paragraphs (d)(3) through (5) are met. This AC/S IFR adds new paragraph
(d)(2)(i) (Product scope) to specify the items that may be authorized
under this new TGL. These items are limited to the items subject to the
EAR that are specified in ECCNs 3A001.z; 3A090; 3D001 (for ``software''
for commodities controlled by 3A001.z, 3A090); 3E001 (for
``technology'' for commodities controlled by 3A001.z, 3A090); 4A003.z;
4A004.z; 4A005.z; 4A090; 4D001 (for ``software'' for commodities
controlled by 4A003.z, 4A004.z, and 4A005.z); 4D090; 4E001 (for
``technology'' for commodities controlled by 4A003.z, 4A004.z, 4A005.z,
4A090 or ``software'' specified by 4D001 (for 4A003.z, 4A004.z, and
4A005.z), 4D090); 5A002.z; 5A004.z; 5A992.z; 5D002.z; 5D992.z; 5E002
(for ``technology'' for commodities controlled by 5A002.z or 5A004.z or
``software'' specified by 5D002 (for 5A002.z or 5A004.z commodities));
or 5E992 (for ``technology'' for commodities controlled by 5A992.z or
``software'' controlled by 5D992.z).
    The TGL--Advanced computing items is limited to the end use scope
specified in paragraphs (d)(2)(ii) (End-use scope). Paragraph (d)(2)(i)
has a different product scope than the original TGL that was included
in the October 7 IFR, but is otherwise similar in the scope of activity
authorized, although the destination scope is broader. Paragraph
(d)(2)(ii) requires that the recipient (1) is located in, but not
headquartered in or whose ultimate parent company is not headquartered
in, a destination specified in Country Groups D:1, D:4, or D:5 that is
not also specified in Country Groups A:5 or A:6. The end-use scope of
this paragraph authorizes entities to continue or engage in
integration, assembly (mounting), inspection, testing, quality
assurance, and distribution of items covered by items specified in
paragraph (d)(2)(i) provided the items are for ultimate end use (1)
outside of destinations specified in Country Groups D:1, D:4, or D:5,
excluding destinations also specified in Country Groups A:5 or A:6, and
(2) by entities that are not headquartered in, or whose ultimate parent
company is not headquartered in, Macau or Country Group D:5.
    This AC/S IFR, as additional conforming changes to the TGL
revisions made in the SME IFR, revises the introductory text of
paragraph (d) (General Order No. 4) to add a reference to paragraph
(d)(2) that this AC/S IFR adds. This AC/S IFR also revises

paragraph (d)(3) (Validity date) to add a sentence to specify the
validity date for paragraph (d)(2). The TGL under paragraph (d)(1)
(added in this SME IFR) of supplement no. 1 to part 736 and the TGL
under paragraph (d)(2) (added in this AC/S IFR) of supplement no. 1 to
part 736 will both expire on December 31, 2025, approximately a 2-year
validity period. This AC/S IFR also revises paragraph (d)(4) (End-use
and end-user restrictions) to revises paragraph (d)(4)(i) (Restrictions
related to part 744) to add a reference to new paragraph (d)(2). This
AC/S IFR under paragraph (d)(4)(ii) (Indigenous production)
redesignates the text added in this SME IFR as new paragraph
(d)(4)(ii)(A) and adds a new paragraph (d)(4)(ii)(B) to impose a
similar restriction on indigenous production, but specific to the new
TGL--Advanced computing items added under paragraph (d)(2).
12. Additional Corrections and Clarifications
    A. Conforming changes to headings for the Foreign Direct Product
(FDP) rules for clarity and consistency with advanced computing rule.
    In Sec.  734.9, this AC/S IFR also revises paragraph (a) to: add
the paragraph heading (Definitions and model certification);
redesignate the existing Definitions text as new paragraph (a)(1)
(Definitions); and move and redesignate existing paragraph (h)(3) as
new paragraph (a)(2) (Model certification). This rule also makes
conforming changes to reflect that the model certification may be used
for any of the FDP rules in Sec.  734.9 instead of being limited for
use with the advanced computing FDP rule under Sec.  734.9(h).
    In Sec.  734.9 (Foreign Direct Product (FDP) Rules), this AC/S IFR
makes conforming changes to the headings of paragraphs (b)(1)(ii),
(c)(1)(ii), (d)(1)(ii), (f)(1)(ii), and (g)(1)(ii) by removing the
heading '' ``Direct product'' of a complete plant or `major component'
of a plant'' and adding in its place the heading ``Product of a
complete plant or `major component' of a plant that is a ``direct
product''.'' This change is made to conform these paragraph headings to
the headings used in the advanced computing rule for paragraphs
(e)(1)(i)(B), (e)(2)(i)(B), (h)(1)(ii), and (i)(1)(i)(B) of Sec.
734.9.
    In Sec.  734.9, this AC/S IFR, as a clarifying change, revises the
first sentence of the introductory text of the section, and paragraphs
(e)(1)(i)(B), (e)(2)(i)(B), (f)(1)(ii)(A), (g)(1)(ii), and (i)(1)(ii)
to remove the term `plant' and add in its place the more precise term
`complete plant.' This AC/S IFR makes this change, so the term
`complete plant' is used consistently throughout the section. For
purposes of this section, prior to publication of this rule, BIS
interpreted the term `plant' and `complete plant' the same, so this is
not a substantive change, but is intended to reduce any confusion
regarding whether the two formulations of the term have different
meanings. Additional changes were made throughout the section to ensure
that the complete plant provisions are identical.
    In Sec.  734.3 (Items subject to the EAR), this AC/S IFR makes a
conforming change to paragraphs (a)(4) and (5) to remove the reference
to Sec.  736.2(b)(3) and add in its place a reference to Sec.  734.9.
Also in Sec.  734.3, this AC/S IFR as a conforming change to Sec.
734.9, revises paragraph (a)(5) to remove the term ``direct products''
and add in its place the term products, so it reads certain foreign-
produced products and adds the phrase ``that is a ``direct product'' of
specified ``technology'' or ``software'' '' after the phrase products
of a complete plant or major component of plant. This change is made to
conform with the other clarifications made on this under Sec.  734.9.
    B. Clarifying changes.
    In supplement no. 1 to part 774--Commerce Control List, this AC/S
IFR revises four ECCNs as follows:
    In ECCN 4A090, this AC/S IFR revises ``items'' paragraph (a) in the
List of Items Controlled section, to add the words ``meets or,'' to
make it clear that this control parameter applies to computers,
``electronic assemblies,'' and ``components'' containing integrated
circuits, any of which meets or exceeds the performance parameters of
ECCN 3A090.a.
    In ECCN 4A994, this AC/S IFR revises ``items'' paragraph (l) in the
List of Items Controlled section, to add the words ``meets or,'' to
make it clear that this control parameter applies to computers,
``electronic assemblies,'' and ``components,'' n.e.s., containing
integrated circuits, any of which meets or exceeds the performance
parameters of ECCN 3A991.p.
    In ECCNs 5A992 and 5D992, this AC/S IFR revises the Country Chart
column in the License Requirements section in both of these ECCNs to
revise ``RS'' control to specify the RS control applies to .z items in
these ECCNs and the license requirement applies to or within
destinations specified in Country Groups D:1, D:4, and D:5 that are not
also specified in Country Groups A:5 or A:6, along with adding a cross
reference to see Sec.  742.6(a)(6)(iii) of the EAR. This change is made
for consistency with the other ECCNs that reference Sec.  742.6(a)(6),
which specify China and Macao.
    C. Conforming changes to ECCNs to not undermine deemed export and
deemed reexport exclusion.
    This AC/S IFR revises two ECCNs: 4D001 and 4E001 to make conforming
changes to ensure these National Security (NS) controlled software and
technology controls do not undermine the intent of the deemed export
and deemed reexport exclusion under Sec.  742.6(a)(6)(iv). This AC/S
IFR does this by adding exclusions where needed to each of these NS
controlled ECCNs to exclude the relevant software and technology from
these ECCNs that are associated with ECCNs 4A090 and 4D090. This
software and technology were intended to be excluded from these NS
controls but were inadvertently not excluded in the October 7 IFR. To
correct this oversight, this rule makes the following changes to two
ECCNs:
    In ECCN 4D001, this rule revises ``items'' paragraph (a) in the
List of Items Controlled section to add an exclusion for 4D090 for the
software controlled under 4D001.a.
    In ECCN 4E001, this rule revises the NS control column the License
Requirements section to exclude technology for 4A090 or ``software''
specified by ECCN 4D090 from the NS control under 4E001.
    D. Typographical, grammatical, and other conforming corrections.
    In Sec.  732.2(b) introductory text, this AC/S IFR makes a
conforming change to the third sentence that referenced supplement no.
1 to part 734 which, prior to September 1, 2016, described several
practical examples describing publicly available technology and
software that are outside the scope of the EAR. These examples were
removed from the EAR on September 1, 2016, and are now found on the BIS
website, but the needed conforming change was not made at that time to
this paragraph (b). Subsequently, the October 7 IFR added a new
supplement no. 1 to part 734, but also inadvertently did not update
this reference to supplement no. 1 to part 734 in Sec.  732.2(b).
However, in the context of this paragraph, supplement no. 1 to part 734
should no longer be referenced and instead a reference to the FAQ
guidance on the BIS website at https://www.bis.doc.gov should replace
this text. This rule revises the third sentence to make this change and
adds a cross reference by adding a new fourth sentence to inform the
public to See the FAQs under the heading, EAR Definitions, Technology
and Software, Fundamental Research, and Patents FAQs, for where the

guidance can be found on the BIS website. This rule also makes this
same type of conforming change to Sec.  734.2(a)(1).
    In Sec.  734.9, this AC/S IFR revises paragraph (h)(3) to make a
grammatical correction to remove an unneeded ``s'' from the word
``items.'' As described above, this rule also redesignates paragraph
(h)(3) as new paragraph (a)(2).

D. BIS Seeks Public Comments on the Following Additional Questions

    In addition to welcoming comments on the topics and BIS responses
and description of the regulatory changes described above under
sections A through C, BIS in this AC/S IFR also specifically seeks
comments on the following questions:
    1. Addressing access to ``development'' at an infrastructure as a
service (IaaS) provider by customers to develop or with the intent to
develop large dual-use AI foundation models with potential capabilities
of concern, such as models exceeding certain thresholds of parameter
count, training compute, and/or training data. This AC/S IFR seeks
public comments on what additional regulations or other requirements
may be warranted to address this national security concern relating to
AI. BIS also seeks input from IaaS providers on the feasibility for
them in complying with additional regulations in this area, how they
would identify whether a customer is ``developing'' or ``producing'' a
dual-use AI foundation model, and what actions would be needed to
address this national security concern while minimizing the business
process changes that would be required to comply with these
regulations.
    2. Developing technical solutions to exempt items otherwise
classified under ECCNs 3A090 and 4A090. This AC/S IFR seeks public
comments on proposed technical solutions that limit items specified
under ECCN 3A090 or 4A090 from being used in conjunction with large
numbers of other such items in ways that enable training large dual-use
AI foundation models with capabilities of concern. Such items could
then be exempted from these ECCNs. An example approach would be to
limit a product that contains a set of ICs, including ECCN 3A090 AI
accelerators, CPUs, and network interface cards--which could form a
high-bandwidth domain including up to e.g., 256 AI accelerators, from
communicating outside the product or set beyond 1 GB/s in at least one
of the input or output direction. In one possible implementation of
this concept, each device in the set might provide a cryptographic
signature to other devices in the set, and then have a tamperproof
silicon root-of-trust in each device that would hold the private keys
for the cryptographic signatures. This approach could constrain a 3A090
item from being used to train large dual-use AI foundation models with
capabilities of concern, while allowing AI training capabilities at a
small or medium scale. In particular, the AC/S IFR seeks specific
technical proposals that would be difficult to circumvent; comments on
the timeline and costs to bring such proposals to market; and comments
on the demand for such ICs and products. The AC/S IFR also seeks
additional proposals for exemptions involving hardware-based technical
solutions that create the ability to limit training of large dual-use
AI foundation models with capabilities of concern.
    3. Identifying ways to assist semiconductor fabrication facility
compliance in recognizing ``direct products.'' As discussed further
under section C.10 above, this AC/S IFR adds new red flag 19 in
supplement no. 3 to part 732 of the EAR to assist any facility where
``production'' of ``advanced node ICs'' occurs to follow guidance to
recognize ``direct products.'' New red flag 19 will assist
semiconductor fabrication facilities to more easily identify ``direct
products'' that they are or will be producing that are subject to the
EAR on the basis of the FDP rule. In order to be most effective, this
enhanced FDP guidance or any additional guidance that is developed
needs to identify criteria that (1) are already ``knowable'' or easily
determined by the semiconductor fabrication facilities and (2) should
be highly indicative of an IC that will meet the FDP scope under Sec.
734.9(h)(1)(i)(B)(2) and (h)(1)(ii)(B)(2). BIS believes that the
criteria added under new red flag 19 meets this two-part test and will
assist semiconductor manufacturing facilities to more easily identify
their regulatory obligations under the EAR. However, in addition to the
criteria BIS included in new red flag 19 in supplement no. 3 to part
732, BIS also seeks any refinements to those criteria or alternative
criteria that would better achieve those two objectives.
    4. Deemed exports and deemed reexports. BIS specifically seeks
public comment on the applicability of deemed exports and deemed
reexports in Sec.  742.6(a)(6)(iv). Commenters are asked to provide
feedback regarding the impact of this provision on their business and
operations, in particular, what if any impact companies would
experience if a license were required for deemed exports and deemed
reexports. Commenters are also asked to provide guidance on what, if
any, practices are utilized to safeguard technology and intellectual
property and the role of foreign person employees in obtaining and
maintaining U.S. technology leadership.
    5. Control parameters under 3A090, in particular Note 2 to 3A090.
In response to this AC/S IFR, BIS seeks comments on how to refine the
parameters under ECCN 3A090 to more granularly cover only ICs that
would raise concerns for use in training large-scale AI systems and to
and to more specifically define ICs not designed or marketed for us in
datacenters.
    6. Definition of headquartered companies. BIS seeks comments on the
definition entities headquartered in, or whose ultimate parent company
is headquartered in, either Macau or a destination specified in Country
Group D:5, including comments on the ability to access information
required to assess the status of a foreign party and any other factors
that would support the policy goal of limiting access to advanced
computing capability by Macau parties or a destination specified in
Country Group D:5 parties.
    7. BIS is interested in receiving public comments in response to
this AC/S IFR on the technical parameters included in the definition of
``supercomputer'' and how those relate to the end-use control under
Sec.  744.23(a)(1). BIS is particularly interested in whether the
definition of ``supercomputer'' may result increasingly in commercial
datacenters falling under the definition of ``supercomputer'' and the
end-use control under Sec.  744.23(a)(1). BIS welcomes comments on the
definition of ``supercomputer,'' as well on what additional criteria
could be added to Sec.  744.23(a)(1) to better focus the control to
ensure that supercomputers used to support foreign government agencies
would be caught under the end-use control, but other datacenters
strictly involved in the commercial sector would not be covered.

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 Export Control Reform Act of 2018 (ECRA) (codified, as
amended, at 50 U.S.C. 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 12866, 13563, and 14094 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 Executive Order 12866.
    2. Notwithstanding any other provision of law, no person is
required to respond to, nor shall any person be subject to a penalty
for failure to comply with, a collection of information subject to the
requirements of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et
seq.) (PRA), unless that collection of information displays a currently
valid Office of Management and Budget (OMB) Control Number.
    This rule involves the following OMB-approved collections of
information subject to the PRA:
     0694-0088, ``Multi-Purpose Application,'' which carries a
burden hour estimate of 29.4 minutes for a manual or electronic
submission;
     0694-0096 ``Five Year Records Retention Period,'' which
carries a burden hour estimate of less than 1 minute;
     0694-0122, ``Licensing Responsibilities and Enforcement;''
and
     0607-0152 ``Automated Export System (AES) Program,'' which
carries a burden hour estimate of 3 minutes per electronic submission.
    This AC/S IFR will affect the collection under control number 0694-
0088, for the multipurpose application because of the addition of the
notification requirement for exports and reexports to China in order to
use new License Exception Notified Advanced Computing (NAC) under Sec.
740.8 that this rule adds to the EAR. BIS estimates that the new
License Exception NAC notification will result in an increase of 3,000
multi-purpose applications submitted annually to BIS and an increase of
950 burden hours under this collection. BIS also anticipates the
submission annually of 200 license applications as a result of the
revision to license requirements included in this AC/S IFR, but because
the original estimate that was included in the October 7 IFR (i.e.,
that BIS estimates that these new controls under the EAR imposed by the
October 7 IFR would result in an increase of 1,700 license applications
submitted annually to BIS) was higher than the actual number of license
applications BIS has received over the first year of the October IFR
changes being in place, BIS does not anticipate any changes in these
estimates as a result of the changes include in this AC/S IFR for
license applications submitted to BIS as a result of this AC/S IFR with
the one exception of the increase in burden hours for the License
Exception NAC notifications, which was not accounted for in the October
7 IFR because License Exception NAC was not part of the EAR at that
time.
    This AC/S IFR will affect the information collection under control
number 0607-0152, for filing EEI in AES because this rule adds Sec.
758.1(g)(5) to impose a requirement for identifying .z items by
``items'' level classification in the EEI filing in AES. This change is
not anticipated to result in a change in the burden under this
collection because filers are already required to provide a description
in the Commodity description block in the EEI filing in AES. This
regulation also involves a collection previously approved by the OMB
under control number 0694-0122, ``Licensing Responsibilities and
Enforcement'' because this rule under the revision to Sec.  758.6(a)(2)
will require the ECCN(s) for any 3A001.z, 3A090, 4A003.z, 4A004.z,
4A005.z, 4A090, 5A002.z, 5A004.z, 5A992.z to be included on the
commercial invoice, similar to the previous requirement to include the
``600 series'' and 9x515 ECCNs on the commercial invoice. BIS does not
anticipate a change in the total burden hours associated with the PRA
and OMB control number 0694-0122 as a result of this rule.
    Additional information regarding these collections of information--
including all background materials--can be found at https://www.reginfo.gov/public/do/PRAMain by using the search function to enter
either the title of the collection or the OMB Control Number.
    3. This rule does not contain policies with federalism implications
as that term is defined in Executive Order 13132.
    4. Pursuant to section 1762 of 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. While section 1762 of ECRA
provides sufficient authority for such an exemption, this action is
also independently exempt from these APA requirements because it
involves a military or foreign affairs function of the United States (5
U.S.C. 553(a)(1)).
    5. Because a notice of proposed rulemaking and an opportunity for
public comment are not required to be given for this rule by 5 U.S.C.
553, or by any other law, the analytical requirements of the Regulatory
Flexibility Act, 5 U.S.C. 601, et seq., are not applicable.
Accordingly, no regulatory flexibility analysis is required, and none
has been prepared.

List of Subjects

15 CFR Parts 732 and 748

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

15 CFR Part 734

    Administrative practice and procedure, Exports, Inventions and
patents, Research, Science and technology.

15 CFR Parts 740 and 758

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

15 CFR Part 742

    Exports, Terrorism.

15 CFR Part 744

    Exports, Reporting and recordkeeping requirements, Terrorism.

15 CFR Parts 746 and 774

    Exports, Reporting and recordkeeping requirements.

15 CFR Parts 736, 770, and 772

    Exports.

    For the reasons stated in the preamble, parts 732, 734, 736, 740,
742, 744, 746, 748, 758, 770, 772, and 774 of the Export Administration
Regulations (15 CFR parts 730 through 774) are amended as follows:

PART 732--STEPS FOR USING THE EAR

0
1. The authority citation for part 732 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. 13026, 61 FR 58767, 3 CFR, 1996 Comp., p.
228; E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 783.

0
2. Effective November 17, 2023, Sec.  732.2 is amended by revising
paragraph (b) introductory text to read as follows:

Sec.  732.2  Steps regarding scope of the EAR.

* * * * *
    (b) Step 2: Publicly available technology and software. This step
is relevant for both exports and reexports. Determine if your
technology or

software is publicly available as defined and explained at part 734 of
the EAR. The Bureau of Industry and Security (BIS) website at https://www.bis.doc.gov contains several practical examples describing publicly
available technology and software that are outside the scope of the EAR
under the FAQ section of the website. See the FAQs under the heading,
EAR Definitions, Technology and Software, Fundamental Research, and
Patents FAQs at https://www.bis.doc.gov/index.php/documents/compliance-training/export-administration-regulations-training/1554-ear-definitions-faq/file. The examples are illustrative, not comprehensive.
Note that encryption software classified under ECCN 5D002 on the
Commerce Control List (refer to supplement no.1 to part 774 of the EAR)
is subject to the EAR even if publicly available, except for publicly
available encryption object code software classified under ECCN 5D002
when the corresponding source code meets the criteria specified in
Sec.  740.13(e) of the EAR. The following also remains subject to the
EAR: ``software'' or ``technology'' for the production of a firearm, or
firearm frame or receiver, controlled under ECCN 0A501, as referenced
in Sec.  734.7(c) of the EAR.
* * * * *

0
3. Effective November 17, 2023, supplement no. 3 to part 732 is amended
by adding paragraphs (b)15 through 19 to read as follows:

Supplement No. 3 to Part 732--BIS's ``Know Your Customer'' Guidance and
Red Flags

* * * * *
    (b) * * *
    15. The customer's website or other marketing materials prior to
October 7, 2022, indicated that the company had advertised or
otherwise indicated its capability for ``developing'' or
``producing'' ``advanced-node integrated circuits.''
    16. The customer has made representations that the items in
question are not intended for use in the ``development'' or
``production'' of ``advanced-node integrated circuits,'' but the
items that are being requested to be exported, reexported, or
transferred (in-country) to this customer are typically exclusively
or predominantly used for the production of ``advanced-node
integrated circuits.''
    17. The customer is ``known'' to ``develop'' or ``produce''
items for companies located in Macau or a destination specified in
Country Group D:5 that are involved with ``supercomputers.''
    18. The exporter has ``knowledge'' indicating this customer
intends to ``develop'' or ``produce'' ``supercomputers'' or
integrated circuits in the future that would otherwise be restricted
under Sec.  744.23(a)(1)(i) or (a)(2)(i).
    19. The exporter has ``knowledge'' that it is or seeks to be
producing at a facility where ``production'' of ``advanced node
ICs'' occur, for a company headquartered in either Macau or a
destination specified in Country Group D:5, an integrated circuit,
or a computer, ``electronic assembly,'' or ``component'' that will
incorporate (A) more than 50 billion transistors and (B) high-
bandwidth memory (HBM). This raises a red flag that needs to be
resolved or a license may be required under the EAR for reexport or
export from abroad of that direct product if destined to Macau or a
destination specified in Country Group D:5 (see supplement no. 1 to
part 774 and part 742 of the EAR for the CCL-based license
requirements for items identified under Sec.  734.9(h)(1)(i)(B)(2)
and (h)(1)(ii)(B)(2) of the EAR), absent a determination that the
item being produced is outside the product scope of these paragraphs
under Sec.  734.9(h)(1)(i)(B)(2) and (h)(1)(ii)(B)(2).
    Technical note to (b)19: To calculate the number of transistors
within a die, a foundry has two options. First, the foundry may take
the transistor density of the process node used to manufacture the
die and multiply this density by the area of the die. This number
may be significantly higher than the true transistor count, but if
the result is below the relevant transistor threshold, then the
foundry can be confident that the die in question will not exceed
that threshold. Second, to adjudicate edge cases, the foundry may
use standard design verification tools to estimate the number of
(both active and passive) transistors on the die using the GDS file.
Regardless of approach, if the foundry has knowledge that multiple
chiplets will be included in a single package, then the foundry
should estimate the aggregate number of transistors in any chiplets
the foundry is responsible for manufacturing. A foundry does not
need to count the transistors of chiplets that it is not responsible
for manufacturing itself.

PART 734--SCOPE OF THE EXPORT ADMINISTRATION REGULATIONS

0
4. Effective November 17, 2023, the authority citation for part 734 is
revised 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. 12938, 59 FR 59099, 3 CFR, 1994 Comp., p.
950; E.O. 13020, 61 FR 54079, 3 CFR, 1996 Comp., p. 219; E.O. 13026,
61 FR 58767, 3 CFR, 1996 Comp., p. 228; E.O. 13222, 66 FR 44025, 3
CFR, 2001 Comp., p. 783; E.O. 13637, 78 FR 16129, 3 CFR, 2014 Comp.,
p. 223; Notice of November 8, 2022, 87 FR 68015, 3 CFR, 2022 Comp.,
p. 563.

0
5. Effective November 17, 2023, Sec.  734.2 is amended by revising the
last sentence of paragraph (a)(1) and adding three sentences at the end
of the paragraph to read as follows:

Sec.  734.2  Subject to the EAR.

    (a) * * *
    (1) * * * Publicly available technology and software not subject to
the EAR are described in Sec. Sec.  734.7, 734.8, and 734.10. The
Bureau of Industry and Security (BIS) website at https://www.bis.doc.gov contains several practical examples describing publicly
available technology and software that are outside the scope of the EAR
under the FAQ section of the website. See the FAQs under the heading,
EAR Definitions, Technology and Software, Fundamental Research, and
Patents FAQs. The examples are illustrative, not comprehensive.
* * * * *

0
6. Effective November 17, 2023, Sec.  734.3 is amended by revising
paragraphs (a)(4) and (5) to read as follows:

Sec.  734.3  Items subject to the EAR.

    (a) * * *
    (4) Certain foreign-produced ``direct products'' of specified
``technology'' and ``software,'' as described in Sec.  734.9 of the
EAR; and

    Note to paragraph (a)(4): Certain foreign-manufactured items
developed or produced from U.S.-origin encryption items exported
pursuant to License Exception ENC are subject to the EAR. See Sec.
740.17(a) of the EAR.

    (5) Certain foreign-produced products of a complete plant or any
major component of a plant that is a ``direct product'' of specified
``technology'' or ``software'' as described in Sec.  734.9 of the EAR.
* * * * *

0
7. Effective November 17, 2023, Sec.  734.4 is amended by revising
paragraph (b)(2) to read as follows:

Sec.  734.4  De minimis U.S. content.

* * * * *
    (b) * * *
    (2) The U.S.-origin encryption items are classified under ECCNs
5A992, 5D992, or 5E992.b.
* * * * *

0
8. Effective November 17, 2023, Sec.  734.9 is amended by:
0
a. Revising the first sentence of the introductory text and paragraph
(a), the headings for paragraphs (b)(1)(ii), (c)(1)(ii), and
(d)(1)(ii), revising paragraphs (e)(1)(i)(B), (e)(2)(i)(B), the heading
for paragraph (f)(1)(ii), and revising paragraphs (f)(1)(ii)(A),
(g)(1)(ii), (h)(1)(i)(B)(2), (h)(1)(ii)(B)(2), and (h)(2)(i) and (ii);
0
b. Adding a note to paragraph (h)(2);
0
c. Removing paragraph (h)(3); and
0
d. Revising paragraph (i)(1)(ii).
    The revisions and addition read as follows:

Sec.  734.9  Foreign-Direct Product (FDP) Rules.

    Foreign-produced items located outside the United States are
subject to

the EAR when they are a ``direct product'' of specified ``technology''
or ``software,'' or are produced by a complete plant or `major
component' of a plant that itself is a ``direct product'' of specified
``technology'' or ``software.'' * * *
    (a) Definitions and model certification--(1) Definitions. The terms
defined in this paragraph are specific to Sec.  734.9 of the EAR. These
terms are indicated by single quotation marks. Terms that are in double
quotation marks are defined in part 772 of the EAR.
    (i) Major component. A major component of a plant located outside
the United States means ``equipment'' that is essential to the
``production'' of an item, including testing ``equipment.''
    (ii) [Reserved]
    (2) Model certification. Exporters, reexporters, and transferors
may obtain a written certification from a supplier that asserts an item
being provided would be subject to the EAR if future transactions meet
the destination or end user scope of one or more of the Foreign Direct
Product (FDP) rules under Sec.  734.9. The model certificate described
by BIS in supplement no. 1 to part 734 is not required under the EAR,
but through its provision, the certificate may assist exporters,
reexporters, and transferors with the process of resolving potential
red flags regarding whether an item is subject to the EAR based on
Sec.  734.9. The model certificate provided by BIS contemplates
signature by an official or designated employee of the certifying
company and inclusion of all the information described in paragraph (b)
of supplement no. 1 to part 734. While this certificate is expected to
be useful for a company to understand the application of the EAR to an
item, BIS does not view this as the only step to be completed during a
company's due diligence process. See supplement no. 1 to part 734 and
supplement no. 3 to part 732 of the EAR.
    (b) * * *
    (1) * * *
    (ii) Product of a complete plant or `major component' of a plant
that is a ``direct product.'' * * *
* * * * *
    (c) * * *
    (1) * * *
    (ii) Product of a complete plant or `major component' of a plant
that is a ``direct product.'' * * *
* * * * *
    (d) * * *
    (1) * * *
    (ii) Product of a complete plant or `major component' of a plant
that is a ``direct product.'' * * *
* * * * *
    (e) * * *
    (1) * * *
    (i) * * *
    (B) Product of a complete plant or `major component' of a plant
that is a ``direct product.'' A foreign-produced item meets the product
scope of this paragraph if the foreign-produced item is produced by any
complete plant or `major component' of a plant that is located outside
the United States, when the complete plant or `major component' of a
plant, whether made in the U.S. or a foreign country, itself is a
``direct product'' of U.S.-origin ``technology'' or ``software'' that
is specified in ECCN 3D001, 3D991, 3E001, 3E002, 3E003, 3E991, 4D001,
4D993, 4D994, 4E001, 4E992, 4E993, 5D001, 5D991, 5E001, or 5E991 of the
CCL.
* * * * *
    (2) * * *
    (i) * * *
    (B) Product of a complete plant or `major component' of a plant
that is a ``direct product.'' A foreign-produced item meets the product
scope of this paragraph if the foreign-produced item is produced by any
complete plant or `major component' of a plant that is located outside
the United States, when the complete plant or `major component' of a
plant, whether made in the U.S. or a foreign country, itself is a
``direct product'' of U.S.-origin ``technology'' or ``software'' that
is specified in ECCN 3D001, 3D991, 3E001, 3E002, 3E003, 3E991, 4D001,
4D993, 4D994, 4E001, 4E992, 4E993, 5D001, 5D002, 5D991, 5E001, 5E002,
or 5E991 of the CCL.
    (f) * * *
    (1) * * *
    (ii) Product of a complete plant or `major component' of a plant
that is a ``direct product.'' * * *
    (A) A foreign-produced item meets the product scope of this
paragraph if the foreign-produced item is produced by any complete
plant or `major component' of a plant that is located outside the
United States, when the complete plant or `major component' of a plant,
whether made in the United States or a foreign country, itself is a
``direct product'' of U.S.-origin ``technology'' or ``software'' that
is specified in any ECCN in product groups D or E of the CCL; and
* * * * *
    (g) * * *
    (1) * * *
    (ii) Product of a complete plant or `major component' of a plant
that is a ``direct product.'' A foreign-produced item meets the product
scope of this paragraph if the foreign-produced item is produced by any
complete plant or `major component' of a plant that is located outside
the United States, when the complete plant or `major component' of a
plant, whether made in the United States or a foreign country, itself
is a ``direct product'' of U.S.-origin ``technology'' or ``software''
that is specified in any ECCN in product groups D or E in any
categories of the CCL.
* * * * *
    (h) * * *
    (1) * * *
    (i) * * *
    (B) * * *
    (2) An integrated circuit, computer, ``electronic assembly,'' or
``component'' specified in ECCN 3A001.z, 4A003.z, 4A004.z, 4A005.z,
5A002.z, 5A004.z, or 5A992.z.
    (ii) * * *
    (B) * * *
    (2) An integrated circuit, computer, ``electronic assembly,'' or
``component'' specified in ECCN 3A001.z, 4A003.z, 4A004.z, 4A005.z,
5A002.z, 5A004.z, or 5A992.z.
* * * * *
    (2) * * *
    (i) Destined to a destination specified in Country Groups D:1, D:4,
or D:5, excluding any destination also specified in Country Groups A:5
or A:6, or will be incorporated into any ``part,'' ``component,''
``computer,'' or ``equipment'' not designated EAR99 that is destined to
a destination specified in Country Groups D:1, D:4, or D:5, excluding
any destination also specified in Country Groups A:5 or A:6, or
worldwide to an entity headquartered in, or whose ultimate parent
company is headquartered in, either Macau or a destination specified in
Country Group D:5; or
    (ii) ``Technology'' ``developed'' by an entity headquartered in, or
whose ultimate parent company is headquartered in, either Macau or a
destination specified in Country Group D:5, for the ``production'' of a
mask or an integrated circuit wafer or die.

    Note to paragraph (h)(2):  These end-use requirements under
paragraph (h) apply when any entity headquartered in, or whose
ultimate parent company is headquartered in, either Macau or
destination specified in Country Group D:5, is a party to any
transaction involving the foreign-produced item, e.g., as a
``purchaser,'' ``intermediate consignee,'' ``ultimate consignee,''
or ``end-user.''

    (i) * * *
    (1) * * *
    (ii) Product of a complete plant or `major component' of a plant
that is a ``direct product.'' A foreign-produced

item meets the product scope of this paragraph if the foreign-produced
item is produced by any complete plant or `major component' of a plant
that is located outside the United States, when the complete plant or
`major component' of a plant, whether made in the United States or a
foreign country, itself is a ``direct product'' of U.S.-origin
``technology'' or ``software'' that is specified in ECCN 3D001, 3D991,
3E001, 3E002, 3E003, 3E991, 4D001, 4D994, 4E001, 4E992, 4E993, 5D001,
5D002, 5D991, 5E001, 5E002, or 5E991 of the CCL.
* * * * *

0
9. Effective November 17, 2023, supplement no. 1 to part 734 is revised
to read as follows:

Supplement No. 1 to Part 734--Model Certification for Purposes of the
FDP Rule

    (a) General. This supplement is included in the EAR to assist
exporters, reexporters, and transferors in determining whether the
items being exported, reexported, or transferred (in-country) are
subject to the EAR based on one or more of the Foreign Direct
Product (FDP) rules under Sec.  734.9. The model certificate
provided by BIS in supplement no. 1 to this part is not required
under the EAR, but through its provision, the certificate may assist
exporters, reexporters, and transferors with the process of
resolving potential red flags regarding whether an item is subject
to the EAR based on one or more of the FDP rules under Sec.  734.9.
The model certificate provided in this supplement by BIS
contemplates signature by an official or designated employee of the
certifying company and inclusion of the information described in
paragraph (b) of this supplement. The certificate may be provided by
any entity in a supply chain or by an exporter, reexporter, or
transferor of the item. For example, the certificate may be provided
by an exporter, reexporter, or transferor to any other entity later
in a supply chain. Similarly, any entity later in a supply chain may
request a certificate from an exporter, reexporter, or transferor
earlier in a supply chain. Any certification relied on for this part
must be retained pursuant to recordkeeping provisions in part 762 of
the EAR. Obtaining the certification set forth in this supplement
no. 1 to part 734 does not relieve exporters, reexporters and
transferors of their obligation to exercise due diligence in
determining whether items are subject to the EAR, including by
following the ``Know Your Customer'' guidance in supplement no. 3 to
part 732 of the EAR.
    (b) Model criteria. A certification will be most useful if it
meets the criteria described in this supplement and if it contains
at least the following information:
    (1) The certification must be signed by an organization official
specifically authorized to certify the document as being accurate
and complete. The certifying official attests that the information
herein supplied in response to this paragraph is complete and
correct to the best of his/her ``knowledge.''
    (2) The organization [INSERT NAME OF THE CERTIFYING OFFICIAL'S
COMPANY] has reviewed the criteria for the foreign direct product
(FDP) rules under Sec.  734.9 the U.S. Export Administration
Regulations (EAR) (15 CFR 730-774) and attests that from the
certifying official's ``knowledge'' of the item, [INSERT A
DESCRIPTION OF THE ITEMS], provided to [INSERT NAME OF THIS
CUSTOMER], are subject to the EAR if future transactions are within
the country/destination and/or end use scope or end-user scope of
one or more of the following FDP rules [include whichever ones are
applicable]:
    (i) Country scope of Sec.  734.9(b)(2), i.e., exported or
reexported to or transferred within a destination listed in Country
Group D:1, E:1, or E:2 (see supplement no.1 to part 740 of the EAR);
    (ii) Country scope of Sec.  734.9(c)(2), i.e., exported or
reexported to or transferred within a destination listed in Country
Group D:5, E:1, or E:2 (see supplement no.1 to part 740 of the EAR);
    (iii) Country scope of Sec.  734.9(d)(2), i.e., exported or
reexported to or transferred within a destination listed in Country
Group D:1, D:3, D:4, D:5, E:1, or E:2 (see supplement no.1 to part
740 of the EAR);
    (iv) End-user scope of Sec.  734.9(e)(1)(ii) or (e)(2)(ii) for a
Footnote 1 or Footnote 4 entity, respectively (see supplement no. 4
to part 744);
    (v) Destination scope of Sec.  734.9(f)(2), i.e., exported or
reexported to or transferred within Russia, Belarus, or the
temporarily occupied Crimea region of Ukraine or will be
incorporated into or used in the ``production'' or ``development''
of any ``part,'' ``component,'' or ``equipment'' specified in any
ECCN on the CCL or in supplement no. 6 or 7 to part 746 of the EAR
and produced in or destined to Russia, Belarus, or the temporarily
occupied Crimea region of Ukraine;
    (vi) End-user scope of Sec.  734.9(g)(2) for a Footnote 3 entity
(see supplement no. 4 to part 744);
    (vii) Destination and end-use scope of Sec.  734.9(h)(2), i.e.,
the foreign-produced item is: destined to a destination specified in
Country Groups D:1, D:4, or D:5, excluding any destination also
specified in Country Groups A:5 or A:6, or will be incorporated into
any ``part,'' ``component,'' ``computer,'' or ``equipment'' not
designated EAR99 that is destined to a destination specified in
Country Groups D:1, D:4, or D:5, excluding any destination also
specified in Country Groups A:5 or A:6, or worldwide to an entity
headquartered in, or whose ultimate parent company is headquartered
in, either a destination specified in Country Groups D:1, D:4, or
D:5, excluding any destination also specified in Country Groups A:5
or A:6; or technology developed by an entity headquartered in, or
whose ultimate parent company is headquartered in, either Country
Groups D:1, D:4, or D:5, excluding any destination also specified in
Country Groups A:5 or A:6, for the ``production'' of a mask or an
integrated circuit wafer or die;
    (viii) Country and end-use scope of Sec.  734.9(i)(2), i.e.,
used in the design, ``development,'' ``production,'' operation,
installation (including on-site installation), maintenance
(checking), repair, overhaul, or refurbishing of, a
``supercomputer'' located in or destined to Macau or a destination
specified in Country Group D:5; or incorporated into, or used in the
``development,'' or ``production,'' of any ``part,'' ``component,''
or ``equipment'' that will be used in a ``supercomputer'' located in
or destined to Macau or a destination specified in Country Group
D:5;
    (ix) Destination scope of Sec.  734.9(j)(2), i.e., is destined
to Iran or will be incorporated into or used in the ``production''
or ``development'' of any ``part,'' ``component,'' or ``equipment,''
including any modified or designed ``components,'' ``parts,''
``accessories,'' and ``attachments'' therefor, identified in
supplement no. 7 to part 746 of the EAR or is specified in any ECCN
on the CCL in Categories 3 through 5 or 7 of the CCL that is located
in or destined to Iran; and
    (3) My organization affirms its commitment to comply with all
applicable requirements under the EAR.
    [INSERT NAME(S) OF CONSIGNEE(S) OR EXPORTER(S), REEXPORTERS), OR
TRANSFERORS AS APPLICABLE].
    [INSERT DATE(S) SIGNED]
    Note 1 to paragraph (b): When multiple consignees engaged in a
production process (or other type of collaborative activity, such as
joint development) will be exporting, reexporting, transferring, or
receiving items subject to the EAR, a single model certification
statement for multiple consignees may be used.
    (c) Additional information. Because this is only a model
certification, parties to the transaction may add additional
elements to the certification and/or use it for multiple purposes as
part of their compliance program. For example, if a company has ten
affiliated companies in a multi-step supply chain, instead of
obtaining a model certification for each export, reexport, or
transfer (in-country), the exporter, reexporter, or transferor may
request all ten parties to sign the certification, if appropriate,
which may further reduce the burden on parties participating in the
supply chain.

PART 736--GENERAL PROHIBITIONS

0
10. The authority citation for part 736 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. 12938, 59 FR 59099, 3 CFR, 1994 Comp., p.
950; E.O. 13020, 61 FR 54079, 3 CFR, 1996 Comp., p. 219; E.O. 13026,
61 FR 58767, 3 CFR, 1996 Comp., p. 228; E.O. 13222, 66 FR 44025, 3
CFR, 2001 Comp., p. 783; E.O. 13338, 69 FR 26751, 3 CFR, 2004 Comp.,
p. 168; Notice of November 8, 2022, 87 FR 68015 (November 10, 2022);
Notice of May 8, 2023, 88 FR 30211 (May 10, 2023).

0
11. Effective November 17, 2023, to January 1, 2026, supplement no. 1
to part 736 is amended by:
0
a. Revising paragraph (d) introductory text;
0
b. Adding paragraph (d)(2); and
0
c. Revising paragraphs (d)(3) and (4).

    The revisions and addition read as follows:

Supplement No. 1 to Part 736--General Orders

* * * * *
    (d) General Order No. 4. Exports, reexports, or transfers (in-
country) authorized under the Temporary General Licenses (TGL)
specified under paragraphs (d)(1) and (2) of this supplement must
also comply with the terms and conditions under paragraphs (d)(3)
through (5) of this supplement.
* * * * *
    (2) TGL--Advanced computing items. This TGL only overcomes the
license requirements described in Sec.  742.6(a)(6)(iii) of EAR
when:
    (i) Product scope. The items subject to the EAR that are
specified in ECCNs 3A001.z; 3A090; 3D001 (for ``software'' for
commodities controlled by 3A001.z, 3A090); 3E001 (for ``technology''
for commodities controlled by 3A001.z, 3A090); 4A003.z; 4A004.z;
4A005.z; 4A090; 4D001 (for ``software'' for commodities controlled
by 4A003.z, 4A004.z, and 4A005.z); 4D090; 4E001 (for ``technology''
for commodities controlled by 4A003.z, 4A004.z, 4A005.z, 4A090 or
``software'' specified by 4D001 (for 4A003.z, 4A004.z, and 4A005.z),
4D090); 5A002.z; 5A004.z; 5A992.z; 5D002.z; 5D992.z; 5E002 (for
``technology'' for commodities controlled by 5A002.z or 5A004.z or
``software'' specified by 5D002 (for 5A002.z or 5A004.z
commodities)); or 5E992 (for ``technology'' for commodities
controlled by 5A992.z or ``software'' controlled by 5D992.z) of the
Commerce Control List (CCL); and
    (ii) End-use scope. Any item identified under the paragraph
(d)(2)(i) of this supplement, may be exported, reexported, or
transferred (in-country) to or within a destination specified in
Country Groups D:1, D:4, or D:5 (and not specified in Country Groups
A:5 or A6) when the recipient is located in but is not headquartered
or whose ultimate parent company is not headquartered in Macau or
Country Group D:5 to continue or engage in integration, assembly
(mounting), inspection, testing, quality assurance, and distribution
of items covered by items specified in paragraph (d)(2)(i) for the
ultimate end use of these items outside of destinations specified in
Country Groups D:1, D:4, or D:5 (and not specified in Country Groups
A:5 or A6) by entities not headquartered or whose ultimate parent
company is not headquartered in Macau or a destination specified in
Country Group D:5.
    (3) Validity date. The TGLs under paragraphs (d)(1) and (2) of
this supplement expire on December 31, 2025.
    (4) End-use and end-user restrictions--(i) Restrictions related
to part 744 of the EAR. The TGL under paragraphs (d)(1) and (2) of
this supplement does not overcome the license requirements of Sec.
744.11 or Sec.  744.21 of the EAR when an entity listed in
supplements no. 4 or 7 to part 744 is a party to the transaction as
described in Sec.  748.5(c) through (f) of the EAR, or when there is
knowledge of any other prohibited end use or end user (other than
the Sec.  744.23 provisions specified above in the TGL).
    (ii) Indigenous production. (A) The TGL under paragraph (d)(1)
of this supplement cannot be used for the indigenous ``development''
or ``production'' of Category 3B tools in either Macau or a
destination specified in Country Group D:5, i.e., where the
``part,'' ``component,'' or ``equipment'' is ``developed'' or
``produced'' at the direction of an entity that is headquartered in,
or whose ultimate parent company is headquartered in, either Macau
or a destination specified in Country Group D:5.
    (B) The TGL under paragraph (d)(2) of this supplement cannot be
used for the indigenous ``development'' or ``production'' of any
item identified under paragraph (d)(2)(i) of this supplement where
the ``part,'' ``component,'' or ``equipment'' is ``developed'' or
``produced'' at the direction of an entity that is headquartered in,
or whose ultimate parent company is headquartered in, either Macau
or a destination specified in Country Group D:5.
* * * * *

PART 740--LICENSE EXCEPTIONS

0
12. The authority citation for part 740 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.; 22 U.S.C. 7201 et seq.; E.O. 13026, 61 FR
58767, 3 CFR, 1996 Comp., p. 228; E.O. 13222, 66 FR 44025, 3 CFR,
2001 Comp., p. 783.

0
13. Effective November 17, 2023, Sec.  740.2 is amended by revising
paragraphs (a)(9)(ii) introductory text and (a)(9)(ii)(B) to read as
follows:

Sec.  740.2  Restrictions on all License Exceptions.

* * * * *
    (a) * * *
    (9) * * *
    (ii) The item is identified in paragraph (a)(9)(ii)(A) or (B) of
this section, is being exported, reexported, or transferred (in-
country) to or within a destination specified in Country Group D:1,
D:4, or D:5, excluding any destination also specified in Country Groups
A:5 or A:6, and the license exception is other than: TMP, restricted to
eligibility under the provisions of Sec.  740.9(a)(6); NAC, under the
provisions of Sec.  740.8; RPL, under the provisions of Sec.  740.10,
including Sec.  740.10(a)(3)(v), which prohibits exports and reexports
of replacement parts to a destination specified in Country Group E:1
(see supplement no. 1 to this part)); GOV, restricted to eligibility
under the provisions of Sec.  740.11(b); or TSU under the provisions of
Sec.  740.13(a) and (c). Items restricted to eligibility only for the
foregoing license exceptions are:
* * * * *
    (B) An integrated circuit, ``electronic assembly'' or ``component''
or related software or technology specified in ECCNs 3A001.z; 3D001
(for ``software'' for commodities controlled by 3A001.z, 3A090); 3E001
(for ``technology'' for commodities controlled by 3A001.z); 4A003.z;
4A004.z; 4A005.z; 4D001 (for ``software'' for commodities controlled by
4A003.z, 4A004.z, and 4A005.z); and 4E001 (for ``technology'' for
commodities controlled by 4A003.z, 4A004.z, 4A005.z); 5A002.z; 5A004.z;
5A992.z; 5D002.z; 5D992.z; 5E002 (for ``technology'' for commodities
controlled by 5A002.z or 5A004.z); ``software'' specified by 5D002 (for
5A002.z or 5A004.z commodities)); 5E992 (for ``technology'' for
commodities controlled by 5A992.z or ``software'' controlled by
5D992.z).
* * * * *

0
14. Effective November 17, 2023, Sec.  740.7 is amended by revising
paragraph (b)(1) to read as follows:

Sec.  740.7  Computers (APP).

* * * * *
    (b) * * *
    (1) Related equipment controlled under ECCN 4A003.g, z.2, or z.4
may not be exported or reexported under this license exception when
exported or reexported separately from eligible computers authorized
under this license exception.
* * * * *

0
15. Effective November 17, 2023, Sec.  740.8 is added to read as
follows:

Sec.  740.8  Notified Advanced Computing (NAC).

    (a) Eligibility requirements. License Exception NAC permits the
export, reexport, and transfer (in-country) of any item classified in