[Federal Register Volume 78, Number 130 (Monday, July 8, 2013)]
[Rules and Regulations]
[Pages 40891-40919]
[FR Doc No: 2013-16238]

Vol. 78

Monday,

No. 130

July 8, 2013

Part III

Department of Commerce

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

Bureau of Industry and Security

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

15 CFR Parts 740, 742, 770, et al.

Revisions to the Export Administration Regulations: Military Vehicles;
Vessels of War; Submersible Vessels, Oceanographic Equipment; Related
Items; and Auxiliary and Miscellaneous Items That the President
Determines No Longer Warrant Control Under the United States Munitions
List; Final Rule

Federal Register / Vol. 78, No. 130 / Monday, July 8, 2013 / Rules
and Regulations

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

DEPARTMENT OF COMMERCE

Bureau of Industry and Security

15 CFR Parts 740, 742, 770, 772 and 774

[Docket No. 110928603-3298-01]
RIN 0694-AF39

Revisions to the Export Administration Regulations: Military
Vehicles; Vessels of War; Submersible Vessels, Oceanographic Equipment;
Related Items; and Auxiliary and Miscellaneous Items That the President
Determines No Longer Warrant Control Under the United States Munitions
List

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

ACTION: Final rule.

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

SUMMARY: This rule adds to the Export Administration Regulations (EAR)
controls on military vehicles and related items; vessels of war and
related items; submersible vessels, oceanographic equipment and related
items; and auxiliary and miscellaneous items that the President has
determined no longer warrant control on the United States Munitions
List (USML). This rule also adds to the EAR controls on items within
the scope of the Munitions List (WAML) of the Wassenaar Arrangement on
Export Controls for Conventional Arms and Dual-Use Goods and
Technologies (Wassenaar Arrangement) that are not specifically
identified on the USML or the Commerce Control List (CCL) but that were
subject to USML jurisdiction. Finally, this rule moves certain items
that were already subject to the EAR to the new Export Control
Classification Numbers (ECCNs) created by this rule. This rule is being
published in conjunction with the publication of a Department of State,
Directorate of Defense Trade Controls rule revising USML Categories
VII, VI, XX, and XIII to control those articles the President has
determined warrant control in those Categories of the USML. Both rules
are part of the President's Export Control Reform Initiative. The
revisions in this final rule are also part of Commerce's retrospective
regulatory review plan under Executive Order (EO) 13563.

DATES: This rule is effective January 6, 2014.

ADDRESSES: Commerce's full plan can be accessed at: http://open.commerce.gov/news/2011/08/23/commerce-plan-retrospective-analysis-existing-rules.

FOR FURTHER INFORMATION CONTACT: For questions regarding ground
vehicles and related items controlled under ECCNs 0Y606, contact Gene
Christiansen, Office of National Security and Technology Transfer
Controls, at<PHONE_NUMBER> or<EMAIL_ADDRESS>    For questions regarding surface vessels and related items
controlled under ECCNs 8Y609 or submersible vessels and related items
controlled under ECCNs 8Y620, contact Alexander Lopes, Office of
Nonproliferation and Treaty Compliance, at<PHONE_NUMBER> or
<EMAIL_ADDRESS>    For questions regarding miscellaneous equipment, materials, and
related items controlled under ECCNs 0Y617, contact Michael Rithmire,
Office of National Security and Technology Transfer Controls, at 202-
482-6105 or<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

Background

    This final rule is published by the Bureau of Industry and Security
(BIS) as part of the Administration's Export Control Reform (ECR)
Initiative. President Obama directed the Administration in August 2009
to conduct a broad-based review of the U.S. export control system to
identify additional ways to enhance national security. In April 2010,
then-Secretary of Defense Robert M. Gates, describing the initial
results of that effort, explained that fundamental reform of the U.S.
export control system is necessary to enhance our national security.
The implementation of ECR includes amendment of the International
Traffic in Arms Regulations (ITAR) and its U.S. Munitions List (USML),
so that they control only those items that provide the United States
with a critical military or intelligence advantage or otherwise warrant
such controls, and amendment of the Export Administration Regulations
(EAR) to control military items that do not warrant USML controls. This
series of amendments to the ITAR and the EAR will reform the U.S.
export control system to enhance our national security by: (i)
Improving the interoperability of U.S. military forces with allied
countries; (ii) strengthening the U.S. industrial base by, among other
things, reducing incentives for foreign manufacturers to design out and
avoid U.S.-origin content and services; and (iii) allowing export
control officials to focus government resources on transactions that
pose greater national security, foreign policy, or proliferation
concerns than those involving our NATO allies and other multi-regime
partners.
    On July 15, 2011, as part of the ECR, BIS published a proposed rule
(76 FR 41958) that set forth a framework for how articles the President
determines, in accordance with section 38(f) of the Arms Export Control
Act (AECA), would no longer warrant control on the USML would be
controlled on the EAR's Commerce Control List (CCL) (herein ``the July
15 (framework) rule'').
    On April 16, 2013, BIS published a final rule setting forth the
framework for adding to the CCL items that the President has determined
no longer warrant control on the USML through the creation of ``600
series'' Export Control Classification Numbers (ECCNs) (78 FR 22660,
April, 16, 2013 (herein the ``April 16 (initial implementation)
rule''). That structure is described at 78 FR 22662 and is not repeated
here. This rule generally follows that structure in creating new ``600
series'' ECCNs to control certain military vehicles and related items;
vessels of war and related items; submersible vessels, oceanographic
equipment and related items; and auxiliary and miscellaneous items on
the CCL. Pursuant to a rule published concurrently with this rule by
the Department of State, the items are being removed from the USML
because the President has determined they no longer warrant control on
the USML.
    The changes described in this rule and the State Department's rule
amending Categories VI, VII, XIII, and XX of the USML are based on a
review of those categories by the Defense Department, which worked with
the Departments of State and Commerce in preparing the amendments. The
review was focused on identifying the types of articles that are now
controlled by the USML that either (i) are inherently military and
otherwise warrant control on the USML, or (ii) if of a type common to
civil applications, possess parameters or characteristics that provide
a critical military or intelligence advantage to the United States and
that are almost exclusively available from the United States. If an
article was found to satisfy either or both of those criteria, the
article remains on the USML. If an article was found not to satisfy
either criterion, but is nonetheless a type of article that is, as a
result of differences in form and fit, ``specially designed'' for
military applications, then it is identified in one of the new ``600
series'' ECCNs created by this rule.
    Section 38(f) of the AECA (22 U.S.C. 2778(f)) obligates the
President to review the USML ``to determine what items, if any, no
longer warrant export controls under'' the AECA. The President must
report the results of the review to Congress and wait 30 days before
removing any such items from the USML. The report must ``describe

the nature of any controls to be imposed on that item under any other
provision of law.'' 22 U.S.C. 2778(f)(1). The Department of State made
the congressional notification required by Section 38(f) of the AECA
for removal of these items from the USML.
    All references to the USML in this rule are to the list of defense
articles that are controlled for purposes of export, temporary import,
or brokering pursuant to the ITAR, and not to the list of defense
articles on the United States Munitions Import List (USMIL) that are
controlled by the Bureau of Alcohol, Tobacco, Firearms and Explosives
(ATF) for purposes of permanent import under its regulations at 27 CFR
part 447. Pursuant to section 38(a)(1) of the AECA, all defense
articles controlled for export or import, or that are subject to
brokering controls, are part of the ``USML'' under the AECA. For the
sake of clarity, references to the USMIL are to the list of defense
articles controlled by ATF for purposes of permanent import. All
defense articles described in the USMIL or the USML are subject to the
brokering controls administered by the U.S. Department of State in part
129 of the ITAR. The transfer of defense articles from the ITAR's USML
to the EAR's CCL, for purposes of export controls, does not affect the
list of defense articles controlled on the USMIL under the AECA for
purposes of permanent import or brokering controls.
    On January 18, 2011, President Barack Obama issued Executive Order
(EO) 13563, affirming general principles of regulation and directing
government agencies to conduct retrospective reviews of existing
regulations. The revisions in this final rule are part of Commerce's
retrospective regulatory review plan under EO 13563. Commerce's full
plan, completed in August 2011, can be accessed at:  http://open.commerce.gov/news/2011/08/23/commerce-plan-retrospective-analysis-existing-rules.
    Although the Export Administration Act expired on August 20, 2001,
the President, through Executive Order 13222 of August 17, 2001, 3 CFR,
2001 Comp., p. 783 (2002), as amended by Executive Order 13637 of March
8, 2013, 78 FR 16129 (March 13, 2013), and as extended by the Notice of
August 15, 2012, 77 FR 49699 (August 16, 2012), has continued the
Export Administration Regulations in effect under the International
Emergency Economic Powers Act. BIS continues to carry out the
provisions of the Act, as appropriate and to the extent permitted by
law, pursuant to Executive Order 13222.

Proposed Rules

    This rule implements amendments to the EAR proposed in the
following four rules:
     Revisions to the Export Administration Regulations (EAR):
Control of Military Vehicles and Related Items That the President
Determines No Longer Warrant Control on the United States Munitions
List, (76 FR 76085, December 6, 2011) (herein ``the December 6
(vehicles) rule'');
     Revisions to the Export Administration Regulations (EAR):
Control of Vessels of War and Related Articles the President Determines
No Longer Warrant Control Under the United States Munitions List
(USML), (76 FR 80282, December 23, 2011) (herein ``the December 23
(vessels) rule'');
     Revisions to the Export Administration Regulations (EAR):
Control of Submersible Vessels, Oceanographic Equipment and Related
Articles That the President Determines No Longer Warrant Control Under
the United States Munitions List (USML) (76 FR 80291, December 23,
2011) (herein ``the December 23 (submersible vessels) rule''); and
     Revisions to the Export Administration Regulations:
Auxiliary and Miscellaneous Items That No Longer Warrant Control Under
the United States Munitions List and Items on the Wassenaar Arrangement
Munitions List (77 FR 29564, May 18, 2012) (herein ``the May 18
(auxiliary equipment) rule'').
    This rule creates new ``600 series'' ECCNs to control certain
military vehicles and related items; vessels of war and related items;
submersible vessels, oceanographic equipment and related items; and
auxiliary and miscellaneous items on the CCL. Descriptions of these
ECCNs, issues raised in public comments on the rules proposing them,
and BIS responses to those comments are addressed in discrete sections
below. However, certain changes made by this rule apply more broadly:
License Exception STA eligibility; notes on forgings and castings; the
United Nations reason for control; removal of the .y.99 paragraph;
separate definitions for ``accessories'' and ``attachments;'' and the
composition of the entries for software and technology.

Broadly Applicable Changes Made by This Rule

Amendments to Section 740.20 (License Exception STA)

    This final rule amends the License Exception STA provisions in
Sec.  740.20(b)(3)(iii) and (g)(1) of the EAR to indicate that the
restrictions applicable to certain ``600 series'' ECCN ``end items''
also apply to ``end items'' controlled under ECCNs 0A606.a, 8A609.a,
and 8A620.a or .b. These ``600 series'' ECCNs are being added to the
CCL as part of this final rule. The April 16 (initial implementation)
rule identified only those end items controlled by ECCN 9A610.a,
because ECCNs 0A606, 8A609 and 8A620 would not be added to the CCL
until publication of this rule.

Cross References to ECCN 0A919

    This final rule adds to the ``related controls'' paragraph of
Product Groups A, B, C, and D of the ``600 series'' ECCNs the following
sentence: ``(2) See ECCN 0A919 for foreign-made ``military
commodities'' that incorporate more than a de minimis amount of U.S.-
origin ``600 series'' controlled content.'' This is a non-substantive
change from what was proposed.

Forgings and Castings

    The December 6 (vehicles) rule included a note to ECCN 0A606.x,
which stated that: ``Forgings, castings, and other unfinished products,
such as extrusions and machined bodies, that have reached a stage in
manufacture where they are clearly identifiable by material
composition, geometry, or function as commodities controlled by ECCN
0A606.x are controlled by ECCN 0A606.x.'' The December 23 (vessels)
rule proposed such a note to ECCN 8A609.x, and the December 23
(submersible vessels) rule proposed such a note to ECCN 8A620.x.
    This final rule adds the phrase ``mechanical properties'' to those
notes because there may be circumstances when the mechanical
properties, as well as the material composition, geometry or function,
of a forging, casting, or unfinished product, may have been altered
specifically for a 0A606.x, 8A609.x, or 8A620.x part or component. The
omission of ``mechanical properties'' from the lists in the proposed
rules was an error that is being corrected in this rule.

United Nations (UN) Reason for Control

    The July 15 (framework) rule proposed applying a United Nations
(UN) reason for control to military vehicles and related items. The
December 6 (vehicles) rule proposed removing the UN reason for control
that had been proposed by the July 15 (framework) rule. None of the
other ``600 series'' ECCNs created by this rule contained items that
would have been subject to a UN reason for control when

they were proposed. Consistent with the April 16 (initial
implementation) rule, this final rule includes the UN controls
described in Sec.  746.1(b) of the EAR in the ECCNs that it creates.
These controls are consistent with the amendments contained in a final
rule that BIS published on July 23, 2012 (77 FR 42973), titled ``Export
and Reexport Controls to Rwanda and United Nations Sanctions under the
Export Administration Regulations.'' That rule amended Sec.  746.1 of
the EAR to describe the licensing policy that applies to countries
subject to a United Nations Security Council (UNSC) arms embargo and to
limit the use of license exceptions to such countries. Applying that
licensing policy and related license exception restrictions to the new
``600 series'' ECCNs that are created by this final rule is appropriate
because of the military nature of the items controlled under these new
ECCNs.

Paragraph .y.99

    The proposed rules would have created a paragraph .y.99 in each of
the new ``600 series'' ECCNs. Those paragraphs would have imposed the
antiterrorism (AT Column 1) reason for control to items that would
otherwise be controlled in that ECCN but that had been determined to be
subject to the EAR in a commodity jurisdiction determination issued by
the Department of State and that are not elsewhere identified on the
CCL (i.e., were designated as EAR99). Applying the AT Column 1 reason
for control would increase the number of circumstances under which
these items would require a license. As stated in the preamble to the
April 16 (initial implementation) rule (See 78 FR 2266, April 16,
2013), BIS agreed with a commenter that the burden of tracking down and
analyzing whether items formally determined not to be subject to the
ITAR that were also EAR99 items because they were not identified on the
CCL outweighs the once-contemplated organizational benefits of creating
the .y.99 control. Such items have already gone through an interagency
review process that concluded whether the items were subject to the
ITAR. Thus, BIS has determined that any such items should retain EAR99
status if not otherwise identified on the CCL. Accordingly, this final
rule does not contain any .y.99 paragraphs.

Accessories and Attachments

    The proposed rules would have enclosed the phrase ``accessories and
attachments'' in quotation marks through its regulatory text, in
keeping with the July 15 (framework) rule, which proposed a single
definition for that phrase. Subsequently, BIS published a proposed rule
entitled ```Specially Designed' Definition'' (77 FR 36409, June 19,
2012), which proposed, inter alia, creating separate, but identical
definitions for ``accessories'' and for ``attachments'' to allow for
instances when only one of the terms would be used. The April 16
(initial implementation) rule adopted that change as a final rule.
Accordingly, this final rule identifies ``accessories'' and
``attachments'' as separate terms wherever they appear in the
regulatory text.

Conforming Change Regarding Gas Turbine Engines

    In the April 16 (initial implementation) rule, BIS created, inter
alia, ECCN 9A619 military gas turbine engines and related commodities
(See 78 FR 22731, April 16, 2013). ECCN 9A619, as it appeared in that
rule, applied to gas turbine engines that are not enumerated on the
USML, but are ``specially designed'' for ``end-items'' in USML Category
VIII or ECCN 9A610, both of which apply to aircraft. Consistent with
the proposed changes in the December 6 (gas turbine engine) rule, this
rule expands the scope of ECCN 9A619 to apply to gas turbine engines
that are not on the USML, but are for military vehicles (USML Category
VII and ECCN 0A606) and surface vessels (USML Category VI and ECCN
8A609). The President has determined these items no longer warrant
control on the USML.

Consistency of Controls

    This final rule diverges in certain instances from the four
proposed rules on which it was based with respect to the composition of
the ECCNs. Software and technology ECCNs related to end items,
production or other equipment, or materials generally control software
and technology for the development and production of those items, and
for some combination of the following six elements: operation,
installation, maintenance, repair, overhaul, or refurbishing of those
items. Separate technical teams determined the scope of control for
different groups of ECCNs. As a result, different software and
technology entries varied in the number and type of functions
controlled.
    Although this variation was not inappropriate technically and did
not receive public comments when proposed in four separate rules, BIS
is concerned that retaining this variation would complicate compliance.
Standard text across ECCNs is a simpler approach. Therefore, each
software ECCN in this final rule will control software for development,
production, operation, or maintenance of the relevant items. Each new
``600 series'' technology ECCN in this final rule will control
technology for development, production, operation, installation,
maintenance, repair, overhaul, or refurbishing of those items. To the
extent that a particular function does not apply to a particular item
because no software or technology to perform the function with respect
to that item exists, no burden is imposed. Controlling a larger number
of functions in technology ECCNs is not an increase in burden because
all six functions are now controlled for technology on the USML.
    Similarly, all production equipment ECCNs will control test,
inspection, and production equipment for the development, production,
repair, overhaul, or refurbishing of the relevant items.

Military Vehicles and Related Items

Background

    The controls on military vehicles and related items in this final
rule are based on the proposals for controlling those items set forth
in the July 15 (framework) rule and refined in the December 6
(vehicles) rule and on a review of the public comments thereon by the
Departments of Defense, State and Commerce.
    This rule generally follows the structure established in the April
16 (initial implementation) rule in creating five new ``600 series''
ECCNs to control military ground vehicles and related items. However,
this rule departs from that structure in ECCN 0A606.b. That paragraph
retains national security (NS Column 2) and regional stability (RS
Column 2) controls on the unarmed armored vehicles that upon the
effective date of this rule will be controlled under ECCN 0A606.b
instead of ECCN 9A018.b. Otherwise, this rule applies the national
security (NS Column 1) and regional stability (RS Column 1) reasons for
control that apply generally to ``600 series'' items that are subject
to the national security and regional stability reasons for control.
The December 6 (vehicles) rule proposed these reasons for control, and
BIS received no comments on that aspect of the December 6 (vehicles)
proposed rule. As a conforming change, this rule revises the RS column
2 license requirement paragraph in Sec.  742.6(a)(4)(i) to reference
the column rather than to list specific ECCNs, as was done for the RS
column 1 license requirement paragraph in the April 16 (initial
implementation) rule.

The change to Sec.  742.6(a)(4)(i) is in format only; it does not alter
the license requirements for any item that is subject to the RS Column
2 reason for control.

Changes to Controls on Military Vehicles and Related Items Made by This
Rule

    This rule implements the proposals of the July 15 (framework) rule
and the December 6 (vehicles) rule by creating five new ECCNs. New ECCN
0A606 applies to military ground vehicles, parts, components,
accessories and attachments. New ECCN 0B606 applies to related test,
inspection and production equipment and parts and components. New ECCN
0C606 applies to related materials. New ECCN 0D606 applies to related
software. New ECCN 0E606 applies to related technology.
    This rule revises ECCN 9A018 only to cross reference ECCNs 9A610
(aircraft), 9A619 (gas turbine engines) and 0A606 (vehicles) because
upon the effective date of this rule, all the commodities previously in
ECCN 9A018 will have been moved to one of those other three ECCNs. This
rule also revises ECCN 9D018 to contain only cross references to ECCNs
9D610 and 9D619 and to EAR99 and revises ECCN 9E610 to contain only
cross references to 9E610, 9E619 and EAR99 because upon the effective
date of this rule, all of the software and technology will have been
moved to one of those ECCNs or will be EAR99.
    This rule also removes ``Interpretation 8'' from Sec.  770.2 of the
EAR (15 CFR 770.2(h)). That interpretation, which explains the
relationship between EAR and the ITAR with respect to ground vehicles,
is no longer necessary because that relationship is expressly
delineated in ECCN 0A606 (as published by this rule) and in USML
Category VII in a Department of State rule that is being published
simultaneously with the rule.

Changes Compared to the Proposed December 6 (Vehicles) Rule

    The December 6 (vehicles) rule proposed including in ECCN 0A606.b
certain all-wheel drive vehicles with armor that meet National
Institute of Justice Level III standards. Such vehicles currently are
controlled in ECCN 9A018.b and listed in the Wassenaar Arrangement
Munitions List (WAML) category ML6. To reflect changes agreed to at the
Wassenaar 2012 plenary meeting and subsequently implemented in ECCN
9A018.b, this rule makes three substantive changes to the descriptions
of those vehicles in ECCN 0A606.b compared to the text of ECCN 0A606.b
in the December 6 (vehicles) rule. One change broadens the coverage of
paragraph .b to apply to vehicles with transmissions that supply drive
to the front and rear wheels simultaneously even if the vehicle has
other wheels that may or may not provide driving force. The proposed
wording was ``all-wheel drive.'' The second change limits the scope of
the paragraph to vehicles with a gross vehicle weight rating greater
than 4,500 kilograms. The third change replaces the term ``capable of
off road use'' with the term ``designed or modified for off road use.''
In this final rule, ECCN 0A606.b also adopts the WAML category ML6
format in describing these vehicles, a non-substantive change from the
December 6 (vehicles) rule.
    This final rule also includes an illustrative list of
characteristics that make a vehicle designed for military use in Note 2
to paragraph .a in ECCN 0A606. This note is based on note 2 to the WAML
category ML6. Prior to the effective date of this rule the contents of
the note were in an interpretation found in Sec.  770.2(h) of the EAR.
Because this rule removes Sec.  770.2(h) from the EAR, inclusion of the
note in ECCN 0A606 is appropriate.
    Following the pattern of many of the ECCNs that control
commodities, ECCN 0A606 contains a paragraph .x, which applies to
unspecified parts, components, accessories and attachments that are
specially designed for a specified set of end items, and a paragraph
.y, which applies to specified parts, components, accessories and
attachments that are ``specially designed'' for items described in that
ECCN or the corresponding USML Category. To lessen the chances that
readers will mistakenly classify items specified in paragraph .y under
paragraph .x, which requires a license to more destinations than does
paragraph .y, this final rule adds wording to paragraph .x specifically
excluding items specified under paragraph .y. This is not a substantive
change to what was proposed.
    ECCN 0A606.y identifies specific ``parts,'' ``components,''
``accessories'' and ``attachments'' that are ``specially designed'' for
commodities enumerated in 0A606 (other than paragraph .b) or for
defense articles enumerated in USML Category VII and are not elsewhere
specified on the USML or CCL. Among the parts so identified in the
December 6 (vehicles) rule (0A606.y.1), were ``brake system
components,'' which were then further described by an illustrative list
reading ``e.g., discs, rotors, shoes, drums, springs, cylinders, lines,
and hoses.'' Subsequent events have made it necessary for BIS to revise
paragraph .y.1 from what was proposed. First, the April 16 (initial
implementation) rule adopted a definition of specially designed that
expressly excludes ``springs'' from that term, effectively treating all
springs as not being specially designed parts, components, accessories
or attachments for purposes of 0A606.x and .y. That rule also adopted
separate definitions of the terms ``parts'' and ``components.'' Some of
the examples in the illustrative list, such as discs and drums, would
be defined as parts rather than components. Finally, upon review of the
public comment that proposed adding electronic braking systems to
paragraph .y.1 (discussed below), BIS concluded that paragraph .y.1
needed additional precision. Therefore, this final rule makes paragraph
.y.1 an exclusive list that reads: ``Brake discs, rotors, drums,
calipers, cylinders, pads, shoes, lines, hoses, vacuum boosters, and
parts therefor.'' The term ``parts therefor'' means parts of any of the
ten individual articles enumerated in paragraph .y.1.
    ECCN 0C606 applies to materials ``specially designed'' for military
vehicles, ``parts,'' ``components,'' ``accessories'' or ``attachments''
controlled by ECCN 0A606. The December 6 (vehicles) rule included
wording in the header and in ``Note 1'' in ECCN 0C606 that would have
limited the scope of materials controlled by ECCN 0C606 to materials
not controlled by other ECCNs. The effect of that wording would have
been to make materials that are specifically mentioned in a non-``600
series'' ECCN controlled by that non-``600 series'' ECCN even if they
are ``specially designed'' for a military vehicle, ``part,''
``component,'' ``accessory'' or ``attachment'' that is controlled by
ECCN 0A606. In a rule published June 19, 2012 (77 FR 36409) (``the June
19 (specially designed) rule''), BIS proposed guidance for reviewing
the CCL to determine an item's classification. The April 16 (initial
implementation) final rule adopted an order of review for the CCL that
gives ``600 series'' ECCNs precedence over non-``600 series'' ECCNs
(See 78 FR 22735, April 16, 2013). The header and note proposed for
0C606 in the December 6 (vehicles) rule would contravene that order of
precedence. Accordingly, this final rule revises the header of ECCN
0C606 to remove the reference to ``not elsewhere specified . . . on the
CCL,'' removes proposed ``Note 1'' and redesignates ``Note 2'' as
``Note.'' This rule replaces the phrase ``N/A'' that appeared in the
``Units'' paragraph in the December 6 (vehicles) rule with the phrase
``$ value,'' which

more accurately describes the unit in which materials would be
licensed.
    The December 6 (vehicles) rule included notes in the ``related
controls'' sections of ECCNs 0A606, 0B606, 0C606, 0D606 and 0E606
referring readers to ECCN 0A919 for controls on ``military
commodities'' containing more than 10 percent U.S.-origin ``600
series'' items. That text was consistent with the de minimis thresholds
for ``600 series'' items proposed in the July 15 (framework) rule.
Since publication of the December 6 (vehicles) rule, the June 21
(transition) rule proposed having no de minimis level for 600 series
items destined for a U.S. arms embargoed country (See 77 FR 37532, June
21, 2012). The April 16 (initial implementation) rule adopted this
standard as a final rule (See 78 FR 22667 and 22707, April 16, 2013).
In addition, that rule created a new Country Group D:5 in Supplement
No. 1 to part 740 to list the U.S. arms embargoed countries (See 78 FR
22675 and 22721, April 16, 2013). Thus, the de minimis level for U.S.-
origin ``600 series'' items could be either 0% or 25% depending on the
destination. Accordingly, in this final rule, the ``related controls''
sections in each of those ECCNs, except 0E606, referring readers to
ECCN 0A919 use the phrase ``more than a de minimis amount of U.S.-
origin 600 series controlled content.'' The reference is not included
in 0E606 because the EAR do not provide for the incorporation of
technology into a commodity under the de minimis rule.

Comments on the December 6 (Vehicles) Rule Addressed by This Rule

    BIS received comments on the December 6 (vehicles) rule from one
organization and one individual. Additionally, in the preamble to the
December 6 (vehicles) rule, BIS stated that it would continue to
consider certain comments made in response to the July 15 (framework)
rule with respect to military vehicles.
    The organization that commented noted that in the preamble to the
December 6 (vehicles) rule, BIS addressed comments made by that
commenter and others concerning which vehicle parts should be subject
to no more than the antiterrorism reason for control. In that preamble,
BIS noted that it was continuing to review this issue and welcomed
further comments. The organization addressed five general topics, all
of which relate to whether certain parts and components should be
included in ``600 series'' ECCNs generally and 0A606 in particular. The
discussion below summarizes the points made under each of those topics
separately and also addresses comments related to military vehicles
that BIS received in response to the July 15 (framework) rule and that
it stated in the December 6 (vehicles) rule it would further consider.
This discussion provides a single response to topics 1, 2 and 3.

Comments Related to Exclusion of Certain Items From the 600 Series or
to Limiting Them to the .y Paragraphs

Topic 1. List of Parts and Components with Little or No Military
Significance

    This commenter proposed that gauges such as speedometers;
instrument panels/clusters; vehicle/engine sensors; vehicle engine
monitoring sensors and displays such as check engine lights and their
associated sensors; electronic braking systems; multiplexing systems to
limit vehicle wiring; tire pressure monitoring systems and data
relating to tires (not including run-flats) be added to the list of .y
items. The commenter reiterated its opinion expressed in its comments
to the July 15 (framework) rule that these items have little or no
military significance. The commenter also attributed to BIS the
statement that these might have to be modified for a particular
military vehicle; such modifications typically relate to fit and are
similar to the types of modifications that are made for civilian
vehicles. BIS's statement to this effect was part of its summary of a
comment received in response to the July 15 (framework) rule. The
commenter noted that BIS appeared to have adopted two ``additional
factors'' for determining whether a part was militarily significant.
Those factors were (1) concealment and (2) water proof/resistant status
and stated that those two factors were not a reason to treat the above
items as militarily significant. This conclusion on the part of the
commenter appears to be based on a statement in the preamble to the
December 6 (vehicles) rule that BIS made in response to a comment to
the effect that exhaust systems should not be treated as militarily
significant because they perform the same function on both civil and
military vehicles. BIS's response noted that the exhaust systems on
some military vehicles have features that reduce infrared signature to
make the vehicle less detectable and features to enable deep water
fording and therefore, could not be considered as per se lacking
military significance.
    In response to comments on the July 15 (framework) rule, BIS stated
that it was still considering comments related to exhaust systems,
wheels and blackout lights and 0A606.y. One such comment stated that
exhaust pipes consist mainly of metal tubing that is bent to fit a
particular model of vehicle. As such, they appear to be classified
under 0A606.x. The commenter stated that exhaust pipes serve the
function of keeping poisonous gases away from the passenger compartment
on both civilian and military vehicles. A second comment recommended
that wheels be added to 0A606.y, stating that wheels have no more
military significance than bearings, axles and blackout lights, all of
which were in 0A606.y of the proposed rule. A third comment questioned
why blackout lights were included in proposed ECCN 0A606.y (in the July
15 (framework) rule). The commenter noted that the .y paragraph was
intended to apply to items of little or no military significance.
However, the commenter noted that blackout lights also were included in
proposed interpretation h, which, among other things, identifies
features that give a military vehicle its military characteristics.

Topic 2. Criteria for Determining Military Significance

    This commenter noted that the December 6 (vehicles) rule solicited
additional comment on appropriate criteria for determining which items
classified under ``600 series'' ECCNs should be limited to the AT
reason for control. The organization stated that the December 6
(vehicles) rule listed five criteria. Actually, those five criteria
were suggested in a comment to the July 15 (framework) rule. BIS noted
them in the preamble to the December 6 (vehicles) rule and neither
adopted nor rejected them, but encouraged further comment on
appropriate criteria for determining which items classified under ``600
series'' ECCNs should be limited to the AT reason for control.

Topic 3. Process to Add to List of Items Lacking Military Significance

    This commenter stated that the EAR, both currently and as proposed,
lacks a process, short of amending the regulations, to designate an
item as subject only to the .y paragraph controls because it lacks
military significance. In addition, the commenter stated, self-
classification will be impossible because of the ``catch-all''
character of the proposed .x paragraphs. Without a specific process to
add more products to the .y paragraphs, the commenter suggested that
export reform might cause more problems than it is intended to resolve.
Although implementing such a process would likely require agency
resources, the commenter suggested that

reduced license application volume would result in a countervailing
reduction in the need for agency resources. Exports of parts without
military significance would be expedited by fewer license requirements.
    This commenter also proposed that a more efficient alternative to
adopting a process for adding items to the .y paragraphs would be to
adopt a definition for ``specially designed'' that would eliminate the
need to list militarily insignificant parts at all. This commenter
suggested that as an alternative, the government could create a
positive list of parts that are militarily significant and
substantially deregulate all other parts. In the commenter's view,
either alternative would give the U.S. military better access at lower
prices to commercial technologies that could update its fleet and
better equip U.S. military personnel.
    Response to topics 1, 2 and 3: Upon further review and reflection,
BIS has concluded that it should not change the list of parts,
components, accessories and attachments that were proposed for ECCN
0A606.y in the December 6 (vehicles) rule (except for the changes to
0A606.y discussed above). BIS has also concluded that it would not be
possible to publish objective criteria by which additional parts,
components, accessories and attachments would be designated as having
such limited military significance that they should be controlled in
the .y paragraph of ECCN 0A606 and establish a routine process for
seeking such designation.
    Subsequent to the closing of the comment period on the December 6
(vehicles) rule, BIS published the April 16 (initial implementation)
rule, which adopted a new definition of ``specially designed.'' As
described in more detail in that rule (see 78 FR 22728), parts and
components that are used in or with USML Category VII or 0A610 vehicles
and other commodities are not caught as specially designed items in
0A606.x or 0A606.y if any of the exclusions in the definition's
paragraph (b) apply. Thus, for example, as described in paragraph
(b)(1), if the Commerce Department issues a classification
determination that the Departments of Commerce, State, and Defense have
agreed that a part or component used in or with a military vehicle does
not warrant being considered ``specially designed,'' then it will not
be controlled by 0A606.x or 0A606.y. If the part is one of the basic
parts listed in paragraph (b)(2), then it is not controlled by 0A606.x
or 0A606.y. If, as described in detail in paragraph (b)(3), a part or
component not elsewhere enumerated on the USML or the CCL is common to
a military vehicle and an EAR99 civil vehicle in production, then it is
not controlled by 0A606.x or 0A606.y. If, as described in detail in
paragraphs (b)(4), (b)(5) and (b)(6), a part or component is not
elsewhere enumerated on the USML or the CCL and there is sufficient
contemporaneous evidence that it was developed for vehicles not on the
USML or CCL (or on the CCL for only AT reasons) for such vehicles and
for vehicles that are on the USML or other entries on the CCL, or was
developed as a general purpose commodity or software, i.e., with no
knowledge that for use in or with a particular commodity, then it will
not be within the scope of 0A606.x or 0A606.y.
    After review of the comments, BIS has concluded that technological
significance to the military character of the vehicle should not
determine whether a particular part, component, accessory or attachment
is included in paragraph .x (requiring a license to all destinations
other than Canada), .y (requiring a license to a limited range of
destinations), or even EAR99 (not listed on the CCL at all). BIS has
reached this conclusion in recognition of national security and foreign
policy justifications for the U.S. Government's having control over the
export and reexport of parts, components, accessories and attachments
that, even if they perform functions that are common to both civil and
military vehicles, are nonetheless in some way unique to or specially
designed for military vehicles. Imposing export license requirements on
such parts, accessories and attachments gives the U.S. Government
visibility into whether persons in certain countries have such military
vehicles or need such vehicles repaired. As circumstances change, these
controls give the U.S. Government the ability to control the flow of
such parts and components as national security and foreign policy
concerns warrant. The U.S. Government has, however, decided that
controlling such items on the ITAR is too restrictive and has, thus,
created the more flexible controls in the ``600 series'' for such
items.
    BIS notes that there are no items within the scope of 0A606.x or
0A606.y that were not, prior to the effective date of this rule,
subject to the ITAR and controlled under USML Category VII(g), which
controlled parts, components, accessories, and attachments specifically
designed or modified for the military vehicle and other items described
in USML Category VII. Although classification under a ``600 series''
ECCN might impose sufficient additional regulatory burden that a
manufacturer of EAR99 items might not wish to modify the design of its
products to adapt them to military vehicles, nonetheless, the movement
of these items to a ``600 series'' ECCN represents a substantial
reduction in the licensing burden for manufacturers whose products
currently are subject to the ITAR.
    BIS does not agree with the commenter's statement that the catch-
all nature of the .x paragraphs would make self-classifications
``impossible.'' If a part or component is listed on the USML, then it
is ITAR controlled. If not, and it is enumerated in an ECCN 0A606
paragraph, then it is subject to the EAR and controlled in that
paragraph. If not, and it was ``specially designed'' for a USML VII
article or a 0A606 (other than 0A606.b) item, then it is controlled
under 0A606.x, unless specifically identified in 0A606.y. Such items,
when they were ITAR controlled under USML Category VII(g), required a
license from State to export worldwide (except Canada if eligible under
the Canadian exemption) and had a zero percent de minimis threshold
when incorporated into civilian or military items. The U.S. Government
has considerably adjusted the controls on such items by controlling
them in the new 0A606.x, which has available to it several license
exceptions and, for most of the world, a 25% de minimis threshold. In
addition, BIS disagrees with the commenter's request that the catch-all
provisions be amended so that they only control ``significant'' parts
and components. The commenter would leave solely up to the exporter the
subjective determination whether something is ``significant.'' It is
certain that not all exporters and government officials would come to
the same conclusion regarding the significance of any particular item.
Granting the requested edit would thus not create the reliability and
predictability BIS is trying to accomplish with the proposed revisions
and the new definition of ``specially designed.'' It is the government
that decides whether a part or component is so significant, from either
a national security or a foreign policy perspective, as to warrant
control on the USML or the more flexible controls of the ``600 series''
ECCNs, not the exporter.
    BIS also notes that although the July 15 (framework) rule included
blackout lights in ECCN 0A606.y, the December 6 (vehicles) rule did not
do so. In the preamble to the December 6 (vehicles) rule, BIS stated
that it did not include blackout lights because blackout lights were
then the subject of discussions at the Wassenaar Arrangement and that

changing controls on them at that time would be premature. Since the
publication of the December 6 (vehicles) rule, two plenary meetings of
the Wassenaar Arrangement have taken place. At neither plenary meeting
did the Wassenaar Arrangement decide to remove blackout lights from the
list of modifications that make a vehicle one for military use as found
in Note 2 to WAML category ML6. For this reason, in addition to those
in the immediately preceding paragraph, this final rule does not
include blackout lights in 0A606.y. Thus, blackout lights that are
``specially designed'' parts for vehicles in USML Category VII or in
ECCN 0A606.a are included in ECCN 0A606.x.

Topic 4. Information Needed To Adapt Militarily Insignificant Parts and
Components for Military Vehicles

    One commenter noted that the December 6 (vehicles) rule stated that
BIS is considering recommendations to ``limit the controls on form, fit
and function data needed to provide militarily insignificant items for
military vehicles to the antiterrorism reason [for control]'' and
reiterated with some elaboration the comments it made on this issue in
response to the July 15 (framework) rule. The commenter stated that
such a limit is critical to effective export control reform. Parts
suppliers need to know basic information about size, shape, available
electrical current and voltage, and other basic parameters in order to
adapt a part to a particular vehicle. They need to communicate this
information to their employees and suppliers. Requiring parts
manufacturers to obtain licenses in order to do so would increase the
cost and complexity of compliance programs, negating much of the
advantage of creating 0A606.y items.
    Response: BIS did not adopt this recommendation. Although BIS
desires to avoid imposing excessive compliance costs on parties engaged
in transactions that are subject to the EAR, some such costs cannot be
avoided. In many cases, BIS maintains export license requirements on
development and production technology for those parts and components
that are comparable to the license requirements imposed on the parts
and components themselves because doing so provides a source of
information about the disposition and status of military vehicles. BIS
also disagrees with the commenter that adding parts and components to
the .y controls increases compliance burdens. All parts and components
that are now controlled in 0A606.y were, prior to the effective date of
this rule, subject to the ITAR under USML Category VII(g). There are
significantly fewer licensing and compliance burdens for an AT-only EAR
item than for an ITAR-controlled item.

Topic 5. Analog v. Digital Parts and Components

    One commenter noted that the proposed December 23 (vessels) and
December 23 (submersible vessels) rules distinguished between digital
and analog parts in compiling lists of parts of little military
significance. However, the commenter addressed its comment on this
issue to those two rules and to the December 6 (vehicles) rule. This
commenter described that distinction as arbitrary and unwarranted. This
commenter noted that digital automobile parts have been in use for
dozens of years and are in almost all modern civil vehicles and
vessels. The commenter noted that the main reasons for using digital
components are: Reduced signal degradation, interoperability with other
vehicle parts and ability to track and display diagnostic, service and
repair codes. This commenter asserted that there is nothing inherently
military about these functions. This commenter also noted that some
parts designed for a specific military function are analog.
    Response: With respect to military vehicles, the July 15
(framework) rule, the December 6 (vehicles) rule and this final rule do
not draw a distinction between analog and digital components in
designating items for the .y paragraph of ECCN 0A606.

Comments Related Primarily to Definitions or Terminology

    Comment: One commenter recommended that the term ``military use''
and similar terms such as ``military application,'' ``military
mission'' or ``defense articles'' be avoided because they are ambiguous
and that more specific terms be substituted instead.
    Response: BIS certainly desires to make the EAR as explicit and
precise as it can. However, in some instances, terms such as the
commenter proposes avoiding cannot be avoided. For some things, a
military application is an important distinguishing factor. In some
instances, such terms are needed to fully describe the items to which
the EAR applies. Sometimes, such terms are needed to conform with
multilateral control lists which continue to use phrases such as
``military application.'' The CCL will be amended over time to reflect
changes in the multilateral control lists.
    Comment: One commenter recommended that the term ``specially
designed'' be replaced with ``required'' and that the definition of
``required'' currently in the EAR be expanded to apply to commodities
as well as software and technology. This definition focuses on the
portion of the technology that is peculiarly responsible for achieving
or exceeding the controlled performance levels. This commenter opined
that ``required'' would be more precise than ``specially designed.'' He
also stated that the term ``specially designed'' is generally
associated with designer intent.
    This commenter recommended that only components that meet the
definition of ``required'' be controlled under ``600 series'' ECCNs. To
address situations in which an end item that is on the USML could be
manufactured from parts, none of which meets the definition of
``required,'' this commenter recommended adding a new end-use control
to part 744 of the EAR that would control technology required for
assembly of components into USML end items even if the components are
not specified on the CCL.
    As a specific instance of this recommendation, this commenter
recommended changing ``specially designed'' to ``required'' in 0A606.x,
0B606 heading, .a, and .b; 0D606 and 0E606 headings.
    Response: BIS did not adopt these recommendations. The term
``required'' is defined in the EAR and is not coextensive with the term
``specially designed.'' Limiting controls on parts and components to
only those that would be ``peculiarly responsible'' for the military
functionality of a particular item would be a significant decontrol
contrary to the national security and foreign policy bases for the
controls and the reform initiative. Most parts and components that are
specially designed for military vehicles do not provide any military
functionality to the item other than to enable it to operate.
    In the April 16 (initial implementation) rule, BIS adopted a
definition of ``specially designed'' that is the product of two rounds
of proposed rules and review of extensive public comments. This
definition applies two tests for inclusion within the definition of
``specially designed'' and then provides six exclusions whereby a part,
component, accessory, attachment or software may be released from the
definition. (See 78 FR 22728, April 16, 2013) The first test, which is
similar to the definition of ``required,'' addresses items that have,
as a result of ``development,'' ``properties peculiarly responsible for
achieving or exceeding the performance levels, characteristics, or
functions in the relevant ECCN or U.S. Munitions List (USML) paragraph

. . . '' The second test in the definition covers parts, components,
accessories, attachments or software that are for use in or with
defense articles on the USML or items on the CCL. When paired with the
exclusions, this second test provides a basis for including within
ECCNs 0A606, 0B606, and 0D606 parts, components, accessories,
attachments and software that are sufficiently military in their
character to merit inclusion in a ``600 series'' ECCN while excluding
those that are common to both military and unlisted civil items in
production. Inclusion of military parts, components, accessories,
attachments and software in these ECCNs provides the U.S. Government
with useful information about the disposition and operating status of
vehicles that previously have been licensed for export.
    The comment also implicitly assumes that the only parts and
components that warrant controls are those that provide peculiar
military functionality to a controlled item. The basis for the
government's controls on unspecified parts and components is that those
items that are deliberately designed or modified and are not otherwise
in normal commercial use--i.e., that are ``specially designed'' for a
military end item--warrant control for that reason. The U.S. government
has national security and foreign policy interests in being able to
monitor, control, and otherwise have visibility into the supply chain
of the parts and components that are necessary to keep military items
functioning. The U.S. Government has made a determination that such
parts and components, which are now ITAR controlled, do not warrant all
the controls of the ITAR. The Government has not made, and does not
intend to make, a determination that such items do not warrant control
at all.
    Comment: One commenter recommended that ECCNs 0D606 and 0E606
(along with related provisions of the ITAR) as proposed in the December
6 (vehicles) rule and the State Department's corresponding rule be
revised to place control over production software and technology with
Commerce because production equipment is controlled by Commerce. This
commenter also stated that the definitions of ``development'' and
``production'' overlap. The commenter proposed remedying these
situations by revising 0D606 and 0E606 to apply to software and
technology required for the development or production of military
vehicles and related items on the ITAR and to apply to software and
technology for the development, production, operation, installation,
maintenance, repair, overhaul or refurbishing of military vehicles and
related items on the CCL.
    Response: BIS did not adopt this recommendation. The commenter is
correct in noting that ECCN 0D606 in the December 6 (vehicles) rule and
in this final rule applies inter alia to software for the production of
commodities in ECCN 0A606 and that the term ``production'' is defined
in the EAR to include inspection and testing. However, the equipment
that is used to produce those commodities and articles is not
necessarily of the same sensitivity as the software and technology that
is specific to the production of the commodities and articles. Some
equipment may be used to produce multiple types of items of varying
sensitivity. The decision to place a particular software or technology
on the USML or on the CCL should be based on the capabilities of that
software or technology.
    BIS does not agree with the commenter's assertion that the
definitions of ``development'' and ``production'' overlap. Those
definitions, which are the definitions used by the Wassenaar
Arrangement, have been in the EAR for years, and BIS is unaware of any
confusion caused by alleged overlap of the terms.
    Comment: One commenter recommended that proposed ECCN 0A606,
paragraph a., be modified to incorporate, into the body of that
paragraph, proposed text in a note immediately following that paragraph
and by revising that text to make the following three changes:
    1. Add language to the description of the tanks subject to that
paragraph to allow certain modifications of tanks built prior to 1956.
Those modifications are safety features required by law, cosmetic
modifications and addition of parts and components available prior to
1956;
    2. Replace with word ``military'' with the word ``armored'' in
describing the trains subject to paragraph .a; and
    3. Remove all references to trailers.
    Response: This final rule adopts the portions of this commenter's
recommendation relating to modifications of certain tanks built prior
to 1956 that do not change the tank's status as a tank built in 1955 or
earlier. The wording concerning such modifications appeared in the
Department of State proposed rule on Category VII in proposed language
in 22 CFR 121.4(b) describing ground vehicles that are subject to the
EAR (See 76 FR 76100, 76102, December 6, 2011). Including matching
language in the EAR will make the boundary between the EAR and the ITAR
more explicit with respect to military vehicles. Accordingly this rule
adds, in response to the commenter's recommendation, at the end of Note
1 to paragraph .a of ECCN 0A606, the sentence ``For purposes of this
note, the term ``modified'' does not include incorporation of safety
features required by law, cosmetic changes (e.g., different paint or
repositioning of bolt holes) or addition of ``parts'' or ``components''
available prior to 1956.''
    BIS did not adopt the proposal to incorporate the text of the note
into the body of paragraph .a because BIS does not believe that doing
so would add clarity to the rule. BIS did not replace the word
``military'' with the word ``armored'' because currently, USML Category
VII(a) applies to, inter alia, ``military railway trains'' and does not
require that such trains be armored. BIS's intent is to include in ECCN
0A606 the trains currently covered by Category VII(a) unless those
trains are armed or are specially designed for launching missiles. BIS
did not remove references to trailers because trailers are included in
WAML category ML6. Failure to include them would be inconsistent with
the U.S. Government's commitments to the Wassenaar Arrangement.
    Comment: This commenter also recommended deleting the term
``specially designed'' from 0A606.b.1, Note 2 because in the
commenter's opinion, ``none of the definitions under consideration for
specially designed make sense when applied to a decontrol.''
    Response: BIS is not deleting the term ``specially designed'' from
this note, which is taken from the WAML category ML6 and reads: ``ECCN
0A606.b.1 does not control civilian vehicles `specially designed' for
transporting money or valuables.'' Although the commenter's position is
arguably correct when applied to the proposed definition of ``specially
designed'' in the July 15 (framework) rule, the definition of
``specially designed'' adopted in the April 16 (initial implementation)
rule does make sense in provisions such as this note. That definition
of ``specially designed'' applies to an item that ``(1) As a result of
``development'' has properties peculiarly responsible for achieving or
exceeding the performance levels, characteristics, or functions in the
relevant ECCN or U.S. Munitions List (USML) paragraph; or (2) Is a
``part,'' ``component,'' ``accessory,'' ``attachment,'' or ``software''
for use in or with a commodity or defense article `enumerated' or
otherwise described on the CCL or the USML.''

    When the first definition criterion is substituted for the defined
term, ECCN 0A606.b.1, Note 2 reads: ``ECCN 0A606.b.1 does not control
civilian vehicles `[that][ a]s a result of ``development'' . . . [have]
properties peculiarly responsible for achieving or exceeding the
performance levels, characteristics, or functions in the relevant ECCN
or U.S. Munitions List (USML) paragraph for transporting money or
valuables.'' Furthermore, the second criterion does not apply because
vehicles for transporting money or valuables are not parts, components,
accessories, attachments or software. The phrase transporting money or
valuables is a parameter that appears on the decontrol note and not in
the ECCN 0A606.b.1 control text. Thus, Note 2 limits the scope of ECCN
0A606.b.1. BIS believes use of the term ``specially designed'' here
will not cause confusion.
    Comment: One commenter also recommended deleting the word
``special'' from the phrase ``special reinforcements for mounts for
weapons'' in 0A606.b.1 Note 3.
    Response: BIS did not accept this recommendation. ECCN 0A606.b.1
applies to, inter alia, certain unarmed vehicles with armor. Note 3
defines an unarmed vehicle for purposes of paragraph .b.1. The
adjective ``special'' in this instance makes clear that ordinary
bracing or reinforcing used in the bodies of civil vehicles does not
make a make a civil vehicle armed. Additionally, BIS notes the
similarity between the language in Note 3--``special reinforcements for
mounts for weapons'' and the example, set forth in WAML category ML6,
of a modification that makes a vehicle ``specially designed'' for
military use--``Special reinforcements or mountings for weapons. . .
.''
    Comment: One commenter also recommended deleting the term
``specially designed'' in the phrase that appears in 0A606.e and reads
``deep water fording kits specially designed for ground vehicles
controlled by 0A606.a or USML Category VII.''
    Response: BIS did not adopt this recommendation. BIS believes that
the term ``specially designed'' is necessary to provide precision to
the scope of paragraph .e.
    Comment: One commenter recommended making 0A606.x, which applies to
``specially designed'' parts, components, accessories and attachments,
inapplicable to 0A606.c (air-cooled diesel engines and engine blocks
for armored vehicles of 40 tons or more), .d (continuously variable
automatic transmission for tracked combat vehicles), .e (deep water
fording kits for vehicles in USML Category VII or ECCN 0A606), and .f
(self-launching bridge components not enumerated in USML Category
VII(g) for deployment by vehicles in USML Category VII or 0A606). This
commenter also asserted that imposing a license requirement on
components of components was problematic but did not provide reason for
the assertion.
    Response: BIS did not adopt this recommendation, which would have
the effect of eliminating the license requirement for ``specially
designed'' parts, components, accessories and attachments for items
listed in this comment. Each of the commodities listed in ECCN 0A606,
paragraphs .c through .f, is a piece of military equipment or a part or
component thereof. Applying a license requirement to ``specially
designed'' parts and components for such equipment serves to provide
the U.S. Government with information about the equipment's disposition
and use. BIS does not agree with the commenter that imposing a license
requirement on components of components is problematic.

Vessels of War and Related Items; Submersible Vessels, Oceanographic
Equipment and Related Items

Background

    This rule makes final the provisions contained in the December 23
(vessels) and the December 23 (submersible vessels) rules. These two
proposed rules from BIS were published in conjunction with two rules
from the Department of State, Directorate of Defense Trade Controls
that proposed to amend the list of articles controlled by USML
Categories VI and XX (see 76 FR 80282, 80302 and 76 FR 80291, 80305,
respectively).
    Specifically, this final rule describes how surface vessels of war
and related articles that the President determines no longer warrant
control under Category VI (surface vessels of war and special naval
equipment) of the USML will now be controlled on the CCL under new
``600 series'' ECCNs 8A609, 8B609, 8C609, 8D609, and 8E609. The rule
also describes how submersible vessels, oceanographic and associated
equipment that the President has determined no longer warrant control
on the USML Category VI or XX will now be controlled on the CCL under
new ``600 series'' ECCNs 8A620, 8B620, 8D620, and 8E620.

Summary of Public Comments Submitted in Response to the Proposals
Contained in the December 23 (Vessels) Rule Published by BIS

    The public comment period for the December 23 (vessels) rule, which
addressed controls on surface vessels of war and related articles,
ended on February 6, 2012. BIS received comments from four respondents.
Following is a summary of those comments, along with BIS's responses.
The comments are organized by topic, with similar comments grouped
together under the same heading.

ECCN 8A609.x (``Parts, ``Components,'' ``Accessories'' and
``Attachments'' That are ``Specially Designed'' for a Commodity
Enumerated in ECCN 8A609 (Except for 8A609.y) or a Defense Article
Enumerated in USML Category VI and Not Specified Elsewhere in the USML
or in 8A609.y)

    Comment: Two respondents commented that Note 2 to proposed ECCN
8A609.x incorrectly referenced USML Category VI(g), instead of USML
Category VI(f).
    Response: This final rule corrects Note 2 to ECCN 8A609.x to refer
to USML Category VI(f), which controls specified components, parts,
accessories, attachments, and associated equipment for surface vessels
of war and special naval equipment enumerated in USML Category VI. Note
2 indicates that the latter are excluded from control under ECCN
8A609.x.

ECCN 8A609.y (Specific ``parts,'' ``Components,'' ``Accessories'' and
``Attachments'' ``Specially Designed'' for a Commodity Controlled by
ECCN 8A609 or for a Defense Article in USML Category VI and Not
Specified Elsewhere in the USML)

    Comment: One respondent questioned why proposed ECCN 8A609.y.12
referred to analog gauges and indicators only, and not also to
``digital'' gauges and indicators, because there is nothing inherently
military about all ``digital'' parts and components.
    Response: Since BIS does not intend that ECCN 8A609.y distinguish
between the relative merits of ``analog'' and ``digital'' technologies,
this final rule changes ECCN 8A609.y to refer to all gauges and
indicators, regardless of whether they are ``analog'' or ``digital.''
As published in this final rule, these gauges and indicators are now
controlled under ECCN 8A609.y.10.
    Comment: Two respondents recommended that additional items be
included in the list of specific ``parts,'' ``components,'' and
``accessories and

attachments'' controlled by ECCN 8A609.y.
    One respondent recommended that the following items be added to
ECCN 8A609.y:

 Atmosphere control and monitoring equipment
 Environmental control and monitoring equipment
 Thermal insulation
 Trash handling systems
 Mooring, towing and dry dock equipment
 Anchoring systems
 Material corrosion and fouling control systems
 Damage-control equipment
 Firefighting equipment, fire suppression systems,
extinguishers, water hoses
 Emergency water rescue equipment
 On-board cranes
 Non-structural bulkheads and flexible space arrangements
 Cargo doors
 Bunks, lockers, and living/recreational quarter equipment or
fixtures
 Meeting and classroom equipment or fixtures
 Bridge screens, panels, and monitors
 Electrical cable, cableways, wire, tapes, distribution panels,
circuit breakers, supply outlets, connectors, switches, and fixtures
 Fiber optic cable, cableways, fixtures, switches, and supply
outlets
 Equipment foundations and shock mounts
 Fasteners, washers, O-rings, bushings, adapters, couplings,
bolts and similar ancillary hardware
 Mountings and clamps (meant to keep computers, office
furniture in place).

    The other respondent recommended that the following items be added
to ECCN 8A609.y:

 Air vents and outlets
 Cabin doors and door seals
 Crew and cabin seats and bunks
 Fire or smoke detection, prevention and suppression systems
 Gas detection and generation systems
 Heating, air-conditioning and air management equipment
 Junction boxes
 Lithium-ion batteries and battery cells
 Port hole and port hole seals.
    Response: This final rule retains the scope of controls set forth
in the December 23 (vessels) rule and does not add the additional items
recommended by the commenters. In this regard, note that BIS has
concluded that the technological significance of a ``part,''
``component,'' ``accessory'' or ``attachment'' to the military
character of a vessel should not be the sole determining factor as to
whether a particular ``part,'' ``component,'' ``accessory'' or
``attachment'' is included in paragraph .x (requiring a license to all
destinations other than Canada) or paragraph .y (requiring a license to
a limited range of destinations) or classified under the designation
``EAR99'' (not listed on the CCL but subject to the EAR). BIS reached
this conclusion in recognition of the national security and foreign
policy justifications in support of the U.S. Government exercising
control over the export and reexport of ``parts,'' ``components,''
``accessories'' and ``attachments'' that, although they perform
functions common to both civil and military vessels, are nonetheless in
some way unique to, or ``specially designed'' for, vessels of war.
Imposing export license requirements on such ``parts,'' ``components,''
``accessories'' and ``attachments'' provides the U.S. Government with
insight into whether persons in certain countries have military vessels
or need to have such vessels repaired. These controls give the U.S.
Government the ability to control the flow of such parts, components,
accessories, and attachments consistent with our national security and
foreign policy objectives. Nevertheless, the U.S. Government has
decided that controlling such items on the ITAR is too restrictive and,
accordingly, has created more flexible controls for such items in the
new ``600 series'' ECCNs on the CCL.
    Comment: One respondent recommended that ECCN 8A609.y.5 be
rewritten to clarify that it controls ``metal hydraulic, fuel, oil and
air lines that are straight, bent, flexible, braided or varying
internal cross sectional area.''
    Response: This final rule clarifies which items of this type are
controlled under 8A609.y by including the following control language in
ECCN 8A609.y.2: ``Filters and filter assemblies, hoses, lines,
fittings, couplings, and brackets for pneumatic, hydraulic, oil and
fuel systems.''
    Comment: One respondent commented that the .y paragraphs in ECCNs
8A609, 8B609, 8C609, 8D609, and 8E609 should be removed and that
``parts'' and ``accessories and attachments'' should not be controlled
elsewhere in the 8Y609 ECCNs or in USML Category VI. Instead, only
individually identified ``required'' ``components'' should be
controlled.
    Response: This final rule controls ``parts,'' ``components,''
``accessories'' and ``attachments'' for commodities enumerated in the
new 8Y609 ECCNs, consistent with the scope of the definition of
``specially designed,'' as published in the April 16 (initial
implementation) rule. Accordingly, an item is considered to be
``specially designed,'' per paragraph (a) of the ``specially designed''
definition, if the item: (i) As a result of ``development'' has
properties peculiarly responsible for achieving or exceeding the
performance levels, characteristics, or functions in the relevant ECCN
or USML paragraph; or (ii) is a ``part,'' ``component,'' ``accessory,''
``attachment,'' or ``software'' for use in or with a commodity or
defense article `enumerated' or otherwise described on the CCL or the
USML. Nevertheless, a ``part,'' ``component,'' ``accessory,''
``attachment,'' or ``software'' that otherwise would be controlled by
paragraph (a) of the ``specially designed'' definition is released from
being treated as ``specially designed,'' if one or more of the
exceptions contained in paragraph (b) of the ``specially designed''
definition applies. The ``catch and release'' construct employed in
paragraphs (a) and (b), respectively, of the ``specially designed''
definition is intended to work in combination to catch all items that
may warrant being controlled as ``specially designed.'' Paragraph (b)
of the definition tries, to the extent possible, to release those
``parts,'' ``components,'' ``accessories,'' ``attachments,'' or
``software'' that the U.S. Government has determined, in all cases, do
not warrant being controlled as ``specially designed.''

ECCN 8E609.a (``Technology'' ``Required'' for the ``Development,''
``Production,'' Operation, Installation, Maintenance, Repair, Overhaul
or Refurbishing of Commodities Controlled by ECCN 8A609, 8B609, or
8C609, or ``Software'' Controlled by ECCN 8D609, Except for ECCN
8A609.y, 8B609.y, 8C609.y, or 8D609.y)

    Comment: One respondent recommended that the phrase ``operation,
installation, maintenance, repair, or overhaul,'' in ECCN 8E609.a, be
removed and replaced with the term ``use,'' as defined in the EAR.
    Response: This final rule uses the phrase ``operation,
installation, maintenance, repair, overhaul, or refurbishing'' in ECCN
8E609.a, because this phrase is intended to include each of the
specific sub-elements of ``use,'' as defined in the EAR.

Production ``Software'' and ``Technology'' Controlled Under ECCNs 8D609
and 8E609, Respectively

    Comment: One respondent stated that ``software'' and ``technology''
should be controlled by the same agency that controls production
equipment (i.e.,

Commerce). In that event, the respondent recommended that ECCN 8D609 be
expanded to control ``software'' ``required'' for the ``development''
or ``production'' of defense articles in USML Category VI(a) through
(f) and the ``software'' portion of USML Category VI(g). In addition,
the respondent recommended that ECCN 8E609 be expanded to control
``technology'' ``required'' for the ``development'' or ``production''
of defense articles in USML Category VI(a) through (f) and the
``software'' portion of USML Category VI(g); and the design of, the
assembly of components into, and the operation, maintenance and repair
of, complete production installations for defense articles in USML
Category VI(a) through (f) and the ``software'' portion of USML
Category VI(g), and items in ECCN 8A609, 8B609 or 8D609, even if the
``components'' of such production installations are not specified on
either the CCL or the USML.
    Response: BIS did not adopt this recommendation. As discussed
previously in the preamble, the changes described in this rule and in
the State Department's rule amending Categories VI, VII, XIII, and XX
of the USML are based on a review of those categories by the Defense
Department, which worked with the Departments of State and Commerce in
preparing the amendments. The review was focused on identifying the
types of articles that are now controlled by the USML that either: (i)
Are inherently military and otherwise warrant control on the USML; or
(ii) if of a type common to civil applications, possess parameters or
characteristics that provide a critical military or intelligence
advantage to the United States and that are almost exclusively
available from the United States. If an article was found to satisfy
either or both of those criteria, the article remains on the USML.
Based on the review of USML Category VI, ECCN 8D609 controls
``software'' for items controlled under ECCN 8A609, 8B609, or 8C609
only (and not ``software'' for any of the defense articles enumerated
in USML Category VI), while ECCN 8E609 controls ``technology'' for
items controlled under ECCN 8A609, 8B609, 8C609, or 8D609 only (and not
``technology'' for any of the defense articles enumerated in USML
Category VI). In short, as a result of the review, ``software'' and
``technology'' for surface vessels of war, special naval equipment, and
related defense articles enumerated in USML Category VI will be
controlled under Category VI and not under the related ``software'' and
``technology'' entries on the CCL (i.e., ECCNs 8D609 and 8E609,
respectively).

Use of the Term ``Specially Designed'' in the 8Y609 ECCNs

    Comment: One respondent recommended that the proposed definition of
``specially designed'' (and, in particular, the ``parts'' and
``components'' exclusions therein) be changed to avoid the overly broad
control of a large and diverse array of militarily insignificant items
used on military surface vessels and related articles. In the
respondent's view, the provisions of the proposed definition applicable
to ``parts'' and ``components,'' if read literally, would capture
``parts'' and ``components'' for practically every military item
enumerated on the CCL or the USML, unless the ``parts'' and
``components'' are separately enumerated (i.e., either in a USML
subcategory or in an ECCN that does not have ``specially designed'' as
a control criterion) or fall within one of the four limited exclusions
in subparagraph (d) of the proposed definition (as published in the
July 15 (framework) rule. To clarify the scope of the definition, with
respect to ``parts'' and ``components,'' the respondent recommended
that ECCN 8A609.y be revised to add the following types of minor
``parts:'' threaded fasteners (e.g., screws, bolts, nuts, nut plates,
studs, inserts), other fasteners (e.g., clips, rivets, pins), common
type hardware (e.g., washers, spacers, insulators, connectors, diodes,
resistors, grommets, bushings), springs, wire, seals, packings,
blankets, insulation, decals, and name/information plates.
    In addition, the respondent noted that the application of the
proposed ``specially designed'' definition to items other than
``parts'' and ``components'' was ambiguous with respect to the phrase
``peculiarly responsible'' (i.e., the significance of an item's
properties to the stated performance characteristics or functions),
which could be interpreted as meaning that the properties are both
``necessary'' and ``sufficient'' to achieve or exceed the stated
performance parameters. To address this ambiguity, the respondent
recommended that BIS provide examples of how the phrase ``peculiarly
responsible'' would be applied in determining whether or not an item
was ``specially designed.''
    Response: This final rule does not adopt the respondent's
recommendation, although the definition of ``specially designed''
published in the April 16 (initial implementation rule) did include a
Note to paragraph (a)(1) to provide more detail on applying the
peculiarly responsible standard, including providing two examples for
applying the peculiarly responsible standard for purposes of paragraph
(a)(1). This rule controls ``parts,'' ``components,'' ``accessories''
and ``attachments'' for commodities enumerated in the new 8Y609 ECCNs,
consistent with the scope of the definition of ``specially designed,''
as published in the April 16 (initial implementation) rule.
    With respect to the phrase ``peculiarly responsible,'' as applied
in subparagraph (a)(1) of the proposed ``specially designed''
definition, most respondents who commented on the proposed ``specially
designed'' definition in the July 15 (framework) rule found this part
of the definition to be clear--perhaps, this is because this part of
the definition was taken from the definition of ``required'' in Sec.
772.1 of the EAR. Although the ``required'' definition applies only to
``software'' and ``technology,'' BIS applied the defining principle of
that definition in paragraph (a)(1) of the ``specially designed''
definition, as published in the April 16 (initial implementation) rule.
Therefore, within the context of paragraph (a)(1) of the ``specially
designed'' definition, the phrase ``peculiarly responsible'' means not
merely that an item captured by this paragraph is somehow capable of
use with a controlled item, but that something was done during the
item's development to enable it to achieve or exceed the performance
levels, characteristics, or functions described in a referenced ECCN or
USML paragraph. If, for example, the control characteristic of a
vehicle indicates that the vehicle be ``specially designed'' for
military use, then, at a minimum, any ``part'' or ``component'' that
was, as a result of development, deliberately made for and unique to
such a military vehicle would be considered peculiarly responsible for
meeting the control characteristic of the vehicle, regardless of the
part or component's capabilities or functions. The only control
characteristic for such vehicles is that the vehicle itself was
``specially designed'' for military use, not that it performed at any
particular level. Whether the part or component is ultimately
considered to be ``specially designed'' depends upon whether any of the
releases in paragraph (b) apply.
    For purposes of paragraph (a)(1) in the definition of ``specially
designed,'' this principle applies equally to ``parts,''
``components,'' ``accessories'' and ``attachments'' for commodities. In
addition, note that an item is considered to be ``specially designed,''
per paragraph (a)(2) of the ``specially designed'' definition, as
published in

the April 16 (initial implementation) rule, if the item is a ``part,''
``component,'' ``accessory,'' ``attachment,'' or ``software'' for use
in or with a commodity or defense article `enumerated' or otherwise
described on the CCL or the USML. Even so, a ``part,'' ``component,''
``accessory,'' ``attachment,'' or ``software'' that otherwise would be
controlled by paragraph (a) of the ``specially designed'' definition
would be released from being treated as ``specially designed,'' if one
or more of the exceptions contained in paragraph (b) of the ``specially
designed'' definition applies. The ``catch and release'' construct
employed in paragraphs (a) and (b), respectively, of the ``specially
designed'' definition is intended to work in combination to catch all
items that may warrant being controlled as ``specially designed.''
Therefore, the paragraph (a) ``catch'' must be broad in scope. To
compensate for those instances in which paragraph (a) of the definition
may overreach, paragraph (b) of the definition seeks, to the extent
possible, to release those ``parts,'' ``components,'' ``accessories,''
``attachments,'' or ``software'' that the U.S. Government has
determined, in all cases, do not warrant being controlled as
``specially designed.'' For example, paragraph (b)(2) in the definition
of ``specially designed'' exempts specified ``parts,'' and
``components'' from the definition, if the item is, regardless of
``form'' or ``fit,'' a fastener (e.g., screw, bolt, nut, nut plate,
stud, insert, clip, rivet, pin), washer, spacer, insulator, grommet,
bushing, spring, wire, or solder.

Changes to Controls on Vessels Made by This Rule

    This final rule creates five new 600 series ECCNs in CCL Category 8
(ECCNs 8A609, 8B609, 8C609, 8D609, and 8E609) that control articles the
President has determined no longer warrant control under USML Category
VI. These amendments are discussed in more detail below.

New ECCN 8A609 (Surface Vessels of War and Related)

    Paragraph .a of ECCN 8A609 controls surface vessels of war that are
``specially designed'' for military use, but not enumerated in the
USML. Paragraph .b of ECCN 8A609 controls non-magnetic diesel engines
that have a power output of 50 hp or more and either of the following:
(1) A non-magnetic content exceeding 25 percent of total weight or (2)
non-magnetic parts other than crankcase, block, head, pistons, covers,
end plates, valve facings, gaskets, and fuel, lubrication and other
supply lines. These diesel engines were listed under ECCN 8A620 in
BIS's December 23 (submersible vessels) rule that proposed to control
on the CCL submersible vessels, oceanographic and associated equipment
determined by the President to no longer warrant control under USML
Category VI or Category XX. However, this final rule controls these
engines under new ECCN 8A609, instead of new ECCN 8A620 (Submersible
vessels oceanographic and associated equipment), because they are
generally designed for use in surface vessels, rather than submersible
vessels. Paragraphs .c through .w of ECCN 8A609 are reserved. Paragraph
.x controls ``parts,'' ``components,'' ``accessories'' and
``attachments'' (including certain unfinished products that have
reached a stage in manufacturing where they are clearly identifiable as
commodities controlled by paragraph .x) that are ``specially designed''
for a commodity in paragraph .a or .b or for a defense article in USML
Category VI. This final rule specifically excludes from 8A609.x any
``parts,'' ``components,'' ``accessories'' and ``attachments'' for
commodities controlled under 8A609.y. Paragraph .y consists of specific
types of commodities that, if ``specially designed'' for a commodity
subject to control in ECCN 8A609 or a defense article in USML Category
VI, warrant less strict controls because they have little or no
military significance. Commodities listed in paragraph .y are subject
to antiterrorism (AT Column 1) controls only.
    This final rule does not add gas turbine engines for military
vessels of war to new ECCN 8A609. Instead, the April 16 (initial
implementation) rule created a new ECCN 9A619 and included gas turbine
engines and related items for military aircraft in that ECCN. This rule
adds gas turbine for surface vessels of war and military vehicles to
that ECCN .
    This final rule adds a note to ECCN 8A609 specifying the changes
that may be made to certain vessels built prior to 1950 without
changing the vessel's status as a vessel built prior to 1950 and
unmodified since 1949. Similar language concerning such modifications
is in the Department of State rule that is being published
simultaneously with this rule. For purposes of this note, the term
modified does not include installation of safety features required by
law, cosmetic changes (e.g., different paint), or the addition of
``parts'' or ``components'' otherwise available prior to 1950.
Including this clarifying language in both rules will make it easier to
distinguish vessels on the USML from those on the CCL.

New ECCN 8B609 (Test, Inspection, and Production ``Equipment'' and
Related Commodities ``Specially Designed'' for the ``Development,''
``Production,'' Repair, Overhaul, or Refurbishing of Commodities in
ECCN 8A609 or USML Category VI (Except for Cat VI(f)(7)))

    ECCN 8B609.a controls test, inspection, and production
``equipment'' ``specially designed'' for the ``development,''
``production,'' repair, overhaul, or refurbishing of surface vessels of
war and related commodities enumerated in ECCN 8A609 (except for items
in 8A609.y) or in USML Category VI (except for articles enumerated in
USML Cat VI(f)(7)). This final rule adds an exclusion to 8B609.a that
applies to test, inspection, and production ``equipment'' ``specially
designed'' for the ``development'' or ``production'' of articles in
USML Cat VI(f)(7). Paragraph .b is reserved.

New ECCN 8C609 (Materials ``Specially Designed'' for the
``Development'' or ``Production'' of Commodities Controlled by 8A609
Not Elsewhere Specified in the USML)

    ECCN 8C609.a controls materials ``specially designed'' for the
``development'' or ``production'' of surface vessels of war and related
commodities enumerated in ECCN 8A609 (except for items in 8A609.y) that
are not specified elsewhere on the USML. The December 23 (vessels) rule
proposed language in the ECCN heading, in 8C609.a, and in the Note
thereto, that would have limited the scope of the materials controlled
by ECCN 8C609 to those materials not controlled by other ECCNs on the
CCL. The effect of that language would have been to make materials
specifically mentioned in a non-``600 series'' ECCN controlled by that
non-``600 series'' ECCN, even if they were ``specially designed'' for a
military vessel, ``part,'' ``component,'' ``accessory,'' or
``attachment'' that is controlled by ECCN 8A609. Conversely, the April
16 (initial implementation) rule adopted a CCL order of review (see 78
FR 22735, April 16, 2013) in Supplement No. 4 to part 774) that gives
``600 series'' ECCNs precedence over non-``600 series'' ECCNs when
classifying an item. Accordingly, this final rule does not include the
proposed language from the December 23 (vessels) rule that would have
limited the scope of the materials controlled by ECCN 8C609 to those
materials that are not controlled under other ECCNs on the CCL.

New ECCN 8D609 (``Software'' ``Specially Designed'' for the
``Development,'' ``Production,'' Operation or Maintenance of
Commodities Controlled by 8A609, 8B609, or 8C609)

    ECCN 8D609.a controls ``software'' ``specially designed'' for the
``development,'' ``production,'' operation, or maintenance of
commodities controlled by ECCN 8A609, ECCN 8B609, or ECCN 8C609 (except
for commodities controlled by ECCN 8A609.y). Paragraph .b is reserved.
ECCN 8D609.y applies to specific ``software'' that is ``specially
designed'' for the ``development,'' ``production,'' operation, or
maintenance of commodities enumerated in ECCN 8A609.y.

New ECCN 8E609 (``Technology'' ``Required'' for the ``Development,''
``Production,'' Operation, Installation, Maintenance, Repair, Overhaul,
or Refurbishing of Commodities Controlled by 8A609, 8B609, or 8C609, or
``Software'' Controlled by 8D609)

    ECCN 8E609.a controls ``technology'' ``required'' for the
``development,'' ``production,'' operation, installation, maintenance,
repair, overhaul, or refurbishing of items enumerated in ECCN 8A609,
8B609, 8C609, or 8D609 (except for commodities enumerated in ECCN
8A609.y). Paragraph .b is reserved. ECCN 8E609.y applies to specific
``technology'' that is ``required'' for the ``development,''
``production,'' operation, installation, maintenance, repair, overhaul,
or refurbishing of items enumerated in ECCN 8A609.y.

Changes to the EAR Amendments Proposed in the December 23 (Vessels)
Rule

Non-Magnetic Diesel Engines Controlled Under New ECCN 8A609.b

    As previously discussed, the December 23 (submersible vessels) rule
published by BIS proposed that new ECCN 8A620.d.3 control non-magnetic
diesel engines having a power output of 50 hp or more, and either of
the following characteristics: (i) A non-magnetic content exceeding 25
percent of total weight or (ii) non-magnetic parts other than
crankcase, block, head, pistons, covers, end plates, valve facings,
gaskets, and fuel, lubrication and other supply lines. However, because
these non-magnetic diesel engines are generally designed for use in
surface vessels, rather than submersible vessels, this final rule
controls these engines under new ECCN 8A609.b.

Changes To Make New ECCN 8C609 Consistent With the CCL Order of Review

    The April 16 (initial implementation) rule adopted a CCL order of
review (see Supplement No. 4 to part 774) that gives ``600 series''
ECCNs precedence over non-``600 series'' ECCNs when classifying an
item. Accordingly, the control language for ECCN 8C609 in this final
rule differs from the control language proposed in the December 23
(vessels) rule in that it does not limit the scope of the materials
controlled by ECCN 8C609 to materials that are not controlled elsewhere
on the CCL. Practically speaking, this means that, if an item subject
to the EAR is described by a ``600 series'' ECCN (e.g., ECCN 8C609),
then the item would be controlled under the ``600 series'' ECCN even if
it were also described elsewhere on the CCL under a non-``600 series''
ECCN.

Summary of Public Comments Submitted in Response to the Proposals
Contained in the December 23 (Submersible Vessels) Rule Published by
BIS

    The public comment period for the December 23 (submersible vessels)
rule, which addressed controls on submersible vessels, oceanographic
equipment and related articles, ended on February 6, 2012. BIS received
comments from four respondents. Following is a summary of those
comments, along with BIS's responses. The comments are organized by
topic, with similar comments grouped together under the same heading.

ECCN 8A620.d (Engines and Propulsion Systems)

    Comment: One respondent recommended that the word ``crankcase'' be
replaced with the word ``crankshaft'' in ECCN 8A620.d.3 (Non-magnetic
diesel engines with a power output of 50 hp or more), as proposed in
the December 23 (submersible vessels) rule.
    Response: This final rule retains the word ``crankcase'' in the
control language, because ``crankcase'' more fully describes the types
of items that are subject to control than the word ``crankshaft.''
Specifically, the ``crankcase'' is often integrated with the cylinder
bank(s), forming the engine block, and serves as the housing for the
``crankshaft.'' In addition, note that the non-magnetic diesel engines
that were proposed for control under new ``600 series'' ECCN 8A620.d.3
of the December 23 (submersible vessels) rule will now be controlled
under new ECCN 8A609 (surface vessels of war and related commodities),
instead of new ECCN 8A620, because these engines are generally designed
for use in surface vessels, rather than submersible vessels.

ECCN 8A620.x (``Parts,'' ``Components,'' ``Accessories'' and
``Attachments'' That Are ``Specially Designed'' for a Commodity
Enumerated in ECCN 8A620 (Except for 8A620.b or .y) and Not Specified
Elsewhere on the USML or in 8A620.y)

    Comment: One respondent noted that proposed ECCN 8A620.x and .y
deviate from similar proposed changes in other ECR rules in that
neither paragraph controls specific ``parts,'' ``components,''
``accessories'' and ``attachments'' for defense articles in USML
Category XX. The respondent recommended that BIS include language in
Note 2 to ECCN 8A620.x to clarify that 8A620.x and .y do not control
``parts,'' ``components,'' ``accessories'' and ``attachments'' for any
defense articles enumerated in USML Category XX.
    Response: The exclusion of ``parts,'' ``components,''
``accessories'' and ``attachments'' for any defense articles in USML
Category XX is clearly indicated in ECCN 8A620.x and .y, both of which
refer only to items controlled under new ``600 series'' ECCN 8A620 and
not to any defense articles in USML Category XX. For this reason, BIS
did not make the recommended change in this final rule.

ECCN 8A620.y (Specific ``Parts,'' ``Components,'' ``Accessories'' and
``Attachments'' ``Specially Designed'' for a Commodity Subject to
Control in This ECCN)

    Comment: Two respondents recommended that additional items be
included in the list of specific ``parts,'' ``components,'' and
``accessories'' and ``attachments'' controlled by ECCN 8A620.y.
    One respondent recommended that the following items be added to
ECCN 8A620.y:
     Thermal insulation
     Firefighting equipment, fire suppression systems,
extinguishers, water hoses
     Emergency water rescue equipment
     Non-structural bulkheads and flexible space arrangements
     Bunks, lockers, and living/recreational quarter facilities
     Meeting and classroom facilities
     Electrical cable, cableways, wire, tapes, distribution
panels, circuit breakers, supply outlets, connectors, switches, and
fixtures

     Fiber optic cable, cableways, fixtures, switches, and
supply outlets
     Equipment foundations and shock mounts
     Fasteners, washers, O-rings, bushings, adapters,
couplings, bolts and similar ancillary hardware
     Mountings and clamps (meant to keep computers, office
furniture in place).
    The other respondent recommended that the following items be added
to ECCN 8A620.y:
     Floats for 8A620.e commodities
     Cabin doors and door seals
     Crew and cabin seats and bunks
     Fire or smoke detection, prevention and suppression
systems
     Junction boxes
     Lithium-ion batteries and battery cells
     Port hole and port hole seals.
    Response: This final rule retains the scope of controls set forth
in the December 23 (submersible vessels) rule. In this regard, note
that BIS has concluded that the technological significance of a
``part,'' ``component,'' ``accessory'' or ``attachment'' to the
military character of a submersible vessel should not be the sole
determining factor as to whether a particular ``part,'' ``component,''
``accessory'' or ``attachment'' is included in paragraph .x (requiring
a license to all destinations other than Canada) or paragraph .y
(requiring a license to a limited range of destinations) or classified
under the designation ``EAR99'' (not listed on the CCL at all). BIS
reached this conclusion in recognition of the national security and
foreign policy justifications in support of the U.S. Government
exercising control over the export and reexport of ``parts,''
``components,'' ``accessories'' and ``attachments'' that, although they
perform functions common to both civil and military submersible
vessels, are nonetheless in some way unique to, or ``specially
designed'' for, submersible vessels of war. Imposing export license
requirements on such ``parts,'' ``components,'' ``accessories'' and
``attachments'' provides the U.S. Government with insight into whether
persons in certain countries have military submersible vessels or need
to have such vessels repaired. These controls give the U.S. Government
the ability to control the flow of such parts, components, accessories,
and attachments consistent with our national security and foreign
policy objectives. Nevertheless, the U.S. Government has decided that
controlling such items on the ITAR is too restrictive and, accordingly,
has created more flexible controls for such items in the new ``600
series'' ECCNs on the CCL.
    Comment: One respondent recommended that ECCN 8A620.y.5 be
rewritten to clarify that it controls ``metal hydraulic, fuel, oil and
air lines that are straight, bent, flexible, braided or varying
internal cross sectional area.''
    Response: This final rule clarifies which items of this type are
controlled under 8A620.y by including the following control language
under ECCN 8A620.y.2: ``Filters and filter assemblies, hoses, lines,
fittings, couplings, and brackets for pneumatic, hydraulic, oil and
fuel systems.''

ECCN 8B620 (Test, Inspection, and Production ``Equipment'' and Related
Commodities ``Specially Designed'' for the ``Development,''
``Production,'' Repair, Overhaul, or Refurbishing of Commodities
Enumerated in ECCN 8A620)

    Comment: One respondent stated that neither proposed ECCN 8B620 nor
proposed USML Category XX addressed equipment ``specially designed'' to
produce defense articles enumerated in USML Category XX. The respondent
recommended that such equipment be controlled on the CCL under new ECCN
8B620.
    Response: USML Category XX has been re-written to specifically
capture equipment ``specially designed'' to produce defense articles in
USML Category XX. Therefore, new ECCN 8B620 does not control this
equipment.

Production ``Software'' and ``Technology'' Controlled Under ECCNs 8D620
and 8E620, Respectively

    Comment: One respondent stated that ``software'' and ``technology''
should be controlled by the same agency that controls production
equipment (i.e., Commerce). In that event, the respondent recommended
that ECCN 8D620 be expanded to control ``software'' ``required'' for
the ``development'' or ``production'' of defense articles in proposed
USML Category XX(a) through (c) and the ``software'' portion of
proposed USML Category XX(d). In addition, the respondent recommended
that ECCN 8E620 be expanded to control ``technology'' ``required'' for
the ``development'' or ``production'' of defense articles in proposed
USML Category XX(a) through (c) and the ``software'' portion of
proposed USML Category XX(d); and the design of, the assembly of
components into, and the operation, maintenance and repair of, complete
production installations for defense articles in proposed USML Category
XX(a) through (c) and the ``software'' portion of proposed USML
Category XX(d), and items in ECCN 8A620, 8B620 or 8D620, even if the
``components'' of such production installations are not specified on
either the CCL or the USML.
    Response: BIS did not adopt this recommendation. As discussed
previously in the preamble, the changes described in this rule and in
the State Department's rule amending Categories VI, VII, XIII, and XX
of the USML are based on a review of those categories by the Defense
Department, which worked with the Departments of State and Commerce in
preparing the amendments. The review was focused on identifying the
types of articles that are now controlled by the USML that either: (i)
Are inherently military and otherwise warrant control on the USML; or
(ii) if of a type common to civil applications, possess parameters or
characteristics that provide a critical military or intelligence
advantage to the United States and that are almost exclusively
available from the United States. If an article was found to satisfy
either or both of those criteria, the article remains on the USML.
Based on the review of USML Categories VI and XX, ECCN 8D620 controls
``software'' for items controlled under ECCN 8A620 or 8B620 only (and
not ``software'' for any of the defense articles enumerated in USML
Category XX), while ECCN 8E620 controls ``technology'' for items
controlled under ECCN 8A620, 8B620, or 8D620 only (and not
``technology'' for any of the defense articles enumerated in USML
Category XX). In short, as a result of the review, ``software'' and
``technology'' for submersible vessels and related defense articles
enumerated in USML Category XX will be controlled under Category XX and
not under the related ``software'' and ``technology'' entries on the
CCL (i.e., ECCNs 8D620 and 8E620, respectively.

Use of the Term ``Specially Designed'' in the 8Y620 ECCNs

    Comment: One respondent recommended that the proposed definition of
``specially designed'' (and, in particular, the ``parts'' and
``components'' exclusions therein) be changed to avoid the overly broad
control of a large and diverse array of militarily insignificant items
used on military surface vessels and related articles. In the
respondent's view, the provisions of the proposed definition applicable
to ``parts'' and ``components,'' if read literally, would capture
``parts'' and ``components'' for practically every military item
enumerated on the CCL or the USML, unless the ``parts'' and
``components''

are separately enumerated (i.e., either in a USML subcategory or in an
ECCN that does not have ``specially designed'' as a control criterion)
or fall within one of the four limited exclusions in subparagraph (d)
of the proposed definition (as published in the July 15 (framework)
rule. To clarify the scope of the definition, with respect to ``parts''
and ``components,'' the respondent recommended that ECCN 8A620.y be
revised to add the following types of minor ``parts'': Threaded
fasteners (e.g., screws, bolts, nuts, nut plates, studs, inserts),
other fasteners (e.g., clips, rivets, pins), common type hardware
(e.g., washers, spacers, insulators, connectors, diodes, resistors,
grommets, bushings), springs, wire, seals, packings, blankets,
insulation, decals, and name/information plates.
    In addition, the respondent noted that the application of the
proposed ``specially designed'' definition to items other than
``parts'' and ``components'' was ambiguous with respect to the phrase
``peculiarly responsible'' (i.e., the significance of an item's
properties to the stated performance characteristics or functions),
which could be interpreted as meaning that the properties are both
``necessary'' and ``sufficient'' to achieve or exceed the stated
performance parameters. To address this ambiguity, the respondent
recommended that BIS provide examples of how the phrase ``peculiarly
responsible'' would be applied in determining whether or not an item
was ``specially designed.''
    Response: This final rule does not adopt the respondent's
recommendation, although the definition of ``specially designed''
published in the April 16 (initial implementation rule) did include a
Note to paragraph (a)(1) to provide more detail on applying the
peculiarly responsible standard, including providing two examples for
applying the peculiarly responsible standard for purposes of paragraph
(a)(1). This rule controls ``parts,'' ``components,'' and
``accessories'' and ``attachments'' for commodities enumerated in the
new 8Y620 ECCNs, consistent with the scope of the definition of
``specially designed,'' as published in the April 16 (initial
implementation) rule.
    With respect to the phrase ``peculiarly responsible,'' as applied
in subparagraph (a)(1) of the proposed ``specially designed''
definition, most respondents who commented on the proposed ``specially
designed'' definition in the July 15 (framework) rule found this part
of the definition to be clear--perhaps, this is because this part of
the definition was taken from the definition of ``required'' in Sec.
772.1 of the EAR. Although the ``required'' definition applies only to
``software'' and ``technology,'' BIS applied the defining principle of
that definition in paragraph (a)(1) of the ``specially designed''
definition, as published in the April 16 (initial implementation) rule.
Therefore, within the context of paragraph (a)(1) of the ``specially
designed'' definition, the phrase ``peculiarly responsible'' means that
an item captured by this paragraph is not merely somehow capable of use
with a controlled item, but that something was done during the item's
development to enable it to achieve or exceed the performance levels,
characteristics, or functions described in a referenced ECCN or USML
paragraph. For purposes of paragraph (a)(1) in the definition of
``specially designed,'' this principle applies equally to ``parts,''
``components,'' ``accessories'' and ``attachments'' for commodities. In
addition, note that an item is considered to be ``specially designed,''
per paragraph (a)(2) of the ``specially designed'' definition, as
published in the April 16 (initial implementation) rule, if the item is
a ``part,'' ``component,'' ``accessory,'' ``attachment,'' or
``software'' for use in or with a commodity or defense article
`enumerated' or otherwise described on the CCL or the USML. Even so, a
``part,'' ``component,'' ``accessory,'' ``attachment,'' or ``software''
that otherwise would be controlled by paragraph (a) of the ``specially
designed'' definition would be released from being treated as
``specially designed,'' if one or more of the exceptions contained in
paragraph (b) of the ``specially designed'' definition applies. The
``catch and release'' construct employed in paragraphs (a) and (b),
respectively, of the ``specially designed'' definition is intended to
work in combination to catch all items that may warrant being
controlled as ``specially designed.'' Therefore, the paragraph (a)
``catch'' must be broad in scope. To compensate for those instances in
which paragraph (a) of the definition may overreach, paragraph (b) of
the definition tries, to the extent possible, to release those
``parts,'' ``components,'' ``accessories,'' ``attachments,'' or
``software'' that the U.S. Government has determined, in all cases, do
not warrant being controlled as ``specially designed.'' For example,
paragraph (b)(2) in the definition of ``specially designed'' exempts
specified ``parts'' and``components'' from the definition, if the item
is, regardless of ``form'' or ``fit,'' a fastener (e.g., screw, bolt,
nut, nut plate, stud, insert, clip, rivet, pin), washer, spacer,
insulator, grommet, bushing, spring, wire, or solder.

Changes to Controls on Submersible Vessels Made by This Rule

    This final rule creates four new ``600 series'' ECCNs in CCL
Category 8 (ECCNs 8A620, 8B620, 8D620, and 8E620) that control articles
the President has determined no longer warrant control under USML
Category VI or Category XX. These amendments are discussed in more
detail below.

New ECCN 8A620 (Submersible Vessels, Oceanographic and Associated
Equipment)

    Paragraph .a of ECCN 8A620 controls submersible and semi-
submersible vessels ``specially designed'' for a military use, but not
enumerated on the USML (e.g., submarine rescue vehicles and Deep
Submergence Vehicles (DSVs)). Paragraph .b of ECCN 8A620 controls
submersible and semi-submersible vessels ``specially designed'' for
cargo transport (submersible and semi-submersible vessels of a type
known to have been used in illegal drug trafficking activities) and
``parts,'' ``components,'' ``accessories'' and ``attachments''
``specially designed'' therefor. Paragraph .c of ECCN 8A620 controls
harbor entrance detection devices (magnetic, pressure, and acoustic)
and controls therefor, not elsewhere specified on the USML or the CCL.
Paragraph .d of ECCN 8A620 controls certain engines and propulsion
devices for submersible or semi-submersible vessels (i.e., diesel
engines of 1,500 hp and over with rotary speed of 700 rpm or over
``specially designed'' for submarines). In a change from BIS's December
23 (submersible vessels) rule, paragraph .d does not control non-
magnetic diesel engines that have a power output of 50 hp or more and
either of the following: (1) A non-magnetic content exceeding 25
percent of total weight or (2) non-magnetic parts other than crankcase,
block, head, pistons, covers, end plates, valve facings, gaskets, and
fuel, lubrication and other supply lines. These engines are controlled
under new ECCN 8A609 (surface vessels of war and related commodities),
instead of new ECCN 8A620, because they are generally designed for use
in surface vessels, rather than submersible vessels. In another change
from BIS's December 23 (submersible vessels) rule, paragraph .d does
not control electric motors ``specially designed'' for submarines and
having all of the following: (i) A power output of more than 1,000 hp;
(ii) quick reversing; (iii) liquid cooled; and

(iv) totally enclosed. These electric motors are controlled under USML
Category XX, instead of ECCN 8A620. The Note to paragraph .d states
that propulsion systems not controlled under ECCN 8A620 that are
``specially designed'' for an article controlled by USML Category XX
are controlled by USML XX(b) or (c). Paragraphs .e and .f control
submarine and torpedo nets and certain closed and semi-closed circuit
(rebreathing) apparatus, respectively. Paragraphs .g through .w are
reserved. Paragraph .x controls ``parts,'' ``components,''
``accessories'' and ``attachments'' (including certain unfinished
products that have reached a stage in manufacturing where they are
clearly identifiable as commodities controlled by paragraph .x) that
are ``specially designed'' for a commodity in paragraphs .a and .c
through .f; however, paragraph .x does not include items ``specially
designed'' for a defense article in USML Category VI or XX.
    Paragraph .y contains specific types of commodities that, if
``specially designed'' for a commodity subject to control in ECCN
8A620, warrant less strict controls because they have little or no
military significance. Commodities listed in paragraph .y are subject
to antiterrorism (AT Column 1) controls only. The systems and equipment
described in ECCN 8A620.y.14 through .y.20, as proposed in the December
23 (submersible vessels) rule, are not included in ECCN 8A620.y in this
final rule. Any such systems and equipment that are subject to the EAR
and not elsewhere specified on the CCL are classified under the
designation ``EAR99.''

New ECCN 8B620 (Test, Inspection, and Production ``Equipment'' and
Related Commodities ``Specially Designed'' for the ``Development,''
``Production,'' Repair, Overhaul, or Refurbishing of Commodities
Enumerated in ECCN 8A620)

    ECCN 8B620.a controls test, inspection, and production
``equipment'' and related commodities ``specially designed'' for the
``development,'' ``production,'' repair, overhaul, or refurbishing of
commodities enumerated in ECCN 8A620 (except for items in 8A620.b and
.y). Paragraph .b of ECCN 8B620 controls test, inspection, and
production ``equipment'' and related commodities ``specially designed''
for the ``development'' or ``production'' of commodities enumerated in
ECCN 8A620.b. Currently, ECCN 8B620 does not identify specific test,
inspection, and production ``equipment'' and related commodities
``specially designed'' for the ``development'' or ``production'' of
commodities enumerated in ECCN 8A620.y.

New ECCN 8D620 (``Software'' ``Specially Designed'' for the
``Development,'' ``Production,'' Operation or Maintenance of
Commodities Controlled by 8A620 or 8B620)

    ECCN 8D620.a controls ``software'' ``specially designed'' for the
``development,'' ``production,'' operation, or maintenance of
commodities controlled by 8A620 or 8B620 (except for commodities
controlled by 8A620.b or .y or ECCN 8B620.b). Paragraph .b of ECCN
8D620 controls ``software'' ``specially designed'' for the
``development,'' ``production,'' operation, or maintenance of
commodities enumerated in 8A620.b or 8B620.b. ECCN 8D620.y applies to
specific ``software'' that is ``specially designed'' for the
``development,'' ``production,'' operation, or maintenance of
commodities enumerated in ECCN 8A620.y.

New ECCN 8E620 (``Technology'' ``Required'' for the ``Development,''
``Production,'' Operation, Installation, Maintenance, Repair, Overhaul
or Refurbishing of Commodities Controlled by 8A620 or 8B620, or
``software'' Controlled by 8D620)

    ECCN 8E620.a controls ``technology'' ``required'' for the
``development,'' ``production,'' operation, installation, maintenance,
repair, overhaul, or refurbishing of commodities controlled by ECCN
8A620 or 8B620 or ``software'' controlled by ECCN 8D620 (except for
commodities controlled by ECCN 8A620.b or .y or ECCN 8B620.b, or
``software'' controlled by ECCN 8D620.b or .y). Paragraph .b of 8E620
controls ``technology'' ``required'' for the ``development,''
``production,'' operation, installation, maintenance, repair, overhaul,
or refurbishing of commodities controlled by ECCN 8A620.b or 8B620.b or
``software'' controlled by 8D620.b. ECCN 8E620.y applies to specific
``technology'' that is ``required'' for the ``development,''
``production,'' operation, installation, maintenance, repair, overhaul,
or refurbishing of items enumerated in ECCN 8A620.y.

Amendments to ECCN 8A018

    This final rule also affects items controlled under ECCN 8A018.
Specifically, engines and propulsion systems described in ECCN
8A018.b.1 will be moved to new ECCN 8A620.d as of the effective date of
this final rule. In addition, anti-submarine and anti-torpedo nets
described in ECCN 8A018.b.4 will be moved to new ECCN 8A620.e and
closed and semi-closed circuit (rebreathing) apparatus described in
ECCN 8A018.a will be moved to new ECCN 8A620.f, as of the effective
date of this final rule. However, new ECCN 8A620.d will not control
either electric motors described in ECCN 8A018.b.2 or non-magnetic
diesel engines described in 8A018.b.3, as proposed in the December 23
(submersible vessels) rule. Instead, the former will be controlled
under USML Category XX, while the latter will be controlled under new
ECCN 8A609.b (since these engines are generally designed for use in
surface vessels, rather than submersible vessels).
    Consistent with the April 16 (initial implementation) rule and with
the statement in the July 15 (framework) rule that 018 entries would
remain in the CCL for a time, but only for cross-reference purposes,
this rule amends ECCN 8A018 to remove all language except cross
references to the controls for these items in new ``600 series'' ECCNs
8A609.b and 8A620.d, .e, and .f and in revised USML Category XX.

Changes to the EAR Amendments Proposed in the December 23 (Submersible
Vessels) Rule

Engines Controlled Under New ECCN 8A620.d

    As previously discussed, the December 23 (submersible vessels) rule
published by BIS proposed that new ECCN 8A620.d.3 control non-magnetic
diesel engines having a power output of 50 hp or more, and either of
the following characteristics: (i) A non-magnetic content exceeding 25
percent of total weight or (ii) non-magnetic parts other than
crankcase, block, head, pistons, covers, end plates, valve facings,
gaskets, and fuel, lubrication and other supply lines. However, because
these non-magnetic diesel engines are generally designed for use in
surface vessels, rather than submersible vessels, these engines are now
controlled under new ECCN 8A609.b, instead. In addition, new ECCN
8A620.d does not control electric motors, as proposed in the December
23 (submersible vessels) rule, that are ``specially designed'' for
submarines and have all of the following: (i) A power output of more
than 1,000 hp; (ii) quick reversing; (iii) liquid cooled; and (iv)
totally enclosed. These electric motors are controlled under USML
Category XX, instead.

Auxiliary and Miscellaneous Military Equipment

Background

    The May 18 (auxiliary equipment) rule described BIS's proposal for
how it would control auxiliary and miscellaneous military equipment,
related articles, software and technology under USML Category XIII that
no longer that no longer warrant control on the USML. That rule
proposed controlling those items under five new ECCNs. That rule also
proposed to include in those five new ECCNs items listed in WAML
category ML17 that would be removed from the USML, or that are not
specifically identified on the USML or CCL but were subject to USML
jurisdiction. This final rule is based on the May 18 (auxiliary
equipment) rule and on a review of the public comments thereon by the
Departments of Defense, State and Commerce. The period for submitting
comments on that rule closed July 2, 2012.

Changes Made to Controls on Auxiliary and Miscellaneous Military
Equipment by This Rule

    This rule implements the proposals of the May 18 (auxiliary
equipment) rule by creating five new ECCNs to control auxiliary and
miscellaneous military equipment and related articles the President
determined no longer warrant control under USML Category XIII
(Auxiliary Military Equipment) and the integration of certain WAML
category ML17 items on the CCL as part of the new ``600 series.''
    This rule controls some items that were classified under ECCNs
0A018, 0A918, and 0E018 now under new ECCNs 0A617 and 0E617.

Comments and Responses to the May 18 (Auxiliary Equipment) Rule

    Three companies submitted comments to BIS regarding the May 18
(auxiliary equipment) rule. Their comments and BIS's responses are as
follows.

General Observations

    Comment: One commenter asserted that BIS omitted several items from
WAML category ML17 in the proposed rule's list of equipment for ECCN
0A617. Specifically, the commenter said that BIS failed to include
items in paragraph 17.a self-contained diving and underwater apparatus;
17.c-.e fittings, field engineer equipment, ``robots''; 17.g-.i.
nuclear power generating equipment, equipment and material, simulators;
and 17.o & .p laser protection equipment, ``fuel cells'' in ECCN 0A617.
    Response: The control in the EAR of the WAML category ML17 items
the commenter identified are described in BIS's May 18 (auxiliary
equipment) rule and are further described in the ``related items'' to
0A617 and in 0A617.y.
    Comment: One commenter stated that proposed changes to companion
USML Category XIII as proposed would result in only a small number of
items proposed to be moved to the ``600 series'' on the CCL. The
commenter further stated that jurisdictional clarity would provide few
benefits for U.S. exporters if items that no longer warrant control as
munitions items continue to be identified on the USML.
    Response: BIS notes that the purpose of ECR and the resulting
movement and revision of the list of items from USML categories was not
intended to be an exercise to decontrol items per se but rather is an
effort to identify items that need to be controlled on the USML
consistent with the national security and foreign policy objectives of
the effort.

ECCN 0A617: Miscellaneous Equipment, Materials, and Related Commodities

    Comment: With regard to paragraph .a of ECCN 0A617 (construction
equipment), a commenter expressed an expectation that this paragraph
would control a substantial amount of construction material not
currently controlled on the USML, subjecting the items to a worldwide
licensing requirement, except Canada. A simple mobile crane designed to
fit within a USML-controlled cargo aircraft would be caught simply on
the basis of size. The commenter went on to say that this would result
in precisely the type of militarily insignificant equipment that does
not warrant such a stringent control.
    Response: Upon further review, BIS has determined that such items
do not warrant controls more than those applicable to 0A617.y and has
revised the rule by placing construction equipment under paragraph .y
of ECCN 0A617.
    Comment: One commenter asked that BIS clarify what is covered or is
meant by the term ``test models,'' as proposed in the May 18 (auxiliary
equipment) rule to be covered by paragraph .d of ECCN 0A617. The
commenter went on to say that without the clarification the control
could have significant licensing impact on all USML-controlled
programs, as well as some systems in the EAR. As proposed, test models
could include both physical and standard computer test models/programs.
Exporters would be required to apply for a license for computer test
models that simply validate form, fit and function or dynamic physical
properties of an end item. The commenter recommended that this item be
deleted. Existing USML and EAR controls are adequate to control
sensitive test models.
    Response: BIS does not accept the recommendation that test models
under ECCN 0A617 be deleted. Instead, this rule clarifies in ECCN
0A617.d what is meant by test models for purposes of that entry, which
does not control software. To the extent software is controlled, it is
described in a D group ECCN. In the proposed rule, BIS stated that such
items are identified in WAML category ML17.n and controlled in relation
to the defense article they model, such as items in USML Categories
VII(g) and VIII(h). However, to address the commenter's request for
further guidance on what is meant by the term test model for purposes
of complying with the EAR, and to track more closely with the WAML,
this rule narrows ECCN 0A617.d to control test models for defense
articles in USML Categories IV, VI, VII and VIII.
    Comment: A commenter recommended that the description of items as
proposed in the May 18 (auxiliary equipment) rule to be covered by then
paragraph .y.1 of ECCN 0A617 (containers ``specially designed for
defense articles or items controlled by a ``600 series'') be modified
if the proposed definition of ``specially designed'' in the June 19
(specially designed) rule changed or was not adopted. Positive criteria
are needed for ``parts,'' ``components,'' ``accessories,'' and
``attachments'' cited in the Federal Register notice. As proposed, the
wording of 0A617.y.1 would be sufficient only to control containers
that are part or component of a defense article or ``600 series'' item,
or an accessory or attachment of such articles if it also enhances the
article's usefulness or effectiveness.
    Response: The intended scope of paragraph y.1 was to control
containers as ``end items.'' Containers ``specially designed'' for use
in or with controlled items may be controlled without being a ``part,''
``component,'' ``accessory,'' or ``attachment.'' To refine the scope of
coverage, in this final rule, BIS revised the description of containers
to be covered by ECCN 0A617.y.3 by limiting the containers to those
that are not elsewhere specified on the CCL and that are ``specially
designed'' for shipping or packing defense articles or ``600 series''
items.

    Comment: A commenter recommended deleting field generators
``specially designed'' for military use covered by proposed paragraph
.y.2 in ECCN 0A617. The commenter noted that the Department of State,
Directorate of Defense Trade Controls determined in in a commodity
jurisdiction determination that these items were classified under ECCN
2A994. The commenter added that this existing ECCN for portable
electric generators and specially designed parts seems to be more
suitable to control these generators/items.
    Response: BIS does not adopt this recommendation. Items ``specially
designed'' for military use are to be controlled in ``600 series''
items, particularly when listed on the WAML. Thus, BIS will control
field generators specially designed for military use in 0A617.y. Items
controlled by 2A994 continue to be controlled by 2A994.

ECCN 0C617 Miscellaneous Materials ``Specially Designed'' for Military
Use

    Comment: A commenter recommended that specific positive criteria be
provided in the entry for proposed paragraph .a of ECCN 0C617--
materials, coatings, and treatments for signature suppression,
``specially designed'' for military use that are not controlled by the
USML Category XIII or ECCNs 1C001 or 1C101. The commenter stated that
such criteria are needed to prevent misinterpretation of what is caught
by the ECCN because the term significant suppression is not defined and
lacks positive criteria as to what level of suppression would be caught
by the ECCN. As proposed, use of thicker sheet metal or insulation
(both are material) to reduce noise level (acoustic signature) could be
construed as controlled by 0C617.a.
    Response: To clarify the scope of the items covered by paragraph .a
of ECCN 0C617, BIS revised the description of that paragraph. That
paragraph now reads ``[m]aterials, coatings and treatments for