Request for Public Comment on Foreign Produced Encryption Items That Are Made From U.S.-Origin Encryption Technology or Software, 413-414 [E8-31371]

Download as PDF Federal Register / Vol. 74, No. 3 / Tuesday, January 6, 2009 / Proposed Rules style. There shall be no discussion of proprietary information, costs or prices, market shares, or other commercial matters regulated by U.S. antitrust laws. A court reporter will record the proceedings of the public meeting, after which a transcript will be available on the above-referenced Web site. After the public meeting and the close of the comment period on the Framework Document, DOE will begin collecting data, conducting the analyses as discussed in the Framework Document and at the public meeting, and reviewing the comments received. DOE considers public participation to be a very important part of the process for setting energy conservation standards. DOE actively encourages the participation and interaction of the public during the comment period in each stage of the rulemaking process. Beginning with the Framework Document, and during each subsequent public meeting and comment period, interactions with and between members of the public provide a balanced discussion of the issues to assist DOE with the standards rulemaking process. Accordingly, anyone who would like to participate in the public meeting, receive meeting materials, or be added to the DOE mailing list to receive future notices and information regarding this rulemaking on walk-in coolers and walk-in freezers, should contact Brenda Edwards at (202) 586–2945, or via email at: Brenda.Edwards@ee.doe.gov. Issued in Washington, DC, on December 24, 2008. John F. Mizroch, Acting Assistant Secretary, Energy Efficiency and Renewable Energy. [FR Doc. E8–31405 Filed 1–5–09; 8:45 am] BILLING CODE 6450–01–P technology or software, BIS is seeking information on the potential impact of controlling such foreign made items for Encryption Items (‘‘EI’’) reasons under the EAR (i.e., those that are classified under ECCN 5A002 or 5D002) if the direct product of U.S.-origin ECCN 5E002 technology or ECCN 5D002 software. Specifically, BIS is requesting comments regarding the impact this control would have on both U.S. exporters of encryption technology and software and foreign manufacturers of products that are derived in whole or in part from U.S.-origin encryption technology or software. DATES: Comments must be received no later than March 9, 2009. ADDRESSES: Written comments may be submitted via https:// www.regulations.gov; by e-mail directly to BIS at publiccomments@bis.doc.gov; in hardcopy to U.S. Department of Commerce, Bureau of Industry and Security, Regulatory Policy Division, 14th St. and Pennsylvania Ave., NW., Room H–2705, Washington, DC 20230; or by fax to 202–482–3355. Please input ‘‘0694–XA15’’ in the subject line of the written comments. FOR FURTHER INFORMATION CONTACT: For General Information Contact: Sharron Cook, Office of Exporter Services, Regulatory Policy Division, Bureau of Industry and Security at 202–482–2440, or fax 202–482–3355, or e-mail at scook@bis.doc.gov. For Specific Encryption Related Information Contact: C. Randall Pratt, Information Technology Division, Office of National Security and Technology Transfer Controls at 202–482–0707 or EMail: C. Randall Pratt at cpratt@bis.doc.gov. SUPPLEMENTARY INFORMATION: Background DEPARTMENT OF COMMERCE Bureau of Industry and Security 15 CFR Part 736 [Docket No. 0810231384–81391–01] RIN 0694–XA15 yshivers on PROD1PC62 with PROPOSALS Request for Public Comment on Foreign Produced Encryption Items That Are Made From U.S.-Origin Encryption Technology or Software AGENCY: Bureau of Industry and Security. ACTION: Notice of inquiry. SUMMARY: To determine the appropriate extent and scope of U.S. export controls on foreign products that are the direct products of U.S.-origin encryption VerDate Nov<24>2008 12:59 Jan 05, 2009 Jkt 217001 The Foreign-Produced Direct Product Rule is found in General Prohibition No. 3 under section 736.2(b)(3) of the Export Administration Regulations (EAR) and in section 734.3(a)(4) of the EAR, ‘‘Items Subject to the EAR.’’ Under section 736.2(b)(3)(ii)(A) of the EAR, a foreign-made item is considered a direct product of U.S. technology or software if it meets the following conditions, it is the direct product of technology or software that requires a written assurance as a supporting document for a license, as defined in paragraph (o)(3)(i) of Supplement No. 2 to part 748 of the EAR, or as a precondition for the use of License Exception TSR at section 740.6 of the EAR, and it is subject to national security controls as designated on the PO 00000 Frm 00003 Fmt 4702 Sfmt 4702 413 applicable ECCN of the Commerce Control List at part 774 of the EAR. Section 736.2(b)(3)(i) provides that if a foreign-made item is a direct product of U.S.-origin technology or software pursuant to the criteria set forth above, then it is subject to the EAR if it is exported from the country of manufacture to a destination in Country Group D:1 or E:2 (Cuba) of Supplement No. 1 to Part 740 of the EAR. General Prohibition 3 prohibits the reexport or export from abroad of items meeting the criteria of foreign direct products of U.S.-origin technology or software to Country Group D:1 destinations or Cuba unless authorization has been granted via a license or license exception. Technology and software controlled under ECCN 5E002 and 5D002 of the Commerce Control List (CCL) (Supplement No. 1 to part 774 of the EAR) are subject to national security (‘‘NS’’) controls. When the foreignproduced direct product of such technology or software would be classified under ECCN 5A002 or 5D002, it would meet the definition of ‘‘direct product’’ under section 736.2(b)(3)(ii)(A) of the EAR. BIS is seeking information on the impact of making the foreign-produced direct product of U.S.-origin ECCN 5E002 technology or ECCN 5D002 software, classified under ECCN 5A002 or 5D002 subject to the EAR if exported from the country of manufacture to any destination (except the United States or Canada). All such foreign-produced direct product ECCN 5A002 or 5D002 hardware or software would be subject to the license requirements of sections 742.15 (‘‘EI’’ encryption items) and 742.4 (‘‘NS’’ national security), or to the review requirements of section 740.17 (License Exception ENC). Reporting requirements under section 740.17(e) would not apply to exports from the country of manufacture of foreignproduced direct products, as reporting is required only for export from the United States or reexports from Canada. The possible revision described above would apply to the foreign direct product of ECCN 5E002 technology and 5D002 software exported under license, not to the foreign direct product of technology and software exported under License Exception ENC of section 740.17 of the EAR. Under the current provisions of section 736.2(b)(3), if ECCN 5E002 technology is exported under an export license for purposes of offshore manufacture of an encryption item that has previously been submitted to the U.S. Government for technical review and has been made eligible for export under License Exception ENC, the E:\FR\FM\06JAP1.SGM 06JAP1 414 Federal Register / Vol. 74, No. 3 / Tuesday, January 6, 2009 / Proposed Rules yshivers on PROD1PC62 with PROPOSALS foreign-produced direct product of the technology is not subject to the EAR unless: (1) It is exported from the country of manufacture to a destination in Country Group D:1 or E:2 (Cuba); or (2) it is exported from the United States after having been shipped to the United States from the country of manufacture. However, all foreign-produced direct product of technology or software exported under License Exception ENC under either paragraph (a)(1) (for internal development of new products by a ‘license-free zone’ (Supplement No. 3 to part 740) ‘‘private sector end-user’’) or (a)(2) (to a ‘‘U.S. subsidiary’’ for internal use or development) are currently subject to the EAR by the terms of the notes to paragraphs (a)(1) and (a)(2). Request for Comment BIS is seeking public comment on the impact such a revision to section 736.2(b)(3)(i) would have on both U.S. manufacturers of encryption technology and software and foreign manufacturers of products (including under contract to U.S. companies who own and maintain the intellectual property, branding, marketing and distribution rights to the end-products manufactured offshore) that are derived in whole or in part from U.S.-origin encryption technology or software. BIS is also seeking information about the cost of compliance with such a revision, including U.S. Government review of foreign direct products prior to export from abroad. BIS is also seeking information on the burdens of complying with multiple sets of laws, foreign and U.S., which could result from the potential revision. BIS would also like information about the various (commercial and military) applications of foreign products that are derived in whole or in part from U.S.origin encryption technology or software. In addition, BIS is seeking information from foreign-manufacturers of encryption items about the factors that they or their competitors might consider in deciding to produce or use U.S.-origin encryption technology or software. Additionally, BIS is interested in specific information (URL addresses, technical specifications, etc.) about the availability of foreign encryption technology and software that is equivalent to U.S.-origin encryption technology and software classified under ECCNs 5E002 and 5D002. Finally, BIS seeks information on the impact on the U.S. information technology manufacturing base and American jobs if encryption products continue to be not subject to the EAR when exported from abroad or reexported to countries VerDate Nov<24>2008 12:59 Jan 05, 2009 Jkt 217001 other than those listed in Country Group D:1 and E:2, simply by being manufactured under an export license, when identical products manufactured onshore by U.S. companies (or overseas by U.S. subsidiaries pursuant to LE ENC or LE ENC-eligible ‘‘private sector endusers’’) are subject to the EAR. Dated: December 29, 2008. Christopher R. Wall, Assistant Secretary for Export Administration. [FR Doc. E8–31371 Filed 1–5–09; 8:45 am] BILLING CODE 3510–33–P DEPARTMENT OF HOMELAND SECURITY Coast Guard 46 CFR Part 197 [USCG–1998–3786] RIN 1625–AA21 Commercial Diving Operations Coast Guard, DHS. Advance notice of proposed rulemaking. AGENCY: ACTION: The Coast Guard proposes to amend the commercial diving regulations. We request public comment on industry standards and current practices that might be incorporated in our regulations or accepted as regulatory equivalents; the use of third-party auditing; new requirements for compliance documentation; the adoption of recommendations made following the investigation of a 1996 fatality; and possible additional regulatory revisions. This rulemaking will promote the enhancement of maritime safety which is a strategic goal of the Coast Guard. DATES: Comments and related material must either be submitted to our online docket via https://www.regulations.gov on or before March 9, 2009 or reach the Docket Management Facility by that date. ADDRESSES: You may submit comments identified by docket number USCG– 1998–3786 using any one of the following methods: (1) Federal eRulemaking Portal: https://www.regulations.gov. (2) Fax: 202–493–2251. (3) Mail: Docket Management Facility (M–30), U.S. Department of Transportation, West Building Ground Floor, Room W12–140, 1200 New Jersey Avenue, SE., Washington, DC 20590– 0001. (4) Hand delivery: Same as mail address above, between 9 a.m. and 5 SUMMARY: PO 00000 Frm 00004 Fmt 4702 Sfmt 4702 p.m., Monday through Friday, except Federal holidays. The telephone number is 202–366–9329. To avoid duplication, please use only one of these methods. For instructions on submitting comments, see the ‘‘Public Participation and Request for Comments’’ portion of the SUPPLEMENTARY INFORMATION section below. FOR FURTHER INFORMATION CONTACT: If you have questions on this proposed rule, call Lieutenant Commander Rogers Henderson, U.S. Coast Guard, telephone (202) 372–1411. If you have questions on viewing or submitting material to the docket, call Renee V. Wright, Program Manager, Docket Operations, telephone 202–366–9826. SUPPLEMENTARY INFORMATION: Table of Contents for Preamble I. Public Participation and Request for Comments A. Submitting Comments B. Viewing Comments and Documents C. Privacy Act D. Public Meeting II. Abbreviations III. Background and Purpose I. Public Participation and Request for Comments We encourage you to participate in this rulemaking by submitting comments and related materials. All comments received will be posted, without change, to https:// www.regulations.gov and will include any personal information you have provided. A. Submitting Comments If you submit a comment, please include the docket number for this rulemaking (USCG–1998–3786), indicate the specific section of this document to which each comment applies, and provide a reason for each suggestion or recommendation. You may submit your comments and material online, or by fax, mail or hand delivery, but please use only one of these means. We recommend that you include your name and a mailing address, an e-mail address, or a phone number in the body of your document so that we can contact you if we have questions regarding your submission. To submit your comment online, go to https://www.regulations.gov, select the Advanced Docket Search option on the right side of the screen, insert ‘‘USCG– 1998–3786’’ in the Docket ID box, press Enter, and then click on the balloon shape in the Actions column. If you submit your comments by mail or hand delivery, submit them in an unbound format, no larger than 81⁄2 by 11 inches, E:\FR\FM\06JAP1.SGM 06JAP1

Agencies

[Federal Register Volume 74, Number 3 (Tuesday, January 6, 2009)]
[Proposed Rules]
[Pages 413-414]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-31371]


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DEPARTMENT OF COMMERCE

Bureau of Industry and Security

15 CFR Part 736

[Docket No. 0810231384-81391-01]
RIN 0694-XA15


Request for Public Comment on Foreign Produced Encryption Items 
That Are Made From U.S.-Origin Encryption Technology or Software

AGENCY: Bureau of Industry and Security.

ACTION: Notice of inquiry.

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

SUMMARY: To determine the appropriate extent and scope of U.S. export 
controls on foreign products that are the direct products of U.S.-
origin encryption technology or software, BIS is seeking information on 
the potential impact of controlling such foreign made items for 
Encryption Items (``EI'') reasons under the EAR (i.e., those that are 
classified under ECCN 5A002 or 5D002) if the direct product of U.S.-
origin ECCN 5E002 technology or ECCN 5D002 software. Specifically, BIS 
is requesting comments regarding the impact this control would have on 
both U.S. exporters of encryption technology and software and foreign 
manufacturers of products that are derived in whole or in part from 
U.S.-origin encryption technology or software.

DATES: Comments must be received no later than March 9, 2009.

ADDRESSES: Written comments may be submitted via https://
www.regulations.gov; by e-mail directly to BIS at 
publiccomments@bis.doc.gov; in hardcopy to U.S. Department of Commerce, 
Bureau of Industry and Security, Regulatory Policy Division, 14th St. 
and Pennsylvania Ave., NW., Room H-2705, Washington, DC 20230; or by 
fax to 202-482-3355. Please input ``0694-XA15'' in the subject line of 
the written comments.

FOR FURTHER INFORMATION CONTACT: For General Information Contact: 
Sharron Cook, Office of Exporter Services, Regulatory Policy Division, 
Bureau of Industry and Security at 202-482-2440, or fax 202-482-3355, 
or e-mail at scook@bis.doc.gov.
    For Specific Encryption Related Information Contact: C. Randall 
Pratt, Information Technology Division, Office of National Security and 
Technology Transfer Controls at 202-482-0707 or E-Mail: C. Randall 
Pratt at cpratt@bis.doc.gov.

SUPPLEMENTARY INFORMATION:

Background

    The Foreign-Produced Direct Product Rule is found in General 
Prohibition No. 3 under section 736.2(b)(3) of the Export 
Administration Regulations (EAR) and in section 734.3(a)(4) of the EAR, 
``Items Subject to the EAR.''
    Under section 736.2(b)(3)(ii)(A) of the EAR, a foreign-made item is 
considered a direct product of U.S. technology or software if it meets 
the following conditions, it is the direct product of technology or 
software that requires a written assurance as a supporting document for 
a license, as defined in paragraph (o)(3)(i) of Supplement No. 2 to 
part 748 of the EAR, or as a precondition for the use of License 
Exception TSR at section 740.6 of the EAR, and it is subject to 
national security controls as designated on the applicable ECCN of the 
Commerce Control List at part 774 of the EAR.
    Section 736.2(b)(3)(i) provides that if a foreign-made item is a 
direct product of U.S.-origin technology or software pursuant to the 
criteria set forth above, then it is subject to the EAR if it is 
exported from the country of manufacture to a destination in Country 
Group D:1 or E:2 (Cuba) of Supplement No. 1 to Part 740 of the EAR. 
General Prohibition 3 prohibits the reexport or export from abroad of 
items meeting the criteria of foreign direct products of U.S.-origin 
technology or software to Country Group D:1 destinations or Cuba unless 
authorization has been granted via a license or license exception.
    Technology and software controlled under ECCN 5E002 and 5D002 of 
the Commerce Control List (CCL) (Supplement No. 1 to part 774 of the 
EAR) are subject to national security (``NS'') controls. When the 
foreign-produced direct product of such technology or software would be 
classified under ECCN 5A002 or 5D002, it would meet the definition of 
``direct product'' under section 736.2(b)(3)(ii)(A) of the EAR.
    BIS is seeking information on the impact of making the foreign-
produced direct product of U.S.-origin ECCN 5E002 technology or ECCN 
5D002 software, classified under ECCN 5A002 or 5D002 subject to the EAR 
if exported from the country of manufacture to any destination (except 
the United States or Canada). All such foreign-produced direct product 
ECCN 5A002 or 5D002 hardware or software would be subject to the 
license requirements of sections 742.15 (``EI'' encryption items) and 
742.4 (``NS'' national security), or to the review requirements of 
section 740.17 (License Exception ENC). Reporting requirements under 
section 740.17(e) would not apply to exports from the country of 
manufacture of foreign-produced direct products, as reporting is 
required only for export from the United States or reexports from 
Canada.
    The possible revision described above would apply to the foreign 
direct product of ECCN 5E002 technology and 5D002 software exported 
under license, not to the foreign direct product of technology and 
software exported under License Exception ENC of section 740.17 of the 
EAR.
    Under the current provisions of section 736.2(b)(3), if ECCN 5E002 
technology is exported under an export license for purposes of offshore 
manufacture of an encryption item that has previously been submitted to 
the U.S. Government for technical review and has been made eligible for 
export under License Exception ENC, the

[[Page 414]]

foreign-produced direct product of the technology is not subject to the 
EAR unless: (1) It is exported from the country of manufacture to a 
destination in Country Group D:1 or E:2 (Cuba); or (2) it is exported 
from the United States after having been shipped to the United States 
from the country of manufacture.
    However, all foreign-produced direct product of technology or 
software exported under License Exception ENC under either paragraph 
(a)(1) (for internal development of new products by a `license-free 
zone' (Supplement No. 3 to part 740) ``private sector end-user'') or 
(a)(2) (to a ``U.S. subsidiary'' for internal use or development) are 
currently subject to the EAR by the terms of the notes to paragraphs 
(a)(1) and (a)(2).

Request for Comment

    BIS is seeking public comment on the impact such a revision to 
section 736.2(b)(3)(i) would have on both U.S. manufacturers of 
encryption technology and software and foreign manufacturers of 
products (including under contract to U.S. companies who own and 
maintain the intellectual property, branding, marketing and 
distribution rights to the end-products manufactured offshore) that are 
derived in whole or in part from U.S.-origin encryption technology or 
software. BIS is also seeking information about the cost of compliance 
with such a revision, including U.S. Government review of foreign 
direct products prior to export from abroad. BIS is also seeking 
information on the burdens of complying with multiple sets of laws, 
foreign and U.S., which could result from the potential revision.
    BIS would also like information about the various (commercial and 
military) applications of foreign products that are derived in whole or 
in part from U.S.-origin encryption technology or software. In 
addition, BIS is seeking information from foreign-manufacturers of 
encryption items about the factors that they or their competitors might 
consider in deciding to produce or use U.S.-origin encryption 
technology or software.
    Additionally, BIS is interested in specific information (URL 
addresses, technical specifications, etc.) about the availability of 
foreign encryption technology and software that is equivalent to U.S.-
origin encryption technology and software classified under ECCNs 5E002 
and 5D002. Finally, BIS seeks information on the impact on the U.S. 
information technology manufacturing base and American jobs if 
encryption products continue to be not subject to the EAR when exported 
from abroad or reexported to countries other than those listed in 
Country Group D:1 and E:2, simply by being manufactured under an export 
license, when identical products manufactured onshore by U.S. companies 
(or overseas by U.S. subsidiaries pursuant to LE ENC or LE ENC-eligible 
``private sector end-users'') are subject to the EAR.

    Dated: December 29, 2008.
Christopher R. Wall,
Assistant Secretary for Export Administration.
[FR Doc. E8-31371 Filed 1-5-09; 8:45 am]
BILLING CODE 3510-33-P

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