Clarification of Grace Period for Encryption Registration Requirement, 43819-43821 [2010-18360]

Agencies

• DEPARTMENT OF COMMERCE
• Bureau of Industry and Security
• Industry and Security Bureau

[Federal Register Volume 75, Number 143 (Tuesday, July 27, 2010)]
[Rules and Regulations]
[Pages 43819-43821]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-18360]


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DEPARTMENT OF COMMERCE

Bureau of Industry and Security

15 CFR Parts 740 and 742

[Docket No. 100309131-0283-03]
RIN 0694-AE89


Clarification of Grace Period for Encryption Registration 
Requirement

AGENCY: Bureau of Industry and Security, Commerce.

ACTION: Final rule; correcting amendments.

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SUMMARY: This rule clarifies the intent of the encryption registration 
requirement that appeared in a rule published on June 25, 2010. In 
addition, this rule corrects the e-mail address for the public contact 
referenced in the June 25, 2010 rule.

DATES: This rule is effective July 27, 2010.

FOR FURTHER INFORMATION CONTACT: Sharron Cook, Regulatory Policy 
Division, e-mail scook@bis.doc.gov, telephone (202) 482-2440.

SUPPLEMENTARY INFORMATION:

[[Page 43820]]

Background

    On June 25, 2010, the Bureau of Industry and Security (BIS) 
published a final rule (75 FR 36482) that, inter alia, established an 
encryption registration requirement for authorization under provisions 
of License Exception ENC, as codified in Sec.  740.17(b)(1), (b)(2) and 
(b)(3) of the EAR, and for transactions in connection with mass market 
encryption transaction, as codified in Sec. Sec.  742.15(b)(1) and 
(b)(3) of the EAR. In Sec.  740.17(d)(1)(i)(A) and (d)(1)(i)(B), the 
rule specified that an encryption registration was required to be filed 
the first time that a party submits an encryption classification 
request under Sec.  740.17(b)(2) and (b)(3) or performs an encryption 
self-classification under Sec.  740.17(b)(1) on or after August 24, 
2010. The rule also stated that an encryption registration was required 
to be submitted in support of an encryption classification or in 
circumstances where a party is making a mass market encryption item 
eligible for export and reexport (including the definition at Sec.  
734.2(b)(9) for encryption software) under Sec.  742.15(b)(1) for the 
first time on or after August 24, 2010. Although the rule was issued in 
final form on June 25, the rule intended to establish a grace period 
permitting parties to wait until August 24 to submit their registration 
requirements.
    The intent of this grace period was to allow industry time to 
gather information necessary to accurately submit the information 
required in the encryption registration (Supplement No. 5 to part 742), 
to change internal procedures, and to train personnel before submitting 
the encryption registration. However, the rule inadvertently omitted 
language that clarifies that parties may self-classify or seek 
classifications between June 25, 2010 and August 24, 2010 without first 
submitting a registration. It also inadvertently omitted language that 
clarifies the post-classification registration requirement for parties 
that self-classified or sought classifications between June 25, 2010 
and August 24, 2010, but did not self-classify or seek a classification 
again on or after August 24, 2010. This rule corrects the regulations 
to include language that clarifies the intent of the grace period.
    Therefore, this rule adds a sentence to the introductory text of 
paragraph (b) of Sec.  740.17 that reads, ``For items self-classified 
under paragraph (b)(1) of this section from June 25, 2010 through 
August 24, 2010, and for requests for classification under paragraphs 
(b)(2) and (b)(3) of this section submitted from June 25, 2010 through 
August 24, 2010, exporters have until August 24, 2010 to submit their 
encryption registrations.'' This rule also adds a sentence to the 
introductory text of paragraph (b) of Sec.  742.15 that reads ``For 
items self-classified under paragraph (b)(1) of this section from June 
25, 2010 through August 24, 2010, and for requests for classification 
under paragraph (b)(3) of this section submitted from June 25, 2010 
through August 24, 2010, exporters have until August 24, 2010 to submit 
their encryption registrations.''
    Since this rule is a clarification of contradicting provisions of 
the regulations, BIS has determined that this rule has no retroactive 
effect. The registration requirement remains prospective (i.e. by 
August 24, 2010), and BIS is not actually triggering any requirements 
with which the affected entities would not otherwise have to comply. 
The encryption clarification rule simply clarifies that those who 
proceed with export between June 25, 2010 and August 24, 2010 must file 
with BIS by August 24, 2010. The public is not adversely affected by 
this clarification since it provides exporters with a clear guidance 
for exporting between June 25, 2010 and August 24, 2010.
    In addition, the June 25, 2010 rule listed a non-existent e-mail 
address (encryption@bis.doc.gov) as the e-mail address for technical 
questions in the FOR FURTHER INFORMATION CONTACT section of the 
preamble of the rule. The correct address for technical questions is 
cpratt@bis.doc.gov. The e-mail address for non-technical questions 
continues to be scook@bis.doc.gov.

Rulemaking Requirements

    1. This rule is not significant for purposes of Executive Order 
12866.
    2. Notwithstanding any other provision of law, no person is 
required to respond to, nor shall any person be subject to a penalty 
for failure to comply with a collection of information, subject to the 
requirements of the Paperwork Reduction Act, unless that collection of 
information displays a currently valid Office of Management and Budget 
Control Number. This rule involves a collection of information that has 
been approved by the OMB under control number 0694-0088, which carries 
a burden hour estimate of 58 minutes to prepare and submit form BIS-
748. Miscellaneous and recordkeeping activities account for 12 minutes 
per submission. BIS believes that this rule will make no change to the 
number of submissions or to the burden imposed by this collection.
    3. This rule does not contain policies with Federalism implications 
as that term is defined in Executive Order 13132.
    4. BIS finds that there is good cause under 5 U.S.C. 553(b)(B) to 
waive the provisions of the Administrative Procedure Act requiring 
prior notice and the opportunity for public comment because it is 
unnecessary. These revisions merely clarify the intent of the 
encryption registration requirement, therefore allowing prior notice 
and comment on these rules is unnecessary. In addition, BIS finds good 
cause under 5 U.S.C. 553(d) to waive the 30-day delay in effectiveness 
because this rule merely makes technical changes to the regulations to 
clarify the intent of the encryption registration requirement. No other 
law requires that notice of proposed rulemaking and an opportunity for 
public comment be given for this rule; therefore, the analytical 
requirements of the Regulatory Flexibility Act (5 U.S.C. 601 et seq.) 
are not applicable.

List of Subjects

15 CFR Part 740

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

15 CFR Part 742

    Exports, Terrorism.

0
Accordingly, the Bureau of Industry and Security amends its Export 
Administration Regulations (15 CFR parts 730-774) as follows:

PART 740 [AMENDED]

0
1. The authority citations for part 740 continue to read as follows:

    Authority:  50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; 
22 U.S.C. 7201 et seq.; E.O. 13026, 61 FR 58767, 3 CFR, 1996 Comp., 
p. 228; E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 783; Notice 
of August 13, 2009, 74 FR 41325 (August 14, 2009).

0
2. Section 740.17 is amended by adding a sentence after the first 
sentence in paragraph (b) introductory text to read as follows:


Sec.  740.17  Encryption commodities, software and technology (ENC).

* * * * *
    (b) * * * For items self-classified under paragraph (b)(1) of this 
section from June 25, 2010 through August 24, 2010, and for requests 
for classification under paragraphs (b)(2) and (b)(3) of this section 
submitted from June 25, 2010 through August 24, 2010, exporters have 
until August 24, 2010 to submit their encryption registrations. * * *

[[Page 43821]]

PART 742 [AMENDED]

0
3. The authority citations for part 742 continue to read as follows:

    Authority:  50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; 
22 U.S.C. 3201 et seq.; 42 U.S.C. 2139a; 22 U.S.C. 7201 et seq.; 22 
U.S.C. 7210; Sec 1503, Pub. L. 108 11, 117 Stat. 559; E.O. 12058, 43 
FR 20947, 3 CFR, 1978 Comp., p. 179; E.O. 12851, 58 FR 33181, 3 CFR, 
1993 Comp., p. 608; E.O. 12938, 59 FR 59099, 3 CFR, 1994 Comp., p. 
950; E.O. 13026, 61 FR 58767, 3 CFR, 1996 Comp., p. 228; E.O. 13222, 
66 FR 44025, 3 CFR, 2001 Comp., p. 783; Presidential Determination 
2003 23 of May 7, 2003, 68 FR 26459, May 16, 2003; Notice of August 
13, 2009, 74 FR 41325 (August 14, 2009); Notice of November 6, 2009, 
74 FR 58187 (November 10, 2009).

0
4. Section 742.15 is amended by adding a sentence after the fourth 
sentence in paragraph (b) to read as follows:


Sec.  742.15  Encryption items.

* * * * *
    (b) * * * For items self-classified under paragraph (b)(1) of this 
section from June 25, 2010 through August 24, 2010, and for requests 
for classification under paragraph (b)(3) of this section submitted 
from June 25, 2010 through August 24, 2010, exporters have until August 
24, 2010 to submit their encryption registrations. * * *

    Dated: July 21, 2010.
Bernard Kritzer,
Director, Office of Exporter Services.
[FR Doc. 2010-18360 Filed 7-26-10; 8:45 am]
BILLING CODE 3510-33-P