Foreign Direct Products of U.S. Technology, 44887-44890 [2010-18733]
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Federal Register / Vol. 75, No. 146 / Friday, July 30, 2010 / Rules and Regulations
word ‘‘itself’’ with the word
‘‘themselves’’.
2. On page 27620, in the first column,
in the 42nd line, add a period followed
by two spaces between ‘‘airport)’’ and
‘‘DOT’s’’.
3. On page 27651, in the first column,
in the 11th line, replace ‘‘382.5’’ with
‘‘382.7.’’
4. On the same page, in the second
column, in the 27th line, replace ‘‘382.5’’
with ‘‘382.7.’’
5. On page 27654, in the first column,
in the 29th and the 30th lines, delete the
first word ‘‘would’’ from the phrase ‘‘if
doing so would would not result’’ so it
reads ‘‘if doing so would not result’’.
6. On the same page in the same
column, in the 34th line, delete the
word ‘‘should’’ from the phrase ‘‘service
would should allow’’ so it reads ‘‘service
would allow’’.
7. On page 27665, in the first column,
in the 35th and the 36th lines, revise the
phrase ‘‘mall carrier use the same
airport’’ so it reads ‘‘Small carriers using
the same airport. * * *’’
8. On the same page, in the same
column, in the 50th line, delete the
word ‘‘a’’ that was between the words
‘‘the’’ and ‘‘present’’ so the phrase reads
‘‘the present value’’.
B. Corrections to the Final Rule
List of Subjects in 14 CFR Part 382
Air carriers, Consumer protection,
Individuals with disabilities, Reporting
and recordkeeping requirements.
■ Accordingly, 14 CFR Part 382 is
corrected by making the following
correcting amendments:
PART 382—NONDISCRIMINATION ON
THE BASIS OF DISABILITY IN AIR
TRAVEL; STOWAGE OF
WHEELCHAIRS, OTHER MOBILITY
AIDS, AND OTHER ASSISTIVE
DEVICES
1. The authority citation for Part 382
continues to read as follows:
■
Authority: 49 U.S.C. 41705.
2. In § 382.7, revise paragraph (f) to
read as the follows:
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*
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(f) If you are an indirect carrier,
§§ 382.1 through 382.15 of this Part
apply to you. §§ 382.17 through 382.157
of this Part do not apply to you except
insofar as provided by § 382.11(b).
*
*
*
*
*
■ 3. In § 382.11, revise paragraph (b) to
read as the follows:
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(b) As an indirect carrier, you must
comply with §§ 382.17 through 382.157
of this Part when providing facilities or
services to passengers that would have
otherwise been provided by a direct air
carrier.
■ 4. In § 382.23, revise the last sentence
of paragraph (d) to read as the follows:
§ 382.23 May carriers require a passenger
with a disability to provide a medical
certificate?
*
*
*
*
*
(d) * * * If the results of this medical
review demonstrate that the passenger,
notwithstanding the medical certificate,
is likely to be unable to complete the
flight without requiring extraordinary
medical assistance (e.g., the passenger
has apparent significant difficulty in
breathing, appears to be in substantial
pain, etc.) or would pose a direct threat
to the health or safety of other persons
on the flight, you may take an action
otherwise prohibited under § 382.21(a)
of this Part.
■ 5. In § 382.27, revise paragraph (a) to
read as the follows:
§ 382.27 May a carrier require a passenger
with a disability to provide advance notice
in order to obtain certain specific services
in connection with a flight?
(a) Except as provided in paragraph
(b) of this section and §§ 382.133(c)(4)
and (5) and 382.133 (d)(5) and (6), as a
carrier you must not require a passenger
with a disability to provide advance
notice in order to obtain services or
accommodations required by this Part.
*
*
*
*
*
§ 382.51
[Amended]
6. In § 382.51, amend the last sentence
of paragraph (b) by replacing the word
‘‘part’’ with ‘‘Part’’.
■ 7. In § 382.111, revise the first
sentence of paragraph (e) and revise
paragraph (f) to read as the follows:
■
*
§ 382.7 To whom do the provisions of this
Part apply?
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*
§ 382.111 What services must carriers
provide to passengers with a disability on
board the aircraft?
■
*
§ 382.11 What is the general
nondiscrimination requirement of this Part?
*
*
*
*
(e) Assistance in stowing and
retrieving carry-on items, including
mobility aids and other assistive devices
stowed in the cabin (see also 382.91(d)).
* * *.
(f) Effective communication with
passengers who have vision
impairments or who are deaf or hard-ofhearing, so that these passengers have
prompt access to information the carrier
provides to other passengers (e.g.
weather, on-board services, flight
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44887
delays, connecting gates at the next
airport).
■ 8. In § 382.151, revise paragraph (a)
and amend paragraph (c)(1) by adding
the phrase ‘‘to do so’’ after the phrase
‘‘provide the passenger a means’’ to read
as follows:
§ 382.151 What are the requirements for
providing Complaints Resolution Officials?
(a) As a carrier providing service
using aircraft with 19 or more passenger
seats, you must designate one or more
CROs.
*
*
*
*
*
■ 9. In § 382.153, revise the introductory
text to read as the follows:
§ 382.153 What actions do CROs take on
complaints?
When a complaint is made directly to
a CRO for a carrier providing service
using aircraft with 19 or more passenger
seats, the CRO must promptly take
dispositive action as follows:
*
*
*
*
*
■ 10. In § 382.155, revise paragraph (a)
by eliminating the reference to
scheduled and nonscheduled services
so the pertinent language reads as
follows:
§ 382.155 How must carriers respond to
written complaints?
(a) As a carrier providing service
using aircraft with 19 or more passenger
seats, you must respond to written
complaints received by any means (e.g.,
letter, fax, e-mail, electronic instant
message) concerning matters covered
buy this Part.
*
*
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*
Issued on July 21, 2010 at Washington, DC,
under authority delegated in 49 CFR 1.57(j).
Robert S. Rivkin,
General Counsel.
[FR Doc. 2010–18531 Filed 7–29–10; 8:45 am]
BILLING CODE 4910–9X–P
DEPARTMENT OF COMMERCE
Bureau of Industry and Security
15 CFR Parts 732, 736, 740, and 748
[Docket No. 080215200–91321–01]
RIN 0694–AE27
Foreign Direct Products of U.S.
Technology
Bureau of Industry and
Security, Commerce.
ACTION: Final rule.
AGENCY:
The Bureau of Industry and
Security (BIS) clarifies the scope of the
SUMMARY:
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Federal Register / Vol. 75, No. 146 / Friday, July 30, 2010 / Rules and Regulations
‘‘direct product rule’’ set forth in the
Export Administration Regulations
(EAR). Under the EAR’s ‘‘direct product
rule,’’ foreign-made items that are
located outside of the United States;
subject to national security controls
under the EAR; the direct product of
U.S.-origin software or technology that
requires a written assurance as a
supporting document for a license or as
a pre-condition for use of License
Exception Technology and Software,
Restricted (TSR); and are being
reexported to a destination in a country
of national security concern or a
terrorist supporting country, are subject
to the EAR and require an export license
or license exception. This rule also
makes parallel revisions or clarifications
to written assurances required under
License Exception TSR (Technology and
Software Restricted), information
required on the license application for
national security controlled technology,
and the instructional steps in the EAR
that provide guidance on how to apply
the direct product rule.
DATES: Effective Date: This rule is
effective July 30, 2010.
ADDRESSES: Although this rule is in final
form, 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 and Pennsylvania Ave., NW.,
Room H–2705, Washington, DC 20230;
or by fax to (202) 482–3355. Please
insert ‘‘0694–AE27’’ in the subject line of
the written comments.
FOR FURTHER INFORMATION CONTACT:
Sharron Cook, Office of Exporter
Services, Bureau of Industry and
Security, U.S. Department of Commerce,
at (202) 482–2440 or by e-mail:
scook@bis.doc.gov.
Comments regarding the collections of
information associated with this rule,
including suggestions for reducing the
burden, should be sent to OMB Desk
Officer, New Executive Office Building,
Washington, DC 20503, Attention:
Jasmeet Seehra, or by e-mail to
Jasmeet_K._Seehra@omb.eop.gov, or by
fax to (202) 395–7285; and to the Office
of Administration, Bureau of Industry
and Security, Department of Commerce,
14th and Pennsylvania Avenue, NW.,
Room 6883, Washington, DC 20230.
SUPPLEMENTARY INFORMATION:
Direct Product Rule
Items subject to the Export
Administration Regulations (EAR)
include items located in the United
States, wherever they are produced;
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16:17 Jul 29, 2010
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items of ‘‘U.S. origin,’’ that is, those
produced in the United States, wherever
they are located; and certain foreign
produced items, including items subject
to the EAR only on the basis of the
‘‘direct product rule.’’ The ‘‘direct
product rule’’ is found in General
Prohibition No. 3, section 736.2(b)(3) of
the EAR, and in section 734.3(a)(4).
Under the ‘‘direct product rule’’ as
amended, foreign-made items are
subject to the EAR and require an export
license or license exception, if such
items are:
• Located outside of the United
States;
• Subject to national security controls
under the EAR;
• The direct product of U.S.-origin
software or technology that requires a
written assurance as a supporting
document for a license or as a precondition for use of License Exception
Technology and Software, Restricted
(TSR); and
• Being reexported to a destination in
Country Group D:1 and E:1 of
Supplement No. 1 to part 740.
As discussed in section 732.2(f), it is
necessary to determine whether an item
is potentially subject to the ‘‘direct
product rule’’ only with regard to
foreign-produced items located in
foreign countries.
This final rule changes the ‘‘direct
product rule’’ as it is codified in the
EAR, by expanding the country scope of
the rule from Country Group D:1 and
Cuba to Country Group D:1 and E:1
(Cuba, Iran, North Korea, Sudan, and
Syria). This change is being made to
bring the ‘‘direct product rule’’ into
harmony with the policies the United
States maintains against terrorist
supporting countries in Country Group
E:1.
Part 732—Steps for Using the EAR
This rule amends section 732.2,
‘‘Steps Regarding Scope of the EAR,’’ by
revising paragraph (f)(1)(i) in ‘‘Step 6:
Foreign-made items produced with
certain U.S. technology for export to
specified destinations,’’ specifically
paragraph (f)(1)(i) and amending section
732.3, ‘‘Steps Regarding the Ten General
Prohibitions,’’ by revising paragraph
(f)(1)(ii) ‘‘Step 11: Foreign-produced
direct product’’ to expand the country
scope of these steps to include all the
countries in Country Group E:1, namely,
Cuba, Iran, North Korea, Sudan, and
Syria. Because this part of the EAR is
merely guidance, it will not affect the
paperwork burden of the public.
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License Exception TSR (Technology
and Software Restricted)
A ‘‘License Exception’’ is an
authorization contained in part 740 of
the EAR that allows export or reexport
under stated conditions of items subject
to the EAR that would otherwise require
a license under the provisions of the
EAR. License Exception TSR, found in
section 740.6 of the EAR, authorizes
exports and reexports of certain
technology and software to destinations
in Country Group B of Supplement No.
1 to part 740 of the EAR. Eligible
technology and software are those that
require a license for national security
reasons only, and are identified by
‘‘TSR—Yes’’ in Export Control
Classification Numbers (ECCNs) on the
Commerce Control List (Supplement
No. 1 to part 774 of the EAR). Prior to
using this license exception, a written
assurance as described in section 740.6
of the EAR must be obtained from the
consignee. This assurance is required as
a preventative measure against
diversion or release of U.S.-origin
technology, a national securitycontrolled foreign direct product of such
technology, and a national securitycontrolled foreign direct product of a
plant or manufacturing equipment made
from such technology to Cuba or
countries with which the U.S. has
national security concerns and nationals
thereof. This rule expands the country
scope covered by this assurance to
include all the countries in Country
Group E:1 of Supplement No. 1 to part
740 of the EAR. License Exception TSR
is subject to the restrictions of section
740.2 of the EAR that apply to all
license exceptions in part 740 of the
EAR. This revision will have no effect
on the paperwork burden of exporters
using License Exception TSR.
License Applications for Shipments
That Include U.S.-Origin Technology
In addition to the instructions
contained in Supplement No. 1 to part
748 that describe how to submit an
application to BIS, section 748.9 and
Supplement No. 2 to part 748 of the
EAR set out requirements that license
applicants must address for certain
items or types of transactions. This rule
revises the instructions under paragraph
(i), ‘‘Parts, components, and materials
incorporated abroad into foreign-made
products’’ by expanding the country
scope to include all the countries in
Country Group E:1. With the
publication of this rule, paragraph
(i)(2)(x) now states that if the foreignmade product is the direct product of
U.S.-origin technology, and U.S.-origin
technology will accompany a shipment
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Federal Register / Vol. 75, No. 146 / Friday, July 30, 2010 / Rules and Regulations
to a country listed in Country Group D:1
or E:1 (see Supplement No. 1 to part 740
of the EAR), Block 24 must describe the
type of technology and how it will be
used. This change is being made to
conform to the changes being made
elsewhere in this rule to the ‘‘direct
product rule.’’ The effect of this
amendment on the paperwork burden
hours for filling out a license
application is negligible, as there are
rarely transactions involving these items
to countries in Country Group E:1.
Export Administration Act
Since August 21, 2001, the Act has
been in lapse. However, the President,
through Executive Order 13222 of
August 17, 2001 (3 CFR, 2001 Comp.
783 (2002)), which has been extended
by successive Presidential Notices, the
most recent being that of August 13,
2009 (74 FR 41325 (August 14, 2009)),
has continued the Regulations in effect
under the International Emergency
Economic Powers Act (50 U.S.C. 1701 et
seq.).
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Saving Clause
Shipments of items removed from
license exception eligibility or from
eligibility for export without a license as
a result of this regulatory action that
were on dock for loading, on lighter,
laden aboard an exporting carrier, or en
route aboard a carrier to a port of export,
on July 30, 2010, pursuant to actual
orders for export to a foreign
destination, may proceed to that
destination under the previous license
exception eligibility, or without a
license, so long as they have been
exported from the United States before
September 28, 2010. Any such items not
actually exported before midnight, on
September 28, 2010, require a license in
accordance with this regulation.
Rulemaking Requirements
1. This final rule has been determined
to be 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 of 1995 (44 U.S.C. 3501
et seq.) (PRA), unless that collection of
information displays a currently valid
Office of Management and Budget
(OMB) Control Number. This rule
involves two collections of information
subject to the PRA. One of the
collections has been approved by OMB
under control number 0694–0088,
‘‘Multi Purpose Application,’’ and
carries a burden hour estimate of 58
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minutes for a manual or electronic
submission. The other collection has
been approved by OMB under control
number 0694–0106, ‘‘Reporting and
Recordkeeping Requirements under the
Wassenaar Arrangement,’’ and carries a
burden hour estimate of 21 minutes for
a manual or electronic submission. Send
comments regarding these burden
estimates or any other aspect of these
collections of information, including
suggestions for reducing the burden, to
OMB Desk Officer, New Executive
Office Building, Washington, DC 20503;
and to Jasmeet Seehra, OMB Desk
Officer, by e-mail at
Jasmeet_K._Seehra@omb.eop.gov or by
fax to (202) 395–7285; and to the Office
of Administration, Bureau of Industry
and Security, Department of Commerce,
14th and Pennsylvania Avenue, NW.,
Room 6622, Washington, DC 20230.
3. This rule does not contain policies
with Federalism implications as that
term is defined under Executive Order
13132.
4. The provisions of the
Administrative Procedure Act (5 U.S.C.
553) requiring notice of proposed
rulemaking, the opportunity for public
participation, and a delay in effective
date, are inapplicable because this
regulation involves a military and
foreign affairs function of the United
States (5 U.S.C. 553(a)(1)). Further, no
other law requires that a notice of
proposed rulemaking and an
opportunity for public comment be
given for this final rule. Because a
notice of proposed rulemaking and an
opportunity for public comment are not
required to be given for this rule under
the Administrative Procedure Act or by
any other law, the analytical
requirements of the Regulatory
Flexibility Act (5 U.S.C. 601 et seq.) are
not applicable. BIS implements the
‘‘direct product rule’’ to require licenses
for the reexport of items controlled for
national security reasons to countries in
Country Groups D:1 and E:2. If this rule
were delayed to allow for notice and
comment and a delay in the effective
date, it would provide additional time
to the embargoed countries, which are
being added to the list of countries for
which the direct product rule applies, to
receive items without a license, contrary
to the foreign policy and national
security of the United States. Therefore,
this regulation is issued in final form.
Although there is no formal comment
period, public comments on this
regulation are welcome on a continuing
basis. Comments should be submitted to
Sharron Cook, Office of Exporter
Services, Bureau of Industry and
Security, Department of Commerce,
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14th and Pennsylvania Ave., NW.,
Room 2705, Washington, DC 20230.
List of Subjects
15 CFR Part 732
Administrative practice and
procedure, Exports, Reporting and
recordkeeping requirements.
15 CFR Part 736
Exports.
15 CFR Parts 740 and 748
Administrative practice and
procedure, Exports, Reporting and
recordkeeping requirements.
Accordingly, Parts 732, 736, 740 and
748 of the Export Administration
Regulations (15 CFR Parts 730–774) are
amended as follows:
■
PART 732—[AMENDED]
1. The authority citation for Part 732
continues to read as follows:
■
Authority: 50 U.S.C. app. 2401 et seq.; 50
U.S.C. 1701–1706; 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).
2. Section 732.2 is amended by
revising paragraph (f)(1)(i) to read as
follows:
■
§ 732.2
Steps regarding scope of the EAR.
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(f) * * *
(1) * * *
(i) Country scope of prohibition. Your
reexport destination for the foreignproduced direct product is a destination
in Country Group D:1 or E:1 (see
Supplement No. 1 to part 740 of the
EAR) (reexports of foreign-produced
direct products to other destinations are
not subject to General Prohibition
Three);
*
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*
■ 3. Section 732.3 is amended by
revising paragraph (f)(1)(i), to read as
follows:
§ 732.3 Steps regarding the ten general
prohibitions.
*
*
*
*
*
(f) * * *
(1) * * *
(i) Country scope of prohibition. Your
reexport destination for the direct
product is a destination in Country
Group D:1 or E:1 (see Supplement No.
1 to part 740 of the EAR) (reexports of
foreign-produced direct products to
other destinations are not subject to
General Prohibition Three described in
§ 736.2(b)(3) of the EAR);
*
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*
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Federal Register / Vol. 75, No. 146 / Friday, July 30, 2010 / Rules and Regulations
PART 736—[AMENDED]
4. The authority citation for Part 736
continues to read as follows:
■
Authority: 50 U.S.C. app. 2401 et seq.; 50
U.S.C. 1701 et seq.; 22 U.S.C. 2151 note; E.O.
12938, 59 FR 59099, 3 CFR, 1994 Comp., p.
950; E.O. 13020, 61 FR 54079, 3 CFR, 1996
Comp., p. 219; E.O. 13026, 61 FR 58767, 3
CFR, 1996 Comp., p. 228; E.O. 13222, 66 FR
44025, 3 CFR, 2001 Comp., p. 783; E.O.
13338, 69 FR 26751, May 13, 2004; Notice of
August 13, 2009, 74 FR 41325 (August 14,
2009); Notice of November 6, 2009, 74 FR
58187 (November 10, 2009).
5. Section 736.2 is amended by
revising paragraph (b)(3)(i), to read as
follows:
■
§ 736.2 General prohibitions and
determination of applicability.
*
*
*
*
*
(b) * * *
(3) * * *
(i) Country scope of prohibition. You
may not, without a license or license
exception, reexport any item subject to
the scope of this General Prohibition
Three to a destination in Country Group
D:1 or E:1 (See Supplement No. 1 to part
740 of the EAR).
*
*
*
*
*
PART 740—[AMENDED]
6. The authority citation for Part 740
continues 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).
§ 740.6
[Amended]
7. Section 740.6 is amended by
removing the reference to ‘‘E:2’’ and
adding in its place ‘‘E:1’’ in paragraphs
(a)(1)(i), (a)(1)(ii), (a)(1)(iii), (a)(2)(i) and
(a)(2)(ii).
■
8. The authority citation for Part 748
continues to read as follows:
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■
Authority: 50 U.S.C. app. 2401 et seq.; 50
U.S.C. 1701 et seq.; E.O. 13026, 61 FR 58767,
3 CFR, 1996 Comp., p. 228; E.O. 13222, 66
FR 44025, 3 CFR, 2001 Comp., p. 783; Notice
of August 13, 2009, 74 FR 41325 (August 14,
2009).
9. Supplement No. 2 to Part 748 is
amended by removing the reference to
‘‘E:2’’ and adding in its place ‘‘E:1’’ in
paragraph (i)(2)(x) and twice in
paragraph (o)(3)(i).
■
16:17 Jul 29, 2010
[FR Doc. 2010–18733 Filed 7–29–10; 8:45 am]
BILLING CODE 3510–33–P
COMMODITY FUTURES TRADING
COMMISSION
17 CFR Part 190
RIN 3038–AC90
Operation, in the Ordinary Course, of
a Commodity Broker in Bankruptcy
Commodity Futures Trading
Commission.
ACTION: Final rule.
AGENCY:
The Commodity Futures
Trading Commission (the
‘‘Commission’’) is amending its
regulations regarding the operation of a
commodity broker in bankruptcy, in
order to permit the trustee in such
bankruptcy to operate, with the written
permission of the Commission, the
business of such commodity broker in
the ordinary course, including the
purchase or sale of new commodity
contracts on behalf of the customers of
such commodity broker, under
appropriate circumstances, as
determined by the Commission.
DATES: Effective Date: The final rules are
effective as of August 30, 2010.
FOR FURTHER INFORMATION CONTACT:
Robert B. Wasserman, Associate
Director, Division of Clearing and
Intermediary Oversight, 202–418–5092,
rwasserman@cftc.gov; or Alicia L.
Lewis, Attorney-Advisor, Division of
Clearing and Intermediary Oversight,
202–418–5862, alewis@cftc.gov;
Commodity Futures Trading
Commission, Three Lafayette Centre,
1155 21st Street, NW., Washington, DC
20581.
SUPPLEMENTARY INFORMATION:
SUMMARY:
I. Background
PART 748—[AMENDED]
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Dated: July 23, 2010.
Kevin J. Wolf,
Assistant Secretary for Export
Administration.
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On December 16, 2009, the
Commission published a Notice of
Proposed Rulemaking, which proposed
to amend Regulation 190.04(d) to permit
a trustee, under appropriate
circumstances, to operate the business
of a commodity broker in bankruptcy in
the ordinary course, including the
purchase or sale of new commodity
contracts on behalf of the customers of
such commodity broker (the ‘‘Notice’’).1
The proposed rule stated that the
appropriateness of a particular set of
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FR 66598 (Dec. 16, 2009).
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circumstances would be determined by
the Commission in its discretion, and
such operation would require the
written permission of the Commission.
The public comment period on the
Notice ended on January 15, 2010. The
Commission received two comments 2
during the comment period: (i) One
from the trustee of a futures commission
merchant (‘‘FCM’’) that was sold as a
going concern in bankruptcy3 and (ii)
one from a futures industry trade
association.4
Collectively, the comments raise the
following five (5) concerns with the
Notice:
• The Commission’s proposed rule is
premature.
• The Commission staff should not be
responsible for operating the FCMrelated business of an insolvent FCM/
broker-dealer.
• The Commission’s proposed rule is
overly broad as it does not specify all
circumstances the Commission will
consider in authorizing a trustee to
operate the business of an FCM and
provide the public with an opportunity
to comment on these circumstances.
• The Commission should work with
the Securities and Exchange
Commission and the Securities Investor
Protection Corporation to develop
uniform procedures to guide a trustee of
an insolvent FCM/broker-dealer in the
absence of legislative changes.
• The Commission should grant
immunity to a bankruptcy trustee, who
is to operate the business of a
commodity broker, in the limited
operation of the business.
The Commission will address below
each of the five concerns.
II. Concern That the Commission’s
Proposed Rule Is Premature
FIA stated that further action on the
proposed rule is premature as the House
of Representatives has passed a
financial services reform bill which
instructs the Commission, in
coordination with the Securities and
Exchange Commission (‘‘SEC’’) and
several bank regulatory authorities, to
recommend, within 180 days of the
bill’s enactment, legislative changes to
the federal insolvency laws to, among
2 For purposes of this release, a comment letter is
referenced by: (i) Its author, (ii) its file number (as
shown in the comment file associated with the
Notice on the Commission’s Web site), and (iii) the
page (if applicable). The comment file associated
with the Notice is available at https://www.cftc.gov/
LawRegulation/FederalRegister/CommentFiles/09034.html.
3 Albert Togut of Togut, Segal & Segal LLP
(Trustee for Refco, LLC) (‘‘Refco Trustee’’) (CL01).
4 The Futures Industry Association (representing
the commodity futures and options industry)
(‘‘FIA’’) (CL02).
E:\FR\FM\30JYR1.SGM
30JYR1
]]>Agencies
[Federal Register Volume 75, Number 146 (Friday, July 30, 2010)]
[Rules and Regulations]
[Pages 44887-44890]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-18733]
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DEPARTMENT OF COMMERCE
Bureau of Industry and Security
15 CFR Parts 732, 736, 740, and 748
[Docket No. 080215200-91321-01]
RIN 0694-AE27
Foreign Direct Products of U.S. Technology
AGENCY: Bureau of Industry and Security, Commerce.
ACTION: Final rule.
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SUMMARY: The Bureau of Industry and Security (BIS) clarifies the scope
of the
[[Page 44888]]
``direct product rule'' set forth in the Export Administration
Regulations (EAR). Under the EAR's ``direct product rule,'' foreign-
made items that are located outside of the United States; subject to
national security controls under the EAR; the direct product of U.S.-
origin software or technology that requires a written assurance as a
supporting document for a license or as a pre-condition for use of
License Exception Technology and Software, Restricted (TSR); and are
being reexported to a destination in a country of national security
concern or a terrorist supporting country, are subject to the EAR and
require an export license or license exception. This rule also makes
parallel revisions or clarifications to written assurances required
under License Exception TSR (Technology and Software Restricted),
information required on the license application for national security
controlled technology, and the instructional steps in the EAR that
provide guidance on how to apply the direct product rule.
DATES: Effective Date: This rule is effective July 30, 2010.
ADDRESSES: Although this rule is in final form, 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 and
Pennsylvania Ave., NW., Room H-2705, Washington, DC 20230; or by fax to
(202) 482-3355. Please insert ``0694-AE27'' in the subject line of the
written comments.
FOR FURTHER INFORMATION CONTACT: Sharron Cook, Office of Exporter
Services, Bureau of Industry and Security, U.S. Department of Commerce,
at (202) 482-2440 or by e-mail: scook@bis.doc.gov.
Comments regarding the collections of information associated with
this rule, including suggestions for reducing the burden, should be
sent to OMB Desk Officer, New Executive Office Building, Washington, DC
20503, Attention: Jasmeet Seehra, or by e-mail to Jasmeet_K._Seehra@omb.eop.gov, or by fax to (202) 395-7285; and to the Office of
Administration, Bureau of Industry and Security, Department of
Commerce, 14th and Pennsylvania Avenue, NW., Room 6883, Washington, DC
20230.
SUPPLEMENTARY INFORMATION:
Direct Product Rule
Items subject to the Export Administration Regulations (EAR)
include items located in the United States, wherever they are produced;
items of ``U.S. origin,'' that is, those produced in the United States,
wherever they are located; and certain foreign produced items,
including items subject to the EAR only on the basis of the ``direct
product rule.'' The ``direct product rule'' is found in General
Prohibition No. 3, section 736.2(b)(3) of the EAR, and in section
734.3(a)(4). Under the ``direct product rule'' as amended, foreign-made
items are subject to the EAR and require an export license or license
exception, if such items are:
Located outside of the United States;
Subject to national security controls under the EAR;
The direct product of U.S.-origin software or technology
that requires a written assurance as a supporting document for a
license or as a pre-condition for use of License Exception Technology
and Software, Restricted (TSR); and
Being reexported to a destination in Country Group D:1 and
E:1 of Supplement No. 1 to part 740.
As discussed in section 732.2(f), it is necessary to determine whether
an item is potentially subject to the ``direct product rule'' only with
regard to foreign-produced items located in foreign countries.
This final rule changes the ``direct product rule'' as it is
codified in the EAR, by expanding the country scope of the rule from
Country Group D:1 and Cuba to Country Group D:1 and E:1 (Cuba, Iran,
North Korea, Sudan, and Syria). This change is being made to bring the
``direct product rule'' into harmony with the policies the United
States maintains against terrorist supporting countries in Country
Group E:1.
Part 732--Steps for Using the EAR
This rule amends section 732.2, ``Steps Regarding Scope of the
EAR,'' by revising paragraph (f)(1)(i) in ``Step 6: Foreign-made items
produced with certain U.S. technology for export to specified
destinations,'' specifically paragraph (f)(1)(i) and amending section
732.3, ``Steps Regarding the Ten General Prohibitions,'' by revising
paragraph (f)(1)(ii) ``Step 11: Foreign-produced direct product'' to
expand the country scope of these steps to include all the countries in
Country Group E:1, namely, Cuba, Iran, North Korea, Sudan, and Syria.
Because this part of the EAR is merely guidance, it will not affect the
paperwork burden of the public.
License Exception TSR (Technology and Software Restricted)
A ``License Exception'' is an authorization contained in part 740
of the EAR that allows export or reexport under stated conditions of
items subject to the EAR that would otherwise require a license under
the provisions of the EAR. License Exception TSR, found in section
740.6 of the EAR, authorizes exports and reexports of certain
technology and software to destinations in Country Group B of
Supplement No. 1 to part 740 of the EAR. Eligible technology and
software are those that require a license for national security reasons
only, and are identified by ``TSR--Yes'' in Export Control
Classification Numbers (ECCNs) on the Commerce Control List (Supplement
No. 1 to part 774 of the EAR). Prior to using this license exception, a
written assurance as described in section 740.6 of the EAR must be
obtained from the consignee. This assurance is required as a
preventative measure against diversion or release of U.S.-origin
technology, a national security-controlled foreign direct product of
such technology, and a national security-controlled foreign direct
product of a plant or manufacturing equipment made from such technology
to Cuba or countries with which the U.S. has national security concerns
and nationals thereof. This rule expands the country scope covered by
this assurance to include all the countries in Country Group E:1 of
Supplement No. 1 to part 740 of the EAR. License Exception TSR is
subject to the restrictions of section 740.2 of the EAR that apply to
all license exceptions in part 740 of the EAR. This revision will have
no effect on the paperwork burden of exporters using License Exception
TSR.
License Applications for Shipments That Include U.S.-Origin Technology
In addition to the instructions contained in Supplement No. 1 to
part 748 that describe how to submit an application to BIS, section
748.9 and Supplement No. 2 to part 748 of the EAR set out requirements
that license applicants must address for certain items or types of
transactions. This rule revises the instructions under paragraph (i),
``Parts, components, and materials incorporated abroad into foreign-
made products'' by expanding the country scope to include all the
countries in Country Group E:1. With the publication of this rule,
paragraph (i)(2)(x) now states that if the foreign-made product is the
direct product of U.S.-origin technology, and U.S.-origin technology
will accompany a shipment
[[Page 44889]]
to a country listed in Country Group D:1 or E:1 (see Supplement No. 1
to part 740 of the EAR), Block 24 must describe the type of technology
and how it will be used. This change is being made to conform to the
changes being made elsewhere in this rule to the ``direct product
rule.'' The effect of this amendment on the paperwork burden hours for
filling out a license application is negligible, as there are rarely
transactions involving these items to countries in Country Group E:1.
Export Administration Act
Since August 21, 2001, the Act has been in lapse. However, the
President, through Executive Order 13222 of August 17, 2001 (3 CFR,
2001 Comp. 783 (2002)), which has been extended by successive
Presidential Notices, the most recent being that of August 13, 2009 (74
FR 41325 (August 14, 2009)), has continued the Regulations in effect
under the International Emergency Economic Powers Act (50 U.S.C. 1701
et seq.).
Saving Clause
Shipments of items removed from license exception eligibility or
from eligibility for export without a license as a result of this
regulatory action that were on dock for loading, on lighter, laden
aboard an exporting carrier, or en route aboard a carrier to a port of
export, on July 30, 2010, pursuant to actual orders for export to a
foreign destination, may proceed to that destination under the previous
license exception eligibility, or without a license, so long as they
have been exported from the United States before September 28, 2010.
Any such items not actually exported before midnight, on September 28,
2010, require a license in accordance with this regulation.
Rulemaking Requirements
1. This final rule has been determined to be 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 of 1995 (44 U.S.C. 3501 et
seq.) (PRA), unless that collection of information displays a currently
valid Office of Management and Budget (OMB) Control Number. This rule
involves two collections of information subject to the PRA. One of the
collections has been approved by OMB under control number 0694-0088,
``Multi Purpose Application,'' and carries a burden hour estimate of 58
minutes for a manual or electronic submission. The other collection has
been approved by OMB under control number 0694-0106, ``Reporting and
Recordkeeping Requirements under the Wassenaar Arrangement,'' and
carries a burden hour estimate of 21 minutes for a manual or electronic
submission. Send comments regarding these burden estimates or any other
aspect of these collections of information, including suggestions for
reducing the burden, to OMB Desk Officer, New Executive Office
Building, Washington, DC 20503; and to Jasmeet Seehra, OMB Desk
Officer, by e-mail at Jasmeet_K._Seehra@omb.eop.gov or by fax to
(202) 395-7285; and to the Office of Administration, Bureau of Industry
and Security, Department of Commerce, 14th and Pennsylvania Avenue,
NW., Room 6622, Washington, DC 20230.
3. This rule does not contain policies with Federalism implications
as that term is defined under Executive Order 13132.
4. The provisions of the Administrative Procedure Act (5 U.S.C.
553) requiring notice of proposed rulemaking, the opportunity for
public participation, and a delay in effective date, are inapplicable
because this regulation involves a military and foreign affairs
function of the United States (5 U.S.C. 553(a)(1)). Further, no other
law requires that a notice of proposed rulemaking and an opportunity
for public comment be given for this final rule. Because a notice of
proposed rulemaking and an opportunity for public comment are not
required to be given for this rule under the Administrative Procedure
Act or by any other law, the analytical requirements of the Regulatory
Flexibility Act (5 U.S.C. 601 et seq.) are not applicable. BIS
implements the ``direct product rule'' to require licenses for the
reexport of items controlled for national security reasons to countries
in Country Groups D:1 and E:2. If this rule were delayed to allow for
notice and comment and a delay in the effective date, it would provide
additional time to the embargoed countries, which are being added to
the list of countries for which the direct product rule applies, to
receive items without a license, contrary to the foreign policy and
national security of the United States. Therefore, this regulation is
issued in final form. Although there is no formal comment period,
public comments on this regulation are welcome on a continuing basis.
Comments should be submitted to Sharron Cook, Office of Exporter
Services, Bureau of Industry and Security, Department of Commerce, 14th
and Pennsylvania Ave., NW., Room 2705, Washington, DC 20230.
List of Subjects
15 CFR Part 732
Administrative practice and procedure, Exports, Reporting and
recordkeeping requirements.
15 CFR Part 736
Exports.
15 CFR Parts 740 and 748
Administrative practice and procedure, Exports, Reporting and
recordkeeping requirements.
0
Accordingly, Parts 732, 736, 740 and 748 of the Export Administration
Regulations (15 CFR Parts 730-774) are amended as follows:
PART 732--[AMENDED]
0
1. The authority citation for Part 732 continues to read as follows:
Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701-1706;
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 732.2 is amended by revising paragraph (f)(1)(i) to read as
follows:
Sec. 732.2 Steps regarding scope of the EAR.
* * * * *
(f) * * *
(1) * * *
(i) Country scope of prohibition. Your reexport destination for the
foreign-produced direct product is a destination in Country Group D:1
or E:1 (see Supplement No. 1 to part 740 of the EAR) (reexports of
foreign-produced direct products to other destinations are not subject
to General Prohibition Three);
* * * * *
0
3. Section 732.3 is amended by revising paragraph (f)(1)(i), to read as
follows:
Sec. 732.3 Steps regarding the ten general prohibitions.
* * * * *
(f) * * *
(1) * * *
(i) Country scope of prohibition. Your reexport destination for the
direct product is a destination in Country Group D:1 or E:1 (see
Supplement No. 1 to part 740 of the EAR) (reexports of foreign-produced
direct products to other destinations are not subject to General
Prohibition Three described in Sec. 736.2(b)(3) of the EAR);
* * * * *
[[Page 44890]]
PART 736--[AMENDED]
0
4. The authority citation for Part 736 continues to read as follows:
Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.;
22 U.S.C. 2151 note; E.O. 12938, 59 FR 59099, 3 CFR, 1994 Comp., p.
950; E.O. 13020, 61 FR 54079, 3 CFR, 1996 Comp., p. 219; E.O. 13026,
61 FR 58767, 3 CFR, 1996 Comp., p. 228; E.O. 13222, 66 FR 44025, 3
CFR, 2001 Comp., p. 783; E.O. 13338, 69 FR 26751, May 13, 2004;
Notice of August 13, 2009, 74 FR 41325 (August 14, 2009); Notice of
November 6, 2009, 74 FR 58187 (November 10, 2009).
0
5. Section 736.2 is amended by revising paragraph (b)(3)(i), to read as
follows:
Sec. 736.2 General prohibitions and determination of applicability.
* * * * *
(b) * * *
(3) * * *
(i) Country scope of prohibition. You may not, without a license or
license exception, reexport any item subject to the scope of this
General Prohibition Three to a destination in Country Group D:1 or E:1
(See Supplement No. 1 to part 740 of the EAR).
* * * * *
PART 740--[AMENDED]
0
6. The authority citation for Part 740 continues 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).
Sec. 740.6 [Amended]
0
7. Section 740.6 is amended by removing the reference to ``E:2'' and
adding in its place ``E:1'' in paragraphs (a)(1)(i), (a)(1)(ii),
(a)(1)(iii), (a)(2)(i) and (a)(2)(ii).
PART 748--[AMENDED]
0
8. The authority citation for Part 748 continues to read as follows:
Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.;
E.O. 13026, 61 FR 58767, 3 CFR, 1996 Comp., p. 228; E.O. 13222, 66
FR 44025, 3 CFR, 2001 Comp., p. 783; Notice of August 13, 2009, 74
FR 41325 (August 14, 2009).
0
9. Supplement No. 2 to Part 748 is amended by removing the reference to
``E:2'' and adding in its place ``E:1'' in paragraph (i)(2)(x) and
twice in paragraph (o)(3)(i).
Dated: July 23, 2010.
Kevin J. Wolf,
Assistant Secretary for Export Administration.
[FR Doc. 2010-18733 Filed 7-29-10; 8:45 am]
BILLING CODE 3510-33-P
