Revisions to the Export Administration Regulations (EAR): Export Control Classification Number 0Y521 Series, Items Not Elsewhere Listed on the Commerce Control List (CCL), 22191-22200 [2012-8944]

Agencies

• DEPARTMENT OF COMMERCE
• Bureau of Industry and Security

[Federal Register Volume 77, Number 72 (Friday, April 13, 2012)]
[Rules and Regulations]
[Pages 22191-22200]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-8944]


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DEPARTMENT OF COMMERCE

Bureau of Industry and Security

15 CFR Parts 732, 734, 738, 740, 742 and 774

[Docket No. 110310188-2058-03]
RIN 0694-AF17


Revisions to the Export Administration Regulations (EAR): Export 
Control Classification Number 0Y521 Series, Items Not Elsewhere Listed 
on the Commerce Control List (CCL)

AGENCY: Bureau of Industry and Security, Commerce.

ACTION: Final rule.

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SUMMARY: The Bureau of Industry and Security (BIS) publishes this final 
rule, which amends the Export Administration Regulations (EAR) by 
establishing a new Export Control Classification Number (ECCN) series, 
0Y521, on the Commerce Control List (CCL) and makes corresponding 
changes to the EAR. The ECCN 0Y521 series will be used for items that 
warrant control on the CCL but are not yet identified in an existing 
ECCN. As BIS explained in the proposed rule issued on July 15, 2011 (76 
FR 41958), this new temporary holding classification is equivalent to 
United States Munitions List (USML) Category XXI (Miscellaneous 
Articles), but with a limitation that while an item is temporarily 
classified under ECCN 0Y521, the U.S. Government works to adopt a 
control through the relevant multilateral regime(s); to determine an 
appropriate longer-term control over the item; or determines that the 
item does not warrant control on the CCL. Items will be added to the 
0Y521 ECCNs by the Department of Commerce, with the concurrence of the 
Departments of Defense and State, when it identifies an item that 
should be controlled because it provides a significant military or 
intelligence advantage to the United States or because foreign policy 
reasons justify such control.
    The 0Y521 series was described in the July 15, 2011 proposed rule 
that identified a framework for how articles, which the President 
determines, as part of the Administration's Export Control Reform 
Initiative, no longer warrant control on the USML would be controlled 
under the CCL. In this rule, however, the 0Y521 provisions are being 
published in final form, with necessary corresponding changes, separate 
from the other July 15 rule proposals. Public comments on the other 
July 15 proposals remain under BIS review.

DATES: This rule is effective April 13, 2012.

FOR FURTHER INFORMATION CONTACT: Eileen Albanese, Director, Office of 
National Security and Technology Transfer Controls, by phone at (202) 
482-0092 or by email at Eileen.Albanese@bis.doc.gov.

SUPPLEMENTARY INFORMATION: 

Background

    On July 15, 2011, as part of the Administration's ongoing Export 
Control Reform Initiative, the Bureau of Industry and Security (BIS) 
published a proposed rule (76 FR 41958) (herein ``the July 15 proposed 
rule'') that set forth a framework for how articles the President 
determines, in accordance with section 38(f) of the Arms Export Control 
Act (AECA) (22 U.S.C. 2778(f)), no longer warrant control on the United 
States Munitions List (USML) instead would be controlled under the 
Commerce Control List (CCL) in Supplement No. 1 to part 774 of the

[[Page 22192]]

Export Administration Regulations (EAR). With that proposed rule, BIS 
also proposed establishing a new Export Control Classification Number 
(ECCN) series, 0Y521, on the CCL, which would be equivalent to United 
States Munitions List (USML) Category XXI (Miscellaneous Articles), but 
with some limitations, and requested public comments thereon. The 0Y521 
ECCN series will provide a mechanism for identifying and controlling 
items that warrant export controls, but that are not yet categorized on 
the CCL or USML, such as emerging technologies. It will provide a 
temporary control category for such items, while the U.S. Government 
works to adopt a control through the relevant multilateral regime(s); 
to determine an appropriate longer-term control over the item; or 
determines that the item does not warrant control on the CCL. With this 
final rule, BIS adopts this proposal, with some modifications described 
below, and makes corresponding necessary changes to the EAR.
    Consistent with the July 15 proposed rule, BIS is amending the EAR 
to establish new ECCNs 0A521, 0B521, 0C521, 0D521 and 0E521 and to make 
corresponding changes. As proposed in the July 15 proposed rule, ECCN 
0Y521 items will be subject to a nearly worldwide license requirement 
(i.e., for every country except Canada) with a case-by-case license 
review policy, through regional stability (RS Column 1) controls. The 
U.S. Government will review the sensitivity of each potential ECCN 
0Y521 item on a case-by-case basis and make a positive determination 
regarding the sensitivity of each item.
    Items classified under ECCN 0Y521 will stay so-classified from the 
date a final rule identifying the item is published in the Federal 
Register amending the EAR for one year following the date of Federal 
Register publication, unless the item is re-classified under a 
different ECCN or the 0Y521 classification is extended. During this 
time, the U.S. Government will determine whether it is appropriate to 
submit a proposed control to the applicable export control regime 
(e.g., the Wassenaar Arrangement) for potential multilateral control, 
with the understanding that multilateral controls are preferable when 
practical. An item's ECCN 0Y521 classification may be extended for two 
one-year periods to provide time for the U.S. Government and 
multilateral regime(s) to reach agreement on controls for the item. As 
discussed in the July 15 preamble, the July 15 proposed rule allowed 
for no more than two one-year extensions provided that the Departments 
of Commerce, State and Defense made a consensus determination to seek 
multilateral controls for the ECCN 0Y521 item and the U.S. Government 
submitted a proposal to obtain multilateral controls over the item. As 
described below under ``Changes from Proposed Rule,'' this final rule 
clarifies that agencies will determine whether a multilateral control 
is appropriate at the time that the items are classified under ECCN 
0Y521. In addition, this final rule allows for further extension beyond 
three years if the Under Secretary for Industry and Security makes a 
determination that such extension is in the national security or 
foreign policy interests of the United States. An extension or re-
extension, including a determination by the Under Secretary for 
Industry and Security, will be published in the Federal Register.
    The U.S. Government's decision to identify an item as included in 
ECCN 0Y521 is a classification based on a determination of whether the 
item has significant military or intelligence advantage to the United 
States or for foreign policy reasons, not a classification of the 
item's technical characteristics. ECCN 0Y521 classifications are 
excluded from the part 756 appeals process. Parties would nonetheless 
be encouraged to provide to BIS information and comments about the item 
and the ECCN 0Y521 controls on it.
    As proposed in the July 15 proposed rule, BIS is also adding a new 
paragraph (a)(7) to Sec.  742.6 to describe the regional stability 
reason for control that applies to items in the 0Y521 series, and is 
adding a reference to ECCN 0Y521 items in the licensing policy 
paragraph (b)(1) of the same section. The license review policy will be 
used to evaluate on a case-by-case basis whether the export or reexport 
could contribute directly or indirectly to any country's military 
capabilities in a manner that would destabilize a region's military 
balance contrary to the foreign policy interests of the United States.
    In the July 15 proposed rule, BIS proposed that no license 
exceptions would be available for any item classified under the 0Y521 
ECCN series other than License Exception GOV, if the item is within the 
scope of Sec.  740.11(b)(2)(ii) (Items for official use by personnel 
and agencies of the U.S. Government). A new Sec.  740.2(a)(14) is being 
added to reflect this. As described below under ``Changes from Proposed 
Rule,'' BIS will have the authority to apply additional license 
exceptions on an item-specific basis at any time if the Departments of 
Defense and State concur with such application.

Comments and Responses

    BIS received 43 public comments on the July 15 proposed rule, 19 of 
which pertained to the ECCN 0Y521 series proposal. Summaries of those 
comments and BIS Responses appear below. Similar comments are 
consolidated. As noted above, the ECCN 0Y521 series proposal was 
separated from the rest of the July 15 proposed rule for purposes of 
this final rule; public comments received on issues other than the 
0Y521 provisions remain under review separate from this final rule.

Purpose of Creating the 0Y521 ECCN Series

    Comment 1: Commenters generally were receptive to, or positive 
toward, the proposed creation of the ECCN 0Y521 series. One commenter 
expressed that the addition of the ECCN 0Y521 series is a feature of 
the EAR long overdue and is consistent with the statutory requirements 
of the Export Administration Act (EAA) to update the control list as 
warranted.
    Response: BIS agrees the addition of the ECCN 0Y521 series will 
play an important role on the CCL, along with helping to move forward 
the Export Control Reform Initiative's goal of structurally aligning 
the CCL and USML. The CCL is reviewed and updated on a continuous 
basis, and the new ECCN 0Y521 series will aid in this process by 
identifying those items where a temporary control is appropriate while 
the U.S. Government identifies a permanent classification.
    Comment 2: Some commenters expressed concern that the proposed 
three-year maximum that an item could be classified under ECCN 0Y521 
was too long.
    Response: The July 15 proposed rule stated that items may be 
classified under ECCN 0Y521 for a one-year period, which may be 
extended for two one-year periods. This three-year period was intended 
to provide sufficient time for the U.S. Government and its multilateral 
regime partners to assess a particular item and determine its 
appropriate classification. Shortening the maximum period would not 
provide an adequate opportunity to consider, develop and implement 
multilateral regime control for such items.
    In reviewing the timing associated with proposing multilateral 
regime controls, BIS determined that, in fact, three years may, on rare 
occasions, be insufficient to accomplish necessary multilateral 
negotiations. To expedite that process, this final rule clarifies that 
the United States will attempt to submit any proposals for 0Y521 items 
to the

[[Page 22193]]

relevant multilateral regime for consideration of multilateral controls 
during the initial one-year 0Y521 classification period or will 
determine whether a different ECCN or EAR99 designation might be more 
appropriate. In addition, consistent with the July 15 proposed rule, 
this final rule generally limits extension to two additional one-year 
periods, and such extensions may only be made provided that the U.S. 
Government submitted a proposal to obtain multilateral controls over 
the item. However, recognizing, inter alia, that there may be a need 
for additional time for the U.S. Government and its multilateral regime 
partners to review and discuss appropriate controls, this final rule 
allows for additional extensions. The Under Secretary for Industry and 
Security may further extend an ECCN 0Y521 control upon a determination 
that such extension is in the national security or foreign policy 
interests of the United States. This change is in keeping with the July 
15 proposed rule's anticipation that time extensions may be necessary 
to achieve multilateral controls. All extension and re-extensions, 
including the determination by the Under Secretary for Industry and 
Security, will be published in the Federal Register.
    In addition, the case-by-case license review policy for ECCN 0Y521 
items will provide discretion to the U.S. Government to approve many 
exports and reexports potentially affected by ECCN 0Y521 
classification.
    Comment 3: Commenters cautioned that: classification should not be 
overused; when used, the classification process should not be hindered 
or protracted; and the classification process should only be used in 
exceptional circumstances. Commenters further expressed concern that 
because they believed that USML Category XXI, which the ECCN 0Y521 
entries are designed to parallel, is ``vague and worrisome,'' the ECCN 
0Y521 process will suffer from the same problems.
    Response: Although BIS cannot predict how often items will be 
classified in ECCN 0Y521 entries, BIS will use this classification only 
when the item has significant military or intelligence advantage to the 
United States or foreign policy considerations warrant its use. Given 
the breadth and scope of the USML and the CCL, BIS does not anticipate 
that a large number of now EAR99 items will be listed on the CCL under 
ECCN 0Y521. The ECCN 0Y521 series is a mechanism to impose license 
requirements when needed within a transparent process and with stated 
parameters of when an item would transition out of temporary ECCN 0Y521 
classification. Each item's ECCN 0Y521 classification will expire one 
year from the date of its initial ECCN 0Y521 classification, unless 
specifically extended. As noted in response to the previous comment, 
for items whose ECCN 0Y521 status is extended, such extension is 
limited to two one-year periods, unless the Under Secretary for 
Industry and Security makes a determination that it is in the national 
security or foreign policy interests of the United States to further 
extend the temporary ECCN 0Y521 controls. For additional discussion on 
how ECCN 0Y521 items will be identified and the classification process 
initiated, see BIS's response to Comment 4.
    With respect to concerns that the USML Category XXI process is, and 
the ECCN 0Y521 process will be, ``vague and worrisome,'' the ECCN 
0Y521-related provisions have been drafted to create as much 
transparency for the public as possible. This final rule clarifies that 
the U.S. Government will attempt to submit any proposals for items 
classified under ECCN 0Y521 during the one-year classification period 
or will determine whether a different ECCN or EAR99 designation might 
be more appropriate. In addition, with this final rule, BIS has made 
efforts to clarify that an extension of 0Y521 classification may only 
occur for a second or third year, provided that the U.S. Government has 
already submitted a proposal to obtain multilateral controls over the 
item. Moreover, just as the State Department continues to improve the 
substance and processes of export controls under the ITAR, BIS intends 
to continue making the EAR increasingly effective, and welcomes public 
comments on an ongoing basis.
    Comment 4: A commenter noted that BIS did not clearly explain 
whether exporters have an affirmative requirement to seek a formal 
determination regarding whether an item not listed on the CCL should be 
subject to ECCN 0Y521 control. Related to that point, some commenters 
seemed unsure about how the ECCN 0Y521 items would be identified and 
the classification process initiated. One commenter recommended that 
BIS add a new ECCN entry for the item if enough information about the 
item is known, instead of classifying the item under an ECCN 0Y521 
entry.
    Response: Neither the July 15 proposed rule nor this final rule 
require exporters or reexporters to seek a determination from the U.S. 
Government as to whether an item that is not identified on the CCL 
should be classified as an ECCN 0Y521 item. If an item that is subject 
to the EAR is not described in an ECCN on the CCL, including in an 
existing ECCN 0Y521 entry, the item is an EAR99 item. As noted in the 
July 15 rule, ECCN 0Y521 controls only become applicable once a final 
rule is published in the Federal Register adding a description of such 
an item to Supplement No. 5 to part 774.
    With regard to identifying new items to classify under ECCN 0Y521 
entries, the U.S. Government is responsible for identifying such items. 
Specifically, BIS, with the concurrence of the Departments of Defense 
and State, will identify and classify items that warrant control under 
0Y521 ECCNs. BIS also relies on input received from its Technical 
Advisory Committees (TACs). As BIS drafts final rules to add additional 
items to an ECCN 0Y521 classification, such rules will be reviewed by 
the TACs, which will provide BIS an opportunity to receive industry 
input on whether the items in question, including emerging 
technologies, warrant control as an ECCN 0Y521 item.
    Finally, in response to the comment that a new ECCN entry specific 
to an item at issue be added to the CCL if sufficient information is 
known about the item, rather than temporarily classifying it as ECCN 
0Y521, BIS believes for several reasons that use of ECCN 0Y521 will 
better serve the purpose of identifying and ultimately classifying 
emerging technologies and other items that may warrant control. ECCN 
0Y521 advances the effort to streamline the CCL and simplify export and 
reexport provisions, which are primary goals of the Administration's 
ongoing Export Control Reform Initiative. Adding new ECCNs for each new 
item would mean expanding the number of distinct ECCN entries on the 
CCL, contrary to the goals of Export Control Reform Initiative. The 
standard heading on the CCL for each ECCN 0Y521 entry, listed by 
product group, immediately provides temporary classifications for items 
that warrant control. Supplement No. 5 to part 774 describes the actual 
items under the ECCN 0Y521 series and allows the public to more easily 
access information about the 0Y521 items, i.e., the date of initial 
classification or subsequent BIS classification of the item. Finally, 
because the information is concentrated in Supplement No. 5, there are 
no unnecessary amendments to the CCL.
    Comment 5: A commenter suggested that the phrase ``or for foreign 
policy reasons'' be removed from the 0Y521 entry headings.
    Response: BIS believes the commenter's point was that items should 
not be added to the 0Y521 ECCN

[[Page 22194]]

series for solely ``foreign policy'' reasons. BIS disagrees. An ECCN 
0Y521 item that has significant military or intelligence advantage may 
warrant worldwide or widespread controls. By including controls for 
foreign policy reasons from the outset, BIS facilitates a broader basis 
for control of ECCN 0Y521 items because such controls include both 
multilateral and unilateral designations. Although the U.S. Government 
would most likely work to obtain multilateral status for items 
classified under the ECCN 0Y521 series, while the items are classified 
under ECCN 0Y521, they will be subject to unilateral foreign policy-
based control (RS1) to secure control of the items in a timely manner 
and thereby avoid an EAR99 designation. At this point and with this 
final rule, items placed under 0Y521 ECCNs are controlled for RS1 
reasons.

ECCN 0Y521 Control Entry Text

    Comment 6: Commenters recommended that BIS revise the heading for 
the entry of a 0Y521 ECCN to name the particular group instead of using 
the term ``item.''
    Response: BIS agrees. After reviewing comments indicating that it 
would help public understanding of the ECCN 0Y521 provisions if product 
group-specific terminology were used for each of the respective 0Y521 
ECCNs (i.e., using ``commodity'' in 0A521 and 0B521, material in 0C521, 
``software'' in 0D521 and ``technology'' in 0E521) rather than 
``item,'' as was proposed in the July 15 rule, BIS accepted this 
suggested change, which is included in the headings for ECCNs 0A521, 
0B521, 0C521, 0D521 and 0E521 included in this final rule.
    Comment 7: A commenter suggested that ECCN 0Y521 items be listed in 
ECCN 0A521, 0B521, 0C521, 0D521 and 0E521 entries instead of in the 
proposed Supplement No. 5 to part 774 (Items Classified Under ECCNs 
0A521, 0B521, 0C521, 0D521 and 0E521).
    Response: As discussed in the Response to Comment 4, in evaluating 
how to structure the ECCN 0Y521 entries, BIS and the other agencies 
participating in the Export Control Reform Initiative determined that 
the Supplement No. 5 approach was a better alternative to adding 
individual ECCNs to the CCL. Listing the items under the respective 
entries would require adding 0Y521 ECCNs to each of the ten CCL 
categories. This would mean instead of adding five ECCN 0Y521 entries 
in the CCL, fifty ECCNs would be added to the CCL to account for all of 
the potential future 0Y521 items. The CCL currently contains 
approximately 500 ECCNs, so this alternative approach would have 
increased by 10 percent the overall number of ECCNs on the CCL. While 
BIS cannot affirmatively state how often items will be classified under 
ECCN 0Y521, the number of items that will likely warrant control under 
ECCN 0Y521 would not justify such a large expansion of ECCN entries. 
Additionally, the table format contained in the new Supplement No. 5 to 
part 774 has a structure that BIS believes makes it easy for the public 
to identify when an item was originally classified as an ECCN 0Y521 
item and when that classification will no longer apply.
    Comment 8: A commenter asserted that listing particular ECCN 0Y521 
items in the respective ECCNs would permit deletion of proposed 
Supplement No. 5 to part 774.
    Response: As noted above, BIS evaluated this option in developing 
the proposed Supplement No. 5 to part 774 included in the July 15 rule, 
along with the other related ECCN 0Y521 provisions. BIS agrees with the 
commenter that if that change were accepted that the supplement could 
be eliminated. However, for the reasons noted above in response to 
Comment 7, BIS decided against adopting such an approach.
    Comment 9: With respect to the proposed ECCN 0Y521 heading stating 
that an item may be classified in a ECCN 0Y521 entry because it 
provides ``at least a significant military or intelligence advantage to 
the United States,'' a commenter described the use of the term 
``advantage'' as too subjective and added that the term sets a higher 
bar than the term ``advance'' to determine whether items would be 
classified under 0Y521 ECCNs.
    Response: BIS agrees there is some degree of interpretation 
required in applying the standard ``significant military or 
intelligence advantage to the United States,'' but does not agree that 
a more expansive term such as ``advance'' would be appropriate. BIS's 
intent is to create a fairly high threshold for an item to warrant 
control in the ECCN 0Y521 series, and for that reason the term 
advantage is appropriate. Ultimately, it is the U.S. Government that 
will determine whether the criteria for classifying an item under a 
0Y521 ECCN have been met, but BIS's intent is to limit ECCN 0Y521 
classification to those items that truly warrant the temporary 
classification.

License Requirements and Related Policies for ECCNs 0Y521

    Comment 10: A commenter expressed confusion about the purpose and 
scope of the proposed ECCN 0Y521 series in relation to the items that 
would be listed in Supplement No. 5 to part 774. That commenter 
recommended that BIS edit or expand proposed Sec.  742.6(a)(7) (RS 
Column 1 license requirements and related policies for `0Y521') to 
clarify that the list of items determined to be classified under ECCN 
0Y521 is limited to those proposed to be enumerated in Supplement No. 5 
to part 774.
    Response: As noted above, only those items listed in Supplement No. 
5 to part 774 are classified under ECCN 0Y521 on the CCL. To make this 
explicit, BIS is revising paragraph (a)(7) as suggested in the comment.
    Comment 11: A commenter stated that Sec.  742.6(a)(7) (RS Column 1 
license requirements and related policies for `0Y521') should be 
revised to clarify that it is consistent with the foreign availability 
provisions in Section 4(c) of the Export Administration Act (EAA), 50 
U.S.C. app. Sec.  2403(c) (2000), regarding the imposition of 
unilateral controls.
    Response: BIS intends that classifications of the ECCN 0Y521 items 
will be consistent with the foreign availability provisions of the EAA. 
Accordingly, no changes are necessary to the rule at this time.
    Comment 12: A commenter stated that license exception eligibility 
should be added to conform with ITAR exemptions available for items in 
parallel ITAR Category XXI.
    Response: In the July 15 proposed rule, BIS proposed that items 
classified under the ECCN 0Y521 series would be eligible only for 
License Exception GOV (Sec.  740.11(b)(2)(ii)). After reviewing the 
public comments, BIS has determined that additional license exception 
eligibility may be warranted for certain items that may be classified 
under ECCN 0Y521, but this additional license exception eligibility 
should be determined at the time an item is added to Supplement No. 5 
to part 774 of the EAR. As such, BIS is revising the language of 
Section 740.2(a)(14) (Restrictions on all License Exceptions) and 
adding a clarifying note to that paragraph, as described above.
    In terms of a parallel to the ITAR, as items falling under the ECCN 
0Y521 series will not be defense articles being moved from the USML to 
the CCL, an ITAR parallel is unnecessary. The ECCN 0Y521 series is not 
part of the proposed ``600 series,'' informally known as the Commerce 
Munitions List inside the larger CCL.
    Finally, in terms of adding license exception authorizations, BIS 
is conducting a comprehensive evaluation of the ITAR exemptions to 
determine if the EAR should be revised to add any

[[Page 22195]]

exceptions available in the ITAR for defense articles. This review is 
ongoing, and any changes would be published in separate rulemaking 
notices.
    Comment 13: One commenter encouraged BIS to contact exporters 
before adding any new ECCN 0Y521 item to the CCL. According to the 
commenter, consulting with companies or the industry that created the 
technology in question or that have the greatest expertise about the 
technology would ensure that accurate information is considered before 
an item is classified under an 0Y521 ECCN. Similarly, one commenter 
stated that 0Y521 ECCN classifications should be appealable.
    Response: BIS understands the rationale behind these comments. 
However, BIS is unable to implement the suggestion for a number of 
reasons. First, in terms of fairness and regulatory rulemaking 
requirements, if BIS were to contact and notify select companies or 
individuals in drafting a new control without providing the same 
opportunity to the entire public, one group of interested persons may 
be disadvantaged over another. This result would be unfair and 
inconsistent with the legal requirements of the Administrative 
Procedure Act (APA), 5 U.S.C. 551-559. However, as explained in 
response to a previous comment, BIS, as a matter of practice, consults 
with the TACs as final rules are drafted to classify items under 0Y521 
ECCNs. The rule also does not prohibit any party from sending 
information to BIS about the item or comments about a control that was 
imposed on it. Also as noted above, such rules classifying items under 
ECCN 0Y521 would not be published as proposed rules because of the harm 
that would likely be done to U.S. national security interests if 
exporters and reexporters were given advance notice of future licensing 
requirements for items such as emerging technologies that warranted 
controls.
    Regarding the appealability of ECCN 0Y521 classifications, as noted 
in the preamble of the July 15 proposed rule, the United States 
Government's decision to identify an item as classified under an 0Y521 
ECCN is based on whether the item has significant military or 
intelligence advantage to the United States or a foreign policy reason, 
not a technical classification. Under Sec.  756.1(a)(1), listing items 
in Supplement No. 5 to part 774 would be excluded from the part 756 
appeals process. However, as stated in Sec.  756.1(a)(1), the EAR 
provides that the public may submit a request to amend, revoke, or 
appeal a regulation at any time. As such, the public has an opportunity 
to provide input to BIS as soon as an ECCN 0Y521 classification is 
made. Given the limited duration that an item is likely to be 
classified under an 0Y521 ECCN, and the fact that BIS cannot classify 
items under an 0Y521 ECCN without the consensus of the Departments of 
State and Defense, the public may find it more useful to focus any 
comments after a regulation identifies a new item in Supplement No. 5 
to part 774 on how an ECCN 0Y521 item should be permanently classified 
on the CCL.
    Comment 14: A commenter stated that it would be appropriate to 
impose RS1 controls on ECCN 0Y521 items, provided that RS1 controls 
apply only to ``600 series'' items not yet controlled by multilateral 
agreement. However, the commenter added, subsequent relocation on the 
CCL for such items, if and when multilateral agreement is reached on 
how the ECCN 0Y521 items should be controlled permanently, should be 
made effective in a timely fashion to reduce unwarranted licensing 
burdens.
    Response: As noted above, the ECCN 0Y521 series is not part of the 
``600 series,'' which was initially proposed in the July 15 proposed 
rule. As such, reasons to control items classified under ECCN 0Y521 
entries are not related to reasons to control proposed ``600 series'' 
items. ECCN 0Y521 classifications are temporary; if a permanent 
classification for an ECCN 0Y521 item is identified, the ECCN 0Y521 
item would be re-classified under an existing, but revised, ECCN or a 
new ECCN and would thus no longer be subject to ECCN 0Y521 controls. 
Any ECCN 0Y521 items that are later added to multilateral control lists 
would be re-classified at the time a final rule is published 
implementing that change to the multilateral regime's control list by 
adding the items to the CCL. Alternatively, ECCN 0Y521 controls may 
expire if an extension or re-classification does not occur before the 
date identified for the items in Supplement No. 5 to part 774 entry, at 
which point the item would return to being an EAR99 item. An item's 
ECCN 0Y521 classification may be extended for two one-year periods, the 
requirements for which are described in BIS's response to Comment 2. 
Further extension may occur only if the Under Secretary for Industry 
and Security makes a determination that an extension is in the national 
security or foreign policy interests of the United States. Any 
extension or re-extension of an ECCN 0Y521 item will be published in 
the Federal Register.
    Comment 15: Another commenter recognized the usefulness of a 0Y521 
ECCN series and appreciates the careful consideration of how items 
should move out of the 0Y521 ECCN classification and into positive 
existing ECCNs or EAR99 designation in a consistent and timely fashion. 
However, the commenter also expressed concern with the proposal to 
include emerging technologies in the 0Y521 series of ECCNs, given the 
potential to capture technologies that are the product of university 
fundamental research activity. The commenter suggests that BIS clarify 
and open to the public prior to publication in a final rule the 
criteria for including items and technologies in the new 0Y521 ECCNs.
    Response: Items classified in 0Y521 ECCNs by definition would only 
be items subject to the EAR. If an item were not subject to the EAR--
such as technology that arises during, or results from, fundamental 
research, as described in Sec.  734.8 of the EAR--then it would not be 
subject to the EAR. BIS will have the authority to control items under 
0Y521 ECCNs if (i) they are not already controlled on the CCL or the 
USML and (ii) BIS determines that they provide at least a significant 
military or intelligence advantage to the United States or there is a 
foreign policy reason for controlling the item. Emerging technologies 
of concern that are subject to the EAR are likely to be items whose 
technological innovation outpaces existing CCL or USML controls. The 
CCL is constructed as a positive control list, so if an item is subject 
to the EAR, but not identified in an ECCN, the USML, or the controls of 
another government agency such as the Department of Energy, it is an 
EAR99 item. The 0Y521 ECCNs are intended to provide BIS the authority 
to impose quickly a license requirement on otherwise uncontrolled items 
in a transparent way for a limited period. During that period, BIS and 
its interagency partners will work with the relevant multilateral 
export control regime(s) to determine what, if any, more lasting 
controls are appropriate for the item. Items that the U.S. Government 
determines are more appropriately captured under the United States 
Munitions List (USML) Category XXI (Miscellaneous Articles) or other 
USML control, which are identified as part of the 0Y521 review will be 
controlled as such.

Publication of ECCN 0Y521 Classifications

    Comment 16: One commenter recommended that BIS consult with the 
appropriate TACs on the process to determine descriptions for 
Supplement No. 5 to part 774.

[[Page 22196]]

    Response: As noted above, BIS plans to consult with the TACs to 
identify the appropriate descriptions to be added to Supplement No. 5 
to part 774 for ECCN 0Y521 items.
    Comment 17: A commenter observed that identification of software 
and technology based on its model or a broader descriptor may present 
situations in which descriptions will need to be performance-based.
    Response: The CCL has many software and technology ECCNs classified 
under product groups D and E. Although the item descriptor column in 
Supplement No. 5 to part 774 will be in a table format, the expertise 
BIS has in describing software and technology in other parts of the CCL 
will be relied on to ensure objective identification of software and 
technology in this Supplement. Other ECCNs on the CCL have identified 
items by model number, such as the QRS11-00100-100/101 and QRS11-00050-
443569 Micromachined Angular Rate Sensors classified under ECCN 7A994.
    Comment 18: A commenter asked what BIS anticipates will be the 
potential risk to industry of positively and publicly identifying items 
via Supplement No. 5 to part 774.
    Response: Supplement No. 5 to part 774 will not disclose any 
proprietary information regarding the items classified therein. In 
addition, in most cases BIS will seek, with the assistance of the TACs, 
to identify items by a broader descriptor that need not be company 
specific.
    Comment 19: One commenter disagrees with using a model number or a 
broader descriptor that is not necessarily company-specific for the 
ECCN 0Y521 items. The commenter adds that common nomenclatures and 
standards are used across industries, which might result in an overly 
generic and therefore confusing descriptor. Yet, in trying to avoid 
confusion, the commenter believes BIS still would need to avoid 
publishing company proprietary information.
    Response: As noted in the BIS Response to Comment 18, the 
identification of an item in Supplement No. 5 to part 774 will not 
disclose any proprietary information regarding the item. BIS will seek, 
with the input of the TACs, to specifically enumerate the ECCN 0Y521 
items as ``positively'' as possible. Also as noted above, where 
possible, BIS will seek to identify items by general descriptors, but 
these descriptors will need to be objective and avoid the potential 
pitfalls identified in this comment. This concern is not specific to 
Supplement No. 5, and is an issue that BIS and the multilateral export 
control regimes confront whenever a control parameter is written. BIS 
is confident that general descriptors can be developed and where a 
model number needs to be used, such as is the case in ECCN 7A994, that 
such descriptors will adequately define ECCN 0Y521 items.
    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 extended by the Notice of August 12, 
2011, 76 FR 50661 (August 16, 2011), has continued the Export 
Administration Regulations in effect under the International Emergency 
Economic Powers Act. BIS continues to carry out the provisions of the 
Export Administration Act, as appropriate and to the extent permitted 
by law, pursuant to Executive Order 13222.
    This action is taken after consultation with the Secretary of 
State. BIS submitted a foreign policy report to the Congress indicating 
the imposition of new foreign policy controls on March 26, 2012.

Changes From Proposed Rule

    The ECCN 0Y521 proposal set forth in the July 15 proposed rule is 
mainly unchanged in this final rule. However, in response to public 
comments, BIS has changed its approach to the circumstances and length 
of time an item may be controlled under ECCN 0Y521 and the availability 
of license exceptions for items classified under 0Y521 ECCNs. BIS has 
also made conforming changes to the EAR to clarify the ECCN 0Y521 
series.
    In the July 15 proposed rule, BIS proposed a mechanism for 
situations in which an item that warrants control is not controlled 
yet. The July 15 proposed rule proposed a three-year maximum control 
period for ECCN 0Y521 items, during which the initial one-year period 
would only be extended if the Departments of Commerce, State and 
Defense made a consensus determination to seek multilateral controls 
for the ECCN 0Y521 item and the U.S. Government submitted a proposal to 
obtain multilateral controls over the item. This final rule clarifies 
that the Departments of Commerce, State and Defense will decide whether 
to seek multilateral controls at the same time that the agencies 
consider classifying the item as an ECCN 0Y521 item. Consistent with 
the July 15 preamble, a second or third-year extension would still 
require that the United States has submitted a proposal for 
multilateral control for the ECCN 0Y521 item to the relevant 
multilateral regime. While the requirement to submit a proposal for 
extension for one or more one-year periods was identified in the 
preamble to the July 15 proposed rule, with this final rule, BIS has 
incorporated into revised Section 742.6(a)(7)(iii) the circumstances in 
which an item's ECCN 0Y521 classification may be extended for a second 
or third year.
    In contrast to the proposed rule, this final rule also establishes 
the potential for further extension of ECCN 0Y521 controls beyond three 
years for a specific item if the Under Secretary for Industry and 
Security makes a determination that such extension is in the national 
security or foreign policy interests of the United States. Any 
extension or re-extension, including a determination by the Under 
Secretary for Industry and Security will be published in the Federal 
Register. As discussed in the ``Comments and Response'' section above, 
allowing for potential additional extensions is necessary to provide 
sufficient time for BIS and its interagency partners to work with the 
relevant multilateral export control regime(s) to determine what, if 
any, controls are appropriate for the item. Regulatory provisions 
related to this extension are set forth in revised Sec.  
742.6(a)(7)(iii).
    Although License Exception GOV, set forth in Sec.  
740.11(b)(2)(ii), remains the only license exception identified at this 
time for all items classified in ECCN 0Y521, in contrast to the July 15 
proposed rule, this final rule establishes the potential availability 
of additional license exceptions on an item-specific basis. To 
implement this change, in this final rule BIS adds a fourth column 
identified as ``Item-specific License Exceptions'' to Supplement No. 5 
to part 774. To conform with that change, BIS also includes in this 
final rule a revision to Sec.  740.2(a)(14) that differs from the 
proposed rule. In the July 15 proposed rule, that paragraph stated a 
restriction on all license exceptions for items designated as 0Y521, 
except for License Exception GOV (Sec.  740.11(b)(ii)). In this final 
rule, paragraph (a)(14) specifies that the only license exceptions that 
may be used to authorize items designated as 0Y521 are GOV (Sec.  
740.11(b)(2)(ii)) or an item-specific license exception identified in 
Supplement No. 5 to part 774 for a particular ECCN 0Y521 item. This 
final rule also adds a new Note to paragraph (a)(14) of Sec.  740.2 to 
indicate that license exception availability is specific to each ECCN 
0Y521 entry in Supplement No. 5 to part 774 and may not be used for any 
other ECCN 0Y521 entries in the supplement. At the time the U.S.

[[Page 22197]]

Government makes a determination that items are classified under ECCNs 
0A521, 0B521, 0C521, 0D521 or 0E521, the U.S. Government will specify 
whether any license exceptions in addition to License Exception GOV 
will be available. BIS also amends ECCN 0Y521 control entry text 
appearing in Supp. No. 1 to part 774 of the EAR to reflect that other 
license exceptions may be eligible for particular items. If there are 
additional license exceptions, they will be listed in Supplement No. 5 
to part 774 under each designated item. In a corresponding change, to 
provide guidance about the applicability of licensing exceptions, BIS 
also adds paragraph (a)(14) and a note to paragraph (a)(14) to Sec.  
740.2.
    BIS incorporated a recommendation to use product group-specific 
terminology for each of the respective 0Y521 ECCNs (i.e., using the 
term ``commodity'' in 0A521 and 0B521, material in 0C521 (as defined in 
the July 15 proposed rule), ``software'' in 0D521 and ``technology'' in 
0E521), rather than ``item,'' as was proposed in the July 15 rule. The 
change has been made to the headings for ECCNs 0A521, 0B521, 0C521, 
0D521 and 0E521 in this final rule.
    Finally, to correspond with establishing the ECCN 0Y521 provisions, 
BIS is making other changes that are necessary to provide guidance to 
the public about these provisions, the applicability of licensing 
exceptions, and to make locating those provisions easier. To identify 
the 0Y521 ECCN series as within the scope of the EAR and primary 
provisions for the series, BIS amends: Sec.  732.3 (Steps regarding the 
ten general prohibitions) by adding paragraph (b)(4); Sec.  734.3 
(Items Subject to the EAR) by revising paragraph (c); Sec.  738.1(a) 
(Introduction--Commerce Control List Scope) by adding paragraph (a)(3); 
and Sec.  774.1 by adding a new paragraph to the Introduction.

Rulemaking Requirements

    1. Executive Orders 13563 and 12866 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distribute impacts, and equity). Executive 
Order 13563 emphasizes the importance of quantifying both costs and 
benefits, of reducing costs, of harmonizing rules, and of promoting 
flexibility. This rule has been designated a ``significant regulatory 
action,'' although not economically significant, under section 3(f) of 
Executive Order 12866. Accordingly, the rule has been reviewed by the 
Office of Management and Budget (OMB).
    2. Notwithstanding any other provision of law, no person is 
required to respond to, nor is 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 OMB 
control number. This rule affects two approved collections: (1) The 
Simplified Network Application Processing + System (control number 
0694-0088), which carries a burden hour estimate of 43.8 minutes, 
including the time necessary to submit license applications, among 
other things, as well as miscellaneous and other recordkeeping 
activities that account for 12 minutes per submission. BIS does not 
believe that this rule will materially increase the number of 
submissions under this collection. (2) License Exceptions and 
Exclusions (0694-0137). BIS cannot at this point describe or estimate 
the items that may be classified under the new 0Y521 ECCN series.
    3. This rule does not contain policies with Federalism implications 
as that term is defined under E.O. 13132.
    4. The Chief Counsel for Regulation of the Department of Commerce 
has certified to the Chief Counsel for Advocacy of the Small Business 
Administration that the proposed rule, if adopted in final form, would 
not have a significant economic impact on a substantial number of small 
entities. The basis for that certification was published in the 
preamble to the proposed rule and is not repeated here. BIS received no 
comments regarding the certification. As a result, a final regulatory 
flexibility analysis is not required and none has been prepared.
    5. BIS finds good cause to waive the requirement of 5 U.S.C.(d)(3) 
that this rule's effectiveness be delayed 30 days from its publication 
in the Federal Register. Delaying the rule's effectiveness for 30 days 
is unnecessary and contrary to the public interest. The delay is 
unnecessary because the rule is non-substantive and has no external 
impact. The agency is essentially inserting an empty box to be filled 
as items warranting export control under the CCL are identified. The 
rule adds no new requirements or burdens on the public, which need not 
take any action as a result of this rule to comply with its terms. In 
addition, a delay in effectiveness is contrary to the public interest, 
because additional delay would prevent the identification and addition 
of items to the CCL, which in turn could inhibit the public's ability 
to obtain export licenses for these items and potentially require the 
public to seek licenses under the USML licensing process during the 
period of delay. This rule, therefore, is effective upon publication in 
the Federal Register.

List of Subjects

15 CFR Parts 732 and 740

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

15 CFR Part 734

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

15 CFR Part 738

    Exports.

15 CFR Part 742

    Exports, Terrorism.

15 CFR Part 774

    Exports, Reporting and recordkeeping requirements.

    Accordingly, parts 732. 734, 738, 740, 742 and 774 of the Export 
Administration Regulations (15 CFR parts 730-774) are amended as 
follows:

PART 732--[AMENDED]

0
1. The authority citation for 15 CFR part 732 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 12, 2011, 76 
FR 50661 (August 16, 2011).


0
2. Amend Sec.  732.3 by adding paragraph (b)(4) to read as follows:


Sec.  732.3  Steps regarding the ten general prohibitions.

* * * * *
    (b) * * *
    (4) Items subject to temporary CCL controls are classified under 
the ECCN 0Y521 series (i.e., 0A521, 0B521, 0C521, 0D521 and 0E521) 
pursuant to Sec.  742.6(a)(7) of the EAR while a determination is being 
made as to whether classification under a revised or new ECCN or EAR99 
designation is appropriate .
* * * * *

PART 734--[AMENDED]

0
3. The authority citation for 15 CFR part 734 continues to read as 
follows:

    Authority:  50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; 
E.O. 12938, 59 FR 59099, 3 CFR, 1994 Comp., p. 950; E.O. 13020, 61

[[Page 22198]]

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; Notice of August 12, 2011, 76 FR 50661 (August 16, 2011); 
Notice of November 9, 2011, 76 FR 70319 (November 10, 2011).


0
4. Revise paragraph (c) of Sec.  734.3 to read as follows:


Sec.  734.3  Items subject to the EAR.

* * * * *
    (c) ``Items subject to the EAR'' consist of the items listed on the 
Commerce Control List (CCL) in part 774 of the EAR and all other items 
which meet the definition of that term. For ease of reference and 
classification purposes, items subject to the EAR which are not listed 
on the CCL are designated as ``EAR99.'' Items subject to temporary CCL 
controls are classified under the ECCN 0Y521 series (i.e., 0A521, 
0B521, 0C521, 0D521, and 0E521) pursuant to Sec.  742.6(a)(7) of the 
EAR, while a determination is made as to whether classification under a 
revised or new ECCN, or an EAR99 designation, is appropriate.
* * * * *

PART 738--[AMENDED]

0
5. The authority citation for 15 CFR part 738 continues to read as 
follows:

    Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; 
10 U.S.C. 7420; 10 U.S.C. 7430(e); 22 U.S.C. 287c; 22 U.S.C. 3201 et 
seq.; 22 U.S.C. 6004; 30 U.S.C. 185(s), 185(u); 42 U.S.C. 2139a; 42 
U.S.C. 6212; 43 U.S.C. 1354; 15 U.S.C. 1824a; 50 U.S.C. app. 5; 22 
U.S.C. 7201 et seq.; 22 U.S.C. 7210; 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 12, 2011, 76 FR 50661 (August 16, 2011).


0
6. Amend Sec.  738.1 by adding paragraph (a)(3) to read as follows:


Sec.  738.1  Introduction.

    (a) * * *
    (3) Items that warrant control for export or reexport but currently 
are not permanently classified on the CCL. Items subject to temporary 
CCL controls are classified under the ECCN 0Y521 series (i.e., 0A521, 
0B521, 0C521, 0D521, and 0E521) pursuant to Sec.  742.6(a)(7) of the 
EAR while a determination is made as to whether classification under a 
revised or new ECCN, or an EAR99 designation, is appropriate.
* * * * *

PART 740--[AMENDED]

0
7. The authority citation for 15 CFR 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 12, 2011, 76 FR 50661 (August 16, 2011).

Sec.  740.2  [Amended]

0
8. Amend Sec.  740.2 by
0
a. Adding and reserving paragraphs (a)(12) and (a)(13);
0
b. Adding paragraph (a)(14); and
0
c. Adding a note to paragraph (a)(14), to read as follows:


Sec.  740.2  Restrictions on all License Exceptions.

    (a) * * *
    (12) [Reserved]
    (13) [Reserved]
    (14) Items classified under ECCNs 0A521, 0B521, 0C521, 0D521 and 
0E521 may only be authorized by License Exception GOV (Sec.  
740.11(b)(2)(ii)) or an item-specific license exception identified in 
Supplement No. 5 to part 774 for a particular ECCN 0Y521 item.
    Note to Paragraph (a)(14): Item-specific license exception 
availability is specific to each ECCN 0Y521 entry in Supplement No. 5 
to part 774 and may not be used for any other ECCN 0Y521 entries in the 
Supplement. The U.S. Government makes a determination at the time items 
are classified under ECCNs 0A521, 0B521, 0C521, 0D521 and 0E521 
regarding whether any license exceptions will be available, in addition 
to License Exception GOV (Sec.  740.11(b)(2)(ii)).
* * * * *

PART 742--[AMENDED]

0
9. The authority citation for 15 CFR part 742 continues to read as 
follows:

    Authority:  50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; 
E.O. 12938, 59 FR 59099, 3 CFR, 1994 Comp., p. 950; E.O. 13020, 61 
FR 54079, 3 CFR, 1996 Comp., p. 219; E.O. 13026, 61 FR 58767, 3 CFR, 
1996 Comp., p. 228; E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 
783; Notice of August 12, 2011, 76 FR 50661 (August 16, 2011); 
Notice of November 9, 2011, 76 FR 70319 (November 10, 2011).


0
10. Amend Sec.  742.6 by
0
a. Adding paragraph (a)(7), and
0
b. Revising the first sentence of paragraph (b)(1), to read as follows:


Sec.  742.6  Regional stability.

    (a) * * *
    (7) RS Column 1 license requirements and related policies for ECCN 
0Y521 items.
    (i) Scope. This paragraph (a)(7) supplements the information in the 
0Y521 ECCNs and in Supplement No. 5 to part 774 (Items Classified Under 
ECCNs 0A521, 0B521, 0C521, 0D521 and 0E521). This paragraph alerts 
exporters, reexporters and transferors to the procedures that apply to 
items classified under the 0Y521 ECCNs.
    (ii) 0Y521 Items. Items subject to the EAR that are not listed 
elsewhere in the CCL, but which the Department of Commerce, with the 
concurrence of the Departments of Defense and State, has determined 
should be controlled for export because the items provide at least a 
significant military or intelligence advantage to the United States or 
for foreign policy reasons are classified under ECCNs 0A521, 0B521, 
0C521, 0D521 and 0E521. These items are typically emerging technologies 
(including emerging commodities, software and technology) that are not 
yet included in the CCL, so such items are listed on the CCL in 0Y521 
ECCNs while the U.S. Government determines whether classification under 
a revised or new ECCN, or an EAR 99 designation, is appropriate. The 
list of items classified under a 0Y521 ECCN is limited to those listed 
in Supplement No. 5 to part 774.
    (iii) Requirement to be classified under another ECCN within one 
calendar year of classification under ECCN 0Y521. Items classified 
under an ECCN 0Y521 entry must be re-classified under another ECCN 
within one calendar year from the date they are listed in Supplement 
No. 5 to part 774 of the EAR. If such re-classification does not occur 
within that period, classification under an ECCN 0Y521 entry expires, 
and such items are designated as EAR99 items unless either the CCL is 
amended to impose a control on such items under another ECCN or the 
ECCN 0Y521 classification is extended. BIS may extend an item's ECCN 
0Y521 classification for two one-year periods, provided that the U.S. 
Government has submitted a proposal to the relevant multilateral 
regime(s) to obtain multilateral controls over the item. Further 
extension beyond three years may occur only if the Under Secretary for 
Industry and Security makes a determination that such extension is in 
the national security or foreign policy interests of the United States. 
Any extension or re-extension of control of an ECCN 0Y521 item, 
including the determination by the Under Secretary, shall be published 
in the Federal Register.
    (b) Licensing policy. (1) Applications for exports and reexports 
described in paragraph (a)(1), (a)(2), (a)(6) or (a)(7) of this section 
will be reviewed on a case-by-case basis to determine whether the 
export or reexport could contribute directly or indirectly to any 
country's

[[Page 22199]]

military capabilities in a manner that would alter or destabilize a 
region's military balance contrary to the foreign policy interests of 
the United States. * * *
* * * * *

PART 774--[AMENDED]

0
11. The authority citation for 15 CFR part 774 continues to read as 
follows:

    Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; 
10 U.S.C. 7420; 10 U.S.C. 7430(e); 22 U.S.C. 287c, 22 U.S.C. 3201 et 
seq., 22 U.S.C. 6004; 30 U.S.C. 185(s), 185(u); 42 U.S.C. 2139a; 42 
U.S.C. 6212; 43 U.S.C. 1354; 15 U.S.C. 1824a; 50 U.S.C. app. 5; 22 
U.S.C. 7201 et seq.; 22 U.S.C. 7210; 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 12, 2011, 76 FR 50661 (August 16, 2011).


0
12. Revise Sec.  774.1 to read as follows:


Sec.  774.1  Introduction.

    (a) In this part, references to the EAR are references to 15 CFR 
chapter VII, subchapter C. The Bureau of Industry and Security (BIS) 
maintains the Commerce Control List (CCL) that describes items (i.e., 
commodities, software, and technology) subject to the jurisdiction of 
the EAR. The CCL does not include those items exclusively controlled 
for export by another department or agency of the U.S. Government. In 
instances where other agencies administer controls over related items, 
entries in the CCL will contain a reference to these controls. Those 
items subject to the EAR but not specified on the CCL are identified by 
the designator ``EAR99.'' See Sec.  734.2(a) of the EAR for items that 
are ``subject to the EAR.'' You should consult part 738 of the EAR for 
an explanation of the organization of the CCL and its relationship to 
the Country Chart.
    (b) Items that warrant control on the CCL, but for which a 
classification has yet to be determined, are temporarily classified 
under one of the 0Y521 ECCNs (i.e., 0A521, 0B521, 0C521, 0D521 or 
0E521), according to their respective product group, pursuant to Sec.  
742.6(a)(7) of the EAR, while a determination is made as to whether 
classification under a revised or new ECCN, or an EAR99 designation, is 
appropriate. The technical description and list of such items appear in 
Supplement No. 5 to part 774--Items Classified Under ECCNs 0A521, 
0B521, 0C521, 0D521 and 0E521. Items that the U.S. Government 
determines are more appropriately captured under the United States 
Munitions List (USML) Category XXI (Miscellaneous Articles) or other 
USML control, as part of the 0Y521 review process will be controlled as 
such.
    (c) The CCL is contained in Supplement No. 1 to this part, and 
Supplement No. 2 to this part contains the General Technology and 
Software Notes relevant to entries contained in the CCL.

0
13. In Supplement No. 1 to part 774 (the Commerce Control List), 
Category 0--Nuclear Materials, Facilities, and Equipment (and 
Miscellaneous Items), is amended by:
0
a. Adding Export Control Classification Number (ECCN) 0A521 after ECCN 
0A018 and before ECCN 0A918,
0
b. Adding ECCN 0B521 after ECCN 0B006 and before ECCN 0B986;
0
c. Adding ECCN 0C521 after ECCN 0C201 and before the header that reads 
``D. Software'';
0
d. Adding ECCN 0D521 after ECCN 0D001 and before ECCN 0D999; and
0
e. Adding ECCN 0E521 after ECCN 0E018 and before ECCN 0E918, to read as 
follows:

SUPPLEMENT NO. 1 TO PART 774--THE COMMERCE CONTROL LIST

CATEGORY 0--NUCLEAR MATERIALS, FACILITIES, AND EQUIPMENT [AND 
MISCELLANEOUS ITEMS]

A. SYSTEMS, EQUIPMENT AND COMPONENTS

* * * * *

0A521 Any commodity subject to the EAR that is not listed elsewhere in 
the CCL, but which is controlled for export because it provides at 
least a significant military or intelligence advantage to the United 
States or for foreign policy reasons.

    0A521 commodities are subject to RS1 controls with no license 
exception eligibility other than License Exception GOV for U.S. 
Government personnel and agencies under Sec.  740.11(b)(2)(ii) of 
the EAR, or an item-specific license exception identified in 
Supplement No. 5 to part 774 particular to an item covered under 
ECCN 0A521. The list of commodities determined to be classified 
under ECCN 0A521 controls is published in Supplement No. 5 to part 
774. The license requirements and licensing policy relating to ECCN 
0A521 are set forth in Sec.  742.6(a)(7) of the EAR.
* * * * *

B. TEST, INSPECTION AND PRODUCTION EQUIPMENT

* * * * *

0B521 Any commodity subject to the EAR that is not listed elsewhere in 
the CCL, but which is controlled for export because it provides at 
least a significant military or intelligence advantage to the United 
States or for foreign policy reasons.

    0B521 commodities are subject to RS1 controls with no license 
exception eligibility other than License Exception GOV for U.S. 
Government personnel and agencies under Sec.  740.11(b)(2)(ii) of 
the EAR, or an item- specific license exception identified in 
Supplement No. 5 to part 774 particular to an item covered under 
ECCN 0B521. The list of commodities determined to be classified 
under ECCN 0B521 controls is published in Supplement No. 5 to part 
774. The license requirements and licensing policy relating to ECCN 
0B521 are set forth in Sec.  742.6(a)(7) of the EAR.
* * * * *

C. MATERIALS

* * * * *

0C521 Any material subject to the EAR that is not listed elsewhere in 
the CCL, but which is controlled for export because it provides at 
least a significant military or intelligence advantage to the United 
States or for foreign policy reasons.

    0C521 materials are subject to RS1 controls with no license 
exception eligibility other than License Exception GOV for U.S. 
Government personnel and agencies under Sec.  740.11(b)(2)(ii) of 
the EAR, or an item-specific license exception identified in 
Supplement No. 5 to part 774 particular to an item covered under 
ECCN 0C521. The list of materials determined to be classified under 
ECCN 0C521 controls is published in Supplement No. 5 to part 774. 
The license requirements and licensing policy relating to ECCN 0C521 
are set forth in Sec.  742.6(a)(7) of the EAR.
* * * * *

D. SOFTWARE

* * * * *

0D521 Any software subject to the EAR that is not listed elsewhere in 
the CCL, but which is controlled for export because it provides at 
least a significant military or intelligence advantage to the United 
States or for foreign policy reasons.

    0D521 software is subject to RS1 controls with no license 
exception eligibility other than License Exception GOV for U.S. 
Government personnel and agencies under Sec.  740.11(b)(2)(ii) of 
the EAR, or an item-specific license exception identified in 
Supplement No. 5 to part 774 particular to an item covered under 
ECCN 0D521. The list of software determined to be classified under 
ECCN 0D521 controls is published in Supplement No. 5 to part 774. 
The license requirements and licensing policy relating to ECCN 0D521 
are set forth in Sec.  742.6(a)(7) of the EAR.
* * * * *

E. TECHNOLOGY

* * * * *

0E521 Any technology subject to the EAR that is not listed elsewhere in 
the CCL, but which is controlled for export because it provides at 
least a significant military or intelligence advantage to the United 
States or for foreign policy reasons.

    0E521 technology is subject to RS1 controls with no license 
exception eligibility other than License Exception GOV for U.S.

[[Page 22200]]

Government personnel and agencies under Sec.  740.11(b)(2)(ii) of 
the EAR, or an item-specific license exception identified in 
Supplement No. 5 to part 774 particular to an item covered under 
ECCN 0E521. The list of technologies determined to be classified 
under ECCN 0E521 controls is published in Supplement No. 5 to part 
774. The license requirements and licensing policy relating to ECCN 
0E521 are set forth in Sec.  742.6(a)(7) of the EAR.
* * * * *

0
14. Add and reserve Supplement No. 4 to part 774 to read as follows:

SUPPLEMENT NO. 4 TO PART 774--[RESERVED]

0
15. Add Supplement No. 5 to part 774 to read as follows:

SUPPLEMENT NO. 5 TO PART 774--ITEMS CLASSIFIED UNDER ECCNS 0A521, 
0B521, 0C521, 0D521 AND 0E521

    The following table lists items subject to the EAR that are not 
listed elsewhere in the CCL, but which the Department of Commerce, with 
the concurrence of the Departments of Defense and State, has identified 
warrant control for export or reexport because the items provide at 
least a significant military or intelligence advantage to the United 
States or for foreign policy reasons.

------------------------------------------------------------------------
 
------------------------------------------------------------------------
Item descriptor.   Date of initial    Date when the     Item-specific
Note: The           or subsequent      item will be      license
 description must   BIS                designated        exception
 match by model     classification.    EAR99, unless     eligibility.
 number or a                           reclassified in
 broader                               another ECCN or
 descriptor that                       the 0Y521
 does not                              classification
 necessarily need                      is reissued.
 to be company
 specific.
1. [Reserved]
2. [Reserved]
------------------------------------------------------------------------


    Dated: April 9, 2012.
Kevin J. Wolf,
Assistant Secretary for Export Administration.
[FR Doc. 2012-8944 Filed 4-12-12; 8:45 am]
BILLING CODE 3510-33-P