Clarifications to the Export Administration Regulations for the Use of License Exceptions, 50511-50517 [2017-23712]

Agencies

• DEPARTMENT OF COMMERCE
• Bureau of Industry and Security

[Federal Register Volume 82, Number 210 (Wednesday, November 1, 2017)]
[Rules and Regulations]
[Pages 50511-50517]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-23712]


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DEPARTMENT OF COMMERCE

Bureau of Industry and Security

15 CFR Part 740

[Docket No. 160303181-6181-01]
RIN 0694-AG80


Clarifications to the Export Administration Regulations for the 
Use of License Exceptions

AGENCY: Bureau of Industry and Security, Commerce.

ACTION: Final rule.

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SUMMARY: This final rule makes clarifications to the Export 
Administration Regulations (EAR) to provide guidance based on existing 
agency understanding and practice on the use of two license exceptions. 
Specifically, this final rule makes three clarifications to License 
Exception Governments, International Organizations, International 
Inspections under the Chemical Weapons Convention, and the 
International Space Station (GOV) and adds five notes, along with 
making other minor clarifications, to License Exception Strategic Trade 
Authorization (STA). These revisions respond to questions BIS has 
received about the use of these two EAR license exceptions and provide 
the general public answers to frequently asked questions based on 
existing agency interpretive practice. Therefore, the clarifications in 
this final rule do not change the EAR requirements for the use of the 
license exceptions but are intended to assist exporters new to the EAR.

DATES: This rule is effective November 1, 2017.

FOR FURTHER INFORMATION CONTACT: Timothy Mooney, Regulatory Policy 
Division, Bureau of Industry and Security, Department of Commerce, 
Phone: (202) 482-2440, Fax: (202) 482-3355, Email: [email protected].

SUPPLEMENTARY INFORMATION:

Background

    This final rule revises part 740 of the Export Administration 
Regulations (EAR) by clarifying two license exceptions based on 
existing agency understanding and practice. To provide the general 
public with guidance on using these license exceptions, this final rule 
makes three clarifications to License Exception Governments, 
International Organizations, International Inspections under the 
Chemical Weapons Convention, and the International Space Station (GOV) 
and adds five notes, along with making other minor clarifications, to 
License Exception Strategic Trade Authorization (STA). These changes 
are described below under sections: (A) Clarifications for License 
Exception GOV and (B) Clarifications for License Exception STA.
    With these revisions, BIS is not changing the EAR requirements for 
the use of these license exceptions. Instead, the agency seeks to 
provide sufficient guidance within the EAR to answer questions the 
agency frequently receives from the public as to the application of the 
two license exceptions. These clarifications should be particularly 
helpful to exporters who are new to the EAR, including exporters of 
items that have recently moved to the EAR from the International 
Traffic in Arms Regulations (ITAR) as a result of the United States 
Munitions List to the Commerce Control List review process.

(A) Clarifications for License Exception GOV

    This final rule revises License Exception GOV, Sec.  740.11, to 
make three clarifications. Specifically, this final rule revises 
paragraph (b)(2)(ii); adds a new note to paragraph (b)(2)(iii)(C); and 
adds a new note to paragraph (c)(1). These clarifications do not change 
the applicability or any other requirements of License Exception GOV 
and are limited to providing guidance on how BIS interprets these 
paragraphs of License Exception GOV in response to questions from the 
public.
    Paragraph (b)(2)(ii). The final rule revises paragraph (b)(2)(ii) 
of License Exception GOV to add two sentences to clarify the 
applicability of the term `contractor support personnel,' which is 
defined in paragraph (b)(2)(ii) of License Exception GOV. BIS has 
received questions regarding the locations where `contractor support 
personnel' must work and the level of U.S. Government supervision 
needed for personnel to be considered `contractor support personnel.' 
The first sentence that this final rule adds to paragraph (b)(2)(ii) 
clarifies that `contractor support personnel' is limited to those 
individuals who are providing such support within a U.S. Government 
owned or operated facility or under the direct supervision of a U.S. 
government employee. This final rule adds a parenthetical phrase to 
clarify that a U.S. government employee is an individual directly 
employed by the U.S. Government.
    As an example of persons directly employed who would meet the 
`contractor support personnel' definition, BIS provides the following: 
A U.S. Government agency plans to conduct a study of soy bean 
cultivation in Malaysia and the U.S. Government agency team will 
include three `contractor support personnel' providing scientific 
support to the U.S. Government agency's study. These three `contractor 
support personnel' will work at the U.S. Embassy in Malaysia to process 
and analyze agricultural field data being gathered by U.S. Government 
personnel as part of a study. These individuals meet the definition of 
contractor support personnel in paragraph (b)(2)(ii) because they will 
be working within a U.S. Government-owned and operated facility (a U.S 
embassy) and providing a form of support (scientific support) that is 
identified in the term's definition.
    For an example of persons not directly employed who would be 
outside the scope of the `contractor support personnel' definition, BIS 
provides the following: A U.S. Government agency is evaluating the 
possibility of providing a grant to a company in Kenya that seeks 
financing for building three windmills. To evaluate the feasibility of 
providing a grant, this U.S. Government agency has entered into a 
contract with a U.S. company that provides feasibility analysis for 
windmill locations. To conduct the feasibility analysis study,

[[Page 50512]]

the contractor will need to have certain items exported to it in Kenya. 
Under this example, the contractor, including personnel of the 
contractor, would not constitute `contractor support personnel' because 
it does not meet the definition of `contractor support personnel.' 
Although it is providing scientific analysis for this U.S. Government 
agency under a contract, the analysis is not being conducted at a U.S. 
Government facility or being conducted under the direct supervision of 
an individual directly employed by the U.S. Government agency.
    The second sentence this final rule adds to paragraph (b)(2)(ii) 
clarifies that private security contractors are not `contractor support 
personnel' for purposes of paragraph (b)(2)(ii). This new sentence 
clarifies that although in certain cases private security contractors 
may work within a U.S. Government owned or operated facility, such 
contractors do not provide administrative, managerial, scientific or 
technical support under contract to the U.S. Government, as required 
under the definition of `contractor support personnel.'
    Note 1 to paragraph (b)(2)(iii)(C). Paragraph (b)(2)(iii)(C) of 
License Exception GOV authorizes the temporary export, reexport, or 
transfer (in-country) of an item in support of any foreign assistance 
or sales program authorized by law and subject to the control of the 
President by other means, when the criteria specified in this paragraph 
are met. This final rule adds a new note to paragraph (b)(2)(iii)(C) of 
License Exception GOV to clarify how BIS interprets the meaning of the 
term `temporary' for purposes of this paragraph. The new note clarifies 
that within the context of the authorization available in paragraph 
(b)(2)(iii)(C), `temporary' means that within no more than four years 
from the date of an item's initial export, reexport, or transfer (in-
country), it must be returned to the exporter, reexporter or transferor 
or its disposition otherwise authorized (e.g., pursuant to a license or 
another license exception) in accordance with the EAR. As a conforming 
change to this new note to paragraph (b)(2)(iii)(C), this final rule 
revises the introductory text of paragraph (b)(2)(iii)(C) to add single 
quotes around the term `temporary.'
    Note 1 to paragraph (c)(1). Paragraph (c) of License Exception GOV 
authorizes certain exports, reexports, and transfers (in-country) to 
agencies of cooperating governments or agencies of the North Atlantic 
Treaty Organization (NATO). Paragraph (c)(1) defines `Agency of a 
cooperating government' for purposes of this paragraph of License 
Exception GOV. This final rule adds a new note to paragraph (c)(1) of 
License Exception GOV to clarify that civil intergovernmental 
organizations in which the membership is limited to national 
governments that are `cooperating governments' are also considered 
`cooperating governments' for purposes of paragraph (c)(1). The new 
note provides an example of a civil intergovernmental organization, the 
European Space Agency (ESA), which BIS has determined to fall within 
the scope of the definition of `cooperating governments.' ESA (and 
other civil intergovernmental organizations) are considered 
`cooperating governments' because their membership is limited to 
`cooperating governments'--meaning that if an export was made directly 
to any of organization's national government members, License Exception 
GOV would be available. On this basis, BIS does not exclude exports, 
reexports and transfers (in-country) made to ESA (and any other civil 
intergovernmental organization whose members are `cooperating 
governments') from License Exception GOV. The purpose of this paragraph 
(c)(1) is to clarify that the fact that two or more `cooperating 
governments' are working together does not change the policy rationale 
for why the United States Government intends to authorize such exports, 
reexports, and transfers (in-country). However, this final rule adds a 
second sentence to the note to paragraph (c)(1) to clarify that if the 
membership of the civil intergovernmental organization involves any 
national governments or other organizations that are not `cooperating 
governments,' such civil intergovernmental organizations are not 
considered cooperating governments for purposes of paragraph (c)(1), 
and a third sentence to provide three illustrative examples of civil 
intergovernmental organizations that are excluded based on this 
criteria. This third sentence also clarifies that this exclusion 
applies even when some or all of the `cooperating governments' are 
members of the civil intergovernmental organization. This final rule 
provides the European Aviation Safety Agency (EASA), the United 
Nations, and the World Bank as three examples of civil 
intergovernmental organizations that include members that are 
`cooperating governments' along with members that are not `cooperating 
governments,' with the inclusion of the latter group meaning that these 
civil intergovernmental organizations are not within the scope of 
paragraph (c)(1).

(B) Clarifications for License Exception STA

    This final rule revises License Exception STA, Sec.  740.20, to add 
five new clarification notes, along with making other minor 
clarifications. Specifically, this final rule adds the following notes 
to License Exception STA: Note 1 to paragraph (a) for applicability of 
transfers (in-country) under STA; Note 1 to paragraphs (b)(2) and 
(b)(3) for staying within the scope of the original authorization; Note 
1 to paragraph (d)(2) for multiple consignees on a single prior 
consignee statement and minor clarifications to the text of paragraph 
(d)(2); and Note 2 to paragraph (d)(2) for exclusion for government 
consignees from prior consignee statement; and Note 1 to paragraph 
(d)(3) for exclusion for intangible exports, reexports or transfers 
(in-country). These new notes, along with the other minor 
clarifications, do not change the applicability or any other 
requirements of License Exception STA and simply provide guidance on 
how BIS interprets these provisions of License Exception STA. These new 
notes are consistent with the agency's responses to questions at 
numerous outreach events and in the Frequently Asked Questions (FAQs) 
available on the agency's Web site.
    Note 1 to paragraph (a) for applicability of transfers (in-country) 
under STA. This final rule adds a new note to paragraph (a) to License 
Exception STA. This new note provides guidance on when License 
Exception STA may be used to authorize transfers (in-country) in 
response to questions from the public about its applicability. The 
purpose of this note to paragraph (a) is to explain why transfers (in-
country) are included in License Exception STA and describe how this 
term is applied in the context of this license exception. Under the 
EAR, outside of prohibited end uses and end users and ``knowing'' 
violations, the transactions where most transferors will need an EAR 
authorization is when the original export, reexport, or transfer (in-
country) was authorized under a BIS license and the consignee will make 
a transfer (in-country) that goes outside the scope of the license. 
License Exception STA would be available to authorize such transfers 
(in-country), provided all the applicable requirements of License 
Exception STA were met, such as obtaining a prior consignee statement 
from the consignee in-country. If the transfer (in-country) did not 
require an authorization, such as for exports received under License 
Exception STA, an authorization is not

[[Page 50513]]

required for subsequent transfers (in-country), provided no prohibited 
end uses, end-users or ``knowing'' violations were involved in the 
transfer (in-country). These nuances on the application of transfers 
(in-country) are sometimes not well understood because some people 
incorrectly assume that the way to determine license requirements for 
exports and reexports is the same way to determine license requirements 
for transfers (in-country). The note to paragraph (a) also specifies 
that when a transfer (in-country) is not being made under STA, then the 
STA requirements do not apply. The note to paragraph (a) includes a 
parenthetical phrase with a reference to see the note to paragraphs 
(b)(2) and (b)(3) of License Exception STA for requirements specific to 
staying within the scope of the original License Exception STA 
authorization, which is described in more detail below.
    Note 1 to paragraphs (b)(2) and (b)(3). This final rule adds a new 
Note 1 to paragraphs (b)(2) and (b)(3) to License Exception STA. This 
new note to paragraphs (b)(2) and (b)(3) clarifies that for ``600 
series'' items authorized under License Exception STA, the items must 
be provided to an eligible ultimate end user, such as a Country Group 
A:5 military, to stay in compliance with the original authorization. 
The new note refers to this concept as `completing the chain,' which 
means that regardless of how many times the ``600 series'' item is 
transferred (in-country) or whether the ``600 series'' item is 
incorporated into higher level assemblies or other items or not, the 
``600 series'' item must ultimately be provided to an eligible ultimate 
end user or be otherwise authorized under the EAR. Lastly, the new note 
to paragraphs (b)(2) and (b)(3) clarifies that because the other items 
eligible for authorization under License Exception STA (i.e., 9x515 and 
other non-600 series ECCNs) do not include the ``600 series'' 
requirements specific to ultimate end user, the `completing the chain' 
concept does not apply to 9x515 and other non-600 series Export Control 
Classification Numbers (ECCNs) authorized under License Exception STA. 
However, the original export, reexport, or transfer (in-country) must 
be completed within the terms and conditions of the original License 
Exception STA authorization. As noted above, this clarification is 
specific to existing EAR requirements; the new note to paragraphs 
(b)(2) and (b)(3) does not change any License Exception STA 
requirements but rather provides guidance on how these existing EAR 
requirements are applied in the context of License Exception STA, in 
particular as it relates to the ``600 series.''
    Adding greater specificity to paragraph (d)(1). This final rule 
revises paragraph (d)(1) (Requirement to furnish Export Control 
Classification Number) of License Exception STA to remove the undefined 
terms ``shipment'' in four places and ``shipped'' in two places and add 
in their place the defined terms ``export'' in paragraph (d)(1)(i) and 
``reexport or transfer (in-country)'' in paragraph (d)(1)(ii). In the 
context of paragraph (d)(1), the requirement to furnish the ECCN is 
intended to apply to all exports, reexports, or transfers (in-country) 
under License Exception STA, and is consistent with how the agency has 
interpreted this paragraph. This final rule clarifies the intent of 
this paragraph (d)(1) by removing the undefined term ``shipment'' and 
adding in its place defined terms that provide greater specificity on 
the intended scope of this paragraph (d)(1). This final rule makes 
similar clarifications as described below to paragraphs (d)(2) and 
(d)(3) to improve the clarity of these paragraphs.
    Paragraph (d)(2) for multiple consignees on a single prior 
consignee statement. This final rule revises paragraph (d)(2) (Prior 
Consignee Statement) of License Exception STA to make four 
clarifications to paragraph (d)(2): Adding greater specificity to the 
introductory text as it relates to the undefined term ``shipment;'' 
adding two new notes to paragraph (d)(2); clarifying the term 
`description'' in paragraph (d)(2)(i); and making certain terms plural 
in the text. Because of past issues with the incorporation of revisions 
to paragraph (d)(2), in particular some of the undesignated text 
included in that paragraph, in this final rule BIS is revising the 
entire paragraph to ensure the intended revisions are incorporated 
correctly. The clarifications to paragraph (d)(2) are described in the 
next four paragraphs.
    Similar to the changes described above for paragraph (d)(1), this 
final rule revises the introductory text of paragraph (d)(2) to remove 
the undefined term ``shipment'' in one place and the undefined term 
``shipping'' in another, and add in their place the defined terms 
``exports, reexports, or transfers (in-country).'' This final rule does 
not remove the undefined term ``shipment'' in the two additional 
instances where the term is used in the introductory text of paragraph 
(d)(2), which specifies the requirement to maintain a log or other 
record. This is because the requirement to maintain a log or other 
record is not intended to apply to intangible (i.e., electronic or in 
an otherwise intangible form) exports, reexports, or transfers (in-
country). BIS adds a sentence clarifying this for purposes of License 
Exception STA in this final rule. BIS has based this existing agency 
practice and interpretation on the use of the term ``shipment'' when 
referring to a log or other record to mean that the original intent of 
this License Exception STA requirement was not to apply the requirement 
to intangible exports, reexports, or transfers (in-country). Because of 
the frequency at which intangible exports, reexports, or transfers (in-
country) often occur, it would have been impractical to impose a log or 
other record requirement for such exports, reexports or transfers (in-
country). For example, for a technical work team located at a U.S. 
parent company that is collaborating with a technical work team in the 
United Kingdom (a Country Group A:5 Country), there may be dozens or 
hundreds of intangible exports that occur during a teleconference or 
telephone call that are authorized under License Exception STA. 
Although the party making the intangible export, reexport, or transfer 
(in-country) and the party receiving the technology or software are 
responsible for complying with the other requirements of License 
Exception STA, which are suitable for keeping an intangible export, 
reexport, or transfer (in-country) within the scope of License 
Exception STA, the party making the intangible export, reexport, or 
transfer (in-country) is not burdened with trying to keep a log or 
other record, the requirement for which was appropriate and intended 
for a tangible shipment but was not intended for intangible exports, 
reexports, or transfers (in-country). The changes included in this rule 
will make this interpretation clearer to the public. This new sentence 
also specifies that an exporter, reexporter, or transferor is required, 
prior to making any export, reexport or transfer (in-country), 
including those that are intangible, to ensure that a prior consignee 
statement has been obtained pursuant to the requirements of paragraph 
(d)(2). This final rule also adds a parenthetical phrase to include a 
cross reference to Note 1 to paragraph (d)(3), which provides 
additional guidance on intangible exports, reexports and transfers (in-
country) under License Exception STA. BIS also has posted on the BIS 
Web site best practices for managing intangible exports, reexports, and 
transfers (in-country) under the EAR. BIS encourages any party involved 
in intangible exports, reexports, or

[[Page 50514]]

transfers (in-country) to review this guidance.
    This final rule adds a new Note 1 to paragraph (d)(2) to clarify an 
existing BIS policy that allows for multiple consignees to be listed on 
a single prior consignee statement, provided certain requirements are 
met. This new Note 1 to paragraph (d)(2) addresses scenarios when 
multiple consignees who form a network engaged in a production process 
(or other type of collaborative activity, such as joint development) 
will be receiving items under License Exception STA. In such cases, it 
is existing BIS policy to allow the use of a single consignee statement 
identifying multiple consignees, provided all the applicable 
requirements of License Exception STA are met, including those 
specified in paragraph (d)(2).
    This final rule revises paragraph (d)(2)(i) by adding the term 
``GENERAL'' before the term ``DESCRIPTION'' and adding the 
parenthetical phrase, ``aircraft parts and components classified under 
ECCN 9A610,'' to provide an example of the level of specificity that 
BIS intends for the description on the prior consignee statement. BIS 
has received questions from the public asking whether the term 
``description'' used in paragraph (d)(2)(i) is intended to mean that 
the prior consignee must include the make and model number of each part 
or component that the consignee would receive under License Exception 
STA. The term ``DESCRIPTION,'' as used in paragraph (d)(2)(i), does not 
require that level of specificity, as clarified by the changes in this 
final rule.
    Lastly, specific to the clarifications to paragraph (d)(2), this 
final rule adds an ``(s)'' to the end of the term ``CONSIGNEE'' in the 
introductory text of paragraph (d)(2) and adds an ``(S)'' to the end of 
the terms ``TITLE,'' ``NAME,'' and ``PERSON'' in the undesignated text 
at the end of paragraph (d)(2)(viii). These changes, along with the new 
Note 1 to paragraph (d)(2), make explicit that it is permissible to 
list multiple consignees on a single consignee statement.
    Note 2 to paragraph (d)(2) for exclusion for government consignees 
from prior consignee statement. This final rule adds Note 2 to 
paragraph (d)(2) to exclude Country Group A:5 and A:6 government 
consignees from the requirement to sign or provide a prior consignee 
statement to an exporter, reexporter, or transferor under License 
Exception STA. In particular, for ``600 series'' items authorized under 
License Exception STA for Country Group A:5 governments, requiring 
government end users to provide a prior consignee statement makes 
little sense, given that the goal of License Exception STA is to get 
these ``600 series'' items to Country Group A:5 governments for their 
ultimate end use (one of the three permissible ultimate end uses for 
``600 series'' items authorized under License Exception STA). In 
addition, this existing interpretation of agency practice takes into 
account that under the other likely license exception under which such 
governments may receive items, License Exception GOV, such a signature 
on a prior consignee statement is not required. This is an existing 
interpretation of agency practice that BIS is making explicit in the 
regulatory text. BIS has provided similar guidance to the public, 
including to Country Group A:5 and A:6 governments.
    Note 1 to paragraph (d)(3) for exclusion for intangible exports, 
reexports or transfers (in-country). This final rule adds a new Note 1 
to paragraph (d)(3) to specify that intangible exports, reexports, and 
transfers (in-country) made under License Exception STA are not subject 
to the notification requirements of paragraph (d)(3). The new note to 
paragraph (d)(3) also specifies that the requirements of paragraph 
(d)(1) and (d)(2) still apply, including to intangible exports, 
reexports, or transfers (in-country) made under License Exception STA. 
The specification in the new note to paragraph (d)(3) is consistent 
with the requirement discussed above for the new Note 1 to paragraphs 
(b)(2) and (b)(3) that any export, reexport or transfer (in-country) 
made under STA must stay within the scope of the authorization. As 
noted above in the explanation of the changes to paragraph (d)(2), BIS 
has posted on the BIS Web site best practices for managing intangible 
exports, reexports, and transfers (in-country) under the EAR. BIS 
encourages any party involved in intangible exports, reexports, or 
transfers (in-country) to review this guidance.

Export Administration Act of 1979

    Although the Export Administration Act of 1979 expired on August 
20, 2001, the President, through Executive Order 13222 of August 17, 
2001, 3 CFR, 2001 Comp., p. 783 (2002), as amended by Executive Order 
13637 of March 8, 2013, 78 FR 16129 (March 13, 2013), and as extended 
by the Notice of August 15, 2017, 82 FR 39005 (August 16, 2017), 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 of 1979, as appropriate 
and to the extent permitted by law, pursuant to Executive Order 13222, 
as amended by Executive Order 13637.

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 final rule has been determined to be not significant 
for purposes of Executive Order 12866. This rule is not an Executive 
Order 13771 regulatory action because this rule is not significant 
under Executive Order 12866.
    2. Notwithstanding any other provision of law, no person is 
required to respond to nor 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 regulation involves 
collections previously approved by OMB under control number 0694-0088, 
Simplified Network Application Processing System, which includes, among 
other things, license applications and carries a burden estimate of 
43.8 minutes for a manual or electronic submission. Total burden hours 
associated with the PRA and OMB control number 0694-0088 are not 
expected to increase as a result of this rule. You may send comments 
regarding the collection of information associated with this rule, 
including suggestions for reducing the burden, to Jasmeet K. Seehra, 
Office of Management and Budget (OMB), by email to 
[email protected], or by fax to (202) 395-7285.
    3. This rule does not contain policies with Federalism implications 
as that term is defined under E.O. 13132.
    4. The Department finds that there is good cause under 5 U.S.C. 
553(b)(B) to waive the provisions of the Administrative Procedure Act 
requiring prior notice and the opportunity for public comment because 
they are either unnecessary or contrary to the public interest. BIS is 
making the changes to its regulations described above to provide 
guidance on existing interpretations of

[[Page 50515]]

current EAR provisions, and thus prior notice and the opportunity for 
public comment is contrary to the public interest. The guidance 
included in this final rule has been provided to many members of the 
public in the past (e.g., those persons that have attended BIS outreach 
events, asked these types of application questions to BIS by phone, 
email or in writing, or read certain FAQs posted on the BIS Web site 
dealing with these EAR provisions). Importantly, this is also the same 
guidance that would be provided to any other member of the public that 
asked the same questions to BIS dealing these EAR provisions. BIS's 
purpose with publishing this final rule is not to change the 
application of these provisions but to more efficiently communicate the 
existing agency guidance and interpretation of these provisions by 
clarifying the regulations. This will benefit members of the public 
because they will be able to more easily understand and apply these 
provisions, which are consistent with past agency guidance and 
interpretations provided to other members of the public. BIS finds good 
cause to waive the 30-day delay in effectiveness under 5 U.S.C. 
553(d)(3). This rule does not change the requirements or obligations of 
persons under the EAR, so a 30-day delay in effectiveness is not 
needed. Because a notice of proposed rulemaking and an opportunity for 
public comment are not required to be given for these amendments by 5 
U.S.C. 553, or by any other law, the analytical requirements of the 
Regulatory Flexibility Act, 5 U.S.C. 601 et seq., are not applicable.

List of Subjects in 15 CFR Part 740

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

    Accordingly, part 740 of the Export Administration Regulations (15 
CFR parts 730-774) is amended as follows:

PART 740--[AMENDED]

0
1. The authority citation for 15 CFR part 740 continues to read as 
follows:

    Authority:  50 U.S.C. 4601 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 15, 2017, 82 FR 39005 (August 16, 2017).


0
2. Section 740.11 is amended:
0
a. By revising paragraph (b)(2)(ii);
0
b. By revising the introductory text of paragraph (b)(2)(iii)(C);
0
c. By adding Note 1 to paragraph (b)(2)(iii)(C); and
0
d. By adding Note 1 to paragraph (c)(1) to read as follows:


Sec.  740.11   Governments, International Organizations, International 
Inspections under the Chemical Weapons Convention, and the 
International Space Station (GOV).

* * * * *
    (b) * * *
    (2) * * *
    (ii) Exports, reexports, and transfers (in-country) made by or 
consigned to a department or agency of the U.S. Government. This 
paragraph authorizes exports, reexports, and transfers of items when 
made by or consigned to a department or agency of the U.S. Government 
solely for its official use or for carrying out any U.S. Government 
program with foreign governments or international organizations that is 
authorized by law and subject to control by the President by other 
means. This paragraph does not authorize a department or agency of the 
U.S. Government to make any export, reexport, or transfer that is 
otherwise prohibited by other administrative provisions or by statute. 
Contractor support personnel of a department or agency of the U.S. 
Government are eligible for this authorization when in the performance 
of their duties pursuant to the applicable contract or other official 
duties. `Contractor support personnel' for the purpose of this 
provision means those persons who provide administrative, managerial, 
scientific or technical support under contract to a U.S. Government 
department or agency (e.g., contractor employees of Federally Funded 
Research Facilities or Systems Engineering and Technical Assistance 
contractors). The term `contractor support personnel' for purposes of 
this paragraph (b)(2)(ii) is limited to those individuals who are 
providing such support within a U.S. Government owned or operated 
facility or under the direct supervision of a U.S. government employee 
(i.e., an individual directly employed by the U.S. Government). Private 
security contractors are not `contractor support personnel' for 
purposes of this paragraph (b)(2)(ii) because although they may work 
within a U.S. Government owned or operated facility, such contractors 
do not provide administrative, managerial, scientific or technical 
support under contract to the U.S. Government. This authorization is 
not available when a department or agency of the U.S. Government acts 
as a transmittal agent on behalf of a non-U.S. Government person, 
either as a convenience or in satisfaction of security requirements.
    (iii) * * *
    (C) This paragraph authorizes the `temporary' export, reexport, or 
transfer (in-country) of an item in support of any foreign assistance 
or sales program authorized by law and subject to the control of the 
President by other means, when:
* * * * *

    Note 1 to paragraph (b)(2)(iii)(C): `Temporary,' for purposes of 
paragraph (b)(2)(iii)(C) of this section, means that four years from 
the date of an item's initial export, reexport, or transfer (in-
country), it must be returned to the exporter, reexporter, or 
transferor or its disposition otherwise authorized (e.g., pursuant 
to a license or another license exception) in accordance with the 
EAR.

* * * * *
    (c) * * *
    (1) * * *

    Note 1 to paragraph (c)(1): Civil intergovernmental 
organizations (such as the European Space Agency (ESA)) where the 
membership is limited to national governments that are `cooperating 
governments' are also considered `cooperating governments' for 
purposes of paragraph (c)(1) of this section. If the membership of 
the civil intergovernmental organization includes any national 
governments or other organizations that are not `cooperating 
governments,' such civil intergovernmental organizations are not 
considered `cooperating governments' for purposes of paragraph 
(c)(1) of this section. For example, civil intergovernmental 
organizations such as the European Aviation Safety Agency (EASA), 
the United Nations, and the World Bank do not fall within paragraph 
(c)(1) of this section because their membership includes governments 
that are not `cooperating governments.'

* * * * *


0
3. Section 740.20 is amended:
0
a. By adding Note 1 to paragraph (a);
0
b. By adding Note 1 to paragraphs (b)(2) and (b)(3) at the end of 
paragraph (b)(3);
0
c. By revising paragraphs (d)(1)(i) and (d)(1)(ii);
0
d. By revising paragraph (d)(2); and
0
e. By adding Note 1 to paragraph (d)(3) to read as follows:


Sec.  740.20   License Exception Strategic Trade Authorization (STA).

* * * * *
    (a) * * *

    Note 1 to paragraph (a): License Exception STA authorizes 
transfers (in-country) but is only needed to authorize a transfer 
(in-country) when an EAR authorization is required. If a transfer 
(in-country) is not being made under STA, the requirements specified 
in this section do not apply (see Note 1 to paragraphs (b)(2) and 
(b)(3) of this section for requirements specific to staying within 
the scope of the original License Exception STA authorization and 
the concept of `completing the chain' for purposes of ``600 series'' 
items originally authorized under License Exception STA).

    (b) * * *

[[Page 50516]]

    (3) * * *

    Note 1 to paragraphs (b)(2) and (b)(3): Any export, reexport, or 
transfer (in-country) originally authorized under License Exception 
STA must stay within the scope of the original authorization. For 
example, for ``600 series'' items authorized under License Exception 
STA, such items must be provided to an eligible ultimate end user, 
such as a Country Group A:5 military, to stay in compliance with the 
original authorization. This requirement for the ``600 series'' is 
referred to as `completing the chain,' meaning regardless of how 
many times the ``600 series'' item is transferred (in-country) or 
whether the ``600 series'' item is incorporated into higher level 
assemblies or other items, the ``600 series'' item must ultimately 
be provided to an eligible ultimate end user, or be otherwise 
authorized under the EAR. This applies regardless of whether the 
``600 series'' item has been incorporated into a foreign-made item 
that may no longer be ``subject to the EAR.'' Because the other 
items eligible for authorization under License Exception STA (9x515 
and other non-600 series ECCNs) do not include the ``600 series'' 
requirements specific to ultimate end user, this `completing the 
chain' concept does not apply to 9x515 and other non-600 series 
ECCNs authorized under License Exception STA. However, the original 
export, reexport, or transfer (in-country) made under License 
Exception STA for 9x515 and other non-600 series ECCNs still must 
comply with the original authorization--meaning the terms and 
conditions of License Exception STA.

* * * * *
    (d) Conditions--(1) Requirement to furnish Export Control 
Classification Number. (i) The exporter must furnish to the consignee 
the ECCN of each item to be exported pursuant to this section. Once 
furnished to a particular consignee, the ECCN that applies to any item 
need not be refurnished to that consignee at the time the same exporter 
makes an additional export of the same item, if the information remains 
accurate at the time of the additional export.
    (ii) A reexporter or transferor must furnish to subsequent 
consignees the ECCN, provided by the exporter or a prior reexporter or 
transferor, of each item to be reexported or transferred (in-country) 
pursuant to this section. Once furnished to a particular consignee, the 
ECCN that applies to any item need not be refurnished to that consignee 
at the time the same reexporter or transferor makes an additional 
reexport or transfer (in-country) of the same item, if the information 
remains accurate at the time of the additional reexport or transfer 
(in-country).
* * * * *
    (2) Prior Consignee Statement. The requirements in this paragraph 
(d)(2) apply to each party using License Exception STA to export, 
reexport, or transfer (in-country), including reexporters and 
transferors of items previously received under License Exception STA. 
The exporter, reexporter, or transferor must obtain the following 
statement in writing from its consignee(s) prior to exporting, 
reexporting, or transferring (in-country) the item and must retain the 
statement in accordance with part 762 of the EAR. One statement may be 
used for multiple exports, reexports, or transfers (in-country) of the 
same items between the same parties so long as the party names, the 
description(s) of the item(s) and the ECCNs are correct. The exporter, 
reexporter, or transferor must maintain a log or other record (such as 
documents created in the ordinary course of business) that identifies 
each shipment made pursuant to this section and the specific consignee 
statement that is associated with each shipment. For purposes of this 
paragraph (d)(2), a log or other record is not required for intangible 
(i.e., electronic or in an otherwise intangible form) exports, 
reexports, or transfers (in-country) made under License Exception STA, 
but an exporter, reexporter, or transferor is required, prior to making 
any export, reexport, or transfer (in-country), to ensure that a prior 
consignee statement has been obtained pursuant to the requirements of 
this paragraph (d)(2). (See Note 1 to paragraph (d)(3) of this section 
for additional guidance on intangible exports, reexports, and transfers 
(in-country), including best practices). Paragraphs (d)(2)(i) through 
(vi) of this section are required for all transactions. In addition, 
paragraph (d)(2)(vii) is required for all transactions in ``600 
series'' items and paragraph (viii) of this section is required for 
transactions in ``600 series'' items if the consignee is not the 
government of a country listed in Country Group A:5 (See supplement no. 
1 to part 740 of the EAR). Paragraph (d)(2)(viii) is also required for 
transactions including 9x515 items.


[INSERT NAME(S) OF CONSIGNEE(S)]:
    (i) Is aware that [INSERT GENERAL DESCRIPTION AND APPLICABLE 
ECCN(S) OF ITEMS TO BE SHIPPED (e.g., aircraft parts and components 
classified under ECCN 9A610)] will be shipped pursuant to License 
Exception Strategic Trade Authorization (STA) in Sec.  740.20 of the 
United States Export Administration Regulations (15 CFR 740.20);
    (ii) Has been informed of the ECCN(s) noted above by [INSERT NAME 
OF EXPORTER, REEXPORTER OR TRANSFEROR];
    (iii) Understands that items shipped pursuant to License Exception 
STA may not subsequently be reexported pursuant to paragraphs (a) or 
(b) of License Exception APR (15 CFR 740.16(a) or (b));
    (iv) Agrees to obtain a prior consignee statement when using 
License Exception STA for any reexport or transfer (in-country) of 
items previously received under License Exception STA;
    (v) Agrees not to export, reexport, or transfer these items to any 
destination, use or user prohibited by the United States' Export 
Administration Regulations;
    (vi) Agrees to provide copies of this document and all other 
export, reexport, or transfer records (i.e., the documents described in 
15 CFR part 762) relevant to the items referenced in this statement to 
the U.S. Government as set forth in 15 CFR 762.7;
    (vii) Understands that License Exception STA may be used to export, 
reexport, and transfer (in-country) ``600 series'' items to persons, 
whether non-governmental or governmental, only if they are in and, for 
natural persons, nationals of a country listed in Country Group A:5 
(See supplement no. 1 to part 740 of the EAR) or the United States and 
if:
    (A) The ultimate end user for such items is the armed forces, 
police, paramilitary, law enforcement, customs, correctional, fire, or 
a search and rescue agency of a government of one of the countries 
listed in Country Group A:5 or the United States Government;
    (B) For the ``development,'' ``production,'' operation, 
installation, maintenance, repair, overhaul, or refurbishing of an item 
in one of the countries listed in Country Group A:5 or the United 
States that will be for one, or more, of the following purposes:
    (1) Ultimately to be used by any such government agencies in one of 
the countries listed in Country Group A:5 or the United States 
Government; or
    (2) Sent to a person in the United States and not for subsequent 
export under Sec.  740.9(b)(1) (License Exception TMP for items moving 
in transit through the United States); or
    (C) The United States Government has otherwise authorized the 
ultimate end use, the license or other authorization is in effect, and 
the consignee verifies in writing that such authorization exists and 
has provided the license or other approval identifier to the exporter, 
reexporter or transferor (as applicable).
    (viii) Agrees to permit a U.S. Government end-use check with 
respect to the items.

    [INSERT NAME(S) AND TITLE(S) OF PERSON(S) SIGNING THIS

[[Page 50517]]

DOCUMENT, AND DATE(S) DOCUMENT IS SIGNED].

    Note 1 to paragraph (d)(2): When multiple consignees who form a 
network engaged in a production process (or other type of 
collaborative activity, such as joint development) will be receiving 
items under License Exception STA, a single prior consignee 
statement for multiple consignees may be used for any item eligible 
for export, reexport, or transfer (in-country) under License 
Exception STA, provided all of the applicable requirements of 
License Exception STA are met, including those specified in 
paragraph (d)(2).


    Note 2 to paragraph (d)(2):  Country Group A:5 and A:6 
government consignees are not required to sign or provide a prior 
consignee statement.

    (3) * * *

    Note 1 to paragraph (d)(3): While the exporter, reexporter, and 
transferor must furnish the applicable ECCN and obtain a consignee 
statement prior to export, reexport or transfer (in-country) made 
under License Exception STA in accordance with the requirements of 
paragraphs (d)(1) and (d)(2) of this section, intangible (i.e., 
electronic or in an otherwise intangible form) exports, reexports, 
and transfers (in-country) made under License Exception STA are not 
subject to the notification requirements of paragraph (d)(3) of this 
section. However, any export, reexport, or transfer (in-country) 
made under STA must stay within the scope of the original 
authorization.

* * * * *

    Dated: October 26, 2017.
Richard E. Ashooh,
Assistant Secretary for Export Administration.
[FR Doc. 2017-23712 Filed 10-31-17; 8:45 am]
 BILLING CODE 3510-33-P