Foreign-Direct Product Rules: Organization, Clarification, and Correction, 6022-6026 [2022-02302]

Download as PDF 6022 Federal Register / Vol. 87, No. 23 / Thursday, February 3, 2022 / Rules and Regulations frequent and routine amendments are necessary to keep them operationally current. It, therefore—(1) is not a ‘‘significant regulatory action’’ under Executive Order 12866; (2) is not a ‘‘significant rule’’ under DOT Regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and (3) does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. For the same reason, the FAA certifies that this amendment will not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act. Lists of Subjects in 14 CFR Part 97; Air Traffic Control, Airports, Incorporation by reference, Navigation (Air). Issued in Washington, DC, on January 21, 2022. Thomas J. Nichols, Aviation Safety, Flight Standards Service, Manager, Standards Section, Flight Procedures & Airspace Group, Flight Technologies & Procedures Division. Adoption of the Amendment Accordingly, pursuant to the authority delegated to me, Title 14, Code of Federal Regulations, Part 97 (14 CRF part 97) is amended by establishing, amending, suspending, or removing Standard Instrument Approach Procedures and/or Takeoff Minimums and Obstacle Departure Procedures effective at 0901 UTC on the dates specified, as follows: PART 97—STANDARD INSTRUMENT APPROACH PROCEDURES 1. The authority citation for part 97 continues to read as follows: ■ Authority: 49 U.S.C. 106(f), 106(g), 40103, 40106, 40113, 40114, 40120, 44502, 44514, 44701, 44719, 44721–44722. 2. Part 97 is amended to read as follows: khammond on DSKJM1Z7X2PROD with RULES ■ [FR Doc. 2022–02137 Filed 2–2–22; 8:45 am] BILLING CODE 4910–13–P Effective 24 March 2022 Siloam Springs, AR, KSLG, RNAV (GPS) RWY 18, Amdt 2 Prescott, AZ, KPRC, VOR RWY 12, Amdt 3 Fresno, CA, KFCH, RNAV (GPS) RWY 12, Amdt 1A Hanford, CA, KHJO, VOR–A, Amdt 10, CANCELLED Napa, CA, KAPC, RNAV (GPS) RWY 6, Amdt 3 Napa, CA, KAPC, VOR RWY 6, Amdt 15 Ontario, CA, KONT, RNAV (RNP) Z RWY 26L, Amdt 3 Ontario, CA, KONT, RNAV (RNP) Z RWY 26R, Amdt 3 Ontario, CA, Ontario International Airport, Takeoff Minimums and Obstacle DP, Amdt 9A VerDate Sep<11>2014 16:34 Feb 02, 2022 Jkt 256001 Rio Vista, CA, O88, RNAV (GPS) RWY 25, Amdt 4 Salinas, CA, KSNS, RNAV (GPS) RWY 8, Orig Tulare, CA, KTLR, VOR RWY 13, Amdt 2A, CANCELLED Alamosa, CO, KALS, ILS OR LOC RWY 2, Amdt 3 Alamosa, CO, KALS, RNAV (GPS) RWY 2, Amdt 2 Alamosa, CO, KALS, RNAV (GPS) RWY 20, Amdt 2 Alamosa, CO, KALS, VOR–B, Amdt 6 Fort Collins/Loveland, CO, KFNL, ILS OR LOC RWY 33, Amdt 7 Fort Collins/Loveland, CO, KFNL, RNAV (GPS) RWY 15, Orig-C Fort Collins/Loveland, CO, KFNL, RNAV (GPS) RWY 33, Amdt 2 Donalsonville, GA, 17J, RNAV (GPS) RWY 1, Amdt 2 Donalsonville, GA, 17J, RNAV (GPS) RWY 19, Amdt 2 Wellington, KS, KEGT, VOR RWY 18, Amdt 3, CANCELLED Falmouth, MA, 5B6, RNAV (GPS) RWY 7, Orig Falmouth, MA, 5B6, RNAV (GPS) RWY 25, Orig Falmouth, MA, Falmouth Airpark, Takeoff Minimums and Obstacle DP, Orig Coldwater, MI, KOEB, VOR RWY 7, Amdt 5B, CANCELLED Coldwater, MI, KOEB, VOR/DME RWY 25, Orig-B, CANCELLED Detroit, MI, KDET, RNAV (GPS) RWY 15, Orig-D Bowling Green, MO, H19, RNAV (GPS) RWY 13, Amdt 1 Bowling Green, MO, H19, RNAV (GPS) RWY 31, Amdt 1 Bowling Green, MO, Bowling Green Muni, Takeoff Minimums and Obstacle DP, Amdt 1 Keene, NH, KEEN, ILS OR LOC RWY 2, Amdt 6 Saranac Lake, NY, KSLK, RNAV (GPS) RWY 23, Amdt 2 Columbus, OH, KCMH, RNAV (RNP) Z RWY 28L, Amdt 2A Albany, OR, S12, VOR–A, Amdt 5 Elizabethton, TN, 0A9, RNAV (GPS) RWY 6, Amdt 1 Decatur, TX, KLUD, RNAV (GPS) RWY 35, Orig-C DEPARTMENT OF COMMERCE Bureau of Industry and Security 15 CFR Parts 734, 736, 744, and 774 [Docket No. 220127–0035] RIN 0694–AI61 Foreign-Direct Product Rules: Organization, Clarification, and Correction Bureau of Industry and Security, Department of Commerce. AGENCY: PO 00000 Frm 00006 Fmt 4700 Sfmt 4700 ACTION: Final rule. The Bureau of Industry and Security (BIS) is clarifying, reorganizing, and making minor corrections to the provisions of the foreign-direct product (FDP) rules. Before this final rule, the FDP rules appeared in parts 736 and 744 of the Export Administration Regulations (EAR); now, the rules are consolidated in part 734 of the EAR. These revisions clarify the applicability of the FDP rules and make one correction applicable to the FDP rules as to the term ‘‘U.S.-origin technology and software.’’ DATES: The effective date of this rule is February 3, 2022. FOR FURTHER INFORMATION CONTACT: Sharron Cook, 202–482–2440, Sharron.Cook@bis.doc.gov. SUPPLEMENTARY INFORMATION: SUMMARY: Consolidation and Organization of the Foreign-Direct Product (FDP) Rules This final rule consolidates the FDP rules in § 734.9 of the Export Administration Regulations (EAR). Before publication of this rule, the FDP rules were found in § 736.2(b)(3) (General Prohibition 3) and footnote 1 to supplement no. 4 to part 744 (the Entity List). Placing the FDP rules in part 734 (Scope of the EAR) clarifies that they are used to determine if a foreign-produced item is subject to, and thus within the scope of, the EAR. To further clarify the FPD rules, this rule moves the license requirement, license review policy, and license exception applicability text for listed entities from the Entity List’s footnote 1 to supplement no. 4 to part 744 to § 744.11(a), where the overall license requirements pertaining to listed entities are located. Organization of the FDP Rules In new § 734.9, this rule separates the FDP provisions into four paragraphs: The National Security FDP rule, the 9x515 FDP rule, the ‘‘600 series’’ FDP rule, and the Entity List FDP rule. While the product scope of the first three FDP rules is relatively similar in format, the country scopes of each rule are different. This reorganization and naming of the FDP rules does not make substantive changes to the FDP rules. Rather, it facilitates reference to and compliance with the rules. The original national security-focused FDP rule is now the National Security FDP rule. The provisions of the 9x515 FDP rule and the ‘‘600 series’’ FDP rule are reorganized into separate paragraphs with a description of the product scope followed by the country scope. The provisions of the Entity List FDP rule are organized with a description of the E:\FR\FM\03FER1.SGM 03FER1 Federal Register / Vol. 87, No. 23 / Thursday, February 3, 2022 / Rules and Regulations product scope followed by the applicable end-user scope. This rule moves a definition of the term ‘major component’ from a note to footnote 1 to Supplement no. 4 to part 744 of the EAR to a new definition paragraph in § 734.9(a) of the EAR. In making this change, this rule clarifies that the definition of the term ‘major component’ applies to all the FDP rules, and not just the Entity List FDP rule. A ‘major component’ of a plant located outside the United States for all FDP rules is ‘‘equipment’’ that is essential to the ‘‘production’’ of an item, including testing ‘‘equipment.’’ As noted in the August 20, 2020, final rule that amended the Entity List FPD rule (see 85 FR 51596, at 51601), any equipment that is involved in any of the production stages is considered essential. As a conforming edit, to indicate that the term is defined in that section, BIS added single quotation marks around the term ‘major component’ wherever it appears in § 734.9. khammond on DSKJM1Z7X2PROD with RULES Clarification of the FDP Rules This rule further clarifies the FDP rules by adding double quotation marks around terms that are defined in part 772 of the EAR, e.g., direct product, technology, software, and equipment. BIS has received requests for additional guidance about determining the scope of production equipment in relation to the Entity List FDP rule and clarifying that these are defined terms should help the public better understand its obligations. In addition, this rule clarifies in § 736.2(b)(3) of the EAR (General Prohibition Three), that foreign-direct products subject to the EAR are not necessarily subject to a license requirement and that license requirements must be determined based on an assessment of the classification, destination, end user, and end use of the items. Lastly, this rule clarifies the circumstances under which the ‘‘600 series’’ FDP rule applies to items described in Export Control Classification Number (ECCN) 0A919. The text of ECCN 0A919 states that it includes the foreign direct product of ‘‘600 series’’ technology or software. However, before this rule, the text of General Prohibition Three did not explicitly include ECCN 0A919 items when describing other aspects of determining applicability of the ‘‘600 series’’ FDP rule. This rule also replaces the cross reference in ECCN 0A919.a.3 as a conforming edit. VerDate Sep<11>2014 16:34 Feb 02, 2022 Jkt 256001 Correction: U.S.-Origin ‘‘technology’’ and ‘‘software’’ In this rule, BIS corrects an earlier revision to General Prohibition Three to clarify when the FDP rules are intended to apply to the direct product of U.S.origin technology or software. On May 19, 2020, BIS published a rule entitled ‘‘Export Administration Regulations: Amendments to General Prohibition Three (Foreign-Direct Product Rule) and the Entity List’’ (85 FR 29849). This rule removed the word ‘‘U.S.’’ from the heading of § 736.2(b)(3) (Foreign-Direct Product rule) where it had been placed in front of the words ‘‘technology and software.’’ This revision was made because the scope of the heading did not align with the scope of the Entity List foreign-direct product rule being added to the EAR on that date. The Entity List FDP rule in § 734.9(e), and as it previously appeared in footnote 1 to supplement no. 4 to part 744 of the EAR, applies to the FDP of technology or software that is subject to the EAR, but that is not necessarily technology or software of U.S. origin. The preamble of the May 19 rule that added the Entity List FDP rule clearly stated that BIS did not intend to change the scope of the other FDP rules, noting General Prohibition Three: ‘‘continues to apply to foreign-produced items controlled for national security reasons, 9x515 items, or ‘‘600 series’’ items and has three criteria: The reason for control or classification of the U.S. ‘‘technology’’ or ‘‘software’’; the foreign-produced item’s reason for control or classification; and the destination country of the foreign-produced item[.]’’ The May 19 rule stated that it ‘‘maintains the scope and criteria of General Prohibition Three[.]’’ Nevertheless, by removing the term ‘‘U.S.’’ from General Prohibition Three’s heading, BIS may have inadvertently caused confusion as to whether the revision was intended to change the product scope of all FDP rules, because the term ‘‘U.S.’’ had only been in the heading and not in the other FDP rules’ product scope descriptions. For this reason, this rule clarifies the EAR by specifically stating in each of the FDP rules that the application of the rule relates to U.S.-origin technology or software. Export Control Reform Act of 2018 On August 13, 2018, the President signed into law the John S. McCain National Defense Authorization Act for Fiscal Year 2019, which included ECRA (codified, as amended, at 50 U.S.C. Sections 4801–4852). ECRA provides the legal basis for BIS’s principal PO 00000 Frm 00007 Fmt 4700 Sfmt 4700 6023 authorities and serves as the authority under which BIS issues this rule. 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 and distributive impacts and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits and of reducing costs, harmonizing rules, and promoting flexibility. This final rule has not been designated a ‘‘significant regulatory action’’ under Executive Order 12866. This rule does not contain policies with Federalism implications as that term is defined under Executive Order 13132. 2. Notwithstanding any other provision of law, no person is required to respond to, nor shall any person be subject to a penalty for failure to comply with, a collection of information subject to the requirements of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.) (PRA), unless that collection of information displays a currently valid Office of Management and Budget (OMB) Control Number. This final rule does not intentionally affect any PRA collection burden, because this intent of this final rule is to organize, clarify, and correct the rules pertaining to the foreign direct product and in doing so BIS only expects minimal, if any, change to the burden hours associated with license requirements. The following is a list of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.) (PRA) collection approvals that may be encountered if a license is required, and the estimated average burden hours for each: • 0694–0088, ‘‘Simplified Network Application Processing System,’’ and carries a burden-hour estimate of 29.6 minutes for a manual or electronic submission; • 0694–0137 ‘‘License Exceptions and Exclusions,’’ which carries a burdenhour estimate average of 1.5 hours per submission (Note: Submissions for License Exceptions are rarely required); • 0694–0096 ‘‘Five Year Records Retention Period,’’ which carries a burden-hour estimate of less than 1 minute; and • 0607–0152 ‘‘Automated Export System (AES) Program,’’ which carries a burden-hour estimate of 3 minutes per electronic submission. Any comments regarding these collections of information, including E:\FR\FM\03FER1.SGM 03FER1 6024 Federal Register / Vol. 87, No. 23 / Thursday, February 3, 2022 / Rules and Regulations suggestions for reducing the burden, may be submitted online at https:// www.reginfo.gov/public/do/PRAMain. Find the particular information collection by using the search function and entering either the title of the collection or the OMB Control Number. 3. Pursuant to Section 1762 of the Export Control Reform Act of 2018 (ECRA) (50 U.S.C. 4821), this action is exempt from the Administrative Procedure Act (APA) (5 U.S.C. 553) requirements for notice of proposed rulemaking, opportunity for public participation and delay in effective date. List of Subjects 15 CFR Part 734 Administrative practice and procedure, Exports, Inventions and patents, Research, Science and technology. 15 CFR Part 736 Exports. 15 CFR Part 744 Exports, Reporting and recordkeeping requirements, Terrorism. 15 CFR Part 774 Exports, Reporting and recordkeeping requirements, Terrorism. For the reasons discussed in the preamble, the Bureau of Industry and Security of the Department of Commerce amends 15 CFR parts 734, 736, 744, and 774 as follows: PART 734—SCOPE OF THE EXPORT ADMINISTRATION REGULATIONS 1. The authority citation for part 734 is revised to read as follows: ■ Authority: 50 U.S.C. 4801–4852; 50 U.S.C. 4601 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; E.O. 13637, 78 FR 16129, 3 CFR, 2014 Comp., p. 223; Notice of November 10, 2021, 86 FR 62891 (November 12, 2021). ■ 2. Add § 734.9 to read as follows: khammond on DSKJM1Z7X2PROD with RULES § 734.9 Rules. Foreign-Direct Product (FDP) Foreign-produced items located outside the United States are subject to the EAR when they are a ‘‘direct product’’ of specified ‘‘technology’’ or ‘‘software,’’ or are produced by a plant or ‘major component’ of a plant that itself is a ‘‘direct product’’ of specified ‘‘technology’’ or ‘‘software.’’ If a foreignproduced item is subject to the EAR, then you should separately determine the license requirements that apply to VerDate Sep<11>2014 16:34 Feb 02, 2022 Jkt 256001 that foreign-produced item (e.g., by assessing the item classification, destination, end-use, and end-user in the relevant transaction). Not all transactions involving foreign-produced items that are subject to the EAR require a license. Those transactions that do require a license may be eligible for a license exception. (a) Definitions. The terms defined in this paragraph are specific to § 734.9 of the EAR. These terms are indicated by single quotation marks. Terms that are in double quotation marks are defined in part 772 of the EAR. Major Component: A major component of a plant located outside the United States means ‘‘equipment’’ that is essential to the ‘‘production’’ of an item, including testing ‘‘equipment.’’ (b) National Security FDP rule. A foreign-produced item is subject to the EAR if it meets both the product scope in paragraph (b)(1) of this section and the country scope in paragraph (b)(2) of this section. (1) Product scope of National Security FDP rule. The product scope applies if a foreign-produced item meets the conditions of either paragraph (b)(1)(i) or (ii) of this section. (i) ‘‘Direct product’’ of ‘‘technology’’ or ‘‘software.’’ A foreign-produced item meets the product scope of this paragraph if it meets both of the following conditions: (A) The foreign-produced item is the ‘‘direct product’’ of U.S.-origin ‘‘technology’’ or ‘‘software’’ that requires a written assurance as a supporting document for a license, as defined in paragraph (o)(3)(i) of supplement no. 2 to part 748 of the EAR, or as a precondition for the use of License Exception TSR at § 740.6 of the EAR; and (B) The foreign-produced item is subject to national security controls as designated in the applicable ECCN of the Commerce Control List in part 774 of the EAR. (ii) ‘‘Direct product’’ of a complete plant or ‘major component’ of a plant. A foreign-produced item meets the product scope of this paragraph if it meets both of the following conditions: (A) The foreign-produced item is a ‘‘direct product’’ of a complete plant or ‘major component’ of a plant that itself is the ‘‘direct product’’ of U.S.-origin ‘‘technology’’ that requires a written assurance as a supporting document for a license or as a precondition for the use of License Exception TSR in § 740.6 of the EAR; and (B) The foreign-produced item is subject to national security controls as designated on the applicable ECCN of PO 00000 Frm 00008 Fmt 4700 Sfmt 4700 the Commerce Control List at part 774 of the EAR. (2) Country scope of National Security FDP rule. A foreign-produced item meets the country scope of this paragraph if its destination is listed in Country Group D:1, E:1, or E:2 (See supplement no.1 to part 740 of the EAR). (c) 9x515 FDP rule. A foreignproduced item is subject to the EAR if it meets both the product scope in paragraph (c)(1) of this section and the country scope in paragraph (c)(2) of this section. (1) Product scope of 9x515 FDP rule. The product scope applies if a foreignproduced item meets the conditions of either paragraph (c)(1)(i) or (ii) of this section. (i) ‘‘Direct product’’ of ‘‘technology’’ or ‘‘software.’’ A foreign-produced item meets the product scope of this paragraph if it meets both of the following conditions: (A) The foreign-produced item is the ‘‘direct product’’ of U.S.-origin ‘‘technology’’ or ‘‘software’’ that is specified in ECCN 9D515 or 9E515; and (B) The foreign-produced item is specified in a 9x515 ECCN. (ii) ‘‘Direct product’’ of a complete plant or ‘major component’ of a plant. A foreign-produced item meets the product scope of this paragraph if it meets both of the following conditions: (A) The foreign-produced item is a ‘‘direct product’’ of a complete plant or any ‘major component’ of a plant that itself is the ‘‘direct product’’ of U.S.origin ‘‘technology’’ specified in ECCN 9E515; and (B) The foreign-produced item is specified in a 9x515 ECCN. (2) Country scope of 9x515 FDP rule. A foreign produced item meets the country scope of this paragraph if its destination is listed in Country Group D:5, E:1, or E:2 (see supplement no. 1 to part 740 of the EAR). (d) ‘‘600 series’’ FDP rule. A foreignproduced item is subject to the EAR if it meets both the product scope in paragraph (d)(1) of this section and the country scope in paragraph (d)(2) of this section. NOTE 1 TO PARAGRAPH (D) INTRODUCTORY TEXT: As described in the CCL, ECCN 0A919 is included in this paragraph because it includes the ‘‘direct product’’ of ‘‘600 series’’ ‘‘technology’’ or ‘‘software’’. (1) Product scope of ‘‘600 series’’ FDP rule. The product scope applies if a foreign-produced item meets the conditions of either paragraph (d)(1)(i) or (ii) of this section. (i) ‘‘Direct product’’ of ‘‘technology’’ or ‘‘software.’’ A foreign-produced item E:\FR\FM\03FER1.SGM 03FER1 khammond on DSKJM1Z7X2PROD with RULES Federal Register / Vol. 87, No. 23 / Thursday, February 3, 2022 / Rules and Regulations meets the product scope of this paragraph if it meets both of the following conditions: (A) The foreign-produced item is the ‘‘direct product’’ of U.S.-origin ‘‘technology’’ or ‘‘software’’ that is specified in a ‘‘600 series’’ ECCN; and (B) The foreign-produced item is specified in a ‘‘600 series’’ ECCN or ECCN 0A919. (ii) ‘‘Direct product’’ of a complete plant or ‘major component’ of a plant. Foreign-produced items meet the product scope of this paragraph if they meet both of the following conditions: (A) The foreign-produced item is the ‘‘direct product’’ of a complete plant or ‘major component’ of a plant that itself is the ‘‘direct product’’ of U.S.-origin ‘‘technology’’ that is specified in a ‘‘600 series’’ ECCN; and (B) The foreign produced item is specified in a ‘‘600 series’’ ECCN. (2) Country scope of ‘‘600 series’’ FDP rule. A foreign-produced item meets the country scope of this paragraph if it is destined to a country listed in Country Group D:1, D:3, D:4, D:5, E:1, or E:2 (see supplement no.1 to part 740 of the EAR). (e) Entity List FDP rule. A foreignproduced item is subject to the EAR if it meets both the product scope in paragraph (e)(1) of this section and the end-user scope in paragraph (e)(2) of this section. See § 744.11(a) of the EAR for license requirements, license review policy, and license exceptions applicable to foreign-produced items that are subject to the EAR pursuant to this paragraph. (1) Product Scope of Entity List FDP rule. The product scope applies if a foreign-produced item meets the conditions of either paragraph (e)(1)(i) or (ii) of this section. (i) ‘‘Direct product’’ of ‘‘technology’’ or ‘‘software.’’ A foreign-produced item meets the product scope of this paragraph if the foreign-produced item is a ‘‘direct product’’ of ‘‘technology’’ or ‘‘software’’ subject to the EAR and specified in ECCN 3D001, 3D991, 3E001, 3E002, 3E003, 3E991, 4D001, 4D993, 4D994, 4E001, 4E992, 4E993, 5D001, 5D991, 5E001, or 5E991 of the Commerce Control List (CCL) in supplement no. 1 to part 774 of the EAR; or (ii) ‘‘Direct product’’ of a complete plant or ‘major component’ of a plant. A foreign-produced item meets the product scope of this paragraph if the foreign-produced item is produced by any plant or ‘major component’ of a plant that is located outside the United States, when the plant or ‘major component’ of a plant, whether made in the U.S. or a foreign country, itself is a VerDate Sep<11>2014 16:34 Feb 02, 2022 Jkt 256001 6025 ‘‘direct product’’ of ‘‘technology’’ or ‘‘software’’ subject to the EAR that is specified in ECCN 3D001, 3D991, 3E001, 3E002, 3E003, 3E991, 4D001, 4D993, 4D994, 4E001, 4E992, 4E993, 5D001, 5D991, 5E001, or 5E991 of the CCL. (ii) Each license exception described in part 740 of the EAR supersedes General Prohibition Three if all terms and conditions of a given license exception are met and none of the restrictions of § 740.2 or 744.11(a) apply. NOTE 2 TO PARAGRAPH (E)(1): A foreignproduced item includes any foreignproduced wafer whether finished or unfinished. PART 744—CONTROL POLICY: ENDUSER AND END-USER BASED (2) End-user scope of the Entity List FDP rule. A foreign-produced item meets the end-user scope of this paragraph if there is ‘‘knowledge’’ that: (i) Activities involving Footnote 1 designated entities. The foreignproduced item will be incorporated into, or will be used in the ‘‘production’’ or ‘‘development’’ of any ‘‘part,’’ ‘‘component,’’ or ‘‘equipment’’ produced, purchased, or ordered by any entity with a footnote 1 designation in the license requirement column of the Entity List in Supplement No. 4 to part 744 of the EAR; or (ii) Footnote 1 designated entities as transaction parties. Any entity with a footnote 1 designation in the license requirement column of the Entity List in Supplement No. 4 to part 744 of the EAR is a party to any transaction involving the foreign-produced item, e.g., as a ‘‘purchaser,’’ ‘‘intermediate consignee,’’ ‘‘ultimate consignee,’’ or ‘‘end-user.’’ PART 736—GENERAL PROHOBITIONS 3. The authority citation for part 736 continues to read as follows: ■ Authority: 50 U.S.C. 4801–4852; 50 U.S.C. 4601 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; E.O. 13338, 69 FR 26751, 3 CFR, 2004 Comp., p. 168; Notice of November 10, 2021, 86 FR 62891 (November 12, 2021); Notice of May 6, 2021, 86 FR 26793 (May 10, 2021). 4. Section 736.2 is amended by revising paragraph (b)(3) to read as follows: ■ § 736.2 General prohibitions and determination of applicability. * * * * * (b) * * * (3) General Prohibition Three— Foreign-direct product (FDP) rules—(i) You may not, without a license or license exception, export from abroad, reexport, or transfer (in-country) foreign-‘‘direct products’’ subject to the EAR pursuant to § 734.9 if such items are subject to a license requirement in part 736, 742, 744, 746, or 764 of the EAR. PO 00000 Frm 00009 Fmt 4700 Sfmt 4700 5. The authority citation for part 744 continues to read as follows: ■ Authority: 50 U.S.C. 4801–4852; 50 U.S.C. 4601 et seq.; 50 U.S.C. 1701 et seq.; 22 U.S.C. 3201 et seq.; 42 U.S.C. 2139a; 22 U.S.C. 7201 et seq.; 22 U.S.C. 7210; E.O. 12058, 43 FR 20947, 3 CFR, 1978 Comp., p. 179; E.O. 12851, 58 FR 33181, 3 CFR, 1993 Comp., p. 608; E.O. 12938, 59 FR 59099, 3 CFR, 1994 Comp., p. 950; E.O. 13026, 61 FR 58767, 3 CFR, 1996 Comp., p. 228; E.O. 13099, 63 FR 45167, 3 CFR, 1998 Comp., p. 208; E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 783; E.O. 13224, 66 FR 49079, 3 CFR, 2001 Comp., p. 786; Notice of September 15, 2021, 86 FR 52069 (September 17, 2021); Notice of November 10, 2021, 86 FR 62891 (November 12, 2021). 6. Section 744.11 is amended by revising paragraph (a) to read as follows: ■ § 744.11 License requirements that apply to entities acting contrary to the national security or foreign policy interests of the United States. * * * * * (a) License requirement, availability of license exceptions, and license application review policy. (1) A license is required, to the extent specified on the Entity List, to export, reexport, or transfer (in-country) any item subject to the EAR when an entity that is listed on the Entity List is a party to the transaction as described in § 748.5(c) through (f). License exceptions may not be used unless authorized in the Entity List entry for the entity that is party to the transaction. Applications for licenses required by this section will be evaluated as stated in the Entity List entry for the entity that is party to the transaction, in addition to any other applicable review policy stated elsewhere in the EAR. (2) Entity List Foreign-Direct Product (FDP) license requirements, review policy, and license exceptions. You may not, without a license or license exception, reexport, export from abroad, or transfer (in-country) any foreignproduced item subject to the EAR pursuant to § 734.9(e) of the EAR to any end user described in § 734.9(e)(2) of the EAR. All license exceptions described in part 740 of the EAR are available for foreign-produced items that are subject to this license requirement if all terms and conditions of the applicable license E:\FR\FM\03FER1.SGM 03FER1 6026 Federal Register / Vol. 87, No. 23 / Thursday, February 3, 2022 / Rules and Regulations exception are met and the restrictions in § 740.2 do not apply. The sophistication and capabilities of technology in items is a factor in license application review; license applications for foreignproduced items subject to a license requirement by this paragraph (a)(2) that are capable of supporting the ‘‘development’’ or ‘‘production’’ of telecom systems, equipment and devices below the 5G level (e.g., 4G, 3G) will be reviewed on a case-by-case basis. * * * * * ■ 7. Supplement No. 4 to part 744 is amended by: ■ a. Removing the phrase ‘‘see §§ 736.2(b)(3)(vi),1’’ wherever it appears and adding in its place ‘‘see §§ 734.9(e),1’’ ; and ■ b. Revising footnote 1. The revision reads as follows: Supplement No. 4 to Part 744—Entity List * * * * * 1 For this entity, see § 734.9(e) of the EAR for foreign-produced items that are subject to the EAR and § 744.11 of the EAR for related license requirements, license review policy, and applicable license exceptions. * * * * * PART 774—THE COMMERCE CONTROL LIST 8. The authority citation for part 774 continues to read as follows: ■ Authority: 50 U.S.C. 4801–4852; 50 U.S.C. 4601 et seq.; 50 U.S.C. 1701 et seq.; 10 U.S.C. 8720; 10 U.S.C. 8730(e); 22 U.S.C. 287c, 22 U.S.C. 3201 et seq.; 22 U.S.C. 6004; 42 U.S.C. 2139a; 15 U.S.C. 1824; 50 U.S.C. 4305; 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. 9. In supplement no. 1 to part 774, Category 0, ECCN 0A919 is revised to read as follows: ■ Supplement No. 1 to Part 774—The Commerce Control List * * * * * 0A919 ‘‘Military commodities’’ located and produced outside the United States as follows (see list of items controlled) khammond on DSKJM1Z7X2PROD with RULES License Requirements Reasons for Control: RS, AT Control(s) RS applies to entire entry. AT applies to entire entry. VerDate Sep<11>2014 Country Chart (see Supp. No. 1 to part 738) RS Column 1, See § 742.6(a)(3) for license requirements. AT Column 1. 16:34 Feb 02, 2022 List Based License Exceptions (See Part 740 for a description of all license exceptions) DEPARTMENT OF HOMELAND SECURITY LVS: N/A GBS: N/A Coast Guard List of Items Controlled Related Controls: (1) ‘‘Military commodities’’ are subject to the export licensing jurisdiction of the Department of State if they incorporate items that are subject to the International Traffic in Arms Regulations (ITAR) (22 CFR parts 120–130). (2) ‘‘Military commodities’’ described in this paragraph are subject to the export licensing jurisdiction of the Department of State if such commodities are described on the U.S. Munitions List (22 CFR part 121) and are in the United States. (3) The furnishing of assistance (including training) to foreign persons, whether in the United States or abroad, in the design, development, engineering, manufacture, production, assembly, testing, repair, maintenance, modification, operation, demilitarization, destruction, processing, or use of defense articles that are subject to the ITAR; or the furnishing to foreign persons of any technical data controlled under 22 CFR 121.1 whether in the United States or abroad are under the licensing jurisdiction of the Department of State. (4) Brokering activities (as defined in 22 CFR 129) of ‘‘military commodities’’ that are subject to the ITAR are under the licensing jurisdiction of the Department of State. Related Definitions: ‘‘Military commodity’’ or ‘‘military commodities’’ means an article, material or supply that is described on the U.S. Munitions List (22 CFR part 121) or on the Munitions List that is published by the Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies (i.e., the Wassenaar Arrangement Munitions List (WAML)), but does not include software, technology, any item listed in any ECCN for which the last three numerals are 018, or any item in the ‘‘600 series.’’ Items: a. ‘‘Military commodities’’ produced and located outside the United States that are not subject to the International Traffic in Arms Regulations (22 CFR parts 120–130) and having any of the following characteristics: a.1. Incorporate more than a de minimis amount of U.S.-origin controlled content classified under ECCNs 6A002, 6A003, or 6A993.a (having a maximum frame rate equal to or less than 9 Hz and thus meeting the criterion of Note 3.a to 6A003.b.4); a.2. Incorporate more than a de minimis amount of U.S.-origin ‘‘600 series’’ controlled content (see § 734.4 of the EAR); or a.3. Are direct products of U.S.-origin ‘‘600 series’’ technology or software (see § 734.9(d) of the EAR). b. [Reserved] * * * * * Thea D. Rozman Kendler, Assistant Secretary for Export Administration. Jkt 256001 PO 00000 Frm 00010 Fmt 4700 Sfmt 4700 [Docket Number USCG–2021–0873] RIN 1625–AA08 Special Local Regulations; Sector Ohio Valley Annual and Recurring Special Local Regulations, Update Coast Guard, DHS. Final rule. AGENCY: ACTION: The Coast Guard is amending and updating its special local regulations for recurring marine parades, regattas, and other events that take place in the Coast Guard Sector Ohio Valley area of responsibility (AOR). This rule informs the public of regularly scheduled events that require additional safety measures through the establishing of a special local regulation. Through this rulemaking the current list of recurring special local regulations is updated with revisions, additional events, and removal of events that no longer take place in Sector Ohio Valley’s AOR. When these special local regulations are enforced, certain restrictions are placed on marine traffic in specified areas. DATES: This rule is effective February 3, 2022. ADDRESSES: To view documents mentioned in this preamble as being available in the docket, go to https:// www.regulations.gov, type USCG–2021– 0873 in the ‘‘SEARCH’’ box and click ‘‘SEARCH.’’ Click on Open Docket Folder on the line associated with this rule. FOR FURTHER INFORMATION CONTACT: If you have questions on this rule, call or email Petty Officer Christopher Roble, Sector Ohio Valley, U.S. Coast Guard; telephone (502) 779–5336, email SECOHV-WWM@uscg.mil. SUPPLEMENTARY INFORMATION: SUMMARY: I. Table of Abbreviations CFR Code of Federal Regulations COTP Captain of the Port Sector Ohio Valley DHS Department of Homeland Security E.O. Executive order FR Federal Register NPRM Notice of proposed rulemaking § Section U.S.C. United States Code II. Background Information and Regulatory History [FR Doc. 2022–02302 Filed 2–2–22; 8:45 am] BILLING CODE 3510–33–P 33 CFR Part 100 The Captain of the Port Sector Ohio Valley (COTP) is establishing, E:\FR\FM\03FER1.SGM 03FER1

Agencies

[Federal Register Volume 87, Number 23 (Thursday, February 3, 2022)]
[Rules and Regulations]
[Pages 6022-6026]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-02302]


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DEPARTMENT OF COMMERCE

Bureau of Industry and Security

15 CFR Parts 734, 736, 744, and 774

[Docket No. 220127-0035]
RIN 0694-AI61


Foreign-Direct Product Rules: Organization, Clarification, and 
Correction

AGENCY: Bureau of Industry and Security, Department of Commerce.

ACTION: Final rule.

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

SUMMARY: The Bureau of Industry and Security (BIS) is clarifying, 
reorganizing, and making minor corrections to the provisions of the 
foreign-direct product (FDP) rules. Before this final rule, the FDP 
rules appeared in parts 736 and 744 of the Export Administration 
Regulations (EAR); now, the rules are consolidated in part 734 of the 
EAR. These revisions clarify the applicability of the FDP rules and 
make one correction applicable to the FDP rules as to the term ``U.S.-
origin technology and software.''

DATES: The effective date of this rule is February 3, 2022.

FOR FURTHER INFORMATION CONTACT: Sharron Cook, 202-482-2440, 
[email protected].

SUPPLEMENTARY INFORMATION:

Consolidation and Organization of the Foreign-Direct Product (FDP) 
Rules

    This final rule consolidates the FDP rules in Sec.  734.9 of the 
Export Administration Regulations (EAR). Before publication of this 
rule, the FDP rules were found in Sec.  736.2(b)(3) (General 
Prohibition 3) and footnote 1 to supplement no. 4 to part 744 (the 
Entity List). Placing the FDP rules in part 734 (Scope of the EAR) 
clarifies that they are used to determine if a foreign-produced item is 
subject to, and thus within the scope of, the EAR. To further clarify 
the FPD rules, this rule moves the license requirement, license review 
policy, and license exception applicability text for listed entities 
from the Entity List's footnote 1 to supplement no. 4 to part 744 to 
Sec.  744.11(a), where the overall license requirements pertaining to 
listed entities are located.

Organization of the FDP Rules

    In new Sec.  734.9, this rule separates the FDP provisions into 
four paragraphs: The National Security FDP rule, the 9x515 FDP rule, 
the ``600 series'' FDP rule, and the Entity List FDP rule. While the 
product scope of the first three FDP rules is relatively similar in 
format, the country scopes of each rule are different. This 
reorganization and naming of the FDP rules does not make substantive 
changes to the FDP rules. Rather, it facilitates reference to and 
compliance with the rules.
    The original national security-focused FDP rule is now the National 
Security FDP rule. The provisions of the 9x515 FDP rule and the ``600 
series'' FDP rule are reorganized into separate paragraphs with a 
description of the product scope followed by the country scope. The 
provisions of the Entity List FDP rule are organized with a description 
of the

[[Page 6023]]

product scope followed by the applicable end-user scope.
    This rule moves a definition of the term `major component' from a 
note to footnote 1 to Supplement no. 4 to part 744 of the EAR to a new 
definition paragraph in Sec.  734.9(a) of the EAR. In making this 
change, this rule clarifies that the definition of the term `major 
component' applies to all the FDP rules, and not just the Entity List 
FDP rule. A `major component' of a plant located outside the United 
States for all FDP rules is ``equipment'' that is essential to the 
``production'' of an item, including testing ``equipment.'' As noted in 
the August 20, 2020, final rule that amended the Entity List FPD rule 
(see 85 FR 51596, at 51601), any equipment that is involved in any of 
the production stages is considered essential. As a conforming edit, to 
indicate that the term is defined in that section, BIS added single 
quotation marks around the term `major component' wherever it appears 
in Sec.  734.9.

Clarification of the FDP Rules

    This rule further clarifies the FDP rules by adding double 
quotation marks around terms that are defined in part 772 of the EAR, 
e.g., direct product, technology, software, and equipment. BIS has 
received requests for additional guidance about determining the scope 
of production equipment in relation to the Entity List FDP rule and 
clarifying that these are defined terms should help the public better 
understand its obligations.
    In addition, this rule clarifies in Sec.  736.2(b)(3) of the EAR 
(General Prohibition Three), that foreign-direct products subject to 
the EAR are not necessarily subject to a license requirement and that 
license requirements must be determined based on an assessment of the 
classification, destination, end user, and end use of the items.
    Lastly, this rule clarifies the circumstances under which the ``600 
series'' FDP rule applies to items described in Export Control 
Classification Number (ECCN) 0A919. The text of ECCN 0A919 states that 
it includes the foreign direct product of ``600 series'' technology or 
software. However, before this rule, the text of General Prohibition 
Three did not explicitly include ECCN 0A919 items when describing other 
aspects of determining applicability of the ``600 series'' FDP rule. 
This rule also replaces the cross reference in ECCN 0A919.a.3 as a 
conforming edit.

Correction: U.S.-Origin ``technology'' and ``software''

    In this rule, BIS corrects an earlier revision to General 
Prohibition Three to clarify when the FDP rules are intended to apply 
to the direct product of U.S.-origin technology or software. On May 19, 
2020, BIS published a rule entitled ``Export Administration 
Regulations: Amendments to General Prohibition Three (Foreign-Direct 
Product Rule) and the Entity List'' (85 FR 29849). This rule removed 
the word ``U.S.'' from the heading of Sec.  736.2(b)(3) (Foreign-Direct 
Product rule) where it had been placed in front of the words 
``technology and software.'' This revision was made because the scope 
of the heading did not align with the scope of the Entity List foreign-
direct product rule being added to the EAR on that date. The Entity 
List FDP rule in Sec.  734.9(e), and as it previously appeared in 
footnote 1 to supplement no. 4 to part 744 of the EAR, applies to the 
FDP of technology or software that is subject to the EAR, but that is 
not necessarily technology or software of U.S. origin. The preamble of 
the May 19 rule that added the Entity List FDP rule clearly stated that 
BIS did not intend to change the scope of the other FDP rules, noting 
General Prohibition Three: ``continues to apply to foreign-produced 
items controlled for national security reasons, 9x515 items, or ``600 
series'' items and has three criteria: The reason for control or 
classification of the U.S. ``technology'' or ``software''; the foreign-
produced item's reason for control or classification; and the 
destination country of the foreign-produced item[.]'' The May 19 rule 
stated that it ``maintains the scope and criteria of General 
Prohibition Three[.]'' Nevertheless, by removing the term ``U.S.'' from 
General Prohibition Three's heading, BIS may have inadvertently caused 
confusion as to whether the revision was intended to change the product 
scope of all FDP rules, because the term ``U.S.'' had only been in the 
heading and not in the other FDP rules' product scope descriptions. For 
this reason, this rule clarifies the EAR by specifically stating in 
each of the FDP rules that the application of the rule relates to U.S.-
origin technology or software.

Export Control Reform Act of 2018

    On August 13, 2018, the President signed into law the John S. 
McCain National Defense Authorization Act for Fiscal Year 2019, which 
included ECRA (codified, as amended, at 50 U.S.C. Sections 4801-4852). 
ECRA provides the legal basis for BIS's principal authorities and 
serves as the authority under which BIS issues this rule.

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 and distributive impacts and equity). 
Executive Order 13563 emphasizes the importance of quantifying both 
costs and benefits and of reducing costs, harmonizing rules, and 
promoting flexibility.
    This final rule has not been designated a ``significant regulatory 
action'' under Executive Order 12866. This rule does not contain 
policies with Federalism implications as that term is defined under 
Executive Order 13132.
    2. Notwithstanding any other provision of law, no person is 
required to respond to, nor shall any person be subject to a penalty 
for failure to comply with, a collection of information subject to the 
requirements of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et 
seq.) (PRA), unless that collection of information displays a currently 
valid Office of Management and Budget (OMB) Control Number. This final 
rule does not intentionally affect any PRA collection burden, because 
this intent of this final rule is to organize, clarify, and correct the 
rules pertaining to the foreign direct product and in doing so BIS only 
expects minimal, if any, change to the burden hours associated with 
license requirements. The following is a list of the Paperwork 
Reduction Act of 1995 (44 U.S.C. 3501 et seq.) (PRA) collection 
approvals that may be encountered if a license is required, and the 
estimated average burden hours for each:
     0694-0088, ``Simplified Network Application Processing 
System,'' and carries a burden-hour estimate of 29.6 minutes for a 
manual or electronic submission;
     0694-0137 ``License Exceptions and Exclusions,'' which 
carries a burden-hour estimate average of 1.5 hours per submission 
(Note: Submissions for License Exceptions are rarely required);
     0694-0096 ``Five Year Records Retention Period,'' which 
carries a burden-hour estimate of less than 1 minute; and
     0607-0152 ``Automated Export System (AES) Program,'' which 
carries a burden-hour estimate of 3 minutes per electronic submission.
    Any comments regarding these collections of information, including

[[Page 6024]]

suggestions for reducing the burden, may be submitted online at https://www.reginfo.gov/public/do/PRAMain. Find the particular information 
collection by using the search function and entering either the title 
of the collection or the OMB Control Number.
    3. Pursuant to Section 1762 of the Export Control Reform Act of 
2018 (ECRA) (50 U.S.C. 4821), this action is exempt from the 
Administrative Procedure Act (APA) (5 U.S.C. 553) requirements for 
notice of proposed rulemaking, opportunity for public participation and 
delay in effective date.

List of Subjects

15 CFR Part 734

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

15 CFR Part 736

    Exports.

15 CFR Part 744

    Exports, Reporting and recordkeeping requirements, Terrorism.

15 CFR Part 774

    Exports, Reporting and recordkeeping requirements, Terrorism.

    For the reasons discussed in the preamble, the Bureau of Industry 
and Security of the Department of Commerce amends 15 CFR parts 734, 
736, 744, and 774 as follows:

PART 734--SCOPE OF THE EXPORT ADMINISTRATION REGULATIONS

0
1. The authority citation for part 734 is revised to read as follows:

    Authority:  50 U.S.C. 4801-4852; 50 U.S.C. 4601 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; E.O. 13637, 78 FR 16129, 3 CFR, 2014 Comp., 
p. 223; Notice of November 10, 2021, 86 FR 62891 (November 12, 
2021).


0
2. Add Sec.  734.9 to read as follows:


Sec.  734.9  Foreign-Direct Product (FDP) Rules.

    Foreign-produced items located outside the United States are 
subject to the EAR when they are a ``direct product'' of specified 
``technology'' or ``software,'' or are produced by a plant or `major 
component' of a plant that itself is a ``direct product'' of specified 
``technology'' or ``software.'' If a foreign-produced item is subject 
to the EAR, then you should separately determine the license 
requirements that apply to that foreign-produced item (e.g., by 
assessing the item classification, destination, end-use, and end-user 
in the relevant transaction). Not all transactions involving foreign-
produced items that are subject to the EAR require a license. Those 
transactions that do require a license may be eligible for a license 
exception.
    (a) Definitions. The terms defined in this paragraph are specific 
to Sec.  734.9 of the EAR. These terms are indicated by single 
quotation marks. Terms that are in double quotation marks are defined 
in part 772 of the EAR.
    Major Component: A major component of a plant located outside the 
United States means ``equipment'' that is essential to the 
``production'' of an item, including testing ``equipment.''
    (b) National Security FDP rule. A foreign-produced item is subject 
to the EAR if it meets both the product scope in paragraph (b)(1) of 
this section and the country scope in paragraph (b)(2) of this section.
    (1) Product scope of National Security FDP rule. The product scope 
applies if a foreign-produced item meets the conditions of either 
paragraph (b)(1)(i) or (ii) of this section.
    (i) ``Direct product'' of ``technology'' or ``software.'' A 
foreign-produced item meets the product scope of this paragraph if it 
meets both of the following conditions:
    (A) The foreign-produced item is the ``direct product'' of U.S.-
origin ``technology'' or ``software'' that requires a written assurance 
as a supporting document for a license, as defined in paragraph 
(o)(3)(i) of supplement no. 2 to part 748 of the EAR, or as a 
precondition for the use of License Exception TSR at Sec.  740.6 of the 
EAR; and
    (B) The foreign-produced item is subject to national security 
controls as designated in the applicable ECCN of the Commerce Control 
List in part 774 of the EAR.
    (ii) ``Direct product'' of a complete plant or `major component' of 
a plant. A foreign-produced item meets the product scope of this 
paragraph if it meets both of the following conditions:
    (A) The foreign-produced item is a ``direct product'' of a complete 
plant or `major component' of a plant that itself is the ``direct 
product'' of U.S.-origin ``technology'' that requires a written 
assurance as a supporting document for a license or as a precondition 
for the use of License Exception TSR in Sec.  740.6 of the EAR; and
    (B) The foreign-produced item is subject to national security 
controls as designated on the applicable ECCN of the Commerce Control 
List at part 774 of the EAR.
    (2) Country scope of National Security FDP rule. A foreign-produced 
item meets the country scope of this paragraph if its destination is 
listed in Country Group D:1, E:1, or E:2 (See supplement no.1 to part 
740 of the EAR).
    (c) 9x515 FDP rule. A foreign-produced item is subject to the EAR 
if it meets both the product scope in paragraph (c)(1) of this section 
and the country scope in paragraph (c)(2) of this section.
    (1) Product scope of 9x515 FDP rule. The product scope applies if a 
foreign-produced item meets the conditions of either paragraph 
(c)(1)(i) or (ii) of this section.
    (i) ``Direct product'' of ``technology'' or ``software.'' A 
foreign-produced item meets the product scope of this paragraph if it 
meets both of the following conditions:
    (A) The foreign-produced item is the ``direct product'' of U.S.-
origin ``technology'' or ``software'' that is specified in ECCN 9D515 
or 9E515; and
    (B) The foreign-produced item is specified in a 9x515 ECCN.
    (ii) ``Direct product'' of a complete plant or `major component' of 
a plant. A foreign-produced item meets the product scope of this 
paragraph if it meets both of the following conditions:
    (A) The foreign-produced item is a ``direct product'' of a complete 
plant or any `major component' of a plant that itself is the ``direct 
product'' of U.S.-origin ``technology'' specified in ECCN 9E515; and
    (B) The foreign-produced item is specified in a 9x515 ECCN.
    (2) Country scope of 9x515 FDP rule. A foreign produced item meets 
the country scope of this paragraph if its destination is listed in 
Country Group D:5, E:1, or E:2 (see supplement no. 1 to part 740 of the 
EAR).
    (d) ``600 series'' FDP rule. A foreign-produced item is subject to 
the EAR if it meets both the product scope in paragraph (d)(1) of this 
section and the country scope in paragraph (d)(2) of this section.

     Note 1 to paragraph (d) introductory text: As described in the 
CCL, ECCN 0A919 is included in this paragraph because it includes 
the ``direct product'' of ``600 series'' ``technology'' or 
``software''.

    (1) Product scope of ``600 series'' FDP rule. The product scope 
applies if a foreign-produced item meets the conditions of either 
paragraph (d)(1)(i) or (ii) of this section.
    (i) ``Direct product'' of ``technology'' or ``software.'' A 
foreign-produced item

[[Page 6025]]

meets the product scope of this paragraph if it meets both of the 
following conditions:
    (A) The foreign-produced item is the ``direct product'' of U.S.-
origin ``technology'' or ``software'' that is specified in a ``600 
series'' ECCN; and
    (B) The foreign-produced item is specified in a ``600 series'' ECCN 
or ECCN 0A919.
    (ii) ``Direct product'' of a complete plant or `major component' of 
a plant. Foreign-produced items meet the product scope of this 
paragraph if they meet both of the following conditions:
    (A) The foreign-produced item is the ``direct product'' of a 
complete plant or `major component' of a plant that itself is the 
``direct product'' of U.S.-origin ``technology'' that is specified in a 
``600 series'' ECCN; and
    (B) The foreign produced item is specified in a ``600 series'' 
ECCN.
    (2) Country scope of ``600 series'' FDP rule. A foreign-produced 
item meets the country scope of this paragraph if it is destined to a 
country listed in Country Group D:1, D:3, D:4, D:5, E:1, or E:2 (see 
supplement no.1 to part 740 of the EAR).
    (e) Entity List FDP rule. A foreign-produced item is subject to the 
EAR if it meets both the product scope in paragraph (e)(1) of this 
section and the end-user scope in paragraph (e)(2) of this section. See 
Sec.  744.11(a) of the EAR for license requirements, license review 
policy, and license exceptions applicable to foreign-produced items 
that are subject to the EAR pursuant to this paragraph.
    (1) Product Scope of Entity List FDP rule. The product scope 
applies if a foreign-produced item meets the conditions of either 
paragraph (e)(1)(i) or (ii) of this section.
    (i) ``Direct product'' of ``technology'' or ``software.'' A 
foreign-produced item meets the product scope of this paragraph if the 
foreign-produced item is a ``direct product'' of ``technology'' or 
``software'' subject to the EAR and specified in ECCN 3D001, 3D991, 
3E001, 3E002, 3E003, 3E991, 4D001, 4D993, 4D994, 4E001, 4E992, 4E993, 
5D001, 5D991, 5E001, or 5E991 of the Commerce Control List (CCL) in 
supplement no. 1 to part 774 of the EAR; or
    (ii) ``Direct product'' of a complete plant or `major component' of 
a plant. A foreign-produced item meets the product scope of this 
paragraph if the foreign-produced item is produced by any plant or 
`major component' of a plant that is located outside the United States, 
when the plant or `major component' of a plant, whether made in the 
U.S. or a foreign country, itself is a ``direct product'' of 
``technology'' or ``software'' subject to the EAR that is specified in 
ECCN 3D001, 3D991, 3E001, 3E002, 3E003, 3E991, 4D001, 4D993, 4D994, 
4E001, 4E992, 4E993, 5D001, 5D991, 5E001, or 5E991 of the CCL.

     Note 2 to paragraph (e)(1): A foreign-produced item includes 
any foreign-produced wafer whether finished or unfinished.

    (2) End-user scope of the Entity List FDP rule. A foreign-produced 
item meets the end-user scope of this paragraph if there is 
``knowledge'' that:
    (i) Activities involving Footnote 1 designated entities. The 
foreign-produced item will be incorporated into, or will be used in the 
``production'' or ``development'' of any ``part,'' ``component,'' or 
``equipment'' produced, purchased, or ordered by any entity with a 
footnote 1 designation in the license requirement column of the Entity 
List in Supplement No. 4 to part 744 of the EAR; or
    (ii) Footnote 1 designated entities as transaction parties. Any 
entity with a footnote 1 designation in the license requirement column 
of the Entity List in Supplement No. 4 to part 744 of the EAR is a 
party to any transaction involving the foreign-produced item, e.g., as 
a ``purchaser,'' ``intermediate consignee,'' ``ultimate consignee,'' or 
``end-user.''

PART 736--GENERAL PROHOBITIONS

0
3. The authority citation for part 736 continues to read as follows:

    Authority: 50 U.S.C. 4801-4852; 50 U.S.C. 4601 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; E.O. 13338, 69 FR 26751, 3 CFR, 2004 Comp., 
p. 168; Notice of November 10, 2021, 86 FR 62891 (November 12, 
2021); Notice of May 6, 2021, 86 FR 26793 (May 10, 2021).


0
4. Section 736.2 is amended by revising paragraph (b)(3) to read as 
follows:


Sec.  736.2  General prohibitions and determination of applicability.

* * * * *
    (b) * * *
    (3) General Prohibition Three--Foreign-direct product (FDP) rules--
(i) You may not, without a license or license exception, export from 
abroad, reexport, or transfer (in-country) foreign-``direct products'' 
subject to the EAR pursuant to Sec.  734.9 if such items are subject to 
a license requirement in part 736, 742, 744, 746, or 764 of the EAR.
    (ii) Each license exception described in part 740 of the EAR 
supersedes General Prohibition Three if all terms and conditions of a 
given license exception are met and none of the restrictions of Sec.  
740.2 or 744.11(a) apply.

PART 744--CONTROL POLICY: END-USER AND END-USER BASED

0
5. The authority citation for part 744 continues to read as follows:

    Authority:  50 U.S.C. 4801-4852; 50 U.S.C. 4601 et seq.; 50 
U.S.C. 1701 et seq.; 22 U.S.C. 3201 et seq.; 42 U.S.C. 2139a; 22 
U.S.C. 7201 et seq.; 22 U.S.C. 7210; E.O. 12058, 43 FR 20947, 3 CFR, 
1978 Comp., p. 179; E.O. 12851, 58 FR 33181, 3 CFR, 1993 Comp., p. 
608; E.O. 12938, 59 FR 59099, 3 CFR, 1994 Comp., p. 950; E.O. 13026, 
61 FR 58767, 3 CFR, 1996 Comp., p. 228; E.O. 13099, 63 FR 45167, 3 
CFR, 1998 Comp., p. 208; E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., 
p. 783; E.O. 13224, 66 FR 49079, 3 CFR, 2001 Comp., p. 786; Notice 
of September 15, 2021, 86 FR 52069 (September 17, 2021); Notice of 
November 10, 2021, 86 FR 62891 (November 12, 2021).


0
6. Section 744.11 is amended by revising paragraph (a) to read as 
follows:


Sec.  744.11  License requirements that apply to entities acting 
contrary to the national security or foreign policy interests of the 
United States.

* * * * *
    (a) License requirement, availability of license exceptions, and 
license application review policy. (1) A license is required, to the 
extent specified on the Entity List, to export, reexport, or transfer 
(in-country) any item subject to the EAR when an entity that is listed 
on the Entity List is a party to the transaction as described in Sec.  
748.5(c) through (f). License exceptions may not be used unless 
authorized in the Entity List entry for the entity that is party to the 
transaction. Applications for licenses required by this section will be 
evaluated as stated in the Entity List entry for the entity that is 
party to the transaction, in addition to any other applicable review 
policy stated elsewhere in the EAR.
    (2) Entity List Foreign-Direct Product (FDP) license requirements, 
review policy, and license exceptions. You may not, without a license 
or license exception, reexport, export from abroad, or transfer (in-
country) any foreign-produced item subject to the EAR pursuant to Sec.  
734.9(e) of the EAR to any end user described in Sec.  734.9(e)(2) of 
the EAR. All license exceptions described in part 740 of the EAR are 
available for foreign-produced items that are subject to this license 
requirement if all terms and conditions of the applicable license

[[Page 6026]]

exception are met and the restrictions in Sec.  740.2 do not apply. The 
sophistication and capabilities of technology in items is a factor in 
license application review; license applications for foreign-produced 
items subject to a license requirement by this paragraph (a)(2) that 
are capable of supporting the ``development'' or ``production'' of 
telecom systems, equipment and devices below the 5G level (e.g., 4G, 
3G) will be reviewed on a case-by-case basis.
* * * * *

0
7. Supplement No. 4 to part 744 is amended by:
0
a. Removing the phrase ``see Sec. Sec.  736.2(b)(3)(vi),\1\'' wherever 
it appears and adding in its place ``see Sec. Sec.  734.9(e),\1\'' ; 
and
0
b. Revising footnote 1.
    The revision reads as follows:

Supplement No. 4 to Part 744--Entity List

* * * * *
    \1\ For this entity, see Sec.  734.9(e) of the EAR for foreign-
produced items that are subject to the EAR and Sec.  744.11 of the 
EAR for related license requirements, license review policy, and 
applicable license exceptions.
* * * * *

PART 774--THE COMMERCE CONTROL LIST

0
8. The authority citation for part 774 continues to read as follows:

    Authority:  50 U.S.C. 4801-4852; 50 U.S.C. 4601 et seq.; 50 
U.S.C. 1701 et seq.; 10 U.S.C. 8720; 10 U.S.C. 8730(e); 22 U.S.C. 
287c, 22 U.S.C. 3201 et seq.; 22 U.S.C. 6004; 42 U.S.C. 2139a; 15 
U.S.C. 1824; 50 U.S.C. 4305; 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.


0
9. In supplement no. 1 to part 774, Category 0, ECCN 0A919 is revised 
to read as follows:

Supplement No. 1 to Part 774--The Commerce Control List

* * * * *

0A919 ``Military commodities'' located and produced outside the United 
States as follows (see list of items controlled)

License Requirements

Reasons for Control: RS, AT

 
                                            Country Chart (see Supp. No.
                Control(s)                         1 to part 738)
 
RS applies to entire entry................  RS Column 1, See Sec.
                                             742.6(a)(3) for license
                                             requirements.
AT applies to entire entry................  AT Column 1.
 

List Based License Exceptions (See Part 740 for a description of all 
license exceptions)

LVS: N/A
GBS: N/A

List of Items Controlled

    Related Controls: (1) ``Military commodities'' are subject to 
the export licensing jurisdiction of the Department of State if they 
incorporate items that are subject to the International Traffic in 
Arms Regulations (ITAR) (22 CFR parts 120-130). (2) ``Military 
commodities'' described in this paragraph are subject to the export 
licensing jurisdiction of the Department of State if such 
commodities are described on the U.S. Munitions List (22 CFR part 
121) and are in the United States. (3) The furnishing of assistance 
(including training) to foreign persons, whether in the United 
States or abroad, in the design, development, engineering, 
manufacture, production, assembly, testing, repair, maintenance, 
modification, operation, demilitarization, destruction, processing, 
or use of defense articles that are subject to the ITAR; or the 
furnishing to foreign persons of any technical data controlled under 
22 CFR 121.1 whether in the United States or abroad are under the 
licensing jurisdiction of the Department of State. (4) Brokering 
activities (as defined in 22 CFR 129) of ``military commodities'' 
that are subject to the ITAR are under the licensing jurisdiction of 
the Department of State.
    Related Definitions: ``Military commodity'' or ``military 
commodities'' means an article, material or supply that is described 
on the U.S. Munitions List (22 CFR part 121) or on the Munitions 
List that is published by the Wassenaar Arrangement on Export 
Controls for Conventional Arms and Dual-Use Goods and Technologies 
(i.e., the Wassenaar Arrangement Munitions List (WAML)), but does 
not include software, technology, any item listed in any ECCN for 
which the last three numerals are 018, or any item in the ``600 
series.''
    Items:
    a. ``Military commodities'' produced and located outside the 
United States that are not subject to the International Traffic in 
Arms Regulations (22 CFR parts 120-130) and having any of the 
following characteristics:
    a.1. Incorporate more than a de minimis amount of U.S.-origin 
controlled content classified under ECCNs 6A002, 6A003, or 6A993.a 
(having a maximum frame rate equal to or less than 9 Hz and thus 
meeting the criterion of Note 3.a to 6A003.b.4);
    a.2. Incorporate more than a de minimis amount of U.S.-origin 
``600 series'' controlled content (see Sec.  734.4 of the EAR); or
    a.3. Are direct products of U.S.-origin ``600 series'' 
technology or software (see Sec.  734.9(d) of the EAR).
    b. [Reserved]
* * * * *

Thea D. Rozman Kendler,
Assistant Secretary for Export Administration.
[FR Doc. 2022-02302 Filed 2-2-22; 8:45 am]
BILLING CODE 3510-33-P