Export Control Measures Under the Export Administration Regulations (EAR) To Address Iranian Unmanned Aerial Vehicles (UAVs) and Their Use by the Russian Federation Against Ukraine, 12150-12155 [2023-03930]

Agencies

• DEPARTMENT OF COMMERCE
• Bureau of Industry and Security

[Federal Register Volume 88, Number 38 (Monday, February 27, 2023)]
[Rules and Regulations]
[Pages 12150-12155]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-03930]



[[Page 12150]]

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DEPARTMENT OF COMMERCE

Bureau of Industry and Security

15 CFR Parts 734 and 746

[Docket No. 230221-0049]
RIN 0694-AJ12


Export Control Measures Under the Export Administration 
Regulations (EAR) To Address Iranian Unmanned Aerial Vehicles (UAVs) 
and Their Use by the Russian Federation Against Ukraine

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

ACTION: Final rule.

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SUMMARY: This rule amends the Export Administrations Regulations (EAR) 
to impose new export control measures on Iran. These measures address 
the use of Iranian Unmanned Aerial Vehicles (UAVs) by the Russian 
Federation (Russia) in its ongoing war against Ukraine, contrary to 
U.S. national security and foreign policy interests. Although UAVs are 
also known as Unmanned Aircraft Systems (UASs), for purposes of 
consistency with the Missile Technology Control Regime (MTCR) they are 
referred to as UAVs in the EAR. These amendments to the EAR target 
Iran's supply of UAVs to Russia to enhance Russia's defense industrial 
base and its military efforts against Ukraine and build on prior EAR 
amendments, including the addition of Iranian entities to the Entity 
List as Russian `military end users.' Specifically, these controls 
impose license requirements for a subset of EAR99 items that are 
destined to Iran, regardless of whether a U.S. person is involved in 
the transaction. Such items are identified by Harmonized Tariff 
Schedule (HTS)-6 Codes in a new supplement added to the EAR, which will 
allow BIS and other relevant U.S. Government agencies to track and 
quantify these exports. This rule also identifies certain foreign-
produced items as subject to the EAR by adding a new foreign direct 
product (FDP) rule specific to Iran that applies to items in certain 
categories of the Commerce Control List (CCL) and the EAR99 items 
identified in this new supplement. This rule similarly revises the 
EAR's existing Russia/Belarus FDP rule to reference these EAR99 items. 
Together with a separate rule published in the same issue of the 
Federal Register adding export controls for Russia and Belarus, these 
changes impose license requirements on additional exports from abroad 
and reexports to Iran, Russia, and Belarus, with the purpose of 
degrading the Iranian UAV program and Russia's use of such UAVs against 
Ukraine.

DATES: This rule is effective on February 24, 2023.

FOR FURTHER INFORMATION CONTACT: For general questions on this final 
rule, contact Eileen Albanese, Director, Office of National Security 
and Technology Transfer Controls, Bureau of Industry and Security, 
Department of Commerce, Phone: (202) 482-0092, Email: [email protected]. 
For emails, include ``Iran UAVs-RIN 0694-AJ12'' in the subject line.

SUPPLEMENTARY INFORMATION: 

I. Background

    In response to Russia's February 2022 further invasion of Ukraine, 
BIS imposed extensive export controls on Russia under the EAR (15 CFR 
parts 730 through 774) as part of the final rule Implementation of 
Sanctions Against Russia Under the Export Administration Regulations 
(EAR) (the Russia Sanctions Rule), effective on February 24, 2022, and 
published on March 3, 2022 (87 FR 12226). Since the publication of the 
Russia Sanctions Rule, BIS has published several other final rules 
imposing stringent export controls on Russia. The new restrictions 
included two new Russia (and Belarus)-specific Foreign-Direct Product 
rules. See Sec.  734.9(f)(1)(i) and (ii). U.S. allies have implemented 
substantially similar measures against Russia. The BIS actions reflect 
the U.S. Government's position that Russia's further invasion of 
Ukraine and Belarus' complicity in such invasion flagrantly violated 
international law, is contrary to U.S. national security and foreign 
policy interests, and undermines global order, peace, and security.
    Consistent with the U.S. Government's and its allies' commitment to 
further strengthening the impact of export control measures in response 
to Russia's aggression, this rule amends the EAR to impose new controls 
to address the use of Iranian UAVs in ways that are contrary to U.S. 
national security and foreign policy interests, specifically, by Russia 
against Ukraine. Iran has been supplying Iranian UAVs to Russia to 
enhance Russia's defense industrial base in the country's ongoing 
military assault in Ukraine. BIS and U.S. Government allies and 
partners have taken additional actions to restrict Iran's ability to 
obtain ``items'' required to manufacture UAVs, such as the blocking 
restrictions put in place by the European Union (EU) on identified 
Iranian drone companies and export restrictions on relevant low-level 
items where there is knowledge the items are ultimately destined to 
Russia. On January 31, 2023, BIS added seven Iranian entities involved 
in the manufacture of UAVs to the Entity List as Russian `Military End 
Users,' thereby subjecting them to some of the most comprehensive 
export restrictions under the EAR, including on foreign-produced items 
under the Russia/Belarus-Military End User FDP rule (see Sec.  734.9(g) 
of the EAR). 88 FR 6621 (Feb. 1, 2023). Recent investigations indicate 
that pieces of Iranian UAVs have been found on the battlefield in 
Ukraine, in some cases with U.S.-branded ``parts'' and ``components.''
    Iran is already subject to comprehensive export restrictions under 
U.S. law, including pursuant to Sec.  746.7 of the EAR. This rule 
builds on recent efforts to target Russian activity involving Iran-
supplied UAVs by imposing new destination-based controls on Iran. These 
new controls impose export and reexport license requirements on a 
subset of EAR99 items, i.e., items not specified on the Commerce 
Control List (supplement no. 1 to part 774 of the EAR) if destined to 
Iran, regardless of whether a U.S. person, is involved in the 
transaction. Such items are identified by HTS-6 Codes in a new 
supplement for Iran that is being added to the EAR by this rule and 
require a license for exports and reexports to Iran. This rule also 
adds a new FDP rule specific to Iran for items in certain categories of 
the CCL. The new FDP rule also covers certain other items identified in 
this new supplement to render additional foreign-produced items subject 
to the EAR. This rule similarly revises the existing Russia/Belarus FDP 
rule to reference these foreign-produced items to ensure that the items 
described in this supplement will be similarly controlled to Russia and 
Belarus when they are also the ``direct product'' of certain U.S.-
origin ``technology'' or ``software,'' or are produced by a plant or a 
`major component' of a plant which is itself the ``direct product'' of 
certain U.S.-origin ``technology'' or ``software.'' Together, with a 
separate rule published in the same issue of the Federal Register 
adding export controls for Russia and Belarus, these changes impose 
license requirements on additional exports from abroad and reexports to 
Iran, Russia, and Belarus, with the purpose of substantially degrading 
the Iranian UAV program and Russia's use of such UAVs against Ukraine. 
Some of the items added to supplement no. 7 to part 746 already 
required a license for exports,

[[Page 12151]]

reexports, and transfers (in-country) to Russia and Belarus prior to 
this rule because they were already identified on supplement no. 4 or 5 
to part 746. The separate rule published in the same issue of the 
Federal Register is adding the remaining items added by this rule to 
supplement no. 7 to part 746 to supplement no. 4 or 5 to impose a 
license requirement for exports and reexports and transfers within 
Russia and Belarus and to align those other controls with U.S. allies.

II. Overview of New Controls

    For the reasons stated above, this rule takes four actions 
targeting Iranian UAVs.
    First, BIS is creating a list of items used in Iranian UAVs. This 
rule identifies these items using HTS-6 codes in a new supplement no. 7 
to part 746 of the EAR.
    Second, this rule, in conjunction with a separate rule in the same 
issue of the Federal Register adding export controls for Russia and 
Belarus, expands the Russia/Belarus FDP rule and adds an Iran FDP rule 
to ensure that foreign-produced items identified in new supplement no. 
7 to part 746 are subject to the EAR when they are destined to Russia, 
Belarus, or Iran, and that certain foreign-produced items specified in 
any ECCN in Categories 3 through 5 or 7 on the CCL are subject to the 
EAR when they are destined for Iran.
    Third, this rule expands the license requirements for Iran in Sec.  
746.7 of the EAR to include requirements for exports and reexports of 
items identified in new supplement no. 7 to part 746 (including 
foreign-made items subject to the EAR under the new Iran FDP rule 
described in Sec.  734.9(j)).
    Fourth, this rule exempts countries identified in supplement no. 3 
to part 746 (Countries Excluded from Certain License Requirements, 
pursuant to Sec.  746.8), from some of the new controls on foreign-
produced items described in new supplement no. 7 to part 746.

III. Amendments to the Export Administration Regulations (EAR)

    This rule imposes new export controls on Iran in connection with 
its UAV program in order to degrade Iran's ability to support Russia's 
military aggression in Ukraine, as described below:
    A. Imposition of additional license requirements for Iran covering 
items used in UAVs that are identified by HTS-6 codes in new supplement 
no. 7 to part 746.
    In part 746, this rule adds a new supplement no. 7 to part 746--
Items that Require a License under Sec.  746.7 When Destined for Iran 
and under Sec.  746.8 When Destined to Russia or Belarus. This rule 
adds these items because they are useful in Iran's UAV program and 
Russia has used such UAVs in its further invasion of Ukraine. New 
supplement no. 7 to part 746 consists of two columns: HTS-6 Code and 
the HTS Description. This rule adds twelve entries to the new 
supplement. These HTS-6 codes cover a greater range of items than those 
described in existing Export Control Classification Numbers (ECCNs) on 
the CCL, and will consequently capture items that are designated EAR99 
(i.e., not specifically described on the CCL).
    This rule adds a paragraph (a) to the introductory text of the 
supplement to explain the origin of the HTS-6 codes and descriptions in 
this list, i.e., the United States International Trade Commission 
(USITC's) HTS of the United States (2023). Similar to introductory text 
set forth in the supplement no. 4 to part 746, this paragraph specifies 
that the items described in supplement no. 7 to part 746 include any 
modified or designed ``components,'' ``parts,'' ``accessories,'' and 
``attachments'' therefor to the items listed in the supplement 
regardless of the HTS Code or HTS Description of the ``components,'' 
``parts,'' ``accessories,'' and ``attachments,'' except that any 
``part'' or minor ``component'' that is a fastener (e.g., screw, bolt, 
nut, nut plate, stud, insert, clip, rivet, pin), washer, spacer, 
insulator, grommet, bushing, spring, wire, or solder is excluded. New 
paragraph (a) also advises exporters with general questions on HTS 
codes to contact an import specialist at U.S. Customs and Border 
Protection at the nearest port of export. Exporters with questions on 
how to classify an item on the CCL or whether a particular 
``component,'' ``part,'' accessory,'' or ``attachment'' therefor is 
``modified or designed'' for an item listed in supplement no. 7 to part 
746 should contact BIS.
    This rule also adds a paragraph (b) to the introductory text of the 
supplement to specify that the items identified in the HTS-6 Code 
column of supplement no. 7 to part 746 are subject to the license 
requirements under Sec. Sec.  746.7(a)(1)(ii) and (iii) and 
746.8(a)(2). Paragraph (b) clarifies that the HTS Description column is 
intended to assist exporters with their Automated Export System (AES) 
filing responsibilities. BIS clarifies here that a subjective 
interpretation of the HTS Description does not determine whether an 
item is subject to the license requirements under Sec. Sec.  
746.7(a)(1)(ii) and (iii) and 746.8(a)(2). If an item is classified 
under any 10-digit Schedule B, or 8-digit HTS code beginning with the 
HTS-6 Code indicated in supplement no. 7 to part 746, then it is 
subject to the license requirements under Sec. Sec.  746.7(a)(1)(ii) 
and (iii) and 746.8(a)(2), regardless of how the HTS Description is 
interpreted. For example, if an exporter, reexporter, or transferor 
``knows'' their item is classified under an HTS-6 Code in supplement 
no. 7 to part 746, but disagrees that their item matches the HTS 
Description in supplement no. 7 to part 746, in that scenario, then the 
HTS-6 Code is still controlling for determining the license requirement 
under Sec. Sec.  746.7(a)(1)(ii) and (iii) and 746.8(a)(2), even if 
someone believes their item could potentially meet the description of 
more than one HTS Description. As noted above, the HTS Description is 
intended to assist exporters with their AES filing responsibilities, 
but is not determinative for whether an item is identified under 
supplement no. 7 to part 746.
    The use of the HTS-6 Code to identify the license requirements for 
these items will ease compliance burdens on exporters and reexporters 
because the HTS-6 Code is more precise than the HTS Description. The 
use of the HTS-6 Code for identifying the license requirement will also 
help to enhance the enforcement of these items because the HTS-6 Code 
will be easier to identify in the Electronic Export Information (EEI) 
in AES.
    BIS estimates the addition of supplement no. 7 to part 746 will not 
result in any additional license applications submitted to BIS 
annually, because the export and reexport to Iran of items newly 
subject to the EAR will be subject to the regulatory authority of the 
U.S. Department of the Treasury's Office of Foreign Assets Control 
(OFAC) to the extent the export or reexport is prohibited by 31 CFR 
560.204 or 560.205 of the Iranian Transactions and Sanctions 
Regulations, 31 CFR part 560 (ITSR); such exports and reexports 
therefore will be subject to the licensing jurisdiction of OFAC and 
eligible for general or specific licenses issued--pursuant to the ITSR 
for purposes of these destination-based license requirements for Iran. 
Any export, reexport, or transfer (in-country) subject to a part 744 
end-use or end-user license requirements will still require a separate 
authorization from BIS.
    B. Expansion of Russia/Belarus FDP rule and addition of new Iran 
FDP rule for items identified in new supplement no. 7 to part 746.
    This rule makes two changes to Sec.  734.9 Foreign-Direct Product 
(FDP)

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Rules related to the new supplement no. 7 to part 746.
    1. Expansion of Russia/Belarus FDP rule. This rule revises the 
existing Russia/Belarus FDP rule in paragraphs (f)(1)(i)(B) and 
(f)(1)(ii)(B) of Sec.  734.9 to reference new supplement no. 7 to part 
746, which expands the product scope of the Russia/Belarus FDP rule to 
include items identified in new supplement no. 7 to part 746, even if 
such items are designated EAR99 when they meet the FDP criteria under 
paragraph (f). The items this rule adds to supplement no. 7 to part 746 
includes ``parts'' and ``components'' that are used in UAVs that have 
been found on the battlefield in Ukraine. As detailed above, Russia has 
been relying on Iran's UAVs for use in strikes against Ukraine. Many of 
the ``parts'' and ``components'' found in such UAVs are branded as U.S. 
or U.S.-origin, including by referring to U.S. manufacturers. However, 
such branding does not definitively indicate that such items were 
produced in the United States. Thus, expanding the foreign direct 
product rule to cover these items will help ensure that such products 
are not available for shipment to Iran for use in the manufacture of 
UAVs that are being used by Russia in Ukraine.
    This rule also revises paragraph (f)(1)(i)(B) and (f)(1)(ii)(B) of 
Sec.  734.9 to remove the term ``identified'' and adds in its place the 
phrase ``specified in any ECCN on the CCL.'' This rule also removes the 
phrase ``or is not designated EAR99,'' because the phrase is no longer 
needed with the other revisions made to these two paragraphs. These 
changes will align the text more closely with the same type of text 
used in the other FDP rules in Sec.  734.9.
    This rule also revises paragraph (f)(2) of Sec.  734.9 to remove 
the phrase ``not designated EAR99'' and adding in its place the phrase 
``specified in any ECCN on the CCL or in supplement no. 6 or 7.'' The 
revision to add ``specified in any ECCN'' is a clarification and the 
addition of ``supplement no. 6 or 7'' is a conforming change to reflect 
the current scope of the Russia/Belarus FDP rule.
    BIS estimates these changes to Sec.  734.9(f) will not result in 
any additional license applications submitted to BIS annually, because 
even though this rule will add items subject to the EAR, the license 
review policy of denial generally discourages applicants from 
submitting licenses.
    2. Addition of new Iran FDP rule. This rule adds a new foreign 
direct product rule under paragraph (j) (Iran FDP rule) of Sec.  734.9 
of the EAR. This Iran FDP rule is generally modeled after the Russia/
Belarus FDP rule in Sec.  734.9(f), but with slight differences to make 
the Iran FDP rule more narrowly targeted at Iran's UAV activities of 
concern. The Iran FDP rule establishes jurisdiction over foreign-
produced items that are the direct product of U.S.-origin software or 
technology classified in Categories 3 through 5 and 7 of the CCL, or 
are produced by a plant or major component of a plant which itself is 
the ``direct product'' of such software or technology. The product 
scope is limited to foreign-produced items identified in supplement no. 
7 to part 746--including items designated EAR99--and to items 
classified in any ECCN in Categories 3 through 5 or 7 of the CCL.
    As further described below, transactions from or within countries 
identified in supplement no. 3 to part 746 are exempted from the 
license requirements for items subject to this new FDP rule.
    BIS estimates that the addition of paragraph (j) to Sec.  734.9 
will result in an additional five license applications submitted to BIS 
annually.
    C. Expansion of Iran controls under part 746 to impose license 
requirements for items identified in new supplement no. 7 to part 746 
and for foreign-produced items made subject to the EAR under the new 
Iran FDP rule.
    In Sec.  746.7--Iran, this rule revises the fourth sentence of the 
introductory text to the section to add a reference to new licensing 
requirement paragraphs in Sec.  746.7. This rule also revises paragraph 
(a) (License Requirements) for Iran by redesignating the existing text 
of paragraph (a)(1) (apart from the paragraph (a)(1) heading) as new 
paragraph (a)(1)(i) (CCL-based license requirements). This rule adds a 
new license requirement to Sec.  746.7 under new paragraph (a)(1)(ii) 
(Supplement no. 7 to part 746 of the EAR license requirements) for 
export or reexport of items identified in new supplement no. 7 to part 
746, and adds a new license requirement for the export from abroad or 
reexport of foreign-produced items subject to the EAR because of the 
new Iran FDP rule under new paragraph (a)(1)(iii). This rule also adds 
new paragraph (a)(1)(iv) to exempt certain exports from abroad and 
reexports from countries identified in supplement no. 3 to part 746 
from the license requirement in paragraph (a)(1)(iii) and adds new 
paragraph (a)(1)(v) to exempt items designated EAR99 and identified in 
supplement no. 7 to part 746 from consideration as U.S.-origin 
controlled content when incorporated into a foreign-made item exported 
or reexported from a country identified in supplement no. 3 to part 
746. The exemptions in paragraphs (a)(1)(iv) and (v) are similar in 
regulatory construction to those that apply to the same countries for 
purposes of export controls on Russia and Belarus in Sec.  746.8 of the 
EAR.
    As a conforming change, this final rule also revises supplement no. 
2 to part 734--Guidelines for De Minimis Rules, by revising the third 
sentence of paragraph (a)(1), which specifies that exporters must use 
the license requirements in part 746 for identifying U.S.-origin 
controlled content for de minimis purposes (excluding U.S.-origin 
content that meets the criteria in Sec.  746.8(a)(5)). This final rule 
revises this parenthetical phrase to specify that U.S.-origin 
controlled content that meets the criteria in Sec.  746.7(a)(1)(v) is 
also excluded from de minimis calculations when identifying controlled 
U.S.-origin content.
    As currently stated in Sec.  746.7 of the EAR, and as applied to 
the new license requirements added by this rule, if a transaction is 
authorized by the U.S. Department of the Treasury, Office of Foreign 
Assets Control (OFAC), separate authorization from BIS is not required. 
However, BIS authorization will generally be required for transactions 
that require a license from BIS under the new Iran license requirements 
added by this rule but that are not subject to the ITSR, unless an 
exemption applies (e.g., exports of foreign-produced items subject to 
the new Iran FDP rule that do not involve U.S. persons and that would 
not qualify for an OFAC general license if subject to the ITSR).
    BIS adds a sentence to the end of new paragraph (a)(1)(iii) under 
Sec.  746.7 to specify that reexports and exports from abroad of 
foreign-produced items that would have otherwise met all of the terms 
and conditions of an OFAC general license if the transactions had been 
subject to OFAC license requirements are exempt from BIS license 
requirements in paragraph (a)(1)(iii). This exemption was added because 
of the potential for the Iran FDP rule to reach certain items that may 
be used in applications other than to develop or produce Iran UAVs, 
such as use in medical devices or communications devices authorized for 
export or reexport to Iran under the ITSR. To the extent that foreign-
produced items subject to the EAR under the Iran FDP rule fall outside 
the scope of OFAC jurisdiction, BIS will treat transactions involving 
such foreign-produced items consistently with comparable transactions 
that are eligible for OFAC general licenses if they were conducted by 
U.S. persons or

[[Page 12153]]

involved reexports of items exported from the United States. Questions 
about whether a transaction is exempt because it is comparable to a 
transaction that would be authorized if subject to the ITSR should be 
directed to OFAC.
    D. Conforming change to expand the scope of supplement no. 3 to 
part 746 to reflect allied countries' exclusion from the new Iran FDP 
rule.
    In supplement no. 3 to part 746--Countries Excluded from Certain 
License Requirements, pursuant to Sec.  746.8, this rule revises the 
heading of the supplement to add a reference to the Iran export 
controls section under Sec.  746.7. This rule also adds a new second 
sentence to the introductory text of the supplement to specify that the 
countries in the supplement are excluded from certain requirements 
related to Iran in Sec.  746.7 of the EAR, as described in Sec.  
746.7(a)(1)(iv) and (v).

Savings Clause

    Shipments of items removed from eligibility for a License Exception 
or export, reexport, or transfer (in-country) without a license (NLR) 
as a result of this regulatory action that were en route aboard a 
carrier to a port of export, reexport, or transfer (in-country), on 
February 24, 2023, pursuant to actual orders for export, reexport, or 
transfer (in-country) to or within a foreign destination, may proceed 
to that destination under the previous eligibility for a License 
Exception or export, reexport, or transfer (in-country) without a 
license (NLR), provided the export, reexport, or transfer (in-country) 
is completed no later than on March 27, 2023.

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 the Export Control Reform Act of 2018 (ECRA) (codified, as 
amended, at 50 U.S.C. 4801-4852). ECRA provides the legal basis for 
BIS's principal authorities and serves as the authority under which BIS 
issues this rule. To the extent it applies to certain activities that 
are the subject of this rule, the Trade Sanctions Reform and Export 
Enhancement Act of 2000 (TSRA) (codified, as amended, at 22 U.S.C. 
7201-7211) also serves as authority for this rule.

Rulemaking Requirements

    1. This final rule is not a ``significant regulatory action'' 
because it ``pertain[s]'' to a ``military or foreign affairs function 
of the United States'' under sec. 3(d)(2) of Executive Order 12866.
    2. Notwithstanding any other provision of law, no person is 
required to respond to, nor shall any person be subject to a penalty 
for failure to comply with, a collection of information subject to the 
requirements of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et 
seq.) (PRA), unless that collection of information displays a currently 
valid Office of Management and Budget (OMB) Control Number.
    This rule involves the following OMB-approved collections of 
information subject to the PRA:
     0694-0088, ``Multi-Purpose Application,'' which carries a 
burden hour estimate of 29.4 minutes for a manual or electronic 
submission;
     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.
    BIS estimates that these new controls on Iran under the EAR will 
result in an increase of five license applications submitted annually 
to BIS. However, the additional burden falls within the existing 
estimates currently associated with these control numbers. Additional 
information regarding these collections of information--including all 
background materials--can be found at https://www.reginfo.gov/public/do/PRAMain by using the search function to enter either the title of 
the collection or the OMB Control Number.
    3. This rule does not contain policies with federalism implications 
as that term is defined in Executive Order 13132.
    4. Pursuant to section 1762 of the Export Control Reform Act of 
2018 (50 U.S.C. 4821) (ECRA), 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. While section 1762 of ECRA provides 
sufficient authority for such an exemption, this action is also 
independently exempt from these APA requirements because it involves a 
military or foreign affairs function of the United States (5. U.S.C. 
553(a)(1)).
    5. Because a notice of proposed rulemaking and an opportunity for 
public comment are not required to be given for this rule 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. 
Accordingly, no regulatory flexibility analysis is required and none 
has been prepared.

List of Subjects

15 CFR Part 734

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

15 CFR Part 746

    Exports, Reporting and recordkeeping requirements.

    For the reasons stated in the preamble, parts 734 and 746 of the 
Export Administration Regulations (15 CFR parts 730 through 774) are 
amended as follows:

PART 734--SCOPE OF THE EXPORT ADMINISTRATION REGULATIONS

0
1. The authority citation for 15 CFR part 734 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. 13637, 78 FR 16129, 3 CFR, 2014 Comp., 
p. 223; Notice of November 8, 2022, 87 FR 68015 (November 10, 2022).


0
2. Section 734.9 is amended by revising paragraphs (f)(1)(i)(B), 
(f)(1)(ii)(B), and (f)(2) and adding paragraph (j) to read as follows:


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

* * * * *
    (f) * * *
    (1) * * *
    (i) * * *
    (B) The foreign-produced item is specified in any ECCN on the CCL 
or in supplement no. 6 or 7 to part 746 of the EAR; or
    (ii) * * *
    (B) The foreign-produced item is specified in any ECCN on the CCL 
or in supplement no. 6 or 7 to part 746 of the EAR.
    (2) Destination scope of the Russia/Belarus FDP rule. A foreign-
produced item meets the destination scope of this paragraph (f)(2) if 
there is ``knowledge'' that the foreign-produced item is destined to 
Russia or Belarus or will be incorporated into or used in the 
``production'' or ``development'' of any ``part,'' ``component,'' or 
``equipment'' specified in any ECCN on the CCL or in supplement no. 6 
or 7 to part 746 of the EAR and produced in or destined to Russia or 
Belarus.
* * * * *
    (j) Iran FDP rule. A foreign-produced item is subject to the EAR if 
it meets both the product scope in paragraph

[[Page 12154]]

(j)(1) of this section and the destination scope in paragraph (j)(2) of 
this section. See Sec.  746.7 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 
(j).
    (1) Product scope of Iran FDP rule. The product scope applies if a 
foreign-produced item meets the conditions of either paragraph 
(j)(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 
(j)(1)(i) if the foreign-produced item meets both of the following 
conditions:
    (A) The foreign-produced item is the ``direct product'' of U.S.-
origin ``technology'' or ``software'' subject to the EAR that is 
specified in any ECCN in product groups D or E in Categories 3 through 
5 or 7 of the CCL; and
    (B) The foreign-produced item is identified in supplement no. 7 to 
part 746 of the EAR or is specified in any ECCN on the CCL in 
Categories 3 through 5 or 7 of the CCL; or
    (ii) Product of a complete plant or 'major component' of a plant 
that is a ``direct product.'' A foreign-produced item meets the product 
scope of this paragraph (j)(1)(ii) if it meets both of the following 
conditions:
    (A) 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 United 
States or a foreign country, itself is a ``direct product'' of U.S.-
origin ``technology'' or ``software'' subject to the EAR that is 
specified in any ECCN in product groups D or E in Categories 3 through 
5 or 7 of the CCL; and
    (B) The foreign-produced item is identified in supplement no. 7 to 
part 746 of the EAR or is specified in any ECCN on the CCL in 
Categories 3 through 5 or 7 of the CCL.
    (2) Destination scope of the Iran FDP rule. A foreign-produced item 
meets the destination scope of this paragraph (j)(2) if there is 
``knowledge'' that the foreign-produced item is destined to Iran or 
will be incorporated into or used in the ``production'' or 
``development'' of any ``part,'' ``component,'' or ``equipment,'' 
including any modified or designed ``components,'' ``parts,'' 
``accessories,'' and ``attachments'' therefor, identified in supplement 
no. 7 to part 746 of the EAR or is specified in any ECCN on the CCL in 
Categories 3 through 5 or 7 of the CCL that is located in or destined 
to Iran.

0
3. Supplement no. 2 to part 734 is amended by revising the third 
sentence of paragraph (a)(1) to read as follows:

Supplement No. 2 to Part 734--Guidelines for De Minimis Rules

    (a) * * *
    (1) * * * For purposes of identifying U.S.-origin controlled 
content, you should consult the Commerce Country Chart in supplement 
no. 1 to part 738 of the EAR and controls described in part 746 of the 
EAR (excluding U.S.-origin content that meets the criteria in 
Sec. Sec.  746.7(a)(1)(v) and 746.8(a)(5)). * * *
* * * * *

PART 746--EMBARGOES AND OTHER SPECIAL CONTROLS

0
4. The authority citation for 15 CFR part 746 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.; 22 U.S.C. 287c; Sec 1503, Pub. L. 108-11, 117 
Stat. 559; 22 U.S.C. 2151 note; 22 U.S.C. 6004; 22 U.S.C. 7201 et 
seq.; 22 U.S.C. 7210; E.O. 12854, 58 FR 36587, 3 CFR, 1993 Comp., p. 
614; E.O. 12918, 59 FR 28205, 3 CFR, 1994 Comp., p. 899; E.O. 13222, 
66 FR 44025, 3 CFR, 2001 Comp., p. 783; E.O. 13338, 69 FR 26751, 3 
CFR, 2004 Comp., p 168; Presidential Determination 2003-23, 68 FR 
26459, 3 CFR, 2004 Comp., p. 320; Presidential Determination 2007-7, 
72 FR 1899, 3 CFR, 2006 Comp., p. 325; Notice of May 9, 2022, 87 FR 
28749 (May 10, 2022).


0
5. Section 746.7 is amended by revising the fourth sentence of the 
introductory text and paragraph (a)(1) to read as follows:


Sec.  746.7  Iran.

    * * * In addition, BIS maintains licensing requirements on exports 
and reexports to or from Iran under the EAR as described in paragraphs 
(a)(1)(i) through (iii) of this section or elsewhere in the EAR (see, 
e.g., Sec.  742.8).
    (a) * * *
    (1) EAR license requirements--(i) CCL-based license requirements. A 
license is required under the EAR to export or reexport to Iran any 
item on the CCL containing a CB Column 1, CB Column 2, CB Column 3, NP 
Column 1, NP Column 2, NS Column 1, NS Column 2, MT Column 1, RS Column 
1, RS Column 2, CC Column 1, CC Column 2, CC Column 3, AT Column 1 or 
AT Column 2 in the Country Chart Column of the License Requirements 
section of an ECCN or classified under ECCNs 0A503, 0A980, 0A982, 
0A983, 0E982, 1C355, 1C395, 1C980, 1C982, 1C983, 1C984, 2A994, 2D994, 
2E994, 5A001.f.1, 5A980, 5D001 (for 5A001.f.1or for 5E001.a (for 
5A001.f.1, or for 5D001.a (for 5A001.f.1)), 5D980, 5E001.a (for 
5A001.f.1, or for 5D001.a (for 5A001.f.1)) or 5E980.
    (ii) Supplement no. 7 to part 746 of the EAR license requirements. 
A license is required under the EAR to export or reexport to Iran any 
item identified in supplement no. 7 to part 746 of the EAR when such 
item is subject to the EAR for any reason other than Sec.  734.9(j) of 
the EAR.
    (iii) Foreign-produced items subject to the EAR under Sec.  
734.9(j) of the EAR (Iran FDP rule). Except as described in paragraph 
(a)(1)(iv) of this section, a license is required to reexport or export 
from abroad to Iran any foreign-produced item subject to the EAR under 
the Iran FDP rule that is located in or destined to Iran. A Department 
of Commerce license is not required for transactions described in this 
paragraph (a)(1)(iii) that would have otherwise met all of the terms 
and conditions of an OFAC general license if the transactions had been 
subject to OFAC jurisdiction.
    (iv) Exclusion from license requirements under paragraph 
(a)(1)(iii) of this section. Exports from abroad or reexports from the 
countries described in supplement no. 3 to this part from the countries 
described in supplement no. 3 are not subject to the license 
requirements described in paragraph (a)(1)(iii) of this section, unless 
a limit to the exclusion is described in the ``Scope'' column in 
supplement no. 3.
    (v) Exclusion from scope of U.S.-origin controlled content under 
paragraph (a)(1) of this section. For purposes of determining U.S.-
origin controlled content under supplement no. 2 to part 734 of the EAR 
when making a de minimis calculation for reexports and exports from a 
country described in supplement no. 3 to this part to Iran, the license 
requirements in paragraph (a)(1)(ii) of this section are not used to 
determine controlled U.S.-origin content in a foreign-made item, 
provided the U.S.-origin content is identified in supplement no. 7 to 
this part and is designated EAR99 and is not otherwise excluded from 
the applicable ``Scope'' column in supplement no. 3 to this part.
* * * * *

0
6. Supplement no. 3 to part 746 is amended by:
0
a. Revising the heading of the supplement; and
0
b. Adding a sentence after the first sentence of the introductory text.
    The revision and addition read as follows:

[[Page 12155]]

Supplement No. 3 to Part 746--Countries Excluded From Certain License 
Requirements of Sec. Sec.  746.7 and 746.8

    * * * In addition, these countries are excluded from the license 
requirements related to Iran in Sec.  746.7, as described in Sec.  
746.7(a)(1)(iv) and (v). * * *
* * * * *

0
7. Supplement no. 7 to part 746 is added to read as follows:

Supplement No. 7 to Part 746--Items That Require a License Under Sec.  
746.7 When Destined to Iran and Under Sec.  746.8 When Destined to 
Russia or Belarus

    The items identified in this supplement are a subset of items that 
are identified in specific Export Control Classification Numbers or 
designated as EAR99 under the Commerce Control List (CCL) in supplement 
no. 1 to part 774 of the EAR. Also see paragraph (f) of Sec.  734.9 of 
the EAR for the Russia/Belarus Foreign Direct Product (FDP) rule and 
paragraph (j) for the Iran FDP rule. Both of these FDP rules include 
the items identified in this supplement as part of the criteria for 
what foreign made items are subject to the EAR.
    (a) The source for the Harmonized Tariff Schedule (HTS)-6 codes and 
descriptions in this list is the United States International Trade 
Commission (USITC's) Harmonized Tariff Schedule of the United States 
(2023). The items described in this supplement include any modified or 
designed ``components,'' ``parts,'' ``accessories,'' and 
``attachments'' therefor regardless of the HTS Code or HTS Description 
of the ``components,'' ``parts,'' ``accessories,'' and ``attachments,'' 
apart from any ``part'' or minor ``component'' that is a fastener 
(e.g., screw, bolt, nut, nut plate, stud, insert, clip, rivet, pin), 
washer, spacer, insulator, grommet, bushing, spring, wire, or solder. 
This supplement includes two columns consisting of the HTS Code and HTS 
Description to assist exporters, reexporters, and transferors in 
identifying the products in this supplement. For information on HTS 
codes in general, you may contact a local import specialist at U.S. 
Customs and Border Protection at the nearest port.
    (b) The items classified under the provisions identified in the 
HTS-6 Code column of this supplement are subject to the license 
requirements under Sec. Sec.  746.7(a)(1)(ii) and (iii) and 
746.8(a)(2). The other column--HTS Description--is intended to assist 
exporters with their AES filing responsibilities. The license 
requirements extend to HTS Codes at the 8 and 10 digit level when those 
HTS-8 and HTS-10 codes begin with the HTS-6 Codes as the first 6 
numbers of those longer HS Codes.

------------------------------------------------------------------------
       HTS-6 codes                        HTS description
------------------------------------------------------------------------
840710...................  Aircraft spark-ignition reciprocating or
                            rotary internal combustion piston engines.
840890...................  Compression-ignition internal combustion
                            piston engines (diesel or semi-diesel
                            engines), NESOI.
840910...................  Parts for spark-ignition or rotary internal
                            combustion piston engines or compression-
                            ignition internal combustion piston engines,
                            for aircraft.
847150...................  Processing units other than those of
                            subheading 8471.41 or 8471.49, whether or
                            not containing in the same housing one or
                            two of the following types of unit: storage
                            units, input units, output units.
851762...................  Machines for the reception, conversion and
                            transmission or regeneration of voice,
                            images or other data, including switching
                            and routing apparatus.
852691...................  Radio navigational aid apparatus.
853221...................  Tantalum capacitors.
853224...................  Fixed capacitors NESOI, multilayer ceramic
                            dielectric.
854231...................  Processors and controllers, whether or not
                            combined with memories, converters, logic
                            circuits, amplifiers, clock and timing
                            circuits, or other circuits.
854232...................  Memories.
854233...................  Amplifiers.
854239...................  Other electronic integrated circuits.
------------------------------------------------------------------------


Thea D. Rozman Kendler,
Assistant Secretary for Export Administration.
[FR Doc. 2023-03930 Filed 2-24-23; 8:45 am]
BILLING CODE 3510-JT-P