January 5, 1996

See introductory and explanatory information for each of the four revisions to this original version of March 25, 1996: Licenses, December 4, 1996; Key Recovery, December 13, 1996; Computers, December 23, 1996; and Encryption Transfer, December 30, 1996.

Return to EAR Table of Contents

# 15 CFR Part 730, et al

    [[61 FR 12713]]

    PART 730, et al

    [Federal Register: March 25, 1996 (Volume 61, Number 58)]
    [Rules and Regulations]
    From the Federal Register Online via GPO Access [wais.access.gpo.gov]

    _______________________________________________________________________

    Part II

    Department of Commerce

    _______________________________________________________________________

    Bureau of Export Administration

    _______________________________________________________________________

    15 CFR Part 730, et al.

    Export Administration Regulation; Simplification of Export
    Administration Regulations; Final Rule

    [[Page 12714]]

    DEPARTMENT OF COMMERCE

    Bureau of Export Administration

    15 CFR Parts 730, 732, 734, 736, 738, 740, 742, 744, 746, 748, 750,
    752, 754, 756, 758, 760, 762, 764, 766, 768, 770, 772, and 774,
    768A, 769A, 770A, 771A, 772A, 773A, 774A, 775A, 776A, 777A, 778A,
    779A, 785A, 786A, 787A, 788A, 789A, 790A, 791A, 799A

    [Docket No. 950407094-6022-02]
    RIN 0694-AA67

    Export Administration Regulation; Simplification of Export
    Administration Regulations

    AGENCY: Bureau of Export Administration, Commerce.

    ACTION: Interim rule.

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

    SUMMARY: This interim rule restructures and reorganizes the Export
    Administration Regulations (EAR), the regulatory regime through which
    the Bureau of Export Administration imposes export and reexport
    controls on those items and activities within its jurisdiction. This
    interim rule clarifies the language of the EAR, simplifies their
    application, and generally makes the export control regulatory regime
    more user-friendly.

    DATES: Effective Dates: This interim rule is effective April 24, 1996,
    except part 752, which shall be effective March 25, 1996. Removal of
    newly designated Sec. 771A.25(d) shall be effective March 25, 1996.
    Removal of newly designated parts 768A through 779A, 785A through 791A,
    and 799A will be effective November 1, 1996.

    COMMENTS: Comments on this rule must be received on or before May 24,
    1996.

    USE OF FORMS: On June 15, 1996 BXA will begin requiring applicants to
    submit certain new forms to implement this interim rule. The new Form
    BXA-748P, Multipurpose Application will be effective June 15, 1996.
    Before June 15, 1996 BXA will not accept Form BXA-748P. After June 15,
    1996 BXA will not accept existing Forms BXA-622P or BXA-699P. See
    SUPPLEMENTARY INFORMATION for guidance on which forms to use before
    June 15, 1996, and which forms to use after that date.

    ADDRESSES: Written comments should be sent to Cecil Hunt, Deputy Chief
    Counsel for Export Administration, United States Department of
    Commerce, Bureau of Export Administration, Fourteenth Street and
    Constitution Avenue, N.W., Room 3839, Washington, D.C. 20230.

    FOR FURTHER INFORMATION CONTACT: Larry E. Christensen, Director,
    Regulatory Policy Division, Bureau of Export Administration, (202) 482-
    2440.

    SUPPLEMENTARY INFORMATION:

    Background

        On September 30, 1993, the Secretary of Commerce submitted to the
    Congress a report of the Trade Promotion Coordinating Committee (TPCC),
    entitled Toward a National Export Strategy. The report included the
    following among its goals:

        Undertake a comprehensive review of the Export Administration
    Regulations to simplify, clarify, and make the regulations more
    user-friendly.

        In November 1993, BXA organized a Task Group, drawn from several of
    its offices, to carry out the TPCC recommendation. The Task Group
    launched its review project by publishing an advance notice of proposed
    rulemaking (ANPRM) in the Federal Register on February 10, 1994 (59 FR
    6528). This notice was designed to solicit comments from industry and
    the interested public. The ANPRM asked for suggestions concerning
    improvements BXA could make to the EAR and described several specific
    issues on which BXA was particularly interested in receiving public
    input.
        Over seven months during the development of a proposed rule with
    request for comments that was published in the Federal Register on May
    11, 1995, titled ``Export Administration Regulations; Simplification of
    Export Administration Regulations'' (60 FR 25268) (hereafter referred
    to as proposed rule), BXA shared four discussion packages with and
    sought comments from the Regulations &amp; Procedures Technical Advisory
    Committee (RPTAC), an advisory committee consisting of industry
    representatives intimately familiar with the private sector's role in
    using the EAR. The packages were also made available to other
    interested members of the public, with the last two being made
    available electronically on FedWorld. The four discussion packages were
    dated August 2, 1994, September 29, 1994, January 12, 1995, and
    February 28, 1995.
        The May 11 proposed rule reflected several new features based upon
    the comments received from the public pursuant to the ANPRM, and the
    RPTAC, and BXA's own assessment of how the EAR could be improved. Such
    features include:
        &lt;bullet&gt; No license or other authorization would be required for
    any transaction under BXA jurisdiction unless the regulations
    affirmatively state the requirement. (Existing regulations state that
    all exports are prohibited unless an applicable general license has
    been established or a validated license or other authorization has been
    granted by BXA.)
        &lt;bullet&gt; The terms ``general'' license and ``validated'' license
    would be dropped. The term ``license'' would be used to refer only to
    authorization issued by BXA upon application. The proposed regulations
    would convert the many existing general licenses into a smaller number
    of ``exceptions'' to require the obligation to seek a license when the
    Commerce Control list indicates that the particular item going to the
    stated country generally requires a license.
        &lt;bullet&gt; The parts of the EAR would be arranged to give the reader
    a logical path to follow.
        &lt;bullet&gt; The affirmative statements of the need to obtain a
    license, scattered throughout various parts of the existing EAR, would
    be consolidated into ten general prohibitions and described in a
    separate part. One part would contain the license review policy for all
    list-based license requirements; another part would provide for the
    requirements and review policies of licenses based on the end-use or
    end-user involved in a proposed export or reexport; and the list-based
    license requirements would be contained in the Commerce Control List
    (CCL) indicating the reason for control and the Country Chart
    indicating the country scope of each reason for control.
        &lt;bullet&gt; The Country Groups used in the existing regulations would
    be revised in favor of Groups which better reflect post-Cold War
    circumstances.
        &lt;bullet&gt; The CCL would be redesigned to state the reasons for
    control more specifically within each Export Control Classification
    Number (ECCN).
        &lt;bullet&gt; The redesigned CCL would be used in tandem with a new
    Country Chart that would indicate whether a license is required for any
    ECCN to any country in the world and the reason or reasons for control.
        Over 80 commenters responded to the proposed rule. Many commenters
    recommended that BXA take sufficient time to draft an interim rule to
    ensure ample opportunity to review and discuss with industry their
    comments on the May 11 proposed rule, and incorporate them into an
    interim rule. BXA has taken the time necessary to thoroughly review,
    analyze, and discuss industry comments on the proposed rule. In
    addition, BXA conducted 18 town-hall style fora (hereafter referred to
    as town-hall fora) that reached over 1,000 industry representatives,
    and met with the RPTAC and other interested

    [[Page 12715]]
    public to discuss their comments and concerns in more detail.
        Following is a detailed part-by-part description of this interim
    rule, and a review of comments received pursuant to the May 11 proposed
    rule:

    Implementation

        This interim rule will become effective April 24, 1996; however,
    final compliance with this interim rule is not compelled until November
    1, 1996. During the period between the effective date and the final
    compliance date of this interim rule, you must comply with the
    provisions of either the existing Export Administration Regulations
    (EAR) (redesignated 15 CFR 768A through 799A by this interim rule)
    including any amendments thereto that are published in the Federal
    Register or the provisions of this interim rule including any
    amendments thereto that are published in the Federal Register.
        Notwithstanding the general effective date of this interim rule,
    the repeal of the importer statement requirement for General License
    GCT is effective immediately, and the Special Comprehensive License
    provisions in part 752 are effective immediately. For up to March 25,
    1997, holders of issued and outstanding special licenses may continue
    to use those special licenses according to their terms and conditions
    and according to the special license provisions of the existing EAR.
        The majority of the commenters requested a 90 day delayed effective
    date plus an additional six to twelve months during which one must
    comply with either the existing Export Administration Regulations or
    this interim rule. The cost of changes to internal information systems
    and the time to train personnel on the new system were the main reasons
    cited for requesting a delayed effective date and a transition period.
    Several large companies said that their computer systems will require
    substantial reprogramming for the new License Exception group symbols,
    the new Destination Control Statement (DCS), and the renumbering of
    entries on the Commerce Control List in part 774 to conform to the
    European Union numbering system.
        Some firms indicated that implementation costs would be reduced if
    they were allowed a span of time in which to implement the changes made
    by this interim rule. Costs would be higher if a single implementation
    date were required because their information systems departments would
    not have flexibility regarding scheduling and might be required to hire
    additional temporary employees or pay overtime. Many large firms cannot
    implement the computer changes on one given day. After receiving the
    above comments in writing and during the town-hall fora, BXA made
    additional contacts with several firms. All acknowledge that they can
    efficiently implement the changes required by this interim rule within
    six months. Since those discussions, BXA has determined to modify the
    Destination Control Statement (DCS) as noted below to closely following
    the existing DCS widely used by many firms. BXA is hopeful that this
    decision will further reduce the costs of implementation of this
    interim rule.
        BXA is sensitive to the costs of implementation, and that is the
    reason this interim rule provides for a rather long implementation
    period. Through this mechanism, BXA hopes to reduce the marginal costs
    of implementation by reducing necessary overtime, contracting, and
    training beyond that regularly scheduled. BXA will also assist the
    business community in training for this interim rule. BXA has already
    announced a substantial program to conduct training sessions around the
    United States to make it convenient for firms to train their personnel.
        The new Multipurpose Application Form, BXA-748P, will replace the
    Application for Export License (BXA-622P) and the Request for Reexport
    Authorization (BXA-699P). It will also serve as an application for the
    Special Comprehensive License. Additionally, the BXA-748P will
    accommodate Commerce Classification Requests, thus allowing item
    classifications to be handled electronically.
        BXA will not accept the new forms listed in this paragraph for
    applications and requests received before June 15. BXA will not accept
    existing forms listed in this paragraph for applications and requests
    received on or after June 15. The existing Form BXA-622P Application
    for Export License, existing Form BXA-685P, Request for Amendment
    Action, and existing Form BXA-699P, Request for Reexport Authorization
    will all be replaced by new Form BXA 748P, Multipurpose Application.
    The existing Form BXA-622P-A, Commodity Description Supplement will be
    replaced by new Form BXA-748P-A, Item Appendix. Existing Form 622P-B,
    End-user Supplement will be replaced by new Form 748P-B, End-user
    Appendix. Form BXA-6052P, Statement by Foreign Consignee in Support of
    Special License Application will be replaced by Form BXA-752P,
    Statement by Consignee in Support of Special Comprehensive License.
        Existing Form BXA-629P, Statement by Ultimate Consignee and
    Purchaser will be replaced by new Form BXA-711, Statement by Ultimate
    Consignee and Purchaser. However, Form BXA-629P may be used until
    November 1, 1996.
        Use of Existing Form BXA 686-P, Statement by Foreign Importer of
    Aircraft or Vessel Repair Parts and Form BXA 6026-P, Service Supply
    (SL) Statement by U.S. Exporter will be discontinued on March 25, 1996,
    because the Aircraft and Vessel Repair Station Procedure at Sec. 773A.8
    and the Service Supply (SL) Procedure at Sec. 773A.7 of the existing
    EAR will be replaced by the Special Comprehensive License in part 752
    of this interim rule.
        BXA will stop issuing BXA Form-648P, Notification of Delivery
    Verification Requirement on June 15, 1996. For licenses issued on or
    after that date, the delivery verification requirement will be printed
    on the license itself.

    The Knowledge Standard

        One step is being taken in this interim rule that changes language
    in many parts of the EAR, but without changing the intended meaning.
    Several commenters noted that the proposed rule continued use in the
    EAR of differing expressions as to knowledge, such as ``know'' or
    ``know or have reason to know''. Three commenters called for the
    removal of the term ``reason to know'' and one commenter requested a
    uniform adoption of ``know or have reason to know''. BXA has decided to
    adopt the term ``knowledge'' (together with variants, such as ``know''
    or ``knowing'') as the standard usage and defines this term in the EAR.
    This definition is added to part 772--Definitions. Variants, such as
    ``reason to believe'' are being retained in the EAR where they are used
    to follow statutory wording. This definition confirms the intention of
    BXA that ``know'' and terms such as ``know or have reason to know'' be
    given the same meaning and that this meaning include more than positive
    knowledge. This definition is not being applied to part 760--
    Restrictive Practices and Boycotts, leaving the interpretation of such
    terms in this distinct part of the EAR to be independent of export
    control usage.

    Part-by-Part Analysis

    Part 730--General Information

        Part 730 provides a general introduction to the EAR. It is intended
    for the first-time reader and is not regulatory.
        Seven of the public comments referred to part 730. There was broad

    [[Page 12716]]
    support for the listing of other control agencies, together with
    telephone and fax numbers for obtaining information. Four commenters
    noted that similar information was provided in a supplement to the
    scope part of the proposed rule, with duplication and some
    inconsistency. BXA has eliminated that supplement and includes the
    agency information in this part 730. Three commenters requested that
    the listing be broadened, and noted the absence of reference to certain
    controls of other agencies listed in the existing EAR. This listing has
    been updated and extended. BXA is not, however, acting on requests to
    add more detailed information on controls administered by other
    agencies, nor on areas of possible overlap, as this would unduly
    complicate this brief introduction to the EAR.
        Three commenters called for combining part 730 with the Steps part
    in some way. BXA concluded that a merger of the two parts is not
    advisable, as the amount of detail needed in steps would obscure the
    more general introductory information offered in part 730. Many
    comments on the two parts called for flow charts and wiring diagrams.
    BXA has recently received authorization from the Office of the Federal
    Register to include such additional aids, and BXA will develop those
    materials for inclusion in the EAR at a later date.
        Two commenters questioned the basic, non-regulatory, approach taken
    in part 730, citing such elements as the Sec. 730.6 reference to the
    benefits from multilateral controls and the Sec. 730.8 explanation of
    why the EAR are lengthy and detailed. BXA continues to believe that
    this kind of introduction to the EAR will be helpful to persons new to
    the field.

    Part 732--Steps

        By cross-references to the relevant provisions, part 732 describes
    the suggested steps for you to determine applicability of (1) the scope
    of the EAR described in part 734, (2) each of the general prohibitions
    in part 736, (3) the License Exceptions in part 740, and (4) other
    requirements such as clearing the U.S. Customs Service, keeping
    records, and completing license applications. This part 732 describes
    the organization of the EAR, informs you of the relationship among the
    parts and provisions, and describes the appropriate order in which to
    consider the various provisions of the EAR by cross-referencing those
    provisions. Supplement No. 1 to this part 732, contains the ``Know Your
    Customer'' Guidance, which has been moved from part 744--Control
    Policy--End-user and End-use Based Control. In this interim rule, BXA
    has also added examples of Red Flags referred to in the ``Know Your
    Customer'' Guidance.
        Over thirty commenters referred to the part on steps in the
    proposed rule, and all but one supported the inclusion of steps to
    guide the reader. Of these commenters, more than half stated that the
    steps part should be relocated so that it could serve as a type of
    road-map in the use of the entire EAR. The proposed rule provided for
    steps at part 736 after the parts on scope and general prohibitions.
    BXA agrees that the steps part is more useful if relocated closer to
    the beginning of the EAR. Therefore, in this interim rule, the steps
    part is renumbered as part 732; and it precedes the part on scope that
    is renumbered as part 734 and the part on prohibitions that is
    renumbered as part 736.
        About one quarter of the commenters on this part urged some type of
    restructuring or reordering of the steps within the part; however, the
    comments were varied. Based upon these written comments and a
    substantial number of oral comments made during the town-hall fora, BXA
    believes that it is useful to organize the steps in categories
    regarding the scope of the EAR, the ten general prohibitions, the
    License Exceptions, and additional requirements such as keeping
    records, documentation for clearing the U.S. Customs Service, and
    completing license applications. In addition, one commenter urged that
    the steps regarding prohibitions at part 736 make clear the distinction
    between the first three prohibitions that are shaped by product
    parameters on the Commerce Control List versus the last seven
    prohibitions that address certain types of activities without regard to
    the product parameters on the Commerce Control List. Another common
    suggestion was to give greater prominence and clarity to the
    determination of the proper ECCN for items, a process referred to as
    classification. This interim rule adopts those recommendations.
        One commenter suggested that the steps part in the proposed rule
    included too many cross-references to the other parts and required the
    reader to flip too many pages. Several other commenters recommended
    additional cross-references in the EAR. BXA believes that the part on
    steps should continue to contain cross-references for fundamental
    reasons. The part on steps is not a substitute for the language of
    other parts of the EAR and the part on steps would be much too long if
    it contained a complete explanation or repetition of every other
    provision of the EAR. Rather, it is a type of road-map, guide, or
    written decision tree that helps the reader understand the order in
    which to read the various provisions and to determine which provisions
    are relevant to a given transaction or activity. By this means, the
    part on steps serves the purpose of describing the relationship among
    the provisions of the EAR, something that was not done in the EAR
    before the proposed rule. When these steps are followed in the proper
    order, the reader will consider those provisions of the EAR necessary
    to determine his or her rights and duties.
        It would be impossible to develop a useful series of steps without
    use of cross-references to the various provisions of the EAR; however,
    BXA is sensitive to a reader's understandable desire for steps that may
    be read with an easy flow and with no more cross-referencing than
    necessary to specify the language that creates regulatory rights and
    obligations. To this end, where possible, we have inserted brief
    explanatory references that give the reader an indication of the
    substance of the referenced provision. One comment made often by the
    public is that the steps part must contain guidance and not create
    additional regulatory duties. BXA agrees that part 732 is not
    controlling for purposes of describing the requirements of the EAR; the
    parts of the EAR referenced in the steps are controlling. For this
    reason, part 732 must reference the regulatory provisions in the other
    parts of the EAR.
        An organization of trade associations, supported by several other
    commenters, suggested several additional drafting changes to improve
    the part on steps. Nearly all of those recommendations are included in
    this interim rule.

    Part 734--Scope

        This part establishes the rules for determining whether
    commodities, software, technology, software and activities of U.S. and
    foreign persons are subject to the EAR. ``Subject to the EAR'' is a
    term used to identify the items and activities that BXA regulates under
    the EAR. Those items and activities not so identified are not regulated
    under the EAR.
        The term ``subject to the EAR'' does not imply that a license is
    required for any particular item or activity. Licensing requirements
    are spelled out in other parts of the EAR. The term does define the
    bounds of the authority that BXA has exercised under the EAR. The term
    is particularly useful to define the limits of the recordkeeping
    requirements, certain denial orders, and the end use and end user
    obligations related to proliferation controls.

    [[Page 12717]]

        This part also provides certain key terms and principles used
    throughout this interim rule. These include definitions for the terms
    ``export'' and ``reexport.'' A comprehensive listing of definitions is
    included in part 772.
        In addition to a change in designation from part 732 in the
    proposed rule to part 734 in this interim rule, this interim rule makes
    substantial changes in part 734 as a result of comments received on the
    proposed rule. BXA received 31 comments on this part. BXA has adopted
    many of the recommendations contained in the public comments and they
    are reflected in the interim rule.
        Section 734.1 has been substantially revised. The proposed rule
    included a list of all the contents to part 734 with specificity. One
    commenter urged that this listing amounted to a table of contents and
    recommended deletion. This interim rule follows this recommendation
    and, and includes an introduction that explains the contents of this
    part and how it fits into the overall structure of the EAR.
        Certain commenters recommended that definitions be included in part
    772, Definitions, rather than in this part. This interim rule removes
    the definitions for the terms ``item'' and ``you'', and moves them to
    part 772. Because the terms ``export'' and ``reexport'' are so key to
    the EAR, these terms have been retained in this section, with certain
    modifications. Section 732.2(d) of the proposed rule defined exports
    and reexports of technology and software, but did not include a
    definition of exports and reexports of commodities. This interim rule
    amends the definition of ``export'' and ``reexport'' to apply to
    commodities, technology, and software.
        A number of commenters also noted that, as written in the proposed
    rule, the reexport in a foreign country of technology by release by one
    foreign national to another foreign national could be read to include
    release of foreign-origin technology, with no United States nexus. This
    interim rule limits this provision to ``items subject to the EAR'' and
    thereby limits the provision to U.S.-origin technology.
        This interim rule adds three additional provisions to part 734.
    Section 734.2(d)(5) reflects the principle that exports that will
    transit a country on their way to a third country or are intended to be
    reexported to a third country are deemed under the EAR to be exports to
    the third country. This principle was not included in the proposed
    rule, except as it relates to Canada (Sec. 732.12 of the proposed
    rule). Section 734.2(d)(6) reflects the principle that appeared in
    Sec. 732.15 of the proposed rule that an export to a territory,
    possession, or department of a country is deemed under the EAR to be an
    export to that country. Finally Sec. 734.2(d)(7) clarifies that
    shipments among the states of the United States and its territories,
    dependencies, and possessions do not constitute exports or reexports.
        A significant number of commenters indicated that the provision
    regarding Canada in Sec. 732.15 of the proposed rule was misleading and
    tended to confuse the distinction between the scope of the EAR and
    licensing requirements with respect to Canada. BXA agrees, and this
    interim rule omits this provision. The minimal number of instances
    where licenses are required for Canada is reflected on the CCL and does
    not need to be recited in this part. As noted above, the in-transit and
    intended reexport principles contained in the Canada provision are
    retained in this interim rule and are made applicable to all
    destinations. Finally, any License Exceptions that apply to Canada are
    reflected in part 740, License Exceptions.
        In the proposed rule, BXA invited comments on the implementation of
    a de minimis rule for software and technology. In particular, BXA said
    that we were considering a requirement for a one-time report on
    calculations under the de minimis rule. Throughout the comment period,
    BXA made clear at the town-hall fora that there are three criteria of
    concern in carrying out the proposal without a reporting requirement.
    First, for transfers between related parties, the export price of the
    software or technology exported from the United States must reflect an
    arms-length price or fair market value. Second, estimates of future
    sales of foreign-made software must be reasonable. Third, selection of
    the scope of foreign technology for measuring U.S.-content must be
    reasonable.
        BXA sought comments and suggestions on a one-time report. This was
    to determine how to avoid the potential misuse of the above criteria
    without requiring a one-time report. BXA also sought comments on
    whether the calculations should be made only under United States-based
    generally accepted accounting principles. From the outset, BXA
    concluded that strict accounting standards would be useful to prevent
    misuse of the rule through unreasonably low transfer prices for U.S.
    software or technology transferred to related parties. BXA also
    believed there is no need to create a new U.S. accounting standard for
    implementation of this rule.
        No commenter offered a solution to avoid misuses in the choice
    amortization assumptions for software and the selection of an
    appropriate universe to measure U.S.-content in foreign commingled
    technology. All comments on the report opposed its requirement.
    Commenters supported the rule with the hope that the de minimis
    exclusion might be granted by BXA without requiring a report. However,
    many of these same firms acknowledge that they and foreign parents,
    subsidiaries and customers will invariably make de minimis calculations
    on valuation assumptions most likely to result in a finding that U.S.
    content is below the relevant de minimis level. The tenor of the
    comments also suggests that most commenters did not fully appreciate
    that the de minimis relief could not likely be granted without either a
    one-time report or some other means to avoid the potential misuses of
    the criteria.
        Some commenters called the report a burden almost as heavy as the
    license requirement. Some of those commenters stated expresses a belief
    that the existing rule is simply not enforced and likely is not
    enforceable. They also concluded that compliance with the existing
    commingled rule is weak. However, some commenters acknowledged that
    without a report requirement in this interim rule, they would
    nonetheless submit advisory requests before relying on the de minimis
    exclusions. Such advisory requests would require the same information
    as the report required by this interim rule. Therefore for such
    companies, the report requirement of this interim rule does not add
    costs for use of the relief granted by this interim rule.
        Almost all foreign commenters on the de minimis rule opposed a
    requirement for U.S. accounting standards. They argued that they should
    be permitted to use their home-country accounting standards and that
    use of U.S. accounting standards would be too costly.
        BXA has determined to require a one-time report and to permit
    various accounting standards so long as the export price is not
    depreciated or otherwise reduced by accounting conventions. With the
    requirement of a one-time report, there is far less need for a single,
    strict accounting standard.
        The report will require a description of the nature and export
    price of the item exported from the United States, the estimate of
    future software sales in units and value along with the basis for those
    estimates within the relevant market category, and a description of the
    technology and its value for

    [[Page 12718]]
    purposes of determining the U.S.-content of technology. The report will
    not require information regarding destinations and end-users for
    reexport.
        BXA has concluded after interagency consultations and review of all
    the comments that the so-called amortization problem exists for
    software and does not exist for commodities. Several commenters have
    asked why.
        Unlike parts incorporated into end products, the cost of U.S.
    software code will be attributed or allocated to the future sales of
    foreign-made software incorporating the U.S. code. In making this
    calculation for foreign software, you must make an estimate of future
    software sales of that software if it is commingled with or
    incorporated with the U.S. code. Unless there is a one-time report
    revealing the assumptions of such calculations, foreign firms may
    misuse the de minimis rule and make unrealistic assumptions of large
    future sales. Such a misuse can result in U.S.-content that is unfairly
    estimated to be below the de minimis level.
        BXA has concluded after interagency consultations and review of all
    the comments that the so-call universe problem exists for technology
    and not for commodities. Several commenters have asked why.
        There is the risk that foreign firms will select excessively large
    categories of foreign technology for division into the U.S.-origin
    technology content. There is no regulatory criteria or standard that is
    sufficient to describe the scope of foreign technology that must be
    divided into the U.S. technology to determine the percentage of U.S.-
    content. The possible choices of a universe by the reexporter are many
    and varied.
        Some commenters wanted BXA to select one U.S. transfer pricing
    standard such as the standard of the Internal Revenue Service found in
    section 482 of the Internal Revenue Code. One software producer
    indicated that it will have very difficult decisions to make in the
    calculation of U.S.-content for purposes of foreign-made software and
    asked BXA how it would be done. In this interim rule, we indicate that
    accepted accounting standards such as section 482, its implementing
    rules, and related ruling provide one option the exporter or reexport
    may follow. The Organization for Economic Cooperation and Development
    (OECD) is considering uniform transfer pricing rules, and such
    international standards would present an attractive option in the
    future. However, it will likely be at least a year before they put such
    OECD standards in place. Other commenters said that their firms do not
    maintain adequate records to perform calculations of U.S.-content. Of
    course, for such firms, any value-based de minimis rule will not
    relieve existing burdens regardless of the report requirement.
        For decades, all reexport controls under the EAR extended to
    foreign software and technology incorporating any level of U.S.-
    content. BXA refers to this as the commingled rule. In 1988, BXA
    proposed giving some relief from the commingled rule with a type of
    shifting of presumptions regarding country of origin after a period of
    time. With one exception, commenters opposed that proposed rule and
    urged a value-based de minimis exclusion. BXA addressed the issue in
    its February 1994 proposed renewal of the Export Administration Act.
    That proposal would have compelled a de minimis exclusion from the
    commingled rule and reserved the authority of the Executive Branch to
    require a one-time report.
        BXA believes that it is appropriate to put reasonable limits on the
    reach of U.S. reexport controls for foreign-made software and
    technology. This is to recognize the sensitivities of other nations and
    to put some outer limits on the obligations of foreign firms doing
    business with U.S. firms. However, it is not the purpose of this
    exercise to eliminate reexport controls on software and technology.
    Reexport controls remain tools of the EAR to prevent diversion contrary
    to vital national security, nonproliferation, and foreign policy
    interests of the United States.
        BXA understands that some foreign firms will benefit from the
    relief offered in this interim rule and will use this relief by filing
    the necessary report. For such firms, the de minimis rule and related
    report is not a new licensing requirement. Rather, it is a means for
    BXA to assure that the above described three criteria are not misused
    in a given set of calculations and assumptions. The report is required
    under a ``report and wait'' procedure. If the reporting firm does not
    hear from BXA within thirty days, then the reporting firm may
    thereafter rely upon its reported calculations, and its foreign
    technology or software described in the filed report is not subject to
    the EAR.
        For those reexporters without the desire or ability to take
    advantage of the de minimis rule, their position under the EAR remains
    unchanged in any respect by this interim rule. The commingled rule
    continues to apply as it has for decades. One commenter said that the
    report requirement would make enforcement easier for BXA than under the
    existing rule. BXA does not believe that to be true. The existing rule
    is clear.
        Reexporters should also be mindful that many authorities for
    permissive reexports remain available to overcome reexport
    prohibitions. The de minimis exclusion from the commingle rule
    determines whether foreign technology or software is subject to the
    EAR. If certain commingled foreign technology or software is subject to
    the EAR, then the general prohibitions and License Exceptions define
    the obligations of the holder of that technology and software.
        This interim rule also makes several changes to Sec. 734.3, Items
    Subject to the EAR. In the proposed rule, foreign made products subject
    to the EAR were separately in Sec. 732.4. These provisions dealing with
    foreign made products are now included in Sec. 734.3, together with
    other items subject to the EAR. This interim rule consolidates all
    related principles in one section.
        A number of commenters questioned whether BXA intended to limit the
    coverage of items subject to the EAR only to ``U.S.-origin'' items as
    reflected in Sec. 732.2(a) of the proposed rule. This interim rule
    clarifies the intent of the proposed rule and the BXA practice related
    to this issue. Specifically, this interim rule has asserted
    jurisdiction over all items subject to the EAR exported from the United
    States, whether of U.S. or foreign origin, but in practice has limited
    other controls, such as reexport controls, over EAR-controlled items to
    those of U.S. origin. Section 734.3(a) of this interim rule reflects
    these provisions. Section 734.3 also applies to all covered items in
    the United States, and to all such items that are of U.S.-origin,
    wherever located.
        This interim rule also specifically states that foreign origin
    items in-transit through the United States and in U.S. foreign trade
    zones are subject to the EAR. For any special licensing treatment that
    may be accorded such shipments on their export from the United States,
    exporters should look at the License Exceptions in part 740.
        This interim rule makes five changes to the proposed rule that are
    reflected in the provisions of Sec. 734.3(b), which lists the
    exclusions from items subject to the EAR.
        1. In proposed Sec. 732.3(a)(1), BXA excluded items exclusively
    controlled for export or reexport by other agencies which maintain
    controls for national security or foreign policy purposes. The agencies
    were identified in Supplement No. 2 to proposed part 732. To reduce
    cross-referencing, the agencies are now listed in part 734, and the
    Supplement has been removed.
        2. This interim rule also adds a new provision that excludes from
    the definition of ``items subject to the EAR''

    [[Page 12719]]
    items included in ECCN 0A98 in the existing EAR, such as films,
    records, books, and periodicals. This provision was not included in the
    proposed rule. Under the existing EAR, items included in that ECCN do
    not require authorization to any destination. This interim rule has the
    same result.
        3. Section 732.2(a)(3) of the proposed rule excluded security-
    classified technology and software from the coverage of items ``subject
    to the EAR.'' This provision was based on the theory that classified
    items are controlled by the Nuclear Regulatory Commission and the
    Department of State's Office of Defense Trade Controls. One commenter
    observed that because these agencies control the export of classified
    items as part of their ``exclusive'' jurisdiction, no specific
    provision needs to appear for classified items. To avoid confusion,
    this interim rule omits the reference to classified items. The
    provision is already implicitly included in part 734 because items
    controlled exclusively for export by another agency are not subject to
    the EAR (Sec. 734.3(b)(1)).
        4. This interim rule also adopts the term ``publicly available
    information'' to refer to all information included in General License
    GTDA of the existing EAR. Such information is listed in
    Sec. 734.3(b)(3). In the proposed rule, the term ``publicly available''
    applied solely to information that was ``generally accessible to the
    interested public in any form''. This interim rule adopts the term
    ``published information'' to represent such generally accessible
    information.
        5. A number of commenters objected to the use of the term ``Not on
    List'' or ``NOL'' to designate and clear for export those items which
    are subject to the EAR but which do not appear on the CCL. This interim
    rule drops this term, which will be discussed in greater detail under
    part 758, General Export Clearance Requirements. However, in response
    to written comments and audience comments at the town-hall fora, BXA
    will designate such items under ``EAR99.'' This designation, discussed
    in Sec. 734.3(c) of this interim rule, will be used for classification
    and reference purposes only, and will not be required for clearing
    exports.
        One commenter recommended that items subject to the EAR be
    specifically limited to exports and reexports because BXA's statutory
    authority relates to controlling exports and reexports. This interim
    rule does not adopt this recommendation because the term ``subject to
    the EAR'' defines the scope of EAR jurisdiction. The prohibition on
    exports and reexports of such items based on BXA's statutory authority
    is reflected in part 736, Prohibitions.
        Finally, this interim rule expands Supplement No. 2 to include a
    requirement for the submission of a report to be submitted to BXA if an
    exporter uses the de minimis for technology or software.

    Part 736--General Prohibitions

        Part 736 includes ten general prohibitions. These are the
    prohibitions that may apply to items subject to the scope of the EAR as
    described in part 734, Scope. General Prohibitions One, Two, and Three
    are product controls. The Commerce Control List in Supplement No. 1 to
    part 774 and the Country Chart in Supplement No. 1 to part 738 are used
    together to define the product scope and destinations for the license
    requirements of General Prohibitions One, Two, and Three. General
    Prohibitions Four through Ten describe certain activities that are not
    permitted without authorization from BXA.
        Several commenters recommended liberalization of the existing
    reexport controls. For example, one commenter suggested a license free
    zone for all members of the former Coordinating Committee on Export
    Controls (COCOM), the Missile Technology Control Regime (MTCR), the
    Nuclear Suppliers Group (NSG), and the Australia Group (AG). BXA notes
    that a provision in the Export Administration Act of 1979 compels
    individual validated licenses for items controlled cooperatively by
    members of the MTCR. BXA is aware of the interest of the exporting
    community in the further expansion of license free zones. However, this
    interim rule is not intended to address such fundamental policy
    decisions and is not an appropriate vehicle to make such changes.
        Some commenters urged BXA to create a separate part for reexport
    controls or a separate guideline for reexports. Others supported this
    view and indicated that it was convenient for them to photocopy newly
    designated part 774A and send this to firms abroad. BXA believes that
    part 774A of the EAR does not describe all the duties of reexporters;
    and reliance upon a reading of only that portion of the regulations
    could well lead to violations of other portions of the EAR. In response
    to these comments, BXA has taken care in this interim rule to indicate
    which requirements of the EAR apply to reexporters and which
    requirements do not. Part 732, Steps contains explicit indications of
    applicability of various provisions to reexporters. As suggested by
    several commenters, part 732, Steps has been substantially expanded to
    present a road map for the use of these provisions by reexporters.
        The foreign-produced direct product control described in General
    Prohibition Three reflects a policy prompted by the Cold War. The
    Regulations and Procedures Technical Advisory Committee (RPTAC)
    recommended that BXA not revise this policy during the drafting period
    that led to the proposed rule. After publication of this interim rule,
    BXA will initiate a policy review of the foreign-produced direct
    product rule.
        All ten general prohibitions in this part 736 apply to firms abroad
    under some circumstances. Part 734, Scope defines the scope of the
    regulations for foreign as well as domestic firms. The key factors that
    make all ten general prohibitions applicable to foreign firms are the
    scope of the parts and components rule, the foreign-produced direct
    product rule, and the general prohibition regarding reexports of U.S.-
    origin items. These are described in detail in part 732, Steps; part
    734, Scope; and part 736, General Prohibitions with specific references
    to reexporters.
        One commenter asked if we would add a provision regarding the
    applicability of License Exceptions to General Prohibition Eight
    concerning the unlading of goods in certain countries. The structure of
    this prohibition is that it applies only to exports and reexports that
    require a license. By definition, if you properly use a License
    Exception authorized by the EAR, General Prohibition Eight does not
    apply. Rather, it is a prohibition against unlading items that are
    shipped under a license. Exporters and carriers should note that BXA
    plans to conduct a policy review of the country scope of General
    Prohibition Eight following the publication of this interim rule.
        Several commenters stated that the proposed rule continued to
    present a complex set of requirements, and many commenters suggested
    fundamental decontrols and elimination of longstanding regulatory
    requirements. Such recommendations would necessary entail changes to
    the general prohibitions. However, the Regulation Reform exercise was
    not intended to address such fundamental policy decisions, and this
    interim rule is not an appropriate vehicle to make such changes.
        Supplement No. 1 to part 736 on General Prohibitions provides for
    certain General Orders. At this time, Supplement No. 1 is reserved.
    Supplement No. 2 to part 736 provides

    [[Page 12720]]
    for three Administrative Orders. These Administrative Orders continue
    polices of the existing regulations regarding the technical advisory
    committees, business conduct before BXA, and certain confidentiality
    provisions.

    Part 738--Commerce Control List Overview and Country Chart

        Part 738 provides an overview of the Commerce Control List (CCL)
    and the Country Chart. The complete CCL is contained in Supplement No.
    1 to part 774, while the Country Chart is contained in this part.
        A significant change to the proposed rule as it relates to the CCL
    is the modification of the numbering system used to identify Export
    Control Classification Numbers (ECCNs) to conform with the European
    Union (EU) numbering system as described in the supplementary
    information regarding the CCL. This part provides an overview of the
    new CCL structure and ECCN numbering system along with a thorough
    discussion of the components that make up an ECCN.
        This interim rule eliminates the use of the term ``License
    Alternative'' and the ``Special Comprehensive License'' reference as
    described in the proposed rule. In addition, this interim rule adopts
    the revised reasons for control as identified in the proposed rule
    (i.e., use of the broad term ``FP'' has been discontinued). New
    ``Related Definition'' and ``Related Controls'' sections contained in
    the proposed rule have also been adopted in this interim rule.
        Several commenters described use of the Country Chart column
    identifier in the ``License Requirement'' section of each ECCN as a
    rational model and fundamental to simplifying the task of determining
    licensing requirements. This interim rule retains this very valuable
    tool with few modifications.
        The Country Chart, as described in the proposed rule, has been
    modified to incorporate columns for destinations eligible for General
    License GCT and GNSG under the existing EAR. General License GCT
    eligibility is now determined by NS Column 2, while NP Column 1 now
    reflects General License GNSG eligibility. NP Column 2 is retained in
    its original format as reflected in the proposed rule. Accordingly,
    references to License Exceptions CSR and NSG in the ``License
    Exceptions'' section within each entry on the Commerce Control List do
    not appear in this interim rule.
        A few commenters noted that the proposed title to part 738,
    Commerce Control List and Country Chart implies that the entire CCL is
    contained in part 738. The title to this part has been modified to
    state this part contains an overview of the CCL structure and its
    relationship to the Country Chart, rather than the actual CCL.
        Two commenters noted that the cross-reference to part 742, Control
    Policy--CCL Based Controls should be clarified. This interim rule
    contains a more descriptive cross-reference to part 742 and is placed
    in a more appropriate location.
        A few commenters expressed confusion over the use of UN Column 1.
    This interim rule removes UN Column 1, because of its limited scope of
    control and for added clarity. In addition, this interim rule revises
    the two instances in which the Country Chart is not consulted to
    determine license requirements. This interim rule expands the proposed
    list of ECCNs in which the Country Chart cannot be used from 5A80D
    (5A980) to include 1A988, 2A994, 2D994, 2E994, 2B985, 0A983, 0A986, and
    0A988.
        This interim rule does not adopt the request made by a few
    commenters that the Country Chart be expanded to incorporate the
    Country Group identification as described in part 740, License
    Exceptions. These two lists were developed for separate purposes and
    allow for systematic licensing determinations (e.g., Country Groups are
    not reviewed unless a license is required by the Country Chart). In
    addition, incorporation increases the possibility that readers will
    make incorrect license determinations.
        This interim rule expands the example for using the CCL and Country
    Chart to illustrate more complex fact patterns, as requested by a
    commenter.

    Part 740--License Exceptions

        Part 740 provides for exceptions from license requirements similar
    to the General Licenses contained in the existing regulations. In
    addition to License Exceptions for commodities, this part contains
    License Exceptions for software and technology and permissive
    reexports. Previously, both technical data and reexports had separate
    parts. License Exceptions for short supply commodities appear in part
    754.
        Eligibility for License Exceptions may be based on the item to be
    exported or reexported, the country of ultimate destination, the end-
    use of the item, or the end-user. If a License Exception is available
    for a particular transaction, the exporter or reexporter may proceed
    with the export or reexport without a license. However, the exporter or
    reexporter is required to meet all the terms of the License Exception;
    in using a License Exception, the exporter or reexporter will be
    certifying that all terms, conditions, and provisions for the use of
    that License Exception have been met.
        The most significant departure in this interim rule from the
    proposed rule is the changed relationship between the determination of
    the applicability of a License Exception to a particular transaction
    and the documenting of that transaction for export clearance purposes.
    Previously, each License Exception bore a three-character symbol that
    transferred directly to shipping documents to certify that the
    transaction did not require a license and that it met the terms and
    condition of the stated License Exception. In this interim rule, each
    three-character symbol that will be used on shipping documents
    represents a group of License Exceptions rather than a single License
    Exception. This change means that a few symbols will cover a large
    percentage of shipments from the United States. Each symbol bears an
    intuitive relationship to its group of License Exceptions; for example,
    those based on the Commerce Control List bear the symbol ``LST.'' Some
    commenters wished to retain the old General License symbols, but a
    preponderance of exporters preferred intuitive symbols and expressed
    that preference at the numerous town-hall fora held around the country.
        Many commenters on the proposed rule protested that certain
    existing General Licenses--specifically GLR and GTDU--had been
    needlessly fragmented. In this interim rule, these License Exceptions
    have been consolidated into Servicing and Replacement (RPL) and
    Technology and Software--Unrestricted (TSU), respectively. General
    Licenses GCT and GNSG in the existing EAR, which appeared as License
    Exceptions CSR and NSG in the proposed rule, have in this interim rule
    been incorporated into the Country Chart in part 738.
        Changes made in General Licenses in the intervening period between
    publication of the proposed rule and this interim rule, including G-
    BETA for beta test software, G-CTP for computers, and a modification of
    GCG (shipments to cooperating governments), are reflected in part 740.
    The former Humanitarian License Procedure, which was included in the
    Embargo part of the proposed rule, has become a License Exception for
    humanitarian donations.

    Part 742--Control Policy--CCL-Based Controls

        If you have determined that a license application must be filed
    after reviewing the Country Chart in part 738 and the Commerce Control
    List (CCL) in part 774, this part 742 provides the licensing

    [[Page 12721]]
    policy that BXA will apply in reviewing your application. This part
    contains licensing review policies for all items listed on the CCL
    except items controlled for ``short supply'' reasons or to implement
    ``U.N. Sanctions.'' It consolidates most of newly designated part 785A,
    Special Country Policies, portions of newly designated part 776A,
    Special Commodity Policies and all the CCL-based controls described in
    newly designated part 778A, Proliferation Controls. It also includes
    control policies for items included on the CCL but not reflected in the
    Country Chart. Specifically, these items are high performance
    computers, implements of torture, and communications intercepting
    devices.
        Part 742 does not include controls and licensing polices that apply
    to exports and reexports to embargoed destinations (currently, Cuba,
    Libya, North Korea, Iraq, Iran, and the Bosnian-Serb controlled areas
    of Bosnia-Herzegovina), except a description of anti-terrorism controls
    applicable to Iran (Sec. 742.8) and other terrorist-designated
    countries (Supplement No. 2 to part 742). Part 746, Embargoes and Other
    Special Controls, covers the licensing policies for embargoed
    destinations.
        This part is structured to assist exporters to easily retrieve
    licensing information related to the reason for control for each item
    listed on the CCL. Each ``Reason for Control'' column on the Country
    Chart in part 738 has a counterpart section in part 742. The sections
    in this part appear consecutively in the same order as the columns on
    the chart, reading from left to right. In addition, each section is
    similarly structured:

    --Paragraph (a) lists the licensing requirements as stated on the CCL;
    --Paragraph (b) provides the licensing policy for specific controls on
    the CCL;
    --Paragraph (c) describes any contract sanctity dates that apply to
    particular controls; and
    --paragraph (d) provides information concerning any multilateral
    cooperation that may apply to a particular control.

        BXA believes that the structure and organization of this part is a
    significant improvement over the existing EAR. It enables an exporter
    to retrieve specific licensing information relevant to each ECCN on the
    CCL without having to review extraneous material.
        Changes were made in Sec. 742.1, Introduction, to accurately
    describe the structure of this interim rule. Paragraph (c) was added to
    make clear that controls on embargoed destinations, other than anti-
    terrorism controls, are covered in part 746, Embargoes and Other
    Special Controls and do not appear in this part 742. Paragraph (d)
    generally describes anti-terrorism controls maintained by BXA.
    Paragraph (e) reminds the reader that items not listed on the CCL are
    nonetheless subject to the end-use and end-user provisions described in
    part 744, Control Policy--End-user/End-use Based.
        In addition, this interim rule contains changes that implement
    regulations which were issued by BXA but were not reflected in the
    proposed rule. The interim rule also reflects changes made in response
    to public comments on the proposed rule.
        On May 6, 1995, the President issued Executive Order 12959,
    imposing a virtual embargo on exports of any goods, technology or
    devices to Iran and on certain reexports of U.S.-origin goods or
    technology. (The Treasury Department, Office of Foreign Assets Control
    (OFAC), has principal responsibility for implementing E.O. 12959.)
    Because of the virtual embargo on exports to Iran, provisions dealing
    with Iran, except anti-terrorism controls, have been shifted to part
    746, Embargoes and Other Special Controls. In this interim rule,
    Sec. 742.8 describes anti-terrorism controls on exports and reexports
    to Iran that BXA continues to maintain while the comprehensive embargo
    administered by OFAC is in effect.
        This interim rule also includes new anti-terrorism controls on
    Sudan, described in Sec. 742.10 and in Supplement No. 2 to part 742.
    The Department will also publish these controls in the format of newly
    designated part 785A and related parts. The items controlled for anti-
    terrorism reasons to Sudan include explosive device detectors, which
    have been moved into a new ECCN. The anti-terrorism control on
    explosive device detectors also applies to Syria and Iran.
        Since the publication of the proposed rule, the Department has
    issued a new regulation on exports of specially designed implements of
    torture (60 FR 58512). This regulation moved specially designed
    implements of torture from Export Commerce Control Number (ECCN) 0A82C
    to a new ECCN, 0A83D, and required a license to all destinations,
    including Canada. The changes made by that regulation are reflected in
    the interim rule. Proposed Sec. 742.7 (Crime Control) is revised to
    eliminate references to implements of torture, and a new Sec. 742.11
    (Specially Designed Implements of Torture) is added to this interim
    rule.
        The President announced a revision of U.S. export controls on
    computers on October 6, 1995 that affects the supercomputer controls
    contained in part 742 (Sec. 742.12) of the proposed rule. The
    Department published the revised regulations on January 25, 1996 (61 FR
    2099). Section 742.12 has been retitled ``High performance computers''
    in this interim rule and describes the license requirements and
    licensing policies applicable to four ``tiers'' of countries.
    Supplement No. 3 to part 742 describes licensing safeguard conditions
    that may be imposed on exports of high performance computers to certain
    destinations.
        Twelve commenters included comments on part 742 in their
    submissions. A number of commenters pointed out technical mistakes and
    omissions in part 742. These are corrected in this interim rule.
    Following is a discussion of other comments submitted.
        Two commenters questioned the appropriateness of continuing
    controls on exports to members of a given multilateral control regime
    of items controlled by that regime. No License Exceptions are available
    for items controlled for missile technology reasons because a provision
    in the Export Administration Act requires individual validated licenses
    to all destinations. Section 742.2(a)(2) of this interim rule states
    that licenses are not required for exports of the listed chemicals to
    Australia Group member countries. This interim rule revises
    Sec. 742.3(a)(1) to inform the exporter that no license is required for
    exports of certain nuclear proliferation controlled items to Nuclear
    Suppliers Group (NSG) member countries. Finally, this interim rule
    describes, in Sec. 742.4(a), a new national security control level,
    denoted by ``NS Column 2'' in the Country Chart, which indicates that
    no license is required for exports to Country Group A:1 and cooperating
    countries.
        One commenter noted that proposed Supplement No. 2, listing
    countries that are party to the Treaty on the Nonproliferation of
    Nuclear Weapons and to the Treaty for the Prohibition of Nuclear
    Weapons in Latin America, required updating. Because the list of
    countries party to these treaties is constantly changing, BXA decided
    to remove this Supplement rather than risk publishing an inaccurate or
    outdated list. BXA will maintain and make available to interested
    persons a current list of the countries party to these treaties.
        One commenter suggested that part 738, Commerce Control List
    Overview; part 742, Control Policy--CCL Based

    [[Page 12722]]
    Controls; and part 774, The Commerce Control List be combined, since
    they all concern the Commerce Control List. BXA did not adopt this
    recommendation. Each of the three parts provides a view of controls
    from a different vantage point: Part 738 by country; part 742 by type
    of control; and part 774 by type of item. BXA believes that
    consolidating the three parts into one would make the interim rule more
    unwieldy and difficult to use.
        Two commenters recommended that contract sanctity provisions be
    established for nuclear nonproliferation, national security, regional
    stability, crime control or computer controls. BXA did not establish
    contract sanctity in this interim rule. Decisions on contract sanctity
    dates are made when new controls are imposed. This interim rule does
    not impose any new controls. Accordingly, no changes have been made in
    contract sanctity provisions.
        Two commenters stated that Sec. 742.2(d) (chemical and biological
    weapons), Sec. 742.4(d) (national security) and Sec. 742.5(d) (missile
    technology) incorrectly state that U.S. controls are consistent with
    multilateral agreements. BXA does not agree with this comment. The only
    change that BXA is making in this interim rule is to reserve
    Sec. 742.4(d). On December 19, 1995, the United States and twenty-seven
    other countries, including its NATO allies and Russia, agreed to
    establish a new multilateral export control arrangement. The Wassenaar
    Arrangement for Export Controls for Conventional Arms and Dual-use
    Goods and Technologies (``Wassenaar Arrangement'') is expected to be
    operational later in 1996. Any EAR changes that may be needed to carry
    out the Wassenaar Arrangement will be made at the appropriate time.
        A commenter suggested that License Exception NSG be extended to
    South Korea, Taiwan and Mexico. License Exception NSG has been removed
    in this interim rule. Instead, items on the CCL with ``NP Column 1'' in
    the Country Chart column of the ``License Requirements'' section of an
    ECCN do not require a license to NSG member countries. The commenter's
    suggestion has not been adopted by BXA for Taiwan and Mexico because
    the regulations simplification initiative was not intended to make
    substantive changes in license requirements. However, recent regulatory
    changes have extended such treatment to South Korea, and that change is
    incorporated into this interim rule.
        One commenter questioned why ECCN 5A80 (communications intercepting
    devices) of the proposed rule is not included in Sec. 742.7 (Crime
    Control). These items are regulated under separate statutory authority
    and licensing criteria. Items controlled under Sec. 742.7 are those
    agreed to pursuant to section 6(n) of the Export Administration Act.
    Controls on communications intercepting devices are maintained in
    accordance with the Omnibus Crime Controls and Safe Streets Act of
    1968, and are therefore separately controlled under Sec. 742.13.

    Part 744--Control Policy--End-User/End-Use Based

        This part contains prohibitions against exports, reexports, and
    activities related to certain end-uses and end-users. Specifically,
    Sec. 744.2 prohibits exports and reexports of items subject to the EAR,
    without a license, if at the time of the export or reexport you know
    that the item will be used in nuclear explosive, or other safeguarded
    or unsafeguarded nuclear activities. Section 744.3 prohibits the export
    or reexport, without a license, of certain items to be used for missile
    end-uses. Similarly, Sec. 744.4 prohibits the export or reexport of
    items with certain chemical and biological weapon end-uses. Next,
    Sec. 744.5 prohibits the export or reexport of items to be used for
    specified nuclear maritime end-uses.
        Section 744.6 places restrictions on certain proliferation-related
    activities of U.S. persons. For purposes of this prohibition the term
    ``U.S. person'' means citizens, permanent resident aliens, or protected
    individuals as defined in the immigration laws; any juridical person
    organized under the laws of the United States or any U.S. jurisdiction;
    and any person physically in the United States. This part also contains
    prohibitions against exports, reexports, and certain transfers to
    specified end-users. Section 744.7 imposes restrictions on certain
    exports to and for the use of certain foreign vessels or aircraft, and
    Sec. 744.8 places restrictions on certain exports to all countries for
    Libyan aircraft.
        Commenters urged BXA to publish a positive list of items and limit
    the applicability of the nonproliferation related end-use restrictions
    to items on such a positive list. In addition, commenters asked BXA to
    publish certain names of end-users as to which individual exporters
    have been ``informed'' that a license is required by reason of
    Sec. 744.2(b), Sec. 744.3(b), Sec. 744.4(b), and Sec. 744.6(b). BXA is
    working within the Administration toward these objectives; however,
    these are major policy initiatives, they are not part of this interim
    rule, and they are not necessary to achieve the goals of the
    Regulations Reform exercise.
        Commenters suggested that under Sec. 744.2(b) the discretion of BXA
    to inform an exporter of the trustworthiness of certain end users
    should be a duty of BXA rather than an option of BXA. The U.S.
    Government will retain this discretion because of the overriding
    interests in protecting sources and methods of intelligence gathering
    and the interests in law enforcement objectives that on occasion
    require flexibility on the part of the government.
        One commenter urged BXA to make clearer the treatment of technology
    that historically was authorized for export under General License GTDA.
    In the proposed rule, BXA excluded such information from the scope of
    the EAR. That approach is retained in this interim rule and clarified
    in the steps that have been added to part 732, Steps to suggest methods
    for using part 734, Scope of the EAR. Items not subject to the scope of
    the EAR are not subject to any prohibition of the EAR.
        Section 744.2(b) contains provisions designed to standardize the
    procedure for informing exporters that a particular party may present
    an unacceptable risk of diversion contrary to nuclear policies. Some
    commenters applauded this addition, and one opposed it. BXA will
    maintain this provision because the procedural discipline it provides
    should prove useful for both BXA and exporters. This provision does not
    change BXA's substantive authorities under the EAR.
        One commenter suggested additional cross-references to the license
    review policies for items subject to, for example, missile technology
    controls identified on the CCL based upon product parameters rather
    than a prohibited end-use. In the proposed rule and in this interim
    rule, the license review standard for applications required by reason
    of the product parameters designated on the CCL are listed in part 742,
    Control Policy--CCL Based Controls. The license review standards for
    license requirements defined by end-uses described in part 744 are
    contained in part 744. Because of the criticism of some commenters that
    the proposed rule contained too many cross-references, BXA has
    concluded in this instance that additional cross-references are not
    advisable.
        This interim rule continues existing policy regarding the country
    scope of the nuclear end-use prohibition. A new Supplement No. 3 is
    added to the part and referenced at Sec. 744.2(a) to exempt designated
    countries from this prohibition, and those are the same countries that
    are exempt under the

    [[Page 12723]]
    existing EAR. This is a change from the proposed rule.
        One commenter suggested that BXA remove from Sec. 744.6 words that
    indicate defined activities are prohibited in the United States. This
    interim rule accepts this recommendation. One commenter complained that
    Sec. 744.6 applies to less than all countries in Country Group D:1. The
    exclusion of Romania and China is consistent with current policy, and
    is maintained in this interim rule. BXA recognizes that such policy
    decisions make the use of the Country Groups and the EAR itself more
    complex. BXA hopes reviewing of provisions of the EAR in the order
    recommended by the steps in part 732 will minimize this problem. BXA
    intends to further address such issues in the future. However, policy
    making in export controls will always present trade offs for exporters
    when petitioning the government for fairness and precision of export
    control policy on the one hand versus simplicity and ease of
    administration for the public on the other.
        The proposed Sec. 744.6(a)(2) prohibited certain U.S. person
    activities related to nuclear explosives devices. It was removed from
    this interim rule because such activity is prohibited under the
    International Traffic in Arms Regulations (22 CFR 120-130), which
    regulate defense services for all destinations.

    Part 746--Embargoes and Other Special Controls

        Part 746 of the proposed rule contained controls for Cuba, Libya,
    Iraq, North Korea, and the Federal Republic of Yugoslavia (Serbia and
    Montenegro), indicating where jurisdiction was divided between BXA and
    the Department of the Treasury's Office of Foreign Assets Control. It
    also contained controls implementing U.N. sanctions resulting in
    additional EAR controls on Rwanda.
        Controls on Iran, embargoed because of Executive Order 12959 of May
    6, 1995, have been added to part 746 in this interim rule. With the
    suspension of the embargo on the Federal Republic of Yugoslavia (Serbia
    and Montenegro), controls on that country, as well as on certain areas
    of Croatia and Bosnia-Herzgovina, have been shifted to a Supplement to
    part 746. Commenters pointed out that ECCN 0A95, which released food
    and medical supplies to Libya from reexport control, was unaccounted
    for in the proposed rule; that oversight has been corrected. The former
    Humanitarian License Procedure, which was included in the Embargo part
    of the proposed rule, has become a License Exception for humanitarian
    donations and is in part 740 of this interim rule.
        Finally, this part includes Supplements containing general
    information on embargoes and sanctions administered by other federal
    agencies.

    Part 748--Applications (Classification, Advisory, and License)
    and Documentation

        Part 748 describes the procedures for submitting license
    applications, classification requests and advisory opinions. This
    interim rule places information from throughout the existing EAR into
    one part. It is intended to provide the reader with all information
    necessary to submit an application to BXA.
        This interim rule adopts use of the new Form BXA-748P for the
    submission of license applications and classification requests, but not
    advisory opinions. Most commenters favored the use of one form for both
    exports and reexports. This interim rule clarifies the definition of
    advisory opinions and states they must be submitted in writing via
    letter. Commenters were evenly split regarding the proposal to require
    use of Form BXA-748P for advisory opinions. One commenter proposed
    adopting the form for use when submitting end-user requests. This
    suggestion along with one recommending the elimination of unit and
    total price boxes are not adopted in this interim rule. A number of
    commenters also queried whether BXA intends to republish the Forms
    Supplement contained in the existing loose leaf EAR subscription. BXA
    will republish the Forms Supplement in the subscription to the EAR
    offered by the National Technical Information Service (NTIS). The Forms
    Supplement is not published in the Code of Federal Regulations.
        Sections in part 748 have been redesignated to better describe each
    section's contents. The addresses in Sec. 748.2 and Sec. 748.14 have
    been placed in one section. Procedures for submitting applications
    electronically have been placed in a separate section for easier
    access. For continuity, the unique license requirements for specific
    items or transactions have been placed in a separate Supplement No. 2
    to this part. This change will allow readers to determine quickly
    whether the unique requirements apply to their transaction, and if not,
    to continue quickly with sections relating to support documents.
    Instructions for completing Form BXA-748P contained in Supplement No. 1
    to part 748 have been clarified in response to comments posed by both
    the public and BXA employees.
        On the suggestion of one commenter, a reminder that information
    submitted under the Export Administration Act will be treated in
    accordance with provisions stated in section 12(c) of the act has been
    added in this interim rule in Sec. 748.1(c).
        The section on license application support documents has been
    revised to eliminate one step in the decision tree. The questions
    contained in Sec. 748.10(a)(3) in the proposed rule have been combined
    into one question in this interim rule. Some commenters noted that
    exceptions for obtaining support documents have decreased in certain
    circumstances. The changes announced in the proposed rule were due
    largely to the changing export control environment and proliferation
    credentials of various countries. Accordingly, this interim rule adopts
    the requirements contained in the proposed rule with a few
    modifications. This interim rule also adopts the two year validity
    period for the Statement by Ultimate Consignee and Purchaser.
        A few commenters noted that though the development of decision
    trees will assist in determining support document requirements, BXA
    should consider the development of a matrix or chart similar to that
    contained in part 775 of the existing rule. Though a chart has not been
    included in this interim rule, BXA will explore development of a new
    matrix/chart based on the support document decision tress in this part.
    This interim rule also eliminates the last letter in the Export Control
    Classification Number contained in the existing rule. This letter had
    been used previously to designate support document requirements, but is
    no longer necessary.
        A few commenters requested additional guidance on what constitutes
    an emergency and clarification of validity periods as they relate to
    licenses approved under emergency processing. This interim rule
    clarifies the validity period by cross-referencing the appropriate
    section in part 750, but does not provide additional language to be
    used by applicants when submitting emergency requests. In order to
    retain the emergency nature of these requests, this interim rule does
    not adopt the suggestion by one commenter to increase the validity
    period from 30 to 60 days for applications involving reexports.
        Commenters were evenly split regarding the elimination of Form BXA-
    685P for amendments with a few stating the elimination of this form is
    long overdue. This interim rule adopts the intent to eliminate Form
    BXA-685P along with Form BXA-648. Changes not

    [[Page 12724]]
    listed in Sec. 750.7(c) will require the submission of a Replacement
    application. One commenter stated the time period for the return of
    Delivery Verifications to BXA was reduced with elimination of Form BXA-
    648. The existing rule states the time frame as ``a reasonable time
    after the last shipment'' while the instructions contained in the
    existing Form BXA-648 stated the time frame as ``90 days after the last
    shipment''. This interim rule eliminates this inconsistency by
    establishing a 90 day time frame.
        Form BXA-711 along with its written counterpart is adopted in this
    interim rule. Commenters stated the ability to use a form or letter was
    a good idea.

    Part 750--Application Processing, Issuance and Denial

        Part 750 describes the processing procedures and time frames for
    classification requests, advisory opinion requests and license
    applications. Once an applicant has prepared documents in accordance
    with part 748, this part describes how the application will be handled
    by BXA. The time frames detailed in this interim rule are drawn from
    Executive Order No. 12981 of December 6, 1995 and the draft 1994 Export
    Administration Act bill written by the Clinton Administration.
        This interim rule provides a detailed description of the
    relationship between all agencies and departments involved in the
    license review process as well as a description of the interagency
    dispute resolution process. This part also addresses actual issuance,
    validity periods, denial, revocations, suspensions, transfers,
    duplicates, and shipping tolerances.
        This interim rule also eliminates the proposed exceptions to the
    license processing time frames and limits all license applications to a
    90 day processing time frame. A number of commenters made
    recommendations for revising the time frames for the processing of
    license applications as well as the types of applications subject to
    Congressional notification. This interim rule incorporates the
    processing time frames provided in Executive Order No. 12981.
    Accordingly, recommendations to establish different time frames have
    not been adopted. In addition, congressional notification requirements
    for crude oil and refined petroleum products have not been adopted
    since they no longer apply to the types of licenses reviewed by the
    Department.
        Most commenters supported the clarification of the license
    processing system and time frames. These commenters agreed that BXA has
    met the goal of making the process more transparent for the exporter.
        A number of commenters requested that applicants be given the
    opportunity to express their views during the license escalation
    process. These commenters also requested clarification of the term
    ``registration'' to include language that would require prompt action
    by BXA upon receipt of a license application. Both of these
    recommendations have been adopted in this interim rule.
        One commenter suggested that part 756, Appeals, be combined with
    this part 750 since most appeals involve license applications. This
    recommendation was not adopted because the appeals process is open to
    all administrative actions, not only those relating to license
    applications.
        One commenter recommended simplification in the provisions for
    shipping tolerances. While this recommendation has merit and may be
    considered at a later date, it was not adopted in this interim rule.

    Part 752--Special Comprehensive License

        Part 752 describes the provisions of the Special Comprehensive
    License (SCL). The SCL consolidates the activities authorized under the
    Project, Distribution, Service Supply, Service Facilities, Aircraft and
    Vessel Repair Station Procedure, and Special Chemical Licenses, and
    provides for additional flexibility to BXA in shaping appropriate SCLs
    and internal control programs (ICPs). For example, the Project License
    and Service Supply Procedure authorize exports and reexports to
    countries of the former Soviet Union, Eastern Europe, and the People's
    Republic of China, but the Distribution License, which includes an
    extensive mandatory ICP that is not required for the Project License or
    the Service Supply Procedure, does not allow exports and reexports for
    distribution in these countries. This interim rule conforms item and
    country eligibility under the SCL. All items subject to the EAR are
    also eligible for export and reexport under the SCL, except a few
    specified items. Form BXA-686P, Statement by Foreign Importer of
    Aircraft or Vessel Repair Parts, which was used for certain exports
    under the Aircraft and Vessel Repair Station Procedure, and Form BXA-
    6026P, Service Supply License Statement by U.S. Exporter, are not used
    under the SCL.
        BXA received fourteen comments on part 752. Overall, several
    commenters stated that the SCL is a significant improvement over the
    existing special license eligibility because it provides broader
    authority to allow exports of items such as software and technology.
        Five commenters suggested that existing special license holders
    retain the right to use existing special licenses until they expire,
    but apply for amendments to take advantage of the increased item and
    country scope of the SCL.
        This interim rule makes the SCL effective March 25, 1996. All
    existing special licenses will expire on March 25, 1997, unless the
    special license expires before that time by its own terms. BXA will not
    grant extensions to existing special licenses. Existing special license
    holders who want to take advantage of the SCL benefits, must apply for
    an SCL according to part 752. BXA will not accept amendments to
    outstanding special licenses.
        Eight commenters provided comments on item scope for the SCL. Most
    commenters stated that the proposed rule would not authorize exports
    under the SCL of items eligible for a License Exception. The proposed
    rule allowed exports under the SCL of all items subject to the EAR,
    including items eligible for a License Exception. However, to prevent
    confusion, the interim rule specifically states in Sec. 752.1 that you
    may apply for an SCL, when appropriate, in lieu of a license described
    in part 748 or a License Exception described in part 740.
        Two commenters stated that the SCL should not exclude any items
    because it defeats the purpose of the SCL, which is designed to allow
    greater flexibility in return for increased monitoring of each shipment
    by the SCL holder and consignees. One commenter added that other
    agencies have the right to review the applications for an SCL, and
    restrictions may be placed on a license on a case-by-case basis.
    However, two commenters stated that there should be no ad-hoc
    restrictions, adding that the only item restrictions should be those
    published in the Federal Register, which would be applicable to all
    companies.
        This interim rule retains the list of items not eligible for the
    SCL in Sec. 752.3 to ensure that potential applicants are aware of the
    few item restrictions before they consider applying for an SCL. If BXA
    determines that an item must be added to the list to protect national
    security, nonproliferation, or foreign policy interests, or determines
    that an item need no longer be prohibited under the SCL, BXA will
    publish a change in the Federal Register, at which time the change will
    become effective and apply to all SCL and potential SCL holders.
        Another commenter was concerned about the general policy of denial
    for

    [[Page 12725]]
    exports to destinations in Country Group D:2 of items controlled for
    nuclear nonproliferation reasons, and suggested that the SCL
    specifically state that items controlled for nuclear nonproliferation
    reasons be authorized on a case-by-case basis provided that the
    exporter has appropriate controls in place to screen for proscribed
    end-uses or end-users. The Internal Control Procedures (ICPs) required
    for most activities authorized under the SCL include screening elements
    for proliferation end-uses. This interim rule revises the policy of
    denial language found in Sec. 752.3(b) of the proposed rule to a policy
    of case-by-case review. In addition, this rule retains the discretion
    to deny or limit the export or reexport of all items, including those
    controlled for nonproliferation reasons.
        Most commenters applauded the expansion of country scope to include
    the newly independent states and Russia. However, several commenters
    requested clarification that the SCL is eligible for countries such as
    Slovenia, Rwanda, Bosnia, and Croatia, which are eligible under
    existing special licenses . One commenter stated that when BXA declares
    a country ineligible to receive items under the SCL, BXA should
    simultaneously list the country in the EAR, and remove it from all
    SCLs.
        It is not BXA's intent to roll-back special license country
    eligibility. This interim rule therefore clarifies that all countries
    are eligible to receive items under the SCL except Cuba, Iran, Iraq,
    Libya, North Korea, Syria, and Sudan. If BXA determines that additional
    countries should become ineligible to receive items under the SCL, it
    will publish the change in the Federal Register, and notify all SCL
    holders.
        Four commenters suggested consolidating Sec. 752.2 into one generic
    paragraph that describes the representative activities. Another
    commenter stated that the SCL should not prohibit the export of service
    parts or upgrades as long as it does not exceed the limits of the SCL
    parameters. Section 752.2 is intended to provide illustrative examples
    of the types of activities that may be approved under the SCL. It is
    not intended to be an inclusive list, and other activities may be
    approved on a case-by-case basis. This interim rule revises Sec. 752.2
    to provide a general description of the types of activities that BXA
    may approve the under the SCL. These activities fall under the general
    categories of ``service'', ``end-user'', ``distribution'', and
    ``other'' activities.
        Four commenters provided comments on the requirement for a letter
    of assurance for exports under the SCL of certain technology. One
    commenter stated that the SCL expands the scope of the existing letter
    of assurance required for exports under General License GTDR because it
    would require the letter of assurance from each new recipient overseas.
    One commenter specifically requested that the letter of assurance be
    required from only one party overseas. The proposed rule did not expand
    current policy. Under the existing EAR, any transfers of technical data
    covered by a letter of assurance would require such assurances from any
    new recipient of the technology. Two commenters indicated that
    assurances are not required for exports of technology under a validated
    license. But, if an assurance must be required, the assurance should be
    included in the SCL certifications.
        This interim rule removes the letter of assurance requirement from
    Sec. 752.5. BXA intends to review requests to export controlled
    software and technology under the SCL on a case-by-case basis, and
    impose conditions or restrictions as appropriate. Depending upon the
    level of software or technology requested for export under the SCL,
    this may include restrictions on reexport of software or technology, or
    exports of direct products of the technology.
        Comments on Sec. 752.5, steps you must follow to apply for an SCL,
    focused on the comprehensive narrative statement. Many commenters
    stated that much of the information required in the comprehensive
    narrative statement is already required on Form BXA-748P, Multipurpose
    Application, or Form BXA-752, Statement by Consignee in Support of
    Special Comprehensive License. Five commenters specifically requested
    that the requirement to state the ratio and dollar volumes of
    controlled items to those not subject to the EAR be removed, because it
    is impractical to calculate and fundamentally unreliable. BXA agrees
    that SCL applicants should not be required to repeat information in a
    comprehensive narrative statement that is also required on Form BXA-
    748P or Form BXA-752. Therefore, this interim rule includes major
    revisions to the comprehensive narrative statement requirements,
    limiting that statement to the information that is not required
    elsewhere. This interim rule also removes the requirement to list the
    items eligible for a License Exception that will be exported under the
    SCL because the ICP requirements assure that appropriate controls are
    in place to prevent diversion.
        One commenter stated that the application stage was too early to
    provide BXA a copy of the proposed ICP, and to do so conflicts with the
    certification requirements that an ICP must be in place upon approval
    of the SCL. This interim rule retains, under Sec. 752.5(c)(3), the
    requirement that applicants and consignees submit ICPs at the time of
    application. This information is necessary for BXA to determine whether
    to approve the items, activities, or countries requested on the SCL
    application, or to modify your proposed ICP depending upon the nature
    of the request.
        One commenter stated that BXA should not require an SCL holder to
    inform all consignees of license conditions. Certain conditions may
    only have relevance to one or two consignees. BXA agrees, and has
    clarified in Sec. 752.9(a)(4) to state that the SCL holder must inform
    all relevant consignees of all license conditions prior to making any
    shipments under the SCL. Four commenters objected to the language that
    refers to prior reporting of exports of certain items, which is was
    included in Sec. 752.9(a)(4). This interim rule retains this language.
    Exporters should note that the list of the special conditions that may
    be placed on your SCL included in this section only provides examples,
    and such conditions may not be included on your SCL.
        Section 752.11 describes the elements of the Internal Control
    Programs (ICPs) that the SCL holder and consignee must implement upon
    approval of the SCL to assure that exports and reexports are not made
    contrary to the EAR. Two commenters stated that the ICP requirements
    included in the proposed rule should be clear and defined, not
    generalized. Three commenters suggested that EPCI screening be limited
    to certain countries. Two commenters requested that BXA clarify when
    the parties to the application must submit the ICP to BXA. One
    commenter also requested that upon publication of the SCL, BXA publish
    guidelines that further define ICP requirements.
        This interim rule also restructures Sec. 752.11 to consolidate the
    elements of all three ICPs into one list, and to remove the different
    levels of ICPs. This simplifies the text, and makes it more user-
    friendly. This interim rule does not place country limits on screens
    against customers who are known to have, or suspected of having,
    unauthorized dealings with specially designated regions and countries
    for which nonproliferation controls apply. Any such limits must be
    approved by BXA, and are dependent upon the specific nature of your SCL
    request. This interim rule also includes information in
    Sec. 752.11(a)(2) on where you may obtain

    [[Page 12726]]
    guidelines to assist you in developing an adequate ICP.
        This interim rule also makes several other editorial changes to
    part 752 to consolidate provisions and simplify the text. Section
    752.10, Changes to the SCL, has been revised to clearly define the
    requirements for changing an SCL. Detailed instructions on how to
    complete Forms BXA-748P, Multipurpose Application, and Form BXA-752,
    Statement by Consignee in Support of Special Comprehensive License, and
    other forms related to applying for an SCL are included in supplements
    to part 752. The servicing provision in Sec. 752.4(b) has been revised
    to conform with the standard used throughout the EAR. This provision
    prohibits you from servicing, under the SCL, any item when you know
    that the item is owned or controlled by, or under the lease or charter
    of, entities in countries not eligible for the SCL, or any nationals of
    such countries. Finally, the recordkeeping provisions of Sec. 752.12
    have been clarified by providing the appropriate cross-references to
    part 762, which applies to all transactions subject to the EAR.

    Part 754--Short Supply

        This part implements section 7 of the EAA and similar provisions in
    other laws that authorize or require restrictions on exports for
    reasons dealing with adequacy of supply of commodities in the United
    States, as opposed to reasons based on foreign policy, national
    security, or nonproliferation considerations. Specifically, this part
    implements controls on exports of crude oil restricted under the EAA
    and a number of other laws; on exports of petroleum products produced
    or derived from the Naval Petroleum Reserves; on exports of western red
    cedar as required by provisions in the EAA; and on exports of horses by
    sea for the purpose of slaughter. It also provides information relating
    to two provisions contained in EAA section 7: The registration of
    agricultural commodities for exemption from short supply controls, and
    the filing of petitions for the imposition of controls on recyclable
    metallic materials.
        Consistent with the revised structure of the proposed and interim
    rules, this part contains all of the requirements that apply uniquely
    to commodities controlled for short supply reasons. It sets forth all
    of the licensing requirements, licensing policy, License Exceptions,
    and other unique requirements that apply to commodities controlled for
    short supply reasons on the CCL. Short supply controlled commodities
    are identified with ``SS'' under ``Reason for Control'' in each
    relevant ECCN on the CCL. Other requirements of the EAR that are not
    unique to short supply controls, such as recordkeeping in part 762,
    also apply to items covered by this part.
        Six commenters provided comments on this part. A number of
    revisions have been made to implement the recommendations contained in
    the comments. Additional revisions were made to incorporate the heavy
    California crude oil rule published in the Federal Register but not
    included in the proposed rule.
        Commenters recommended that the definition of ``crude oil'' in
    Sec. 754.2 be moved to the front of this section from paragraph (g).
    The definition of ``crude oil'' is now included in paragraph (a).
        Section 754.2(b) deals with licensing policy for crude oil. It has
    been revised significantly to distinguish BXA's licensing policy for
    shipments of crude oil which have already been found to be in the
    national interest, by Presidential decision or otherwise, e.g., crude
    oil from Cook Inlet or California heavy crude, and those which will be
    approved if BXA makes the necessary findings on a case-by-case review
    of applications. In the proposed rule all crude oil applications would
    be reviewed by BXA and approved if the crude oil was not subject to
    certain statutory restrictions and BXA made a finding that the export
    was in the national interest and consistent with the purposes of the
    Energy Policy and Conservation Act. In this interim rule, paragraph
    (b)(1) of Sec. 754.2 lists the exports that have already been found to
    be in the national interest and paragraph (b)(2) lists the exports for
    which BXA must make the necessary findings.
        Section 754.2(b)(2) also reflects a revision relating to the kinds
    of transactions that BXA will find to be in the national interest. The
    proposed rule had cited examples of crude-for-crude and crude-for-
    product exchanges that would be found to be in the national interest.
    The language of the proposed rule, however, could have been interpreted
    as limiting the national interest to these examples. The interim rule
    makes clear that the cited exchanges are only examples.
        This interim rule also adds a new paragraph (g) to Sec. 754.2,
    reflecting regulations that were published in the Federal Register (60
    FR 15669, March 27, 1995).
        Finally, this interim rule creates two new License Exceptions which
    apply to the exports of crude oil. Section 754.2(h) implements a new
    License Exception SS-SPR, intended to permit the export of foreign
    origin oil stored for emergency use by a foreign government in the
    Strategic Petroleum Reserves (SPR). License Exception SS-SPR permits
    the export even if the foreign origin oil is commingled with other SPR
    oil, provided that the Department of Energy certifies that the crude
    oil being exported is of the same quantity and of comparable quality as
    the foreign origin oil imported by the foreign government for storage
    in the SPR.
        Section 754.2(i) of this interim rule creates a new License
    Exception, SS-SAMPLE, to permit limited quantities of crude oil for
    analytical or testing purposes. This revision implements
    recommendations included in the public comments. Under this License
    Exception you may ship up to ten barrels of crude oil to any one end-
    user annually, up to a cumulative limit of 100 barrels per exporter
    annually. This License Exception codifies a BXA licensing policy for
    sample shipments that has been in effect for several years. This
    licensing policy has been included in BXA's annual report to the
    Congress, but has not been reflected in the EAR. Such de minimis sample
    shipments have no measurable effect on U.S. oil supplies.
        Section 754.3 of this interim rule reflects a significant change in
    the way that the Naval Petroleum Reserves Production Act (NPRPA)
    restriction on non-crude oil products are implemented. The NPRPA
    prohibits the export of petroleum origination or derived from the Naval
    Petroleum Reserve (NPR), unless the President approves the export.
    Under existing EAR, licenses are required for all petroleum products,
    and General License G-NNR authorizes shipments of all such product of
    non-NPR origin or derivation. The proposed rule continued this approach
    and provided License Exception SS-NPR.
        Commenters noted that if all NPR crude oil produced in fiscal year
    1994 were refined, it would amount to less than one percent of all the
    crude oil refined in the United States. The commenters recommended that
    the existing approach be changed to require a license only for
    petroleum products which were NPR produced or derived. BXA adopted this
    recommendation and this provision reflects the change.
        The relevant ECCNs on the CCL have been revised to apply only to
    petroleum products that were produced or derived from the NPR or became
    available for export as a result of an exchange of any NPR produced or
    derived commodities. With this change, General License SS-NNR is no
    longer necessary and is removed.

    [[Page 12727]]

        Section 754.4, unprocessed western red cedar, has been reorganized
    consistent with a recommendation included in the comments. In the
    proposed rule, Sec. 754.4(a)(2) contained instructions for filing a
    license application, and preceded provisions on license policy and
    exceptions. A commenter noted that an exporter will first look for
    licensing policy and license exceptions before looking for information
    on how to fill out a license application. The commenter observed that
    there is no point in instructing the exporter how to complete a license
    application if subsequent text informs the exporter either that a
    license will not be approved or is not necessary. This interim rule
    adopts this comment and has restructured Sec. 754.4 accordingly.

    Part 756--Appeals

        This part describes the procedures applicable to appeals from
    administrative actions taken by BXA. An administrative action is any
    action (not including an administrative enforcement proceeding) taken
    under the EAA or EAR with respect to a particular person, including
    denial of a license application, return of a license application for
    other than procedural deficiencies or additional information, or
    classification of an appellant's item. Essentially, any person directly
    and adversely affected by an administrative action would be allowed to
    appeal to the Under Secretary for Export Administration for
    reconsideration of that administrative action.
        No substantial comments were received on this part 756. One
    commenter suggested the possibility of combining this part with part
    748, Applications. This interim rule does not adopt the suggestion.
        With the exception of minor editorial revisions and clarifications,
    the provisions of part 756 remain unchanged from the proposed rule.

    Part 758--General Export Clearance Requirements

        This part deals with requirements imposed on exporters and others
    regarding the movement of items subject of the Export Administration
    Regulations (EAR) out of the United States. The purpose of this part is
    to assure that the movement of items subject to these EAR conforms to
    the requirements of the export license or other authorization for their
    export.
        This part imposes specific responsibilities on the different
    persons involved in export transactions to ensure compliance with other
    provisions of the EAR and of the Foreign Trade Statistics Regulations
    (FTSR) (15 CFR Part 30), including exporters, freight forwarders,
    exporters' agents, carriers and all other persons. It prohibits any
    person from engaging in certain proscribed conduct. This part governs
    some of the same conduct that is governed by the FTSR.
        This part imposes specific responsibilities for assuring that
    Shipper's Export Declarations (SEDs), bills of lading and air waybills
    are accurately filled out and are consistent with the export license or
    other authorization for the export to which they correspond. It
    restricts the conduct of exporters, forwarders, carriers and others to
    assure that the delivery abroad of items subject to the EAR is in
    accordance with the terms of the export license, exception to the
    licensing requirement or other authorization. In some cases, it imposes
    duties on parties to the transaction to return the items to the United
    States or take steps to prevent them from entering the commerce of a
    foreign country.
        The proposed rule made several changes to this part. Approximately
    25 commenters made comments on the proposed part 758.
        A majority of those who commented on part 758 recommended that we
    eliminate the requirement to place the symbol ``NOL'' on Shippers
    Export Declarations (SEDs) for transactions involving items not on the
    CCL. Most of those commenters suggested that we adopt a single symbol
    ``NLR'' for all transactions where the export does not require a
    license either because it is on the CCL but does not require a license
    to the destination in question or because it is not on the CCL. Several
    commenters went further and recommended that we authorize the use of
    the symbol ``NLR'' for transactions that are authorized by a License
    Exception instead of requiring that the License Exception symbol be
    listed on the SED. We adopted the suggestion to eliminate the symbol
    ``NOL''. However, this interim rule includes a designator (EAR99) for
    items that in the proposed rule were subject to the EAR but not on the
    CCL, that will be used by BXA in responding to classification requests
    and by exporters for their management systems. The designator will not
    be used on SEDs. We have also reduced the number of License Exception
    symbols from which parties filling out SEDs must choose. As noted above
    in the discussion of License Exceptions, we have created a small number
    of symbols for various groups of License Exceptions, and it is these
    symbols for groups of License Exceptions that must appear on the SED.
        Several commenters suggested that the choice of Destination Control
    Statements (DCSs) in the proposed rule was unduly complex. In addition,
    some commenters suggested that the proposed rule on DCSs did not make
    it clear that the most restrictive DCS could be used for any
    transaction. This interim rule adopts a single simplified DCS.
        A number of commenters raised the issue of what information should
    be shown on SEDs for items which in the proposed rule were not subject
    to the EAR, but which in the existing EAR are eligible for general
    license GTDA. In response to these comments this interim rule creates
    an optional designator TSPA which exporters may use on SEDs for
    software or technology that the proposed rule and this interim rule
    define as outside the scope of the EAR.
        The proposed rule eliminated some information about authority and
    status of forwarding agents and procedures for correcting SEDs on the
    grounds that those points are covered in the FTSR (15 CFR part 30) and
    including them in the EAR was redundant of the FTSR. Some trade
    associations recommended that we retain these procedures. We did not
    adopt this suggestion because the FTSR applies to all exports from the
    United States including those subject to the EAR and those that are
    not. These procedures need to be in the FTSR because exporters who have
    no transactions subject to the EAR must follow them. Retaining
    duplicate language in a regulation that applies to only a portion of
    the exports from the United States would be redundant and creates the
    burden of keeping two different sets of regulations identical whenever
    amendments are adopted.
        Two commenters suggested that proposed Sec. 758.1 was too long and
    portions were redundant. They suggested breaking it up into several
    sections. We did not adopt this suggestion in this interim rule. The
    section has been shortened because of the elimination of the NOL
    provisions.
        Several commenters suggested that the use of the word ``you'' in
    the proposed rule under Sec. 758.1(a)(1) shifted responsibility from
    exporters to forwarders. This interim rule does not change that
    language. The proposed rule, by its terms makes those who obtain
    licenses from BXA or rely on License Exceptions in their export
    transactions responsible for the proper use of that license or License
    Exception. This is a reasonable policy and is retained in this interim
    rule.
        Two commenters proposed that forwarding agents not be required to
    keep a record of the delegation of authority to them unless the

    [[Page 12728]]
    responsibility to do so was delegated by the exporter. This interim
    rule does not adopt this suggestion. The proposed rule and this interim
    rule conform with the existing EAR and with the FTSR on this issue.
        Two commenters stated that the use of the phrase ``exporter and the
    person submitting the document'' in the proposed Secs. 758.3(e) and
    758.3(l)(1) expands the scope of the persons making representations to
    the U.S. Government to include forwarders in instances where the
    existing EAR does not impose responsibility on forwarders. We accepted
    this recommendation. This interim rule adopts language from the
    existing EAR. However, other sections of this interim rule, like the
    existing EAR, impose liability on forwarders who make
    misrepresentations to the government.
        Two commenters recommended that the HTSUS numbers be permitted on
    SEDs in lieu of Schedule B numbers. We did not adopt this
    recommendation in this interim rule. The FTSR (15 CFR part 30) which
    govern all exports from the United States require Schedule B numbers.
    To the extent that there are differences between the HTSUS and the
    Schedule B numbers, errors in compiling foreign trade statistics would
    occur if either classification numbering system were permitted for
    exports subject to the EAR.
        One commenter recommended that this rule eliminate the
    responsibility of exporters and forwarders who file summary monthly
    reports in lieu of SEDs to ensure that carriers place the destination
    control statement on bills of lading and air waybills. We did not adopt
    this suggestion. The proposed rule and this interim rule follow the
    existing EAR which was designed to assure that exports made under the
    privileged monthly procedure were totally in compliance with the EAR.
        Two commenters recommended that the regulations impose a limit on
    the time that the Government may hold up export shipments for
    inspection. We did not adopt that suggestion because it was beyond the
    scope of the regulations reform exercise. Input from a number of other
    government agencies would be necessary to develop a rational time
    limit.
        One commenter recommended that when the government orders a carrier
    to return or unload a shipment that the government be required to
    notify the exporter. We did not adopt this suggestion. In some cases
    the exporter may be the target of an investigation and a notification
    requirement could jeopardize legitimate law enforcement activities.
    More than one agency has authority to order return or unloading and
    developing a rule would require the coordinated input of several
    agencies. That coordination would be beyond the scope of the
    regulations reform exercise.
        One commenter recommended that we require that exporters show the
    Export Control Classification Number (ECCN) on the SED for all exports.
    We did not adopt this suggestion. Although exporters need to determine
    the proper ECCN in order to determine whether they need an export
    license, requiring them to show that number on SED's for all exports
    would unduly increase the paperwork burden.
        To assist in defining parties to an export transaction, one
    association recommended we adopt as a guide a Power of Attorney
    utilized by Customs. We did not adopt this recommendation. The EAR
    defines parties to a transaction in an adequate manner. Parties to
    transactions additionally are free to adopt any Power of Attorney
    arrangement that addresses pertinent roles and is not inconsistent with
    the EAR or other applicable regulations.
        One commenter questioned the proposed requirement to place the
    various EAR authorizations for each item being exported under its
    corresponding line item description. This commenter pointed out that
    the FTSR requires that same information to be placed in blocks 21 and
    22 on the SED form or continuation sheet. This interim rule adopts the
    FTSR procedure and eliminates the requirement to repeat the
    authorization under the line item description.
        This same commenter also recommended that the ``Conformity''
    provisions in Sec. 758.4(c)(2)(iii) be changed to allow a name of a
    party other that the licensee/shipper on the SED to be shown on the
    bill of lading as shipper. We did not adopt this recommendation. These
    provisions are designed to assure that new parties are not introduced
    in transactions contrary to the EAR and that exports are completed in
    an orderly and legal manner. Additionally, the situation described may
    be appropriately addressed in the application for license process, by
    showing the foreign subsidiary as exporter/licensee and the United
    States affiliated/related company as agent for the exporter.
        Two commenters recommended eliminating the proposed rule
    requirements concerning commodity descriptions on the SED
    (Sec. 758.3(g)(2)(ii)) and the requirement that a copy of the
    commercial invoice with a DCS be sent to the ultimate consignee
    (Sec. 758.6(c)(4)). They claimed that these were new requirements. We
    did not adopt the recommendations in this interim rule because the
    proposed rule merely retained the requirements of the existing EAR.

    Part 760--Restrictive Trade Practices or Boycotts

        This part revises the existing part 769. The recordkeeping
    requirement found in Sec. 760.5(b)(8) of this interim rule requires the
    recipient of records relating to a reportable boycott request to keep
    those records for five years after receipt of the request. The existing
    EAR Sec. 769.6(b)(8) requires the recipient of records relating to a
    reportable boycott request to keep those records for three years after
    receipt of the request.
        Two sections that were reserved in the existing EAR (769.5 and
    769.7) have been removed. As a result of this change, Sec. 769.6 in the
    existing EAR has been renumbered as Sec. 760.5 in this interim rule. In
    addition two grace period provisions in the existing EAR have been
    removed. They are; Sec. 760.2(f)(11) (along with its accompanying
    example xi) in which certain actions to implement letters of credit
    prior to the expirations of grace periods and Sec. 769.8 which
    established a grace period for agreements entered into on or before May
    16, 1977 could be complied with. The last such grace period expired on
    December 31, 1978. Supplement No. 14 which relates to U.S. sanctions
    against South Africa that have been repealed has also been removed and
    subsequent supplements renumbered.
        A new Supplement No. 16 interpreting antiboycott policy in light of
    recent developments in Jordan has been added by this interim rule.
        None of the changes made to this part by this interim rule were
    published in the proposed rule.

    Part 762--Recordkeeping

        In this interim rule, this part has been reorganized and revised to
    eliminate the requirement that regulated persons obtain BXA approval
    prior to destroying original documents and replacing them with
    electronic, magnetic, photographic or other images. This interim rule
    also makes it clear that persons required to keep records may always
    keep the records in the form in which that person receives or creates
    it. It extends the recordkeeping period to five years to coincide with
    the applicable statute of limitations and sets standards of legibility
    and retrievability for reproductions that are kept in lieu of
    originals.
        Several commenters objected to the extension of the recordkeeping
    requirement to five years in the

    [[Page 12729]]
    proposed rule. This interim rule adopts the five year record retention
    period. A record retention period that coincides with the applicable
    statute of limitations is needed to promote effective enforcement. In
    addition, such a retention period benefits firms that comply with the
    regulations because the EAR require that those who export under a
    License Exception justify the use of that exception. Such persons will
    need the records of the transaction to do so.
        Three commenters suggested that recordkeeping requirements be
    eliminated for certain categories of exports that do not require a
    license from BXA. We did not adopt this suggestion. Many transactions
    that are subject to the EAR do not require a license from BXA.
    Comprehensive records are necessary for effective enforcement and
    administration of the EAA and EAR.
        One commenter objected to a requirement in the proposed rule that
    records which are the subject of a request for production of records by
    the government may not be destroyed even if the record retention period
    has otherwise expired. This provision is a requirement under the
    existing EAR and is retained in this interim rule. Enforcement and
    compliance efforts would be undermined if parties were allowed to
    destroy records after they have been notified that those records are
    wanted in connection with an audit or investigation.
        Several commenters recommended that we eliminate the specific
    requirements for legibility and retrievability of reproduced records
    that are kept in lieu of originals that appeared in the proposed rule.
    We did not adopt this suggestion. This interim rule does not impose any
    requirements of legibility on original records. However, standards of
    legibility and retrievability are necessary when the originals are
    destroyed and copies are retained in lieu thereof. BXA will continue to
    review this issue to ascertain if the standards might be simplified
    without compromising record integrity.
        Two commenters recommended that the EAR specifically state that
    records of certain activities of U.S. persons in connection with the
    proliferation controls described in Secs. 734.2(b)(7) and 744.6 are
    subject to the recordkeeping requirement. Although the proposed rule
    stated that all transactions that are subject to the EAR are subject to
    these recordkeeping requirements, we adopted this suggestion to make
    more explicit the fact that activities subject to the proliferation
    controls are covered.

    Part 764--Enforcement

        Eleven of the commenters dealt with part 764. This interim rule
    makes numerous changes to the proposed rule based upon these comments.
        This interim rule accepts the suggestion of one commenter and
    revises Sec. 764.2(e) expressly to limit the offense of acting with
    knowledge of a violation to actions that are connected with an item
    that is the object of the violation of the EAA or EAR.
        Section 764.2(j) is revised to remove from the list of violations a
    number of actions characterized as ``trafficking and advertising export
    control documents''. BXA accepted the suggestion that some of the
    restrictions on the creation of an interest in a licensed transaction
    are inconsistent with normal trade practice in financing and insuring
    exports. BXA is eliminating other parts of this section as unnecessary
    because limitations on license transfer and use are effectively covered
    by other EAR provisions, such as Sec. 750.10, and concerns regarding
    disclosure of a person's relationship to a transaction are covered by
    provisions such as Sec. 764.2(g). This interim rule limits
    Sec. 764.2(j) to the offense of license, other export control documents
    or other alteration.
        Some commenters called for distinguishing between ``substantive''
    and ``minor'' violations. BXA did not adopt this suggestion. BXA
    concludes that such distinctions are not feasible or appropriate with
    respect to the type of activity covered by the EAR.
        Some commenters urged BXA to list factors that would mitigate
    sanctions for violations. BXA did not adopt this suggestion. BXA notes
    that its practice shows that it is open to the consideration of a wide
    range of mitigating factors, and it does not believe that a listing of
    such factors is needed to enhance compliance or to ensure that
    sanctions will be appropriate.
        Some commenters called for BXA to include in the EAR a
    comprehensive denial list that would include the names not only of
    persons denied export privileges by BXA, but of persons covered by
    denial orders or designations by other agencies. This interim rule does
    not contain such a list. BXA cannot make its regulations an official
    repository of legal action by other agencies. BXA will work with other
    agencies to try to improve coordination of and access to the lists.
        This interim rule describes certain measures such as license
    suspensions and temporary denial orders and places them in a new
    Sec. 764.6, entitled ``protective administrative measures''. These
    measures are not punitive, but are intended to protect against activity
    contrary to the purposes of the EAR. Although these measures were
    included in the existing EAR and in the proposed rule, they were not
    all in a single section. Placing these measures in a single section
    distinguishes them from the sanctions which are covered elsewhere in
    part 764.

    Part 766--Administration Enforcement Proceedings

        Five commenters specifically addressed part 766. Three of these
    commenters addressed substantially the same points.
        Three commenters called for changes to protect the interests of
    persons BXA seeks to add to a denial order on the basis of relationship
    to the respondent. This interim rule makes three such changes. It
    revises Sec. 766.23 to clarify that prevention of evasion is the basis
    for making an order applicable to a related person, to provide more
    specifically and uniformly for notice to persons that BXA seeks to have
    named as related, and provides that such persons may oppose or appeal
    not only the issue of relationship, but also whether the order is
    justified to prevent evasion. These commenters suggested, further, that
    related persons be allowed to challenge the order on the merits, that
    is, as to whether or not there has been a violation or a temporary
    denial order is necessary in the public interest in order to prevent an
    imminent violation. BXA did not adopt this suggestion. BXA believes
    that it is proper to limit contests on the merits to respondents, as it
    is the alleged conduct of respondents that is the basis for the order.
        One commenter expressed concern that having the Under Secretary
    decide appeals from Administrative Law Judge (ALJ) decisions in
    enforcement proceedings raises doubts about impartiality, due process
    and fairness. This commenter called for direct appeal from the ALJ to
    the U.S. Court of Appeals. No such change has been made, as it would be
    contrary to specific EAA provisions and to general administrative law
    practice that makes final agency action subject to judicial review. An
    ALJ decision cannot be final agency action under 50 U.S.C. app. 2412(c)
    or (d). Moreover, BXA believes that its conduct of administrative
    proceedings has been marked by fairness and the careful observance of
    due process.
        Three commenters called for stating that ``clear and convincing
    evidence'' is required to sustain an administrative enforcement case.
    BXA did not adopt this suggestion. The EAA (50 U.S.C.

    [[Page 12730]]
    app. 2412(c)) makes the Administrative Procedure Act (5 U.S.C. 556)
    evidence standard (``reliable, probative, and substantial'')
    applicable. BXA does not believe that any different EAR standard is
    needed.
        Three commenters called for detailed provisions on how much
    evidence is needed to support a summary decision under Sec. 766.8.
        BXA did not adopt this suggestion. BXA concludes that the use of
    the standard ``there is no genuine issue as to any material fact'' is
    proper and sufficient.
        Another commenter stated that Sec. 766.24(b) should be revised to
    define the ``imminent violation'' criterion for issuance of a temporary
    denial order as requiring a showing of imminence both in nearness of
    time and in likelihood of occurrence. BXA did not adopt this
    suggestion. BXA retains its longstanding definition from the existing
    EAR, consistent with the legislative history of the 1985 amendments to
    the EAA, that either time or probability imminence will support the
    issuance or renewal of a temporary denial order.
        This interim rule adopts many improvements in drafting clarity and
    precision that were suggested in the comments, along with numerous
    others that BXA developed. This interim rule revises Sec. 766.7 to make
    default procedures available in antiboycott proceedings. There were no
    public comments suggesting this change, but it makes the procedures for
    imposing administrative sanctions and other measures in antiboycott
    cases more consistent with other proceedings under the EAR. Finally,
    BXA decided to remove from this interim rule one provision that
    appeared in the proposed rule even though no comments on it were
    received. This interim rule eliminates a provision from Sec. 766.18 of
    the proposed rule that would have barred reference in a settlement
    order to a finding of a violation, as the content of such an order is
    consensual. This deletion makes this interim rule consistent with the
    existing EAR.

    Part 768--Foreign Availability

        Part 768 reflects the provisions described in part 791A of the
    existing EAR. It implements section 5(h) of the Export Administration
    Act (EAA) and contains procedures and criteria relating to
    determinations of foreign availability for national security controlled
    items. It is substantively unchanged from the existing part 791A. This
    revised version contains several technical changes, such as use of the
    term ``claimant'' instead of ``applicant,'' intended to make part 768
    easier to read and understand.
        Only three commenters mentioned this part in their submissions,
    possibly because the Federal Register notice soliciting comments had
    stated that BXA did not intend to make any significant changes in this
    part.
        One commenter questioned why Cuba is included in the definition of
    ``controlled countries'' for foreign availability purposes under
    Sec. 768.1(d) and not for general purposes by inclusion in Country
    Group D:1, as described in Supplement No. 1 to part 740. Cuba is a
    ``controlled country'' pursuant to determination made by BXA under
    section 5(b) of the EAA. (See Export Administration Annual Report 1994,
    at II-8.) Country Group D:1 does not include countries subject to broad
    based embargoes, such as Cuba and North Korea, even though they are
    controlled countries. This interim rule adds a clarifying notation
    stating that since virtually all exports to Cuba and North Korea
    currently are subject to an embargo, the foreign availability
    procedures do not apply to these two controlled countries. A similar
    notation is included in Supplement No. 1 to part 740.
        Another commenter suggested that Sec. 768.7(d) be revised to
    clearly reflect the provision of section 5(f)(3) of the EAA that ``the
    Secretary shall accept the representations of applicants * * *
    supported by reasonable evidence, unless contradicted by reliable
    evidence * * *''. BXA did not make any revisions because Sec. 768.7
    paragraphs (c), (d)(1), (d)(2), and (d)(3) of this interim Rule already
    implement this provision.
        One comment suggested that the provision in Sec. 768.7(f)((1)(i)(C)
    for submitting foreign availability determinations to COCOM or a
    successor regime was unnecessary and should be deleted. When COCOM
    ceased functioning on March 31, 1994, the United States and other
    member countries agreed to maintain the control lists that were in
    place at that time until a successor regime was in place. A change has
    been made in this interim rule to reflect BXA's intention to conduct
    any necessary consultations with former member countries.
        Another commenter questioned why foreign availability procedures do
    not apply to foreign policy controlled items. Foreign availability is
    always taken into account whenever foreign policy controls are imposed,
    expanded, or extended. Because the purposes of foreign policy controls
    vary, strict procedures for conducting assessments have not been deemed
    to be warranted. Finally, one commenter suggested that part 768 be
    revised to reflect the expanded role of the Strategic Industries and
    Economic Security Office's Economic Analysis Division in considering
    unfair impact, effectiveness of controls, and foreign availability, and
    to discuss how exporters may contribute to this work and analysis. BXA
    will consider such an addition to the EAR in future revisions.

    Part 770--Interpretations

        Part 770 contains certain interpretations concerning commodities,
    software, technology, and de minimis exceptions for chemical mixtures.
    These are designed to clarify the scope of the controls. BXA intends to
    add interpretations to this part over time to aid you in interpreting
    the EAR. Since the publication of the proposed rule, BXA has issued
    certain interpretations on the application of the de minimis exclusion
    for certain mixtures of chemicals. Those interpretations are added to
    part 770 in this interim rule.
        Some commenters suggested that the part numbers of this chapter and
    others will overlap with the part numbers of different chapters in
    earlier versions of the EAR and therefore BXA should use both odd and
    even numbers for the parts of this interim rule. BXA does not believe
    that using only even numbers for the parts of this interim rule will
    cause confusion. BXA further believes that is it useful to retain only
    even numbers in this interim rule so as to leave room for future parts
    that cannot now be anticipated.
        Certain commenters urged BXA to add interpretations of certain
    issues; and BXA will review those recommendations for inclusion in the
    future.
        Commenters also asked BXA to include an interpretation of the
    phrase ``specially designed.'' BXA is not responding to this
    recommendation due to pending criminal enforcement action and for other
    reasons.
        This part contains certain interpretations regarding the de minimis
    content of certain chemical mixtures. These reflect amendments to the
    EAR adopted after the publication of the proposed rule.

    Part 772--Definitions

        This part defines terms as used in the EAR.
        In response to comments, this interim rule combines the definitions
    part from the proposed rule with the multilaterally-agreed definitions
    found on the Commerce Control List that are found in Supplement No. 3
    to Sec. 799A.1 of the existing EAR. These definitions may be
    distinguished from other definitions by the fact that they appear in
    quotation marks.

    [[Page 12731]]

    Part 774--The Commerce Control List

        On May 11, 1995, BXA published an advance notice of public
    rulemaking in the Federal Register, (60 FR 25480), soliciting comments
    from industry and interested public on whether and how to conform the
    numbering system used to identify items controlled by the Export
    Administration Regulations, or Export Control Classification Numbers
    (ECCNs), with the numbering system used by the European Union (EU) to
    identify such items.
        BXA received a total of eighteen responses to the May 11 notice.
    Ten commenters responded directly to this notice, while the remaining
    commenters included comments on the May 11 notice with their comments
    on the proposed rule. Additional verbal comments were also provided at
    the town-hall fora conducted throughout the United States by BXA.
        Overall, industry supports harmonizing the U.S. ECCN system with
    the EU numbering system. The following is an analysis of the responses
    to the five questions posed by BXA in the Federal Register notice,
    followed by other general comments.

    1. Should the U.S. Harmonize the ECCNs With the EC Numbers and
    Encourage Other Countries To Adopt a Uniform Numbering System?

        Most commenters stated that they were very supportive of adopting
    the EU numbering system. Four stated that if such a change were to be
    made, there should be a grace period during which either the ECCN or EU
    number could be used. One of these commenters stated that the grace
    period should be six months, and another stated that a minimum of nine
    months should be allowed for a smooth transition to the new system. One
    company stated that it would be less costly to plan for such a change
    now rather than sometime in the ``years ahead''. Another commenter
    stated that although the initial computerization of the new numbers
    could be costly, they will be able to use the information to process
    export declarations electronically, which will make processing the
    information much more timely.
        One foreign-based company stated that they do not support
    converting the ECCNs to the EU numbering system because the U.S.-based
    ECCN automatically shows that the item is U.S.-origin, and that there
    are just too many discrepancies between the items controlled by ECCNs
    and the corresponding EU numbers. Another commenter who does not
    support conversion to the EU numbering system stated that the use of a
    common ECCN has little benefit in the export documentation and should
    not be considered an advantage to exporters. This commenter further
    stated that it was only recently that they incurred costs of
    administering the changes BXA made to the ECCNs to implement the
    Coordinating Committee on Multilateral Export Control's (COCOM) ``Core
    List'' in 1991 (56 FR 42824, August 29, 1991), and would not want to do
    it again. Another commenter stated that the ECCN system is a good
    system that works and that they see no advantage of a world-wide system
    in this area.
        One commenter, that supported the conversion of ECCNs to the EU
    system, stated that BXA should not require conversion to the EU system
    until the differences between the existing ECCNs and the numbering
    system used by the EU are resolved, and also until the COCOM successor
    regime and control lists are finalized and all export destinations
    agree to adopt the system. Another commenter echoed this opinion, and
    added that the new U.S. ECCNs should only be developed for U.S.-
    controlled items now controlled by the EU. One commenter stated that
    unless the U.S. and EU numbers are identical, there will still be a
    need for exporters to classify U.S. and EU separately.
        BXA agrees that complete harmonization between the new ECCN system
    and the EU system is desirable. Without such harmonization, any
    resulting list may be confusing for industry and difficult to
    implement. For multilaterally controlled items, the new ECCNs described
    in this interim rule are renumbered according to the comparable entry
    on the EU list. The scope of such controls are generally the same on
    both lists, however the style of the text may be different.
        It is important to note that the EU list provides guidance to
    member states on the control parameters for items controlled by on the
    Industrial List, the International Atomic Energy List, Missile
    Technology Control Regime Annex, the Nuclear Supplier's Group, and the
    list of items controlled by the Australia Group. Each EU member
    publishes its own national list to implement such controls and any
    other unilateral controls. Many national lists are therefore different
    from the EU list, except for the scope of multilateral controls. The
    U.S. also uses discretion in developing its national list, the CCL, for
    dual-use items. Certain entries on the CCL have been created for those
    items that are not controlled multilaterally on the EU list. Such items
    are identified an unilateral controls. In those few instances where the
    multilateral entries differ, the U.S. will ask its trading partners to
    adopt the CCL.

    2. What are the Specific Implications If We Change the ECCNs To Conform
    With the EC Numbering System? For Example, if You Currently Have
    Computer Programs That Aid in Facilitating Exports and Reexports, What
    Will be the Programming Implications for Your Firm if We Make This
    Change?

        Most of the commenters stated that the reprogramming of computer
    systems would be a significant undertaking to convert to a EU numbering
    system. One commenter stated that they estimate it would take
    approximately 2 person years of effort and $300,000 to change the data
    base and ancillary associated systems worldwide. The time for
    performing this effort would be approximately three to four months. Two
    commenters stated that consideration would need to be given to the
    diversion of human resources from current tasks to the review of entire
    product lines against the proposed new classification numbers. This
    would involve the review of several thousand product part numbers and
    the time required to enter each new EU-based number into the computer
    system. Three commenters remarked on the export control personnel
    retraining requirements requisite to use of the new numbering system.
    Another commenter stated that changes to their current system would be
    minimal, but they are now in the process of upgrading relevant programs
    and processes, and would like to see a change in numbering system now.
        One commenter stated that they currently give dual classifications
    (ECCN and EU number) to items on their product matrices, and that the
    matrices are computerized. Changes to the matrices will be required for
    the implementation of the EAR simplification project, so it would be
    beneficial if the ECCN harmonization could be carried out at the same
    time.
        BXA is sympathetic to the time and cost involved in implementing a
    new numbering system. However, as many companies have stated, the
    benefits of a global numbering system far outweigh the costs of
    implementing such a system. The new ECCNs identified in this interim
    rule implement the first steps toward a global control list.

    [[Page 12732]]

    3. What Problems Have You Had in the Past in Tracking Two or More
    Numbering Systems for Identical Items Controlled by Two or More
    Countries?

        One commenter stated that a uniform numbering system would
    eliminate a potential area for misunderstanding or confusion in
    references to a specific item while another stated that the current
    need to track multiple numbering systems adds cost and unnecessary
    complexity to their compliance programs. This latter commenter also
    stated that there is added confusion caused by changes on different
    dates by different countries to the various lists. Another commenter
    stated that the lack of correlation between the various lists has made
    it all but impossible to develop a computerized correlation between the
    various numbers that may apply to one unique product. This commenter
    also stated there is no correlation in the EU numbering system for
    ECCNs designated for unilateral controls.

    4. What Are the Specific Ways in Which a Uniform Numbering System Would
    Help Your Company?

        Five commenters responded to this question. One commenter stated
    that it would simplify their product matrices, while another two stated
    that it would streamline their training procedures. One of these
    commenters also stated that it would also increase their ability to
    maintain high levels of export control compliance. Another commenter
    agreed that standardization would allow the company to avoid building
    and maintaining cross-reference tables as they communicate order
    requirements and status on U.S. export orders with importing foreign
    entities.
        Another commenter also cited simplification as the major benefit of
    a uniform system, and highlighted the specific benefit of consistency
    in classification of items. Only one commenter stated that a uniform
    numbering system would not benefit their company, but provided no
    further explanation as to why it would not be beneficial.

    5. Are There Numbering Systems of Other Countries That You Prefer to
    the EC System? If So, State Which Ones and Exactly How You Would
    Reconcile Any Differences in Scope?

        Two of the ten commenters supported maintaining the current ECCN
    system. Of the seven commenters that specifically supported a unified
    numbering system, none identified a system other than the EU as
    preferable.
        Four commenters provided additional comments other than those
    supporting the four specific questions posed in the May 11 Federal
    Register notice. One commenter, who did not support a conversion to the
    EU numbering system, stated that the fourth and fifth digits of the EU
    number do not provide any real benefit or added clarity. This commenter
    further stated that the alpha-character used at the end of the current
    ECCNs has been useful in internal control procedures. For example, an
    ``A'' at the end of a ECCN easily indicates a highly sensitive item,
    while a ``G'' indicates greater range of exportability.
        Two commenters, who were supportive of the EU numbering system,
    also supported the elimination of basket categories. One of these
    commenters stated that the continued use of such categories would
    conflict with the objective of harmonizing the ECCNs with the EU list.
    Another commenter stated that elimination of the ``G'' level basket
    categories was not favorable.
        One commenter also stated that there should be no interim or
    intermediate changes to the ECCN numbering system, and future changes
    to the control list should be effective on the same date in all
    countries that are a party to the control regimes using the list. The
    EU provides guidance to member states for drafting national control
    lists. Each state is responsible for implementing changes to
    multilateral control lists based upon agreements reached by the
    Wassenaar Arrangement, the Missile Technology Control Regime, the
    Nuclear Suppliers Group, and the Australia Group. BXA will continue to
    implement agreements reached by each of the regimes through prompt
    publication in the Federal Register.
        Another commenter suggested that if the United States were to adopt
    the EU numbering system, BXA should clarify whether new control numbers
    (not included on the EU control list) represent new controls, and if
    so, what items are being suggested for control and the policy basis for
    such controls. A comprehensive cross-reference will be included in
    Supplement No. 3 to this part. The Supplement will provide cross-
    references for both new format to old format and old to new, so that
    readers will be able to locate new numbers based on their current
    ECCNs. In this manner, readers will be able to determine the origin of
    all numbers that do not currently appear on the EU list. Further, the
    revised CCL implements recent multilateral agreements that have not yet
    been incorporated in the EU list, such as the NSG revisions published
    February 1, 1996 (61 FR 3555).
        Under the new numbering system adopted by this interim rule, it
    will be easy to identify whether an item is controlled multilaterally
    (e.g., for national security, missile technology, nuclear
    nonproliferation, or chemical and biological reasons) or unilaterally,
    based upon the third digit of the number. ECCNs having a ``9'' as their
    third digit (i.e., 5A980, surreptitious listening devices) are controls
    unique to the United States, just as other countries may have their own
    unique controls. Further, Category 10 has been renumbered, and will
    appear as Category 0 in conformance with the EU list. Titles of the
    various categories have also been revised in conformance with the EU.
        This interim rule retains one ``basket'' entry (EAR99), referenced
    at the end of each category in the Commerce Control List, which
    contains all the items that used to be classified under those ECCNs
    ending with ``96G'' and were thus eligible for General License G-DEST
    to most destinations. Items classified as EAR99 are those items not
    specified on the CCL, but still subject to the EAR. Therefore,
    exporters first must determine that their items are not, in fact, on
    the CCL; only then may they classify their items as EAR99.
        As in the existing EAR, terms enclosed in quotation marks (i.e.,
    ``aircraft'' or ``production'') are those with multilaterally agreed
    definitions that appear throughout the CCL. These definitions, found in
    Supplement No. 3 to part 799A of the existing EAR, are in this interim
    rule integrated into part 772 (Definitions). By contrast, definitions
    or parameters not enclosed in quotation marks and identified by the
    Related Definitions header in individual ECCNs are unique to particular
    entries, and therefore appear only in those entries.
        Administrative Exception Notes, denoting ``favorable
    consideration'' of licenses for certain items to certain destinations
    in the existing Supplement No. 1 to part 799A, became meaningless when
    COCOM disbanded, and they have been removed from the CCL in this
    interim rule.
        With the harmonization of the CCL and the EU list, most items will
    need to be reclassified. Exporter and reexporters may submit requests
    for reclassification beginning on the effective date of this interim
    rule. BXA will publish a list of those ECCNs where reclassification is
    not necessary prior to November 1, 1996.

    Forms Supplement

        The new Multipurpose Application Form, BXA-748P, will replace the
    Application for Export License (BXA-622P) and the Request for Reexport
    Authorization (BXA-699P). It will also

    [[Page 12733]]
    serve as an application for the Special Comprehensive License.
    Additionally, the BXA-748P will accommodate Commerce Classification
    Requests, thus allowing item classifications to be handled
    electronically.
        The BXA-711P replaces BXA-629P, Statement by Ultimate Consignee and
    Purchaser. A letter from the ultimate consignee or purchaser may now be
    substituted for this form, provided the letter contains the same
    information. The BXA-752P will be required as support documentation for
    the Special Comprehensive License, replacing the Statement by Foreign
    Consignee in Support of Special License Application (BXA-6052P).
        The International Import Certificate (BXA-645P/ATF-4522/DSP-53),
    the Delivery Verification Certificate (BXA-647P), and the Notification
    of Delivery Verification Requirement (BXA-648P) remain unchanged.
    Applicants will now submit replacement licenses rather than amendment
    requests when their situations change; therefore, the Request for
    Amendment Action (BXA-685P) will be discontinued.
        Exporters and reexporters may find instructions for completing
    forms in part 748, while applicants for the Special Comprehensive
    License may find instructions in part 752.
        Applicants must begin using the new forms as of June 15, 1996. Due
    to the requirements of electronic submission and processing systems,
    there will be no transition period during which either version of each
    form may be used. Old forms received after the changeover date will be
    returned without action to the applicant. Forms may be obtained from
    U.S. Department of Commerce District Offices or from: Exporter
    Counselling Division, Bureau of Export Administration, Room 1099, U.S.
    Department of Commerce, 14th Street and Pennsylvania Avenue, NW.,
    Washington, DC 20230. Telephone (202) 482-4811.

    Rulemaking Requirements

        1. For purposes of Executive Order 12866, this interim rule has
    been determined to be significant.
        2. Notwithstanding any other provision of law, no person is
    required to respond to nor shall a person be subject to a penalty for
    failure to comply with a collection of information subject to the
    requirements of the Paperwork Reduction Act unless that collection of
    information displays a currently valid OMB Control Number. This interim
    rule contains five new collections of information subject to the
    requirements of the Paperwork Reduction Act, 44 U.S.C. ch. 35, which
    were cleared by the Office of Management and Budget. The new
    ``Multipurpose Application'' is cleared under OMB Control Number 0694-
    0088, the ``Special Comprehensive License'' is cleared under OMB
    Control Number 0694-0089, five year record retention is cleared under
    OMB Control Number 0694-0096, the one-time report on calculations under
    the de minimis rule for software and technology is cleared under OMB
    Control Number 0694-0101, requests for appointment of a Technical
    Advisory Committee is cleared under OMB Control Number 0694-0100,
    miscellaneous activities are cleared under OMB Control Number and 0694-
    0102. All other collections of information contained in the rulemaking
    have been previously approved by OMB. Supplement No. 2 to part 730 of
    the EAR contains a table of the current OMB Control Numbers. The public
    reporting burdens for the new collections of information are estimated
    to average 45 minutes for the Multipurpose Application, between 20 and
    40 hours for the Special Comprehensive License, 10 seconds for
    recordkeeping, 25 hours for the one-time report, 5 hours for requests
    for appointment of Technical Advisory Committee, and 5 hours for
    petitions covered under miscellaneous activities. These estimates
    include the time for reviewing instructions, searching existing data
    sources, gathering and maintaining the data needed, and completing and
    reviewing the collections of information. Send comments regarding these
    burden estimates or any other aspect of these collections of
    information, including suggestions for reducing the burden, to Larry E.
    Christensen, Director, Regulatory Policy Division, Bureau of Export
    Administration, U.S. Department of Commerce, Washington, D.C. 20230.
        3. For purposes of Executive Order 12612, this interim rule does
    not contain policies with Federalism implications sufficient to warrant
    preparation of a Federalism Assessment.
        4. Pursuant to authority at 5 U.S.C. 553(a)(1) and section 13(a) of
    the Export Administration Act, 50 U.S.C. 2401-2420 et seq., though
    prior notice and an opportunity for public comment are provided, such
    procedures are not required for this regulatory action. As such, no
    Initial or Final Regulatory Flexibility Analysis is required under
    sections 3 and 4 of the Regulatory Flexibility Act, 5 U.S.C. 603(a) and
    604(a), and none has been prepared.
        5. Although the Export Administration Act expired on August 20,
    1994, the President invoked his authority under the International
    Emergency Economic Powers Act, through Executive Order 12924, August
    19, 1994, as extended on August 15, 1995, and determined that, to the
    extent permitted by law, the provisions of the Export Administration
    Act shall be extended so as to continue in full force and effect and
    amend, as necessary, the export control system previously implemented,
    as the Export Administration Regulations, pursuant to the Export
    Administration Act.
        However, because of the importance of the issues raised by these
    regulations, this rule is issued in interim form and comments will be
    considered in the development of final regulations. Accordingly, the
    Department encourages interested persons who wish to comment to do so
    at the earliest possible time to permit the fullest consideration of
    their views.
        The period for submission of comments will close May 24, 1996. The
    Department will consider all comments received before the close of the
    comment period in developing final regulations. Comments received after
    the end of the comment period will be considered if possible, but their
    consideration cannot be assured. The Department will not accept public
    comments accompanied by a request that a part or all of the material be
    treated confidentially because of its business proprietary nature or
    for any other reason. The Department will return such comments and
    materials to the person submitting the comments and will not consider
    them in the development of final regulations. All public comments on
    these regulations will be a matter of public record and will be
    available for public inspection and copying. In the interest of
    accuracy and completeness, the Department requires comments in written
    form.
        Oral comments must be followed by written memoranda, which will
    also be a matter of public record and will be available for public
    review and copying. Communications from agencies of the United States
    Government or foreign governments will not be made available for public
    inspection.
        The public record concerning these regulations will be maintained
    in the Bureau of Export Administration Freedom of Information Records
    Inspection Facility, Room 4525, Department of Commerce, 14th Street and
    Pennsylvania Avenue, N.W., Washington, DC 20230. Records in this
    facility, including written public comments and memoranda summarizing
    the substance of oral communications, may be inspected and copied in
    accordance with regulations published in Part 4 of Title 15 of the Code
    of Federal Regulations.

    [[Page 12734]]
    Information about the inspection and copying of records at the facility
    may be obtained from Margaret Cornejo, Bureau of Export Administration
    Freedom of Information Officer, at the above address or by calling
    (202) 482-5653.

    List of Subjects

    15 CFR Part 730

        Administrative practice and procedure, Advisory committees,
    Exports, Foreign trade, Reporting and recordkeeping requirements,
    Strategic and critical materials.

    15 CFR Part 732

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

    15 CFR Part 734

        Administrative practice and procedure, Exports, Foreign trade.

    15 CFR Part 736

        Exports, Foreign trade.

    15 CFR Part 738

        Exports, Foreign trade.

    15 CFR Part 740

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

    15 CFR Part 742

        Exports, Foreign trade.

    15 CFR Part 744

        Exports, Foreign trade, Reporting and recordkeeping requirements.

    15 CFR Part 746

        Embargoes, Exports, Foreign trade, Reporting and recordkeeping
    requirements.

    15 CFR Part 748

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

    15 CFR Part 750

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

    15 CFR Part 752

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

    15 CFR Part 754

        Exports, Foreign trade, Forests and forest products, Petroleum,
    Reporting and recordkeeping requirements.

    15 CFR Part 756

        Administrative practice and procedure, Exports, Foreign trade,
    Penalties.

    15 CFR Part 758

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

    15 CFR Part 760

        Boycotts, Exports, Foreign trade, Reporting and recordkeeping
    requirements.

    15 CFR Part 762

        Administrative practice and procedure, Business and industry,
    Confidential business information, Exports, Foreign trade, Reporting
    and recordkeeping requirements.

    15 CFR Part 764

        Administrative practice and procedure, Exports, Foreign trade, Law
    enforcement, Penalties.

    15 CFR Part 766

        Administrative practice and procedure, Confidential business
    information, Exports, Foreign trade, Law enforcement, Penalties.

    15 CFR Part 768

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

    15 CFR Part 770

        Exports, Foreign trade.

    15 CFR Part 772

        Exports, Foreign trade.

    15 CFR Part 774

        Exports, Foreign trade.

        Under authority set forth at 50 U.S.C. 2401 et seq., and for the
    reasons set forth in the preamble, Subchapter C, Chapter 7 of Title 15,
    Code of Federal Regulations is amended as follows:
        1. In Subchapter C, the following parts are redesignated with an A
    as set forth in the table below:

    ------------------------------------------------------------------------
                     Old part                             New part
    ------------------------------------------------------------------------
    768.......................................  768A
    769.......................................  769A
    770.......................................  770A
    771.......................................  771A
    772.......................................  772A
    773.......................................  773A
    774.......................................  774A
    775.......................................  775A
    776.......................................  776A
    777.......................................  777A
    778.......................................  778A
    779.......................................  779A
    785.......................................  785A
    786.......................................  786A
    787.......................................  787A
    788.......................................  788A
    789.......................................  789A
    790.......................................  790A
    791.......................................  791A
    799.......................................  799A
    ------------------------------------------------------------------------

        2. All internal references appearing in newly designated parts 768A
    through 779A, 785A through 791A, and 799A are revised as set forth in
    the redesignation table set forth above.
        3. Effective November 1, 1996, the newly designated parts are
    removed.
        4. Newly designated Sec. 771A.25(d) is removed effective March 25,
    1996.
        5. Parts 730, 732, 734, 736, 738, 740, 742, 744, 746, 748, 750,
    752, 754, 756, 758, 760, 762, 764, 766, 768, 770, 772, and 774 are
    added to read as follows:

Next: Part 730--General Introduction

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