2011-2760. Simplified Network Application Processing System, On-line Registration and Account Maintenance

AGENCY:

Bureau of Industry and Security, Commerce.

ACTION:

Final rule.

SUMMARY:

The Bureau of Industry and Security (BIS) amends the Export Administration Regulations to implement a mandatory on-line registration process for obtaining an account to submit license applications and similar documents electronically through SNAP-R. This final rule sets forth the information that parties registering on-line are required to provide to BIS and the duties that registered parties have with respect to keeping information in their accounts current. This rulemaking is consistent with the goals and principles of Executive Orders 13563 and 12866, which are to enhance effectiveness and efficiency and to promote transparency and openness in government, and the Presidential Memorandum on Regulatory Flexibility, Small Business, and Job Creation (January 18, 2011).

DATES:

Effective date: March 11, 2011.

Compliance dates: Beginning on April 11, 2011, all new SNAP-R registrations must be made in accordance with this rule.

Beginning on June 10, 2011 accounts of filing entities that do not have account administrators will not be accessible until an existing individual user for that entity logs-on to SNAP-R and registers as account administrator.

Beginning on September 8, 2011 the accounts of filing entities that do not have an account administrator will become inactive. In order to reactivate the account, filing entities will have to complete the entire registration process that applies to new entities.

FOR FURTHER INFORMATION CONTACT:

Thomas W. Andrukonis, Director, Export Management and Compliance Division, Office of Exporter Services, telephone [phone], e-mail [e-mail].

SUPPLEMENTARY INFORMATION:

Immediate Voluntary Implementation of On-Line Registration

Beginning on February 9, 2011, BIS will accept on-line SNAP-R registrations from parties who wish to submit them.

Background

BIS administers an export licensing program pursuant to the Export Administration Regulations (EAR). In connection with this program, BIS requires most parties to submit license applications, classification requests, encryption registrations, License Exception AGR notifications and foreign national review requests in connection with the License Exceptions APP and CIV (herein “work items”) electronically via BIS's Simplified Network Application Processing (SNAP-R) system. To use SNAP-R, BIS required filing entities to register for an account through a paper and facsimile registration process.

On November 23, 2010, BIS published a proposed rule with request for comments entitled “Simplified Network Application Processing System, On-line Registration and Account Maintenance” (75 FR 71376) to amend the EAR to replace the paper and facsimile process for registering to use SNAP-R with an on-line account registration and account maintenance process, and to make modifications to user accounts in SNAP-R. In developing this rule, BIS considered ways to reduce regulatory burden and provide flexibility, an approach consistent with Executive Orders 13563 and 12866 and Presidential Memorandum on Regulatory Flexibility, Small Business, and Job Creation (January 18, 2011). This rule will eliminate the current and archaic practice of using a paper and facsimile based process for obtaining authorization to submit work items electronically. It will also reduce the time between initial submission of registration information and receipt of authorization to use the electronic filing system. Finally, the system will allow registered filing entities to add or remove individual users without waiting for approval from BIS.

The final day of the comment period on the proposed rule was January 24, 2011. BIS received nine comments on the proposed rule. Eight of the commenters expressed approval of the proposed changes. One commenter expressed opposition to the proposed changes. Commenters who expressed approval mentioned the following points as benefits of the changes: The process would be faster than paper registration; the time needed to add a new employee to a filing entity's account under the paper registration system caused delays and interruptions in new employee training; and on-line registration would free up government employee time for other tasks. In addition, the fact that the new rule would not require a corporate officer to sign registration-related documents would simplify account maintenance within companies that use the system.

The reasoning of the commenters who favored the change generally aligns with BIS's purposes in proposing this rule, i.e. reduced time and effort to register for an on-line submission account, reduced time and effort to maintain that account, faster accommodation of personnel changes in companies that use the system, and more effective use of existing resources in both the public and private sector.

In addition to expressing general support for the rule, three of the eight commenters who favored the rule offered suggestions related to implementation of the rule or improvements to the SNAP-R system. A summary of each suggestion and BIS's response is below.

One commenter who favored the changes proposed by the rule noted that in some instances paper might be a submitter's only option and asked whether there would be a manual process in the future.

BIS believes that its existing systems are adequate to accommodate situations in which submitting paper is the only option. This rule addresses the process of registering with BIS to submit license applications and other documents to BIS on-line. This rule does not change the text of § 748.1(d)(1) of the EAR (15 CFR 748.1(d)(1)), which provides conditions under which parties may make those submissions to BIS by paper. Those circumstances include low volume (no more than one submission in the past twelve months) and lack of access to the Internet. None of those circumstances requires prior registration with BIS. In practice, there are very few submissions made via the paper submissions process in a given year (ten paper submissions out of 26,803 total submissions in calendar year 2010). BIS believes that because the agency has procedures in place for accepting paper submissions, which do not require prior registration, a separate paper-based registration process for on-line submissions via SNAP-R is not needed. Those parties for whom paper is truly the only option need not register, on-line or otherwise.

One commenter, who favored the changes in the proposed rule, asked that BIS clarify whether the system would function automatically, that is, once an individual end-user designates himself or herself on-line as an account administrator, would the system immediately accept the action and generate a response or would BIS review the information and respond later. If the response would be later, this commenter asked that BIS state the estimated time-frame for a response.

When an individual user registers as the account administrator for a filing entity, all individual users for that filing entity will be notified by an automatically generated e-mail at the e-mail address currently recorded for those individual users in the SNAP-R system. All but two of the account administrator's capabilities will be immediately available to the new account administrator. There will be a two week delay before the new account administrator will be able to reset individual user passwords or change individual user e-mail addresses. BIS intends that the combination of e-mail notification to all individual users of the filing entity and the two week delay in implementing these two functions will provide a safeguard to prevent individual users who are not authorized by the filing entity to be the account administrator from doing so. During the two week period, the filing entity could contact BIS to notify the agency that the person claiming to be the account administrator is not authorized to do so. If BIS receives no notice during the two week period, the two delayed account administrator functions would become active automatically.

One commenter stated that it supported the changes in the proposed rule but offered one recommendation concerning SNAP-R and one comment concerning the process for making the transition from the paper based registration and account maintenance system to the on-line registration and account maintenance system. This commenter suggested that SNAP-R be further revised to allow first party account administrators to authorize access under a third party filer's company identification number. The commenter noted that such a change would allow greater flexibility to parties who wish to authorize third parties to submit on their behalf and for the first and third parties to collaborate on submissions. The commenter suggested that changes to SNAP-R concerning the relationship between first and third parties would require additional software development but likely could be accomplished without amending the EAR.

The EAR does not designate certain filers as first parties and others as third parties although the paper-based SNAP-R registration procedure does make this distinction. For this reason, BIS concurs that regulatory amendment is not necessarily required to implement changes to make the SNAP-R system more useful in situations in which an agent submits license applications or other documents on behalf of a principal. However, such changes would require further software development. Moreover, BIS would want to take steps to assure itself that any such changes would be useful to more than one party and that the changes would not undermine the integrity and security of the on-line submission system. Therefore, BIS is making no changes to the proposed rule in response to this comment, but will continue to look for ways to improve SNAP-R irrespective of whether the improvements would require regulatory change.

This commenter also noted that BIS's plan, to inactivate SNAP-R accounts of the filing entities for which no individual user who has logged-in and registered as that entity's company administrator within the first 180 days of the effective date, could cause accounts of infrequent users to be inactivated. The commenter stated that if BIS intends to shut down accounts that have not been updated, it should notify the account holder directly and advise it of the need to take action.

BIS proposed to inactivate those accounts that do not have a registered account administrator beginning on the 181st day after the effective date of the rule for two reasons. First, a large number of SNAP-R accounts have not been used in years and may have been established for companies that no longer export or that no longer exist. BIS needs to make such accounts inactive to promote efficient operation of the SNAP-R system. Second, BIS needs to complete the transition from a paper based registration and account maintenance system to an on-line system within a reasonable and certain period of time. Assuring that all active accounts have account administrators is integral to an effective on-line system. In addition, BIS notes that because the effective date of this rule will be 30 days after publication, the deactivation of accounts will actually take place 211 days after publication of the rule. That said, BIS recognizes that not all parties who need to use the system are frequent users. BIS plans to publicize the transition to the on-line registration system and the deadlines for existing SNAP-R users to designate account administrators through the on-line process through a variety of ways including: Sending e-mail notices to user e-mail addresses that are in the SNAP-R system; sending e-mail notifications to parties who subscribe to BIS's listserv service; Web site postings; and announcements at BIS outreach events. Finally, BIS notes that the only burden to a filing entity for failing to have a registered account administrator by the deadline is that the filing entity will have to complete the registration process on-line as if it were a new user of the system. That registration process will consist of providing basic identifying information and certifying that it understands that it will be submitting documents to the government electronically and agrees to the terms for doing so.

One commenter expressed opposition to the procedures in the proposed rule. That commenter noted that new SNAP users can be added via the existing process and stated that the proposed changes would waste the users' and BIS' time. BIS recognizes that filing entities will need additional time to designate account administrators. However, BIS believes that over time, the time savings of allowing filing entities to manage their own accounts will exceed any time invested in designating account administrators. Those time savings will include elimination of the time spent while requests for changes are sent to BIS and responses are returned to the requester. BIS notes that most commenters recognized the net time savings and favored the proposal.

Accordingly BIS is making no changes to the text of the proposed rule in this final rule.

How the SNAP-R on-line registration process will work.

Organizations or individuals who submit work items are referred to in revised § 748.7 of the EAR as “filing entities.” Individuals who act on behalf of filing entities are referred to as “individual users.” For each filing entity, at least one individual user must act as an “account administrator.” An account administrator is able to submit work items on behalf of his or her filing entity and has additional responsibilities within the on-line registration system.

An account administrator can add and remove individual users to or from the account of his or her filing entity. The account administrator can also designate other individual users who are authorized to act on behalf of the same filing entity as account administrators or can terminate an individual user's account administrator status. The account administrator can deactivate the account of an individual user and reactivate the account of a previously deactivated individual user. The account administrator can update the filing entity's identifying information, such as name and address, and any individual user's identifying information, such as name and telephone number. The account administrator can also reset an individual user's password.

BIS expects under this revised system, account administrators for filing entities will handle routine changes to the filing entity's accounts and BIS personnel will become involved only if necessary to protect a government interest, such as preventing misuse of the SNAP-R system, or if necessary to assist someone attempting to register on-line or administer an account.

Immediate acceptance of on-line registration for parties who wish to use it.

Beginning on February 9, 2011, BIS will accept on-line registrations for both filing entities and account administrators from parties who wish to submit them.

Deadline for new filing entities to use electronic registration.

Beginning on April 11, 2011, the on-line registration process will be mandatory for all new registrants. Until that date, new registrants can register via paper if they wish to do so.

Requirement to designate an account administrator at the time of registration.

A person registering on-line for a filing entity that does not have a SNAP-R account will be required to enter all of the identifying information for the filing entity including a certification that the person is authorized to register the filing entity and to act as account administrator for the filing entity as well as his or her own identifying information. That person will become the initial account administrator for that filing entity.

Deadlines for designating an account administrator if the filing entity is not registered electronically.

Filing entities that are registered to use SNAP-R on the effective date of the final rule and filing entities that elect to use the paper and facsimile based registration process prior to April 11, 2011 will be required to designate an account administrator as described below.

Prior to June 10, 2011, any individual user who is authorized to submit work items on behalf of a filing entity will be able to continue to access SNAP-R, submit new work items and perform any necessary tasks in connection with pending work items. In addition, the first such individual user who designates himself or herself as the account administrator will be required to certify that he or she is authorized to act as account administrator and will become the initial account administrator. BIS will inform via e-mail all other individual users who are authorized to act for that filing entity of the identity of the newly designated account administrator.

On or after June 10, 2011, but before September 8, 2011, an individual user from a filing entity that does not have at least one account administrator will be able to access the SNAP-R system only: (1) For the purpose of designating himself or herself as account administrator for that filing entity and (2) certifying that he or she is authorized to act as account administrator. As soon as one individual user is designated as the account administrator, that individual user as well as all of the other individual users from that filing entity will regain full SNAP-R access.

Beginning on September 8, 2011, all filing entity accounts for which no account administrator has been designated will become inactive. To use the account for any purpose, an individual will have to log on to the SNAP-R Web site and furnish all of the information that would be required to register as a new filing entity.

Rulemaking Requirements

1. This rule has been determined to be not significant for purposes of E.O. 12866.

2. Notwithstanding any other provision of law, no person is required to respond to, nor is subject to a penalty for failure to comply with, a collection of information, subject to the requirements of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.) (PRA), unless that collection of information displays a currently valid Office of Management and Budget (OMB) Control Number. This regulation contains a collection previously approved by OMB under control number 0694-0096. BIS believes that this rule will not materially affect the burden imposed by that collection. Send comments regarding these burden estimates or any other aspect of these collections of information, including suggestions for reducing the burden, to Jasmeet Seehra, Office of Management and Budget (OMB), by e-mail to [e-mail], or by fax to [phone]; and to the Regulatory Policy Division, Bureau of Industry and Security, Department of Commerce, Room 2705, 14th Street and Pennsylvania Ave., NW., Washington, DC 20230.

3. This rule does not contain policies with Federalism implications as that term is defined under E.O. 13132.

4. The Chief Counsel for Regulation of the Department of Commerce certified to the Chief Counsel for Advocacy of the Small Business Administration that the proposed rule, if adopted in final form, would not have a significant economic impact on a substantial number of small entities. The basis for that certification was published in the preamble to the proposed rule and is not repeated here. BIS received no comments regarding the certification. As a result, a final regulatory flexibility analysis is not required and one has not been prepared.

List of Subjects in 15 CFR Part 748

• Administrative practice and procedure
• Exports
• Reporting and recordkeeping requirements

Accordingly, the Export Administration Regulations (15 CFR parts 730-774) are amended as follows:

PART 748—APPLICATIONS (CLASSIFICATION, ADVISORY, AND LICENSE) AND DOCUMENTATION

1. The authority citation for part 748 continues to read as follows:

Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; E.O. 13026, 61 FR 58767, 3 CFR, 1996 Comp., p. 228; E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 783; Notice of August 12, 2010, 75 FR 50681 (August 16, 2010).

2. Section 748.7 is revised to read as follows:

§ 748.7

Registering for electronic submission of license applications and related documents.

(a) Scope. This section describes the procedures for registering to submit electronic documents to BIS. The procedures in this section apply to submission of export and reexport license applications (other than Special Comprehensive Licenses and Special Iraq Reconstruction Licenses), classification requests, encryption registrations, License Exception AGR notifications and foreign national review requests under License Exceptions APP or CIV.

(b) Registration and use of BIS's Simplified Network Applications System—Redesign (SNAP-R). Parties wishing to submit electronically must log on to https://snapr.bis.doc.gov/​registration to register. Upon initial registration, the party (the filing entity) will have to supply the name of the entity that will be submitting documents electronically and its address and the name, telephone number, facsimile number and e-mail address of the person who will act as account administrator. The person will be required to certify that the information so supplied is correct and complete, that the person has authority to register the entity that will be making electronic submissions and that the person has authority to act as an account administrator for that entity.

(c) Role of account administrator. The account administrator is able to add and remove individual users to and from the account of the filing entity for which it is the account administrator. The account administrator can also make individual users account administrators and can terminate an individual user's administrator status. The account administrator can deactivate the account of an individual user and reactivate the account of a previously deactivated individual user. The account administrator can update the filing entity's identifying information such as name and address and any individual user's identifying information such as name, telephone number, facsimile number and e-mail address. The account administrator can reset individual users' passwords.

(d) Role of individual users. An individual user may submit to BIS export and reexport license applications (other than Special Comprehensive Licenses and Special Iraq Reconstruction Licenses), classification requests, encryption registrations, License Exception AGR notifications and foreign national review requests under License Exceptions APP or CIV.

(e) Effect of submission to BIS. BIS may refuse to accept an electronic submission if it has reason to believe that the individual user making the submission lacks authority to do so. However, BIS is not obligated to conduct any checks to determine whether an individual user has the necessary authority and will generally treat users as acting within their authority. Acting through their account administrators, parties have the ability to remove an individual user when that individual user is no longer authorized to make submissions on behalf of that party to BIS and should do so promptly.

(f) Requirement to keep identifying information accurate and current.

(1) Filing entities. Filing entities must, through their account administrators, update their identifying information such as name, address and telephone number in their SNAP-R account as necessary to keep that information accurate and current.

(2) Individual users. Individual users must, through their account administrators, update their identifying information such as name, telephone number, facsimile number and e-mail address in their SNAP-R accounts as necessary to keep that information accurate and current.

Dated: February 3, 2011.

Matthew S. Borman,

Deputy Assistant Secretary for Export Administration.