04-25951. Revision of Licensee's Responsibility To Communicate License Conditions

AGENCY:

Bureau of Industry and Security, Commerce.

ACTION:

Interim rule.

SUMMARY:

This interim rule revises the Export Administration Regulations (EAR) to require licensees to communicate in writing specific license conditions to the parties to whom the license conditions apply. This rule also makes a technical correction to the title of part 750 of the EAR.

DATES:

This rule is effective: December 23, 2004.

FOR FURTHER INFORMATION CONTACT:

Jeffery Lynch, Regulatory Policy Division, Office of Exporter Services, Bureau of Industry and Security; e-mail: [e-mail].

SUPPLEMENTARY INFORMATION:

Background

In July 2000, BIS published a regulation (65 FR 42565) that required the licensee to communicate specific license conditions to applicable parties. The Export Administration Regulations (EAR) state, in § 750.7(d), that “it is the licensee's responsibility to communicate the specific license conditions to the parties to whom those conditions apply. In addition, when required by the license condition, the licensee is responsible for obtaining written acknowledgment(s) of receipt of the conditions from the party(ies) to whom those conditions apply.”

The purpose of this rule is to ensure that license conditions are communicated to the parties to whom they apply, and to clarify the manner in which the conditions should be communicated. Such communication must be in writing (which includes recorded and retrievable media, such as e-mail). This revision is in accordance with the Government Accountability Office's (GAO) post-shipment verification recommendations to the Bureau of Industry and Security (BIS) (found in GAO-04-357). This revision will not increase the burden to the public, as license conditions generally are typically communicated in writing, (e.g., via e-mail or facsimile).

The written communication of the text of license conditions (not the manner in which the writing is formatted) is the most important aspect of this requirement. For example, if a licensee communicates the conditions via a sales contract, then the sales contract must specifically state that the conditions continue beyond any stated validity period of the contract.

Export licenses may include several different types of conditions, including restrictions on end-use, requirements to keep records or submit reports, or requirements to return certain items to the United States. Some licenses may be subject to several conditions, each of which may affect a different party to the export transaction. Pursuant to the requirements set forth in this rule, the licensee bears the responsibility of ensuring that the terms and text of the conditions are clearly conveyed to the appropriate involved parties.

In addition to the above provisions, this rule also makes a technical correction to the title of Part 750 of the EAR. Currently, that part is entitled “Application Processing, Issuance or and Denial.” The “or and” in the title is in reverse order. This rule changes the title to read “Application Processing, Issuance and Denial.”

Although the Export Administration Act expired on August 20, 2001, Executive Order 13222 of August 17, 2001 (3 CFR, 2001 Comp., p. 783 (2002)), as extended by the Notice of August 6, 2004, 69 FR 48763 (August 10, 2004) continues the EAR in effect under the International Emergency Economic Powers Act.

Rulemaking Requirements

1. This interim 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 shall any person be subject to a penalty for failure to comply with a collection of information, subject to the requirements of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.) (PRA), unless that collection of information displays a currently valid Office of Management and Budget (OMB) Control Number. This rule involves a collection of information subject to the PRA. This collection has been approved by OMB under control number 0694-0122, “Multi-Purpose Application,” which carries a burden hour estimate of 10 minutes for a manual or electronic submission. Send comments regarding these burden estimates or any other aspect of this collection of information, including suggestions for reducing the burden, to David Rostker, Office of Management and Budget (OMB), by e-mail to [e-mail], or by fax to [phone]; and to the Office of Administration, Bureau of Industry and Security, Department of Commerce, 14th and Pennsylvania Avenue, NW., Room 6883, Washington, DC 20230.

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

4. The Department finds under 5 U.S.C. 553(b)(B) that good cause exists to waive prior notice and opportunity for public comment. This rule revises the EAR to require licensees to communicate in writing specific license conditions to the parties to whom they apply. By requiring such notice to be in writing, BIS merely clarifies the form in which the notice must be provided. The previously existing EAR requirement to provide such notice is unchanged by this rule. Because this revision is not a substantive change to the EAR, it is unnecessary to provide prior notice and opportunity for public comment. Therefore, this rule is being issued in interim form.

Although there is no formal comment period, public comments on this regulation are welcome on a continuing basis. Comments should be submitted to Jeffrey Lynch, Regulatory Policy Division, Office of Exporter Services, Bureau of Industry and Security, P.O. Box 273, Washington, DC 20044, e-mailed to: [e-mail], or faxed to [phone].

The public record concerning this regulation will be maintained in the Bureau of Industry and Security Freedom of Information Records Inspection Facility, Room 6881, Department of Commerce, 14th Street and Pennsylvania Avenue, NW., Washington, DC 20230. Records in this facility may be inspected and copied in accordance with regulations published in part 4 of Title 15 of the Code of Federal Regulations. Information about the inspection and copying of records at the facility may be obtained from the Bureau of Industry and Security Freedom of Information Officer, at the above address or by calling [phone].

List of Subjects for 15 CFR Part 750

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

Accordingly, part 750 of the Export Administration Regulations (15 CFR parts 730-799) is amended as follows:

PART 750—[AMENDED]

1. The authority citation for 15 CFR part 750 is revised to read as follows:

Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; Sec 1503, Pub. L. 108-11, 117 Stat. 559; E.O. 13026, 61 FR 58767, 3 CFR, 1996 Comp., p. 228; E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 783; Presidential Determination 2003-23 of May 7, 2003, 68 FR 26459, May 16, 2003; Notice of August 6, 2004, 69 FR 48763 (August 10, 2004).

2. Revise the title of part 750 to read as follows: “PART 750—APPLICATION PROCESSING, ISSUANCE, AND DENIAL”.

§ 750.7

[Amended]

3. Revise the sixth sentence in § 750.7(d) to read as follows: “It is the licensee's responsibility to communicate in writing the specific license conditions.”

Dated: November 16, 2004.

Peter Lichtenbaum,

Assistant Secretary for Export Administration.