Rule2023-03930
Export Control Measures Under the Export Administration Regulations (EAR) To Address Iranian Unmanned Aerial Vehicles (UAVs) and Their Use by the Russian Federation Against Ukraine
Primary source
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Published
February 27, 2023
Effective
February 24, 2023
Issuing agencies
Commerce DepartmentIndustry and Security Bureau
Abstract
This rule amends the Export Administrations Regulations (EAR) to impose new export control measures on Iran. These measures address the use of Iranian Unmanned Aerial Vehicles (UAVs) by the Russian Federation (Russia) in its ongoing war against Ukraine, contrary to U.S. national security and foreign policy interests. Although UAVs are also known as Unmanned Aircraft Systems (UASs), for purposes of consistency with the Missile Technology Control Regime (MTCR) they are referred to as UAVs in the EAR. These amendments to the EAR target Iran's supply of UAVs to Russia to enhance Russia's defense industrial base and its military efforts against Ukraine and build on prior EAR amendments, including the addition of Iranian entities to the Entity List as Russian `military end users.' Specifically, these controls impose license requirements for a subset of EAR99 items that are destined to Iran, regardless of whether a U.S. person is involved in the transaction. Such items are identified by Harmonized Tariff Schedule (HTS)-6 Codes in a new supplement added to the EAR, which will allow BIS and other relevant U.S. Government agencies to track and quantify these exports. This rule also identifies certain foreign- produced items as subject to the EAR by adding a new foreign direct product (FDP) rule specific to Iran that applies to items in certain categories of the Commerce Control List (CCL) and the EAR99 items identified in this new supplement. This rule similarly revises the EAR's existing Russia/Belarus FDP rule to reference these EAR99 items. Together with a separate rule published in the same issue of the Federal Register adding export controls for Russia and Belarus, these changes impose license requirements on additional exports from abroad and reexports to Iran, Russia, and Belarus, with the purpose of degrading the Iranian UAV program and Russia's use of such UAVs against Ukraine.
Full Text
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<title>Federal Register, Volume 88 Issue 38 (Monday, February 27, 2023)</title>
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[Federal Register Volume 88, Number 38 (Monday, February 27, 2023)]
[Rules and Regulations]
[Pages 12150-12155]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-03930]
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DEPARTMENT OF COMMERCE
Bureau of Industry and Security
15 CFR Parts 734 and 746
[Docket No. 230221-0049]
RIN 0694-AJ12
Export Control Measures Under the Export Administration
Regulations (EAR) To Address Iranian Unmanned Aerial Vehicles (UAVs)
and Their Use by the Russian Federation Against Ukraine
AGENCY: Bureau of Industry and Security, Department of Commerce.
ACTION: Final rule.
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SUMMARY: This rule amends the Export Administrations Regulations (EAR)
to impose new export control measures on Iran. These measures address
the use of Iranian Unmanned Aerial Vehicles (UAVs) by the Russian
Federation (Russia) in its ongoing war against Ukraine, contrary to
U.S. national security and foreign policy interests. Although UAVs are
also known as Unmanned Aircraft Systems (UASs), for purposes of
consistency with the Missile Technology Control Regime (MTCR) they are
referred to as UAVs in the EAR. These amendments to the EAR target
Iran's supply of UAVs to Russia to enhance Russia's defense industrial
base and its military efforts against Ukraine and build on prior EAR
amendments, including the addition of Iranian entities to the Entity
List as Russian `military end users.' Specifically, these controls
impose license requirements for a subset of EAR99 items that are
destined to Iran, regardless of whether a U.S. person is involved in
the transaction. Such items are identified by Harmonized Tariff
Schedule (HTS)-6 Codes in a new supplement added to the EAR, which will
allow BIS and other relevant U.S. Government agencies to track and
quantify these exports. This rule also identifies certain foreign-
produced items as subject to the EAR by adding a new foreign direct
product (FDP) rule specific to Iran that applies to items in certain
categories of the Commerce Control List (CCL) and the EAR99 items
identified in this new supplement. This rule similarly revises the
EAR's existing Russia/Belarus FDP rule to reference these EAR99 items.
Together with a separate rule published in the same issue of the
Federal Register adding export controls for Russia and Belarus, these
changes impose license requirements on additional exports from abroad
and reexports to Iran, Russia, and Belarus, with the purpose of
degrading the Iranian UAV program and Russia's use of such UAVs against
Ukraine.
DATES: This rule is effective on February 24, 2023.
FOR FURTHER INFORMATION CONTACT: For general questions on this final
rule, contact Eileen Albanese, Director, Office of National Security
and Technology Transfer Controls, Bureau of Industry and Security,
Department of Commerce, Phone: (202) 482-0092, Email: <a href="/cdn-cgi/l/email-protection#255755411765474c560b414a460b424a53"><span class="__cf_email__" data-cfemail="067476623446646f752862696528616970">[email protected]</span></a>.
For emails, include ``Iran UAVs-RIN 0694-AJ12'' in the subject line.
SUPPLEMENTARY INFORMATION:
I. Background
In response to Russia's February 2022 further invasion of Ukraine,
BIS imposed extensive export controls on Russia under the EAR (15 CFR
parts 730 through 774) as part of the final rule Implementation of
Sanctions Against Russia Under the Export Administration Regulations
(EAR) (the Russia Sanctions Rule), effective on February 24, 2022, and
published on March 3, 2022 (87 FR 12226). Since the publication of the
Russia Sanctions Rule, BIS has published several other final rules
imposing stringent export controls on Russia. The new restrictions
included two new Russia (and Belarus)-specific Foreign-Direct Product
rules. See Sec. 734.9(f)(1)(i) and (ii). U.S. allies have implemented
substantially similar measures against Russia. The BIS actions reflect
the U.S. Government's position that Russia's further invasion of
Ukraine and Belarus' complicity in such invasion flagrantly violated
international law, is contrary to U.S. national security and foreign
policy interests, and undermines global order, peace, and security.
Consistent with the U.S. Government's and its allies' commitment to
further strengthening the impact of export control measures in response
to Russia's aggression, this rule amends the EAR to impose new controls
to address the use of Iranian UAVs in ways that are contrary to U.S.
national security and foreign policy interests, specifically, by Russia
against Ukraine. Iran has been supplying Iranian UAVs to Russia to
enhance Russia's defense industrial base in the country's ongoing
military assault in Ukraine. BIS and U.S. Government allies and
partners have taken additional actions to restrict Iran's ability to
obtain ``items'' required to manufacture UAVs, such as the blocking
restrictions put in place by the European Union (EU) on identified
Iranian drone companies and export restrictions on relevant low-level
items where there is knowledge the items are ultimately destined to
Russia. On January 31, 2023, BIS added seven Iranian entities involved
in the manufacture of UAVs to the Entity List as Russian `Military End
Users,' thereby subjecting them to some of the most comprehensive
export restrictions under the EAR, including on foreign-produced items
under the Russia/Belarus-Military End User FDP rule (see Sec. 734.9(g)
of the EAR). 88 FR 6621 (Feb. 1, 2023). Recent investigations indicate
that pieces of Iranian UAVs have been found on the battlefield in
Ukraine, in some cases with U.S.-branded ``parts'' and ``components.''
Iran is already subject to comprehensive export restrictions under
U.S. law, including pursuant to Sec. 746.7 of the EAR. This rule
builds on recent efforts to target Russian activity involving Iran-
supplied UAVs by imposing new destination-based controls on Iran. These
new controls impose export and reexport license requirements on a
subset of EAR99 items, i.e., items not specified on the Commerce
Control List (supplement no. 1 to part 774 of the EAR) if destined to
Iran, regardless of whether a U.S. person, is involved in the
transaction. Such items are identified by HTS-6 Codes in a new
supplement for Iran that is being added to the EAR by this rule and
require a license for exports and reexports to Iran. This rule also
adds a new FDP rule specific to Iran for items in certain categories of
the CCL. The new FDP rule also covers certain other items identified in
this new supplement to render additional foreign-produced items subject
to the EAR. This rule similarly revises the existing Russia/Belarus FDP
rule to reference these foreign-produced items to ensure that the items
described in this supplement will be similarly controlled to Russia and
Belarus when they are also the ``direct product'' of certain U.S.-
origin ``technology'' or ``software,'' or are produced by a plant or a
`major component' of a plant which is itself the ``direct product'' of
certain U.S.-origin ``technology'' or ``software.'' Together, with a
separate rule published in the same issue of the Federal Register
adding export controls for Russia and Belarus, these changes impose
license requirements on additional exports from abroad and reexports to
Iran, Russia, and Belarus, with the purpose of substantially degrading
the Iranian UAV program and Russia's use of such UAVs against Ukraine.
Some of the items added to supplement no. 7 to part 746 already
required a license for exports,
[[Page 12151]]
reexports, and transfers (in-country) to Russia and Belarus prior to
this rule because they were already identified on supplement no. 4 or 5
to part 746. The separate rule published in the same issue of the
Federal Register is adding the remaining items added by this rule to
supplement no. 7 to part 746 to supplement no. 4 or 5 to impose a
license requirement for exports and reexports and transfers within
Russia and Belarus and to align those other controls with U.S. allies.
II. Overview of New Controls
For the reasons stated above, this rule takes four actions
targeting Iranian UAVs.
First, BIS is creating a list of items used in Iranian UAVs. This
rule identifies these items using HTS-6 codes in a new supplement no. 7
to part 746 of the EAR.
Second, this rule, in conjunction with a separate rule in the same
issue of the Federal Register adding export controls for Russia and
Belarus, expands the Russia/Belarus FDP rule and adds an Iran FDP rule
to ensure that foreign-produced items identified in new supplement no.
7 to part 746 are subject to the EAR when they are destined to Russia,
Belarus, or Iran, and that certain foreign-produced items specified in
any ECCN in Categories 3 through 5 or 7 on the CCL are subject to the
EAR when they are destined for Iran.
Third, this rule expands the license requirements for Iran in Sec.
746.7 of the EAR to include requirements for exports and reexports of
items identified in new supplement no. 7 to part 746 (including
foreign-made items subject to the EAR under the new Iran FDP rule
described in Sec. 734.9(j)).
Fourth, this rule exempts countries identified in supplement no. 3
to part 746 (Countries Excluded from Certain License Requirements,
pursuant to Sec. 746.8), from some of the new controls on foreign-
produced items described in new supplement no. 7 to part 746.
III. Amendments to the Export Administration Regulations (EAR)
This rule imposes new export controls on Iran in connection with
its UAV program in order to degrade Iran's ability to support Russia's
military aggression in Ukraine, as described below:
A. Imposition of additional license requirements for Iran covering
items used in UAVs that are identified by HTS-6 codes in new supplement
no. 7 to part 746.
In part 746, this rule adds a new supplement no. 7 to part 746--
Items that Require a License under Sec. 746.7 When Destined for Iran
and under Sec. 746.8 When Destined to Russia or Belarus. This rule
adds these items because they are useful in Iran's UAV program and
Russia has used such UAVs in its further invasion of Ukraine. New
supplement no. 7 to part 746 consists of two columns: HTS-6 Code and
the HTS Description. This rule adds twelve entries to the new
supplement. These HTS-6 codes cover a greater range of items than those
described in existing Export Control Classification Numbers (ECCNs) on
the CCL, and will consequently capture items that are designated EAR99
(i.e., not specifically described on the CCL).
This rule adds a paragraph (a) to the introductory text of the
supplement to explain the origin of the HTS-6 codes and descriptions in
this list, i.e., the United States International Trade Commission
(USITC's) HTS of the United States (2023). Similar to introductory text
set forth in the supplement no. 4 to part 746, this paragraph specifies
that the items described in supplement no. 7 to part 746 include any
modified or designed ``components,'' ``parts,'' ``accessories,'' and
``attachments'' therefor to the items listed in the supplement
regardless of the HTS Code or HTS Description of the ``components,''
``parts,'' ``accessories,'' and ``attachments,'' except that any
``part'' or minor ``component'' that is a fastener (e.g., screw, bolt,
nut, nut plate, stud, insert, clip, rivet, pin), washer, spacer,
insulator, grommet, bushing, spring, wire, or solder is excluded. New
paragraph (a) also advises exporters with general questions on HTS
codes to contact an import specialist at U.S. Customs and Border
Protection at the nearest port of export. Exporters with questions on
how to classify an item on the CCL or whether a particular
``component,'' ``part,'' accessory,'' or ``attachment'' therefor is
``modified or designed'' for an item listed in supplement no. 7 to part
746 should contact BIS.
This rule also adds a paragraph (b) to the introductory text of the
supplement to specify that the items identified in the HTS-6 Code
column of supplement no. 7 to part 746 are subject to the license
requirements under Sec. Sec. 746.7(a)(1)(ii) and (iii) and
746.8(a)(2). Paragraph (b) clarifies that the HTS Description column is
intended to assist exporters with their Automated Export System (AES)
filing responsibilities. BIS clarifies here that a subjective
interpretation of the HTS Description does not determine whether an
item is subject to the license requirements under Sec. Sec.
746.7(a)(1)(ii) and (iii) and 746.8(a)(2). If an item is classified
under any 10-digit Schedule B, or 8-digit HTS code beginning with the
HTS-6 Code indicated in supplement no. 7 to part 746, then it is
subject to the license requirements under Sec. Sec. 746.7(a)(1)(ii)
and (iii) and 746.8(a)(2), regardless of how the HTS Description is
interpreted. For example, if an exporter, reexporter, or transferor
``knows'' their item is classified under an HTS-6 Code in supplement
no. 7 to part 746, but disagrees that their item matches the HTS
Description in supplement no. 7 to part 746, in that scenario, then the
HTS-6 Code is still controlling for determining the license requirement
under Sec. Sec. 746.7(a)(1)(ii) and (iii) and 746.8(a)(2), even if
someone believes their item could potentially meet the description of
more than one HTS Description. As noted above, the HTS Description is
intended to assist exporters with their AES filing responsibilities,
but is not determinative for whether an item is identified under
supplement no. 7 to part 746.
The use of the HTS-6 Code to identify the license requirements for
these items will ease compliance burdens on exporters and reexporters
because the HTS-6 Code is more precise than the HTS Description. The
use of the HTS-6 Code for identifying the license requirement will also
help to enhance the enforcement of these items because the HTS-6 Code
will be easier to identify in the Electronic Export Information (EEI)
in AES.
BIS estimates the addition of supplement no. 7 to part 746 will not
result in any additional license applications submitted to BIS
annually, because the export and reexport to Iran of items newly
subject to the EAR will be subject to the regulatory authority of the
U.S. Department of the Treasury's Office of Foreign Assets Control
(OFAC) to the extent the export or reexport is prohibited by 31 CFR
560.204 or 560.205 of the Iranian Transactions and Sanctions
Regulations, 31 CFR part 560 (ITSR); such exports and reexports
therefore will be subject to the licensing jurisdiction of OFAC and
eligible for general or specific licenses issued--pursuant to the ITSR
for purposes of these destination-based license requirements for Iran.
Any export, reexport, or transfer (in-country) subject to a part 744
end-use or end-user license requirements will still require a separate
authorization from BIS.
B. Expansion of Russia/Belarus FDP rule and addition of new Iran
FDP rule for items identified in new supplement no. 7 to part 746.
This rule makes two changes to Sec. 734.9 Foreign-Direct Product
(FDP)
[[Page 12152]]
Rules related to the new supplement no. 7 to part 746.
1. Expansion of Russia/Belarus FDP rule. This rule revises the
existing Russia/Belarus FDP rule in paragraphs (f)(1)(i)(B) and
(f)(1)(ii)(B) of Sec. 734.9 to reference new supplement no. 7 to part
746, which expands the product scope of the Russia/Belarus FDP rule to
include items identified in new supplement no. 7 to part 746, even if
such items are designated EAR99 when they meet the FDP criteria under
paragraph (f). The items this rule adds to supplement no. 7 to part 746
includes ``parts'' and ``components'' that are used in UAVs that have
been found on the battlefield in Ukraine. As detailed above, Russia has
been relying on Iran's UAVs for use in strikes against Ukraine. Many of
the ``parts'' and ``components'' found in such UAVs are branded as U.S.
or U.S.-origin, including by referring to U.S. manufacturers. However,
such branding does not definitively indicate that such items were
produced in the United States. Thus, expanding the foreign direct
product rule to cover these items will help ensure that such products
are not available for shipment to Iran for use in the manufacture of
UAVs that are being used by Russia in Ukraine.
This rule also revises paragraph (f)(1)(i)(B) and (f)(1)(ii)(B) of
Sec. 734.9 to remove the term ``identified'' and adds in its place the
phrase ``specified in any ECCN on the CCL.'' This rule also removes the
phrase ``or is not designated EAR99,'' because the phrase is no longer
needed with the other revisions made to these two paragraphs. These
changes will align the text more closely with the same type of text
used in the other FDP rules in Sec. 734.9.
This rule also revises paragraph (f)(2) of Sec. 734.9 to remove
the phrase ``not designated EAR99'' and adding in its place the phrase
``specified in any ECCN on the CCL or in supplement no. 6 or 7.'' The
revision to add ``specified in any ECCN'' is a clarification and the
addition of ``supplement no. 6 or 7'' is a conforming change to reflect
the current scope of the Russia/Belarus FDP rule.
BIS estimates these changes to Sec. 734.9(f) will not result in
any additional license applications submitted to BIS annually, because
even though this rule will add items subject to the EAR, the license
review policy of denial generally discourages applicants from
submitting licenses.
2. Addition of new Iran FDP rule. This rule adds a new foreign
direct product rule under paragraph (j) (Iran FDP rule) of Sec. 734.9
of the EAR. This Iran FDP rule is generally modeled after the Russia/
Belarus FDP rule in Sec. 734.9(f), but with slight differences to make
the Iran FDP rule more narrowly targeted at Iran's UAV activities of
concern. The Iran FDP rule establishes jurisdiction over foreign-
produced items that are the direct product of U.S.-origin software or
technology classified in Categories 3 through 5 and 7 of the CCL, or
are produced by a plant or major component of a plant which itself is
the ``direct product'' of such software or technology. The product
scope is limited to foreign-produced items identified in supplement no.
7 to part 746--including items designated EAR99--and to items
classified in any ECCN in Categories 3 through 5 or 7 of the CCL.
As further described below, transactions from or within countries
identified in supplement no. 3 to part 746 are exempted from the
license requirements for items subject to this new FDP rule.
BIS estimates that the addition of paragraph (j) to Sec. 734.9
will result in an additional five license applications submitted to BIS
annually.
C. Expansion of Iran controls under part 746 to impose license
requirements for items identified in new supplement no. 7 to part 746
and for foreign-produced items made subject to the EAR under the new
Iran FDP rule.
In Sec. 746.7--Iran, this rule revises the fourth sentence of the
introductory text to the section to add a reference to new licensing
requirement paragraphs in Sec. 746.7. This rule also revises paragraph
(a) (License Requirements) for Iran by redesignating the existing text
of paragraph (a)(1) (apart from the paragraph (a)(1) heading) as new
paragraph (a)(1)(i) (CCL-based license requirements). This rule adds a
new license requirement to Sec. 746.7 under new paragraph (a)(1)(ii)
(Supplement no. 7 to part 746 of the EAR license requirements) for
export or reexport of items identified in new supplement no. 7 to part
746, and adds a new license requirement for the export from abroad or
reexport of foreign-produced items subject to the EAR because of the
new Iran FDP rule under new paragraph (a)(1)(iii). This rule also adds
new paragraph (a)(1)(iv) to exempt certain exports from abroad and
reexports from countries identified in supplement no. 3 to part 746
from the license requirement in paragraph (a)(1)(iii) and adds new
paragraph (a)(1)(v) to exempt items designated EAR99 and identified in
supplement no. 7 to part 746 from consideration as U.S.-origin
controlled content when incorporated into a foreign-made item exported
or reexported from a country identified in supplement no. 3 to part
746. The exemptions in paragraphs (a)(1)(iv) and (v) are similar in
regulatory construction to those that apply to the same countries for
purposes of export controls on Russia and Belarus in Sec. 746.8 of the
EAR.
As a conforming change, this final rule also revises supplement no.
2 to part 734--Guidelines for De Minimis Rules, by revising the third
sentence of paragraph (a)(1), which specifies that exporters must use
the license requirements in part 746 for identifying U.S.-origin
controlled content for de minimis purposes (excluding U.S.-origin
content that meets the criteria in Sec. 746.8(a)(5)). This final rule
revises this parenthetical phrase to specify that U.S.-origin
controlled content that meets the criteria in Sec. 746.7(a)(1)(v) is
also excluded from de minimis calculations when identifying controlled
U.S.-origin content.
As currently stated in Sec. 746.7 of the EAR, and as applied to
the new license requirements added by this rule, if a transaction is
authorized by the U.S. Department of the Treasury, Office of Foreign
Assets Control (OFAC), separate authorization from BIS is not required.
However, BIS authorization will generally be required for transactions
that require a license from BIS under the new Iran license requirements
added by this rule but that are not subject to the ITSR, unless an
exemption applies (e.g., exports of foreign-produced items subject to
the new Iran FDP rule that do not involve U.S. persons and that would
not qualify for an OFAC general license if subject to the ITSR).
BIS adds a sentence to the end of new paragraph (a)(1)(iii) under
Sec. 746.7 to specify that reexports and exports from abroad of
foreign-produced items that would have otherwise met all of the terms
and conditions of an OFAC general license if the transactions had been
subject to OFAC license requirements are exempt from BIS license
requirements in paragraph (a)(1)(iii). This exemption was added because
of the potential for the Iran FDP rule to reach certain items that may
be used in applications other than to develop or produce Iran UAVs,
such as use in medical devices or communications devices authorized for
export or reexport to Iran under the ITSR. To the extent that foreign-
produced items subject to the EAR under the Iran FDP rule fall outside
the scope of OFAC jurisdiction, BIS will treat transactions involving
such foreign-produced items consistently with comparable transactions
that are eligible for OFAC general licenses if they were conducted by
U.S. persons or
[[Page 12153]]
involved reexports of items exported from the United States. Questions
about whether a transaction is exempt because it is comparable to a
transaction that would be authorized if subject to the ITSR should be
directed to OFAC.
D. Conforming change to expand the scope of supplement no. 3 to
part 746 to reflect allied countries' exclusion from the new Iran FDP
rule.
In supplement no. 3 to part 746--Countries Excluded from Certain
License Requirements, pursuant to Sec. 746.8, this rule revises the
heading of the supplement to add a reference to the Iran export
controls section under Sec. 746.7. This rule also adds a new second
sentence to the introductory text of the supplement to specify that the
countries in the supplement are excluded from certain requirements
related to Iran in Sec. 746.7 of the EAR, as described in Sec.
746.7(a)(1)(iv) and (v).
Savings Clause
Shipments of items removed from eligibility for a License Exception
or export, reexport, or transfer (in-country) without a license (NLR)
as a result of this regulatory action that were en route aboard a
carrier to a port of export, reexport, or transfer (in-country), on
February 24, 2023, pursuant to actual orders for export, reexport, or
transfer (in-country) to or within a foreign destination, may proceed
to that destination under the previous eligibility for a License
Exception or export, reexport, or transfer (in-country) without a
license (NLR), provided the export, reexport, or transfer (in-country)
is completed no later than on March 27, 2023.
Export Control Reform Act of 2018
On August 13, 2018, the President signed into law the John S.
McCain National Defense Authorization Act for Fiscal Year 2019, which
included the Export Control Reform Act of 2018 (ECRA) (codified, as
amended, at 50 U.S.C. 4801-4852). ECRA provides the legal basis for
BIS's principal authorities and serves as the authority under which BIS
issues this rule. To the extent it applies to certain activities that
are the subject of this rule, the Trade Sanctions Reform and Export
Enhancement Act of 2000 (TSRA) (codified, as amended, at 22 U.S.C.
7201-7211) also serves as authority for this rule.
Rulemaking Requirements
1. This final rule is not a ``significant regulatory action''
because it ``pertain[s]'' to a ``military or foreign affairs function
of the United States'' under sec. 3(d)(2) of Executive Order 12866.
2. Notwithstanding any other provision of law, no person is
required to respond to, nor shall any person be subject to a penalty
for failure to comply with, a collection of information subject to the
requirements of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et
seq.) (PRA), unless that collection of information displays a currently
valid Office of Management and Budget (OMB) Control Number.
This rule involves the following OMB-approved collections of
information subject to the PRA:
<bullet> 0694-0088, ``Multi-Purpose Application,'' which carries a
burden hour estimate of 29.4 minutes for a manual or electronic
submission;
<bullet> 0694-0096 ``Five Year Records Retention Period,'' which
carries a burden hour estimate of less than 1 minute; and
<bullet> 0607-0152 ``Automated Export System (AES) Program,'' which
carries a burden hour estimate of 3 minutes per electronic submission.
BIS estimates that these new controls on Iran under the EAR will
result in an increase of five license applications submitted annually
to BIS. However, the additional burden falls within the existing
estimates currently associated with these control numbers. Additional
information regarding these collections of information--including all
background materials--can be found at <a href="https://www.reginfo.gov/public/do/PRAMain">https://www.reginfo.gov/public/do/PRAMain</a> by using the search function to enter either the title of
the collection or the OMB Control Number.
3. This rule does not contain policies with federalism implications
as that term is defined in Executive Order 13132.
4. Pursuant to section 1762 of the Export Control Reform Act of
2018 (50 U.S.C. 4821) (ECRA), this action is exempt from the
Administrative Procedure Act (APA) (5 U.S.C. 553) requirements for
notice of proposed rulemaking, opportunity for public participation,
and delay in effective date. While section 1762 of ECRA provides
sufficient authority for such an exemption, this action is also
independently exempt from these APA requirements because it involves a
military or foreign affairs function of the United States (5. U.S.C.
553(a)(1)).
5. Because a notice of proposed rulemaking and an opportunity for
public comment are not required to be given for this rule by 5 U.S.C.
553, or by any other law, the analytical requirements of the Regulatory
Flexibility Act, 5 U.S.C. 601, et seq., are not applicable.
Accordingly, no regulatory flexibility analysis is required and none
has been prepared.
List of Subjects
15 CFR Part 734
Administrative practice and procedure, Exports, Inventions and
patents, Research, Science and technology.
15 CFR Part 746
Exports, Reporting and recordkeeping requirements.
For the reasons stated in the preamble, parts 734 and 746 of the
Export Administration Regulations (15 CFR parts 730 through 774) are
amended as follows:
PART 734--SCOPE OF THE EXPORT ADMINISTRATION REGULATIONS
0
1. The authority citation for 15 CFR part 734 continues to read as
follows:
Authority: 50 U.S.C. 4801-4852; 50 U.S.C. 4601 et seq.; 50
U.S.C. 1701 et seq.; E.O. 12938, 59 FR 59099, 3 CFR, 1994 Comp., p.
950; E.O. 13020, 61 FR 54079, 3 CFR, 1996 Comp., p. 219; E.O. 13026,
61 FR 58767, 3 CFR, 1996 Comp., p. 228; E.O. 13222, 66 FR 44025, 3
CFR, 2001 Comp., p. 783; E.O. 13637, 78 FR 16129, 3 CFR, 2014 Comp.,
p. 223; Notice of November 8, 2022, 87 FR 68015 (November 10, 2022).
0
2. Section 734.9 is amended by revising paragraphs (f)(1)(i)(B),
(f)(1)(ii)(B), and (f)(2) and adding paragraph (j) to read as follows:
Sec. 734.9 Foreign-Direct Product (FDP) Rules.
* * * * *
(f) * * *
(1) * * *
(i) * * *
(B) The foreign-produced item is specified in any ECCN on the CCL
or in supplement no. 6 or 7 to part 746 of the EAR; or
(ii) * * *
(B) The foreign-produced item is specified in any ECCN on the CCL
or in supplement no. 6 or 7 to part 746 of the EAR.
(2) Destination scope of the Russia/Belarus FDP rule. A foreign-
produced item meets the destination scope of this paragraph (f)(2) if
there is ``knowledge'' that the foreign-produced item is destined to
Russia or Belarus or will be incorporated into or used in the
``production'' or ``development'' of any ``part,'' ``component,'' or
``equipment'' specified in any ECCN on the CCL or in supplement no. 6
or 7 to part 746 of the EAR and produced in or destined to Russia or
Belarus.
* * * * *
(j) Iran FDP rule. A foreign-produced item is subject to the EAR if
it meets both the product scope in paragraph
[[Page 12154]]
(j)(1) of this section and the destination scope in paragraph (j)(2) of
this section. See Sec. 746.7 of the EAR for license requirements,
license review policy, and license exceptions applicable to foreign-
produced items that are subject to the EAR pursuant to this paragraph
(j).
(1) Product scope of Iran FDP rule. The product scope applies if a
foreign-produced item meets the conditions of either paragraph
(j)(1)(i) or (ii) of this section.
(i) ``Direct product'' of ``technology'' or ``software.'' A
foreign-produced item meets the product scope of this paragraph
(j)(1)(i) if the foreign-produced item meets both of the following
conditions:
(A) The foreign-produced item is the ``direct product'' of U.S.-
origin ``technology'' or ``software'' subject to the EAR that is
specified in any ECCN in product groups D or E in Categories 3 through
5 or 7 of the CCL; and
(B) The foreign-produced item is identified in supplement no. 7 to
part 746 of the EAR or is specified in any ECCN on the CCL in
Categories 3 through 5 or 7 of the CCL; or
(ii) Product of a complete plant or 'major component' of a plant
that is a ``direct product.'' A foreign-produced item meets the product
scope of this paragraph (j)(1)(ii) if it meets both of the following
conditions:
(A) The foreign-produced item is produced by any plant or 'major
component' of a plant that is located outside the United States, when
the plant or 'major component' of a plant, whether made in the United
States or a foreign country, itself is a ``direct product'' of U.S.-
origin ``technology'' or ``software'' subject to the EAR that is
specified in any ECCN in product groups D or E in Categories 3 through
5 or 7 of the CCL; and
(B) The foreign-produced item is identified in supplement no. 7 to
part 746 of the EAR or is specified in any ECCN on the CCL in
Categories 3 through 5 or 7 of the CCL.
(2) Destination scope of the Iran FDP rule. A foreign-produced item
meets the destination scope of this paragraph (j)(2) if there is
``knowledge'' that the foreign-produced item is destined to Iran or
will be incorporated into or used in the ``production'' or
``development'' of any ``part,'' ``component,'' or ``equipment,''
including any modified or designed ``components,'' ``parts,''
``accessories,'' and ``attachments'' therefor, identified in supplement
no. 7 to part 746 of the EAR or is specified in any ECCN on the CCL in
Categories 3 through 5 or 7 of the CCL that is located in or destined
to Iran.
0
3. Supplement no. 2 to part 734 is amended by revising the third
sentence of paragraph (a)(1) to read as follows:
Supplement No. 2 to Part 734--Guidelines for De Minimis Rules
(a) * * *
(1) * * * For purposes of identifying U.S.-origin controlled
content, you should consult the Commerce Country Chart in supplement
no. 1 to part 738 of the EAR and controls described in part 746 of the
EAR (excluding U.S.-origin content that meets the criteria in
Sec. Sec. 746.7(a)(1)(v) and 746.8(a)(5)). * * *
* * * * *
PART 746--EMBARGOES AND OTHER SPECIAL CONTROLS
0
4. The authority citation for 15 CFR part 746 is revised to read as
follows:
Authority: 50 U.S.C. 4801-4852; 50 U.S.C. 4601 et seq.; 50
U.S.C. 1701 et seq.; 22 U.S.C. 287c; Sec 1503, Pub. L. 108-11, 117
Stat. 559; 22 U.S.C. 2151 note; 22 U.S.C. 6004; 22 U.S.C. 7201 et
seq.; 22 U.S.C. 7210; E.O. 12854, 58 FR 36587, 3 CFR, 1993 Comp., p.
614; E.O. 12918, 59 FR 28205, 3 CFR, 1994 Comp., p. 899; E.O. 13222,
66 FR 44025, 3 CFR, 2001 Comp., p. 783; E.O. 13338, 69 FR 26751, 3
CFR, 2004 Comp., p 168; Presidential Determination 2003-23, 68 FR
26459, 3 CFR, 2004 Comp., p. 320; Presidential Determination 2007-7,
72 FR 1899, 3 CFR, 2006 Comp., p. 325; Notice of May 9, 2022, 87 FR
28749 (May 10, 2022).
0
5. Section 746.7 is amended by revising the fourth sentence of the
introductory text and paragraph (a)(1) to read as follows:
Sec. 746.7 Iran.
* * * In addition, BIS maintains licensing requirements on exports
and reexports to or from Iran under the EAR as described in paragraphs
(a)(1)(i) through (iii) of this section or elsewhere in the EAR (see,
e.g., Sec. 742.8).
(a) * * *
(1) EAR license requirements--(i) CCL-based license requirements. A
license is required under the EAR to export or reexport to Iran any
item on the CCL containing a CB Column 1, CB Column 2, CB Column 3, NP
Column 1, NP Column 2, NS Column 1, NS Column 2, MT Column 1, RS Column
1, RS Column 2, CC Column 1, CC Column 2, CC Column 3, AT Column 1 or
AT Column 2 in the Country Chart Column of the License Requirements
section of an ECCN or classified under ECCNs 0A503, 0A980, 0A982,
0A983, 0E982, 1C355, 1C395, 1C980, 1C982, 1C983, 1C984, 2A994, 2D994,
2E994, 5A001.f.1, 5A980, 5D001 (for 5A001.f.1or for 5E001.a (for
5A001.f.1, or for 5D001.a (for 5A001.f.1)), 5D980, 5E001.a (for
5A001.f.1, or for 5D001.a (for 5A001.f.1)) or 5E980.
(ii) Supplement no. 7 to part 746 of the EAR license requirements.
A license is required under the EAR to export or reexport to Iran any
item identified in supplement no. 7 to part 746 of the EAR when such
item is subject to the EAR for any reason other than Sec. 734.9(j) of
the EAR.
(iii) Foreign-produced items subject to the EAR under Sec.
734.9(j) of the EAR (Iran FDP rule). Except as described in paragraph
(a)(1)(iv) of this section, a license is required to reexport or export
from abroad to Iran any foreign-produced item subject to the EAR under
the Iran FDP rule that is located in or destined to Iran. A Department
of Commerce license is not required for transactions described in this
paragraph (a)(1)(iii) that would have otherwise met all of the terms
and conditions of an OFAC general license if the transactions had been
subject to OFAC jurisdiction.
(iv) Exclusion from license requirements under paragraph
(a)(1)(iii) of this section. Exports from abroad or reexports from the
countries described in supplement no. 3 to this part from the countries
described in supplement no. 3 are not subject to the license
requirements described in paragraph (a)(1)(iii) of this section, unless
a limit to the exclusion is described in the ``Scope'' column in
supplement no. 3.
(v) Exclusion from scope of U.S.-origin controlled content under
paragraph (a)(1) of this section. For purposes of determining U.S.-
origin controlled content under supplement no. 2 to part 734 of the EAR
when making a de minimis calculation for reexports and exports from a
country described in supplement no. 3 to this part to Iran, the license
requirements in paragraph (a)(1)(ii) of this section are not used to
determine controlled U.S.-origin content in a foreign-made item,
provided the U.S.-origin content is identified in supplement no. 7 to
this part and is designated EAR99 and is not otherwise excluded from
the applicable ``Scope'' column in supplement no. 3 to this part.
* * * * *
0
6. Supplement no. 3 to part 746 is amended by:
0
a. Revising the heading of the supplement; and
0
b. Adding a sentence after the first sentence of the introductory text.
The revision and addition read as follows:
[[Page 12155]]
Supplement No. 3 to Part 746--Countries Excluded From Certain License
Requirements of Sec. Sec. 746.7 and 746.8
* * * In addition, these countries are excluded from the license
requirements related to Iran in Sec. 746.7, as described in Sec.
746.7(a)(1)(iv) and (v). * * *
* * * * *
0
7. Supplement no. 7 to part 746 is added to read as follows:
Supplement No. 7 to Part 746--Items That Require a License Under Sec.
746.7 When Destined to Iran and Under Sec. 746.8 When Destined to
Russia or Belarus
The items identified in this supplement are a subset of items that
are identified in specific Export Control Classification Numbers or
designated as EAR99 under the Commerce Control List (CCL) in supplement
no. 1 to part 774 of the EAR. Also see paragraph (f) of Sec. 734.9 of
the EAR for the Russia/Belarus Foreign Direct Product (FDP) rule and
paragraph (j) for the Iran FDP rule. Both of these FDP rules include
the items identified in this supplement as part of the criteria for
what foreign made items are subject to the EAR.
(a) The source for the Harmonized Tariff Schedule (HTS)-6 codes and
descriptions in this list is the United States International Trade
Commission (USITC's) Harmonized Tariff Schedule of the United States
(2023). The items described in this supplement include any modified or
designed ``components,'' ``parts,'' ``accessories,'' and
``attachments'' therefor regardless of the HTS Code or HTS Description
of the ``components,'' ``parts,'' ``accessories,'' and ``attachments,''
apart from any ``part'' or minor ``component'' that is a fastener
(e.g., screw, bolt, nut, nut plate, stud, insert, clip, rivet, pin),
washer, spacer, insulator, grommet, bushing, spring, wire, or solder.
This supplement includes two columns consisting of the HTS Code and HTS
Description to assist exporters, reexporters, and transferors in
identifying the products in this supplement. For information on HTS
codes in general, you may contact a local import specialist at U.S.
Customs and Border Protection at the nearest port.
(b) The items classified under the provisions identified in the
HTS-6 Code column of this supplement are subject to the license
requirements under Sec. Sec. 746.7(a)(1)(ii) and (iii) and
746.8(a)(2). The other column--HTS Description--is intended to assist
exporters with their AES filing responsibilities. The license
requirements extend to HTS Codes at the 8 and 10 digit level when those
HTS-8 and HTS-10 codes begin with the HTS-6 Codes as the first 6
numbers of those longer HS Codes.
------------------------------------------------------------------------
HTS-6 codes HTS description
------------------------------------------------------------------------
840710................... Aircraft spark-ignition reciprocating or
rotary internal combustion piston engines.
840890................... Compression-ignition internal combustion
piston engines (diesel or semi-diesel
engines), NESOI.
840910................... Parts for spark-ignition or rotary internal
combustion piston engines or compression-
ignition internal combustion piston engines,
for aircraft.
847150................... Processing units other than those of
subheading 8471.41 or 8471.49, whether or
not containing in the same housing one or
two of the following types of unit: storage
units, input units, output units.
851762................... Machines for the reception, conversion and
transmission or regeneration of voice,
images or other data, including switching
and routing apparatus.
852691................... Radio navigational aid apparatus.
853221................... Tantalum capacitors.
853224................... Fixed capacitors NESOI, multilayer ceramic
dielectric.
854231................... Processors and controllers, whether or not
combined with memories, converters, logic
circuits, amplifiers, clock and timing
circuits, or other circuits.
854232................... Memories.
854233................... Amplifiers.
854239................... Other electronic integrated circuits.
------------------------------------------------------------------------
Thea D. Rozman Kendler,
Assistant Secretary for Export Administration.
[FR Doc. 2023-03930 Filed 2-24-23; 8:45 am]
BILLING CODE 3510-JT-P
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