Proposed Rule2024-16498
Export Administration Regulations: Crime Controls and Expansion/Update of U.S. Persons Controls
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Published
July 29, 2024
Issuing agencies
Commerce DepartmentIndustry and Security Bureau
Abstract
The Department of Commerce, Bureau of Industry and Security (BIS), seeks public comments on proposed amendments to the Export Administration Regulations (EAR) in support of U.S. national security and foreign policy interests. To build upon existing controls, BIS proposes establishing certain Foreign-Security End User (FSEU) and "U.S. persons" activities controls and Commerce Control List-based (CCL) controls. The proposed additions of the foreign-security end user control and "U.S. persons" activity controls would implement expanded authority under the Export Control Reform Act of 2018 (ECRA), as amended, to control certain "U.S. persons" activities under the EAR. Specific to the EAR's "U.S. persons" activities controls, BIS is proposing amendments to control "support" furnished by "U.S. persons" to identified foreign-security end users. In addition, BIS is proposing to add to the Commerce Control List two new unilateral item controls on facial recognition technology.
Full Text
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[Federal Register Volume 89, Number 145 (Monday, July 29, 2024)]
[Proposed Rules]
[Pages 60998-61004]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-16498]
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DEPARTMENT OF COMMERCE
Bureau of Industry and Security
15 CFR Parts 736, 744, and 774
[Docket No. 240712-0191]
RIN 0694-AI35
Export Administration Regulations: Crime Controls and Expansion/
Update of U.S. Persons Controls
AGENCY: Bureau of Industry and Security, Department of Commerce.
ACTION: Proposed rule, with request for comments.
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SUMMARY: The Department of Commerce, Bureau of Industry and Security
(BIS), seeks public comments on proposed amendments to the Export
Administration Regulations (EAR) in support of U.S. national security
and foreign policy interests. To build upon existing controls, BIS
proposes establishing certain Foreign-Security End User (FSEU) and
``U.S. persons'' activities controls and Commerce Control List-based
(CCL) controls. The proposed additions of the foreign-security end user
control and ``U.S. persons'' activity controls would implement expanded
authority under the Export Control Reform Act of 2018 (ECRA), as
amended, to control certain ``U.S. persons'' activities under the EAR.
Specific to the EAR's ``U.S. persons'' activities controls, BIS is
proposing amendments to control ``support'' furnished by ``U.S.
persons'' to identified foreign-security end users. In addition, BIS is
proposing to add to the Commerce Control List two new unilateral item
controls on facial recognition technology.
DATES: Comments must be received by BIS no later than September 27,
2024.
ADDRESSES: Comments on this rule may be submitted to the Federal
rulemaking portal (<a href="http://www.regulations.gov">www.regulations.gov</a>). The <a href="http://regulations.gov">regulations.gov</a> ID for
this rule is: BIS-2023-0006. Please refer to RIN 0694-AI35 in all
comments.
All filers using the portal should use the name of the person or
entity submitting the comments as the name of their files, in
accordance with the instructions below. Anyone submitting business
confidential information should clearly identify the business
confidential portion at the time of submission, file a statement
justifying nondisclosure and referring to the specific legal authority
claimed, and provide a non-confidential version of the submission. For
comments submitted electronically containing business confidential
information, the file name of the business confidential version should
begin with the characters ``BC.'' Any page containing business
confidential information must be clearly marked ``BUSINESS
CONFIDENTIAL'' on the top of that page. The corresponding non-
confidential version of those comments must be clearly marked
``PUBLIC.'' The file name of the non-confidential version should begin
with the character ``P.'' Any submissions with file names that do not
begin with either a ``BC'' or a ``P'' will be assumed to be public and
will be made publicly available through <a href="https://www.regulations.gov">https://www.regulations.gov</a>.
Commenters submitting business confidential information are encouraged
to scan a hard copy of the non-confidential version to create an image
of the file, rather than submitting a digital copy with redactions
applied, to avoid inadvertent redaction errors which could enable the
public to read business confidential information.
FOR FURTHER INFORMATION CONTACT: For questions specific to the human
rights or foreign-security end-user provisions set forth in proposed
Sec. 744.25, contact Anthony Christino, Director, Human Rights and
Embargoes Division, <a href="/cdn-cgi/l/email-protection#61200f15090e0f184f220913081215080f0e210308124f050e024f060e17"><span class="__cf_email__" data-cfemail="bffed1cbd7d0d1c691fcd7cdd6cccbd6d1d0ffddd6cc91dbd0dc91d8d0c9">[email protected]</span></a>, Phone: (202) 482-
3241. For general questions, contact Hillary Hess, Director, Regulatory
Policy Division, <a href="/cdn-cgi/l/email-protection#027072663042606b712c666d612c656d74"><span class="__cf_email__" data-cfemail="f0828094c2b0929983de949f93de979f86">[email protected]</span></a>. Include, ``Human Rights End Users''
on subject line of emails. Phone: (202) 482-2440.
SUPPLEMENTARY INFORMATION:
Background
In accordance with the Export Control Reform Act of 2018 (ECRA),
the Bureau
[[Page 60999]]
of Industry and Security (BIS) utilizes item-based controls, end-user-
based controls, and specific licensing policies to address
proliferation and prevent items subject to the Export Administration
Regulations (EAR) from being diverted or misused contrary to U.S.
national security and foreign policy interests. See 50 U.S.C. 4811(2);
4813(a)(16); 15 CFR 742.7, 744.11.
As set forth in 15 CFR 742.7, BIS imposes license requirements that
support the protection of human rights (described in the EAR as crime
control (CC) reasons for control). Under the licensing policy for CC-
controlled items in Sec. 742.7(b), BIS generally considers license
applications favorably on a case-by-case basis unless there is civil
disorder in the country or region of destination or unless there is a
risk that the items will be used to violate or abuse human rights. In
October 2020, BIS expanded this licensing policy beyond CC-controlled
items to include those items controlled for any other reason (85 FR
63007, Oct. 6, 2020). In April 2024, BIS further revised the CC
licensing policy such that certain firearms and related items have a
distinct licensing policy (89 FR 34680, April 30, 2024).
In addition to item-based controls and licensing policy, BIS
imposes end-user controls to promote the national security and foreign
policy interests of the United States, which includes the promotion and
protection of human rights. Entity List additions may be made to
address activities that present a risk of being contrary to the
national security and foreign policy interests of the United States,
including the protection of human rights. See 15 CFR 744.11(b). To
date, BIS has added 103 entities for such human rights reasons. With
this proposed rule, BIS would add end user, end use, and item-based
controls.
On November 14, 1994, Executive Order 12938 (E.O. 12938, 59 FR
59099) directed BIS to continue to regulate the activities of ``U.S.
persons'' to prevent their participation in activities that could
contribute to the proliferation of weapons of mass destruction. This
control, which is set forth in Sec. 744.6 of the EAR, imposes
licensing requirements on assistance furnished by ``U.S. persons'' in
connection with activities of proliferation concern, even when such
assistance does not involve any items subject to the EAR or any foreign
entities subject to specified restrictions under the EAR (e.g., persons
whose export privileges have been denied under the EAR). Subsequently,
with the enactment of ECRA as part of the John S. McCain NDAA for FY
2019 (Pub. L. 115-232), Congress authorized, in ECRA section
1753(a)(2)(F), the control of ``U.S. persons'' activities related not
only to weapons of mass destruction and their means of delivery, but
also to specific ``foreign military intelligence services.''
Accordingly, in January 2021, BIS amended Sec. 744.6 of the EAR to add
a new restriction on the activities of ``U.S. persons'' in support of
certain military-intelligence end uses and end users. BIS also created
a new Sec. 744.22 that targeted exports, reexports, and transfers (in-
country) destined for certain military-intelligence end uses or end
users (86 FR 4865, Jan. 15, 2021).
Subsequently, section 5589(b) of the December 2022 National Defense
Authorization Act (NDAA) for Fiscal Year (FY) 2023 (Pub. L. 117-263,
NDAA for FY 2023) amended section 1753(a)(2)(F) of ECRA (50 U.S.C.
4812(a)(2)(F)) by providing BIS with the statutory authority to impose
controls on ``the activities of United States persons, wherever
located, relating to specific foreign military, security, or
intelligence services.'' Consistent with this statutory amendment, in
this proposed rule, BIS would add to the ``U.S. persons'' activities
control in Sec. 744.6 ``support'' of foreign-security end user
activities and would expand existing part 744 restrictions to encompass
activities of ``U.S. persons'' in connection with defined foreign-
security end users. Specifically, BIS proposes to add paragraph (b)(8)
as the prohibition on ``U.S. persons'' `support' in Sec. 744.6(b)(8)
to apply to foreign-security end users. BIS is proposing amendments to
the EAR on military and intelligence end user controls, and controls
that would restrict U.S. persons' support of such end users, in a
separate rule published concurrently with this rule.
Consistent with section 1754(d)(1) of ECRA (50 U.S.C. 4813(d)(1))
and Sec. 744.6 of the EAR, BIS proposes to regulate the ``U.S.
persons'' activities described above only to the extent they are not
subject to a license requirement or general prohibition administered by
another Federal department or agency. Accordingly, ``U.S. persons'' are
required to seek a license from BIS only for the activities described
in section 744.6 that are not subject to a license requirement or
general prohibition administered by the Department of Energy,
Department of State, Department of the Treasury, or other federal
department or agency. The issuance of a license by BIS, or any other
federal department or agency, does not authorize ``U.S. persons'' to
engage in any activity that is otherwise prohibited by law, including
criminal statutes. See 15. CFR 744.6(a).
In addition to the ``U.S. persons'' activities control and foreign-
security end user controls, BIS is proposing new item controls for
facial recognition systems. In July 2020, BIS published a Notice of
Inquiry (NOI) on Advanced Surveillance Systems and Other Items of Human
Rights Concern NOI. (85 FR 43532, July 17, 2020; ``July 2020 NOI'').
The proposed amendments in this proposed rule were informed by the
public comments on the July 2020 NOI. In that NOI, BIS requested
comments on: (1) new license requirements on crime control and
detection items, including facial recognition software and other
biometric systems for surveillance; (2) the proposed removal or
modification of the CC controls on several items on the CCL; and (3)
potential revisions to CC controls that are based on end uses and end
users, such as end use and end user controls set forth in part 744 of
the EAR.
Of the 22 public comments received, eleven supported the
implementation of end-use-and end-user-based controls, instead of list-
based controls (i.e., controls that derive from items' placement on the
CCL). Overall, commenters that supported end-use and end-user-based
controls over list-based controls noted several implementation
challenges for list-based controls imposed to address concerns about
misuse. Exporters cautioned that, in the human rights context, items
are often ubiquitous and have a wide variety of end uses. Thus,
depending on the item at issue, it may be difficult to tailor list-
based controls to precisely guard against the potential for human
rights violations or abuses. Moreover, commenters warned that, in
trying to meet the challenge of preventing items subject to the EAR
from being used to commit or enable human rights violations or abuses,
applying list-based controls may lead to over-broad controls that could
stifle innovation and harm U.S. technological leadership. Exporters
noted that even where list-based controls are successfully implemented,
they may quickly become obsolete given the rapid advancement of
technology. Commenters suggested that, in contrast to broad list-based
controls on items that are often ubiquitous and have multiple uses, in
the human rights context, targeted end-use and end-user controls,
preferably end user controls, would allow BIS to review each item, end
use, and end user to assess whether the item may be used to commit
human rights violations or abuses.
Additionally, several comments focused specifically on the expected
[[Page 61000]]
impact of new license requirements for facial recognition technology.
Certain comments raised concerns with controls that could stifle the
beneficial use of facial recognition technology. For example,
commenters noted that the auto industry is developing new technologies
that utilize facial-recognition-related capabilities to verify
authorized users and allow for keyless entry and ignition. Commenters
also noted that facial recognition technology is used in airports to
enhance public safety and has several beneficial investigative and law
enforcement applications when appropriate legal frameworks are in place
to protect civil rights and liberties. In contrast, other commenters
noted that certain state actors of concern are using facial recognition
technology for more nefarious end uses--namely, to target individuals;
track individuals' movements and actions; link individuals' actions to
biometric profiles that include blood types, fingerprints, irises, and
DNA analysis; and log spoken and written digital communications. BIS
has considered these comments in proposing both the foreign-security
end user control and the item controls.
Discussed below are the proposed: `foreign-security end user' rule
license requirement; expansion of the ``U.S. persons'' control for
``support'' furnished by ``U.S. persons'' to identified `foreign-
security end users'; conforming changes to Sec. 744.11; and unilateral
item controls on facial recognition technology.
I. Proposed New Sec. 744.25, Controls on `Foreign-Security End Users'
License Requirement for `Foreign-Security End Users'
State actors exploit advancements in technologies to reinforce
existing repression; target civil society actors, human rights
defenders, journalists, activists, and dissidents; surveil and profile
women in all their diversity, ethnic, religious, and racial minorities,
and other members of marginalized populations; censor speech; spread
misinformation and disinformation; engage in mass surveillance; control
the flow of information; infringe privacy; and suppress freedom through
a variety of end users, including traditional law enforcement bodies,
public security agencies, private prisons, and private contractors.
These practices are not new, but advances in technology have
supercharged the ability of such state actors to leverage new
mechanisms to deploy their repressive agendas. With this proposed rule,
BIS would require a license for exports, reexports, and transfers (in-
country) for items subject to the EAR that are specified on the CCL
when they are destined for `foreign-security end users,' as newly
defined in the proposed new section, of a specified destination.
The country scope of the license requirement would apply to Country
Groups D:5 and E. Country Group D:5 includes countries subject to a
U.S. arms embargo under the State Department's International Traffic in
Arms Regulations (ITAR). Under the ITAR, with certain enumerated
exceptions, it is the policy of the United States to deny licenses or
other approval for exports of defense articles or defense services
destined to these countries, including their armed forces, police,
intelligence, or other internal security forces. See 22 CFR 126.1.
Similarly, BIS requires a license for many ``600 series'' items--items
that are of a military nature but do not warrant control on the U.S.
Munitions List--to these countries. Country Group E represents
countries that are state sponsors of terrorism or against which the
United States imposes a unilateral embargo. BIS would impose a license
requirement on foreign-security end users of D:5 and E countries for
all items on the CCL to provide visibility into the end uses and end
users of these items and to contribute to efforts to prevent use of
these items to violate or abuse human rights.
Application of the Term `Foreign-Security End Users'
The license requirement under this section would apply when a
person has ``knowledge,'' as defined in part 772, that a CCL item is
intended, entirely or in part, for `foreign-security end users.' The
term `foreign-security end users' is defined in paragraph (f) of
proposed new Sec. 744.25 as ``governmental and other entities with the
authority to arrest, detain, monitor, search, or use force in the
furtherance of their official duties.'' This definition would include
persons or entities at all levels of the government police and security
services, from the national headquarters or the ministry level to all
subordinate agencies/bureaus (e.g., municipal, provincial, regional).
The proposed definition of `foreign-security end users' also includes
other persons or entities performing functions of a `foreign-security
end user,' such as arrest, detention, monitoring, or search, and may
include analytic and data centers (e.g., genomic data centers),
forensic laboratories, jails, prisons, detention facilities, labor
camps, and reeducation facilities, because government `foreign-security
end users' often hire non-government entities to assist in their
duties. Also included in the proposed definition of `foreign-security
end users' would be Entity List entities identified through new
footnote ``8'' designation.
In this proposed rule, BIS would not apply the term `foreign-
security end users' to civilian emergency medical, firefighting, and
search-and-rescue end users. In situations in which a country
integrates police, emergency medical, firefighting, and search-and-
rescue services into a single public safety department, BIS seeks to
ensure that the export, reexport, or transfer (in-country) of items
necessary to protect lives is not disrupted and therefore would apply a
case-by-case review standard. BIS also seeks to ensure that the export,
reexport, or transfer (in-country) of items necessary to protect lives
at airport terminals, railway and rapid transit stations, and other
public transport hubs is not disrupted. Where an entity that appears to
satisfy the definition of `foreign-security end user' but the end user
is integrated into or organized under the military, the `Military End
User' control in section 744.21 applies.
License Application Review Standard/Policy
BIS would review license applications submitted pursuant to Sec.
744.25 on a case-by-case basis to determine whether the proposed
transaction presents an unacceptable risk of enabling human rights
violations or abuses. Applications for transactions that would pose an
unacceptable risk will be reviewed under a presumption of denial.
This proposed rule would also establish a case-by-case license
review policy to allow for the approval of items necessary for public
health or safety, or for other end uses that do not implicate human
rights. This case-by-case license review policy is intended to ensure
that such exports, reexports, and transfers (in-country) would not be
disrupted, while also allowing for the U.S. Government to review such
license applications to ensure that such exports are consistent with
that purpose and are not otherwise contrary to U.S. national security
or foreign policy interests.
Proposed paragraph (b) of Sec. 744.25 states that BIS may inform
the public either individually by specific notice or through a
rulemaking or notice published in the Federal Register that a license
is required for specific exports, reexports, or transfers (in-county)
of any item subject to the EAR because there is an unacceptable risk of
use by, or diversion to, a certain end user in the specified
destination. Only License Exception GOV, set forth in existing
[[Page 61001]]
Sec. 740.11(b)(2) and (c)(2), would be available to overcome the
proposed license requirement if conditions of that license exception
are met.
II. Proposed Expansion of U.S. Persons Controls
This proposed rule would expand existing restrictions to encompass
certain activities of U.S. persons in connection with `foreign-security
end users.' Specifically, this proposed rule would revise Sec.
744.6(b) of the EAR to add paragraph (b)(8) to reflect the expanded
scope of U.S. person activities subject to the EAR, as described below,
which includes activities identified in that section that support
foreign-security end users defined by proposed new Sec. 744.25(f) and
that are identified on the Entity List with a new footnote ``8''
designation. As with all existing Sec. 744.6(b) controls on specific
activities of ``U.S. persons,'' such controls would only apply to the
extent that the underlying activities would not be subject to a license
requirement or general prohibition administered by another Federal
department or agency. Thus, as proposed, the ``U.S. persons'' control
would only apply to entities that fit the definition of proposed new
Sec. 744.25(f) if they are identified on the Entity List with a
footnote 8.
III. Proposed Conforming Amendments to Sec. 744.11
Consistent with the proposed revisions to Sec. 744.6 and addition
of Sec. 744.25, BIS proposes to amend Sec. 744.11 ``License
requirements that apply to entities acting or at significant risk of
acting contrary to the national security or foreign policy interests of
the United States'' by adding entities that are `foreign-security end
users' to the Entity List in supplement no. 4 to part 744, designating
them by specific footnote, and adding license requirements for these
entities to Sec. 744.11 of the EAR. Amendments to the Entity List
would be made in a separate final rule.
BIS proposes to amend Sec. 744.11 by revising the heading for
paragraph (a)(2) from ``Entity List foreign-direct product'' (FDP)
license requirements, review policy, and license exceptions'' to
``Entities designated with specific conditions identified by
footnote,'' because not all Entity List entities or footnote designated
entities would have license requirements that include foreign-produced
items subject to the EAR pursuant to a foreign-direct product rule in
existing Sec. 734.9 of the EAR. This proposed rule would also move the
description of footnote 4 entities in existing (a)(2)(ii) to
(a)(2)(iii) and would include in (a)(2)(ii) requirements for footnote 3
entities--Russian and Belarusian `military end users.' This proposed
rule would reserve (a)(2)(iv), (v), (vi) for future use. Finally, this
proposed rule would add paragraph (a)(2)(vii) footnote 8 entities--
`foreign-security end users.'
Additionally, this proposed rule would add introductory text to
paragraph (a)(2) to clarify that the ``standards-related activities''
exclusion to the license requirements set forth in existing paragraph
(a)(1) would apply to all the footnote designated entities described in
paragraph (a)(2).
IV. Proposed Amendments to CCL for Protection of Human Rights
As described below, this proposed rule would revise three ECCNs in
Category 3 of the CCL (Electronics) to enable further protection
against human rights abuses.
Facial Recognition Systems
Facial recognition technology coupled with artificial intelligence
technology has bolstered the ability of foreign-security end users,
such as law enforcement agencies (municipal, provincial, regional,
national) and other government affiliated entities to target victims at
a higher rate, leading to increased capabilities for violations or
abuses of human rights. Working in concert, these technologies can log
countless images to help state actors of concern arbitrarily and
unlawfully track, mistreat, detain, and monitor people. Facial
recognition technology can be used to draw inferences about
individuals, such as inferences about ethnicity or religion, that can
result in discriminatory treatment or detention. Previously, this same
task would have been accomplished manually with a cost of thousands of
hours and was difficult or impossible to perform at scale. In this way,
advances in digital technology can be weaponized to deploy repressive
tactics at lower cost, with greater ease, and larger impact.
To further promote and protect human rights throughout the world,
this proposed rule would create a new CC1 control for facial
recognition systems specially designed for mass-surveillance and crowd
scanning. CC1 controls would apply to crime control and detection
instruments and equipment and related ``technology'' and ``software''
identified in the appropriate ECCNs on the CCL. A license would be
required for exports of these items to countries listed in CC Column 1
in the Country Chart (Supplement No. 1 to part 738 of the EAR). As
these proposed controls are narrowly tailored, they would not apply to
systems that merely restrict individual access to personal devices,
automobiles, or residential or work premises by verifying that a person
attempting to gain such access is authorized to do so.
One of the ways facial recognition systems identify or verify a
person from a digital image or a video frame is by comparing selected
facial features from an input image to the features of faces stored in
a database. The major components of such systems are input camera(s),
data storage, processing computers, and the software algorithms needed
to model facial images.
There is no longer any effective difference between systems that
require active permission by the subject and systems that can be
utilized clandestinely, whether for individual or crowd identification.
The capture components of these systems can be very small and easily
concealable. Targets can employ limited measures to thwart
identification, but these measures are expected to be less effective
and less available as the technology matures.
Accordingly, this proposed rule would amend ECCN 3A981 to include a
proposed new item for facial recognition systems. Facial recognition
software would be controlled under ECCN 3D980. As a result of the
proposed changes to ECCN 3A981, facial recognition technology would be
controlled under ECCN 3E980. All of these ECCNs would be controlled for
CC1 reasons. CC reasons for control support U.S. foreign policy to
promote the observance of human rights throughout the world.
V. Additional Conforming Amendments
This proposed rule would make conforming revisions to Sec. Sec.
736.2 to update the descriptions and applicability of the proposed new
Sec. 744.25 `Foreign-Security End User' controls and Sec. 744.6
revisions of U.S. Persons controls.
Request for Comments on This Proposed Rule
BIS seeks to provide the interested public with an opportunity to
submit comments in order to mitigate any unnecessary disruption to
supply chains, ensure that the controls are drafted to be as effective
as possible, and that the provisions of the controls are clear and
unambiguous for ease of compliance for exporters, reexporters, and
transferors. BIS continues to evaluate the scope of items subject to
this rule, the scope of the end users covered by this rule, and the
potential
[[Page 61002]]
for complementary controls, and welcomes comments on these issues.
In particular, BIS is soliciting public comment on the proposed
addition of Sec. 744.25 (Restrictions on certain human rights related
end uses and end users: foreign-security end users) and the proposed
revision to Sec. 744.6 (Restrictions on certain activities of U.S.
persons), as well as any other proposed revisions. Comments may be
submitted in accordance with the DATES and ADDRESSES sections above.
BIS will review and, if appropriate, address such comments through a
related rulemaking process.
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) (50 U.S.C. 4801-
4852). On December 23, 2022, the President signed into law the National
Defense Authorization Act for Fiscal Year 2023 (NDAA, Pub. L. 117-263)
section 5589(b) of which amended section 4812(a)(2)(F) of ECRA. ECRA
provides the legal basis for BIS's principal authorities and serves as
the authority under which BIS issues this proposed rule.
Rulemaking Requirements
1. This proposed rule has been designated a ``significant
regulatory action'' under Executive Order 12866, as amended by
Executive Order 14094.
2. Notwithstanding any other provision of law, no person is
required to respond to nor 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 regulation involves
collections previously approved by OMB under control number 0694-0088,
Simplified Network Application Processing System, which includes, among
other things, license applications and commodity classifications, and
carries a burden estimate of 29.4 minutes for a manual or electronic
submission for a total burden estimate of 33,133 hours. Total license
applications associated with the PRA and OMB control number 0694-0088
are expected to be fewer than 200 license applications as a result of
this rule. Therefore, the increase in burden hours will not exceed that
approved for OMB control number 0694-0088.
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. 4801-4852), this action is exempt from the
Administrative Procedure Act (5 U.S.C. 553) requirements for notice of
proposed rulemaking, opportunity for public participation, and delay in
effective date. Notwithstanding this exemption, BIS is providing the
public with an opportunity to comment on this proposed rule.
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 736
Exports.
15 CFR Parts 744 and 774
Exports, Reporting and recordkeeping requirements, Terrorism.
Accordingly, 15 CFR parts 736, 744, and 774 of the EAR (15 CFR
parts 730-774) is proposed to be amended as follows:
PART 736--GENERAL PROHIBITIONS
0
1. The authority citation for 15 CFR part 736 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. 13338, 69 FR 26751, 3 CFR, 2004 Comp.,
p. 168; Notice of November 8, 2022, 87 FR 68015 (November 10, 2022);
Notice of May 8, 2023, 88 FR 30211 (May 10, 2023).
0
2. Section 736.2 is amended by adding paragraph (b)(7)(i)(A)(6) to read
as follows:
Sec. 736.2 General prohibitions and determination of applicability.
* * * * *
(b) * * *
(7) * * *
(i) * * *
(A) * * *
(6) A `foreign-security end user' as defined in Sec. 744.25(f)
designated with a footnote 8 on the Entity List in supplement no. 4 of
part 744 of the EAR.
* * * * *
PART 744--CONTROL POLICY: END-USER AND END-USE BASED
0
3. The authority citation for 15 CFR part 744 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.; 22 U.S.C. 3201 et seq.; 42 U.S.C. 2139a; 22
U.S.C. 7201 et seq.; 22 U.S.C. 7210; E.O. 12058, 43 FR 20947, 3 CFR,
1978 Comp., p. 179; E.O. 12851, 58 FR 33181, 3 CFR, 1993 Comp., p.
608; E.O. 12938, 59 FR 59099, 3 CFR, 1994 Comp., p. 950; E.O. 13026,
61 FR 58767, 3 CFR, 1996 Comp., p. 228; E.O. 13099, 63 FR 45167, 3
CFR, 1998 Comp., p. 208; E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp.,
p. 783; E.O. 13224, 66 FR 49079, 3 CFR, 2001 Comp., p. 786; Notice
of September 7, 2023, 88 FR 62439 (September 11, 2023); Notice of
November 1, 2023, 88 FR 75475 (November 3, 2023).
0
4. Section 744.6 is amended by:
0
a. Adding paragraph (b)(8);
0
b. Revising paragraph (c)(1);
0
c. Redesignating paragraph (e)(3) as (e)(4) and adding new paragraph
(e)(3); and
0
d. Revising newly redesignated paragraphs (e)(4) introductory text,
(e)(4)(i), and (e)(4)(ii)(C).
The additions and revisions read as follows:
Sec. 744.6 Restrictions on specific activities of ``U.S. persons.''
* * * * *
(b) * * *
(8) A `foreign-security end user,' as defined in Sec. 744.25(f)
designated with a footnote 8 on the Entity List in supplement no. 4 of
part 744 of the EAR.
(c) * * *
(1) BIS may inform ``U.S. persons,'' either individually by
specific notice, through amendment to the EAR published in the Federal
Register, or through a separate notice published in the Federal
Register, that a license is required because an activity could involve
the types of `support' (as defined in paragraph (a)(1) of this section)
to the end uses or end users described in paragraph (b) of this
section. Specific notice is to be given only by, or at the direction
of, the Principal Deputy Assistant Secretary for Strategic Trade and
Technology Security or the Deputy Assistant Secretary for Strategic
Trade. When such notice is provided orally, it will be followed by a
written notice within two working days signed by the Principal Deputy
Assistant Secretary for Strategic Trade and Technology Security or the
Deputy Assistant Secretary for Strategic Trade or their designee.
However, the absence of any such notification does not excuse the
``U.S. person'' from compliance with the license
[[Page 61003]]
requirements of paragraph (b) of this section.
* * * * *
(e) * * *
(3) Applications for a ``U.S. person'' to `support' a `foreign-
security end user' will be reviewed consistent with the applicable
policies described in Sec. 744.25 of the EAR.
(4) In addition to any applicable license review standards in
paragraphs (e)(1) through (3), applications for licenses submitted
pursuant to the notice of a license requirement set forth in paragraph
(c)(2) of this section will be reviewed in accordance with the policies
described in this paragraph (e)(4). License review will take into
account factors including technology level, customers, compliance
plans, and contract sanctity.
(i) Presumption of denial. Applications will be reviewed with a
presumption of denial for Macau and destinations specified in Country
Group D:5 and E and entities headquartered or whose ultimate parent is
headquartered in Macau or destinations specified in Country Group D:5
and E, unless paragraph (e)(4)(ii) of this section applies.
(ii) * * *
(C) For all other applications not specified in paragraph (e)(4)(i)
or (e)(4)(ii)(A) or (B) of this section.
* * * * *
0
5. Section 744.11 is amended by revising and republishing paragraph
(a)(2) to read as follows:
Sec. 744.11 License requirements that apply to entities acting or at
significant risk of acting contrary to the national security or foreign
policy interests of the United States.
* * * * *
(a) * * *
(2) Entities designated with specific conditions identified by
footnote. With the exception of ``standards-related activities''
described in paragraph (a)(1) of this section, license requirements are
set forth for footnote designated entities as described in paragraphs
(a)(2)(i) through (vii) of this section.
(i) Footnote 1 entities. You may not, without a license or license
exception, reexport, export from abroad, or transfer (in-country) any
foreign-produced item subject to the EAR pursuant to Sec.
734.9(e)(1)(i) of the EAR when an entity designated with footnote 1 on
the Entity List in supplement. no. 4 to this part is a party to the
transaction. All license exceptions described in part 740 of the EAR
are available for foreign-produced items that are subject to this
license requirement if all terms and conditions of the applicable
license exception are met and the restrictions in Sec. 740.2 of this
EAR do not apply. The sophistication and capabilities of technology in
items is a factor in license application review; license applications
for foreign-produced items subject to a license requirement by this
paragraph (a)(2) that are capable of supporting the ``development'' or
``production'' of telecom systems, equipment, and devices below the 5G
level (e.g., 4G, 3G) will be reviewed on a case-by-case basis.
(ii) Footnote 3 entities. You may not export, reexport, or transfer
(in-country) any item subject to the EAR, including foreign-produced
items that are subject to the EAR under Sec. 734.9(g) of the EAR,
without a license from BIS if, at the time of the export, reexport, or
transfer (in-country), you have ``knowledge'' that the item is
intended, entirely or in part, for a Russian or Belarusian `military
end user,' as defined in Sec. 744.21(g), wherever located, that is
listed on the Entity List in supplement no. 4 to this part with a
footnote 3 designation. See Sec. 744.21 and part 746 of the EAR for
license review policy, and restrictions on license exceptions.
(iii) Footnote 4 entities. You may not, without a license,
reexport, export from abroad, or transfer (in-country) any foreign-
produced item subject to the EAR pursuant to Sec. 734.9(e)(2) of the
EAR when an entity designated with footnote 4 on the Entity List in
supp. no. 4 to this part is a party to the transaction, or that will be
used in the ``development'' or ``production'' of any ``part,''
``component,'' or ``equipment'' produced, purchased, or ordered by any
such entity. See Sec. 744.23 for additional license requirements that
may apply to these entities. The license review policy for foreign-
produced items subject to this license requirement is set forth in the
entry in supplement no. 4 to this part for each entity with a footnote
4 designation.
(iv) [Reserved]
(v) [Reserved]
(vi) [Reserved]
(vii) Footnote 8 entities. You may not export, reexport, or
transfer (in-country) any item on the CCL without a license from BIS
if, at the time of the export, reexport, or transfer (in-country), if
the item is intended, entirely or in part, for a `foreign-security end
user,' wherever located, that is listed on the Entity List in
supplement no. 4 to this part with a footnote 8 designation. See Sec.
744.25 of the EAR. See also Sec. 744.6(b)(8) for restrictions on
specific activities of ``U.S. persons'' related to such entities.
* * * * *
0
8. Add Sec. 744.25 to read as follows:
Sec. 744.25 Restrictions on certain human rights related end users:
foreign-security end users.
(a) General prohibition. In addition to the license requirements
for items on the Commerce Control List (CCL) in supplement no. 1 to
part 774 of the EAR, you may not export, reexport, or transfer (in-
country) without a license items subject to the EAR that are specified
on the CCL if, at the time of the export, reexport, or transfer (in-
country), you have ``knowledge'' that the item is intended, entirely or
in part for `foreign-security end users,' as this term is defined in
paragraph (f) of this section, of a country listed in Country Group D:5
or E.
(b) Additional prohibition on those informed by BIS. BIS may inform
persons, either individually by specific notice or through amendment to
the EAR, that a license is required for a specific export, reexport, or
transfer (in-country), or for the export, reexport, or transfer (in-
country) of any item subject to the EAR to a certain end user, because
there is an unacceptable risk of use in, or diversion to, the
activities specified in paragraph (a) of this section. Specific notice
is to be given only by, or at the direction of, the Principal Deputy
Assistant Secretary for Strategic Trade and Technology Security or the
Deputy Assistant Secretary for Strategic Trade. When such notice is
provided orally, it will be followed by a written notice within two
working days signed by the Principal Deputy Assistant Secretary for
Strategic Trade and Technology Security, the Deputy Assistant Secretary
for Strategic Trade, or their designee. However, the absence of any
such notification does not excuse persons from compliance with the
license requirements in paragraph (a) of this section.
(c) License exception. Notwithstanding the prohibitions described
in paragraphs (a) and (b) of this section, you may export, reexport, or
transfer (in-country) items subject to the EAR under the provisions of
License Exception GOV set forth in Sec. 740.11(b)(2) and (c)(2). No
other license exceptions are available.
(d) License application procedure. When submitting a license
application pursuant to this section, you must state in the
``additional information'' block of the application, ``this application
is submitted because of the license requirement in Sec. 744.25 of the
EAR.''
(e) License review policy. Applications to export, reexport, or
transfer (in-country) items requiring a license pursuant to paragraph
(a) or (b) of this section will be reviewed on a case-by-case basis to
determine whether
[[Page 61004]]
there is an unacceptable risk of use in human rights violations or
abuses. Applications for transactions that would pose such an
unacceptable risk will be reviewed with a presumption of denial.
Applications will also be reviewed consistent with United States arms
embargo policies in Sec. 126.1 of the ITAR (22 CFR 126.1).
(f) Definition. For the purposes of this section, references to
this section, or references to the terms in this paragraph, `foreign-
security end user' means any of the following:
(1) Governmental and other entities with the authority to arrest,
detain, monitor, search, or use force in furtherance of their official
duties, including persons or entities at all levels of the government
police and security services from the national headquarters or the
Ministry level, down to all subordinate agencies/bureaus (e.g.,
municipal, provincial, regional),
(2) Other persons or entities performing functions of a `foreign-
security end user,' such as arrest, detention, monitoring, or search,
and may include analytic and data centers (e.g., genomic data centers)
forensic laboratories, jails, prisons, other detention facilities,
labor camps, and reeducation facilities, or
(3) Entities designated with a footnote 8 on the Entity List in
supplement no. 4 to this part.
Note 1 to paragraph (f): This definition does not include
civilian emergency medical, firefighting, and search-and-rescue end
users. In situations in which a country integrates police, emergency
medical, firefighting, and search-and-rescue services into a single
public safety department, BIS seeks to ensure that the export,
reexport, or transfer (in-country) of items necessary to protect
lives is not disrupted and will apply a case-by-case review.
Note 2 to paragraph (f): If the end user also satisfies the
definition of `Military end user' in Sec. 744.21, then the control
in Sec. 744.21 applies (e.g., if the national police is integrated
into or organized under the military of a country listed in country
group D:5 or E, the control in Sec. 744.21 applies.)
PART 774--THE COMMERCE CONTROL LIST
0
9. The authority citation for part 774 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.; 10 U.S.C. 8720; 10 U.S.C. 8730(e); 22 U.S.C.
287c, 22 U.S.C. 3201 et seq.; 22 U.S.C. 6004; 42 U.S.C. 2139a; 15
U.S.C. 1824; 50 U.S.C. 4305; 22 U.S.C. 7201 et seq.; 22 U.S.C. 7210;
E.O. 13026, 61 FR 58767, 3 CFR, 1996 Comp., p. 228; E.O. 13222, 66
FR 44025, 3 CFR, 2001 Comp., p. 783.
0
10. Supplement No. 1 to Part 774 is amended under Category 3 by
revising ECCNs 3A981 and 3D980 to read as follows:
Supplement No. 1 to Part 774--The Commerce Control List
* * * * *
3A981 Polygraphs (except biomedical recorders designed for use in
medical facilities for monitoring biological and neurophysical
responses); fingerprint analyzers, cameras and equipment, n.e.s.;
automated fingerprint and identification retrieval systems, n.e.s.;
psychological stress analysis equipment; electronic monitoring
restraint devices; facial recognition systems; and ``specially
designed'' ``components'' and ``accessories'' therefor, n.e.s.
License Requirements
Reason for Control: CC
Country chart (see Supp.
Control(s) No. 1 to part 738)
CC applies to entire entry................ CC Column 1
List Based License Exceptions (See Part 740 for a Description of All
License Exceptions)
LVS: N/A
GBS: N/A
List of Items Controlled
Related Controls: See ECCN 0A982 for other types of restraint
devices
Related Definitions: N/A
Items: The list of items controlled is contained in the ECCN
heading.
Note 1 to ECCN 3A981. In this ECCN, electronic monitoring
restraint devices are devices used to record or report the location
of confined persons for law enforcement or penal reasons. The term
does not include devices that confine memory impaired patents to
appropriate medical facilities.
Note 2 to ECCN 3A981. Item 3A981 does not control detection or
authentication items versus identification items, nor items that
facilitate individual access to personal devices or facilities.
* * * * *
3D980 ``Software'' ``specially designed'' for any of the following
(see List of Items Controlled).
License Requirements
Reason for Control: CC, AT
Country chart (see Supp.
Control(s) No. 1 to part 738)
CC applies to entire entry................ CC Column 1
AT applies to entire entry................ AT Column 1
List Based License Exceptions (See Part 740 for a Description of All
License Exceptions)
TSR: N/A
List of Items Controlled
Related Controls: N/A
Related Definitions: N/A
Items:
a. Software ``specially designed'' for the ``development,''
``production'' or ``use'' of commodities controlled by 3A980 and
3A981,
b. Software ``specially designed'' for the analysis and matching
of voice, fingerprints, or facial features for facial recognition.
This entry does not control software solely for person or object
detection or for individual authentication to facilitate individual
access to personal devices or facilities.
* * * * *
Thea D. Rozman Kendler,
Assistant Secretary for Export Administration.
[FR Doc. 2024-16498 Filed 7-25-24; 8:45 am]
BILLING CODE 3510-33-P
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