Rule2024-19132
Implementation of Additional Sanctions Against Russia and Belarus Under the Export Administration Regulations (EAR); and Corrections
Primary source
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Published
August 27, 2024
Effective
August 27, 2024
Issuing agencies
Commerce DepartmentIndustry and Security Bureau
Abstract
In this final rule, the Bureau of Industry and Security (BIS) makes changes to the Russian and Belarusian sanctions under the Export Administration Regulations (EAR). This final rule expands the scope of the Russia/Belarus-Military End User (MEU) Foreign-Direct Product (FDP) rule, and renames it accordingly, so that the rule will also apply to transactions involving entities on the Entity List that pose a significant risk of involvement in the supply or diversion of items subject to the EAR to procurement networks for Russia's and Belarus's defense industry or intelligence services. This final rule also adds controls on the export, reexport, or transfer (in-country) to or within Russia or Belarus of "software" for the operation of computer numerical control (CNC) machine tools. In addition, this final rule makes corrections and clarifications to certain aspects of the EAR's Russia and Belarus sanctions.
Full Text
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<title>Federal Register, Volume 89 Issue 166 (Tuesday, August 27, 2024)</title>
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[Federal Register Volume 89, Number 166 (Tuesday, August 27, 2024)]
[Rules and Regulations]
[Pages 68539-68544]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-19132]
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DEPARTMENT OF COMMERCE
Bureau of Industry and Security
15 CFR Parts 734, 740, 744, and 746
[Docket No. 240820-0220]
RIN 0694-AJ78
Implementation of Additional Sanctions Against Russia and Belarus
Under the Export Administration Regulations (EAR); and Corrections
AGENCY: Bureau of Industry and Security, Department of Commerce.
ACTION: Final rule.
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SUMMARY: In this final rule, the Bureau of Industry and Security (BIS)
makes changes to the Russian and Belarusian sanctions under the Export
Administration Regulations (EAR). This final rule expands the scope of
the Russia/Belarus-Military End User (MEU) Foreign-Direct Product (FDP)
rule, and renames it accordingly, so that the rule will also apply to
transactions involving entities on the Entity List that pose a
significant risk of involvement in the supply or diversion of items
subject to the EAR to procurement networks for Russia's and Belarus's
defense industry or intelligence services. This final rule also adds
controls on the export, reexport, or transfer (in-country) to or within
Russia or Belarus of ``software'' for the operation of computer
numerical control (CNC) machine tools. In addition, this final rule
makes corrections and clarifications to certain aspects of the EAR's
Russia and Belarus sanctions.
DATES: This rule is effective August 27, 2024 except for amendatory
instruction 11, which is effective September 16, 2024.
FOR FURTHER INFORMATION CONTACT:
For general questions on this final rule, contact Collmann Griffin,
Senior Policy Advisor, International Policy Office, Bureau of Industry
and Security, Department of Commerce, Phone: 202-482-1430, Email:
<a href="/cdn-cgi/l/email-protection#9becf2f7f7f2faf6b5fce9f2fdfdf2f5dbf9f2e8b5fff4f8b5fcf4ed"><span class="__cf_email__" data-cfemail="2e59474242474f4300495c47484847406e4c475d004a414d00494158">[email protected]</span></a>.
For questions on the Entity List changes in this final rule,
contact Chair, End-User Review Committee, Office of the Assistant
Secretary for Export Administration, Bureau of Industry and Security,
Department of Commerce, Phone: (202) 482-5991, Email: <a href="/cdn-cgi/l/email-protection#01445342416368722f656e622f666e77"><span class="__cf_email__" data-cfemail="185d4a5b587a716b367c777b367f776e">[email protected]</span></a>.
For emails, include ``Russia and Belarus, August 2024 export control
measures'' in the subject line.
SUPPLEMENTARY INFORMATION:
I. Background
A. Export Controls Implemented Against Russia and Belarus
In response to Russia's February 2022 full-scale invasion of
Ukraine, BIS imposed extensive sanctions on Russia under the EAR as
part of the final rule, ``Implementation of Sanctions Against Russia
Under the Export Administration Regulations (EAR)'' (``Russia Sanctions
Rule'') (87 FR 12226, March 3, 2022). To address Belarus's complicity
in the invasion, BIS imposed similar sanctions on Belarus under the EAR
in a final rule, ``Implementation of Sanctions Against Belarus''
(``Belarus Sanctions Rule'') (87 FR 13048, March 6, 2022). Since March
2022, BIS has published numerous final rules strengthening the export
controls on Russia and Belarus, including measures undertaken in
coordination with U.S. allies and partners.
B. Overview of This Final Rule
BIS is amending the EAR (15 CFR parts 730 through 774) to
strengthen export controls against Russia and Belarus by targeting
entities that pose a risk of supplying items to the Russian and
Belarusian defense industry or intelligence services by making them
subject to foreign direct product rule-related restrictions. This final
rule also imposes licensing requirements on certain operation
``software'' designated as EAR99 that is destined for Russia or Belarus
and corrects or clarifies certain Russia and/or Belarus export controls
that were added to the EAR by rules issued earlier this year. The three
sets of changes this final rule makes are described in section II as
follows:
A. Expansion of FDP rule to apply to Russia and Belarus Procurement
Entities;
B. Addition of License Requirements for Operation ``Software'' for
Machine Tools; and
C. Corrections and clarifications to the EAR's Russia and Belarus
controls that are related to a January 2024 Final Rule and a June 2024
Final Rule.
II. Amendments to the EAR
A. Expansion of FDP Rule To Apply to Russia and Belarus Procurement
Entities
The EAR's jurisdiction extends to certain foreign-made items that
meet the criteria under one of the FDP rules under Sec. 734.9 that are
the ``direct product'' of certain ``technology'' or ``software'' or
produced by a complete plant or `major component' of a plant that
itself is a ``direct product'' of certain ``technology'' or
``software.'' Each FDP rule also includes a product scope, and certain
FDP rules include an end-user or end-use scope. Among these different
FDP rules, there are two that are specific to Russia and Belarus that
were added to the EAR to address Russia's full-scale invasion of
Ukraine: (1) the FDP rule under Sec. 734.9(f) (Russia/Belarus/
Temporarily occupied Crimea region of Ukraine FDP rule); and (2) the
FDP rule under Sec. 734.9(g) (Russia/Belarus-Military End User FDP
rule). The Russia/Belarus/Temporarily occupied Crimea region of Ukraine
FDP rule applies to the destinations of Russia/Belarus/Temporarily
occupied Crimea region of Ukraine, and the Russia/Belarus-Military End
User FDP rule has a broader product scope that is specific to Russian
and Belarusian Military End Users, wherever located. As described in
this section II.A, this final rule expands the scope of the Russia/
Belarus-Military End User FDP Rule to further address the national
security and foreign policy concerns due to the significant risk of
procurement entities (as described below) supplying items to the
Russian and Belarusian defense industry or intelligence services.
Specifically, this final rule is modifying the name of the Russia/
Belarus-Military End User FDP rule in Sec. 734.9(g) to the ``Russia/
Belarus-Military End User and Procurement FDP rule,'' so that the rule,
as renamed, applies to both Russian and Belarusian military end users
as defined in Sec. 744.21 of the EAR, as well as to a second, new
category of entities under the EAR: Russian or Belarusian Procurement
Entities (i.e., an entity that poses a significant risk of involvement
in the supply or diversion of items subject to the EAR to procurement
networks for Russia's or Belarus's defense industry or intelligence
services) (as described below). Such Russian or Belarusian Procurement
Entities are entities placed on the Entity List under Sec. 744.11 of
the EAR and that pose a significant risk of involvement in the supply
or diversion of items subject to the EAR to procurement networks for
Russia's or Belarus's defense industry or intelligence services.
Entities affected by the Russia/Belarus-Military End User and
Procurement FDP rule will continue to be identified with footnote 3 on
the Entity List in supplement no. 4 to part 744. The standard for a
footnote 3 designation, as revised and expanded to refer to Russian or
Belarusian Procurement entities, is described in note 3 to paragraph
(g) in Sec. 734.9. All footnote 3 designated entities will be
[[Page 68540]]
subject to the (now renamed) Russia/Belarus-Military End User and
Procurement FDP rule set forth in Sec. 734.9(g), along with the
license requirements set forth in Sec. 746.8(a)(3) of the EAR.
The creation of this new category of Russian and Belarusian
Procurement Entities addresses the continuing efforts of Russia and
Belarus to obtain items needed to support Russia's war against Ukraine.
As the U.S. and its partners and allies have steadily expanded the
scope of export controls against Russia and Belarus since Russia's
unprovoked full-scale invasion of Ukraine in February 2022, Russia and
Belarus have in turn developed extensive procurement networks to obtain
restricted items from third countries. These procurement networks have
been used to funnel controlled items, including those described on the
Common High Priority List (see <a href="https://www.bis.doc.gov/index.php/all-articles/13-policy-guidance/country-guidance/2172-russia-export-controls-list-of-common-high-priority-items">https://www.bis.doc.gov/index.php/all-articles/13-policy-guidance/country-guidance/2172-russia-export-controls-list-of-common-high-priority-items</a>), and including
microelectronics and other items that have been recovered from Russian
weapons systems found on the battlefield in Ukraine, to Russia's
defense industrial base. Due to the elongated nature of these supply
chains, entities involved in this procurement may be multiple steps
removed from military production, even as they supply items critical to
Russia's war effort. This has been especially true as Russia and
Belarus have shifted their economies to a wartime footing, converting
large sectors of their industry to support the production of weapons
systems and other items needed by the military. As a result, many of
the items (including foreign-produced items that may be U.S.-branded)
that are sought out by these procurement networks (e.g., the kinds of
items described in Sec. 744.21(f) of the EAR) are likely destined for
military end uses in Russia or Belarus, or to intelligence services in
furtherance of Russia's war. It is possible that third-country
intermediaries may not have actual knowledge of the intended end use of
the items they are providing to Russia or Belarus. This rule will
enable the United States to more aggressively target such
intermediaries and other procurement entities that are not directly
involved in supplying the Russian or Belarusian defense industry or
intelligence services, but that obtain items that ultimately support
military production or use by intelligence services. For example, as a
result of the change made by this rule, an entity in a third country
that sends U.S.-branded electronic ``components'' produced outside the
United States to a Russian trading company with a record of supplying
the Russian defense industry or intelligence services may qualify as a
Russian or Belarusian Procurement Entity. This set of FDP-related
restrictions under the EAR would limit this entity's ability to
continue to obtain the U.S.-branded electronic components that are of
concern, including certain foreign-made items, and cut off the support
such entity is providing to Russian or Belarusian defense industry or
intelligence services. Prior to this, this procurement entity would
have had to have been a `military end user' as defined in Sec.
744.21(g) in order to be subject to the FDP-related restrictions on
foreign-made items. To implement this more expansive FDP rule, this
rule revises note 3 to paragraph (g) in Sec. 734.9 to establish a
standard pursuant to which the End User Review Committee (ERC) may
designate an entity as a footnote 3 entity if the ERC determines that
the entity is a Russian or Belarusian MEU, as defined in Sec. 744.21
of the EAR, or a Russian or Belarusian Procurement Entity. The rule
also makes corresponding changes to the headings to paragraphs (g)(1)
and (2) in Sec. 734.9. The ERC, composed of representatives of the
Departments of Commerce (Chair), State, Defense, Energy, and, where
appropriate, the Treasury, makes all decisions regarding additions to,
removals from, or other modifications to the Entity List. The ERC makes
all decisions to add an entry to the Entity List by majority vote and
makes all decisions to remove or modify an entry by unanimous vote.
Along with the amendments to Sec. 734.9, BIS in this final rule is
amending Sec. 744.11 of the EAR to clarify that FDP license
requirements relating to footnote 3 are described in Sec. 746.8 of the
EAR. In Sec. 744.11 under paragraph (a)(2), the EAR specifies the FDP
license requirements associated with footnotes 1 and 4. In this rule, a
reference to footnote 3 is added to ensure that reexporters and
transferors understand where to find these license requirements. As a
conforming change, BIS amends the numbering and organization of the
paragraphs under Sec. 744.11(a)(2), so the footnotes associated with
the Entity List are specified and described in numerical order.
Consistent with these structural changes, paragraph (a)(2)(ii) under
Sec. 744.11 is removed and reserved, and new paragraphs (a)(2)(iii)
and (iv) under Sec. 744.11 are added for footnote 3 and footnote 4,
respectively.
Restrictions on certain military end uses and military end users
are located in Sec. 744.21. BIS is making a conforming change to Sec.
744.21 of the EAR to clarify that only footnote 3 entities meeting the
MEU definition on the Entity List will cross-reference Sec. 744.21,
but footnote 3 entities meeting the procurement-related standard will
not cross-reference Sec. 744.21. As a result, Sec. 744.21(a)(2) and
(b)(1) are revised to reflect that MEUs placed on the Entity List will
be identified with a footnote 3 designation and a reference to Sec.
744.21.
In supplement no. 4 to part 744--Entity List, this final rule makes
conforming changes to footnotes 3 and 4. A reference to Sec. 744.11 is
added to footnote 3 to parallel the addition of the footnote 3
description in Sec. 744.11(a)(2)(iii) in this final rule, and the
paragraphs are reorganized to be in numerical order. With the
reorganization of the footnote descriptions under Sec. 744.11(a)(2) in
this final rule, footnote 4 is updated by removing the reference to it
in paragraph (a)(2)(ii) and adding that reference to paragraph
(a)(2)(iv), the location of the description of footnote 4.
In Sec. 746.8 (Sanctions against Russia and Belarus), a conforming
change is made to Sec. 746.8(a)(3), which describes the Russian and
Belarusian Military End User FDP rule. This FDP rule is being renamed
consistent with the changes made by this final rule as the ``Russian
and Belarusian Military End User and Procurement FDP rule''. This final
rule also amends Sec. 746.8(a)(3) to add a reference to procurement
entities for Russia's defense industry or intelligence services. Note 1
to paragraph (a)(3), which had identified MEUs on the Entity List as
having a footnote 3 designation, is removed consistent with the changes
made by this rule so that footnote 3 designations may be applied to
Russian and Belarusian MEUs or to Russian or Belarusian Procurement
Entities. The relevant description of a footnote 3 designation is now
located in note 3 to paragraph (g) in Sec. 734.9.
BIS estimates these changes described in section II.A will result
in an additional fifteen license applications submitted to BIS
annually.
B. Imposition of License Requirements for Operation ``Software'' for
Machine Tools
With this final rule, BIS is amending the license requirements that
apply to ``software'' designated as EAR99 (EAR99 ``software'') in Sec.
746.8(a)(8) of the EAR. Specifically, BIS is adding controls on EAR99
``software'' for the operation of computer numerical control (CNC)
machine tools (i.e., operation
[[Page 68541]]
``software'') to ensure that CNC machine tools that are already
restricted for export, reexport, and transfer to or within Russia and
Belarus under the EAR cannot receive ``software'' updates. While Sec.
746.8 already restricts ``software'' used to design industrial
``parts'' and ``components'' and convert them into machine-readable
instructions, this expansion in controls targets operation ``software''
embedded in CNC machine tools that allows them to carry out these
instructions to produce the finished industrial ``parts'' and
``components,'' including:
<bullet> ``Software'' that provides a user interface for setting
up, operating, and troubleshooting the machine tool;
<bullet> ``Software'' that translates the instructions produced by
computer-aided manufacturing (CAM) software into physical actions by
the machine tool;
<bullet> ``Software'' that monitors conditions during the machining
process; and
<bullet> ``Software'' that automatically adjusts the machine tool's
settings based on real-time conditions.
Much of this ``software'' is typically installed within the machine
tool itself, and software updates are often purchased and loaded after
the fact. Machine tools currently operating in Russia and Belarus are
likely to already have some version of this ``software'' pre-installed.
However, it is not uncommon for the companies that produce CNC machine
tools to offer ``software'' updates for existing tools which can
improve performance by modernizing the ``software'' installed in older
tools, or fix ``software'' defects that came to light after the
original machine was shipped. Controlling Russian and Belarusian access
to these ``software'' updates will limit the utility of these machine
tools. As with other EAR99 ``software'' that is otherwise restricted
from export, reexport, and transfer (in country) to or within Russia
and/or Belarus, there will be an exclusion for EAR99 operation software
destined for companies exclusively operating in either of the two
countries' agricultural or medical industries (see 89 FR 51644, June
18, 2024; adding 15 CFR 746.8(a)(12)(iv)).
This amendment has a delayed effective date of September 16, 2024,
consistent with the effective date of other controls on EAR99
``software'' that were added in the June 18, 2024 Final Rule.
BIS estimates these changes described in section II.A will result
in an additional twenty license applications submitted to BIS annually.
C. Corrections and Clarifications
On January 25, 2024, BIS published the final rule, ``Implementation
of Additional Sanctions Against Russia and Belarus Under the Export
Administration Regulations (EAR) and Refinements to Existing Controls''
(89 FR 4804) (January 2024 Final Rule) and on June 18, 2024 the final
rule, ``Implementation of Additional Sanctions Against Russia and
Belarus Under the Export Administration Regulations (EAR) and
Refinements to Existing Controls'' (89 FR 51644) (June 2024 Final
Rule). This final rule corrects inadvertent errors introduced by those
two final rules and eliminates obsolete cross references. BIS estimates
that these changes, as described in section II.C.1 through .3, will
result in a reduction of five license applications submitted to BIS
annually because of the restoration of the availability of certain
license exceptions that had been inadvertently rendered unavailable.
1. Correction to License Exception MED To Update the Cross Reference to
the License Requirements That May Be Overcome
In Sec. 740.23 (Medical Devices (MED)), this final rule corrects
the cross reference to the license requirements that this license
exception may overcome. This correction addresses an inadvertent error
made by the June 2024 Final Rule that consolidated various Russia and
Belarus-related sanctions into an expanded Sec. 746.8. Specifically,
this final rule replaces outdated references to Sec. Sec. 746.5 and
746.10 in the last sentence of paragraph (a) introductory text in Sec.
740.23 with a cross reference to paragraphs (a)(5) through (8) of Sec.
746.8 of the EAR, which is where the applicable license requirements
are now located following the consolidation made by the June 2024 Final
Rule.
2. Correction to Amendatory Instruction for Software Controls in the
June 2024 Final Rule
This final rule also corrects an error inadvertently introduced by
an incorrect amendatory instruction in the June 2024 Final Rule.
Specifically, amendatory instruction 14a. erroneously omitted the term
``revising.'' By making this correction, the new text from this
instruction for Sec. 746.8(a) will be incorporated as intended in the
CFR. This error is corrected in instruction 11 of this final rule.
Consistent with the June 2024 Final Rule, this correction has a delayed
effective date of September 16, 2024.
3. Corrections Involving License Exception Eligibility in Sec.
746.8(c)(2)
In this final rule, BIS issues a correction to text erroneously
added by the June 2024 Final Rule that had inadvertently restricted the
availability of certain license exceptions for exports, reexports, or
transfer (in-country) to or within Russia and Belarus. This correction
is made by removing limiting text in paragraphs (c)(2)(i) to (viii) in
Sec. 746.8 to correct inconsistencies regarding license exception
availability in connection with the Russia controls in Sec. Sec.
746.5, 746.8, and 746.10 of the EAR.
In the preamble of the January 2024 Final Rule, BIS explained that
it was harmonizing license exceptions across Sec. Sec. 746.5, 746.8,
and 746.10 by adding eligibility for several license exceptions or
portions of license exceptions that were previously excluded under
certain sections of the Russian and Belarus sanctions. However, in
certain cases a restriction in the introductory text to paragraph (c)
in Sec. Sec. 746.5, 746.8, and 746.10 was inadvertently retained,
thereby resulting in inconsistent limits on the availability of certain
license exceptions or portions of those license exceptions. Those
limits were subsequently carried over to the revised Sec. 746.8 by the
June 2024 Final Rule. BIS is now removing that text from paragraphs
(c)(2)(i) to (viii) in Sec. 746.8 as included in the June 2024 Final
Rule to reflect the original intent of the January 2024 Final Rule to
change the EAR such that the regulatory text specifies the correct
limits on license exception availability.
The removal of this limitation does not change the fact that in
order to use any EAR license exception, the export, reexport, or
transfer (in-country) must not be otherwise restricted under Sec.
740.2, must meet all of the applicable terms and conditions of the
referenced license exception, and must also be consistent with Sec.
746.8(c), which excludes the use of all EAR license exceptions, except
for those license exceptions or portions of license exceptions
specifically identified in Sec. 746.8(c).
To implement these changes in Sec. 746.8, this final rule corrects
paragraph (c)(1) to remove the restriction on the use of license
exceptions for the license requirements in paragraph (a)(8) of that
section. Consistent with the intent of the June 2024 Final Rule, this
final rule removes the reference to paragraph (a)(8) regarding the
availability of license exceptions from paragraph (c)(1) and adds that
reference to paragraph (c)(2).
[[Page 68542]]
BIS has also determined that apart from the introductory text of
paragraph (c)(2), specifying the applicable license requirements in
each paragraph under (c)(2)(i) through (viii) creates unnecessary
complexity and confusion. The other restrictions specified in these
paragraphs, the terms and conditions of the referenced license
exceptions or portions of license exceptions referenced in paragraphs
(c)(2)(i) through (viii), and the general restrictions on the use of
license exceptions under Sec. 740.2, are sufficient to allow limited
exports, reexports, and transfers (in-country) to or within Russia and
Belarus that are consistent with U.S. national security and foreign
policy interests. For these reasons, BIS makes these changes to Sec.
746.8(c)(1) and (2) to position the reference to paragraph (a)(8) in
the paragraph (c)(2) and to simplify the structure of paragraph (c)(2).
These changes should facilitate understanding of these provisions while
also aligning the regulatory text with the intent of the January 2024
Final Rule.
Savings Clause
For the changes being made in this final rule, 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 August 27, 2024,
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 September 26, 2024.
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.
Rulemaking Requirements
1. BIS has examined the impact of this rule as required by
Executive Orders (E.O.) 12866, 13563, and 14094, which direct agencies
to assess all costs and benefits of available regulatory alternatives
and, if regulation is necessary, to select regulatory approaches that
maximize net benefits (e.g., potential economic, environmental, public,
health, and safety effects, distributive impacts, and equity). Pursuant
to E.O. 12866, as amended, this final rule has not been determined to
be a ``significant regulatory action.''
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, ``Simple Network Application Process and
Multipurpose Application Form,'' 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 Russia and Belarus under
the EAR will result in an increase of thirty 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 under E.O. 13132.
4. Pursuant to section 1762 of ECRA (50 U.S.C. 4821), 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 neither the Administrative Procedure Act nor any other
law requires that notice of proposed rulemaking and an opportunity for
public comment be given for this rule, the analytical requirements of
the Regulatory Flexibility Act (5 U.S.C. 601 et seq.) are not
applicable. Accordingly, no Final 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 740
Administrative practice and procedure, Exports, Reporting and
recordkeeping requirements.
15 CFR Part 744
Exports, Reporting and recordkeeping requirements, Terrorism.
15 CFR Part 746
Exports, Reporting and recordkeeping requirements.
Accordingly, parts 734, 740, 744, and 746 of the Export
Administration Regulations (15 CFR parts 730 through 774) are revised
to read 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 1, 2023, 88 FR 75475 (November 3, 2023).
0
2. Section 734.9 is amended by revising the headings of paragraphs (g),
(g)(1), and (g)(2), and revising the note to paragraph (g), to read as
follows:
Sec. 734.9 Foreign-Direct Product (FDP) Rules.
* * * * *
(g) Russia/Belarus-Military End User and Procurement FDP rule. * *
*
(1) Product Scope of Russia/Belarus-Military End User and
Procurement FDP rule. * * *
* * * * *
(2) End-user scope of the Russia/Belarus-Military End User and
Procurement FDP rule. * * *
* * * * *
[[Page 68543]]
Note 3 to paragraph (g). Footnote 3 may be added to an entity that
the End User Review Committee has determined to be either a Russian or
Belarusian `military end user' as defined in Sec. 744.21 of the EAR,
or a Russian or Belarusian Procurement Entity that poses a significant
risk of involvement in the supply or diversion of items subject to the
EAR to procurement networks for Russia's or Belarus's defense industry
or intelligence services.
* * * * *
PART 740--LICENSE EXCEPTIONS
0
3. The authority citation for 15 CFR part 740 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. 7201 et seq.; E.O. 13026, 61 FR
58767, 3 CFR, 1996 Comp., p. 228; E.O. 13222, 66 FR 44025, 3 CFR,
2001 Comp., p. 783.
0
4. Section 740.23 is amended by revising the second to last sentence of
paragraph (a) introductory text to read as follows:
Sec. 740.23 Medical Devices (MED).
* * * * *
(a) * * * This license exception authorizes transactions involving
items designated as EAR99 that would otherwise require a license
pursuant to Sec. 746.6 or paragraphs (a)(5) through (8) of Sec. 746.8
of the EAR, subject to the terms and conditions described in this
section. * * *
* * * * *
PART 744--CONTROL POLICY: END-USER AND END-USE BASED
0
5. 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
6. Amend Sec. 744.11 by removing and reserving paragraph (a)(2)(ii)
and adding paragraphs (a)(2)(iii) and (a)(2)(iv) 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) * * *
(iii) Footnote 3 entities. License requirements for foreign-
produced items involving entities marked with footnote 3 are described
in Sec. 746.8(a)(3). The license review policy is set forth in the
entry in supplement no. 4 to this part for each entity with a footnote
3 designation.
(iv) 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.
* * * * *
0
7. Section 744.21 is amended by revising the last sentence of paragraph
(a)(2) and the third and sixth sentences of the introductory text of
paragraph (b)(1) to read as follows:
Sec. 744.21 Restrictions on certain 'military end uses' or 'military
end users'.
(a) * * *
(2) * * * Belarusian or Russian `military end users' located
outside of Belarus or Russia are limited to entities identified on the
Entity List under supplement no. 4 to this part with a footnote 3
designation and a reference to this section.
* * * * *
(b) * * *
(1) * * * Such Belarusian or Russian `military end users' may also
be added to supplement no. 4 to this part (Entity List) and will be
listed with a footnote 3 designation and a reference to this section. *
* * As specified in paragraphs (a)(1) and (2) of this section,
`military end users' of a country identified in this section not
located in that same country are exhaustively listed on either the
Entity List with a footnote 3 designation and a reference to this
section, or on the MEU List under supplement no. 7 this part. * * *
* * * * *
0
8. Supplement no. 4 to part 744 is amended by revising footnotes 3 and
4 to read as follows:
Supplement No. 4 to Part 744--Entity List
* * * * *
\3\ For this entity, ``items subject to the EAR'' includes foreign-
produced items that are subject to the EAR under Sec. 734.9(g) of the
EAR. See Sec. Sec. 744.11, 744.21, and 746.8 of the EAR for related
license requirements, license review policy, and restrictions on
license exceptions.
\4\ For this entity, ``items subject to the EAR'' includes foreign-
produced items that are subject to the EAR under Sec. 734.9(e)(2) of
the EAR. See Sec. 744.11(a)(2)(iv) for related license requirements
and license review policy.
* * * * *
PART 746--EMBARGOES and OTHER SPECIAL CONTROLS
0
9. The authority citation for 15 CFR part 746 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. 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 8, 2024, 89 FR
40355 (May 9, 2024).
0
10. In Sec. 746.8 amend paragraph (a)(3) by:
0
a. Revising the paragraph heading; and
0
b. Removing note 1 to paragraph (a)(3).
The revision reads as follows:
Sec. 746.8 Sanctions against Russia and Belarus.
(a) * * *
(3) Russia/Belarus-Military End User and Procurement FDP rule. * *
*
* * * * *
0
11. Effective September 16, 2024, amend Sec. 746.8 by:
0
a. Revising the first and last sentences of the introductory text of
paragraph (a), and paragraphs (a)(8)(ii); (c)(1) and (2) to read as
follows:
Sec. 746.8 Sanctions against Russia and Belarus.
(a) License requirements. Except as described in the exclusions in
paragraph (a)(12), and in addition to license requirements specified on
the
[[Page 68544]]
Commerce Control List (CCL) in supplement no. 1 to part 774 of the EAR
and in other provisions of the EAR, including part 744 and other
sections of part 746, a license is required as specified under
paragraphs (a)(1) through (8) of this section. * * * License
requirements in paragraph (a)(4) of this section that apply to exports,
reexports, and transfers (in-country) involved in certain end uses
should be reviewed only after license requirements in paragraphs (a)(1)
through (3) and (5) through (8) of this section are reviewed.
* * * * *
(8) * * *
(ii) The following types of software subject to the EAR are in the
scope of paragraph (a)(8): Enterprise resource planning (ERP); customer
relationship management (CRM); business intelligence (BI); supply chain
management (SCM); enterprise data warehouse (EDW); computerized
maintenance management system (CMMS); project management software,
product lifecycle management (PLM); building information modelling
(BIM); computer aided design (CAD); computer-aided manufacturing (CAM);
engineering to order (ETO); and software for the operation of computer
numerical control (CNC) machine tools. The scope of paragraph (a)(8)
also includes software updates for software identified in this
paragraph that are subject to the EAR and designated as EAR99.
* * * * *
(c) * * *
(1) No license exceptions may overcome the license requirements in
paragraph (a)(3) of this section, except as specified in the entry for
a Footnote 3 entity on the Entity List in supplement no. 4 to part 744
of the EAR.
(2) No license exceptions may overcome the license requirements in
paragraphs (a)(1), (2), and (4) through (8) of this section except the
following:
(i) License Exception TMP for items for use by the news media as
set forth in Sec. 740.9(a)(9) of the EAR.
(ii) License Exception GOV (Sec. 740.11(b) of the EAR).
(iii) License Exception TSU for software updates for civil end-
users that are wholly-owned U.S. subsidiaries, branches, or sales
offices; foreign subsidiaries, branches, or sales offices of U.S.
companies that are joint ventures with other U.S. companies; joint
ventures of U.S. companies with companies headquartered in countries
from Country Group A:5 and A:6 in supplement no. 1 to part 740 of the
EAR countries; the wholly-owned subsidiaries, branches, or sales
offices of companies headquartered in countries from Country Group A:5
and A:6 in supplement no. 1 to part 740; or joint ventures of companies
headquartered in Country Group A:5 and A:6 with other companies
headquartered in Country Groups A:5 and A:6 (Sec. 740.13(c) of the
EAR).
(iv) License Exception BAG, excluding firearms and ammunition
(Sec. 740.14, excluding paragraph (e), of the EAR).
(v) License Exception AVS, excluding any aircraft registered in,
owned or controlled by, or under charter or lease by Russia or Belarus
or a national of Russia or Belarus (Sec. 740.15(a) and (b) of the
EAR).
(vi) License Exception encryption commodities, software, and
technology (ENC) for civil end-users that are wholly-owned U.S.
subsidiaries, branches, or sales offices; foreign subsidiaries,
branches, or sales offices of U.S. companies that are joint ventures
with other U.S. companies; joint ventures of U.S. companies with
companies headquartered in countries from Country Group A:5 and A:6 in
supplement no. 1 to part 740 of the EAR countries; the wholly-owned
subsidiaries, branches, or sales offices of companies headquartered in
countries from Country Group A:5 and A:6 in supplement no. 1 to part
740; or joint ventures of companies headquartered in Country Group A:5
and A:6 with other companies headquartered in Country Groups A:5 and
A:6 (Sec. Sec. 740.13(c) and 740.17 of the EAR).
(vii) License Exception CCD (Sec. 740.19 of the EAR).
(viii) License Exception MED (Sec. 740.23 of the EAR).
* * * * *
Thea D. Rozman Kendler,
Assistant Secretary for Export Administration.
[FR Doc. 2024-19132 Filed 8-23-24; 8:45 am]
BILLING CODE 3510-JT-P
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