January 1, 2007 CODE OF FEDERAL REGULATIONS 15 Parts 300 to 799 Revised as of January 1, 2007 Commerce and Foreign Trade Containing a codification of documents of general applicability and future effect As of January 1, 2007 With Ancillaries

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 Table of Contents Page Explanation v Title 15: Subtitle B—Regulations Relating to Commerce and Foreign Trade (Continued) Chapter III—International Trade Administration, Department of Commerce 5 Chapter IV—Foreign-Trade Zones Board, Department of Commerce 59 Chapter VII—Bureau of Industry and Security, Department of Commerce 79 Finding Aids: Table of CFR Titles and Chapters 785 Alphabetical List of Agencies Appearing in the CFR 803 List of CFR Sections Affected 813

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The Code of Federal Regulations is a codification of the general and permanent rules published in the Federal Register by the Executive departments and agencies of the Federal Government. The Code is divided into 50 titles which represent broad areas subject to Federal regulation. Each title is divided into chapters which usually bear the name of the issuing agency. Each chapter is further subdivided into parts covering specific regulatory areas.

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 Raymond A. Mosley, Director, Office of the Federal Register. January 1, 2007. THIS TITLE

Title 15—Commerce and Foreign Trade is composed of three volumes. The parts in these volumes are arranged in the following order: parts 0-299, 300-799, and part 800-End. The first volume containing parts 0-299 is comprised of Subtitle A—Office of the Secretary of Commerce, Subtitle B, chapter I—Bureau of the Census, Department of Commerce, and chapter II—National Institute of Standards and Technology, Department of Commerce. The second volume containing parts 300-799 is comprised of chapter III—International Trade Administration, Department of Commerce, chapter IV—Foreign-Trade Zones Board, and chapter VII—Bureau of Industry and Security, Department of Commerce. The third volume containing part 800-End is comprised of chapter VIII—Bureau of Economic Analysis, Department of Commerce, chapter IX—National Oceanic and Atmospheric Administration, Department of Commerce, chapter XI—Technology Administration, Department of Commerce, chapter XIII—East-West Foreign Trade Board, chapter XIV—Minority Business Development Agency, chapter XX—Office of the United States Trade Representative, and chapter XXIII—National Telecommunications and Information Administration, Department of Commerce. The contents of these volumes represent all current regulations codified under this title of the CFR as of January 1, 2007.

For this volume, Kenneth R. Payne and Ruth Green were Chief Editors. The Code of Federal Regulations publication program is under the direction of Frances D. McDonald, assisted by Ann Worley.

 <LRH>15 CFR Ch. III (1-1-07 Edition)</LRH> <RRH>International Trade Admin., Commerce</RRH> <CFRTITLE> <TITLEHD> <PRTPAGE P="1"/> <HD SOURCE="HED">Title 15—Commerce and Foreign Trade</HD> <P>(This book contains parts 300-799)</P> </TITLEHD> <CFRTOC> <PTHD>Part</PTHD> <SUBTI> <HD SOURCE="HED">Subtitle B—<E T="04">Regulations Relating to Commerce and Foreign Trade (Continued)</E> </HD> </SUBTI> <CHAPTI> <SUBJECT> <E T="04">chapter iii</E>—International Trade Administration, Department of Commerce</SUBJECT> <PG>301</PG> </CHAPTI> <CHAPTI> <SUBJECT> <E T="04">chapter iv</E>—Foreign-Trade Zones Board, Department of Commerce</SUBJECT> <PG>400</PG> </CHAPTI> <CHAPTI> <SUBJECT> <E T="04">chapter vii</E>—Bureau of Industry and Security, Department of Commerce</SUBJECT> <PG>700</PG> </CHAPTI> </CFRTOC> </CFRTITLE> <SUBTITLE> <PRTPAGE P="3"/> <HD SOURCE="HED">Subtitle B—Regulations Relating to Commerce and Foreign Trade (Continued)</HD> <CHAPTER> <TOC> <TOCHD> <PRTPAGE P="5"/> <HD SOURCE="HED">CHAPTER III—INTERNATIONAL TRADE ADMINISTRATION, DEPARTMENT OF COMMERCE</HD> </TOCHD> <SUBCHAP> <HD SOURCE="HED">SUBCHAPTER A—MISCELLANEOUS REGULATIONS</HD> </SUBCHAP> <PTHD>Part</PTHD> <PGHD>Page</PGHD> <CHAPTI> <PT>301</PT> <SUBJECT>Instruments and apparatus for educational and scientific institutions</SUBJECT> <PG>7</PG> <PT>302</PT> <RESERVED>[Reserved]</RESERVED> <PT>303</PT> <SUBJECT>Watches, watch movements and jewelry program</SUBJECT> <PG>19</PG> <PT>310</PT> <SUBJECT>Official U.S. Government recognition of and participation in international expositions held in the United States</SUBJECT> <PG>39</PG> <PT>315</PT> <SUBJECT>Determination of bona fide motor-vehicle manufacturer</SUBJECT> <PG>44</PG> <PT>325</PT> <SUBJECT>Export trade certificates of review</SUBJECT> <PG>46</PG> <PT>335</PT> <SUBJECT>Imports of worsted wool fabric</SUBJECT> <PG>55</PG> </CHAPTI> </TOC> <SUBCHAP TYPE="N"> <PRTPAGE P="7"/> <HD SOURCE="HED">SUBCHAPTER A—MISCELLANEOUS REGULATIONS</HD> <PART> <EAR>Pt. 301</EAR> <HD SOURCE="HED">PART 301—INSTRUMENTS AND APPARATUS FOR EDUCATIONAL AND SCIENTIFIC INSTITUTIONS</HD> <CONTENTS> <SECHD>Sec.</SECHD> <SECTNO>301.1</SECTNO> <SUBJECT>General provisions.</SUBJECT> <SECTNO>301.2</SECTNO> <SUBJECT>Definitions.</SUBJECT> <SECTNO>301.3</SECTNO> <SUBJECT>Application for duty-free entry of scientific instruments.</SUBJECT> <SECTNO>301.4</SECTNO> <SUBJECT>Processing of applications by the Department of the Treasury (U.S. Customs Service).</SUBJECT> <SECTNO>301.5</SECTNO> <SUBJECT>Processing of applications by the Department of Commerce.</SUBJECT> <SECTNO>301.6</SECTNO> <SUBJECT>Appeals.</SUBJECT> <SECTNO>301.7</SECTNO> <SUBJECT>Final disposition of an application.</SUBJECT> <SECTNO>301.8</SECTNO> <SUBJECT>Instructions for entering instruments through U.S. Customs under subheading 9810.00.60, HTSUS.</SUBJECT> <SECTNO>301.9</SECTNO> <SUBJECT>Uses and disposition of instruments entered under subheading 9810.00.60, HTSUS.</SUBJECT> <SECTNO>301.10</SECTNO> <SUBJECT>Importation of repair components and maintenance tools under HTSUS subheadings 9810.00.65 and 9810.00.67 for instruments previously the subject of an entry liquidated under subheading 9810.00.60, HTSUS.</SUBJECT> </CONTENTS> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>Sec. 6(c), Pub. L. 89-651, 80 Stat. 897, 899; Sec. 2402, Pub. L. 106-36, 113 Stat. 127, 168.</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>47 FR 32517, July 28, 1982, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>§ 301.1</SECTNO> <SUBJECT>General provisions.</SUBJECT> <P>(a) <E T="03">Purpose.</E> This part sets forth the regulations of the Department of Commerce and the Department of the Treasury applicable to the duty-free importation of scientific instruments and apparatus by public or private nonprofit institutions.</P> <P>(b) <E T="03">Background.</E> (1) The Agreement on the importation of Educational, Scientific and Cultural Materials (Florence Agreement; “the Agreement”) is a multinational treaty, which seeks to further the cause of peace through the freer exchange of ideas and knowledge across national boundaries, primarily by eliminating tariffs on certain educational, scientific and cultural materials.</P> <P>(2) Annex D of the Agreement provides that scientific instruments and apparatus intended exclusively for educational purposes or pure scientific research use by qualified nonprofit institutions shall enjoy duty-free entry if instruments or apparatus of equivalent scientific value are not being manufactured in the country of importation.</P> <P>(3) The Annex D provisions are implemented for U.S. purposes in Subchapter X, Chapter 98, Harmonized Tariff Schedule of the United States (HTSUS).</P> <P>(c) <E T="03">Summary of statutory procedures and requirements.</E> (1) U.S. Note 1, Subchapter X, Chapter 98, HTSUS, provides, among other things, that articles covered by subheadings 9810.00.60 (scientific instruments and apparatus), 9810.00.65 (repair components therefor) and 9810.00.67 (tools for maintaining and testing the above), HTSUS, must be exclusively for the use of the institutions involved and not for distribution, sale, or other commercial use within five years after entry. These articles may be transferred to another qualified nonprofit institution, but any commercial use within five years of entry shall result in the assessment of applicable duties pursuant to § 301.9(c).</P> <P>(2) An institution wishing to enter an instrument or apparatus under tariff subheading 9810.00.60, HTSUS, must file an application with the Secretary of the Treasury (U.S. Customs Service) in accordance with the regulations in this section. If the application is made in accordance with the regulations, notice of the application is published in the <E T="04">Federal Register</E> to provide an opportunity for interested persons and government agencies to present views. The application is reviewed by the Secretary of Commerce (Director, Statutory Import Programs Staff) , who decides whether or not duty-free entry may be accorded the instrument and publishes the decision in the <E T="04">Federal Register.</E> An appeal of the final decision may be filed with the U.S. Court of Appeals for the Federal Circuit, on questions of law only, within 20 days after publication in the <E T="04">Federal Register.</E> </P> <P>(3) Repair components for instruments or apparatus admitted duty-free <PRTPAGE P="8"/>under subheading 9810.00.60, HTSUS require no application and may be entered duty-free in accordance with the procedures prescribed in § 301.10.</P> <P>(4) Tools specifically designed to be used for the maintenance, checking, gauging or repair of instruments or apparatus admitted under subheadings 9810.00.65 and 9810.00.67, HTSUS, require no application and may be entered duty-free in accordance with the procedures prescribed in § 301.10.</P> <P>(d) <E T="03">Authority and delegations.</E> The Act authorizes the Secretaries of Commerce and the Treasury to prescribe joint regulations to carry out their functions under U.S. Note 6, Subchapter X, Chapter 98, HTSUS. The Secretary of the Treasury has delegated authority to the Assistant Secretary for Enforcement, who has retained rulemaking authority and further delegated administration of the regulations to the Commissioner of the U.S. Customs Service. The authority of the Secretary of Commerce has been delegated to the Assistant Secretary for Import Administration who has retained rulemaking authority and further delegated administration of the regulations to the Director of the Statutory Import Programs Staff.</P> <CITA>[47 FR 32517, July 28, 1982; 47 FR 34368, Aug. 9, 1982, as amended at 66 FR 28832, May 25, 2001]</CITA> </SECTION> <SECTION> <SECTNO>§ 301.2</SECTNO> <SUBJECT>Definitions.</SUBJECT> <P>For the purposes of these regulations and the forms used to implement them:</P> <P>(a) <E T="03">Director</E> means the Director of the Statutory Import Programs Staff, International Trade Administration, U.S. Department of Commerce.</P> <P>(b) <E T="03">Customs</E> means the U.S. Customs Service and the “The Commissioner” means Commissioner of the U.S. Customs Service, or the official(s) designated to act on the Commissioner's behalf.</P> <P>(c) <E T="03">Customs Port</E> or <E T="03">the Port</E> means the port where a particular claim has been or will be made for duty-free entry of a scientific instrument or apparatus under subheading 9810.00.60, HTSUS.</P> <P>(d) <E T="03">Entry</E> means entry of an instrument into the Customs territory of the United States for consumption or withdrawal of an instrument from a Customs bonded warehouse for consumption.</P> <P>(e) <E T="03">United States</E> includes only the several States, the District of Columbia and the Commonwealth of Puerto Rico.</P> <P>(f) <E T="03">Instrument</E> means instruments and apparatus specified in U.S. Note 6(a), Subchapter X, Chapter 98, HTSUS. A combination of basic instrument or apparatus and accompanying accessories shall be treated as a single instrument provided that, under normal commercial practice, such combination is considered to be a single instrument and provided further that the applicant has ordered or, upon favorable action on its application, firmly intends to order the combination as a unit. The term “instrument” also covers separable components of an instrument that are imported for assembly in the United States in such instrument where that instrument, due to its size, cannot feasibly be imported in its assembled state. The components, as well as the assembled instrument itself, must be classifiable under the tariff provisions listed in U.S. Note 6(a), Subchapter X, Chapter 98, HTSUS. See paragraph (k) of this section and § 301.3(f). Unless the context indicates otherwise, instrument or apparatus shall mean a foreign “instrument or apparatus” for which duty-free entry is sought under subheading 9810.00.60, HTSUS. Spare parts typically ordered and delivered with an instrument are also considered part of an instrument for purposes of these regulations. The term “instruments” shall not include:</P> <P>(1) Materials or supplies used in the operation of instruments and apparatus such as paper, cards, tapes, ink, recording materials, expendable laboratory materials, apparatus that loses identity or is consumed by usage or other materials or supplies.</P> <P>(2) Ordinary equipment for use in building construction or maintenance; or equipment for use in supporting activities of the institution, such as its administrative offices, machine shops, libraries, centralized computer facilities, eating facilities, or religious facilities; or support equipment such as copying machines, glass working apparatus and film processors.<PRTPAGE P="9"/> </P> <P>(3) General purpose equipment such as air conditioners, electric typewriters, electric drills, refrigerators.</P> <P>(4) General-purpose computers. Accessories to computers which are not eligible for duty-free treatment are also ineligible. Scientific instruments containing embedded computers which are to be used in a dedicated process or in instrument control, as opposed to general data processing or computation, are, however, eligible for duty-free consideration.</P> <P>(5) Instruments initially imported solely for testing or review purposes which were entered under bond under subheading 9813.00.30, HTSUS, subject to the provisions of U.S. Note 1(a), Subchapter XIII, Chapter 98, HTSUS, and must be exported or destroyed within the time period specified in that U.S. Note.</P> <P>(g) <E T="03">Domestic instrument</E> means an instrument which is manufactured in the United States. A domestic instrument need not be made exclusively of domestic components or accessories.</P> <P>(h) <E T="03">Accessory</E> has the meaning which it has under normal commercial usage. An accessory, whether part of an instrument or an attachment to an instrument, adds to the capability of an instrument. An accessory for which duty-free entry is sought under subheading 9810.00.60, HTSUS shall be the subject of a separate application when it is not an accompanying accessory. The existing instrument, for which the accessory is being purchased, may be domestic or, if foreign, it need not have entered duty free under subheading 9810.00.60, HTSUS.</P> <P>(i) <E T="03">Accompanying accessory</E> means an accessory for an instrument that is listed as an item in the same purchase order and that is necessary for accomplishment of the purposes for which the instrument is intended to be used.</P> <P>(j) <E T="03">Ancillary equipment</E> means an instrument which may be functionally related to the foreign instrument but is not operationally linked to it. Examples of ancillary equipment are vacuum evaporators or ultramicrotomes, which can be used to prepare specimens for electron microscopy. Further, equipment which is compatible with the foreign instrument, but is also clearly compatible with similar domestic instruments, such as automatic sampling equipment sold for use with a variety of mass spectrometers, will be treated as ancillary equipment. A separate application will be required for ancillary equipment even if ordered with the basic instrument.</P> <P>(k) <E T="03">Components</E> of an instrument means parts or assemblies of parts which are substantially less than the instrument to which they relate. A component enables an instrument to function at a specified minimum level, while an accessory adds to the capability of an instrument. Applications shall not be accepted for components of instruments that did not enter duty-free under subheading 9810.00.60, HTSUS or for components of instruments being manufactured or assembled by a commercial firm or entity in the U.S. In determining whether an item is a component ineligible for duty-free consideration or an accessory eligible for such consideration, Customs shall take into account such factors as the item's complexity, novelty, degree of integration and pertinency to the research purposes to be performed by the instrument as a whole. The above notwithstanding, separable components of some instruments may be eligible for duty-free treatment. See paragraph (f) of this section.</P> <P>(l) <E T="03">Produced for stock</E> means an instrument which is manufactured, on sale and available from a stock.</P> <P>(m) <E T="03">Produced on order</E> means an instrument which a manufacturer lists in current catalog literature and is able and willing to produce and have available without unreasonable delay to the applicant.</P> <P>(n) <E T="03">Custom-made</E> means an instrument which a manufacturer is willing and able to make to purchaser's specifications. Instruments resulting from a development effort are treated as custom-made for the purposes of these regulations. Also, a special-order variant of a produced on order instrument, with significant modifications specified by the applicant, may be treated as custom-made.</P> <P>(o) <E T="03">Same general category</E> means the category in which an instrument is customarily classified in trade directories and product-source lists, e.g., scanning electron microscope, mass <PRTPAGE P="10"/>spectrometer, light microscope, x-ray spectrometer.</P> <P>(p) <E T="03">Comparable domestic instrument</E> means a domestic instrument capable or potentially capable of fulfilling the applicant's technical requirements or intended uses, whether or not in the same general category as the foreign instrument.</P> <P>(q) <E T="03">Specifications</E> means the particulars of the structural, operational and performance characteristics or capabilities of a scientific instrument.</P> <P>(r) <E T="03">Guaranteed</E> specifications are those specifications which are an explicit part of the contractual agreement between the buyer and the seller (or which would become part of the agreement if the buyer accepted the seller's offer), and refer only to the minimum and routinely achievable performance levels of the instrument under specified conditions. If a capability is listed or quoted as a range (e.g., “5 to 10 nanometers”) or as a minimum that may be exceeded (e.g., “5 angstroms or better”), only the inferior capability may be considered the guaranteed specification. Evidence that specifications are “guaranteed” will normally consist of their being printed in a brochure or other descriptive literature of the manufacturer; being listed in a purchase agreement upon which the purchase is conditioned; or appearing in a manufacturer's formal response to a request for quote. If, however, no opportunity to submit a bid was afforded the domestic manufacturer or if, for any other reason, comparable guaranteed specifications of the foreign and domestic instruments do not appear on the record, other evidence relating to a manufacturer's ability to provide an instrument with comparable specifications may, at the discretion of the Director, be considered in the comparison of the foreign and domestic instruments' capabilities. Performance results on a test sample run at the applicant's request may be cited as evidence for or against a guaranteed specification.</P> <P>(s) <E T="03">Pertinent</E> specifications are those specifications necessary for the accomplishment of the specific scientific research or science-related educational purposes described by the applicant. Specifications of features (even if guaranteed) which afford greater convenience, satisfy personal preferences, accommodate institutional commitments or limitations, or assure lower costs of acquisition, installation, operation, servicing or maintenance are not pertinent. For example, a design feature, such as a small number of knobs or controls on an instrument primarily designed for research purposes, would be a convenience. The ability to fit an instrument into a small room, when the required operations could be performed in a larger room, would be either a cost consideration or a matter of convenience and not a pertinent specification. In addition, mere difference in design (which would, for example, broaden the educational experience of students but not provide superior scientific capability) would not be pertinent. Also, characteristics such as size, weight, appearance, durability, reliability, complexity (or simplicity), ease of operation, ease of maintenance, productivity, versatility, “state of the art” design, specific design and compatibility with currently owned or ordered equipment are not pertinent unless the applicant demonstrates that the characteristic is necessary for the accomplishment of its scientific purposes.</P> <CITA>[47 FR 32517, July 28, 1982; 47 FR 34368, Aug. 9, 1982, as amended at 66 FR 28832, May 25, 2001]</CITA> </SECTION> <SECTION> <SECTNO>§ 301.3</SECTNO> <SUBJECT>Application for duty-free entry of scientific instruments.</SUBJECT> <P>(a) <E T="03">Who may apply.</E> An applicant for duty-free entry of an instrument under subheading 9810.00.60, HTSUS must be a public or private nonprofit institution which is established for educational or scientific purposes and which has placed a bona fide order or has a firm intention to place a bona fide order for a foreign instrument within 60 days following a favorable decision on the institution's application.</P> <P>(b) <E T="03">Application forms.</E> Applications must be made on form ITA-338P which may be obtained from the Statutory Import Programs Staff, International Trade Administration, U.S. Department of Commerce, Washington, DC <PRTPAGE P="11"/>20230, or from the various District Offices of the U.S. Department of Commerce. (Approved by the Office of Management and Budget under control number 0625-0037)</P> <P>(c) <E T="03">Where to apply.</E> Applications must be filed with the U.S. Customs Service, Department of the Treasury, at the address specified on page 1 of the form.</P> <P>(d) Five copies of the form, including relevant supporting documents, must be submitted. One of these copies shall be signed in the original by the person in the applicant institution under whose direction and control the foreign instrument will be used and who is familiar with the intended uses of the instrument. The remaining four copies of the form may be copies of the original. Attachments should be fully identified and referenced to the question(s) on the form to which they relate.</P> <P>(e) A single application (in the requisite number of copies) may be submitted for any quantity of the same type or model of foreign instrument provided that the entire quantity is intended to be used for the same purposes and provided that all units are included on a single purchase order. A separate application shall be submitted for each different type or model or variation in the type or model of instrument for which duty-free entry is sought even if covered by a single purchase order. Orders calling for multiple deliveries of the same type or model of instrument over a substantial period of time may, at the discretion of the Director, require multiple applications.</P> <P>(f) An application for components of an instrument to be assembled in the United States as described in § 301.2(f) may be filed provided that all of the components for the complete, assembled instrument are covered by, and fully described in, the application. See also § 301.2(k).</P> <P>(g) Failure to answer completely all questions on the form in accordance with the instructions on the form or to supply the requisite number of copies of the form and supporting documents may result in delays in processing of the application while the deficiencies are remedied, return of the application without processing, or denial of the application without prejudice to resubmission. Any questions on these regulations or the application form should be addressed to the Director.</P> <CITA>[47 FR 32517, July 28, 1982, as amended at 50 FR 11501, Mar. 22, 1985; 66 FR 28833, May 25, 2001]</CITA> </SECTION> <SECTION> <SECTNO>§ 301.4</SECTNO> <SUBJECT>Processing of applications by the Department of the Treasury (U.S. Customs Service).</SUBJECT> <P>(a) <E T="03">Review and determination.</E> The Commissioner shall date each application when received by Customs. If the application appears to be complete, the Commissioner shall determine:</P> <P>(1) Whether the institution is a nonprofit private or public institution established for research and educational purposes and therefore authorized to import instruments into the U.S. under subheading 9810.00.60, HTSUS. In making this determination, the Commissioner may require applicants to document their eligibility under this paragraph;</P> <P>(2) Whether the instrument or apparatus falls within the classes of instruments eligible for duty-free entry consideration under subheading 9810.00.60, HTSUS. For eligible classes, see U.S. Note 6(a), Subchapter X, Chapter 98, HTSUS; and</P> <P>(3) Whether the instrument or apparatus is for the exclusive use of the applicant institution and is not intended to be used for commercial purposes. For the purposes of this section, commercial uses would include, but not necessarily be limited to: Distribution, lease or sale of the instrument by the applicant institution; any use by, or for the primary benefit of, a commercial entity; or use of the instrument for demonstration purposes in return for a fee, price discount or other valuable consideration. Evaluation, modification or testing of the foreign instrument, beyond normal, routine acceptance testing and calibration, to enhance or expand its capabilities primarily to benefit the manufacturer in return for a discount or other valuable consideration, may be considered a commercial benefit. In making the above determination, the Commissioner may consider, among other things, whether the results of any research to be performed with the instrument will be fully and timely made <PRTPAGE P="12"/>available to the public. For the purposes of this section, use of an instrument for the treatment of patients is considered noncommercial. </P> <EXTRACT> <FP>If any of the Commissioner's determinations is in the negative, the application shall be found to be outside the scope of the Act and shall be returned to the applicant with a statement of the reason(s) for such findings.</FP> </EXTRACT> <P>(b) <E T="03">Forwarding of applications to the Department of Commerce.</E> If the Commissioner finds the application to be within the scope of the Act and these regulations, the Commissioner shall (1) assign a number to the application and (2) forward one copy to the Secretary of the Department of Health and Human Services (HHS), and two copies, including the one that has been signed in the original, to the Director. The Commissioner shall retain one copy and return the remaining copy to the applicant stamped “Accepted for Transmittal to the Department of Commerce.” The applicant shall file the stamped copy of the form with the Port when formal entry of the article is made. If entry has already occurred under a claim of subheading 9810.00.60, HTSUS , the applicant (directly or through his/her agent) shall at the earliest possible date supply the stamped copy to the Port. Further instructions for entering instruments are contained in § 301.8 of the regulations.</P> <CITA>[47 FR 32517, July 28, 1982; 47 FR 34368, Aug. 9, 1982, as amended at 50 FR 11501, Mar. 22, 1985; 66 FR 28833, May 25, 2001]</CITA> </SECTION> <SECTION> <SECTNO>§ 301.5</SECTNO> <SUBJECT>Processing of applications by the Department of Commerce.</SUBJECT> <P>(a) <E T="03">Public notice and opportunity to present views.</E> (1) Within 5 days of receipt of an application from the Commissioner, the Director shall make a copy available for public inspection during ordinary business hours of the Department of Commerce. Unless the Director determines that an application has deficiencies which preclude consideration on its merits (e.g., insufficient description of intended purposes to rule on the scientific equivalency of the foreign instrument and potential domestic equivalents), he shall publish in the <E T="04">Federal Register</E> a notice of the receipt of the application to afford all interested persons a reasonable opportunity to present their views with respect to the question “whether an instrument or apparatus of equivalent scientific value for the purpose for which the article is intended to be used is being manufactured in the United States.” The notice will include the application number, the name and address of the applicant, a description of the instrument(s) for which duty-free entry is requested, the name of the foreign manufacturer and a brief summary of the applicant's intended purposes extracted from the applicant's answer to question 7 of the application. In addition, the notice shall specify the date the application was accepted by the Commissioner for transmittal to the Department of Commerce.</P> <P>(2) If the Director determines that an application is incomplete or is otherwise deficient, he may request the applicant to supplement the application, as appropriate, prior to publishing the notice of application in the <E T="04">Federal Register.</E> Supplemental information/material requested under this provision shall be supplied to the Director in two copies within 20 days of the date of the request and shall be subject to the certification on the form. Failure to provide the requested information on time shall result in a denial of the application without prejudice to resubmission pursuant to paragraph (e) of this section.</P> <P>(3) <E T="03">Requirement for presentation of views (comments) by interested persons.</E> Any interested person or government agency may make written comments to the Director with respect to the question whether an instrument of equivalent scientific value, for the purposes for which the foreign instrument is intended to be used, is being manufactured in the United States. Except for comments specified in paragraph (a)(4) of this section, comments should be in the form of supplementary answers to the applicable questions on the application form. Comments must be postmarked no later than 20 days from the date on which the notice of application is published in the <E T="04">Federal Register.</E> In order to be considered, comments and related attachments must be submitted to the Director in duplicate; shall state the name, affiliation and address of the person submitting the comment; and shall <PRTPAGE P="13"/>specify the application to which the comment applies. In order to preserve the right to appeal the Director's decision on a particular application pursuant to § 301.6 of these regulations, a domestic manufacturer or other interested person must make timely comments on the application. Separate comments should be supplied on each application in which a person has an interest. However, brochures, pamphlets, printed specifications and the like, included with previous comments, if properly identified, may be incorporated by reference in subsequent comments.</P> <P>(4) <E T="03">Comments by domestic manufacturers.</E> Comments of domestic manufacturers opposing the granting of an application should:</P> <P>(i) Specify the domestic instrument considered to be scientifically equivalent to the foreign article for the applicant's specific intended purposes and include documentation of the domestic instrument's guaranteed specifications and date of availability.</P> <P>(ii) Show that the specifications claimed by the applicant in response to question 8 to be pertinent to the intended purpose can be equaled or exceeded by those of the listed domestic instrument(s) whether or not it has the same design as the foreign instrument; that the applicant's alleged pertinent specifications should not be considered pertinent within the meaning of § 301.2(s) of the regulations for the intended purposes of the instrument described in response to question 7 of the application; or that the intended purposes for which the instrument is to be used do not qualify the instrument for duty-free consideration under the Act.</P> <P>(iii) Where the comments regarding paragraphs (a)(4)(i) and (a)(4)(ii) of this section relate to a particular accessory or optional device offered by a domestic manufacturer, cite the type, model or other catalog designation of the accessory device and include the specification therefor in the comments.</P> <P>(iv) Where the justification for duty-free entry is based on excessive delivery time, show whether:</P> <P>(A) The domestic instrument is as a general rule either produced for stock, produced on order, or custom-made and;</P> <P>(B) An instrument or apparatus of equivalent scientific value to the article, for the purposes described in response to question 7, could have been produced and delivered to the applicant within a reasonable time following the receipt of the order.</P> <P>(v) Indicate whether the applicant afforded the domestic manufacturer an opportunity to furnish an instrument or apparatus of equivalent scientific value to the article for the purposes described in response to question 7 and, if such be the case, whether the applicant issued an invitation to bid that included the technical requirements of the applicant.</P> <P>(5) <E T="03">Untimely comments.</E> Comments must be made on a timely basis to ensure their consideration by the Director and the technical consultants, and to preserve the commenting person's right to appeal the Director's decision. The Director, at his discretion, may take into account factual information contained in untimely comments.</P> <P>(6) <E T="03">Provision of general comments.</E> A domestic manufacturer who does not wish to oppose duty-free entry of a particular application, but who desires to inform the Director of the availability and capabilities of its instrument(s), may at any time supply documentation to the Director without reference to a particular application. Such documentation shall be taken into account by the Director when applications involving comparable foreign instruments are received. The provision of general comments does not preserve the provider's right to appeal the Director's decision.</P> <P>(b) <E T="03">Additions to the record.</E> The Director may solicit from the applicant, from foreign or domestic manufacturers, their agents, or any other person or Government agency considered by the Director to have related competence, any additional information the Director considers necessary to make a decision. The Director may attach conditions and time limitations upon the provision of such information and may draw appropriate inferences from a person's failure to provide the requested information.</P> <P>(c) <E T="03">Advice from technical consultants.</E> (1) The Director shall consider any written advice from the Secretary of <PRTPAGE P="14"/>HHS, or his delegate, on the question whether a domestic instrument of equivalent scientific value to the foreign instrument, for the purposes for which the instrument is intended to be used, is being manufactured in the United States.</P> <P>(2) After the comment period has ended (§ 301.5(a)(3)), the complete application and any comments received and related information are forwarded to appropriate technical consultants for their advice.</P> <P>(3) The technical consultants relied upon for advice include, but are not limited to, the National Institutes of Health (delegated the function by the Secretary of HHS), the National Institute of Standards and Technology and the National Oceanographic and Atmospheric Administration.</P> <P>(d) <E T="03">Criteria for the determinations of the Department of Commerce</E>—(1) <E T="03">Scientific equivalency.</E> (i) The determination of scientific equivalency shall be based on a comparison of the pertinent specifications of the foreign instrument with similar pertinent specifications of comparable domestic instruments (see § 301.2(s) for the definition of pertinent specification). Ordinarily, the Director will consider only those performance characteristics which are “guaranteed specifications” within the meaning of § 301.2(r) of this part. In no event, however, shall the Director consider performance capabilities superior to the manufacturer's guaranteed specifications or their equivalent. In making the comparison the Director may consider a reasonable combination of domestic instruments that brings together two or more functions into an integrated unit if the combination of domestic instruments is capable of accomplishing the purposes for which the foreign instrument is intended to be used. If the Director finds that a domestic instrument possesses all of the pertinent specifications of the foreign instrument, he shall find that there is being manufactured in the United States an instrument of equivalent scientific value for such purposes as the foreign instrument is intended to be used. If the Director finds that the foreign instrument possesses one or more pertinent specifications not possessed by the comparable domestic instrument, the Director shall find that there is not being manufactured in the United States an instrument of equivalent scientific value to the foreign instrument for such purposes as the foreign instrument is intended to be used.</P> <P>(ii) Programs that may be undertaken at some unspecified future date shall not be considered in the Director's comparison. In making the comparison, the Director shall consider only the instrument and accompanying accessories described in the application and determined eligible by the U.S. Customs Service. The Director shall not consider the planned purchase of additional accessories or the planned adaptation of the article at some unspecified future time.</P> <P>(iii) In order for the Director to make a determination with respect to the “scientific equivalency” of the foreign and domestic instruments, the applicant's intended purposes must include either scientific research or science-related educational programs. Instruments used exclusively for nonscientific purposes have no scientific value, thereby precluding the requisite finding by the Director with respect to “whether an instrument or apparatus of equivalent scientific value to such article, for the purposes for which the article is intended to be used, is being manufactured in the United States.” In such cases the Director shall deny the application for the reason that the instrument has no scientific value for the purposes for which it is intended to be used. Examples of nonscientific purposes would be the use of an instrument in routine diagnosis or patient care and therapy (as opposed to clinical research); in teaching a nonscientific trade (e.g., printing, shoemaking, metalworking or other types of vocational training); in teaching nonscientific courses (e.g., music, home economics, journalism, drama); in presenting a variety of subjects or merely for presenting coursework, whether or not science related (e.g., video tape editors, tape recorders, projectors); and in conveying cultural information to the public (e.g., a planetarium in the Smithsonian Institution).</P> <P>(2) <E T="03">Manufactured in the United States.</E> An instrument shall be considered as being manufactured in the United <PRTPAGE P="15"/>States if it is customarily “produced for stock,” “produced on order” or “custom-made” within the United States. In determining whether a U.S. manufacturer is able and willing to produce an instrument, and have it available without unreasonable delay, the normal commercial practices applicable to the production and delivery of instruments of the same general category shall be taken into account, as well as other factors which in the Director's judgment are reasonable to take into account under the circumstances of a particular case. For example, in determining whether a domestic manufacturer is able to produce a custom-made instrument, the Director may take into account the production experience of the domestic manufacturer including (i) the types, complexity and capabilities of instruments the manufacturer has produced, (ii) the extent of the technological gap between the instrument to which the application relates and the manufacturer's customary products, (iii) the manufacturer's technical skills, (iv) the degree of saturation of the manufacturer's production capability, and (v) the time required by the domestic manufacturer to produce the instrument to the purchaser's specification. Whether or not the domestic manufacturer has field tested or demonstrated the instrument will not, in itself, enter into the decision regarding the manufacturer's ability to manufacture an instrument. Similarly, in determining whether a domestic manufacturer is willing to produce an instrument, the Director may take into account the nature of the bid process, the manufacturer's policy toward manufacture of the product(s) in question, the minimum size of the manufacturer's production runs, whether the manufacturer has bid similar instruments in the past, etc. Also, if a domestic manufacturer was formally requested to bid an instrument, without reference to cost limitations and within a leadtime considered reasonable for the category of instrument involved, and the domestic manufacturer failed formally to respond to the request, for the purposes of this section the domestic manufacturer would not be considered willing to have supplied the instrument.</P> <P>(3) <E T="03">Burden of proof.</E> The burden of proof shall be on the applicant to demonstrate that no instrument of equivalent scientific value for the purposes for which the foreign instrument is to be used is being manufactured in the United States. Evidence of applicant favoritism towards the foreign manufacturer (advantages not extended to domestic firms, such as additional lead time, know-how, methods, data on pertinent specifications or intended uses, results of research or development, tools, jigs, fixtures, parts, materials or test equipment) may be, at the Director's discretion, grounds for rejecting the application.</P> <P>(4) <E T="03">Excessive delivery time.</E> Duty-free entry of the instrument shall be considered justified without regard to whether there is being manufactured in the United States an instrument of equivalent scientific value for the intended purposes if excessive delivery time for the domestic instrument would seriously impair the accomplishment of the applicant's intended purposes. For purposes of this section, (i) except when objective and convincing evidence is presented that, at the time of order, the actual delivery time would significantly exceed quoted delivery time, no claim of excessive delivery time may be made unless the applicant has afforded the domestic manufacturer an opportunity to quote and the delivery time for the domestic instrument exceeds that for the foreign instrument; and (ii) failure by the domestic manufacturer to quote a specific delivery time shall be considered a non-responsive bid (see § 301.5(d)(2)). In determining whether the difference in delivery times cited by the applicant justifies duty-free entry on the basis of excessive delivery time, the Director shall take into account (A) the normal commercial practice applicable to the production of the general category of instrument involved; (B) the efforts made by the applicant to secure delivery of the instruments (both foreign and domestic) in the shortest possible time; and (C) such other factors as the Director finds relevant under the circumstances of a particular case.</P> <P>(5) <E T="03">Processing of applications for components.</E> (i) The Director may process an application for components which <PRTPAGE P="16"/>are to be assembled in the United States into an instrument or apparatus which, due to its size, cannot be imported in its assembled state (see § 301.2(k)) as if it were an application for the assembled instrument. A finding by the Director that no equivalent instrument is being manufactured in the United States shall, subject to paragraph (d)(5)(ii) of this section, qualify all the associated components, provided they are entered within the period established by the Director, taking into account both the scientific needs of the importing institution and the potential for development of related domestic manufacturing capacity.</P> <P>(ii) Notwithstanding a finding under paragraph (d)(5)(i) of this section that no equivalent instrument is being manufactured in the United States, the Director shall disqualify a particular component for duty-free treatment if the Director finds that the component is being manufactured in the United States.</P> <P>(e) Denial without prejudice to resubmission (DWOP). The Director may, at any stage in the processing of an application by the Department of Commerce, DWOP an application if it contains any deficiency which, in the Director's judgment, prevents a determination on its merits. The Director shall state the deficiencies of the application in the DWOP letter to the applicant.</P> <P>(1) The applicant has 60 days from the date of the DWOP to correct the cited deficiencies in the application unless a request for an extension of time for submission of the supplemental information has been received by the Director prior to the expiration of the 60-day period and is approved.</P> <P>(2) If granted, extensions of time will generally be limited to 30 days.</P> <P>(3) Resubmissions must reference the application number of the earlier submission. The resubmission may be made by letter to the Director. The record of a resubmitted application shall include the original submission on file with the Department. Any new material or information contained in a resubmission, which should address the specific deficiencies cited in the DWOP letter, should be clearly labeled and referenced to the applicable question on the application form. The resubmission must be for the instrument covered by the original application unless the DWOP letter specifies to the contrary. The resubmission shall be subject to the certification made on the original application.</P> <P>(4) If the applicant fails to resubmit within the applicable time period, the prior DWOP shall, irrespective of the merits of the case, result in a denial of the application.</P> <P>(5) The Director shall use the postmark date of the fully completed resubmission in determining whether the resubmission was made within the allowable time period. Certified or registered mail, or some other means which can unequivocally establish the date of mailing, is recommended. Resubmission by fax, e-mail or other electronic means is acceptable provided an appropriate return number or address is provided in the transmittal. Resubmissions must clearly indicate the date of transmittal to the Director.</P> <P>(6) The applicant may, at any time prior to the end of the resubmission period, notify the Director in writing that it does not intend to resubmit the application. Upon such notification, the application will be deemed to have been withdrawn. (See § 301.5(g).)</P> <P>(7) Information provided in a resubmission that, in the judgment of the Director, contradicts or conflicts with information provided in a prior submission, or is not a reasonable extension of the information contained in the prior submission, shall not be considered in making the decision on an application that has been resubmitted. Accordingly, an applicant may elect to reinforce an orginal submission by elaborating in the resubmission on the description of the purposes contained in a prior submission and may supply additional examples, documentation and/or other clarifying detail, but the applicant shall not introduce new purposes or other material changes in the nature of the original application. The resubmission should address the specific deficiencies cited in the DWOP. The Director may draw appropriate inferences from the failure of an applicant to attempt to provide the information requested in the DWOP.<PRTPAGE P="17"/> </P> <P>(8) In the event an applicant fails to address the noted deficiencies in the response to the DWOP, the Director may deny the application.</P> <P>(f) <E T="03">Decisions on applications.</E> The Director shall prepare a written decision granting or denying each application. However, when he deems appropriate, the Director may issue a consolidated decision on two or more applications. The Director shall promptly forward a copy of the decision to each applicant institution and to the <E T="04">Federal Register</E> for publication.</P> <P>(g) <E T="03">Withdrawal of applications.</E> The Director shall discontinue processing an application withdrawn by the applicant and shall publish notice of such withdrawal in the <E T="04">Federal Register.</E> If at any time while its application is pending before the Director, either during the intital application or resubmission stage, an applicant cancels an order for the instrument to which the application relates or ceases to have a firm intention to order such instrument or apparatus, the institution shall promptly notify the Director. Such notification shall constitute a withdrawal. Withdrawals shall be considered as having been finally denied for purposes of § 301.7(c) below.</P> <P>(h) Nothing in this subsection shall be construed as limiting the Director's discretion at any stage of processing to insert into the record and consider in making his decision any information in the public domain which he deems relevant.</P> <CITA>[47 FR 32517, July 28, 1982; 47 FR 34368, Aug. 9, 1982, as amended at 50 FR 11501, Mar. 22, 1985; 66 FR 28833, May 25, 2001]</CITA> </SECTION> <SECTION> <SECTNO>§ 301.6</SECTNO> <SUBJECT>Appeals.</SUBJECT> <P>(a) An appeal from a final decision made by the Director under § 301.5(f) may be taken in accordance with U.S. Note 6(e), Subchapter X, Chapter 98, HTSUS, only to the U.S. Court of Appeals for the Federal Circuit and only on questions of law, within 20 days after publication of the decision in the <E T="04">Federal Register.</E> If at any time while its application is under consideration by the Court of Appeals on an appeal from a finding by the Director an institution cancels an order for the instrument to which the application relates or ceases to have a firm intention to order such instrument, the institution shall promptly notify the court.</P> <P>(b) An appeal may be taken by: (1) The institution which makes the application;</P> <P>(2) A person who, in the proceeding which led to the decision, timely represented to the Secretary of Commerce in writing that he/she manufactures in the United States an instrument of equivalent scientific value for the purposes for which the instrument to which the application relates is intended to be used;</P> <P>(3) The importer of the instrument, if the instrument to which the application relates has been entered at the time the appeal is taken; or</P> <P>(4) An agent of any of the foregoing.</P> <P>(c) Questions regarding appeal procedures should be addressed directly to the U.S. Court of Appeals for the Federal Circuit, Clerk's Office, Washington, DC 20439.</P> <CITA>[47 FR 32517, July 28, 1982, as amended at 66 FR 28834, May 25, 2001]</CITA> </SECTION> <SECTION> <SECTNO>§ 301.7</SECTNO> <SUBJECT>Final disposition of an application.</SUBJECT> <P>(a) Disposition of an application shall be final when 20 days have elapsed after publication of the Director's final decision in the <E T="04">Federal Register</E> and no appeal has been taken pursuant to § 301.6 of these regulations, of if such appeal has been taken, when final judgment is made and entered by the Court.</P> <P>(b) The Director shall notify the Customs Port when disposition of an application becomes final. If the Director has not been advised of the port of entry of the instrument, or if entry has not been made when the decision on the application becomes final, the Director shall notify the Commissioner of final disposition of the application.</P> <P>(c) An instrument, the duty-free entry of which has been finally denied, may not be the subject of a new application from the same institution.</P> <CITA>[47 FR 32517, July 28, 1982, as amended at 66 FR 28834, May 25, 2001]</CITA> </SECTION> <SECTION> <PRTPAGE P="18"/> <SECTNO>§ 301.8</SECTNO> <SUBJECT>Instructions for entering instruments through U.S. Customs under subheading 9810.00.60, HTSUS.</SUBJECT> <P>Failure to follow the procedures in this section may disqualify an instrument for duty-free entry notwithstanding an approval of an application on its merits by the Department of Commerce.</P> <P>(a) <E T="03">Entry procedures.</E> (1) An applicant desiring duty-free entry of an instrument may make a claim at the time of entry of the instrument into the Customs territory of the United States (as defined in 19 CFR 101.1) that the instrument is entitled to duty-free classification under subheading 9810.00.60, HTSUS.</P> <P>(2) If no such claim is made the instrument shall be immediately classified without regard to subheading 9810.00.60, HTSUS , duty will be assessed, and the entry liquidated in the ordinary course.</P> <P>(3) If a claim is made for duty-free entry under subheading 9810.00.60, HTSUS , the entry shall be accepted without requiring a deposit of estimated duties provided that a copy of the form, stamped by Customs as accepted for transmittal to the Department of Commerce in accordance with § 301.4(b), is filed simultaneously with the entry.</P> <P>(4) If a claim for duty-free entry under subheading 9810.00.60, HTSUS is made but is not accompanied by a copy of the properly stamped form, a deposit of the estimated duty is required. Liquidation of the entry shall be suspended for a period of 180 days from the date of entry. On or before the end of this suspension period the applicant must file with the Customs Port a properly stamped copy of the form. In the event that the Customs Port does not receive a copy of the properly stamped form within 180 days the instrument shall be classified and liquidated in the ordinary course, without regard to subheading 9810.00.60, HTSUS.</P> <P>(5) Entry of an instrument after the Director's approval of an application. Whenever an institution defers entry until after it receives a favorable final determination on the application for duty-free entry of the instrument, either by delaying importation or by placing the instrument in a bonded warehouse or foreign trade zone, the importer shall file with the entry of the instrument (i) the stamped copy of the form, (ii) the institution's copy of the favorable final determination and (iii) proof that a bona fide order for the merchandise was placed on or before the 60th day after the favorable decision became final pursuant to § 301.7 of these regulations. Liquidation in such case shall be made under subheading 9810.00.60, HTSUS.</P> <P>(b) <E T="03">Normal Customs entry requirements.</E> In addition to the entry requirements in paragraph (a) of this section, the normal Customs entry requirements must be met. In most of the cases, the value of the merchandise will be such that the formal Customs entry requirements, which generally include the filing of a Customs entry bond, must be complied with. (For further information, see 19 CFR 142.3 and 142.4 (TD-221).)</P> <P>(c) <E T="03">Late filing.</E> Notwithstanding the preceding provisions of this section any document, form, or statement required by regulations in this section to be filed in connection with the entry may be filed at any time before liquidation of the entry becomes final, provided that failure to file at the time of entry or within the period for which a bond was filed for its production was not due to willful negligence or fraudulent intent. Liquidation of any entry becomes conclusive upon all persons if the liquidation is not protested in writing in accordance with 19 CFR part 174, or the necessary document substantiating duty-free entry is not produced in accordance with 19 CFR 10.112, within 90 days after notice of liquidation. Upon notice of such final and conclusive liquidation, the Department of Commerce will cease the processing of any pending application for duty-free entry of the subject article. In all other respects, the provisions of this section do not apply to Department of Commerce responsibilities and procedures for processing applications pursuant to other sections of these regulations.</P> <P>(d) <E T="03">Payment of duties.</E> The importer of record will be billed for payment of duties when Customs determines that such payment is due. If a refund of a deposit made pursuant to paragraph <PRTPAGE P="19"/>(a)(4) of this section is due, the importer should contact Customs officials at the port of entry, not the Department of Commerce.</P> <CITA>[47 FR 32517, July 28, 1982, as amended at 66 FR 28834, May 25, 2001]</CITA> </SECTION> <SECTION> <SECTNO>§ 301.9</SECTNO> <SUBJECT>Uses and disposition of instruments entered under subheading 9810.00.60, HTSUS.</SUBJECT> <P>(a) An instrument granted duty-free entry may be transferred from the applicant institution to another eligible institution provided the receiving institution agrees not to use the instrument for commercial purposes within 5 years of the date of entry of the instrument. In such cases title to the instrument must be transferred directly between the institutions involved. An institution transferring a foreign instrument entered under subheading 9810.00.60, HTSUS within 5 years of its entry shall so inform the Customs Port in writing and shall include the following information:</P> <P>(1) The name and address of the transferring institution.</P> <P>(2) The name and address of the transferee.</P> <P>(3) The date of transfer.</P> <P>(4) A detailed description of the instrument.</P> <P>(5) The serial number of the instrument and any accompanying accessories.</P> <P>(6) The entry number, date of entry, and port of entry of the instrument.</P> <P>(b) Whenever the circumstances warrant, and occasionally in any event, the fact of continued use for 5 years for noncommercial purposes by the applicant institution shall be verified by Customs.</P> <P>(c) If an instrument is transferred in a manner other than specified above or is used for commercial purposes within 5 years of entry, the institution for which such instrument was entered shall promptly notify the Customs officials at the Port and shall be liable for the payment of duty in an amount determined on the basis of its condition as imported and the rate applicable to it.</P> <CITA>[47 FR 32517, July 28, 1982, as amended at 66 FR 28834, May 25, 2001]</CITA> </SECTION> <SECTION> <SECTNO>§ 301.10</SECTNO> <SUBJECT>Importation of repair components and maintenance tools under HTSUS subheadings 9810.00.65 and 9810.00.67 for instruments previously the subject of an entry liquidated under subheading 9810.00.60, HTSUS.</SUBJECT> <P>(a) An institution owning an instrument that was the subject of an entry liquidated duty-free under subheading 9810.00.60, HTSUS, that wishes to enter repair components or maintenance tools for that instrument may do so without regard to the application procedures required for entry under subheading 9810.00.60, HTSUS. The institution must certify to Customs officials at the port of entry that such components are repair components for that instrument under subheading 9810.00.65, HTSUS, or that the tools are maintenance tools necessary for the repair, checking, gauging or maintenance of that instrument under subheading 9810.00.67, HTSUS.</P> <P>(b) Instruments entered under subheading 9810.00.60, HTSUS, and subsequently returned to the foreign manufacturer for repair, replacement or modification are not covered by subheading 9810.00.65 or 9810.00.67, HTSUS, although they may, upon return to the United States, be eligible for a reduced duty payment under subheading 9802.00.40 or 9802.00.50, HTSUS (covering articles exported for repairs or alterations) or may be made the subject of a new application under subheading 9810.00.60, HTSUS.</P> <CITA>[66 FR 28834, May 25, 2001]</CITA> </SECTION> </PART> <PART> <RESERVED>PART 302 [RESERVED]</RESERVED> </PART> <PART> <EAR>Pt. 303</EAR> <HD SOURCE="HED">PART 303—WATCHES, WATCH MOVEMENTS AND JEWELRY PROGRAM</HD> <CONTENTS> <SUBPART> <HD SOURCE="HED">Subpart A—Watches and Watch Movements</HD> <SECHD>Sec.</SECHD> <SECTNO>303.1</SECTNO> <SUBJECT>Purpose.</SUBJECT> <SECTNO>303.2</SECTNO> <SUBJECT>Definitions and forms.</SUBJECT> <SECTNO>303.3</SECTNO> <SUBJECT>Determination of the total annual duty-exemption.</SUBJECT> <SECTNO>303.4</SECTNO> <SUBJECT>Determination of territorial distribution.</SUBJECT> <SECTNO>303.5</SECTNO> <SUBJECT>Application for annual allocations of duty-exemptions.<PRTPAGE P="20"/> </SUBJECT> <SECTNO>303.6</SECTNO> <SUBJECT>Allocation and reallocation of exemptions among producers.</SUBJECT> <SECTNO>303.7</SECTNO> <SUBJECT>Issuance of licenses and shipment permits.</SUBJECT> <SECTNO>303.8</SECTNO> <SUBJECT>Maintenance of duty-exemption entitlements.</SUBJECT> <SECTNO>303.9</SECTNO> <SUBJECT>Restrictions on the transfer of duty-exemptions.</SUBJECT> <SECTNO>303.10-303.11</SECTNO> <SUBJECT>[Reserved]</SUBJECT> <SECTNO>303.12</SECTNO> <SUBJECT>Issuance and use of production incentive certificates.</SUBJECT> <SECTNO>303.13</SECTNO> <SUBJECT>Appeals.</SUBJECT> <SECTNO>303.14</SECTNO> <SUBJECT>Allocation factors and miscellaneous provisions.</SUBJECT> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart B—Jewelry</HD> <SECTNO>303.15</SECTNO> <SUBJECT>Purpose.</SUBJECT> <SECTNO>303.16</SECTNO> <SUBJECT>Definitions and forms.</SUBJECT> <SECTNO>303.17</SECTNO> <SUBJECT>Annual jewelry application.</SUBJECT> <SECTNO>303.18</SECTNO> <SUBJECT>Sale and transfer of business.</SUBJECT> <SECTNO>303.19</SECTNO> <SUBJECT>Issuance and use of production incentive certificates.</SUBJECT> <SECTNO>303.20</SECTNO> <SUBJECT>Duty refund.</SUBJECT> <SECTNO>303.21</SECTNO> <SUBJECT>Appeals.</SUBJECT> </SUBPART> </CONTENTS> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>Pub. L. 97-446, 96 Stat. 2331 (19 U.S.C. 1202, note); Pub. L. 103-465, 108 Stat. 4991; Pub. L. 94-241, 90 Stat. 263 (48 U.S.C. 1681, note); Pub. L. 106-36, 113 Stat. 167; Pub. L. 108-429, 118 Stat. 2582.</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>49 FR 17740, Apr. 25, 1984, unless otherwise noted.</P> </SOURCE> <EDNOTE> <HD SOURCE="HED">Editorial Note:</HD> <P>Nomenclature changes to part 303 appear at 68 FR 56555, Oct. 1, 2003.</P> </EDNOTE> <SUBPART> <HD SOURCE="HED">Subpart A—Watches and Watch Movements</HD> <SECTION> <SECTNO>§ 303.1</SECTNO> <SUBJECT>Purpose.</SUBJECT> <P>(a) This part implements the responsibilities of the Secretaries of Commerce and the Interior (“the Secretaries”) under Pub. L. 97-446, enacted on 12 January 1983, which substantially amended Pub. L. 89-805, enacted 10 November 1966, amended by Pub. L. 94-88, enacted 8 August 1975, and amended by Pub. L. 94-241, enacted 24 March 1976, amended by Public Law 103-465, enacted 8 December 1994 and amended by Public Law 108-429 enacted 3 December 2004. The law provides for exemption from duty of territorial watches and watch movements without regard to the value of the foreign materials they contain, if they conform with the provisions of U.S. Legal Note 5 to Chapter 91 of the Harmonized Tariff Schedule of the United States (“91/5”). 91/5 denies this benefit to articles containing any material which is the product of any country with respect to which Column 2 rates of duty apply; authorizes the Secretaries to establish the total quantity of such articles, provided that the quantity so established does not exceed 10,000,000 units or one-ninth of apparent domestic consumption, whichever is greater, and provided also that the quantity is not decreased by more than ten percent nor increased by more than twenty percent (or to more than 7,000,000 units, whichever is greater) of the quantity established in the previous year.</P> <P>(b) The law directs the International Trade Commission to determine apparent domestic consumption for the preceding calendar year in the first year U.S. insular imports of watches and watch movements exceed 9,000,000 units. 91/5 authorizes the Secretaries to establish territorial shares of the overall duty-exemption within specified limits; and provides for the annual allocation of the duty-exemption among insular watch producers equitably and on the basis of allocation criteria, including minimum assembly requirements, that will reasonably maximize the net amount of direct economic benefits to the insular possessions.</P> <P>(c) The amended law also provides for the issuance to producers of certificates entitling the holder (or any transferee) to obtain duty refunds on watches and watch movements and parts (except discrete watchcases) imported into the customs territory of the United States. The amounts of these certificates may not exceed specified percentages of the producers' verified creditable wages in the insular possessions (90% of wages paid for the production of the first 300,000 units and declining percentages, established by the Secretaries, of wages paid for incremental production up to 750,000 units by each producer) nor an aggregate annual amount for all certificates exceeding $5,000,000 adjusted for growth by the ratio of the previous year's gross national product to the gross national product in 1982. Refund requests are governed by regulations issued by the Department of Homeland Security. The Secretaries are authorized to issue regulations necessary to carry out their duties under Headnote 6 and may <PRTPAGE P="21"/>cancel or restrict the license or certificate of any insular manufacturer found violating the regulations.</P> <CITA>[49 FR 17740, Apr. 25, 1984, as amended at 50 FR 43568, Oct. 28, 1985; 53 FR 52994, Dec. 30, 1988; 61 FR 55884, Oct. 30, 1996; 70 FR 67647, Nov. 8, 2005]</CITA> </SECTION> <SECTION> <SECTNO>§ 303.2</SECTNO> <SUBJECT>Definitions and forms.</SUBJECT> <P>(a) <E T="03">Definitions.</E> Unless the context indicates otherwise:</P> <P>(1) <E T="03">Act</E> means Pub. L. 97-446, enacted January 12, 1983 (19 U.S.C. 1202), 96 Stat. 2329, as amended by Pub. L. 103-465, enacted on December 8, 1994, 108 Stat. 4991, Public Law 108-429, enacted on 3 December 2004, 118 Stat. 2582.</P> <P>(2) <E T="03">Secretaries</E> means the Secretary of Commerce and the Secretary of Interior or their delegates, acting jointly.</P> <P>(3) <E T="03">Director</E> means the Director of the Statutory Import Programs Staff, International Trade Administration, U.S. Department of Commerce.</P> <P>(4) <E T="03">Sale or tranfer of a business</E> means the sale or transfer of control, whether temporary or permanent, over a firm to which a duty-exemption has been allocated, to any other firm, corporation, partnership, person or other legal entity by any means whatsoever, including, but not limited to, merger and transfer of stock, assets or voting trusts.</P> <P>(5) New firm is a watch firm not affiliated through ownership or control with any other watch duty-refund recipient. In assessing whether persons or parties are affiliated, the Secretaries will consider the following factors, among others: stock ownership; corporate or family groupings; franchise or joint venture agreements; debt financing; and close supplier relationships. The Secretaries may not find that control exists on the basis of these factors unless the relationship has the potential to affect decisions concerning production, pricing, or cost. Also, no watch duty-refund recipient may own or control more than one jewelry duty-refund recipient. A new entrant is a new watch firm which has received an allocation.</P> <P>(6) <E T="03">Producer</E> means a duty-exemption holder which has maintained its eligibility for further allocations by complying with these regulations.</P> <P>(7) <E T="03">Established industry</E> means all producers, including new entrants, that have maintained their eligibility for further allocations.</P> <P>(8) <E T="03">Territories, territorial, and insular possessions</E> refer to the insular possessions of the United States (i.e., the U.S. Virgin Islands, Guam, and American Samoa) and the Northern Mariana Islands.</P> <P>(9) <E T="03">Duty-exemption</E> refers to the authorization of duty-free entry of a specified number of watches and watch movements into the Customs Territory of the United States.</P> <P>(10) <E T="03">Total annual duty-exemption</E> refers to the entire quantity of watches or watch components which may enter duty-free into the customs territory of the United States from the territories under 91/5 in a calendar year, as determined by the Secretaries or by the International Trade Commission in accordance with the Act.</P> <P>(11) <E T="03">Territorial distribution</E> refers to the apportionment by the Secretaries of the total annual duty-exemption among the separate territories; <E T="03">territorial share</E> means the portion consigned to each territory by this apportionment.</P> <P>(12) <E T="03">Allocation</E> refers to the distribution of all parts of a territorial share, or a portion thereof, among the several producers in a territory.</P> <P>(13) Creditable wages, creditable fringe benefits and creditable duty differentials eligible for the duty refund benefit include, but are not limited to, the following:</P> <P>(i) Wages up to an amount equal to 65 percent of the contribution and benefit base for Social Security, as defined in the Social Security Act for the year in which wages were earned, paid to permanent residents of the insular possessions employed in a firm's 91/5 watch and watch movement program.</P> <P>(A) Wages paid for the repair of watches up to an amount equal to 85 percent of the firm's total creditable wages.</P> <P>(B) Wages paid to watch and watch movement assembly workers involved in the complete assembly of watches and watch movements which have entered the United States duty-free and have complied with the laws and regulations governing the program.<PRTPAGE P="22"/> </P> <P>(C) Wages paid to watch and watch movement assembly workers involved in the complete assembly of watches, excluding the movement, only in situations where the desired movement can not be purchased unassembled and the producer has documentation establishing this.</P> <P>(D) Wages paid to those persons engaged in the day-to-day assembly operations on the premises of the company office, wages paid to administrative employees working on the premises of the company office, wages paid to security employees and wages paid to servicing and maintenance employees if these services are integral to the assembly and manufacturing operations and the employees are working on the premises of the company office.</P> <P>(E) Wages paid to persons engaged in both creditable and non-creditable assembly and repair operations may be credited proportionally provided the firm maintains production, shipping and payroll records adequate for the Departments' verification of the creditable portion.</P> <P>(F) Wages paid to new permanent residents who have met the requirements of permanent residency in accordance with the Departments' regulations, along with meeting all other creditable wage requirements of the regulations, which must be documented and verified to the satisfaction of the Secretaries.</P> <P>(ii) The combined creditable amount of individual health and life insurance per year, for each full-time permanent resident employee who works on the premises of the company office and whose wages qualify as creditable, may not exceed 100 percent of the “weighted average” yearly federal employee health insurance, which is calculated from the individual health plans weighted by the number of individual contracts in each plan. The yearly amount is calculated by the Office of Personnel Management and includes the “weighted average” of all individual health insurance costs for federal employees throughout the United States. The maximum life insurance allowed within this combined amount is $50,000 for each employee.</P> <P>(A) The combined creditable amount of family health and life insurance per year, for each full-time permanent resident employee who works on the premises of the company office and whose wages qualify as creditable, may not exceed 120 percent of the “weighted average” yearly federal employee health insurance, which is calculated from the family health plans weighted by the number of family contracts in each plan. The yearly amount is calculated by the Office of Personnel Management and includes the “weighted average” of all family health insurance costs for federal employees throughout the United States. The maximum life insurance allowed within this combined amount is $50,000 for each employee.</P> <P>(B) The creditable pension benefit, for each full-time permanent resident employee who works on the premises of the company office and whose wages qualify as creditable, is up to 3 percent of the employee's wages unless the employee's wages exceed the maximum annual creditable wage allowed under the program (see paragraph (a)(13)(i) of this section). An employee earning more than the maximum creditable wage allowed under the program will be eligible for only 3 percent of the maximum creditable wage.</P> <P>(iii) If tariffs on watches and watch movements are reduced, then companies would be required to provide the annual aggregate data by individual HTSUS watch tariff numbers for the following components contained therein: the quantity and value of watch cases, the quantity of movements, the quantity and value of each type of strap, bracelet or band, and the quantity and value of batteries shipped free of duty into the United States. If discrete watch movements are shipped free of duty into the United States, then the annual aggregate quantity by individual HTSUS movement tariff numbers would also be required along with the value of each battery if it is contained within. These data would be used to calculate the annual duty rate before each HTSUS tariff reduction, and the annual duty rate after the HTSUS tariff reduction. The amount of the difference would be creditable toward the duty refund. The tariff information would only be collected and used in the calculation of the annual <PRTPAGE P="23"/>duty-refund certificate and would not be used in the calculation of the mid-year duty-refund.</P> <P>(14) Non-creditable wages and non-creditable fringe benefits. Wages ineligible for the duty refund benefit wages include, but are not limited to, the following:</P> <P>(i) Wages over 65 percent of the contribution and benefit base for Social Security, as defined in the Social Security Act for the year in which wages were earned, paid to permanent residents of the territories employed in a firm's 91/5 watch and watch movement program.</P> <P>(A) Wages paid for the repair of watches in an amount over 85 percent of the firm's total creditable wages.</P> <P>(B) Wages paid for the assembly of watches and watch movements which are shipped outside the customs territory of the United States; wages paid for the assembly of watches and watch movements that do not meet the regulatory assembly requirements; or wages paid for the assembly of watches or watch movements that contain HTSUS column 2 components.</P> <P>(C) Wages paid for the complete assembly of watches, excluding the movement, when the desired movement can be purchased unassembled, if the producer does not have adequate documentation, demonstrating to the satisfaction of the Secretaries, that the movement could not be purchased unassembled whether or not it is entering the United States.</P> <P>(D) Wages paid to persons not engaged in the day-to-day assembly operations on the premises of the company office; wages paid to any outside consultants; wages paid to outside the office personnel, including but not limited to, lawyers, gardeners, construction workers, and accountants; wages paid to employees not working on the premises of the company office; and wages paid to employees who do not qualify as permanent residents in accordance with the Departments' regulations.</P> <P>(E) Wages paid to persons engaged in both creditable and non-creditable assembly and repair operations if the producer does not maintain production, shipping and payroll records adequate for the Departments' verification of the creditable portion.</P> <P>(ii) Any costs, for the year in which the wages were paid, of the combined creditable amount of individual health and life insurance for employees over 100 percent of the “weighted average” yearly individual health insurance costs for all federal employees. The cost of any life insurance over the $50,000 limit for each employee.</P> <P>(A) Any costs, for the year in which the wages were paid, of the combined creditable amount of family health and life insurance for employees over 120 percent of the “weighted average” yearly family health insurance costs for all federal employee. The cost of any life insurance over the $50,000 limit for each employee.</P> <P>(B) The cost of any pension benefit per employee over 3 percent of the employee's creditable wages unless the employee's wages exceed the maximum annual creditable annual maximum creditable wage allowed under the program (<E T="03">see</E> paragraph (a)(13)(i) of this section). Employees earning over the maximum creditable wage allowed under the program would have a creditable annual pension benefit of up to 3 percent of the maximum creditable wage and wages over 3 percent of the maximum creditable wage would not be creditable.</P> <P>(15) <E T="03">Non-91/5 watches and watch movements</E> include, but are not limited to, watches and movements which are liquidated as dutiable by the Bureau of Customs and Border Protection but do not include, for purposes of the duty refund, watches that are completely assembled in the insular possessions, with the exception of a desired movement if the movement cannot be purchased in an unassembled condition; contains any material which is the product of any country with respect to which Column 2 rates of duty apply; are ineligible for duty-free treatment pursuant to law or regulation; or are units the assembly of which the Departments have determined not to involve substantial and meaningful work in the territories (as elsewhere defined in these regulations).</P> <P>(16) <E T="03">Discrete movements and components</E> means screws, parts, components <PRTPAGE P="24"/>and subassemblies not assembled together with another part, component or subassembly at the time of importation into the territory. (A mainplate containing set jewels or shock devices, together with other parts, would be considered a single discrete component, as would a barrel bridge subassembly.)</P> <P>(17) <E T="03">Permanent resident</E> means a person with one residence which is in the insular possessions or a person with one or more residences outside the insular possessions who meets criteria that include maintaining his or her domicile in the insular possessions, residing (<E T="03">i.e.,</E> be physically present for at least 183 days within a continuous 365 day period) and working in the territory at a program company, and maintaining his or her primary office for day-to-day work in the insular possessions.</P> <P>(b) <E T="03">Forms</E>—(1) <E T="03">ITA-334P “Application for License to Enter Watches and Watch Movements into the Customs Territory of the United States.”</E> This form must be completed annually by all producers desiring to receive an annual allocation. It is also used, with appropriate special instructions for its completion, by new firms applying for duty-exemptions and by producers who wish to receive the duty refund in installments on a biannual basis.</P> <P>(2) <E T="03">ITA-333 “License to Enter Watches and Watch Movements into the Customs Territory of the United States.”</E> This form is issued by the Director to producers who have received an allocation and constitutes authorization for issuing specific shipment permits by the territorial governments. It is also used to record the balance of a producer's remaining duty-exemptions after each shipment permit is issued.</P> <P>(3) <E T="03">ITA-340 “Permit to Enter Watches and Watch Movements into the Customs Territory of the United States.”</E> This form may be obtained, by producers holding a valid license, from the territorial government or may be produced by the licensee in an approved computerized format or any other medium or format approved by the Departments of Commerce and the Interior. The completed form authorizes duty-free entry of a specified amount of watches or watch movements at a specified U.S. Customs port.</P> <P>(4) <E T="03">ITA-360P “Certificate of Entitlement to Secure the Refund of Duties on Articles that Entered the Customs Territory of The United State Duty Paid.”</E> This document authorizes an insular watch producer to request the refund of duties on imports of articles that entered the customs territory of the United States duty paid, up to the specified value of the certificate. Certificates may be used to obtain duty refunds only when presented with a properly executed Form ITA-361P.</P> <P>(5) <E T="03">ITA-361P “Request for Refund of Duties on Articles that Entered the Customs Territory of the United States Duty Paid.”</E> This form must be completed to obtain the refund of duties authorized by the Director through Form ITA-360P. After authentication by the Department of Commerce, it may be used for the refund of duties on items which were entered into the customs territory of the United States during a specified time period. Copies of the appropriate Customs entries must be provided with this form to establish a basis for issuing the claimed amounts. The forms may also be used to transfer all or part of the producer's entitlement to another party. (See § 303.12.)</P> <APPRO>(The information collection requirements in paragraph (b)(1) were approved by the Office of Management and Budget under control number 0625-0040. The information collection requirements in paragraphs (b) (4) through (6) were approved under control number 0625-0134)</APPRO> <CITA>[49 FR 17740, Apr. 25, 1984, as amended at 50 FR 43568, Oct. 28, 1985; 53 FR 52994, Dec. 30, 1988; 56 FR 9621, Mar. 7, 1991; 61 FR 55884, 55885, Oct. 30, 1996; 65 FR 8049, Feb. 17, 2000; 66 FR 34812, July 2, 2001; 67 FR 77408, Dec. 18, 2002; 68 FR 56555, Oct. 1, 2003; 70 FR 67647, Nov. 8, 2005]</CITA> </SECTION> <SECTION> <SECTNO>§ 303.3</SECTNO> <SUBJECT>Determination of the total annual duty-exemption.</SUBJECT> <P>(a) <E T="03">Procedure for determination.</E> If, after considering the productive capacity of the territorial watch industry and the economic interests of the territories, the Secretaries determine that the amount of the total annual duty-exemption, or the territorial shares of the total amount, should be changed, they shall publish in the <E T="04">Federal Register</E> a proposed limit on the quantity <PRTPAGE P="25"/>of watch units which may enter duty-free into the customs territory of the United States and proposed territorial shares thereof and, after considering comments, establish the limit and shares by <E T="04">Federal Register</E> notice. If the Secretaries take no action under this section, they shall make the allocations in accordance with the limit and shares last established by this procedure.</P> <P>(b) <E T="03">Standards for determination.</E> (1) Notwithstanding paragraph (b)(2) of this section, the limit established for any year may be 7,000,000 units if the limit established for the preceding year was a smaller amount.</P> <P>(2) Subject to paragraph (c) of this section, the total annual duty-exemption shall not be decreased by more than 10% of the quantity established for the preceding calendar year, or increased, if the resultant total is larger than 7,000,000, by more than 20% of the quantity established for the calendar year immediately preceding.</P> <P>(3) The Secretaries shall determine the limit after considering the interests of the territories; the domestic or international trade policy objectives of the United States; the need to maintain the competitive nature of the territorial industry; the total contribution of the industry to the economic well-being of the territories; and the territorial industry's utilization of the total duty-exemption established in the preceding year.</P> <P>(c) <E T="03">Determinations based on consumption.</E> (1) The Secretaries shall notify the International Trade Commission whenever they have reason to believe duty-free watch imports from the territories will exceed 9,000,000 units, or whenever they make a preliminary determination that the total annual duty-exemption should exceed 10,000,000 units.</P> <P>(2) In addition to the limitations in paragraph (b) of this section, the Secretaries shall not establish a limit exceeding one-ninth of apparent domestic consumption if such consumption, as determined by International Trade Commission, exceeds 90 million units.</P> <CITA>[49 FR 17740, Apr. 25, 1984, as amended at 50 FR 7170, Feb. 21, 1985; 50 FR 43568, Oct. 28, 1985; 53 FR 52994, Dec. 30, 1988]</CITA> </SECTION> <SECTION> <SECTNO>§ 303.4</SECTNO> <SUBJECT>Determination of territorial distribution.</SUBJECT> <P>(a) <E T="03">Procedure for determination.</E> The Secretaries shall determine the territorial shares concurrently with their determination of the total annual duty exemption, and in the same manner (see § 303.3, above).</P> <P>(b) <E T="03">Standards for determination</E>—(1) <E T="03">Limitations.</E> A territorial share may not be reduced by more than 500,000 units in any calendar year. No territorial share shall be less than 500,000 units.</P> <P>(2) <E T="03">Criteria for setting precise quantities.</E> The Secretaries shall determine the precise quantities after considering, <E T="03">inter alia,</E> the territorial capacity to produce and ship watch units. The Secretaries shall further bear in mind the aggregate benefits to the territories, such as creditable wages paid, creditable wages per unit exported, and corporate income tax payments.</P> <P>(3) <E T="03">Limitations on reduction of share.</E> The Secretaries shall not reduce a territory's share if its producers use 85% or more of the quantity distributed to that territory in the immediately preceding year, except in the case of a major increase or decrease in the number of producers in a territory or if they believe that a territorial industry will decrease production by more than 15% from the total of the preceding year.</P> <P>(4) <E T="03">Standby redistribution authority.</E> The Secretaries may redistribute territorial shares if such action is warranted by circumstances unforeseen at the time of the initial distributions, such as that a territory will use less than 80% of its total by the end of a calendar year, or if a redistribution is necessary to maintain the competitive nature of the territorial industries.</P> <CITA>[49 FR 17740, Apr. 25, 1984, as amended at 50 FR 7170, Feb. 21, 1985]</CITA> </SECTION> <SECTION> <SECTNO>§ 303.5</SECTNO> <SUBJECT>Application for annual allocations of duty-exemptions.</SUBJECT> <P>(a) Application forms (ITA-334P) shall be furnished to producers by January 1, and must be completed and returned to the Director no later than January 31, of each calendar year.</P> <P>(b) All data supplied are subject to verification by the Secretaries and no allocation shall be made to producer until the Secretaries are satisfied that <PRTPAGE P="26"/>the data are accurate. To verify the data, representatives of the Secretaries shall have access to relevant company records including:</P> <P>(1) Work sheets used to answer all questions on the application form;</P> <P>(2) Original records from which such data are derived;</P> <P>(3) Records pertaining to ownership and control of the company and to the satisfaction of eligibility requirements of duty-free treatment of its product by the Bureau of Customs and Border Protection;</P> <P>(4) Records pertaining to corporate income taxes, gross receipts taxes and excise taxes paid by each producer in the territories on the basis of which a portion of each producer's annual allocation is or may be predicated;</P> <P>(5) Customs, bank, payroll, production records, and all shipping records including the importer of record number and proof of residency, as requested;</P> <P>(6) Records on purchases of components, including documentation on the purchase of any preassembled movements, which demonstrate that such movements could not have been purchased from the vendor in an unassembled condition, and records on the sales of insular watches and movements, including proof of payment; and</P> <P>(7) Any other records in the possession of the parent or affiliated companies outside the territory pertaining to any aspect of the producer's 91/5 watch assembly operation.</P> <P>(8) All records pertaining to health insurance, life insurance and pension benefits for each employee; and</P> <P>(9) If HTSUS tariffs on watches and watch movements are reduced, records of the annual aggregate data by individual HTSUS watch tariff numbers for the following components contained therein would be required: the quantity and value of watch cases; the quantity of movements; the quantity and value of each type of strap, bracelet or band; and the quantity and value of batteries shipped free of duty into the United States. In addition, if applicable, records of the annual aggregate quantity of discrete watch movements shipped free of duty into the United States by HTSUS tariff number.</P> <P>(c) Data verification shall be performed in the territories, unless other arrangements satisfactory to the Departments are made in advance, by the Secretaries' representatives by the end of February of each calendar year. In the event a company cannot substantiate the data in its application before allocations must be calculated, the Secretaries shall determine which data will be used.</P> <P>(d) Records subject to the requirements of paragraph (b), above, shall be retained for a period of two years following their creation.</P> <CITA>[49 FR 17740, Apr. 25, 1984, as amended at 50 FR 43568, Oct. 28, 1985; 53 FR 52994, Dec. 30, 1988; 68 FR 56556, Oct. 1, 2003; 70 FR 67648, Nov. 8, 2005]</CITA> </SECTION> <SECTION> <SECTNO>§ 303.6</SECTNO> <SUBJECT>Allocation and reallocation of exemptions among producers.</SUBJECT> <P>(a) <E T="03">Interim allocations.</E> As soon as practicable after January 1 of each year the Secretaries shall make an interim allocation to each producer equaling 70% of the number of watch units it has entered duty-free into the customs territory of the United States during the first eight months of the preceding calendar year, or any lesser amount requested in writing by the producer. The Secretaries may also issue a lesser amount if, in their judgment, the producer might otherwise receive an interim allocation in an amount greater than the producer's probable annual allocation. In calculating the interim allocations, the Director shall count only duty-free watches and watch movements verified by the Bureau of Customs and Border Protection, or verified by other means satisfctory to the Secretaries, as having been entered on or before August 31 of the preceding year. Interim allocations shall not be published.</P> <P>(b) <E T="03">Annual allocations.</E> (1) By March 1 of each year the Secretaries shall make annual allocations to the producers in accordance with the allocation formula based on data supplied in their annual application (Form ITA-334P) and verified by the Secretaries.</P> <P>(2) The excess of a producer's duty-exemption earned under the allocation <PRTPAGE P="27"/>criteria over the amount formally requested by the producer shall be considered to have been relinquished voluntarily (see paragraph (f) below). A producer's request may be modified by written communication received by the Secretaries by February 28, or, at the discretion of the Secretaries, before the annual allocations are made. An allocation notice shall be published in the <E T="04">Federal Register.</E> </P> <P>(c) <E T="03">Supplemental allocations.</E> At the request of a producer, the Secretaries may supplement a producer's interim allocation if the Secretaries determine the producer's interim allocation will be used before the Secretaries can issue the annual allocation. Allocations to supplement a producer's annual allocation shall be made under the reallocation provisions prescribed below.</P> <P>(d) <E T="03">Allocations to new entrants.</E> In making interim and annual allocations to producers selected the preceding year as new entrants, the Secretaries shall take into account that such producers will not have had a full year's operation as a basis for computation of its duty-exemption. The Secretaries may make an interim or annual allocation to a new entrant even if the firm did not operate during the preceding calendar year.</P> <P>(e) <E T="03">Special allocations.</E> A producer may request a special allocation if unusual circumstances kept it from making duty-free shipments at a level comparable with its past record. In considering such requests, the Secretaries shall take into account the firm's proposed assembly operations; its record in contributing to the territorial economy; and its intentions and capacity to make meaningful contributions to the territory. They shall also first determine that the amount of the special allocation requested will not significantly affect the amounts allocated to other producers pursuant to § 303.6(b)(1).</P> <P>(f) <E T="03">Reallocations.</E> Duty-exemptions may become available for reallocation as a result of cancellation or reduction for cause, voluntary relinquishment or nonplacement of duty-exemption set aside for new entrants. At the request of a producer, the Secretaries may reallocate such duty-exemptions among the remaining producers who can use additional quantities in a manner judged best for the economy of the territories. The Secretaries shall consider such factors as the wage and income tax contributions of the respective producers during the preceding year and the nature of the producer's present assembly operations. In addition, the Secretaries may consider other factors which, in their judgment, are relevant to determining that applications from new firms, in lieu of reallocations, should be considered for part or all of unused portions of the total duty exemptions. Such factors may include:</P> <P>(1) The ability of the established industry to use the duty-exemption;</P> <P>(2) Whether the duty-exemption is sufficient to support new entrant operations;</P> <P>(3) The impact upon the established industry if new entrants are selected, particularly with respect to the effect on local employment, tax contributions to the territorial government, and the ability of the established industry to maintain satisfactory production levels; and</P> <P>(4) Whether additional new entrants offer the best prospect for adding economic benefits to the territory.</P> <P>(g) Section 303.14 of this part contains the criteria and formulae used by the Secretaries in calculating each watch producer's annual watch duty-exemption allocation, and other special rules or provisions the Secretaries may periodically adopt to carry out their responsibilities in a timely manner while taking into account changing circumstances. References to duty-exemptions, unless otherwise indicated, are to the amount available for reallocation in the current calendar year. Specifications of or references to data or bases used in the calculation of current year allocations (e.g., economic contributions and shipments) are, unless indicated otherwise, those which were generated in the previous year.</P> <P>(h) The Secretaries may propose changes to § 303.14 at any time they consider it necessary to fulfill their responsibilities. Normally, such changes will be proposed towards the end of each calendar year. Interested parties <PRTPAGE P="28"/>shall be given an opportunity to submit written comments on proposed changes.</P> <CITA>[49 FR 17740, Apr. 25, 1984, as amended at 50 FR 43568, Oct. 28, 1985; 61 FR 55885, Oct. 30, 1996; 63 FR 5888, Feb. 5, 1998]</CITA> </SECTION> <SECTION> <SECTNO>§ 303.7</SECTNO> <SUBJECT>Issuance of licenses and shipment permits.</SUBJECT> <P>(a) <E T="03">Issuance of Licenses (ITA-333).</E> (1) Concurrently with annual allocations under § 303.5 the Director shall issue a non-transferable license (Form ITA-333) to each producer. The Director shall also issue a replacement license if a producer's allocation is reduced pursuant to § 303.6.</P> <P>(2) Annual duty-exemption licenses shall be for only that portion of a producer's annual duty-exemption not previously licensed.</P> <P>(3) If a producer's duty-exemption has been reduced, the Director shall not issue a replacement license for the reduced amount until the producer's previous license has been received for cancellation by the Director.</P> <P>(4) A producer's license shall be used in their entirety, except when they expire or are cancelled, in order of their date of issuance, i.e., an interim license must be completely used before shipment permits can be issued against an interim supplemental license.</P> <P>(5) Outstanding licenses issued by the Director automatically expire at midnight, December 31, of each calendar year. No unused allocation of duty-exemption may be carried over into the subsequent calendar year.</P> <P>(6) The Director shall ensure that all licenses issued are conspicuously marked to show the type of license issued, the identity of the producer, and the year for which the license is valid. All licenses shall bear the signature of the Director.</P> <P>(7) Each producer is responsible for the security of its licenses. The loss of a license shall be reported immediately to the Director. Defacing, tampering with, and unauthorized use of a license are forbidden.</P> <P>(b) <E T="03">Shipment Permit Requirements (ITA-340).</E> (1) Producers may obtain shipment permits from the territorial government officials designated by the Governor. Permits may also be produced in any computerized or other format or medium approved by the Departments. The permit is for use against a producer's valid duty-exemption license and a permit must be completed for every duty-free shipment.</P> <P>(2) Each permit must specify the license and permit number, the number of watches and watch movements included in the shipment, the unused balance remaining on the producer's license, pertinent shipping information and must have the certification statement signed by an official of the licensee's company. A copy of the completed permit must be sent electronically or taken to the designated territorial government officials, no later than the day of shipment, for confirmation that the producer's duty-exemption license has not been exceeded and that the permit is properly completed.</P> <P>(3) The permit (form ITA-340) shall be filed with Customs along with the other required entry documents to receive duty-free treatment unless the importer or its representative clears the documentation through Customs' automated broker interface. Entries made electronically do not require the submission of a permit to Customs, but the shipment data must be maintained as part of a producer's recordkeeping responsibilities for the period prescribed by Customs' recordkeeping regulations. Bureau of Customs and Border Protection Import Specialists may request the documentation they deem appropriate to substantiate claims for duty-free treatment, allowing a reasonable amount of time for the importer to produce the permit.</P> <CITA>[49 FR 17740, Apr. 25, 1984, as amended at 50 FR 43568, Oct. 28, 1985; 61 FR 55885, Oct. 30, 1996]</CITA> </SECTION> <SECTION> <SECTNO>§ 303.8</SECTNO> <SUBJECT>Maintenance of duty-exemption entitlements.</SUBJECT> <P>(a) The Secretaries may order a producer to show cause within 30 days of receipt of the order why the duty-exemption to which the firm would otherwise be entitled should not be cancelled, in whole or in part, if:</P> <P>(1) At any time after June 30 of the calendar year:</P> <P>(i) A producer's assembly and shipment record provides a reasonable basis to conclude that the producer will use less than 80 percent of its total <PRTPAGE P="29"/>allocation by the end of the calendar year, <E T="03">and</E> </P> <P>(ii) The producer refuses a request from the Departments to relinquish that portion of its allocation which they conclude will not be used; <E T="03">or</E> </P> <P>(2) A producer fails to satisfy or fulfill any term, condition or representation, whether undertaken by itself or prescribed by the Departments, upon which receipt of allocation has been predicated or upon which the Departments have relied in connection with the sale or transfer of a business together with its allocation; <E T="03">or</E> </P> <P>(3) A producer, in the judgment of the Secretaries, has failed to make a meaningful contribution to the territory for a period of two or more consecutive calendar years, when compared with the performance of the duty-free watch assembly industry in the territory as a whole. This comparison shall include the producer's quantitative use of its allocations, amount of direct labor employed in the assembly of watches and watch movements, and the net amount of corporate income taxes paid to the government of the territory. If the producer fails to satisfy the Secretaries as to why such action should not be taken, the firm's allocation shall be reduced or cancelled, whichever is appropriate under the show-cause order. The eligibility of a firm whose allocation has been cancelled to receive further allocations may also be terminated.</P> <P>(b) The Secretaries may also issue a show-cause order to reduce or cancel a producer's allocation or production incentive certificate (see § 303.12, below), as appropriate, or to declare the producer ineligible to receive an allocation or certificate if it violates any regulation in this part, uses a form, license, permit, or certificate in an unauthorized manner, or fails to provide information or data required by these regulations or requested by the Secretaries or their delegates in the performance of their responsibilities.</P> <P>(c) If a firm's allocation is reduced or cancelled, or if a firm voluntarily relinquishes a part of its allocation, the Secretaries may:</P> <P>(1) Reallocate the allocation involved among the remaining producers in a manner best suited to contribute to the economy of the territory;</P> <P>(2) Reallocate the allocation or part thereof to a new entrant applicant; or</P> <P>(3) Do neither of the above if deemed in the best interest of the territories and the established industry.</P> <CITA>[49 FR 17740, Apr. 25, 1984, as amended at 61 FR 55885, Oct. 31, 1996]</CITA> </SECTION> <SECTION> <SECTNO>§ 303.9</SECTNO> <SUBJECT>Restrictions on the transfer of duty-exemptions.</SUBJECT> <P>(a) The sale or transfer of a duty-exemption from one firm to another shall not be permitted.</P> <P>(b) The sale or transfer of a business together with its duty-exemption shall be permitted with prior written notification to the Departments. Such notification shall be accompanied by certifications and representations, as appropriate, that:</P> <P>(1) If the transferee is a subsidiary of or in any way affiliated with any other company engaged in the production of watch movements components being offered for sale to any territorial producer, the related company or companies will continue to offer such watch and watch movement components on equal terms and conditions to all willing buyers and shall not engage in any practice, in regard to the sale of components, that competitively disadvantages the non-affiliated territorial producers <E T="03">vis-a-vis</E> the territorial subsidiary;</P> <P>(2) The sale or transfer price for the business together with its duty-exemption does not include the capitalization of the duty-exemption <E T="03">per se;</E> </P> <P>(3) The transferee is neither directly or indirectly affiliated with any other territorial duty-exemption holder in any territory;</P> <P>(4) The transferee will not modify the watch assembly operations of the duty-exemption firm in a manner that will significantly diminish its economic contributions to the territory.</P> <P>(c) At the request of the Departments, the transferee shall permit representatives of the Departments to inspect whatever records are necessary to establish to their satisfaction that the certifications and representations contained in paragraph (b) of this section have been or are being met.</P> <P>(d) Any transferee who is either unwilling or unable to make the certifications and representations specified in <PRTPAGE P="30"/>paragraph (b) of this section shall secure the Departments' approval in advance of the sale or transfer of the business together with its duty-exemption. The request for approval shall specify which of the certifications specified in paragraph (b) of this section the firm is unable or unwilling to make, and give reasons why such fact should not constitute a basis for the Departments' disapproval of the sale or transfer.</P> <CITA>[49 FR 17740, Apr. 25, 1984, as amended at 50 FR 43568, Oct. 28, 1985]</CITA> </SECTION> <SECTION> <SECTNO>§§ 303.10-303.11</SECTNO> <RESERVED>[Reserved]</RESERVED> </SECTION> <SECTION> <SECTNO>§ 303.12</SECTNO> <SUBJECT>Issuance and use of production incentive certificates.</SUBJECT> <P>(a) <E T="03">Issuance of certificates.</E> (1) The total annual amount of the Certificate of Entitlement, Form ITA-360, may be divided and issued on a biannual basis. The first portion of the total annual certificate amount will be based on reported duty-free shipments and creditable wages paid during the first six months of the calendar year, using the formula in § 303.14(c). The Departments require the receipt of the data by July 31 for each producer who wishes to receive an interim duty refund certificate. The interim duty refund certificate will be issued on or before August 31 of the same calendar year in which the wages were earned unless the Departments have unresolved questions. The process of determining the total annual amount of the duty refund will remain the same. The completed annual application (Form ITA-334P) shall be received by the Departments on or before January 31 and the annual verification of data and the calculation of each producer's total annual duty refund, based on the verified data, will continue to take place in February. Once the calculations for each producer's duty refund has been completed, the portion of the duty refund that has already been issued to each producer will be deducted from the total amount of each producer's annual duty refund amount. The duty refund certificate will continue to be issued by March 1 unless the Departments have unresolved questions.</P> <P>(2) Certificates shall not be issued to more than one company in the territories owned or controlled by the same corporate entity.</P> <P>(b) <E T="03">Securities and handling of certificates.</E> (1) Certificate holders are responsible for the security of the certificates. The certificates shall be kept at the territorial address of the insular producer or at another location having the advance approval of the Departments.</P> <P>(2) All refund requests made pursuant to the certificates shall be entered on the reverse side of the certificate.</P> <P>(3) Certificates shall be returned by registered, certified or express carrier mail to the Departments when:</P> <P>(i) A refund is requested which exhausts the entitlement on the face of the certificate,</P> <P>(ii) The certificate expires, or</P> <P>(iii) The Departments request their return with good cause.</P> <P>(4) Certificate entitlements may be transferred according to the procedures described in (c) of this section.</P> <P>(c) <E T="03">The use and transfer of certificate entitlements.</E> (1) Insular producers issued a certificate may request a refund by executing Form ITA-361P (<E T="03">see</E> § 303.2(b)(5) and the instructions on the form). After authentication by the Department of Commerce, Form ITA-361P may be used to obtain duty refunds on articles that entered the customs territory of the United States duty paid except for any article containing a material which is the product of a country to which column 2 rates of duty apply. Articles for which duty refunds are claimed must have entered the customs territory of the United States during the two-year period prior to the issue date of the certificate or during the one-year period the certificate remains valid. Copies of the appropriate Customs entries must be provided with the refund request in order to establish a basis for issuing the claimed amounts. Certification regarding drawback claims and liquidated refunds relating to the presented entries is required from the claimant on the form.</P> <P>(2) Regulations issued by the Bureau of Customs and Border Protection, U.S. Department of Homeland Security, govern the refund of duties under Public Law 97-446, as amended by Public Law 103-465 and Public Law 108-429. If the Departments receive information <PRTPAGE P="31"/>from the Bureau of Customs and Border Protection that a producer has made unauthorized use of any official form, they shall cancel the affected certificate.</P> <P>(3) The insular producer may transfer a portion of all of its certificate entitlement to another party by entering in block C of Form ITA-361P the name and address of the party.</P> <P>(4) After a Form ITA-361P transferring a certificate entitlement to a party other than the certificate holder has been authenticated by the Department of Commerce, the form may be exchanged for any consideration satisfactory to the two parties. In all cases, authenticated forms shall be transmitted to the certificate holder or its authorized custodian for disposition (see paragraph (b) above).</P> <P>(5) All disputes concerning the use of an authenticated Form ITA-361P shall be referred to the Departments for resolution. Any party named on an authenticated Form ITA-361P shall be considered an “interested party” within the meaning of § 303.13 of this part.</P> <CITA>[49 FR 17740, Apr. 25, 1984, as amended at 50 FR 43568, Oct. 28, 1985; 56 FR 9621, Mar. 7, 1991; 61 FR 55885, Oct. 30, 1996; 66 FR 34812, July 2, 2001; 70 FR 67648, Nov. 8, 2005]</CITA> </SECTION> <SECTION> <SECTNO>§ 303.13</SECTNO> <SUBJECT>Appeals.</SUBJECT> <P>(a) Any official decision or action relating to the allocation of duty-exemptions or to the issuance or use of production incentive certificates may be appealed to the Secretaries by any interested party. Such appeals must be received within 30 days of the date on which the decision was made or the action taken in accordance with the procedures set forth in paragraph (b) of this section. Interested parties may petition for the issuance of a rule, or amendment or repeal of a rule issued by the Secretaries. Interested parties may also petition for relief from the application of any rule on the basis of hardship or extraordinary circumstances resulting in the inability of the petitioner to comply with the rule.</P> <P>(b) Petitions shall bear the name and post office address of the petitioner and the name and address of the principal attorney or authorized representative (if any) for the party concerned. They shall be addressed to the Secretaries and filed in one original and two copies with the U.S. Department of Commerce, Import Administration, International Trade Administration, Washington, D.C. 20230, Attention: Statutory Import Programs Staff. Petitions shall contain the following:</P> <P>(1) A reference to the decision, action or rule which is the subject of the petition;</P> <P>(2) A short statement of the interest of the petitioner;</P> <P>(3) A statement of the facts as seen by the petitioner;</P> <P>(4) The petitioner's argument as to the points of law, policy of fact. In cases where policy error is contended, the alleged error together with the policy the submitting party advocates as the correct one should be described in full;</P> <P>(5) A conclusion specifying the action that the petitioner believes the Secretaries should take.</P> <P>(c) The Secretaries may at their discretion schedule a hearing and invite the participation of other interested parties.</P> <P>(d) The Secretaries shall communicate their decision which shall be final, to the petitioner by registered mail.</P> <P>(e) If the outcome of any petition materially affects the amount of the petitioner's allocation and if the Secretaries' consideration of the petition continues during the calculation of the annual allocations, the Secretaries shall set aside a portion of the affected territorial share in an amount which, in their judgment, protects the petitioner's interest and shall allocate the remainder among the other producers.</P> <CITA>[49 FR 17740, Apr. 25, 1984, as amended at 56 FR 9622, Mar. 7, 1991]</CITA> </SECTION> <SECTION> <SECTNO>§ 303.14</SECTNO> <SUBJECT>Allocation factors and miscellaneous provisions.</SUBJECT> <P>(a) <E T="03">The allocation formula.</E> (1) Except as provided in (a)(2) of this section, the territorial shares (excluding any amount set aside for possible new entrants) shall be allocated among the several producers in each territory in accordance with the following formula:</P> <P>(i) Fifty percent of the territorial share shall be allocated on the basis of <PRTPAGE P="32"/>the net dollar amount of economic contributions to the territory consisting of the dollar amount of creditable wages, up to an amount equal to 65% of the contribution and benefit base for Social Security as defined in the Social Security Act for the year in which the wages were earned, paid by each producer to territorial residents, plus the dollar amount of income taxes (excluding penalty and interest payments and deducting any income tax refunds and subsidies paid by the territorial government), and</P> <P>(ii) Fifty percent of the territorial share shall be allocated on the basis of the number of units of watches and watch movements assembled in the territory and entered by each producer duty-free into the customs territory of the United States.</P> <P>(2) If there is only one producer in a territory, the entire territorial share, excluding any amount set aside for possible new entrants, may be allocated without recourse to any distributive formula.</P> <P>(b) <E T="03">Minimum assembly requirements and prohibition of preferential supply relationship.</E> (1) No insular watch movement or watch may be entered free of duty into the customs territory of the United States unless the producer used 30 or more discrete parts and components to assemble a mechanical watch movement and 33 or more discrete parts and components to assemble a mechanical watch.</P> <P>(2) Quartz analog watch movements must be assembled from parts knocked down to the maximum degree possible for the technical capabilities of the insular industry as a whole. The greatest degree of disassembly specified, for each manufacturer's brand and model, by any producer in any territory purchasing such brands and models shall constitute the disassembly required as a minimum for the industry as a whole.</P> <P>(3) Watch movements and watches assembled from components with a value of more than $35 for watch movements and $800 for watches shall not be eligible for duty-exemption upon entry into the U.S. Customs territory. Value means the value of the merchandise plus all charges and costs incurred up to the last point of shipment (i.e., prior to entry of the parts and components into the territory).</P> <P>(4) No producer shall accept from any watch parts and components supplier advantages and preferences which might result in a more favorable competitive position for itself vis-a-vis other territorial producers relying on the same supplier. Disputes under this paragraph may be resolved under the appeals procedures contained in § 303.13(b).</P> <P>(c) Calculation of the value of production incentive certificates. (1) The value of each producer's certificate shall equal the producer's average creditable wages per unit shipped (including non-91/5 units as provided for in § 303.2(a)(13)) multiplied by the sum of:</P> <P>(i) The number of units shipped up to 300,000 units times a factor of 90%; plus</P> <P>(ii) Incremental units shipped up to 450,000 units times a factor of 85%; plus</P> <P>(iii) Incremental units shipped up to 600,000 times a factor of 80%; plus</P> <P>(iv) Incremental shipments up to 750,000 units times a factor of 75%.</P> <P>(2) The Departments may make adjustments for these data in the manner set forth in § 303.5(c).</P> <P>(d) <E T="03">New entrant invitations.</E> Applications from new firms are invited for any unused portion of any territorial share.</P> <P>(e) <E T="03">Territorial shares.</E> The shares of the total duty exemption are 1,866,000 for the Virgin Islands, 500,000 for Guam, 500,000 for American Samoa, and 500,000 for the Northern Mariana Islands.</P> <CITA>[49 FR 17740, Apr. 25, 1984, as amended at 50 FR 43568, Oct. 28, 1985; 53 FR 17825, May 19, 1988; 53 FR 52679, Dec. 29, 1988; 53 FR 52994, Dec. 30, 1988; 56 FR 9622, Mar. 7, 1991; 58 FR 21348, Apr. 21, 1993; 59 FR 8847, 8848, Feb. 24, 1994; 61 FR 55885, Oct. 30, 1996; 63 FR 49667, Sept. 17, 1998; 65 FR 8049, Feb. 17, 2000; 69 FR 51533, Aug. 20, 2004]</CITA> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart B—Jewelry</HD> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>64 FR 67150, Dec. 1, 1999, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>§ 303.15</SECTNO> <SUBJECT>Purpose.</SUBJECT> <P>(a) This subpart implements the responsibilities of the Secretaries of Commerce and the Interior (“the Secretaries”) under Pub. L. 106-36, enacted 25 June 1999 which substantially <PRTPAGE P="33"/>amended Pub. L. 97-446, enacted 12 January 1983, amended by Pub. L. 89-805, enacted 10 November 1966, amended by Pub. L. 94-88, enacted 8 August 1975, amended by Pub. L. 94-241, enacted 24 March 1976, and amended by Pub. L. 103-465, enacted 8 December 1994, and Public Law 108-429, enacted on 3 December 2004.</P> <P>(b) The amended law provides for the issuance of certificates to insular jewelry producers who have met the requirements of the laws and regulations, entitling the holder (or any transferee) to obtain refunds of duties on watches and watch movements and parts (except discrete watch cases) imported into the customs territory of the United States. The amounts of these certificates may not exceed specified percentages of the producers' verified creditable wages in the insular possessions (90% of wages paid for the production of the first 300,000 duty-free units and declining percentages, established by the Secretaries, of wages paid for incremental production up to 750,000 units by each producer) nor an aggregate annual amount for all certificates exceeding $5,000,000 adjusted for growth by the ratio of the previous year's gross national product to the gross national product in 1982. However, the law specifies that watch producer benefits are not to be diminished as a consequence of extending the duty refund to jewelry manufacturers. In the event that the amount of the calculated duty refunds for watches and jewelry exceeds the total aggregate annual amount that is available, the watch producers shall receive their calculated amounts and the jewelry producers would receive amounts proportionately reduced from the remainder. Refund requests are governed by regulations issued by the Department of Homeland Security (<E T="03">see</E> 19 CFR 7.4).</P> <P>(c) Section 2401(a) of Pub. L. 106-36 and additional U.S. note 5 to chapter 91 of the HTSUS authorize the Secretaries to issue regulations necessary to carry out their duties. The Secretaries may cancel or restrict the certificate of any insular manufacturer found violating the regulations.</P> <CITA>[49 FR 17740, Apr. 25, 1984, as amended at 70 FR 67648, Nov. 8, 2005]</CITA> </SECTION> <SECTION> <SECTNO>§ 303.16</SECTNO> <SUBJECT>Definitions and forms.</SUBJECT> <P>(a) <E T="03">Definitions.</E> For purposes of the subpart, unless the context indicates otherwise:</P> <P>(1) <E T="03">Act</E> means Pub. L. 97-446, enacted 12 January 1983 (19 U.S.C. 1202), 96 Stat. 2329, as amended by Pub. L. 103-465, enacted on 8 December 1994, 108 Stat. 4991 and, as amended by Pub. L. 106-36, enacted on 25 June 1999, and Public Law 108-429, enacted on 3 December 2004.</P> <P>(2) <E T="03">Secretaries</E> means the Secretary of Commerce and the Secretary of the Interior or their delegates, acting jointly.</P> <P>(3) <E T="03">Director</E> means the Director of the Statutory Import Programs Staff, International Trade Administration, U.S. Department of Commerce.</P> <P>(4) <E T="03">Sale or transfer of a business</E> means the sale or transfer of control, whether temporary or permanent, over a firm which is eligible for a jewelry program duty-refund to any other firm, corporation, partnership, person or other legal entity by any means whatsoever, including, but not limited to, merger and transfer of stock, assets or voting trusts.</P> <P>(5) <E T="03">New firm</E> means a jewelry company which has requested in writing to the Secretaries permission to participate in the program. In addition to any other information required by the Secretaries, new firm requests shall include a representation that the company agrees to abide by the laws and regulations of the program, an outline of the company's anticipated economic contribution to the territory (including the number of employees) and a statement as to whether the company is affiliated by ownership or control with any other watch or jewelry company in the insular possessions. The Secretaries will then review the request and make a decision based on the information provided and the economic contribution to the territory. A new jewelry firm may not be affiliated through ownership or control with any other jewelry duty-refund recipient. In assessing whether persons or parties are affiliated, the Secretaries will consider the following factors, among others: stock ownership; corporate or family groupings; franchise or joint venture agreements; debt financing; and close supplier relationships. The Secretaries <PRTPAGE P="34"/>may not find that control exists on the basis of these factors unless the relationship has the potential to affect decisions concerning production, pricing, or cost. Also, no jewelry duty-refund recipient may own or control more than one watch duty-refund recipient.</P> <P>(6) <E T="03">Jewelry producer</E> means a company, located in one of the insular territories (<E T="03">see</E> paragraph (a)(8) of this section), that produces jewelry provided for in heading 7113, HTSUS, which meets all the Bureau of Customs and Border Protection requirements for duty-free entry set forth in General Note 3(a)(iv), HTSUS, and 19 CFR 7.3, and has maintained its eligibility for duty refund benefits by complying with these regulations.</P> <P>(7) Unit of Jewelry means a single article (<E T="03">e.g.</E>, ring, bracelet, necklace), pair (e.g, cufflinks), gram for links which are sold in grams and stocked in grams, and other subassemblies and components in the customary unit of measure they are stocked and sold within the industry.</P> <P>(8) <E T="03">Territories, territorial and insular possessions</E> refers to the insular possessions of the United States (i.e., the U.S. Virgin Islands, Guam, American Samoa and the Northern Mariana Islands).</P> <P>(9) Creditable wages and creditable fringe benefits eligible for the duty refund benefit include, but are not limited to, the following:</P> <P>(i) Wages up to an amount equal to 65 percent of the contribution and benefit base for Social Security, as defined in the Social Security Act for the year in which wages were earned, paid to permanent residents of the insular possessions employed in a firm's manufacture of HTSUS heading 7113 articles of jewelry which are a product of the insular possessions and have met the Bureau of Customs and Border Protection's criteria for duty-free entry into the United States, plus any wages paid for the repair of non-insular HTSUS heading 7113 jewelry up to an amount equal to 50 percent of the firm's total creditable wages.</P> <P>(A) Wages paid to persons engaged in the day-to-day assembly operations at the company office, wages paid to administrative employees working on the premises of the company office, wages paid to security operations employees and wages paid to servicing and maintenance employees if these services are integral to the assembly and manufacturing operations and the employees are working on the premises of the company office.</P> <P>(B) Wages paid to permanent residents who are employees of a new company involved in the jewelry assembly and jewelry manufacturing of HTSUS heading 7113 jewelry for up to 18 months after such jewelry company commences jewelry manufacturing or jewelry assembly operations in the insular possessions.</P> <P>(C) Wages paid when a maximum of two producers work on a single piece of HTSUS heading 7113 jewelry which entered the United States free of duty under the program. Wages paid by the two producers will be credited proportionally provided both producers demonstrate to the satisfaction of the Secretaries that they worked on the same piece of jewelry, the jewelry received duty-free treatment into the customs territory of the United States, and the producers maintained production and payroll records sufficient for the Departments' verification of the creditable wage portion (<E T="03">see</E> § 303.17(b)).</P> <P>(D) Wages paid to persons engaged in both creditable and non-creditable assembly and repair operations may be credited proportionally provided the firm maintains production, shipping and payroll records adequate for the Departments' verification of the creditable portion.</P> <P>(E) Wages paid to new permanent residents who have met the requirements of permanent residency in accordance with the Departments' regulations along with meeting all other creditable wage requirements of the regulations, which must be documented and verified to the satisfaction of the Secretaries.</P> <P>(ii) The combined creditable amount of individual health and life insurance per year, for each full-time permanent resident employee who works on the premises of the company office and whose wages qualify as creditable, may not exceed 100 percent of the “weighted average” yearly federal employee health insurance, which is calculated from the individual health plans <PRTPAGE P="35"/>weighted by the number of individual contracts in each plan. The yearly amount is calculated by the Office of Personnel Management and includes the “weighted average” of all individual health insurance costs for federal employees throughout the United States. The maximum life insurance allowed within this combined amount is $50,000 for each employee.</P> <P>(A) The combined creditable amount of family health and life insurance per year, for each full-time permanent resident employee who works on the premises of the company office and whose wages qualify as creditable, may not exceed 120 percent of the “weighted average” yearly federal employee health insurance, which is calculated from the family health plans weighted by the number of family contracts in each plan. The yearly amount is calculated by the Office of Personnel Management and includes the “weighted average” of all family health insurance costs for federal employees throughout the United States. The maximum life insurance allowed within this combined amount is $50,000 dollars for each employee.</P> <P>(B) The creditable pension benefit, for each full-time permanent resident employee who works on the premises of the company office and whose wages qualify as creditable, is up to 3 percent of the employee's wages unless the employee's wages exceed the maximum annual creditable wage allowed under the program (see paragraph (a)(9)(i) of this section). An employee earning more than the maximum creditable wage allowed under the program will be eligible for only 3 percent of the maximum creditable wage.</P> <P>(10) Non-creditable wages and non-creditable fringe benefits. Wages ineligible for the duty refund benefit include, but are not limited to, the following:</P> <P>(i) Wages over 65 percent of the contribution and benefit base for Social Security, as defined in the Social Security Act for the year in which wages were earned, paid to permanent residents of the territories employed in a firm's 91/5 heading 7113, HTSUS, jewelry program.</P> <P>(A) Wages paid for the repair of jewelry in an amount over 50 percent of the firm's total creditable wages.</P> <P>(B) Wages paid to employees who are involved in assembling HTSUS heading 7113 jewelry beyond 18 months after such jewelry company commences jewelry manufacturing or jewelry assembly operations in the insular possessions if the jewelry does not meet the Bureau of Customs and Border Protection's substantial transformation requirements and other criteria for duty-free enter into the United States.</P> <P>(C) Wages paid for the assembly and manufacturing of jewelry which is shipped to places outside the customs territory of the United States; wages paid for the assembly and manufacturing of jewelry that does not meet the regulatory assembly requirements; or wages paid for the assembly and manufacture of jewelry that contain HTSUS column 2 components.</P> <P>(D) Wages paid to those persons not engaged in the day-to-day assembly operations on the premises of the company office, wages paid to any outside consultants, wages paid to outside the office personnel, including but not limited to, lawyers, gardeners, construction workers and accountants; wages paid to employees not working on the premises of the company office and wages paid to employees who do not qualify as permanent residents in accordance with the Departments' regulations.</P> <P>(E) Wages paid to persons engaged in both creditable and non-creditable assembly and repair operations if the producer does not maintain production, shipping and payroll records adequate for the Departments' verification of the creditable portion.</P> <P>(ii) Any costs, for the year in which the wages were paid, of the combined creditable amount of individual health and life insurance for employees over 100 percent of the “weighted average” yearly individual health insurance costs for all federal employees. The cost of any life insurance over the $50,000 limit for each employee.</P> <P>(A) Any costs, for the year in which the wages were paid, of the combined creditable amount of family health and life insurance for employees over 120 percent of the “weighted average” <PRTPAGE P="36"/>yearly family health insurance costs for all federal employee. The cost of any life insurance over the $50,000 limit for each employee.</P> <P>(B) The cost of any pension benefit per employee over 3 percent of the employee's creditable wages unless the employee's wages exceed the maximum annual creditable annual maximum creditable wage allowed under the program (<E T="03">see</E> paragraph (a)(9)(i) of this section). Employees earning over the maximum creditable wage allowed under the program would have a creditable annual pension benefit of up to 3 percent of the maximum creditable wage and wages over 3 percent of the maximum creditable wage would not be creditable.</P> <P>(11) <E T="03">Dutiable jewelry</E> includes jewelry which does not meet the requirements for duty-free entry under General Note 3(a)(iv), HTSUS, and 19 CFR 7.3, contains any material which is the product of any country with respect to which Column 2 rates of duty apply or is ineligible for duty-free treatment pursuant to other laws or regulations.</P> <P>(12) <E T="03">Permanent resident</E> means a person with one residence which is in the insular possessions or a person with one or more residences outside the insular possessions who meets criteria that include maintaining his or her domicile in the insular possessions, residing (<E T="03">i.e.,</E> be physically present for at least 183 days within a continuous 365 day period year) and working in the territory at a program company, and maintaining his or her primary office for day-to-day work in the insular possessions.</P> <P>(b) <E T="03">Forms.</E> (1) <E T="03">ITA—334P</E> “Annual Application for License to Enter Watches and Watch Movements into the Customs Territory of the United States.” The Director shall issue instructions for jewelry manufacturers on the completion of the relevant portions of the form. The form must be completed annually by all jewelry producers desiring to receive a duty refund and, with special instructions for its completion, by producers who wish to receive the total annual amount of the duty refund in installments on a biannual basis.</P> <P>(2) <E T="03">ITA-360P “Certificate of Entitlement to Secure the Refund of Duties on Articles that Entered the Customs Territory of The United State Duty Paid.”</E> This document authorizes an insular jewelry producer to request the refund of duties on imports of articles that entered the customs territory of the United States duty paid, with certain exceptions, up to the specified value of the certificate. Certificates may be used to obtain duty refunds only when presented with a properly executed Form ITA-361P.</P> <P>(3) <E T="03">ITA-361P “Request for Refund of Duties on Articles that Entered the Customs Territory of the United States Duty Paid.”</E> This form must be completed to obtain the refund of duties authorized by the Director through Form ITA-360P. After authentication by the Department of Commerce, it may be used for the refund of duties on items which were entered into the customs territory of the United States during a specified time period. Copies of the appropriate Customs entries must be provided with this form to establish a basis for issuing the claimed amounts. The forms may also be used to transfer all or part of the producer's entitlement to another party (<E T="03">see</E> Sec. 303.19(c)).</P> <APPRO>(The information collection requirements in paragraph (b)(1) were approved by the Office of Management and Budget under control number 0625-0040. The information collection requirements in paragraphs (b) (2) and (3) were approved under control number 0625-0134)</APPRO> <CITA>[64 FR 67150, Dec. 1, 1999, as amended at 65 FR 8049, Feb. 17, 2000; 66 FR 34812, July 2, 2001; 67 FR 77409, Dec. 18, 2202; 70 FR 67648, Nov. 8, 2005]</CITA> </SECTION> <SECTION> <SECTNO>§ 303.17</SECTNO> <SUBJECT>Annual jewelry application.</SUBJECT> <P>(a) Form ITA-334P shall be furnished to producers by January 1 and must be completed and returned to the Director no later than January 31 of each calendar year.</P> <P>(b) All data supplied are subject to verification by the Secretaries and no duty refund shall be made to producers until the Secretaries are satisfied that the data are accurate. To verify the data, representatives of the Secretaries shall have access to relevant company records including, but not limited to:</P> <P>(1) Work sheets used to answer all questions on the application form, as specified by the instructions;<PRTPAGE P="37"/> </P> <P>(2) Original records from which such data are derived;</P> <P>(3) Records pertaining to ownership and control of the company;</P> <P>(4) Records pertaining to all duty-free and dutiable shipments of HTSUS 7113 jewelry, including Customs entry documents, or the certificate of origin for the shipment, or, if a company did not receive such documents from Customs, a certification from the consignee that the jewelry shipment received duty-free treatment, or a certification from the producer, if the producer can attest that the jewelry shipment received duty-free treatment;</P> <P>(5) Records pertaining to corporate income taxes, gross receipts taxes and excise taxes paid by each producer in the territories;</P> <P>(6) Customs, bank, payroll, production records, and all shipping records including the importer of record number and proof of residency, as requested;</P> <P>(7) All records pertaining to health insurance, life insurance and pension benefits for each employee;</P> <P>(8) Records on purchases of components and sales of jewelry, including proof of payment; and</P> <P>(9) Any other records in the possession of the parent or affiliated companies outside the territory pertaining to any aspect of the producer's jewelry operations.</P> <P>(c) Data verification shall be performed in the territories, unless other arrangements satisfactory to the Departments are made in advance, by the Secretaries' representatives by the end of February of each calendar year. In the event a company cannot substantiate the data in its application, the Secretaries shall determine which data will be used.</P> <P>(d) Records subject to the requirements of paragraph (b) of this section, shall be retained for a period of two years following their creation.</P> <CITA>[49 FR 17740, Apr. 25, 1984, as amended at 66 FR 34813, July 2, 2001; 70 FR 67650, Nov. 8, 2005]</CITA> </SECTION> <SECTION> <SECTNO>§ 303.18</SECTNO> <SUBJECT>Sale or transfer of business.</SUBJECT> <P>(a) The sale or transfer of a business together with its duty refund entitlement shall be permitted with prior written notification to the Departments. Such notification shall be accompanied by certifications and representations, as appropriate, that:</P> <P>(1) The transferee is neither directly nor indirectly affiliated with any other territorial duty refund jewelry recipient in any territory;</P> <P>(2) The transferee will not modify the jewelry operations in a manner that will significantly diminish its economic contributions to the territory.</P> <P>(b) At the request of the Departments, the transferee shall permit representatives of the Departments to inspect whatever records are necessary to establish to their satisfaction that the certifications and representations contained in paragraph (a) of this section have been or are being met.</P> <P>(c) Any transferee who is either unwilling or unable to make the certifications and representations specified in paragraph (a) of this section shall secure the Departments' approval in advance of the sale or transfer of the business. The request for approval shall specify which of the certifications specified in paragraph (a) of this section the firm is unable or unwilling to make, and give reasons why such fact should not constitute a basis for the Departments' disapproval of the sale or transfer.</P> </SECTION> <SECTION> <SECTNO>§ 303.19</SECTNO> <SUBJECT>Issuance and use of production incentive certificates.</SUBJECT> <P>(a) <E T="03">Issuance of certificates.</E> (1) The total annual amount of the Certificate of Entitlement, Form ITA-360, may be divided and issued on a biannual basis. The first portion of the total annual certificate amount will be based on reported duty-free shipments and creditable wages paid during the first six month of the calendar year, using the formula in § 303.20(b). The Departments require the receipt of the data by July 31 for each producer who wishes to receive an interim duty refund certificate. The interim duty refund certificate will be issued on or before August 31 of the same year in which the wages were earned unless the Departments have unresolved questions. The process of determining the total annual amount of the duty refund will remain the same. The completed annual application (Form ITA-334P) shall be received by the Departments on or before <PRTPAGE P="38"/>January 31 and the annual verification of data and calculation of each producer's total annual duty refund, based on the verified data, will continue to take place in February. Once the calculations for each producer's duty refund has been completed, the portion of the duty refund that has already been issued to each producer will be deducted from the total amount of each producer's annual duty refund amount. The duty refund certificate will continue to be issued by March 1 unless the Departments have unresolved questions.</P> <P>(2) Certificates shall not be issued to more than one jewelry company in the territories owned or controlled by the same corporate entity.</P> <P>(b) <E T="03">Security and handling of certificates.</E> (1) Certificate holders are responsible for the security of the certificates. The certificates shall be kept at the territorial address of the producer or at another location having the advance approval of the Departments.</P> <P>(2) All refund requests made pursuant to the certificates shall be entered on the reverse side of the certificate.</P> <P>(3) Certificates shall be returned by registered, certified or express carrier mail to the Department of Commerce when:</P> <P>(i) A refund is requested which exhausts the entitlement on the face of the certificate,</P> <P>(ii) The certificate expires, or</P> <P>(iii) The Departments request their return with good cause.</P> <P>(4) Certificate entitlements may be transferred according to the procedures described in paragraph (c) of this section.</P> <P>(c) <E T="03">The use and transfer of certificate entitlements.</E> (1) Insular producers issued a certificate may request a refund by executing Form ITA-361P (<E T="03">see</E> § 303.16(b)(3)) and the instruction on the form). After authentication by the Department of Commerce, Form ITA-361P may be used to obtain duty refunds on article that entered the customs territory of the United States duty paid. Duties on an article which is the product of a country with respect to column 2 rates of duty apply may not be refunded Articles for which duty refunds are claimed must have entered the customs territory of the United States during the two-year period prior to the issue date of the certificate or during the one-year period the certificate remains valid. Copies of the appropriate Customs entries must be provided with the refund request in order to establish a basis for issuing the claimed amounts. Certification regarding drawback claims and liquidated refunds relating to the presented entries is required from the claimant on the form.</P> <P>(2) Regulations issued by the Bureau of Customs and Border Protection, U.S. Department of Homeland Security, govern the refund of duties under 19 CFR 7.4. If the Departments receive information from the Bureau of Customs and Border Protection that a producer has made unauthorized use of any official form, they may cancel the affected certificate.</P> <P>(3) The territorial producer may transfer a portion of all of its certificate entitlement to another party by entering in block C of Form ITA-361P the name and address of the party.</P> <P>(4) After a Form ITA-361P transferring a certificate entitlement to a party other than the certificate holder has been authenticated by the Department of Commerce, the form may be exchanged for any consideration satisfactory to the two parties. In all cases, authenticated forms shall be transmitted to the certificate holder or its authorized custodian for disposition (<E T="03">see</E> paragraph (b) of this section).</P> <P>(5) All disputes concerning the use of an authenticated Form ITA-361P shall be referred to the Departments for resolution. Any party named on an authenticated Form ITA-361P shall be considered an “interested party” within the meaning of § 303.21 of this part.</P> <CITA>[49 FR 17740, Apr. 25, 1984, as amended at 66 FR 34813, July 2, 2001; 70 FR 67650, Nov. 8, 2005]</CITA> </SECTION> <SECTION> <SECTNO>§ 303.20</SECTNO> <SUBJECT>Duty refund.</SUBJECT> <P>(a) Territorial jewelry producers are entitled to duty refund certificates only for jewelry that they produce which is provided for in heading 7113, HTSUS, is a product of a territory and otherwise meets the requirements for duty-free entry under General Note 3 (a)(iv), HTSUS, and 19 CFR 7.3.<PRTPAGE P="39"/> </P> <P>(1) An article of jewelry is considered to be a product of a territory if:</P> <P>(i) The article is wholly the growth or product of the territory; or</P> <P>(ii) The article became a new and different article of commerce as a result of production or manufacture performed in the territories.</P> <P>(2) Eighteen month exemption. Any article of jewelry provided for in HTSUS heading 7113, assembled in the insular possessions by a new entrant jewelry manufacturer shall be treated as a product of the insular possessions if such article is entered into the customs territory of the United States no later than 18 months after such producer commences jewelry manufacturing or jewelry assembly operations in the insular possessions.</P> <P>(b) Calculation of the value of production incentive certificates. (1) The value of each producer's certificate shall equal the producer's average creditable wages per unit shipped free of duty into the United States multiplied by the sum of:</P> <P>(i) The number of units shipped up to 300,000 units times a factor of 90%; plus</P> <P>(ii) Incremental units shipped up to 3,533,334 units times a factor of 85%; plus</P> <P>(iii) Incremental units shipped up to 6,766,667 times a factor of 80%; plus</P> <P>(iv) Incremental shipments up to 10,000,000 units times a factor of 75%.</P> <P>(2) The Departments may make adjustments for these data in the manner set forth in § 303.17(c).</P> <CITA>[64 FR 67150, Dec. 1, 1999, as amended at 70 FR 67650, Nov. 8, 2005]</CITA> </SECTION> <SECTION> <SECTNO>§ 303.21</SECTNO> <SUBJECT>Appeals.</SUBJECT> <P>(a) Any official decision or action relating to the issuance or use of production incentive certificates may be appealed to the Secretaries by any interested party. Such appeals must be received within 30 days of the date on which the decision was made or the action taken in accordance with the procedures set forth in paragraph (b) of this section. Interested parties may petition for the issuance of a rule, or amendment or repeal of a rule issued by the Secretaries. Interested parties may also petition for relief from the application of any rule on the basis of hardship or extraordinary circumstances resulting in the inability of the petitioner to comply with the rule.</P> <P>(b) Petitions shall bear the name and post office address of the petitioner and the name and address of the principal attorney or authorized representative (if any) for the party concerned. They shall be addressed to the Secretaries and filed in one original and two copies with the U.S. Department of Commerce, Import Administration, International Trade Administration, Washington, DC 20230, Attention: Statutory Import Programs Staff. Petitions shall contain the following:</P> <P>(1) A reference to the decision, action or rule which is the subject of the petition;</P> <P>(2) A short statement of the interest of the petitioner;</P> <P>(3) A statement of the facts as seen by the petitioner;</P> <P>(4) The petitioner's argument as to the points of law, policy or fact. In cases where policy error is contended, the alleged error together with the policy the submitting party advocates as the correct one should be described in full;</P> <P>(5) A conclusion specifying the action that the petitioner believes the Secretaries should take.</P> <P>(c) The Secretaries may at their discretion schedule a hearing and invite the participation of other interested parties.</P> <P>(d) The Secretaries shall communicate their decision, which shall be final, to the petitioner by registered, certified or express mail.</P> </SECTION> </SUBPART> </PART> <PART> <EAR>Pt. 310</EAR> <HD SOURCE="HED">PART 310—OFFICIAL U.S. GOVERNMENT RECOGNITION OF AND PARTICIPATION IN INTERNATIONAL EXPOSITIONS HELD IN THE UNITED STATES</HD> <CONTENTS> <SECHD>Sec.</SECHD> <SECTNO>310.1</SECTNO> <SUBJECT>Background and purpose.</SUBJECT> <SECTNO>310.2</SECTNO> <SUBJECT>Definitions.</SUBJECT> <SECTNO>310.3</SECTNO> <SUBJECT>Applications for Federal recognition.</SUBJECT> <SECTNO>310.4</SECTNO> <SUBJECT>Action on application.</SUBJECT> <SECTNO>310.5</SECTNO> <SUBJECT>Report of the Secretary on Federal recognition.</SUBJECT> <SECTNO>310.6</SECTNO> <SUBJECT>Recognition by the President.</SUBJECT> <SECTNO>310.7</SECTNO> <SUBJECT>Statement for Federal participation.</SUBJECT> <SECTNO>310.8</SECTNO> <SUBJECT>Proposed plan for Federal participation.<PRTPAGE P="40"/> </SUBJECT> <SECTNO>310.9</SECTNO> <SUBJECT>Report of the Secretary on Federal participation.</SUBJECT> </CONTENTS> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>Pub. L. 91-269, 84 Stat. 271 (22 U.S.C. 2801 <E T="03">et seq.).</E> </P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>40 FR 34107, Aug. 14, 1975, unless otherwise noted. Redesignated at 46 FR 57457, Nov. 24, 1981.</P> </SOURCE> <SECTION> <SECTNO>§ 310.1</SECTNO> <SUBJECT>Background and purpose.</SUBJECT> <P>The regulations in this part are issued under the authority of Pub. L. 91-269 (84 Stat. 271, 22 U.S.C. 2801 et seq.) which establishes an orderly procedure for Federal Government recognition of, and participation in, international expositions to be held in the United States. The Act provides, inter alia, that Federal recognition of an exposition is to be granted upon a finding by the President that such recognition will be in the national interest. In making this finding, the President is directed to consider, among other factors, a report from the Secretary of Commerce as to the purposes and reasons for an exposition and the extent of financial and other support to be provided by the State and local officials and business and community leaders where the exposition is to be held, and a report by the Secretary of State to determine whether the exposition is qualified for registration under Bureau of International Expositions (BIE) rules. The BIE is an international organization established by the Paris Convention of 1928 (T.I.A.S. 6548 as amended by T.I.A.S. 6549) to regulate the conduct and scheduling of international expositions in which foreign nations are officially invited to participate. The BIE divides international expositions into different categories and types and requires each member nation to observe specified minimum time intervals in scheduling each of these categories and types of expositions. <SU>1</SU> <FTREF/> Under BIE rules, member nations may not ordinarily participate in an international exposition unless such exposition has been approved by the BIE. The United States became a member of the BIE on April 30, 1968, upon ratification of the Paris Convention by the U.S. Senate (114 Cong. Rec. 11012).</P> <FTNT> <P> <SU>1</SU> The BIE defines a General Exposition of the First Category as an exposition dealing with progress achieved in a particular field applying to several branches of human activity at which the invited countries are obligated to construct national pavilions. A General Exposition of the Secondary Category is a similar exposition at which invited countries are not authorized to construct national pavilions, but occupy space provided by the exposition sponsors. Special Category Expositions are those dealing only with one particular technique, raw material, or basic need.</P> <P>The BIE frequency rules require that an interval of 15 years must elapse between General Expositions of the First Category held in one country. General Expositions of the Second Category require an interval of 10 years. An interval of 5 years must ordinarily elapse between Special Category Expositions of the same kind in one country or three months between Special Category Expositions of different kinds. These frequency intervals are computed from the date of the opening of the exposition.</P> <P>More detailed BIE classification criteria and regulations are contained in the Paris Convention of 1928, as amended in 1948 and 1966. Applicants not having a copy of the text of this convention may obtain one by writing the Director. (The Convention may soon be amended by a Protocol which has been approved by the BIE and ratified by the United States. This amendment would increase authorized frequencies or intervals for BIE approved expositions.)</P> </FTNT> <FP>Federal participation in a recognized international exposition requires a specific authorization by the Congress, upon a finding by the President that such participation would be in the national interest. The Act provides for the transmission to Congress of a participation proposal by the President. This proposal transmits to the Congress information regarding the exposition, including a statement that it has been registered by the BIE and a plan for Federal participation prepared by the Secretary of Commerce in cooperation with other interested Federal departments and agencies.</FP> </SECTION> <SECTION> <SECTNO>§ 310.2</SECTNO> <SUBJECT>Definitions.</SUBJECT> <P>For the purpose of this part, except where the context requires otherwise:</P> <P>(a) <E T="03">Act</E> means Pub. L. 91-269.</P> <P>(b) <E T="03">Secretary</E> means the Secretary of Commerce.</P> <P>(c) <E T="03">Commissioner General</E> means the person appointed to act as the senior Federal official for the exposition as required by BIE rules and regulations.<PRTPAGE P="41"/> </P> <P>(d) <E T="03">Director</E> means the Director of the International Expositions Staff, Office of the Deputy Assistant Secretary for Export Development, International Trade Administration, Department of Commerce.</P> <P>(e) <E T="03">Applicant</E> means a State, County, municipality, a political subdivision of the foregoing, private non-profit or not-for-profit organizations, or individuals filing an application with the Director seeking Federal recognition of an international exposition to be held in the United States.</P> <P>(f) <E T="03">State</E> means one of the several States of the United States, the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, American Samoa, and the Trust Territory of the Pacific Islands.</P> <P>(g) <E T="03">Exposition</E> means an international exposition proposed to be held in the United States for which an application has been filed with the Director seeking Federal recognition under the Act; which proposes to invite more than one foreign country to participate; and, which would exceed three weeks in duration. Any event under three weeks in duration is not considered an international exposition under BIE rules.</P> <CITA>[40 FR 34107, Aug. 14, 1975. Redesignated and amended at 46 FR 57457, Nov. 24, 1981]</CITA> </SECTION> <SECTION> <SECTNO>§ 310.3</SECTNO> <SUBJECT>Applications for Federal recognition.</SUBJECT> <P>(a) Applications for Federal recognition of an exposition shall be filed with, and all official communications in connection therewith addressed to, the International Expositions Staff, International Trade Administration, Department of Commerce, Washington, DC 20230.</P> <P>(b) Every application, exhibit, or enclosure, except where specifically waived by the Director, shall be in quadruplicate, duly authenticated and referenced.</P> <P>(c) Every application shall be in letter form and shall contain the date, address, and official designation of the applicant and shall be signed by an authorized officer or individual.</P> <P>(d) Every application, except where specifically waived by the Director, shall be accompanied by the following exhibits: </P> <EXTRACT> <P>1. <E T="03">Exhibit No. 1.</E> A study setting forth in detail the purpose for the exposition, including any historical, geographic, or other significant event of the host city, State, or region related to the exposition.</P> <P>2. <E T="03">Exhibit No. 2.</E> An exposition plan setting forth in detail (i) the theme of the exposition and the “storyline” around which the entire exposition is to be developed; (ii) whatever preliminary architectural and design plans are available on the physical layout of the site plus existing and projected structures; (iii) the type of participation proposed in the exposition (e.g., foreign and domestic exhibits); (iv) cultural, sports, and special events planned; (v) the proposed BIE category of the event and evidence of its conformity to the regulations of the BIE (a copy of these regulations can be obtained from the Director upon request); (vi) the proposed steps that will be taken to protect foreign exhibitors under the BIE model rules and regulations and (vii) in writing commit its organization to the completion of the exposition.</P> <P>3. <E T="03">Exhibit No. 3.</E> Documentary evidence of State, regional and local support (e.g., letters to the applicant from business and civic leadership of the region, pledging assistance and/or financing; State and/or municipal resolutions, acts, or appropriations; referendums on bond issues, and others).</P> <P>4. <E T="03">Exhibit No. 4.</E> An organization chart of the exposition management structure (actual or proposed) of the applicant, including description of the functions, duties and responsibilities of each official position along with bibliographic material, including any professional experience in the fields of architecture, industrial design, engineering, labor relations, concession management, interpretative theme planning, exhibit development, etc., on principal officers, if available. (The principal officials should also be prepared to submit subsequent individual statements under oath of their respective financial holdings and other interests.)</P> <P>5. <E T="03">Exhibit No. 5.</E> A statement setting forth in detail (i) the availability of visitor services in existence or projected to accommodate tourists at the exposition (e.g., number of hotel and motel units, number and type of restaurants, health facilities, etc.); (ii) evidence of adequate transportation facilities and accessibility of the host city to large groups of national and international visitors (e.g., number and schedule of airlines, bus lines, railroads, and truck lines serving the host city); and (iii) plans to promote the exposition as a major national and international tourist destination.</P> <P>6. <E T="03">Exhibit No. 6.</E> A statement setting forth in detail the applicant's plans for acquiring title to, or the right to occupy and use real property, other than that owned by the applicant or by the United States, essential for implementing the project or projects covered by the application. If the applicant, at the <PRTPAGE P="42"/>time of filing the application, has acquired title to the real property, he should submit a certified copy of the deed(s). If the applicant, at the time of filing the application, has by easement, lease, franchise, or otherwise acquired the right to occupy and use real property owned by others, he should submit a certified copy of the appropriate legal instrument(s) evidencing this right.</P> <P>7. <E T="03">Exhibit No. 7.</E> A statement of the latest prevailing hourly wage rates for construction workers in the host city (e.g., carpenters, cement masons, sheet metal workers, etc.).</P> <P>8. <E T="03">Exhibit No. 8.</E> Information on attitudes of labor leaders as to “no strike” agreements during the development and operation of the exposition. Actual “no strike” pledges are desirable.</P> <P>9. <E T="03">Exhibit No. 9.</E> A detailed study conducted and certified by a nationally recognized firm(s) in the field of economics, accounting, management, etc., setting forth (i) proposed capital investment cost; cash flow projections; and sources of financing available to meet these costs, including but not limited to funds from State and municipal financing, general obligation and/or general revenue bond issues, and other public or private sources of front-end capital; (ii) assurances that the “guaranteed financing” is or will be available in accordance with Section 2(a)(1)(b) of Pub. L. 91-269; (iii) the projected expenses for managing the exposition; (iv) projected operational revenues broken down to include admissions, space rental, concessions, service fees and miscellaneous income; and (v) cost-benefit projections. These should be accompanied by a statement of the firm that the needed cash flow, sources of funding, and revenue projections are realistic and attainable.</P> <P>10. <E T="03">Exhibit No. 10.</E> A description of the exposition implementation time schedule and the management control system to be utilized to implement the time schedule (e.g., PERT, CPM, etc.).</P> <P>11. <E T="03">Exhibit No. 11.</E> A statement setting forth in detail the public relations, publicity and other promotional plans of the applicant. For example, the statement could include: (i) an outline of the public relations/publicity program broken down by percentage allocations among the various media; (ii) a public relations/publicity program budget with the various calendar target dates for completion of phases prior to the opening, the opening and post-opening of the exposition; and (iii) protocol plans for U.S. and foreign dignitaries, as well as for special ceremonies and events and how these plans are to be financed.</P> <P>12. <E T="03">Exhibit No. 12.</E> A study setting forth in detail the benefits to be derived from the exposition and residual use plans. For example, the study might include: (i) extent of immediate economic benefits for the city/region/nation in proportion to total investment in the exposition; (ii) extent of long range economic benefits for the city/region/nation in proportion to total investment in the exposition; and (iii) extent of intangible (social, psychological, “good will”) benefits accruing to the city/region/nation including the solution or amelioration of any national/local problems.</P> <P>13. <E T="03">Exhibit No. 13.</E> A statement committing the applicant to develop and complete an environmental impact statement which complies with section 102(2)(c) of the National Environmental Policy Act of 1969 (83 Stat. 852; 42 U.S.C. 4331). Sample copies of environmental impact statements may be obtained from the Director. Prior to the Director's submitting a report to the Secretary containing his findings on the application for Federal recognition pursuant to § 310.4, the applicant must have completed the required Environmental Impact Statement (EIS), in a form acceptable to the Department of Commerce.</P> <P>14. <E T="03">Exhibit No. 14.</E> A detailed set of general and special rules and regulations governing the exposition and participation in it, which, if Federal recognition is obtained, can be used by the Federal Government in seeking BIE registration.</P> <P>15. <E T="03">Exhibit No. 15.</E> A statement from the applicant agreeing to accept a U.S. Commissioner General, appointed by the President. He will be recognized as the senior Federal official and titular head of the exposition, final arbiter in disputes with exhibitors, and the official contact with foreign governments. The applicant should also agree to furnish the Commissioner General and his staff with suitable facilities in the host community during the development and operation of the exposition.</P> </EXTRACT> <CITA>[40 FR 34107, Aug. 14, 1975. Redesignated and amended at 46 FR 57457, Nov. 24, 1981]</CITA> </SECTION> <SECTION> <SECTNO>§ 310.4</SECTNO> <SUBJECT>Action on application.</SUBJECT> <P>(a) Upon receipt of an application, the Director will analyze the application and all accompanying exhibits to insure compliance with the provisions of § 310.3 and report his findings with respect thereto to the Secretary.</P> <P>(b) If more than one applicant applies for Federal recognition for expositions to be held within three years or less of each other, the applications will be reviewed concurrently by the Director. The following standards will be considered in determining which if any of the competing applicants will be recommended for Federal recognition:</P> <P>(1) The order of receipt of the applications by the Director, complete with all exhibits required by § 310.3.<PRTPAGE P="43"/> </P> <P>(2) The financial plans of the applications. Primary consideration will be given to those applications which do not require Federal financing for exposition development. This does not extend to funding for a Federal pavilion, if one is desired.</P> <P>(3) The relative merit of the applications in terms of their qualifications as tourism destination sites, both with respect to existing facilities and those facilities planned for the proposed exposition. If necessary, to assist in making this determination, the Director will appoint a panel of travel industry experts representing tour developers, the transportation, entertainment and hotel/motel industries for the purpose of studying the competing applications and reporting to the Director its views as to which proposed site best meets the above criteria. If such a panel is deemed necessary, the provisions of the Federal Advisory Committee Act (86 Stat. 770, 5 U.S.C. App. I) will be applicable.</P> <P>(c) In analyzing the applications, the Director may hold public hearings with the objective of clarifying issues that might be raised by the application. If desired, the Director may utilize the services of an examiner.</P> <P>(d) If the Director, in his discretion, decides to hold a public hearing, notice of such hearing shall be published in the <E T="04">Federal Register,</E> and a copy of the notice shall be furnished to local newspapers. The notice shall state the subject to be considered and when and where the hearing will be held, specifically designating the date, hour, and place.</P> <P>(e) The following general procedure shall govern the conduct of public hearings: (1) Stenographic minutes of the proceedings shall be made; (2) the names and addresses of all parties present or represented at the hearing shall be recorded; and (3) the Director or Examiner shall read aloud for the record and for the benefit of the public such parts of the Act and of these regulations as bear on the application. He shall also read aloud for the record and for the benefit of the public such other important papers, or extracts therefrom, as may be necessary for a full understanding of the issues which require clarification. The Director or Examiner shall impress upon the parties in attendance at the public hearing, and shall specifically state at the commencement of the hearing, that the hearing is not adversary in nature and that the sole objective thereof is to clarify issues that might have been raised by the application.</P> <P>(f) Statements of interested parties may be presented orally at the hearing, or submitted in writing for the record.</P> <P>(g) Within six months after receipt of a fully completed application and/or the adjournment of the public hearing, the Director shall submit his report containing his findings on the application to the Secretary.</P> </SECTION> <SECTION> <SECTNO>§ 310.5</SECTNO> <SUBJECT>Report of the Secretary on Federal recognition.</SUBJECT> <P>If the Director's report recommends Federal recognition, the Secretary, within a reasonable time, shall submit a report to the President.</P> <P>(a) The Secretary's report shall include: (1) An evaluation of the purposes and reasons for the exposition; and (2) a determination as to whether guaranteed financial and other support has been secured by the exposition from affected State and local governments and from business and civic leaders of the region and others in amounts sufficient to assure the successful development and progress of the exposition.</P> <P>(b) Based on information from, and coordination with the Department of Commerce the Secretary of State shall also file a report with the President that the exposition qualifies for recognition by the BIE.</P> </SECTION> <SECTION> <SECTNO>§ 310.6</SECTNO> <SUBJECT>Recognition by the President.</SUBJECT> <P>If the President concurs in the favorable reports from the Secretaries of State and Commerce, he may grant Federal recognition to the exposition by indicating his concurrence to the two Secretaries and authorizing them to seek BIE registration.</P> </SECTION> <SECTION> <SECTNO>§ 310.7</SECTNO> <SUBJECT>Statement for Federal participation.</SUBJECT> <P>If Federal participation in the exposition, as well as Federal recognition thereof is desired, the applicant shall in a statement to the Director outline the nature of the Federal participation <PRTPAGE P="44"/>envisioned, including whether construction of a Federal pavilion is contemplated. (It should be noted, however, that before Federal participation can be authorized by the Congress under the Act, the exposition must have (i) met the criteria for Federal recognition and be so recognized, and (ii) been registered by the BIE. Although applicants need not submit such a statement until these prerequisites are satisfied, they are encouraged to do so.) Where the desired Federal participation includes a request for construction of a Federal pavilion, the statement shall be accompanied by the following exhibits: </P> <EXTRACT> <P>1. <E T="03">Exhibit No. 1.</E> A survey drawing of the proposed Federal pavilion site, showing its areas and boundaries, its grade elevations, and surface and subsoil conditions.</P> <P>2. <E T="03">Exhibit No. 2.</E> Evidence of resolutions, statutes, opinions, etc., as to the applicant's ability to convey by deed the real property comprising the proposed Federal pavilion site in fee-simple and free of liens and encumbrances to the Federal Government. The only consideration on the part of the Government for the conveyance of the property shall be the Government's commitment to participate in the exposition.</P> <P>3. <E T="03">Exhibit No. 3.</E> A certified copy of the building code which would be applicable should a pavilion be constructed.</P> <P>4. <E T="03">Exhibit No. 4.</E> An engineering drawing showing the accessibility of the proposed pavilion site to utilities (e.g., sewerage, water, gas, electricity, etc.).</P> <P>5. <E T="03">Exhibit No. 5.</E> A statement setting forth the security and maintenance and arrangements which the applicant would undertake (and an estimate of their cost) while a pavilion is under construction.</P> <P>6. <E T="03">Exhibit No. 6.</E> A study pursuant to Executive Order 11296 of August 10, 1966, entitled “Evaluation of flood hazard in locating Federally owned or financed buildings, roads and other facilities and in disposing of Federal land and properties.”</P> </EXTRACT> </SECTION> <SECTION> <SECTNO>§ 310.8</SECTNO> <SUBJECT>Proposed plan for Federal participation.</SUBJECT> <P>(a) Upon receipt of the statement, and the exhibits referred to in § 310.7, the Director shall prepare a proposed plan in cooperation with other interested departments and agencies of the Federal Government for Federal participation in the exposition.</P> <P>(b) In preparing the proposed plan for Federal participation in the exposition, the Director shall conduct a feasibility study of Federal participation including cost estimates by utilizing the services within the Federal Government, professional consultants and private sources as required and in accordance with applicable laws and regulations.</P> <P>(c) The Director, in the proposed plan for Federal participation in the exposition, shall determine whether or not a Federal pavilion should be constructed and, if so, whether or not the Government would have need for a permanent structure in the area of the exposition or whether a temporary structure would be more appropriate.</P> <P>(d) The Director shall seek the advice of the Administrator of the General Services Administration to the extent necessary in carrying out the proposed plan for Federal participation in the exposition.</P> <P>(e) Upon completion of the proposed plan for Federal participation in the exposition, the Director shall submit the plan to the Secretary.</P> </SECTION> <SECTION> <SECTNO>§ 310.9</SECTNO> <SUBJECT>Report of the Secretary on Federal participation.</SUBJECT> <P>Upon receipt of the Director's proposed plan for Federal participation, the Secretary, within a reasonable time, shall submit a report to the President including: (a) Evidence that the exposition has met the criteria for Federal recognition and has been so recognized; (b) a statement that the exposition has been registered by the BIE; and (c) a proposed plan for the Federal participation referred to in § 310.8.</P> </SECTION> </PART> <PART> <EAR>Pt. 315</EAR> <HD SOURCE="HED">PART 315—DETERMINATION OF BONA FIDE MOTOR-VEHICLE MANUFACTURER</HD> <CONTENTS> <SECHD>Sec.</SECHD> <SECTNO>315.1</SECTNO> <SUBJECT>Scope and purpose.</SUBJECT> <SECTNO>315.2</SECTNO> <SUBJECT>Definitions.</SUBJECT> <SECTNO>315.3</SECTNO> <SUBJECT>Application.</SUBJECT> <SECTNO>315.4</SECTNO> <SUBJECT>Determination by the Under Secretary.</SUBJECT> <SECTNO>315.5</SECTNO> <SUBJECT>Maintenance and publication of a list of bona fide motor-vehicle manufacturers.</SUBJECT> </CONTENTS> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>Headnote 2, subpart B, part 6, schedule 6, Tariff Schedules of the United States (19 U.S.C. 1202); sec. 501(2) of Title V, Automotive Products Trade Act of 1965 (19 U.S.C. 2031).</P> </AUTH> <SOURCE> <PRTPAGE P="45"/> <HD SOURCE="HED">Source:</HD> <P>45 FR 42214, June 23, 1980, unless otherwise noted. Redesignated at 53 FR 52115, Dec. 27, 1988.</P> </SOURCE> <SECTION> <SECTNO>§ 315.1</SECTNO> <SUBJECT>Scope and purpose.</SUBJECT> <P>The purpose of this part is to set forth regulations implementing headnote 2 to subpart B, part 6, schedule 6 of the Tariff Schedules of the United States as proclaimed by Proclamation No. 3682 of October 21, 1965 (3 CFR 140-65 Comp.). issued pursuant to the Automotive Products Trade Act of 1965 (19 U.S.C. 2031), by establishing a procedure under which a person may apply to be determined a bona fide motor-vehicle manufacturer. Under headnote 2 to subpart B, part 6, schedule 6 of the Tariff Schedules of the United States, whenever the Secretary of Commerce has determined a person to be a bona fide motor-vehicle manufacturer, such person is eligible to obtain duty-free importation of certain Canadian articles and to issue certain orders, contracts, or letters of intent under or pursuant to which other persons, not themselves bona fide motor-vehicle manufacturers, may obtain duty-free treatment for such Canadian articles. The responsibilities of Secretary of Commerce relating to the development, maintenance and publication of a list of bona fide motor-vehicle manufacturers and the authority to promulgate rules and regulations pertaining thereto have been delegated to Under Secretary for International Trade, Department of Commerce pursuant to Department of Commerce Organization Order 40-1, Amendment 9 of January 22, 1984 (49 FR 4538).</P> <CITA>[45 FR 42214, June 23, 1980. Redesignated and amended at 53 FR 52115, Dec. 27, 1988]</CITA> </SECTION> <SECTION> <SECTNO>§ 315.2</SECTNO> <SUBJECT>Definitions.</SUBJECT> <P>For the purpose of the regulations in this part and the forms issued to implement it:</P> <P>(a) <E T="03">Act</E> means the Automotive Products Trade Act of 1965 (79 Stat. 1016, 19 U.S.C. 2001 through 2033).</P> <P>(b) <E T="03">Under Secretary</E> means Under Secretary for International Trade of the Department of Commerce, or such official as may be designated by the Under Secretary to act in his or her behalf.</P> <P>(c) <E T="03">Motor vehicle</E> means a motor vehicle of a kind described in item 692.05 or 692.10 of subpart B, part 6, schedule 6, of the Tariff Schedules of the United States (excluding an electric trolley bus and a three-wheeled vehicle) or an automotive truck tractor.</P> <P>(d) <E T="03">Bona fide motor-vehicle manufacturer</E> means a person who upon application to the Under Secretary is determined by the Under Secretary to have produced no fewer than 15 complete motor vehicles in the United States during the 12-month period preceding the date certified in the application, and to have had as of such date installed capacity in the United States to produce 10 or more complete motor vehicles per 40-hour week. A person shall only be regarded as having had the capacity to produce a complete motor vehicle if his operation included the assembly of two or more major components (e.g., the attachment of a body to a chassis) to create a new motor vehicle ready for use.</P> <P>(e) <E T="03">Person</E> includes any individual, corporation, partnership, association, company, or any kind of organization.</P> <P>(f) <E T="03">United States</E> includes only the States, the District of Columbia and Puerto Rico.</P> <CITA>[45 FR 42214, June 23, 1980. Redesignated and amended at 53 FR 52115, Dec. 27, 1988]</CITA> </SECTION> <SECTION> <SECTNO>§ 315.3</SECTNO> <SUBJECT>Application.</SUBJECT> <P>Any person in the United States desiring to be determined a bona fide motor vehicle manufacturer shall apply to the Under Secretary by filing two copies of Form BIE-3 in accordance with the instructions set forth on the form and this part. Application forms may be obtained from the Under Secretary, District offices of the U.S. Department of Commerce, or from U.S. Collectors of Customs, and should be mailed or delivered to the: </P> <EXTRACT> <FP SOURCE="FP-1">U.S. Department of Commerce, International Trade Administration, Office of Automotive Industry Affairs—APTA, 14th and Constitution Avenue, NW., Room 4036, Washington, DC 20230.</FP> </EXTRACT> <CITA>[45 FR 42214, June 23, 1980. Redesignated and amended at 53 FR 52115, Dec. 27, 1988]</CITA> </SECTION> <SECTION> <PRTPAGE P="46"/> <SECTNO>§ 315.4</SECTNO> <SUBJECT>Determination by the Under Secretary.</SUBJECT> <P>(a) As soon as practicable after receipt of the application, the Under Secretary shall determine whether an applicant has produced no fewer than 15 complete motor vehicles in the United States during the 12-month period preceding the date certified in the application and as of such date, had installed capacity in the United States to produce 10 or more complete motor vehicles per 40 hour week. The Under Secretary may request such additional data from an applicant as he may deem appropriate to establish whether the applicant has satisfied the requirements of this part.</P> <P>(b) A determination by the Under Secretary under this part shall be effective for a 12-month period to begin on the date as of which the Under Secretary determines that the applicant qualified under this part. Within 60 days prior to the termination of such period, a bona fide motor vehicle manufacturer may apply for another determination under this part.</P> <P>(c) The Under Secretary will promptly notify each applicant in writing of the final action taken on his application.</P> <CITA>[45 FR 42214, June 23, 1980. Redesignated and amended at 53 FR 52115, Dec. 27, 1988]</CITA> </SECTION> <SECTION> <SECTNO>§ 315.5</SECTNO> <SUBJECT>Maintenance and publication of a list of bona fide motor-vehicle manufacturers.</SUBJECT> <P>The Under Secretary shall maintain and publish from time to time in the <E T="04">Federal Register,</E> a list of the names and addresses of bona fide motor vehicle manufacturers, and the effective dates from each determination.</P> <CITA>[45 FR 42214, June 23, 1980. Redesignated and amended at 53 FR 52115, Dec. 27, 1988]</CITA> </SECTION> </PART> <PART> <EAR>Pt. 325</EAR> <HD SOURCE="HED">PART 325—EXPORT TRADE CERTIFICATES OF REVIEW</HD> <CONTENTS> <SECHD>Sec.</SECHD> <SECTNO>325.1</SECTNO> <SUBJECT>Scope.</SUBJECT> <SECTNO>325.2</SECTNO> <SUBJECT>Definitions.</SUBJECT> <SECTNO>325.3</SECTNO> <SUBJECT>Applying for a certificate of review.</SUBJECT> <SECTNO>325.4</SECTNO> <SUBJECT>Calculating time periods.</SUBJECT> <SECTNO>325.5</SECTNO> <SUBJECT>Issuing the certificate.</SUBJECT> <SECTNO>325.6</SECTNO> <SUBJECT>Publishing notices in the <E T="04">Federal Register.</E> </SUBJECT> <SECTNO>325.7</SECTNO> <SUBJECT>Amending the certificate.</SUBJECT> <SECTNO>325.8</SECTNO> <SUBJECT>Expediting the certification process.</SUBJECT> <SECTNO>325.9</SECTNO> <SUBJECT>Reconsidering an application that has been denied.</SUBJECT> <SECTNO>325.10</SECTNO> <SUBJECT>Modifying or revoking a certificate.</SUBJECT> <SECTNO>325.11</SECTNO> <SUBJECT>Judicial review.</SUBJECT> <SECTNO>325.12</SECTNO> <SUBJECT>Returning the applicant's documents.</SUBJECT> <SECTNO>325.13</SECTNO> <SUBJECT>Nonadmissibility in evidence.</SUBJECT> <SECTNO>325.14</SECTNO> <SUBJECT>Submitting reports.</SUBJECT> <SECTNO>325.15</SECTNO> <SUBJECT>Relinquishing a certificate.</SUBJECT> <SECTNO>325.16</SECTNO> <SUBJECT>Protecting confidentiality of information.</SUBJECT> <SECTNO>325.17</SECTNO> <SUBJECT>Waiver.</SUBJECT> </CONTENTS> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>Title III of the Export Trading Company Act, Pub. L. 97-290 (96 Stat. 1240-1245, 15 U.S.C. 4011-4021).</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>50 FR 1806, Jan. 11, 1985, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>§ 325.1</SECTNO> <SUBJECT>Scope.</SUBJECT> <P>This part contains regulations for issuing export trade certificates of review under title III of the Export Trading Company Act, Pub. L. 97-290. A holder of a certificate of review and the members named in the certificate will have specific protections from private treble damage actions and government criminal and civil suits under U.S. Federal and State antitrust laws for the export conduct specified in the certificate and carried out during its effective period in compliance with its terms and conditions.</P> </SECTION> <SECTION> <SECTNO>§ 325.2</SECTNO> <SUBJECT>Definitions.</SUBJECT> <P>As used in this part:</P> <P>(a) <E T="03">Act</E> means title III of Pub. L. 97-290, Export Trade Certificates of Review.</P> <P>(b) <E T="03">Antitrust laws</E> means the antitrust laws, as the term is defined in the first section of the Clayton Act (15 U.S.C. 12), section 5 of the Federal Trade Commission Act (15 U.S.C. 45) (to the extent that section 5 prohibits unfair methods of competition), and any State antitrust or unfair competition law.</P> <P>(c) <E T="03">Applicant</E> means the person or persons who submit an application for a certificate.</P> <P>(d) <E T="03">Application</E> means an application for a certificate to be issued under the Act.</P> <P>(e) <E T="03">Attorney General</E> means the Attorney General of the United States or his designee.</P> <P>(f) <E T="03">Certificate</E> means a certificate of review issued pursuant to the Act.<PRTPAGE P="47"/> </P> <P>(g) <E T="03">Control</E> means either (1) holding 50 percent or more of the outstanding voting securities of an issuer; or (2) having the contractual power presently to designate a majority of the directors of a corporation, or in the case of an unincorporated entity, a majority of the individuals who exercise similar functions.</P> <P>(h) <E T="03">Controlling entity</E> means an entity which directly or indirectly controls a member or applicant, and is not controlled by any other entity.</P> <P>(i) <E T="03">Export conduct</E> means specified export trade activities and methods of operation carried out in specified export trade and export markets.</P> <P>(j) <E T="03">Export trade</E> means trade or commerce in goods, wares, merchandise, or services that are exported, or are in the course of being exported, from the United States or any territory of the United States to any foreign nation.</P> <P>(k) <E T="03">Export trade activities</E> means activities or agreements in the course of export trade.</P> <P>(l) <E T="03">Member</E> means an entity (U.S. or foreign) or a person which is seeking protection under the certificate with the applicant. A member may be a partner in a partnership or a joint venture; a shareholder of a corporation; or a participant in an association, cooperative, or other form of profit or nonprofit organization or relationship, by contract or other arrangement.</P> <P>(m) <E T="03">Method of operation</E> means any method by which an applicant or member conducts or proposes to conduct export trade.</P> <P>(n) <E T="03">Person</E> means an individual who is a resident of the United States; a partnership that is created under and exists pursuant to the laws of any State or of the United States; a State or local government entity; a corporation, whether it is organized as a profit or nonprofit corporation, that is created under and exists pursuant to the laws of any State or of the United States; or any association or combination, by contract or other arrangement, between or among such persons.</P> <P>(o) <E T="03">Secretary</E> means the Secretary of Commerce or his designee.</P> <P>(p) <E T="03">Services</E> means intangible economic output, including, but not limited to—</P> <P>(1) business, repair, and amusement services,</P> <P>(2) management, legal, engineering, architectural, and other professional services, and</P> <P>(3) financial, insurance, transportation, informational and any other data-based services, and communication services.</P> <P>(q) <E T="03">United States</E> means the fifty States of the United States, the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, American Samoa, Guam, the Commonwealth of the Northern Mariana Islands, and the Trust Territory of the Pacific Islands.</P> </SECTION> <SECTION> <SECTNO>§ 325.3</SECTNO> <SUBJECT>Applying for a certificate of review.</SUBJECT> <P>(a) <E T="03">Place of filing.</E> The applicant shall submit an original and two copies of a completed application form (ITA 4093-P, OMB control number 0625-0125) by personal delivery during normal business hours or by first class mail to the Office of Export Trading Company Affairs, Room 5618, International Trade Administration, Department of Commerce, Washington, DC 20230. Although not required, the applicant should consider using registered mail or some other delivery method that provides evidence of receipt.</P> <P>(b) <E T="03">Contents of application.</E> Any person may submit an application for certification. The application shall contain, where applicable, the information listed below. Some information, in particular the identification of goods or services that the applicant exports or proposes to export, is requested in a certain form (Standard Industrial Classification [SIC] numbers) if reasonably available. Where information does not exist in this form, the applicant may satisfy the request for information by providing it in some other convenient form. If the applicant is unable to provide any of the information requested or if the applicant believes that any of the information requested would be both burdensome to obtain and unnecessary for a determination on the application, the applicant should state that the information is not being provided or is being provided in lesser detail, and explain why.<PRTPAGE P="48"/> </P> <P>(1) Name and principal address of the applicant and of its controlling entity, if any. Include the name, title, address, telephone number, and relationship to the applicant of each individual to whom the Secretary should address correspondence.</P> <P>(2) The name and principal address of each member, and of each member's controlling entity, if any.</P> <P>(3) A copy of any legal instrument under which the applicant is organized or will operate. Include copies, as applicable, of its corporate charter, bylaws, partnership, joint venture, membership or other agreements or contracts under which the applicant is organized.</P> <P>(4) A copy of the applicant's most recent annual report, if any, and that of its controlling entity, if any. To the extent the information is not included in the annual report, or other documents submitted in connection with the application, a description of the applicant's domestic (including import) and export operations, including the nature of its business, the types of products or services in which it deals, and the places where it does business. This description may be supplemented by a chart or table.</P> <P>(5) A copy of each member's most recent annual report, if any, and that of its controlling entity, if any. To the extent the information is not included in the annual report, or other documents submitted in connection with the application, a description of each member's domestic (including import) and export operations, including the nature of its business, the types of products or services in which it deals, and the places where it does business. This description may be supplemented by a chart or table.</P> <P>(6) The names, titles, and responsibilities of the applicant's directors, officers, partners and managing officials, and their business affiliations with other members or other businesses that produce or sell any of the types of goods or services described in paragraph (b)(7) of this section.</P> <P>(7)(i) A description of the goods or services which the applicant exports or proposes to export under the certificate of review. This description should reflect the industry's customary definitions of the products and services.</P> <P>(ii) If it is reasonably available, an identification of the goods or services according to the Standard Industrial Classification (SIC) number. Goods should normally be identified according to the 7-digit level. Services should normally be identified at the most detailed SIC level available.</P> <P>(iii) The foreign geographic areas to which the applicant and each member export or intend to export their goods and services.</P> <P>(8) For each class of the goods, wares, merchandise or services described in paragraph (b)(7) of this section:</P> <P>(i) The principal geographic area or areas in the United States in which the applicant and each member sell their goods and services.</P> <P>(ii) For their previous two fiscal years, the dollar value of the applicant's and each member's (A) total domestic sales, if any; and (B) total export sales, if any. Include the value of the sales of any controlling entities and all entities under their control.</P> <P>(9) For each class of the goods, wares, merchandise or services described in paragraph (b)(7) of this section, the best information or estimate accessible to the applicant of the total value of sales in the United States by all companies for the last two years. Identify the source of the information or the basis of the estimate.</P> <P>(10) A description of the specific export conduct which the applicant seeks to have certified. Only the specific export conduct described in the application will be eligible for certification. For each item, the applicant should state the antitrust concern, if any, raised by that export conduct. (Examples of export conduct which applicants may seek to have certified include the manner in which goods and services will be obtained or provided; the manner in which prices or quantities will be set; exclusive agreements with U.S. suppliers or export intermediaries; territorial, quantity, or price agreements with U.S. suppliers or export intermediaries; and restrictions on membership or membership withdrawal. These examples are given only to illustrate the type of export conduct which might be of concern. The specific activities <PRTPAGE P="49"/>which the applicant may wish to have certified will depend on its particular circumstances or business plans.).</P> <P>(11) If the export trade, export trade activities, or methods of operation for which certification is sought will involve any agreement or any exchange of information among suppliers of the same or similar products or services with respect to domestic prices, production, sales, or other competitively sensitive business information, specify the nature of the agreement or exchange of information. Such information exchanges are not necessarily impermissible and may be eligible for certification. Whether or not certification is sought for such exchanges, this information is necessary to evaluate whether the conduct for which certification is sought meets the standards of the Act.</P> <P>(12) A statement of whether the applicant intends or reasonably expects that any exported goods or services covered by the proposed certificate will re-enter the United States, either in their original or modified form. If so, identify the goods or services and the manner in which they may re-enter the U.S.</P> <P>(13) The names and addresses of the suppliers of the goods and services to be exported (and the goods and services to be supplied by each) unless the goods and services to be exported are to be supplied by the applicant and/or its members.</P> <P>(14) A proposed non-confidential summary of the export conduct for which certification is sought. This summary may be used as the basis for publication in the <E T="04">Federal Register.</E> </P> <P>(15) Any other information that the applicant believes will be necessary or helpful to a determination of whether to issue a certificate under the standards of the Act.</P> <P>(16) (Optional) A draft proposed certificate.</P> <P>(c) The applicant must sign the application and certify that (1) each member has authorized the applicant to submit the application, and (2) to the best of its belief the information in the application is true, correct, and fully responsive.</P> <P>(d) <E T="03">Conformity with regulations.</E> No application shall be deemed submitted unless it complies with these regulations. Applicants are encouraged to seek guidance and assistance from the Department of Commerce in preparing and documenting their applications.</P> <P>(e) <E T="03">Review and acceptance.</E> The Secretary will stamp the application on the day that it is received in the Office of Export Trading Company Affairs. From that date, the Secretary will have five working days to decide whether the application is complete and can be deemed submitted under the Act. On the date on which the application is deemed submitted, the Secretary will stamp it with that date and notify the applicant that the application has been accepted for review. If the application is not accepted for review, the Secretary shall advise the applicant that it may file the application again after correcting the deficiencies that the Secretary has specified. If the Secretary does not take action on the application within the five-day period, the application shall be deemed submitted as of the sixth day.</P> <P>(f) <E T="03">Withdrawal of application.</E> The applicant may withdraw an application by written request at any time before the Secretary has determined whether to issue a certificate. An applicant who withdraws an application may submit a new application at any time.</P> <P>(g) <E T="03">Supplemental information.</E> After an application has been deemed submitted, if the Secretary or the Attorney General finds that additional information is necessary to make a determination on the application, the Secretary will ask the applicant in writing to supply the supplemental information. The running of the time period for a determination on the application will be suspended from the date on which the request is sent until the supplemental information is received and is considered complete. The Secretary shall promptly decide whether the supplemental information is complete, and shall notify the applicant of his decision. If the information is being sought by the Attorney General, the supplemental information may be deemed complete only if the Attorney General concurs. If the applicant does not agree to provide the additional information, <PRTPAGE P="50"/>or supplies information which the Secretary or the Attorney General considers incomplete, the Secretary and the Attorney General will decide whether the information in their possession is sufficient to make a determination on the application. If either the Secretary or the Attorney General considers the information in their possession insufficient, the Secretary may make an additional request or shall deny the application. If they consider the information in their possession sufficient to make a determination on the application, the Secretary shall notify the applicant that the time period for a determination has resumed running.</P> <APPRO>(Information collection requirements in paragraph (a) approved by the Office of Management and Budget under control number 0625-0125)</APPRO> </SECTION> <SECTION> <SECTNO>§ 325.4</SECTNO> <SUBJECT>Calculating time periods.</SUBJECT> <P>(a) When these regulations require action to be taken within a fixed time period, and the last day of the time period falls on a non-working day, the time period shall be extended to the next working day.</P> <P>(b) The day after an application is deemed submitted shall be deemed the first of the days within which the Secretary must make a determination on the application.</P> </SECTION> <SECTION> <SECTNO>§ 325.5</SECTNO> <SUBJECT>Issuing the certificate.</SUBJECT> <P>(a) <E T="03">Time period.</E> The Secretary shall determine whether to issue a certificate within ninety days after the application is deemed submitted (excluding any suspension pursuant to § 325.3(f) of the time period for making a determination). If the Secretary or the Attorney General considers it necessary, and the applicant agrees, the Secretary may take up to an additional thirty days to determine whether to issue a certificate.</P> <P>(b) <E T="03">Determination.</E> The Secretary shall issue a certificate to the applicant if he determines, and the Attorney General concurs, that the proposed export trade, export trade activities and methods of operation will—</P> <P>(1) Result in neither a substantial lessening of competition or restraint of trade within the United States nor a substantial restraint of the export trade of any competitor of the applicant;</P> <P>(2) Not unreasonably enhance, stabilize, or depress prices within the United States of the class of the goods, wares, merchandise or services exported by the applicant;</P> <P>(3) Not constitute unfair methods of competition against competitors who are engaged in the export of goods, wares, merchandise or services of the class exported by the applicant; and</P> <P>(4) Not include any act that may reasonably be expected to result in the sale for consumption or resale within the United States of the goods, wares, merchandise, or services exported by the applicant.</P> <P>(c) <E T="03">Concurrence of the Attorney General.</E> (1) Not later than seven days after an application is deemed submitted, the Secretary shall deliver to the Attorney General a copy of the application, any information submitted in connection with the application, and any other relevant information in his possession. The Secretary and the Attorney General shall make available to each other copies of other relevant information that was obtained in connection with the application, unless otherwise prohibited by law.</P> <P>(2) Not later than thirty days before the day a determination on the application is due, the Secretary shall deliver a proposed certificate to the Attorney General for discussion and comment. If the Attorney General does not agree that the proposed certificate may be issued, he shall, not later than ten days before the day a determination on the application is due, so advise the Secretary and state the reasons for the disagreement. The Secretary with the concurrence of the Attorney General, may modify or revise the proposed certificate to resolve the objections and problems raised by the Attorney General, or deny the application.</P> <P>(3) If the Attorney General receives the proposed certification by the date specified in the preceding paragraph and does not respond within the time period specified in that paragraph, he shall be deemed to concur in the proposed certificate.</P> <P>(d) <E T="03">Content of certificate.</E> The certificate shall specify the export conduct and all persons or entities which are <PRTPAGE P="51"/>protected from liability under the antitrust laws. The Secretary may certify the proposed export conduct contained in the application, in whole or in part, with such changes, modifications, terms, or conditions as are appropriate. If the Secretary intends to issue a certificate different from a draft certificate submitted by the applicant, the Secretary shall first consult with the applicant.</P> <P>(e) <E T="03">Certificate obtained by fraud.</E> A certificate shall be void <E T="03">ab initio</E> with respect to any export conduct for which a certificate was obtained by fraud.</P> <P>(f) <E T="03">Minimum thirty-day period.</E> The Secretary may not issue a certificate until thirty days after the summary of the application is published in the <E T="04">Federal Register</E>.</P> </SECTION> <SECTION> <SECTNO>§ 325.6</SECTNO> <SUBJECT>Publishing notices in the Federal Register.</SUBJECT> <P>(a) Within ten days after an application is deemed submitted, the Secretary shall deliver to the <E T="04">Federal Register</E> a notice summarizing the application. The notice shall identify the applicant and each member and shall include a summary of the export conduct for which certification is sought. If the Secretary does not intend to publish the summary proposed by the applicant, he shall notify the applicant. Within twenty days after the date the notice is published in the <E T="04">Federal Register,</E> interested parties may submit written comments to the Secretary on the application. The Secretary shall provide a copy of such comments to the Attorney General.</P> <P>(b) If a certificate is issued, the Secretary shall publish a summary of the certification in the <E T="04">Federal Register.</E> If an application is denied, the Secretary shall publish a notice of denial. Certificates will be available for inspection and copying in the International Trade Administration Freedom of Information Records Inspection Facility.</P> <P>(c) If the Secretary initiates proceedings to revoke or modify a certificate, he shall publish a notice of his final determination in the <E T="04">Federal Register</E>.</P> <P>(d) If the applicant requests reconsideration of a determination to deny an application, in whole or in part, the Secretary shall publish notice of his final determination in the <E T="04">Federal Register</E>.</P> </SECTION> <SECTION> <SECTNO>§ 325.7</SECTNO> <SUBJECT>Amending the certificate.</SUBJECT> <P>An application for an amendment to a certificate shall be treated in the same manner as an original application. The application for an amendment shall set forth the proposed amendment(s) and the reasons for them. It shall contain any information specified in § 325.3(b) that is relevant to the determination on the application for an amendment. The effective date of an amendment will be the date on which the application for the amendment was deemed submitted.</P> </SECTION> <SECTION> <SECTNO>§ 325.8</SECTNO> <SUBJECT>Expediting the certification process.</SUBJECT> <P>(a) <E T="03">Request for expedited action.</E> (1) An applicant may be granted expedited action on its application in the discretion of the Secretary and the Attorney General. The Secretary and the Attorney General will consider such requests in light of an applicant's showing that it has a special need for a prompt decision. A request for expedited action should include an explanation of why expedited action is needed, including a statement of all relevant facts and circumstances, such as bidding deadlines or other circumstances beyond the control of the applicant, that require the applicant to act in less than ninety days and that have a significant impact on the applicant's export trade.</P> <P>(2) The Secretary shall advise the applicant within ten days after the application is deemed submitted whether it will receive expedited action. The Secretary may grant the request in whole or in part and process the remainder of the application through the normal procedures. Expedited action may be granted only if the Attorney General concurs.</P> <P>(b) <E T="03">Time period.</E> The Secretary shall determine whether to issue a certificate to the applicant within forty-five days after the Secretary granted the request for expedited action, or within a longer period if agreed to by the applicant (excluding any suspension pursuant to § 325.3(f) of the time period for making a determination). The Secretary may not issue a certificate until <PRTPAGE P="52"/>thirty days after the summary of the application is published in the <E T="04">Federal Register</E>.</P> <P>(c) <E T="03">Concurrence of the Attorney General.</E> (1) Not later than ten working days before the date on which a determination on the application is due, the Secretary shall deliver a proposed certificate to the Attorney General for discussion and comment. If the Attorney General does not agree that the proposed certificate may be issued, he shall, not later than five working days before the date on which a determination on the application is due, so advise the Secretary and state the reasons for the disagreement. The Secretary, with the concurrence of the Attorney General, may revise the proposed certificate to resolve the objections and problems raised by the Attorney General, or deny the application.</P> <P>(2) If the Attorney General receives the proposed certificate by the date specified in the preceding paragraph and does not respond within the time period specified in that paragraph, he shall be deemed to concur in the proposed certificate.</P> <APPRO>(Information collection requirements in paragraph (a)(1) approved by the Office of Management and Budget under control number 0625-0125)</APPRO> </SECTION> <SECTION> <SECTNO>§ 325.9</SECTNO> <SUBJECT>Reconsidering an application that has been denied.</SUBJECT> <P>(a) If the Secretary determines to deny an application in whole or in part, he shall notify the applicant in writing of his decision and the reasons for his determination.</P> <P>(b) Within thirty days after receiving a notice of denial, the applicant may request the Secretary to reconsider his determination.</P> <P>(1) The request for reconsideration shall include a written statement setting forth the reasons why the applicant believes the decision should be reconsidered, and any additional information that the applicant considers relevant.</P> <P>(2) Upon the request of the applicant, the Secretary and the Attorney General will meet informally with the applicant and/or his representative to discuss the applicant's reasons why the determination on the application should be changed.</P> <P>(c) The Secretary shall consult with the Attorney General with regard to reconsidering an application. The Secretary may modify his original determination only if the Attorney General concurs.</P> <P>(d) The Secretary shall notify the applicant in writing of his final determination after reconsideration and of his reasons for the determination within thirty days after the request for reconsideration has been received.</P> </SECTION> <SECTION> <SECTNO>§ 325.10</SECTNO> <SUBJECT>Modifying or revoking a certificate.</SUBJECT> <P>(a) <E T="03">Action subject to modification or revocation.</E> The Secretary shall revoke a certificate, in whole or in part, or modify it, as the Secretary or the Attorney General considers necessary, if:</P> <P>(1) The export conduct of a person or entity protected by the certificate no longer complies with the requirements set forth in § 325.4(b);</P> <P>(2) A person or entity protected by the certificate fails to comply with a request for information under paragraph (b) of this section; or</P> <P>(3) The certificate holder fails to file a complete annual report.</P> <P>(b) <E T="03">Request for information.</E> If the Secretary or the Attorney General has reason to believe that the export trade, export trade activities, or methods of operation of a person or entity protected by a certificate no longer comply with the requirements set forth in § 325.4(b), the Secretary shall request any information that he or the Attorney General considers to be necessary to resolve the matter.</P> <P>(c) <E T="03">Proceedings for the revocation or modification of a certificate</E>—(1) <E T="03">Notification letter.</E> If, after reviewing the relevant information in their possession, it appears to the Secretary or the Attorney General that a certificate should be revoked or modified for any of the reasons set forth in paragraph (a) above, the Secretary shall so notify the certificate holder in writing. The notification shall be sent by registered or certified mail to the address specified in the certificate. The notification shall include a detailed statement of the facts, conduct, or circumstances which may warrant the revocation or modification of the certificate.<PRTPAGE P="53"/> </P> <P>(2) <E T="03">Answer.</E> The certificate holder shall respond to the notification letter within thirty days after receiving it, unless the Secretary, in his discretion, grants a thirty day extension for good cause shown. The certificate holder shall respond specifically to the statement included with the notification letter and state in detail why the facts, conduct or circumstances described in the notification letter are not true, or if they are true, why they do not warrant the revoking or modifying of the certificate. If the certificate holder does not respond within the specified period, it will be considered an admission of the statements contained in the notification letter.</P> <P>(3) <E T="03">Resolution of factual disputes.</E> Where material facts are in dispute, the Secretary and the Attorney General shall, upon request, meet informally with the certificate holder. The Secretary or the Attorney General may require the certificate holder to provide any documents or information that are necessary to support its contentions. After reviewing the statements of the certificate holder and the documents or information that the certificate holder has submitted, and upon considering other relevant documents or information in his possession, the Secretary shall make proposed findings of the factual matters in dispute. The Attorney General is not bound by the proposed findings.</P> <P>(4) <E T="03">Final determination.</E> The Secretary and the Attorney General shall review the notification letter and the certificate holder's answer to it, the proposed factual findings made under paragraph (c)(3) of this section, and any other relevant documents or information in their possession. If, after review, the Secretary or the Attorney General determines that the export conduct of a person or entity protected by the certificate no longer complies with the standards set forth in § 325.4(b), the Secretary shall revoke or modify the certificate as appropriate. If the Secretary or the Attorney General determines that the certificate holder has failed to comply with the request for information under paragraph (b) of this section, or has failed to file a complete annual report, and that the failure to comply or file should result in revocation of modification, the Secretary shall revoke or modify the certificate as appropriate. The determination will be final and will be issued to the certificate holder in writing. The notice to the certificate holder shall include a statement of the circumstances underlying and the reasons in support of the determination. If the Secretary determines to revoke or modify the certificate, the decision shall specify the effective date of the revocation or modification; this date must be at least thirty days but not more than ninety days after the Secretary notifies the certificate holder of his determination. The Secretary shall publish notice in the <E T="04">Federal Register</E> of a revocation or modification or a decision not to revoke or modify.</P> <P>(d) <E T="03">Investigative information.</E> In proceedings under this section, the Attorney General shall make available to the Secretary any information that has been obtained in response to Civil Investigative Demands issued under section 304(b)(3) of the Act. Unless prohibited by law, the Attorney General and the Secretary shall also make available to each other any other information which each is relying upon under these proceedings.</P> </SECTION> <SECTION> <SECTNO>§ 325.11</SECTNO> <SUBJECT>Judicial review.</SUBJECT> <P>(a) <E T="03">Review of certain determinations.</E> (1) Any person aggrieved by a final determination of the Secretary under § 325.5, § 325.7, § 325.9, or § 325.10 of these regulations may, within thirty days of the determination, bring an action in an appropriate district court of the United States to set aside the determination on the ground that it is erroneous. If a certificate is denied, the applicant may bring suit within thirty days after the notice of denial is published in the <E T="04">Federal Register,</E> or, if the applicant seeks reconsideration, within thirty days after the Secretary publishes in the <E T="04">Federal Register</E> notice of his determination after reconsideration.</P> <P>(b) For purposes of judicial review, determinations of the Secretary are final when notice is published in the <E T="04">Federal Register</E>.</P> <P>(c) <E T="03">Record for judicial review.</E> For purposes of judicial review, the record shall include all information presented to or obtained by the Secretary which <PRTPAGE P="54"/>had a bearing on the determination, the determination itself, the supporting statement setting forth the reasons for the determination, and the Attorney General's response to the Secretary indicating concurrence or nonconcurrence.</P> <P>(d) <E T="03">Limitation of judicial review.</E> Except as provided in paragraph (a) of this section, no agency action taken under the Act shall be subject to judicial review.</P> </SECTION> <SECTION> <SECTNO>§ 325.12</SECTNO> <SUBJECT>Returning the applicant's documents.</SUBJECT> <P>(a) Upon the denial or withdrawal of an application for a certificate in its entirety, the applicant may request the return of all copies of the documents submitted by the applicant in connection with the application to the Department of Commerce or the Department of Justice. The applicant shall submit this request in writing to both the Secretary and the Attorney General.</P> <P>(b) The Secretary and the Attorney General shall return the documents to the applicant within thirty days after they receive the applicant's request.</P> </SECTION> <SECTION> <SECTNO>§ 325.13</SECTNO> <SUBJECT>Nonadmissibility in evidence.</SUBJECT> <P>If the Secretary denies, in whole or in part, an application for a certificate or for an amendment to a certificate, or revokes or amends a certificate, neither the negative determination nor the statement of reasons therefor shall be admissible in evidence in any administrative or judicial proceeding in support of any claim under the antitrust laws.</P> </SECTION> <SECTION> <SECTNO>§ 325.14</SECTNO> <SUBJECT>Submitting reports.</SUBJECT> <P>(a) Not later than each anniversary of a certificate's effective date, the Secretary shall notify the certificate holder of the information to be included in the annual report. This report shall contain any changes relevant to the matters specified in the certificate, an update of the information contained in the application brought current to the anniversary date, and any other information the Secretary considers appropriate, after consultation with the Attorney General.</P> <P>(b) Not later than forty-five days after each anniversary of a certificate's effective date, a certificate holder shall submit its annual report to the Secretary. The Secretary shall deliver a copy of the annual report to the Attorney General.</P> <P>(c) Failure to submit a complete annual report may be the basis for modification or revocation of a certificate.</P> </SECTION> <SECTION> <SECTNO>§ 325.15</SECTNO> <SUBJECT>Relinquishing a certificate.</SUBJECT> <P>A certificate holder may relinquish a certificate at any time through written notice to the Secretary. The certificate will cease to be effective on the day the Secretary receives the notice.</P> </SECTION> <SECTION> <SECTNO>§ 325.16</SECTNO> <SUBJECT>Protecting confidentiality of information.</SUBJECT> <P>(a) Any information that is submitted by any person under the Act is exempt from disclosure under the Freedom of Information Act (5 U.S.C. 552).</P> <P>(b)(1) Except as authorized under paragraph (b)(3) of this section, no officer or employee of the United States shall disclose commercial or financial information submitted under this Act if the information is privileged or confidential, and if disclosing the information would cause harm to the person who submitted it.</P> <P>(2) A person submitting information shall designate the documents or information which it considers privileged or confidential and the disclosure of which would cause harm to the person submitting it. The Secretary shall endeavor to notify these persons of any requests or demands before disclosing any of this information.</P> <P>(3) An officer or employee of the United States may disclose information covered under paragraph (b)(1) of this section only under the following circumstances—</P> <P>(i) Upon a request made by either House of Congress or a Committee of the Congress,</P> <P>(ii) In a judicial or administrative proceeding subject to issuance of an appropriate protective order,</P> <P>(iii) With the written consent of the person who submitted the information,</P> <P>(iv) When the Secretary considers disclosure of the information to be necessary for determining whether or not <PRTPAGE P="55"/>to issue, amend, or revoke a certificate, if—</P> <P>(A) The Secretary determines that a non-confidential summary of the information is inadequate; and</P> <P>(B) The person who submitted the information is informed of the intent to disclose the information, and has an opportunity to advise the Secretary of the potential harm which disclosure may cause,</P> <P>(v) In accordance with any requirement imposed by a statute of the United States.</P> <P>(c) In any judicial or administrative proceeding in which disclosure is sought from the Secretary or the Attorney General of any confidential or privileged documents or information submitted under this Act, the Secretary or Attorney General shall attempt to notify the party who submitted the information of the request or demand for disclosure. In appropriate circumstances the Secretary or Attorney General may seek or support an appropriate protective order on behalf of the party who submitted the documents or information.</P> </SECTION> <SECTION> <SECTNO>§ 325.17</SECTNO> <SUBJECT>Waiver.</SUBJECT> <P>The Secretary may waive any of the provisions of this part in writing for good cause shown, if the Attorney General concurs and if permitted by law.</P> </SECTION> </PART> <PART> <EAR>Pt. 335</EAR> <HD SOURCE="HED">PART 335—IMPORTS OF WORSTED WOOL FABRIC</HD> <CONTENTS> <SECHD>Sec.</SECHD> <SECTNO>335.1</SECTNO> <SUBJECT>Purpose.</SUBJECT> <SECTNO>335.2</SECTNO> <SUBJECT>Definitions.</SUBJECT> <SECTNO>335.3</SECTNO> <SUBJECT>Applications to receive allocation.</SUBJECT> <SECTNO>335.4</SECTNO> <SUBJECT>Allocation.</SUBJECT> <SECTNO>335.5</SECTNO> <SUBJECT>Licenses.</SUBJECT> <SECTNO>335.6</SECTNO> <SUBJECT>Surrender, reallocation and license utilization requirement.</SUBJECT> </CONTENTS> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>Title V of the Trade and Development Act of 2000 (Public Law No. 106-200) as amended by Trade Act of 2002 and the Miscellaneous Trade Act of 2004 (Public Law 108-429), Presidential Proclamation No. 7383 (December 1, 2000).</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>66 FR 6461, Jan. 22, 2001, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>§ 335.1</SECTNO> <SUBJECT>Purpose.</SUBJECT> <P>This part sets forth regulations regarding the issuance and effect of licenses for the allocation of Worsted Wool Fabric under the TRQs established by Section 501 of the Act, including the new HTS categories 9902.51.15 and 9902.51.16 added by the amended Act.</P> <CITA>[70 FR 25777, May 16, 2005]</CITA> </SECTION> <SECTION> <SECTNO>§ 335.2</SECTNO> <SUBJECT>Definitions.</SUBJECT> <P>For purposes of these regulations and the forms used to implement them:</P> <P> <E T="03">The Act</E> means the Trade and Development Act of 2000 (Public Law No. 106-200, 114 Stat 251).</P> <P> <E T="03">The Department</E> means the United States Department of Commerce.</P> <P> <E T="03">HTS</E> means the Harmonized Tariff Schedule of the United States.</P> <P> <E T="03">Imports</E> subject to Tariff Rate Quotas are defined by date of presentation as defined in 19 CFR 132.1(d) and 19 CFR 132.11(a).</P> <P> <E T="03">Licensee</E> means an applicant for an allocation of the Tariff Rate Quotas that receives an allocation and a license.</P> <P> <E T="03">Production</E> means cutting and sewing garments in the United States.</P> <P> <E T="03">Tariff Rate Quota or Quotas</E> means the temporary duty reduction provided under Section 501 of the Act for limited quantities of fabrics of worsted wool with average diameters greater than 18.5 micron, certified by the importer as suitable for use in making suits, suit-type jackets, or trousers (HTS heading 9902.51.11), and for limited quantities of fabrics of worsted wool with average diameters of 18.5 microns or less, certified by the importer as suitable for use in making suits, suit-type jackets, or trousers for the benefit of persons (including firms, corporations, or other legal entities) who cut and sew men's and boy's wool suits, suit-type jackets and trousers in the United States (HTS heading 9902.51.15), and worsted wool fabric with average fiber diameters of 18.5 microns or less for the benefit of persons (including firms, corporations, or other legal entities) who weave worsted wool fabric in the United States (HTS 9902.51.16).</P> <P> <E T="03">Tariff Rate Quota Year</E> means a calendar year for which the Tariff Rate Quotas are in effect.</P> <P> <E T="03">Worsted Wool Fabric</E> means fabric containing at least 85 percent by weight worsted wool.</P> <P> <E T="03">Worsted Wool Suits</E> means men's and boys' worsted wool suits, containing at <PRTPAGE P="56"/>least 85 percent by weight worsted wool fabric.</P> <P> <E T="03">Worsted Wool Suit-Type Jackets</E> mean men's and boys' worsted wool suit-type jackets, containing at least 85 percent by weight worsted wool fabric.</P> <P> <E T="03">Worsted Wool Trousers</E> means men's and boys' worsted wool trousers, containing at least 85 percent by weight worsted wool fabric.</P> <CITA>[66 FR 6461, Jan. 22, 2001, as amended at 70 FR 25777, May 16, 2005]</CITA> </SECTION> <SECTION> <SECTNO>§ 335.3</SECTNO> <SUBJECT>Applications to receive allocation.</SUBJECT> <P>(a) In each year prior to a Tariff Rate Quota Year, the Department will cause to be published a <E T="04">Federal Register</E> notice soliciting applications to receive an allocation of the Tariff Rate Quotas.</P> <P>(b) An application for a Tariff Rate Quota allocation must be received, or postmarked by the U.S. Postal Service, within 30 calendar days after the date of publication of the <E T="04">Federal Register</E> notice soliciting applications.</P> <P>(c) For applying for TRQs 9902.51.11 or 9902.51.15 during the calendar year of the date of the application, an applicant must have cut and sewed in the United States all three of the following apparel products: Worsted Wool Suits, Worsted Wool Suit-Type Jackets, and Worsted Wool Trousers. The applicant may either have cut and sewn these products on its own behalf or had another person cut and sew the products on the applicant's behalf, provided the applicant owned the fabric at the time it was cut and sewn. The application must contain a statement to this effect. For applying for TRQ 9902.51.16 during the calendar year of the date of the application, an applicant must have woven in the United States worsted wool fabrics with average fiber diameters of 18.5 microns or less, suitable for use in making suits, suit-type jackets, and trousers. The application must contain a statement to this effect.</P> <P>(d) An applicant must provide the following information in the format set forth in the application form provided by the Department:</P> <P>(1) <E T="03">Identification.</E> Applicant's name, address, telephone number, fax number, and federal tax identification number; name of person submitting the application, and title, or capacity in which the person is acting for the applicant.</P> <P>(2)(i) <E T="03">Production.</E> Applicants for TRQs 9902.51.11 and 9902.51.15 must provide the name and address of each plant or location where Worsted Wool Suits, Worsted Wool Suit-Type Jackets, and Worsted Wool Trousers were cut and sewn or woven by the applicant and the name and address of all plants or locations that cut and sewed such products on behalf of the applicant. Production data, including the following: the quantity and value of the Worsted Wool Suits, Worsted Wool Suit-Type Jackets, and Worsted Wool Trousers cut and sewn in the United States by applicant, or on behalf of applicant, from fabric owned by applicant. This data must indicate actual production (not estimates) of Worsted Wool Suits, Worsted Wool Suit-Type Jackets and Worsted Wool Trousers containing at least 85 percent worsted wool fabric by weight with an average diameter of 18.5 microns or less. This data must also indicate actual production (not estimates) of Worsted Wool Suits, Worsted Wool Suit-Type Jackets and Worsted Wool Trousers containing at least 85 percent worsted wool fabric by weight with average diameter greater than 18.5 microns. Production data must be provided for the first six months of the year of the application. This data will be annualized for the purpose of making Tariff Rate Quota allocations.</P> <P>(ii) Applicants for TRQ 9902.51.16 must provide the name and address of each plant or location where Worsted Wool Fabric was woven by the applicant. The quantity and value of the Worsted Wool Fabric woven in the United States by applicant. This data must indicate actual production (not estimates) of Worsted Wool Fabric containing at least 85 percent worsted wool fabric by weight with an average diameter of 18.5 microns or less. For applications for the 2005 Tariff Rate Quota year, production data must be provided for full calendar year 2004. For allocations of Tariff Rate Quota years after 2005, production data must be provided for the first six months of the year of the application. This data will be annualized for the purpose of making Tariff Rate Quota allocations.<PRTPAGE P="57"/> </P> <P>(3) <E T="03">Worsted Wool Fabric.</E> Data indicating the quantity and value of the Worsted Wool Fabric used in reported production.</P> <P>(4) <E T="03">Certification.</E> A statement by the applicant (if a natural person), or on behalf of applicant, by an employee, officer or agent, with personal knowledge of the matters set out in the application, certifying that the information contained therein is complete and accurate, signed and sworn before a Notary Public, and acknowledging that false representations to a federal agency may result in criminal penalties under federal law.</P> <P>(e) <E T="03">Confidentiality.</E> Any business confidential information provided pursuant to this section that is marked business confidential will be kept confidential and protected from disclosure to the full extent permitted by law.</P> <P>(f) <E T="03">Record Retention:</E> The applicant shall retain records substantiating the information provided in § 335.3(d)(2), (3), and (4) for a period of 3 years and the records must be made available upon request by an appropriate U.S. government official.</P> <CITA>[66 FR 6461, Jan. 22, 2001, as amended at 70 FR 25777, May 16, 2005]</CITA> </SECTION> <SECTION> <SECTNO>§ 335.4</SECTNO> <SUBJECT>Allocation.</SUBJECT> <P>(a) For HTS 9902.51.11 and HTS 9902.51.15 each Tariff Rate Quota will be allocated separately. Allocation will be based on an applicant's Worsted Wool Suit production, on a weighted average basis, and the proportion of imported Worsted Wool Fabric consumed in the production of Worsted Wool Suits. In regards to HTS 9902.51.16 the Tariff Rate Quota will be allocated based on an applicant's Worsted Wool Fabric production, on a weighted average basis.</P> <P>(b) For the purpose of calculating allocations for HTS 9902.51.11 and HTS 9902.51.15 only, Worsted Wool Suit production will be increased by the percentage of imported fabric consumed in the production of Worsted Wool Suits to total fabric consumed in this production. For example, if an applicant uses 30 percent imported fabric in the production of Worsted Wool Suits, that applicant's production level will be increased by 30 percent.</P> <P>(c) The Department will cause to be published in the <E T="04">Federal Register</E> its determination to allocate the Tariff Rate Quotas and will notify applicants of their respective allocation as soon as possible. Promptly thereafter, the Department will issue licenses.</P> <CITA>[66 FR 6461, Jan. 22, 2001, as amended at 70 FR 25777, May 16, 2005]</CITA> </SECTION> <SECTION> <SECTNO>§ 335.5</SECTNO> <SUBJECT>Licenses.</SUBJECT> <P>(a) Each Licensee will receive a license, which will include a unique control number. The license is subject to the surrender and reallocation provisions in § 335.6.</P> <P>(b) A license may be exercised only for fabric entered for consumption, or withdrawn from warehouse for consumption, during the Tariff Rate Quota Year specified in the license. A license will be debited on the basis of date of entry for consumption or withdrawal from warehouse for consumption.</P> <P>(c) A Licensee may import fabric certified by the importer as suitable for use in making suits, suit-type jackets, or trousers under the appropriate Tariff Rate Quota as specified in the license (<E T="03">i.e.,</E> under the Tariff Rate Quota for fabric of worsted wool with average fiber diameters greater than 18.5 micron or the Tariff Rate Quota for fabric of worsted wool with average fiber diameters of 18.5 micron or less) up to the quantity specified in the license subject to the Tariff Rate Quota duty rate. Only a Licensee or an importer authorized by a Licensee will be permitted to import fabric under the Tariff Rate Quotas and to receive the Tariff Rate Quota duty rate.</P> <P>(d) The term of a license shall be the Tariff Rate Quota Year for which it is issued. Fabric may be entered or withdrawn from warehouse for consumption under a license only during the term of that license. The license cannot be used for fabric entered or withdrawn from warehouse for consumption after December 31 of the year of the term of the license.</P> <P>(e) The importer of record of fabric entered or withdrawn from warehouse for consumption under a license must be the Licensee or an importer authorized by the Licensee to act on its behalf. If the importer of record is the Licensee, the importer must possess the <PRTPAGE P="58"/>license at the time of filing the entry summary or warehouse withdrawal for consumption (Customs Form 7501).</P> <P>(f) A Licensee may only authorize an importer to import fabric under the license on its behalf by making such an authorization in writing or by electronic notice to the importer and providing a copy of such authorization to the Department. A Licensee may only withdraw authorization from an importer by notifying the importer, in writing or by electronic notice, and providing a copy to the Department.</P> <P>(g) The written authorization must include the unique number of the license, must specifically cover the type of fabric imported, and must be in the possession of the importer at the time of filing the entry summary or warehouse withdrawal for consumption (Customs Form 7501), or its electronic equivalent, in order for the importer to obtain the applicable Tariff Rate Quota duty rate.</P> <P>(h) It is the responsibility of the Licensee to safeguard the use of the license issued. The Department and the U.S. Customs Service will not be liable for any unauthorized or improper use of the license.</P> </SECTION> <SECTION> <SECTNO>§ 335.6</SECTNO> <SUBJECT>Surrender, reallocation and license utilization requirement.</SUBJECT> <P>(a) Not later than September 30 of each Tariff Rate Quota Year, a Licensee that will not import the full quantity granted in a license during the Tariff Rate Quota Year shall surrender the allocation that will not be used to the Department for purposes of reallocation through a written or electronic notice to the Department, including the license control number and the amount being surrendered. The surrender shall be final, and shall apply only to that Tariff Rate Quota Year.</P> <P>(b) For purposes of this section, “unused allocation” means the amount by which the quantity set forth in a license, including any additional amount received pursuant to paragraph (d) of this section, exceeds the quantity entered under the license, excluding any amount surrendered pursuant to paragraph (a) of this section.</P> <P>(c) The Department will notify Licensees of any amount surrendered and the application period for requests for reallocation. A Licensee that has imported, or intends to import, a quantity of Worsted Wool Fabric exceeding the quantity set forth in its license may apply to receive additional allocation from the amount to be reallocated. The application shall state the maximum amount of additional allocation the applicant will be able to use.</P> <P>(d) The amount surrendered will be reallocated to Licensees that have applied for reallocation. The entire amount surrendered will be reallocated pro-rata among applicants based on the applicant's share of the annual allocation, but will not exceed the amount set forth in the reallocation application as the maximum amount able to be used.</P> <P>(e) A Licensee whose unused allocation in a Tariff Rate Quota Year exceeds five percent of the quantity set forth in its license shall be subject to having its allocation reduced in the subsequent Tariff Rate Quota Year. The subsequent Tariff Rate Quota Year allocation will be reduced from the quantity such Licensee would otherwise have received by a quantity equal to 25 percent of its unused allocation from the prior year. A Licensee whose unused allocation in two or more consecutive Tariff Rate Quota Years exceeds five percent of the quantity set forth in its license shall have its allocation reduced in the subsequent Tariff Rate Quota Year by a quantity equal to 50 percent of its unused allocation from the prior year.</P> <P>(f) No penalty will be imposed under paragraph (e) of this section if the Licensee demonstrates to the satisfaction of the Department that the unused allocation resulted from breach by a carrier of its contract of carriage, breach by a supplier of its contract to supply the fabric, act of God, or force majeure.</P> <CITA>[66 FR 6461, Jan. 22, 2001, as amended at 70 FR 25777, May 16, 2005]</CITA> </SECTION> </PART> </SUBCHAP> </CHAPTER> <CHAPTER> <LRH>15 CFR Ch IV (1-1-07 Edition)</LRH> <RRH>Foreign-Trade Zones Board, Commerce</RRH> <TOC> <TOCHD> <PRTPAGE P="59"/> <HD SOURCE="HED">CHAPTER IV—FOREIGN-TRADE ZONES BOARD, DEPARTMENT OF COMMERCE</HD> </TOCHD> <PTHD>Part</PTHD> <PGHD>Page</PGHD> <CHAPTI> <PT>400</PT> <SUBJECT>Regulations of the Foreign-Trade Zones Board</SUBJECT> <PG>61</PG> </CHAPTI> </TOC> <PART> <PRTPAGE P="61"/> <EAR>Pt. 400</EAR> <HD SOURCE="HED">PART 400—REGULATIONS OF THE FOREIGN-TRADE ZONES BOARD</HD> <CONTENTS> <SUBPART> <HD SOURCE="HED">Subpart A—Scope and Definitions</HD> <SECHD>Sec.</SECHD> <SECTNO>400.1</SECTNO> <SUBJECT>Scope.</SUBJECT> <SECTNO>400.2</SECTNO> <SUBJECT>Definitions.</SUBJECT> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart B—Foreign-Trade Zones Board</HD> <SECTNO>400.11</SECTNO> <SUBJECT>Authority of the Board.</SUBJECT> <SECTNO>400.12</SECTNO> <SUBJECT>Responsibilities and authority of the Executive Secretary.</SUBJECT> <SECTNO>400.13</SECTNO> <SUBJECT>Board headquarters.</SUBJECT> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart C—Establishment and Modification of Zone Projects</HD> <SECTNO>400.21</SECTNO> <SUBJECT>Number and location of zones and subzones.</SUBJECT> <SECTNO>400.22</SECTNO> <SUBJECT>Eligible applicants.</SUBJECT> <SECTNO>400.23</SECTNO> <SUBJECT>Criteria for grants of authority for zones and subzones.</SUBJECT> <SECTNO>400.24</SECTNO> <SUBJECT>Application for zone.</SUBJECT> <SECTNO>400.25</SECTNO> <SUBJECT>Application for subzone.</SUBJECT> <SECTNO>400.26</SECTNO> <SUBJECT>Application for expansion or other modification to zone project.</SUBJECT> <SECTNO>400.27</SECTNO> <SUBJECT>Procedure for processing application.</SUBJECT> <SECTNO>400.28</SECTNO> <SUBJECT>Conditions, prohibitions and restrictions applicable to grants of authority.</SUBJECT> <SECTNO>400.29</SECTNO> <SUBJECT>Application fees.</SUBJECT> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart D—Manufacturing and Processing Activity—Reviews</HD> <SECTNO>400.31</SECTNO> <SUBJECT>Manufacturing and processing activity; criteria.</SUBJECT> <SECTNO>400.32</SECTNO> <SUBJECT>Procedure for review of request for approval of manufacturing or processing.</SUBJECT> <SECTNO>400.33</SECTNO> <SUBJECT>Restrictions on manufacturing and processing activity.</SUBJECT> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart E—Zone Operations and Administrative Requirements</HD> <SECTNO>400.41</SECTNO> <SUBJECT>Zone operations; general.</SUBJECT> <SECTNO>400.42</SECTNO> <SUBJECT>Requirements for commencement of operations in a zone project.</SUBJECT> <SECTNO>400.43</SECTNO> <SUBJECT>Restriction and prohibition of certain zone operations.</SUBJECT> <SECTNO>400.44</SECTNO> <SUBJECT>Zone-restricted merchandise.</SUBJECT> <SECTNO>400.45</SECTNO> <SUBJECT>Retail trade.</SUBJECT> <SECTNO>400.46</SECTNO> <SUBJECT>Accounts, records and reports.</SUBJECT> <SECTNO>400.47</SECTNO> <SUBJECT>Appeals to the Board from decisions of the Assistant Secretary for Import Administration and the Executive Secretary.</SUBJECT> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart F—Notice, Hearings, Record and Information</HD> <SECTNO>400.51</SECTNO> <SUBJECT>Notice and hearings.</SUBJECT> <SECTNO>400.52</SECTNO> <SUBJECT>Official record; public access.</SUBJECT> <SECTNO>400.53</SECTNO> <SUBJECT>Information.</SUBJECT> </SUBPART> </CONTENTS> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>Foreign-Trade Zones Act of June 18, 1934, as amended (Pub. L. 397, 73rd Congress, 48 Stat. 998-1003 (19 U.S.C. 81a-81u)).</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>56 FR 50798, Oct. 8, 1991, unless otherwise noted.</P> </SOURCE> <SUBPART> <HD SOURCE="HED">Subpart A—Scope and Definitions</HD> <SECTION> <SECTNO>§ 400.1</SECTNO> <SUBJECT>Scope.</SUBJECT> <P>(a) This part sets forth the regulations, including the rules of practice and procedure, of the Foreign-Trade Zones Board with regard to foreign-trade zones in the United States pursuant to the Foreign-Trade Zones Act of 1934, as amended (19 U.S.C. 81a-81u). It includes the substantive and procedural rules for the authorization of zones and the regulation of zone activity. The purpose of zones as stated in the Act is to “expedite and encourage foreign commerce, and other purposes.” The regulations provide the legal framework for accomplishing this purpose in the context of evolving U.S. economic and trade policy, and economic factors relating to international competition.</P> <P>(b) Part 146 of the regulations of the United States Customs Service (19 CFR part 146) governs zone operations, including the admission of merchandise into zones, zone activity involving such merchandise, and the transfer of merchandise from zones.</P> <P>(c) To the extent “activated” under Customs procedures in 19 CFR part 146, and only for the purposes specified in the Act (19 U.S.C. 81c), zones are treated for purposes of the tariff laws and Customs entry procedures as being outside the Customs territory of the United States. Under zone procedures, foreign and domestic merchandise may be admitted into zones for operations such as storage, exhibition, assembly, manufacture and processing, without being subject to formal Customs entry procedures and payment of duties, unless and until the foreign merchandise enters Customs territory for domestic consumption. At that time, the importer ordinarily has a choice of paying duties either at the rate applicable to the foreign material in its condition as admitted into a zone, or if used in manufacturing or processing, to the emerging product. Quota restrictions do not normally apply to foreign goods in zones. The Board can deny or limit the <PRTPAGE P="62"/>use of zone procedures in specific cases on public interest grounds. Merchandise moved into zones for export (zone-restricted status) may be considered exported for purposes such as federal excise tax rebates and Customs drawback. Foreign merchandise (tangible personal property) admitted to a zone and domestic merchandise held in a zone for exportation are exempt from certain state and local <E T="03">ad valorem</E> taxes (19 U.S.C. 81o(e)). Articles admitted into zones for purposes not specified in the Act shall be subject to the tariff laws and regular entry procedures, including the payment of applicable duties, taxes, and fees.</P> <CITA>[56 FR 50798, Oct. 8, 1991; 56 FR 56544, Nov. 5, 1991]</CITA> </SECTION> <SECTION> <SECTNO>§ 400.2</SECTNO> <SUBJECT>Definitions.</SUBJECT> <P>(a) <E T="03">Act</E> means the Foreign-Trade Zones Act of 1934, as amended.</P> <P>(b) <E T="03">Board</E> means the Foreign-Trade Zones Board, which consists of the Secretary of the Department of Commerce (chairman) and the Secretary of the Treasury, or their designated alternates.</P> <P>(c) <E T="03">Customs Service</E> means the United States Customs Service of the Department of the Treasury.</P> <P>(d) <E T="03">Executive Secretary</E> is the Executive Secretary of the Foreign-Trade Zones Board.</P> <P>(e) <E T="03">Foreign-trade zone</E> is a restricted-access site, in or adjacent to a Customs port of entry, operated pursuant to public utility principles under the sponsorship of a corporation granted authority by the Board and under supervision of the Customs Service.</P> <P>(f) <E T="03">Grant of authority</E> is a document issued by the Board which authorizes a zone grantee to establish, operate and maintain a zone project or a subzone, subject to limitations and conditions specified in this part and in 19 CFR part 146. The authority to establish a zone includes the authority to operate and the responsibility to maintain it.</P> <P>(g) <E T="03">Manufacturing,</E> as used in this part, means activity involving the substantial transformation of a foreign article resulting in a new and different article having a different name, character, and use.</P> <P>(h) <E T="03">Port Director</E> is normally the director of Customs for the Customs jurisdictional area in which the zone is located.</P> <P>(i) <E T="03">Port of entry</E> means a port of entry in the United States, as defined by part 101 of the regulations of the Customs Service (19 CFR part 101), or a user fee airport authorized under 19 U.S.C. 58b and listed in part 122 of the regulations of the Customs Service (19 CFR part 122).</P> <P>(j) <E T="03">Private corporation</E> means any corporation, other than a public corporation, which is organized for the purpose of establishing a zone project and which is chartered for this purpose under a law of the state in which the zone is located.</P> <P>(k) <E T="03">Processing,</E> when referring to zone activity, means any activity involving a change in condition of merchandise, other than manufacturing, which results in a change in the Customs classification of an article or in its eligibility for entry for consumption.</P> <P>(l) <E T="03">Public corporation</E> means a state, a political subdivision (including a municipality) or public agency thereof, or a corporate municipal instrumentality of one or more states.</P> <P>(m) <E T="03">State</E> includes any state of the United States, the District of Columbia, and Puerto Rico.</P> <P>(n) <E T="03">Subzone</E> means a special-purpose zone established as an adjunct to a zone project for a limited purpose.</P> <P>(o) <E T="03">Zone</E> means a foreign-trade zone established under the provisions of the Act and these regulations. Where used in this part, the term also includes subzones, unless the context indicates otherwise.</P> <P>(p) <E T="03">Zone grantee</E> is the corporate recipient of a grant of authority for a zone project. Where used in this part, the term “grantee” means “zone grantee” unless otherwise indicated.</P> <P>(q) <E T="03">Zone operator</E> is a corporation, partnership, or person that operates a zone or subzone under the terms of an agreement with the zone grantee or an intermediary entity, with the concurrence of the Port Director.</P> <P>(r) <E T="03">Zone project</E> means the zone plan, including all of the zone and subzone sites that the Board authorizes a single grantee to establish.</P> <P>(s) <E T="03">Zone site</E> means the physical location of a zone or subzone.<PRTPAGE P="63"/> </P> <P>(t) <E T="03">Zone user</E> is a party using a zone under agreement with the zone grantee or operator.</P> <CITA>[62 FR 53534, Oct. 15, 1997]</CITA> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart B—Foreign-Trade Zones Board</HD> <SECTION> <SECTNO>§ 400.11</SECTNO> <SUBJECT>Authority of the Board.</SUBJECT> <P>(a) <E T="03">In general.</E> In accordance with the Act and procedures of this part, the Board has authority to:</P> <P>(1) Prescribe rules and regulations concerning zones;</P> <P>(2) Issue grants of authority for zones and subzones, and approve modifications to the original zone project;</P> <P>(3) Approve manufacturing and processing activity in zones and subzones as described in subpart D of this part;</P> <P>(4) Make determinations on matters requiring Board decisions under this part;</P> <P>(5) Decide appeals in regard to certain decisions of the Commerce Department's Assistant Secretary for Import Administration or the Executive Secretary;</P> <P>(6) Inspect the premises, operations and accounts of zone grantees and operators;</P> <P>(7) Require zone grantees to report on zone operations;</P> <P>(8) Report annually to the Congress on zone operations;</P> <P>(9) Restrict or prohibit zone operations;</P> <P>(10) Impose fines for violations of the Act and this part;</P> <P>(11) Revoke grants of authority for cause; and</P> <P>(12) Determine, as appropriate, whether zone activity is or would be in the public interest or detrimental to the public interest.</P> <P>(b) <E T="03">Authority of the Chairman of the Board.</E> The Chairman of the Board (Secretary of the Department of Commerce) has the authority to:</P> <P>(1) Appoint the Executive Secretary of the Board;</P> <P>(2) Call meetings of the Board, with reasonable notice given to each member; and</P> <P>(3) Submit to the Congress the Board's annual report as prepared by the Executive Secretary.</P> <P>(c) <E T="03">Alternates.</E> Each member of the Board will designate an alternate with authority to act in an official capacity for that member.</P> <P>(d) <E T="03">Determinations of the Board.</E> (1) The determination of the Board will be based on the unanimous vote of the members (or alternate members) of the Board.</P> <P>(2) All votes will be recorded.</P> <P>(3) The Board will issue its determination in proceedings under the regulations in the form of a Board order.</P> <CITA>[56 FR 50798, Oct. 8, 1991, as amended at 62 FR 53535, Oct. 15, 1997</CITA> </SECTION> <SECTION> <SECTNO>§ 400.12</SECTNO> <SUBJECT>Responsibilities and authority of the Executive Secretary.</SUBJECT> <P>The Executive Secretary has the following responsibilities and authority:</P> <P>(a) Represent the Board in administrative, regulatory, operational, and public affairs matters;</P> <P>(b) Serve as director of the Commerce Department's Foreign-Trade Zones staff;</P> <P>(c) Execute and implement orders of the Board;</P> <P>(d) Arrange meetings and direct circulation of action documents for the Board;</P> <P>(e) Arrange with other sections of the Department of Commerce, Board agencies and other governmental agencies for studies and comments on zone issues and proposals;</P> <P>(f) Maintain custody of the seal, records, files and correspondence of the Board, with disposition subject to the regulations of the Department of Commerce;</P> <P>(g) Issue notices on zone matters for publication in the <E T="04">Federal Register</E>;</P> <P>(h) Determine subzone sponsorship questions as provided in § 400.22(d);</P> <P>(i) Determine whether additional information is needed for evaluation of applications and other requests for decisions under this part, as provided for in various sections of this part, including §§ 400.24, 400.25, and 400.26;</P> <P>(j) Issue guidelines on information required for subzone applications under § 400.25(a)(6);</P> <P>(k) Determine whether proposed modifications involve major changes under § 400.26(a)(2);<PRTPAGE P="64"/> </P> <P>(l) Determine whether applications meet prefiling requirements under § 400.27(b);</P> <P>(m) Direct processing of applications, including designation of examiners and scheduling of hearings under §§ 400.27 and 400.32;</P> <P>(n) Authorize minor modifications to zone projects under § 400.27(f);</P> <P>(o) Review changes in sourcing under § 400.28(a)(3);</P> <P>(p) Direct monitoring of zone activity under § 400.31(d);</P> <P>(q) Direct reviews and make recommendations on requests for manufacturing/processing approvals under § 400.32(b);</P> <P>(r) Determine questions of scope under § 400.32(c);</P> <P>(s) Accept rate schedules and determine their sufficiency under § 400.42(b)(3);</P> <P>(t) Review and decide zone rate complaints cases under § 400.42(b)(5);</P> <P>(u) Make recommendations in cases involving questions as to whether zone activity should be prohibited or restricted for public interest reasons, including reviews under § 400.43;</P> <P>(v) Authorize under certain circumstances the return of “zone-restricted merchandise” for entry into Customs territory under § 400.44;</P> <P>(w) Authorize certain duty-paid retail trade under § 400.45;</P> <P>(x) Determine the format for the annual reports of zone grantees to the Board and direct preparation of an annual report to Congress from the Board under § 400.46(d); and</P> <P>(y) Designate an acting Executive Secretary.</P> </SECTION> <SECTION> <SECTNO>§ 400.13</SECTNO> <SUBJECT>Board headquarters.</SUBJECT> <P>The headquarters of the Board is located within the U.S. Department of Commerce (Herbert C. Hoover Building), Pennsylvania Avenue and 14th Street, NW., Washington, DC 20230, as part of the office of the Foreign-Trade Zones staff.</P> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart C—Establishment and Modification of Zone Projects</HD> <SECTION> <SECTNO>§ 400.21</SECTNO> <SUBJECT>Number and location of zones and subzones.</SUBJECT> <P>(a) <E T="03">Number of zone projects—port of entry entitlement.</E> (1) Provided that the other requirements of this subpart are met:</P> <P>(i) Each port of entry is entitled to at least one zone project;</P> <P>(ii) If a port of entry is located in more than one state, each of the states in which the port of entry is located is entitled to a zone project; and</P> <P>(iii) If a port of entry is defined to include more than one city separated by a navigable waterway, each of the cities is entitled to a zone project.</P> <P>(2) Zone projects in addition to those approved under the entitlement provision of paragraph (a)(1) of this section may be authorized by the Board if it determines that existing project(s) will not adequately serve the public interest (convenience of commerce).</P> <P>(b) <E T="03">Location of zones and subzones—port of entry adjacency requirements.</E> (1) The Act provides that the Board may approve “zones in or adjacent to ports of entry” (19 U.S.C. 81b).</P> <P>(2) The “adjacency” requirement is satisfied if:</P> <P>(i) A general-purpose zone is located within 60 statute miles or 90 minutes' driving time from the outer limits of a port of entry;</P> <P>(ii) A subzone meets the following requirements relating to Customs supervision:</P> <P>(A) Proper Customs oversight can be accomplished with physical and electronic means; and</P> <P>(B) All electronically produced records are maintained in a format compatible with the requirements of the U.S. Customs Service for the duration of the record period; and</P> <P>(C) The grantee/operator agrees to present merchandise for examination at a Customs site selected by Customs when requested, and further agrees to present all necessary documents directly to the Customs oversight office.</P> </SECTION> <SECTION> <SECTNO>§ 400.22</SECTNO> <SUBJECT>Eligible applicants.</SUBJECT> <P>(a) <E T="03">In general.</E> Subject to the other provisions of this section, public or private corporations may apply for a grant of authority to establish a zone project. The board will give preference to public corporations.</P> <P>(b) <E T="03">Public and non-profit corporations.</E> The eligibility of public and non-profit <PRTPAGE P="65"/>corporations to apply for a grant of authority shall be supported by an enabling legislation of the legislature of the state in which the zone is to be located, indicating that the corporation, individually or as part of a class, is authorized to so apply.</P> <P>(c) <E T="03">Private for-profit corporations.</E> The eligibility of private for-profit corporations to apply for a grant of authority shall be supported by a special act of the state legislature naming the applicant corporation and by evidence indicating that the corporation is chartered for the purpose of establishing a zone.</P> <P>(d) <E T="03">Applicants for subzones</E>—(1) <E T="03">Eligibility.</E> The following entities are eligible to apply for a grant of authority to establish a subzone:</P> <P>(i) The zone grantee of the closest zone project in the same state;</P> <P>(ii) The zone grantee of another zone in the same state, which is a public corporation, if the Board, or the Executive Secretary, finds that such sponsorship better serves the public interest; or</P> <P>(iii) A state agency specifically authorized to submit such an application by an act of the state legislature.</P> <P>(2) <E T="03">Complaints.</E> If an application is submitted under paragraph (d)(1) (ii) or (iii) of this section, the Executive Secretary will:</P> <P>(i) Notify, in writing, the grantee specified in paragraph (d)(1)(i) of this section, who may, within 30 days, object to such sponsorship, in writing, with supporting information as to why the public interest would be better served by its acting as sponsor;</P> <P>(ii) Review such objections prior to filing the application to determine whether the proposed sponsorship is in the public interest, taking into account:</P> <P>(A) The complaining zone's structure and operation;</P> <P>(B) The views of State and local public agencies; and</P> <P>(C) The views of the proposed subzone operator;</P> <P>(iii) Notify the applicant and complainants in writing of the Executive Secretary's determination;</P> <P>(iv) If the Executive Secretary determines that the proposed sponsorship is in the public interest, file the application (see § 400.47 regarding appeals to decisions of the Executive Secretary).</P> </SECTION> <SECTION> <SECTNO>§ 400.23</SECTNO> <SUBJECT>Criteria for grants of authority for zones and subzones.</SUBJECT> <P>(a) <E T="03">Zones.</E> The Board will consider the following factors in determining whether to issue a grant of authority for a zone project:</P> <P>(1) The need for zone services in the port of entry area, taking into account existing as well as projected international trade related activities and employment impact;</P> <P>(2) The adequacy of the operational and financial plans and the suitability of the proposed sites and facilities, with justification for duplicative sites;</P> <P>(3) The extent of state and local government support, as indicated by the compatibility of the zone project with the community's master plan or stated goals for economic development and the views of State and local public officials involved in economic development. Such officials shall avoid commitments that anticipate outcome of Board decisions;</P> <P>(4) The views of persons and firms likely to be affected by proposed zone activity; and</P> <P>(5) If the proposal involves manufacturing or processing activity, the criteria in § 400.31.</P> <P>(b) <E T="03">Subzones.</E> In reviewing proposals for subzones the Board will also consider:</P> <P>(1) Whether the operation could be located in or otherwise accommodated by the multi-purpose facilities of the zone project serving the area;</P> <P>(2) The specific zone benefits sought and the significant public benefit(s) involved supported by evidence to meet the requirement in § 400.31(c); and</P> <P>(3) Whether the proposed activity is in the public interest, taking into account the criteria in § 400.31.</P> </SECTION> <SECTION> <SECTNO>§ 400.24</SECTNO> <SUBJECT>Application for zone.</SUBJECT> <P>(a) <E T="03">In general.</E> An application for a grant of authority to establish a zone project shall consist of a transmittal letter, an executive summary and five exhibits.</P> <P>(b) <E T="03">Letter of transmittal.</E> The transmittal letter shall be currently dated and signed by an authorized officer of <PRTPAGE P="66"/>the corporation and bear the corporate seal.</P> <P>(c) <E T="03">Executive summary.</E> The executive summary shall describe:</P> <P>(1) The corporation's legal authority to apply;</P> <P>(2) The type of authority requested from the Board;</P> <P>(3) The proposed zone site and facilities and the larger project of which the zone is a part;</P> <P>(4) The project background, including surveys and studies;</P> <P>(5) The relationship of the project to the community's and state's overall economic development plans and objectives;</P> <P>(6) The plans for operating and financing the project; and</P> <P>(7) Any additional pertinent information needed for a complete summary description of the proposal.</P> <P>(d) <E T="03">Exhibits.</E> (1) Exhibit One (Legal Authority for the Application) shall consist of:</P> <P>(i) A certified copy of the state enabling legislation described in § 400.22;</P> <P>(ii) A copy of pertinent sections of the applicant's charter or organization papers; and</P> <P>(iii) A certified copy of the resolution of the governing body of the corporation authorizing the official signing the application.</P> <P>(2) Exhibit Two (Site Description) shall consist of:</P> <P>(i) A detailed description of the zone site, including size, location, address, and a legal description of the area proposed for approval; a table with site designations shall be included when more than one site is involved;</P> <P>(ii) A summary description of the larger project of which the zone is a part, including type, size, location and address;</P> <P>(iii) A statement as to whether the zone is within or adjacent to a customs port of entry;</P> <P>(iv) A description of zone facilities and services, including dimensions and types of existing and proposed structures;</P> <P>(v) A description of existing or proposed site qualifications including: land-use zoning, relationship to flood-plain, infrastructure, utilities, security, and access to transportation services;</P> <P>(vi) A description of current activities carried on in or contiguous to the project;</P> <P>(vii) If part of a port facility, a summary of port and transportation services and facilities; if not, a summary description of transportation systems indicating connections from local and regional points of arrival to the zone; and</P> <P>(viii) A statement as to the possibilities and plans for zone expansion.</P> <P>(3) Exhibit Three (Operation and Financing) shall consist of:</P> <P>(i) A statement as to site ownership (if not owned by the applicant or proposed operator, evidence as to their legal right to use the site);</P> <P>(ii) A discussion of the operational plan (if the zone or a portion thereof is to be operated by other than the grantee, a summary of the selection process used or to be used, the type of operation agreement and, if available, the name and qualifications of the proposed operator);</P> <P>(iii) A brief explanation of the plans for providing facilities, physical security, and for satisfying the requirements for Customs automated systems;</P> <P>(iv) A summary of the plans for financing capital and operating costs, including a statement as to the source and use of funds; and</P> <P>(v) The estimated time schedule for construction and activation.</P> <P>(4) Exhibit Four (Economic Justification) shall include:</P> <P>(i) A statement of the community's overall economic goals and strategies in relation to those of the region and state;</P> <P>(ii) A reference to the plan or plans on which the goals are based and how they relate to the zone project;</P> <P>(iii) An economic profile of the community including identification and discussion of dominant sectors in terms of percentage of employment or income, area resources and problems, economic imbalances, unemployment rates, area foreign trade statistics, and area port facilities and transportation networks;</P> <P>(iv) A statement as to the role and objective of the zone project, and a justification for each of the proposed sites;<PRTPAGE P="67"/> </P> <P>(v) A discussion of the anticipated economic impact, direct and indirect, of the zone project, including references to public costs and benefits, employment, U.S. international trade, and environmental impact;</P> <P>(vi) A statement as to the need for zone services in the community, with information on surveys of business, and specific expressions of interest from proposed zone users, with letters of intent from those firms that are considered prime prospects; and</P> <P>(vii) A description of proposed manufacturing and processing operations, if applicable, with information covering the factors described in § 400.31(b), including the nature and scope of the operation and production process, materials and components used, items to be foreign sourced with relevant tariff information, zone benefits anticipated and how they will affect the firm's plans, and the economic impact of the operation on the community and on related domestic industries.</P> <P>(5) Exhibit Five (Maps) shall consist of:</P> <P>(i) The following maps and drawings:</P> <P>(A) State and county maps showing the general location of the zone in terms of the area's transportation network;</P> <P>(B) A local community map showing in red the location of the proposed zone; and</P> <P>(C) A detailed blueprint of the zone or subzone area showing zone boundaries in red, with dimensions and metes and bounds, or other legal description, and showing existing and proposed structures.</P> <P>(ii) Proposals involving existing zones shall include a drawing showing existing zone sites and the proposed changes.</P> <P>(e) <E T="03">Additional information.</E> The Board or the Executive Secretary may require additional information needed to adequately evaluate a proposal.</P> <P>(f) <E T="03">Amendment of application.</E> The Board or the Executive Secretary may allow amendment of the application.</P> <P>(g) <E T="03">Drafts.</E> Applicants may submit a draft application to the Executive Secretary for review.</P> <P>(h) <E T="03">Format and number of copies.</E> Unless the Executive Secretary alters the requirements of this paragraph, submit an original and 8 copies of the application on 8<FR>1/2</FR>″ × 11″ (216 × 279 mm) paper. Exhibit Five of the original application shall contain full-sized maps, and copies shall contain letter-sized reductions.</P> <P>(i) <E T="03">Where to file.</E> Address and mail the application to the Secretary of Commerce, Attention: Executive Secretary, Foreign-Trade Zones Board, U.S. Department of Commerce, Pennsylvania Avenue and 14th Street, NW., Washington, DC 20230.</P> <APPRO>(Approved by the Office of Management and Budget under control number 0625-0139)</APPRO> <CITA>[56 FR 50798, Oct. 8, 1991, as amended at 62 FR 53535, Oct. 15, 1997]</CITA> </SECTION> <SECTION> <SECTNO>§ 400.25</SECTNO> <SUBJECT>Application for subzone.</SUBJECT> <P>(a) <E T="03">In general.</E> An application to establish a subzone as part of a proposed or existing zone shall be submitted in accordance with the format in § 400.24, except that the focus of the information provided in Exhibit Four shall be on the specific activity involved and its net economic effect. The information submitted in Exhibit Four shall include:</P> <P>(1) A summary as to the reasons for the subzone and an explanation of its anticipated economic effects;</P> <P>(2) Identity of the subzone user and its corporate affiliation;</P> <P>(3) Description of the proposed activity, including:</P> <P>(i) Products;</P> <P>(ii) Materials and Components;</P> <P>(iii) Sourcing plans (domestic/foreign);</P> <P>(iv) Tariff rates and other import requirements or restrictions;</P> <P>(v) Information to assist the Board in making a determination under §§ 400.31(b)(1)(iii) and 400.31(b)(2);</P> <P>(vi) Benefits to subzone user;</P> <P>(vii) Information required in § 400.24(d)(4)(vii);</P> <P>(viii) Information as to whether alternative procedures have been considered as a means of obtaining the benefits sought;</P> <P>(ix) Information on the industry involved and extent of international competition; and</P> <P>(x) Economic impact of the operation on the area;</P> <P>(4) Reason operation cannot be conducted within a general-purpose zone;<PRTPAGE P="68"/> </P> <P>(5) Statement as to environmental impact; and</P> <P>(6) Any additional information requested by the Board or the Executive Secretary in order to conduct the review. The Executive Secretary may issue guidelines as to the kind of detailed information needed for various types of subzone cases.</P> <P>(b) <E T="03">Burden of proof.</E> An applicant for a subzone must demonstrate to the Board that the proposed operation meets the criteria in § 400.23(b).</P> <APPRO>(Approved by the Office of Management and Budget under control number 0625-0139)</APPRO> </SECTION> <SECTION> <SECTNO>§ 400.26</SECTNO> <SUBJECT>Application for expansion or other modification to zone project.</SUBJECT> <P>(a) <E T="03">In general.</E> (1) A grantee may apply to the Board for authority to expand or otherwise modify its zone project.</P> <P>(2) The Executive Secretary, in consultation with the Port Director, will determine whether the proposed modification involves a major change in the zone plan and is thus subject to paragraph (b) of this section, or is minor and subject to paragraph (c) of this section. In making this determination the Executive Secretary will consider the extent to which the proposed modification would:</P> <P>(i) Substantially modify the plan originally approved by the Board; or</P> <P>(ii) Expand the physical dimensions of the approved zone area as related to the scope of operations envisioned in the original plan.</P> <P>(b) <E T="03">Major modification to zone project.</E> An application for a major modification to an approved zone project shall be submitted in accordance with the format in § 400.24, except that:</P> <P>(1) Reference may be made to current information in an application from the same applicant on file with the Board; and</P> <P>(2) The content of Exhibit Four shall relate specifically to the proposed change.</P> <P>(c) <E T="03">Minor modification to zone project.</E> Other applications or requests under this subpart, including those for minor revisions of zone boundaries, grant of authority transfers, or time extensions, shall be submitted in letter form with information and documentation necessary for analysis, as determined by the Executive Secretary, who shall determine whether the proposed change is a minor one subject to this paragraph (c) instead of paragraph (b) of this section (see, § 400.27(f)).</P> <P>(d) <E T="03">Applications for other revisions to grants of authority.</E> Applications or requests for revisions to grants of authority, such as restriction modifications, shall be submitted in letter form with information and documentation necessary for analysis, as determined by the Executive Secretary. If the change involves removal or significant modification of a restriction included by the Board in a grant of authority, the review procedures of § 400.32 shall apply. If not, the procedure set forth in § 400.27(f) shall apply.</P> <APPRO>(Approved by the Office of Management and Budget under control number 0625-0139)</APPRO> <CITA>[56 FR 50798, Oct. 8, 1991, as amended at 62 FR 53535, Oct. 15, 1997]</CITA> </SECTION> <SECTION> <SECTNO>§ 400.27</SECTNO> <SUBJECT>Procedure for processing application.</SUBJECT> <P>(a) <E T="03">In general.</E> This section outlines the procedure followed in processing applications submitted under §§ 400.24-400.26. In addition, it sets forth the time schedules which will normally be applied in processing applications. The schedules will provide guidance to applicants with respect to the time frames for each of the procedural steps involved in the Board's review. Under these schedules, applications involving manufacturing or processing activity would be processed within 1 year, and those not involving such activity, within 10 months. While the schedules set forth a standard time frame, the Board may determine that it requires additional time based on special circumstances, such as when the public comment period must be reopened pursuant to paragraphs (d)(2)(v)(B) and (d)(3)(vi)(B) of this section.</P> <P>(b) <E T="03">Prefiling review.</E> Applications subject to § 400.29 shall be accompanied with a check in accordance with that section, and will be dated upon receipt at the headquarters of the Board. The Executive Secretary will determine whether the application satisfies the requirements of §§ 400.22-400.24, 400.25, 400.26, 400.32, and other applicable provisions of this part.<PRTPAGE P="69"/> </P> <P>(1) If the application is deficient, the Executive Secretary will notify the applicant within 20 days of receipt of the application, specifying the deficiencies. The applicant shall correct the deficiencies and submit the correct application within 30 days of notification. Otherwise, the application (original) will be returned.</P> <P>(2) If the application is sufficient, the Executive Secretary will within 45 days of receipt of the application:</P> <P>(i) Formally file the application, thereby initiating the proceeding or review;</P> <P>(ii) Assign a case docket number in cases requiring a Board order; and</P> <P>(iii) Notify the applicant.</P> <P>(c) <E T="03">Procedure—Executive Secretary responsibilities.</E> After initiating a proceeding based on an application under §§ 400.24-400.25, or 400.26(b), the Executive Secretary will:</P> <P>(1) Designate an examiner to conduct a review and prepare a report with recommendations for the Board;</P> <P>(2) Publish in the <E T="04">Federal Register</E> a notice of the formal filing of the application and initiation of the review which includes the name of the applicant, a description of the zone project, information as to any hearing scheduled at the outset, and an invitation for public comment, including a time period during which the public may submit evidence, factual information, and written arguments. Normally, the comment period will close 60 days after the date the notice appears, except that, if a hearing is held (see, § 400.51), the period will not close prior to 15 days after the date of the hearing. The closing date for general comment will ordinarily be followed by an additional 15-day period for rebuttal comments;</P> <P>(3) Send copies of the filing and initiation notice and the application to the Commissioner of Customs and the Port Director, or a designee;</P> <P>(4) Arrange for hearings, as appropriate;</P> <P>(5) Transmit the reports and recommendations of the examiner and of the officials identified in paragraph (c)(3) of this section to the Board for appropriate action; and</P> <P>(6) Notify the applicant in writing and publish notice in the <E T="04">Federal Register</E> of the Board's determination.</P> <P>(d) <E T="03">Case reviews—procedure and time schedule</E>—(1) <E T="03">Customs review.</E> The Port Director, or a designee, in accordance with agency regulations and directives, will submit a technical report to the Executive Secretary within 45 days of the conclusion of the public comment period described in paragraph (c)(2) of this section.</P> <P>(2) <E T="03">Examiners reviews—non-manufacturing/processing.</E> Examiners assigned to cases not involving manufacturing or processing activity shall conduct a review taking into account the factors enumerated in § 400.23 and other appropriate sections of this part, which shall include:</P> <P>(i) Conducting or participating in necessary hearings scheduled by the Executive Secretary;</P> <P>(ii) Reviewing case records, including public comments;</P> <P>(iii) Requesting information and evidence from parties of record;</P> <P>(iv) Developing information and evidence necessary for evaluation and analysis of the application in accordance with the criteria of the Act and this part;</P> <P>(v) Preparing a report with recommendations to the Board and submitting it to the Executive Secretary within 120 days of the close of the period for public comment (see, paragraph (c)(2) of this section).</P> <P>(A) If the report is unfavorable to the applicant, it shall be considered a preliminary report and the applicant shall be notified within 5 days (in writing or by phone) and given 30 days from the date of notification in which to respond to the report and submit additional evidence.</P> <P>(B) If the response contains new evidence on which there has not been an opportunity for public comment, the Executive Secretary will publish notice in the <E T="04">Federal Register</E> after completion of the review of the response. The new material will be made available for public inspection and the <E T="04">Federal Register</E> notice will invite further public comment for 30 days, with an additional 15-day period for rebuttal comments.</P> <P>(C) The Customs adviser shall be notified when necessary for further comments, which shall be submitted within 45 days after notification.<PRTPAGE P="70"/> </P> <P>(D) The examiners report in a situation under paragraph (d)(2)(v)(A) of this section shall be completed and submitted to the Executive Secretary within 30 days after receipt of additional evidence or notice from the applicant that there will be none; except that, if paragraph (d)(2)(v)(B) of this section applies, the report will be submitted within 30 days of the close of the period for public comment.</P> <P>(3) <E T="03">Examiners reviews—cases involving manufacturing or processing activity.</E> Examiners shall conduct a review taking into account the factors enumerated in § 400.23, § 400.31, and other appropriate sections of this part, which shall include:</P> <P>(i) Conducting or participating in hearings scheduled by the Executive Secretary;</P> <P>(ii) Reviewing case records, including public comments;</P> <P>(iii) Requesting information and evidence from parties of record;</P> <P>(iv) Developing information and evidence necessary for analysis of the threshold factors and the economic factors enumerated in § 400.31;</P> <P>(v) Conducting an analysis to include:</P> <P>(A) An evaluation of policy considerations pursuant to §§ 400.31(b)(1)(i) and 400.31(b)(1)(ii);</P> <P>(B) An evaluation of the economic factors enumerated in §§ 400.31(b)(1)(iii) and 400.31(b)(2), which shall include an evaluation of the economic impact on domestic industry, considering both producers of like products and producers of components/materials used in the manufacture/processing or assembly of the products. The evaluation will take into account such factors as market conditions, price sensitivity, degree and nature of foreign competition, effect on exports and imports, and the net effect on U.S. employment;</P> <P>(vi) Conducting appropriate industry surveys when necessary; and</P> <P>(vii) Preparing a report with recommendations to the Board and submitting it to the Executive Secretary within 150 days of the close of the period for public comment:</P> <P>(A) If the report is unfavorable to the applicant, it shall be considered a preliminary report and the applicant shall be notified (in writing or by phone) and given 45 days from the date of notification in which to respond to the report and submit additional evidence pertinent to the factors considered in the report.</P> <P>(B) If the response contains new evidence on which there has not been an opportunity for public comment, the Executive Secretary will publish notice in the <E T="04">Federal Register</E> after completion of the review of the response. The new material will be made available for public inspection and the <E T="04">Federal Register</E> notice will invite further public comment for 30 days, with an additional 15-day period for rebuttal comments.</P> <P>(e) <E T="03">Procedure—Completion of review</E>—(1) The Executive Secretary will circulate the examiners report with recommendations to Board members for their review and votes (by resolution).</P> <P>(2) The Treasury and Army Board members will return their votes to the Executive Secretary within 30 days, unless a formal meeting is requested (see, § 400.11(d)).</P> <P>(3) The Commerce Department will complete the decision process within 15 days of receiving the votes of both other Board members, and the Executive Secretary will publish the Board decision.</P> <P>(f) <E T="03">Procedure—Application for minor modification of zone project.</E> (1) The Executive Secretary, with the concurrence of the Port Director, will make a determination in cases under § 400.26(c) involving minor changes to zone projects that do not require a Board order, such as boundary modifications, including certain relocations, and will notify the applicant in writing of the decision within 30 days of the determination that the application or request can be processed under § 400.26(c).</P> <P>(2) The Port Director shall provide the decision as to concurrence within 20 days after being notified of the request or application.</P> <CITA>[56 FR 50798, Oct. 8, 1991, as amended at 62 FR 53535, Oct. 15, 1997]</CITA> </SECTION> <SECTION> <SECTNO>§ 400.28</SECTNO> <SUBJECT>Conditions, prohibitions and restrictions applicable to grants of authority.</SUBJECT> <P>(a) <E T="03">In general.</E> Grants of authority issued by the Board for the establishment of zones or subzones, including <PRTPAGE P="71"/>those already issued, are subject to the Act and this part and the following general conditions or limitations:</P> <P>(1) Approvals from the grantee and the Port Director, pursuant to 19 CFR part 146, are required prior to the activation of any portion of an approved zone project; and</P> <P>(2) Approval of the Board or the Commerce Department's Assistant Secretary for Import Administration pursuant to subpart D of this part is required prior to the commencement of manufacturing beyond the scope of that approved as part of the application or pursuant to reviews under this part (e.g., new end products, significant expansions of plant production capacity), and of similar changes in processing activity which involves foreign articles subject to quantitative import controls (quotas) or results in articles subject to a lower (actual or effective) duty rate (inverted tariff) than any of their foreign components.</P> <P>(3) <E T="03">Sourcing changes</E>—(i) <E T="03">Notification requirement.</E> The grantee or operator of a zone or subzone shall notify the Executive Secretary when there is a change in sourcing for authorized manufacturing or processing activity which involves the use of new foreign articles subject to quotas or inverted tariffs, unless—</P> <P>(A) Entries for consumption are not to be made at the lower duty rate; or</P> <P>(B) The product in which the foreign articles are to be incorporated is being produced for exportation.</P> <P>(ii) <E T="03">Notification procedure.</E> Notification shall be given prior to the commencement of the activity, when possible, otherwise at the time the new foreign articles arrive in the zone or are withdrawn from inventory for use in production. Requests may be made to the Executive Secretary for authority to submit notification of sourcing changes on a quarterly federal fiscal year basis covering changes in the previous quarter.</P> <P>(iii) <E T="03">Reviews.</E> (A) Upon notification of a sourcing change under paragraph (a)(3)(i) of this section, within 30 days, the Executive Secretary will conduct a preliminary review of the changes in relation to the approved activity to determine whether they could have significant adverse effects, taking into account the factors enumerated in § 400.31(b), and will submit a report and recommendation to the Commerce Department's Assistant Secretary for Import Administration, who shall determine whether review is necessary. The procedures of § 400.32(b) shall be used in these situations when appropriate.</P> <P>(B) The Board or the Commerce Department's Assistant Secretary for Import Administration may, based on public interest grounds, prohibit or restrict the use of zone procedures in regard to the change in sourcing, including requiring that items be placed in privileged foreign status (19 CFR 146.41) upon admission to a zone or subzone.</P> <P>(C) The Executive Secretary shall direct reviews necessary to ensure that activity involved in these situations continues to be in the public interest.</P> <P>(4) Prior to activation of a zone, the zone grantee or operator shall obtain all necessary permits from federal, state and local authorities, and except as otherwise specified in the Act or this part, shall comply with the requirements of those authorities.</P> <P>(5) A grant of authority for a zone or a subzone shall lapse unless the zone project (in case of subzones, the subzone facility) is activated, pursuant to 19 CFR part 146, and in operation not later than five years from:</P> <P>(i) A Board order (authorizing the zone or subzone) issued after November 7, 1991; or</P> <P>(ii) November 7, 1991.</P> <P>(6) A grant of authority approved under this subpart includes authority for the grantee to permit the erection of buildings necessary to carry out the approved zone project subject to concurrence of the Port Director.</P> <P>(7) Zone grantees, operators, and users shall permit federal government officials acting in an official capacity to have access to the zone project and records during normal business hours and under other reasonable circumstances.</P> <P>(8) A grant of authority may not be sold, conveyed, transferred, set over, or assigned (FTZ Act, section 17; 19 U.S.C. 81q). Private ownership of zone land and facilities is permitted provided the zone grantee retains the control necessary to implement the approved zone <PRTPAGE P="72"/>project. Should title to land or facilities be transferred after a grant of authority is issued, the zone grantee must retain, by agreement with the new owner, a level of control which allows the grantee to carry out its responsibilities as grantee. The sale of a zone site or facility for more than its fair market value without zone status could, depending on the circumstances, be subject to section 17 of the Act.</P> <P>(9) A grant of authority will not be construed to make the zone grantee automatically liable for violations by operators, users, or other parties.</P> <P>(b) <E T="03">Additional conditions, prohibitions and restrictions.</E> Other requirements, conditions or restrictions under Federal, State or local law may apply to the zone or subzone authorized by the grant of authority.</P> <P>(c) <E T="03">Revocation of grants of authority</E>—(1) <E T="03">In general.</E> As provided in this section, the Board can revoke in whole or in part a grant of authority for a zone or subzone whenever it determines that the zone grantee or, in the case of subzones, the subzone operator, has violated, repeatedly and willfully, the provisions of the Act.</P> <P>(2) <E T="03">Procedure.</E> When the Board has reason to believe that the conditions for revocation, as described in paragraph (a) of this section, are met, the Board will:</P> <P>(i) Notify the zone or subzone grantee in writing stating the nature of the alleged violations, and provide the grantee an opportunity to request a hearing on the proposed revocation;</P> <P>(ii) Conduct a hearing, if requested or otherwise if appropriate;</P> <P>(iii) Make a determination on the record of the proceeding not earlier than 4 months after providing notice to the zone grantee under paragraph (b)(1) of this section; and</P> <P>(iv) If the Board's determination is affirmative, publish notice of revocation of the grant of authority in the <E T="04">Federal Register</E>.</P> <P>(3) As provided in section 18 of the Act (19 U.S.C. 81r(c)), the zone or subzone grantee may appeal an order of the Board revoking the grant of authority.</P> <CITA>[56 FR 50798, Oct. 8, 1991; 56 FR 65833, Dec. 19, 1991, as amended at 62 FR 53535, Oct. 15, 1997]</CITA> </SECTION> <SECTION> <SECTNO>§ 400.29</SECTNO> <SUBJECT>Application fees.</SUBJECT> <P>(a) <E T="03">In general.</E> This section sets forth a uniform system of charges in the form of fees to recover some costs incurred by the Foreign-Trade Zones staff of the Department of Commerce in processing the applications listed in paragraph (b) of this section. The legal authority for the fees is 31 U.S.C. 9701, which provides for the collection of user fees by agencies of the Federal Government.</P> <P>(b) <E T="03">Uniform system of user fee charges.</E> The following graduated fee schedule establishes fees for certain types of applications and requests for authority based on their average processing time. Applications combining requests for more than one type of approval are subject to the fee for each category.</P> <GPOTABLE CDEF="s10,6" COLS="2" OPTS="L2,7/8,g1,t1,i1"> <ROW> <ENT I="01">(1) Additional general-purpose zones (§ 400.24; § 400.21(a)(2))</ENT> <ENT>$3,200</ENT> </ROW> <ROW> <ENT I="11">(2) Special-purpose subzones (§ 400.25):</ENT> </ROW> <ROW> <ENT I="02">(i) Non-manufacturing/processing or less than three products</ENT> <ENT>4,000</ENT> </ROW> <ROW> <ENT I="02">(ii) Manufacturing/processing—three or more products</ENT> <ENT>6,500</ENT> </ROW> <ROW> <ENT I="01">(3) Expansions (§ 400.26(b))</ENT> <ENT>1,600</ENT> </ROW> </GPOTABLE> <P>(c) Applications submitted to the Board shall include a check drawn on a national or state bank or trust company of the United States or Puerto Rico in the amount called for in paragraph (b) of this section. Uncertified checks must be acceptable for deposit by a Federal Reserve bank or branch.</P> <P>(d) Applicants shall make their checks payable to the U.S. Department of Commerce ITA. The checks will be deposited by ITA into the Treasury receipts account. If applications are found deficient under § 400.27(b)(1), or withdrawn by applicants prior to formal filing, refunds will be made.</P> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart D—Manufacturing and Processing Activity—Reviews</HD> <SECTION> <SECTNO>§ 400.31</SECTNO> <SUBJECT>Manufacturing and processing activity; criteria.</SUBJECT> <P>(a) <E T="03">In general.</E> Pursuant to section 15(c) of the Act (19 U.S.C. 81o(c)), the Board has authority to restrict or prohibit zone activity “that in its judgment is detrimental to the public interest.” When evaluating zone and subzone manufacturing and processing <PRTPAGE P="73"/>activity, either as proposed in an application, in a request for manufacturing/processing approval, or as part of a review of an ongoing operation, the Board shall determine whether the activity is in the public interest by reviewing it in relation to the evaluation criteria contained in paragraph (b) of this section. With regard to processing activity, this section shall apply only when the activity involves foreign articles subject to quantitative import controls (quotas) or results in articles subject to a lower duty rate (inverted tariff) than any of their foreign components. Such a review involves consideration of whether the activity is consistent with trade policy and programs, and whether its net economic effect is positive.</P> <P>(b) <E T="03">Evaluation criteria</E>—(1) <E T="03">Threshold factors.</E> It is the policy of the Board to authorize zone activity only when it is consistent with public policy and, in regard to activity involving foreign merchandise subject to quotas or inverted tariffs, when zone procedures are not the sole determining cause of imports. Thus, without undertaking a review of the economic factors enumerated in § 400.31(b)(2), the Board shall deny or restrict authority for proposed or ongoing activity if it determines that:</P> <P>(i) The activity is inconsistent with U.S. trade and tariff law, or policy which has been formally adopted by the Executive branch;</P> <P>(ii) Board approval of the activity under review would seriously prejudice U.S. tariff and trade negotiations or other initiatives; or</P> <P>(iii) The activity involves items subject to quantitative import controls or inverted tariffs, and the use of zone procedures would be the direct and sole cause of imports that, but for such procedures, would not likely otherwise have occurred, taking into account imports both as individual items and as components of imported products.</P> <P>(2) <E T="03">Economic factors.</E> After its review of threshold factors, if there is a basis for further consideration, the Board shall consider the following factors in determiing the net economic effect of the activity or proposed activity:</P> <P>(i) Overall employment impact;</P> <P>(ii) Exports and reexports;</P> <P>(iii) Retention or creation of manufacturing or processing activity;</P> <P>(iv) Extent of value-added activity;</P> <P>(v) Overall effect on import levels of relevant products, including import displacement;</P> <P>(vi) Extent and nature of foreign competition in relevant products;</P> <P>(vii) Impact on related domestic industry, taking into account market conditions; and</P> <P>(viii) Other relevant information relating to public interest and net economic impact considerations, including technology transfers and investment effects.</P> <P>(c) <E T="03">Methodology and evidence</E>—(1)(i) The first phase (§ 400.31(b)) involves consideration of threshold factors. If an examiner or reviewer makes a negative finding on any of the factors in paragraph (b)(1) of this section in the course of a review, the applicant shall be informed pursuant to § 400.27(d)(3)(vii)(A). When threshold factors are the basis for a negative recommendation in a review of ongoing activity, the zone grantee and directly affected party shall be notified and given an opportunity to submit evidence pursuant to § 400.27(d)(3)(vii)(A). If the Board determines in the negative any of the factors in paragraph (b)(1) of this section, it shall deny or restrict authority for the proposed or ongoing activity.</P> <P>(ii) The process for paragraph (b)(2) of this section involves consideration of the enumerated economic factors, taking into account their relative weight and significance under the circumstances. Previous evaluations in similar cases are considered. The net effect is arrived at by balancing the positive and negative factors and arriving at a net economic effect.</P> <P>(2) <E T="03">Contributory effect.</E> In assessing the significance of the economic effect of the zone activity as part of the consideration of economic factors, and in consideration of whether there is a significant public benefit, the Board may consider the contributory effect zone savings have as an incremental part of cost effectiveness programs adopted by companies to improve their international competitiveness.<PRTPAGE P="74"/> </P> <P>(3) <E T="03">Burden of proof.</E> Applicants for subzones shall have the burden of submitting evidence establishing that the activity does or would result in a significant public benefit, taking into account the factors in paragraph (b) of this section. Applicants for approval of manufacturing or processing in general-purpose zones shall submit evidence regarding the positive economic effects that would result from activity within the zone and may submit evidence and comments as to policy considerations. Both types of applicants are expected to submit information in response to evidence of adverse economic effects during the public comment period. Parties should submit evidence that is probative and substantial in addressing the matter in issue.</P> <P>(d) <E T="03">Monitoring and post-approval reviews</E>—(1) Ongoing zone activity may be reviewed at anytime to determine whether it is in compliance with the Act and regulations, as well as the authority granted by the Board. Reviews may also be conducted to determine whether there are changed circumstances that raise questions as to whether the activity is detrimental to the public interest, taking into account the factors enumerated in § 400.31. The Board may prescribe special monitoring requirements in its decisions when appropriate.</P> <P>(2) Reviews may be initiated by the Board, the Commerce Department's Assistant Secretary for Import Administration, or the Executive Secretary; or, they may be undertaken in response to requests from parties directly affected by the activity in question and showing good cause.</P> <P>(3) Upon review, if the Board finds that zone activity is no longer in the public interest, taking into account the provisions of § 400.31, it may restrict the activity in question. The appropriateness of a delayed effective date will be considered in such cases.</P> <CITA>[56 FR 50798, Oct. 8, 1991; 56 FR 56544, Nov. 5, 1991]</CITA> </SECTION> <SECTION> <SECTNO>§ 400.32</SECTNO> <SUBJECT>Procedure for review of request for approval of manufacturing or processing.</SUBJECT> <P>(a) <E T="03">Request as part of application for grant of authority.</E> A request for approval of proposed manufacturing or processing activity may be submitted as part of an application under §§ 400.24-400.26(a). The Board will review the request taking into account the criteria in § 400.31(b).</P> <P>(b) <E T="03">Request for manufacturing/processing in approved zone or subzone.</E> Prior to the commencement of manufacturing in a zone or subzone involving activity beyond the scope of that which has been previously authorized at the facility (i.e., new end products, significant expansions of plant production capacity), and of similar changes in processing activity that involves foreign articles subject to quotas or inverted tariffs, zone grantees or operators shall request the determination referred to in § 400.31(a) by submitting a request in writing to the Executive Secretary (§ 400.28(a)(2)). Such requests shall include the information required by §§ 400.24(d)(4)(vii) and 400.25.</P> <P>(1) The Commerce Department's Assistant Secretary for Import Administration may make determinations in these cases based upon a review by the FTZ staff and the recommendation of the Executive Secretary, when:</P> <P>(i) The proposed activity is the same, in terms of products involved, to activity recently approved by the Board and similar in circumstances; or</P> <P>(ii) The activity is for export only; or</P> <P>(iii) The zone benefits sought do not involve the election of non-privileged foreign status (19 CFR 146.42) on items involving inverted tariffs; or</P> <P>(iv) The Port Director determines that the activity could otherwise be conducted under Customs bonded procedures.</P> <P>(2) When the informal procedure in paragraph (b)(1) of this section is not appropriate—</P> <P>(i) The Executive Secretary will:</P> <P>(A) Assign a case docket number and give notice in the <E T="04">Federal Register</E> inviting public comment;</P> <P>(B) Arrange a public hearing, if appropriate;</P> <P>(C) Appoint an examiner, if appropriate, to conduct a review and prepare a report with recommendations for the Board; and</P> <P>(D) Prepare and transmit a report with recommendations, or transmit the examiners report, to the Board for appropriate action; and<PRTPAGE P="75"/> </P> <P>(ii) The Board will make a determination on the requests, and the Executive Secretary will notify the grantee in writing of the Board's determination, and will publish notice of the determination in the <E T="04">Federal Register</E>.</P> <P>(c) <E T="03">Scope determinations.</E> Determinations shall be made by the Executive Secretary as to whether changes in activity are within the scope of related activity already approved for the facility involved under this part. When warranted, the procedures of paragraph (b)(2) of this section will be followed.</P> <CITA>[56 FR 50798, Oct. 8, 1991, as amended at 62 FR 53535, Oct. 15, 1997]</CITA> </SECTION> <SECTION> <SECTNO>§ 400.33</SECTNO> <SUBJECT>Restrictions on manufacturing and processing activity.</SUBJECT> <P>(a) <E T="03">In general.</E> In approving manufacturing or processing activity for a zone or subzone the Board may adopt restrictions to protect the public interest, health, or safety. The Commerce Department's Assistant Secretary for Import Administration may similarly adopt restrictions in exercising authority under § 400.32(b)(1).</P> <P>(b) <E T="03">Restrictions on items subject to antidumping and countervailing duty actions</E>—(1) <E T="03">Board policy.</E> Zone procedures shall not be used to circumvent antidumping (AD) and countervailing duty (CVD) actions under 19 CFR parts 353 and 355.</P> <P>(2) <E T="03">Admission of items subject to AD/CVD actions.</E> Items subject to AD/CVD orders or items which would be otherwise subject to suspension of liquidation under AD/CVD procedures, if they entered U.S. Customs territory, shall be placed in privileged foreign status (19 CFR 146.41) upon admission to a zone or subzone. Upon entry for consumption, such items shall be subject to duties under AD/CVD orders or to suspension of liquidation, as appropriate, under 19 CFR parts 353 and 355.</P> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart E—Zone Operations and Administrative Requirements</HD> <SECTION> <SECTNO>§ 400.41</SECTNO> <SUBJECT>Zone operations; general.</SUBJECT> <P>Zones shall be operated by or under the contractual oversight of zone grantees, subject to the requirements of the Act and this part, as well as those of other federal, state and local agencies having jurisdiction over the site and operation. Zone grantees shall ensure that the reasonable zone needs of the business community are served by their zone projects. The Port Director represents the Board with regard to the zone projects in the district and is responsible for enforcement, including physical security and access requirements, as provided in 19 CFR part 146.</P> <CITA>[56 FR 50798, Oct. 8, 1991, as amended at 62 FR 53535, Oct. 15, 1997]</CITA> </SECTION> <SECTION> <SECTNO>§ 400.42</SECTNO> <SUBJECT>Requirements for commencement of operations in a zone project.</SUBJECT> <P>(a) <E T="03">In general.</E> The following actions are required before operations in a zone may commence:</P> <P>(1) Approval by the Port Director of an application for activation is required as provided in 19 CFR part 146; and</P> <P>(2) The Executive Secretary will review proposed manufacturing or processing, pursuant to § 400.32, and a zone schedule as provided in this section.</P> <P>(b) <E T="03">Zone schedule.</E> (1) The zone grantee shall submit to the Executive Secretary and to the Port Director a zone schedule which sets forth:</P> <P>(i) Internal rules and regulations for the zone; and</P> <P>(ii) A statement of the rates and charges (fees) applicable to zone users.</P> <P>(2) A zone schedule shall consist of typed, loose-leaf, numbered, letter-sized pages, enclosed in covers, and shall contain:</P> <P>(i) A title page, with information to include:</P> <P>(A) The name of the zone grantee and operator(s);</P> <P>(B) Schedule identification;</P> <P>(C) Site description;</P> <P>(D) Date of original schedule; and</P> <P>(E) Name of the preparer;</P> <P>(ii) A table of contents;</P> <P>(iii) Administrative information;</P> <P>(iv) A statement of zone operating policy, rules and regulations, including uniform procedures regarding the construction of buildings and facilities; and</P> <P>(v) A section listing rates and charges for zones and subzones with information sufficient for the Board or the Executive Secretary to determine <PRTPAGE P="76"/>whether the rates and charges are reasonable based on other like operations in the port of entry area, and whether there is uniform treatment under like circumstances among zone users.</P> <P>(3) The Executive Secretary will review the schedule to determine whether it contains sufficient information for users concerning the operation of the facility and a statement of rates and charges as provided in paragraph (b)(2) of this section. If the Executive Secretary determines that the schedule satisfies these requirements, the Executive Secretary will notify the zone grantee, unless there is a basis for review under paragraph (b)(5) of this section. A copy of the schedule shall be available for public inspection at the offices of the zone grantee and operator. The zone grantee shall send a copy to the Port Director, who may submit comments to the Executive Secretary.</P> <P>(4) Amendments to the schedule shall be prepared and submitted in the manner described in paragraphs (b)(1) through (b)(3) of this section, and listed in the concluding section of the schedule, with dates.</P> <P>(5) A zone user or prospective user showing good cause may object to the zone or subzone fee on the basis that it is not reasonable, fair and uniform, by submitting to the Executive Secretary a complaint in writing with supporting information. The Executive Secretary will review the complaint and issue a report and decision, which will be final unless appealed to the Board within 30 days. The Board or the Executive Secretary may otherwise initiate a review for cause. The factors considered in reviewing reasonableness and fairness, will include:</P> <P>(i) The going-rates and charges for like operations in the area and the extra costs of operating a zone, including return on investment; and</P> <P>(ii) In the case of subzones, the value of actual services rendered by the zone grantee or operator, and reasonable out-of-pocket expenses.</P> <CITA>[56 FR 50798, Oct. 8, 1991, as amended at 62 FR 53535, Oct. 15, 1997]</CITA> </SECTION> <SECTION> <SECTNO>§ 400.43</SECTNO> <SUBJECT>Restriction and prohibition of certain zone operations.</SUBJECT> <P>(a) <E T="03">In general.</E> After review, the Board may restrict or prohibit any admission of merchandise into a zone project or operation in a zone project when it determines that such activity is detrimental to the public interest, health or safety.</P> <P>(b) <E T="03">Initiation of review.</E> The Board may conduct a proceeding, or the Executive Secretary a review, to consider a restriction or prohibition under paragraph (a) of this section either self-initiated, or in response to a complaint made to the Board by a party directly affected by the activity in question and showing good cause.</P> </SECTION> <SECTION> <SECTNO>§ 400.44</SECTNO> <SUBJECT>Zone-restricted merchandise.</SUBJECT> <P>(a) <E T="03">In general.</E> Merchandise which has been given export status by Customs officials (“zone-restricted merchandise”—19 CFR 146.44) may be returned to the Customs Territory of the United States only when the Board determines that the return would be in the public interest. Such returns are subject to the Customs laws and the payment of applicable duties and excise taxes (19 U.S.C. 81c, 4th proviso).</P> <P>(b) <E T="03">Criteria.</E> In making the determination described in paragraph (a) of this section, the Board will consider:</P> <P>(1) The intent of the parties;</P> <P>(2) Why the goods cannot be exported;</P> <P>(3) The public benefit involved in allowing their return; and</P> <P>(4) The recommendation of the Port Director.</P> <P>(c) <E T="03">Procedure.</E> (1) A request for authority to return “zone-restricted” merchandise into Customs territory shall be made to the Executive Secretary in letter form by the zone grantee or operator of the zone in which the merchandise is located, with supporting information and documentation.</P> <P>(2) The Executive Secretary will investigate the request and prepare a report for the Board.</P> <P>(3) The Executive Secretary may act for the Board under this section in cases involving merchandise valued at 500,000 dollars or less, provided requests <PRTPAGE P="77"/>are accompanied with a letter of concurrence from the Port Director.</P> <CITA>[56 FR 50798, Oct. 8, 1991, as amended at 62 FR 53535, Oct. 15, 1997]</CITA> </SECTION> <SECTION> <SECTNO>§ 400.45</SECTNO> <SUBJECT>Retail trade.</SUBJECT> <P>(a) <E T="03">In general.</E> Retail trade is prohibited in zones, except that sales or other commercial activity involving domestic, duty-paid, and duty-free goods may be conducted within an activated zone project under permits issued by the zone grantee and approved by the Board, with the further exception that no permits shall be necessary for sales involving domestic, duty-paid or duty-free food and non-alcoholic beverage products sold within the zone or subzone for consumption on premises by persons working therein. The Port Director will determine whether an activity is retail trade, subject to review by the Board when the zone grantee requests such a review with a good cause.</P> <P>(b) <E T="03">Procedure.</E> Requests for Board approval under this section shall be submitted in letter form, with supporting documentation, to the Port Director, who is authorized to act for the Board in these cases, subject to the concurrence of the Executive Secretary.</P> <P>(c) <E T="03">Criteria.</E> In evaluating requests under this section, the Port Director and the Executive Secretary will consider:</P> <P>(1) Whether any public benefits would result from approval; and</P> <P>(2) The economic effect such activity would have on the retail trade outside the zone in the port of entry area.</P> <CITA>[56 FR 50798, Oct. 8, 1991; 57 FR 2319, Jan. 21, 1992, as amended at 62 FR 53535, Oct. 15, 1997]</CITA> </SECTION> <SECTION> <SECTNO>§ 400.46</SECTNO> <SUBJECT>Accounts, records and reports.</SUBJECT> <P>(a) <E T="03">Zone accounts.</E> Zone accounts shall be maintained in accordance with generally accepted accounting principles, and in compliance with the requirements of Federal, State or local agencies having jurisdiction over the site or operation.</P> <P>(b) <E T="03">Records and forms.</E> Zone records and forms shall be prepared and maintained in accordance with the requirements of the Customs Service and the Board, and the zone grantee shall retain copies of applications it submits to the Board.</P> <P>(c) <E T="03">Maps and drawings.</E> Zone grantees or operators, and Port Directors, shall keep current layout drawings of approved sites as described in § 400.24(d)(5), showing activated portions, and a file showing required approvals. The zone grantee shall furnish necessary maps to the Port Director.</P> <P>(d) <E T="03">Annual reports.</E> (1) Zone grantees shall submit annual reports to the Board at the time and in the format prescribed by the Executive Secretary, for use by the Executive Secretary in the preparation of the Board's annual report to the Congress.</P> <P>(2) The Board shall submit an annual report to the Congress.</P> <APPRO>(Approved by the Office of Management and Budget under control number 0625-0109)</APPRO> <CITA>[56 FR 50798, Oct. 8, 1991, as amended at 62 FR 53535, Oct. 15, 1997]</CITA> </SECTION> <SECTION> <SECTNO>§ 400.47</SECTNO> <SUBJECT>Appeals to the Board from decisions of the Assistant Secretary for Import Administration and the Executive Secretary.</SUBJECT> <P>(a) <E T="03">In general.</E> Decisions of the Assistant Secretary for Import Administration and the Executive Secretary made pursuant to §§ 400.22(d)(2)(ii), 400.32(b)(1), 400.44(c)(3), and 400.45(b)(2) may be appealed to the Board by adversely affected parties showing good cause.</P> <P>(b) <E T="03">Procedures.</E> Parties appealing a decision under paragraph (a) of this section shall submit a request for review to the Board in writing, stating the basis for the request, and attaching a copy of the decision in question, as well as supporting information and documentation. After a review, the Board will notify the complaining party of its decision in writing.</P> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart F—Notice, Hearings, Record and Information</HD> <SECTION> <SECTNO>§ 400.51</SECTNO> <SUBJECT>Notice and hearings.</SUBJECT> <P>(a) <E T="03">In general.</E> The Executive Secretary will publish notice in the <E T="04">Federal Register</E> inviting public comment on applications docketed for Board action (see, § 400.27(c)), and with regard to other reviews or matters considered under this part when public comment is necessary. Applicants shall <PRTPAGE P="78"/>give appropriate notice of their proposals in local newspapers. The Board, the Secretary, the Commerce Department's Assistant Secretary for Import Administration, or the Executive Secretary, as appropriate, may schedule and/or hold hearings during any proceedings or reviews conducted under this part whenever necessary or appropriate.</P> <P>(b) <E T="03">Requests for hearings</E>—(1) A directly affected party showing good cause may request a hearing during a proceeding or review.</P> <P>(2) The request must be made within 30 days of the beginning of the period for public comment (see, § 400.27) and must be accompanied by information establishing the need for the hearing and the basis for the requesting party's interest in the matter.</P> <P>(3) A determination as to the need for the hearing will be made by the Commerce Department's Assistant Secretary for Import Administration within 15 days after the receipt of such a request.</P> <P>(c) <E T="03">Procedure for public hearings.</E> The Board will publish notice in the <E T="04">Federal Register</E> of the date, time and location of a hearing. All participants shall have the opportunity to make a presentation. Applicants and their witnesses shall ordinarily appear first. The presiding officer may adopt time limits for individual presentations.</P> </SECTION> <SECTION> <SECTNO>§ 400.52</SECTNO> <SUBJECT>Official record; public access.</SUBJECT> <P>(a) <E T="03">Content.</E> The Executive Secretary will maintain at the location stated in § 400.53(d) an official record of each proceeding within the Board's jurisdiction. The Executive Secretary will include in the official record all factual information, written argument, and other material developed by, presented to, or obtained by the Board in connection with the proceeding. The official record will contain material that is public, business proprietary, privileged, and classified. While there is no requirement that a verbatim record shall be kept of public hearings, the proceedings of such hearings shall ordinarily be recorded and transcribed when significant opposition is involved.</P> <P>(b) <E T="03">Opening and closing of official record.</E> The official record opens on the date the Executive Secretary files an application or receives a request that satisfies the applicable requirements of this part and closes on the date of the final determination in the proceeding or review, as applicable.</P> <P>(c) <E T="03">Protection of the official record.</E> Unless otherwise ordered in a particular case by the Executive Secretary, the official record will not be removed from the Department of Commerce. A certified copy of the record will be made available to any court before which any aspect of a proceeding is under review, with appropriate safeguards to prevent disclosure of proprietary or privileged information.</P> </SECTION> <SECTION> <SECTNO>§ 400.53</SECTNO> <SUBJECT>Information.</SUBJECT> <P>(a) <E T="03">Request for information.</E> The Board may request submission of any information, including business proprietary information, and written argument necessary or appropriate to the proceeding.</P> <P>(b) <E T="03">Public information.</E> Except as provided in paragraph (c) of this section, the Board will consider all information submitted in a proceeding to be public information. If the person submitting the information does not agree to its public disclosure, the Board will return the information and not consider it in the proceeding.</P> <P>(c) <E T="03">Business proprietary information.</E> Persons submitting business proprietary information and requesting protection from public disclosure shall mark the cover page “business proprietary,” as well as the top of each page on which such information appears.</P> <P>(d) <E T="03">Disclosure of information.</E> Disclosure of public information will be governed by 15 CFR part 4. Public information in the official record will be available for inspection and copying at the Office of the Executive Secretary, Foreign-Trade Zones Board, U.S. Department of Commerce Building, Pennsylvania Avenue and 14th Street, NW., Washington, DC 20230.</P> </SECTION> </SUBPART> </PART> </CHAPTER> <CHAPTER> <LRH>15 CFR Ch. VII (1-1-07 Edition)</LRH> <RRH>Bureau of Industry and Security, Commerce</RRH> <TOC> <TOCHD> <PRTPAGE P="79"/> <HD SOURCE="HED">CHAPTER VII—BUREAU OF INDUSTRY AND SECURITY, DEPARTMENT OF COMMERCE</HD> </TOCHD> <EDNOTE> <HD SOURCE="HED">Editorial Note:</HD> <P>Nomenclature changes to chapter VII appear at 67 FR 20632, Apr. 26, 2002 and 69 FR 60546 and 60547, Oct. 12, 2004.</P> </EDNOTE> <SUBCHAP> <HD SOURCE="HED">SUBCHAPTER A—NATIONAL SECURITY INDUSTRIAL BASE REGULATIONS</HD> </SUBCHAP> <PTHD>Part</PTHD> <PGHD>Page</PGHD> <CHAPTI> <PT>700</PT> <SUBJECT>Defense priorities and allocations system</SUBJECT> <PG>81</PG> <PT>701</PT> <SUBJECT>Reporting of offsets agreements in sales of weapon systems or defense-related items to foreign countries or foreign firms</SUBJECT> <PG>106</PG> <PT>702-704</PT> <RESERVED>[Reserved]</RESERVED> <PT>705</PT> <SUBJECT>Effect of imported articles on the national security</SUBJECT> <PG>108</PG> <PT>706-709</PT> <RESERVED>[Reserved]</RESERVED> </CHAPTI> <SUBCHAP> <HD SOURCE="HED">SUBCHAPTER B—CHEMICAL WEAPONS CONVENTION REGULATIONS</HD> </SUBCHAP> <CHAPTI> <PT>710</PT> <SUBJECT>General information and overview of the Chemical Weapons Convention Regulations (CWCR)</SUBJECT> <PG>113</PG> <PT>711</PT> <SUBJECT>General information regarding declaration, reporting, and advance notification requirements, and the electronic filing of declarations and reports</SUBJECT> <PG>120</PG> <PT>712</PT> <SUBJECT>Activities involving Schedule 1 chemicals</SUBJECT> <PG>124</PG> <PT>713</PT> <SUBJECT>Activities involving Schedule 2 chemicals</SUBJECT> <PG>132</PG> <PT>714</PT> <SUBJECT>Activities involving Schedule 3 chemicals</SUBJECT> <PG>143</PG> <PT>715</PT> <SUBJECT>Activities involving Unscheduled Discrete Organic Chemicals (UDOCs)</SUBJECT> <PG>149</PG> <PT>716</PT> <SUBJECT>Initial and routine inspections of declared facilities</SUBJECT> <PG>154</PG> <PT>717</PT> <SUBJECT>CWC Clarification procedures (consultations and challenge inspections) </SUBJECT> <PG>164</PG> <PT>718</PT> <SUBJECT>Confidential business information</SUBJECT> <PG>166</PG> <PT>719</PT> <SUBJECT>Enforcement</SUBJECT> <PG>169</PG> <PT>720</PT> <SUBJECT>Denial of export privileges</SUBJECT> <PG>178</PG> <PT>721</PT> <SUBJECT>Inspection of records and recordkeeping</SUBJECT> <PG>180</PG> <PT>722</PT> <RESERVED>Interpretations [Reserved]<PRTPAGE P="80"/> </RESERVED> <PT>723-729</PT> <RESERVED>[Reserved]</RESERVED> </CHAPTI> <SUBCHAP> <HD SOURCE="HED">SUBCHAPTER C—EXPORT ADMINISTRATION REGULATIONS</HD> </SUBCHAP> <CHAPTI> <PT>730</PT> <SUBJECT>General information</SUBJECT> <PG>183</PG> <PT>732</PT> <SUBJECT>Steps for using the EAR</SUBJECT> <PG>192</PG> <PT>734</PT> <SUBJECT>Scope of the Export Administration regulations</SUBJECT> <PG>207</PG> <PT>736</PT> <SUBJECT>General prohibitions</SUBJECT> <PG>223</PG> <PT>738</PT> <SUBJECT>Commerce Control List overview and the country chart</SUBJECT> <PG>229</PG> <PT>740</PT> <SUBJECT>License exceptions</SUBJECT> <PG>240</PG> <PT>742</PT> <SUBJECT>Control policy—CCL based controls</SUBJECT> <PG>283</PG> <PT>743</PT> <SUBJECT>Special Reporting</SUBJECT> <PG>322</PG> <PT>744</PT> <SUBJECT>Control policy: end-user and end-use based</SUBJECT> <PG>325</PG> <PT>745</PT> <SUBJECT>Chemical Weapons Convention requirements</SUBJECT> <PG>345</PG> <PT>746</PT> <SUBJECT>Embargoes and other special controls</SUBJECT> <PG>349</PG> <PT>747</PT> <SUBJECT>Special Iraq reconstruction license</SUBJECT> <PG>357</PG> <PT>748</PT> <SUBJECT>Applications (classification, advisory, and license) and documentation</SUBJECT> <PG>359</PG> <PT>750</PT> <SUBJECT>Application processing, issuance, and denial</SUBJECT> <PG>393</PG> <PT>752</PT> <SUBJECT>Special comprehensive license</SUBJECT> <PG>404</PG> <PT>754</PT> <SUBJECT>Short supply controls</SUBJECT> <PG>420</PG> <PT>756</PT> <SUBJECT>Appeals</SUBJECT> <PG>433</PG> <PT>758</PT> <SUBJECT>Export clearance requirements</SUBJECT> <PG>434</PG> <PT>760</PT> <SUBJECT>Restrictive trade practices or boycotts</SUBJECT> <PG>443</PG> <PT>762</PT> <SUBJECT>Recordkeeping</SUBJECT> <PG>510</PG> <PT>764</PT> <SUBJECT>Enforcement and protective measures</SUBJECT> <PG>514</PG> <PT>766</PT> <SUBJECT>Administrative enforcement proceedings</SUBJECT> <PG>523</PG> <PT>768</PT> <SUBJECT>Foreign availability determination procedures and criteria</SUBJECT> <PG>541</PG> <PT>770</PT> <SUBJECT>Interpretations</SUBJECT> <PG>551</PG> <PT>772</PT> <SUBJECT>Definitions of terms</SUBJECT> <PG>559</PG> <PT>774</PT> <SUBJECT>The Commerce Control List</SUBJECT> <PG>585</PG> <PT>775-799</PT> <RESERVED>[Reserved]</RESERVED> </CHAPTI> </TOC> <SUBCHAP TYPE="N"> <PRTPAGE P="81"/> <HD SOURCE="HED">SUBCHAPTER A—NATIONAL SECURITY INDUSTRIAL BASE REGULATIONS</HD> <PART> <EAR>Pt. 700</EAR> <HD SOURCE="HED">PART 700—DEFENSE PRIORITIES AND ALLOCATIONS SYSTEM</HD> <CONTENTS> <SUBPART> <HD SOURCE="HED">Subpart A—Purpose</HD> <SECHD>Sec.</SECHD> <SECTNO>700.1</SECTNO> <SUBJECT>Purpose of this regulation.</SUBJECT> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart B—Overview</HD> <SECTNO>700.2</SECTNO> <SUBJECT>Introduction.</SUBJECT> <SECTNO>700.3</SECTNO> <SUBJECT>Priority ratings and rated orders.</SUBJECT> <SECTNO>700.4</SECTNO> <SUBJECT>Priorities and allocations in a national emergency.</SUBJECT> <SECTNO>700.5</SECTNO> <SUBJECT>Special priorities assistance.</SUBJECT> <SECTNO>700.6</SECTNO> <SUBJECT>Official actions.</SUBJECT> <SECTNO>700.7</SECTNO> <SUBJECT>Compliance.</SUBJECT> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart C—Definitions</HD> <SECTNO>700.8</SECTNO> <SUBJECT>Definitions.</SUBJECT> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart D—Industrial Priorities</HD> <SECTNO>700.10</SECTNO> <SUBJECT>Delegation of authority.</SUBJECT> <SECTNO>700.11</SECTNO> <SUBJECT>Priority ratings.</SUBJECT> <SECTNO>700.12</SECTNO> <SUBJECT>Elements of a rated order.</SUBJECT> <SECTNO>700.13</SECTNO> <SUBJECT>Acceptance and rejection of rated orders.</SUBJECT> <SECTNO>700.14</SECTNO> <SUBJECT>Preferential scheduling.</SUBJECT> <SECTNO>700.15</SECTNO> <SUBJECT>Extension of priority ratings.</SUBJECT> <SECTNO>700.16</SECTNO> <SUBJECT>Changes or cancellations of priority ratings and rated orders.</SUBJECT> <SECTNO>700.17</SECTNO> <SUBJECT>Use of rated orders.</SUBJECT> <SECTNO>700.18</SECTNO> <SUBJECT>Limitations on placing rated orders.</SUBJECT> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart E—Industrial Priorities for Energy Programs</HD> <SECTNO>700.20</SECTNO> <SUBJECT>Use of priority ratings.</SUBJECT> <SECTNO>700.21</SECTNO> <SUBJECT>Application for priority rating authority.</SUBJECT> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart F—National emergency Preparedness and Critical Items</HD> <SECTNO>700.30</SECTNO> <SUBJECT>Priorities and allocations in a national emergency.</SUBJECT> <SECTNO>700.31</SECTNO> <SUBJECT>Metalworking machines.</SUBJECT> </SUBPART> <SUBPART> <RESERVED>Subpart G [Reserved]</RESERVED> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart H—Special Priorities Assistance</HD> <SECTNO>700.50</SECTNO> <SUBJECT>General provisions.</SUBJECT> <SECTNO>700.51</SECTNO> <SUBJECT>Requests for priority rating authority.</SUBJECT> <SECTNO>700.52</SECTNO> <SUBJECT>Examples of assistance.</SUBJECT> <SECTNO>700.53</SECTNO> <SUBJECT>Criteria for assistance.</SUBJECT> <SECTNO>700.54</SECTNO> <SUBJECT>Instances where assistance may not be provided.</SUBJECT> <SECTNO>700.55</SECTNO> <SUBJECT>Assistance programs with Canada and other nations.</SUBJECT> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart I—Official Actions</HD> <SECTNO>700.60</SECTNO> <SUBJECT>General provisions.</SUBJECT> <SECTNO>700.61</SECTNO> <SUBJECT>Rating Authorizations.</SUBJECT> <SECTNO>700.62</SECTNO> <SUBJECT>Directives.</SUBJECT> <SECTNO>700.63</SECTNO> <SUBJECT>Letters of Understanding.</SUBJECT> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart J—Compliance</HD> <SECTNO>700.70</SECTNO> <SUBJECT>General provisions.</SUBJECT> <SECTNO>700.71</SECTNO> <SUBJECT>Audits and investigations.</SUBJECT> <SECTNO>700.72</SECTNO> <SUBJECT>Compulsory process.</SUBJECT> <SECTNO>700.73</SECTNO> <SUBJECT>Notification of failure to comply.</SUBJECT> <SECTNO>700.74</SECTNO> <SUBJECT>Violations, penalties, and remedies.</SUBJECT> <SECTNO>700.75</SECTNO> <SUBJECT>Compliance conflicts.</SUBJECT> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart K—Adjustments, Exceptions, and Appeals</HD> <SECTNO>700.80</SECTNO> <SUBJECT>Adjustments or exceptions.</SUBJECT> <SECTNO>700.81</SECTNO> <SUBJECT>Appeals.</SUBJECT> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart L—Miscellaneous Provisions</HD> <SECTNO>700.90</SECTNO> <SUBJECT>Protection against claims.</SUBJECT> <SECTNO>700.91</SECTNO> <SUBJECT>Records and reports.</SUBJECT> <SECTNO>700.92</SECTNO> <SUBJECT>Applicability of this regulation and official actions.</SUBJECT> <SECTNO>700.93</SECTNO> <SUBJECT>Communications.</SUBJECT> <APP>Schedule I to Part 700—Approved Programs and Delegate Agencies</APP> <APP>Appendix I to Part 700—Form BIS-999-Request for Special Priorities Assistance</APP> </SUBPART> </CONTENTS> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>Titles I and VII of the Defense Production Act of 1950, as amended (50 U.S.C. App. 2061, <E T="03">et seq.</E>), Title VI of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5195 <E T="03">et seq.</E>), Executive Order 12919, 59 FR 29525, 3 CFR, 1994 Comp. 901, and Executive Order 13286, 68 FR 10619, 3 CFR, 2003 Comp. 166; section 18 of the Selective Service Act of 1948 (50 U.S.C. App. 468), 10 U.S.C. 2538, 50 U.S.C. 82, and Executive Order 12742, 56 FR 1079, 3 CFR, 1991 Comp. 309; and Executive Order 12656, 53 FR 226, 3 CFR, 1988 Comp. 585.</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>49 FR 30414, July 30, 1984, unless otherwise noted. Redesignated at 54 FR 601, Jan. 9, 1989.</P> </SOURCE> <SUBPART> <HD SOURCE="HED">Subpart A—Purpose</HD> <SECTION> <SECTNO>§ 700.1</SECTNO> <SUBJECT>Purpose of this regulation.</SUBJECT> <P>(a) Title I of the Defense Production Act of 1950, as amended (50 U.S.C. App. 2061, <E T="03">et seq</E>.) (Defense Production Act), <PRTPAGE P="82"/>authorizes the President: to require the priority performance of contracts and orders necessary or appropriate to promote the national defense over other contracts or orders; to allocate materials, services, and facilities as necessary or appropriate to promote the national defense; and to require the allocation of, or the priority performance under contracts or orders relating to, supplies of materials, equipment, and services in order to assure domestic energy supplies for national defense needs.</P> <P>(b) Section 18 of the Selective Service Act of 1948 (50 U.S.C. app. 468) (Selective Service Act) authorizes the President to place an order with a supplier for any articles or materials required for the exclusive use of the U.S. armed forces whenever the President determines that in the interest of national security, prompt delivery of the articles and materials is required. The supplier must give precedence to the order so as to deliver the articles or materials in a required time period. 10 U.S.C. 2538, and 50 U.S.C. 82, provide similar authority specifically for Department of Defense procurement, but only in time of war or when war is imminent.</P> <P>(c) Section 602(b) of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5195a(b)) provides that the terms “national defense” and “defense” as used in the Defense Production Act includes “emergency preparedness activities” conducted pursuant to Title VI of the Stafford Act. The definition of “national defense” in section 702(14) of the Defense Production Act provides that this term includes “emergency preparedness activities” conducted pursuant to Title VI of the Stafford Act and “critical infrastructure protection and restoration.”</P> <P>(d) The Defense Priorities and Allocations System (DPAS) regulation implements the priorities and allocations authority of the Defense Production Act and as this authority pertains to Title VI of the Stafford Act, and the priorities authority of the Selective Service Act and related statutes, all with respect to industrial resources. The DPAS ensures the timely availability of industrial resources for approved programs and provides an operating system to support rapid industrial response to a national emergency.</P> <P>(e) To aid in understanding and using the DPAS, an overview of its major provisions is incorporated into this regulation as subpart B—Overview. The full text of the DPAS is found in subparts D through L.</P> <CITA>[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as amended at 63 FR 31921, June 11, 1998; 71 FR 39527, July 13, 2006]</CITA> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart B—Overview</HD> <SECTION> <SECTNO>§ 700.2</SECTNO> <SUBJECT>Introduction.</SUBJECT> <P>(a) Certain national defense and energy programs (including emergency preparedness activities) are approved for priorities and allocations support. For example, military aircraft production, ammunition, and certain programs which maximize domestic energy supplies are “approved programs.” A complete list of currently approved programs is provided at Schedule I to this part.</P> <P>(b) The Department of Commerce administers the DPAS to ensure the timely delivery of industrial items to meet approved program requirements.</P> <P>(c) Commerce has delegated authorities to place priority ratings on contracts or orders necessary or appropriate to promote the national defense to the government agencies that issue such contracts or orders. Schedule I includes a list of agencies delegated this authority.</P> <CITA>[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as amended at 63 FR 31921, June 11, 1998; 71 FR 39527, July 13, 2006]</CITA> </SECTION> <SECTION> <SECTNO>§ 700.3</SECTNO> <SUBJECT>Priority ratings and rated orders.</SUBJECT> <P>(a) Rated orders are identified by a priority rating consisting of the rating—either DX or DO—and a program identification symbol. Rated orders take preference over all unrated orders as necessary to meet required delivery dates. Among rated orders, DX rated orders take preference over DO rated orders. Program identification symbols <PRTPAGE P="83"/>indicate which approved program is involved with the rated order. For example, A1 identifies defense aircraft programs and A7 signifies defense electronic programs. The program identification symbols, in themselves, do not connote any priority.</P> <P>(b) Persons receiving rated orders must give them preferential treatment as required by this regulation. This means a person must accept and fill a rated order for items that the person normally supplies. The existence of previously accepted unrated or lower rated orders is not sufficient reason for rejecting a rated order. Persons are required to reschedule unrated orders if they conflict with performance against a rated order. Similarly, persons must reschedule DO rated orders if they conflict with performance against a DX rated order.</P> <P>(c) All rated orders must be scheduled to the extent possible to ensure delivery by the required delivery date.</P> <P>(d) Persons who receive rated orders must in turn place rated orders with their suppliers for the items they need to fill the orders. This provision ensures that suppliers will give priority treatment to rated orders from contractor to subcontractor to suppliers throughout the procurement chain.</P> <P>(e) Persons may place a priority rating on orders only when they are in receipt of a rated order, have been explicitly authorized to do so by the Department of Commerce or a Delegate Agency, or are otherwise permitted to do so by this regulation.</P> <CITA>[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as amended at 63 FR 31921, June 11, 1998]</CITA> </SECTION> <SECTION> <SECTNO>§ 700.4</SECTNO> <SUBJECT>Priorities and allocations in a national emergency.</SUBJECT> <P>(a) In the event of a national emergency, special rules may be established as needed to supplement this part, thus ensuring rapid industrial response and the timely availability of critical industrial items and facilities to meet the urgent national defense requirements, including domestic emergency preparedness requirements, of approved programs.</P> <P>(b) The special rules established in response to the emergency may include provisions for the taking of certain emergency official actions and the allocation of critical and scarce materials and facilities.</P> <CITA>[63 FR 31921, June 11, 1998]</CITA> </SECTION> <SECTION> <SECTNO>§ 700.5</SECTNO> <SUBJECT>Special priorities assistance.</SUBJECT> <P>(a) The DPAS is designed to be largely self-executing. However, from time-to-time production or delivery problems will arise. In this event, special priorities assistance is available from Commerce and from the Delegate Agencies.</P> <P>(b) Special priorities assistance is available for any reason consistent with this regulation. Generally, special priorities assistance is provided to expedite deliveries, resolve delivery conflicts, place rated orders, locate suppliers, or to verify information supplied by customers and vendors. Special priorities assistance may also be used to request rating authority for items not automatically ratable.</P> </SECTION> <SECTION> <SECTNO>§ 700.6</SECTNO> <SUBJECT>Official actions.</SUBJECT> <P>When necessary, Commerce takes specific official actions to implement or enforce the provisions of this regulation and to provide special priorities assistance. Such actions may include the issuance of: Rating Authorizations, Directives, Letters of Understanding, Set-asides, and compliance documents (Administrative Subpoenas, Demands for Information, and Inspection Authorizations).</P> </SECTION> <SECTION> <SECTNO>§ 700.7</SECTNO> <SUBJECT>Compliance.</SUBJECT> <P>(a) Compliance with the provisions of this regulation and official actions is required by the Defense Production Act and the Selective Service Act and related statutes. Violators are subject to criminal penalties.</P> <P>(b) Any person who places or receives a rated order should be thoroughly familiar with, and must comply with, the provisions of this regulation.</P> <CITA>[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as amended at 63 FR 31921, June 11, 1998]</CITA> </SECTION> </SUBPART> <SUBPART> <PRTPAGE P="84"/> <HD SOURCE="HED">Subpart C—Definitions</HD> <SECTION> <SECTNO>§ 700.8</SECTNO> <SUBJECT>Definitions.</SUBJECT> <P>In addition to the definitions provided in Section 702 of the Defense Production Act (excepting the definition of “industrial resources”) and Section 602(a) of the Stafford Act, the following definitions pertain to all sections of this part:</P> <P> <E T="03">Approved program.</E> A program determined as necessary or appropriate for priorities and allocations support to promote the national defense by the Secretary of Defense, the Secretary of Energy, or the Secretary of Homeland Security, under the authority of the Defense Production Act, the Stafford Act, and Executive Order 12919, or the Selective Service Act and related statutes and Executive Order 12742.</P> <P> <E T="03">Construction.</E> The erection, addition, extension, or alteration of any building, structure, or project, using materials or products which are to be an integral and permanent part of the building, structure, or project. Construction does not include maintenance and repair.</P> <P> <E T="03">Delegate Agency.</E> A government agency authorized by delegation from the Department of Commerce to place priority ratings on contracts or orders needed to support approved programs.</P> <P> <E T="03">Defense Production Act.</E> the Defense Production Act of 1950, as amended (50 U.S.C. App. 2061, <E T="03">et seq.).</E> </P> <P> <E T="03">Industrial resources</E>—all materials, services, and facilities, including construction materials, the authority for which has not been delegated to other agencies under Executive Order 12919. This term also includes the term “item” as defined and used in this part.</P> <P> <E T="03">Item.</E> Any raw, in process, or manufactured material, article, commodity, supply, equipment, component, accessory, part, assembly, or product of any kind, technical information, process, or service.</P> <P> <E T="03">Maintenance and repair and operating supplies (MRO):</E> </P> <P>(a) <E T="03">Maintenance</E> is the upkeep necessary to continue any plant, facility, or equipment in working condition.</P> <P>(b) <E T="03">Repair</E> is the restoration of any plant, facility, or equipment to working condition when it has been rendered unsafe or unfit for service by wear and tear, damage, or failure of parts.</P> <P>(c) <E T="03">Operating supplies</E> are any items carried as operating supplies according to a person's established accounting practice. Operating supplies may include hand tools and expendable tools, jigs, dies, fixtures used on production equipment, lubricants, cleaners, chemicals and other expendable items.</P> <P>(d) MRO does not include items produced or obtained for sale to other persons or for installation upon or attachment to the property of another person, or items required for the production of such items; items needed for the replacement of any plant, facility, or equipment; or items for the improvement of any plant, facility, or equipment by replacing items which are still in working condition with items of a new or different kind, quality, or design.</P> <P> <E T="03">Official action.</E> An action taken by Commerce under the authority of the Defense Production Act, the Selective Service Act and related statutes, and this regulation. Such actions include the issuance of Set-asides, Rating Authorizations, Directives, Letters of Understanding, Demands for Information, Inspection Authorizations, and Administrative Subpoenas.</P> <P> <E T="03">Person</E>—any individual, corporation, partnership, association, or any other organized group of persons, or legal successor or representative thereof; or any authorized State or local government or agency thereof; and for purposes of administration of this part, includes the United States Government and any authorized foreign government or agency thereof, delegated authority as provided in this part.</P> <P> <E T="03">Production equipment.</E> Any item of capital equipment used in producing materials or furnishing services that has a unit acquisition cost of $2,500 or more, an anticipated service life in excess of one year, and the potential for maintaining its integrity as a capital item.</P> <P> <E T="03">Rated order.</E> A prime contract, a subcontract, or a purchase order in support of an approved program issued in accordance with the provisions of this regulation.<PRTPAGE P="85"/> </P> <P> <E T="03">Selective Service Act and related statutes</E>—Section 18 of the Selective Service Act of 1948 (50 U.S.C. app. 468), 10 U.S.C. 2538, and 50 U.S.C. 82.</P> <P> <E T="03">Set-aside.</E> The amount of an item for which a supplier must reserve order book space in anticipation of the receipt of rated orders.</P> <P> <E T="03">Stafford Act</E>—Title VI (Emergency Preparedness) of the Robert T. Stafford Disaster Relief and Emergency Assistance Act, as amended (42 U.S.C. 5195 <E T="03">et seq.</E>).</P> <CITA>[49 FR 30414, July 30, 1984; 49 FR 50172, Dec. 27, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as amended at 63 FR 31921, June 11, 1998; 71 FR 39528, July 13, 2006]</CITA> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart D—Industrial Priorities</HD> <SECTION> <SECTNO>§ 700.10</SECTNO> <SUBJECT>Delegation of authority.</SUBJECT> <P>(a) The priorities and allocations authorities of the President under Title I of the Defense Production Act with respect to industrial resources have been delegated to the Secretary of Commerce under Executive Order 12919 of June 3, 1994 (59 FR 29525). The priorities authorities of the President under the Selective Service Act and related statutes with respect to industrial resources have also been delegated to the Secretary of Commerce under Executive Order 12742 of January 8, 1991 (56 FR 1079).</P> <P>(b) Within the Department of Commerce, these responsibilities have been assigned to the Office of Strategic Industries and Economic Security. The Department of Commerce has authorized the Delegate Agencies to assign priority ratings to orders for items needed for approved programs.</P> <CITA>[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as amended at 63 FR 31922, June 11, 1998; 71 FR 39528, July 13, 2006]</CITA> </SECTION> <SECTION> <SECTNO>§ 700.11</SECTNO> <SUBJECT>Priority ratings.</SUBJECT> <P>(a) <E T="03">Levels of priority.</E> (1) There are two levels of priority established by this regulation, identified by the rating symbols “DO” and “DX”.</P> <P>(2) All DO rated orders have equal priority with each other and take preference over unrated orders. All DX rated orders have equal priority with each other and take preference over DO rated orders and unrated orders. (For resolution of conflicts among rated orders of equal priority, see § 700.14(c).)</P> <P>(3) In addition, a Directive issued by Commerce takes preference over any DX rated order, DO rated order, or unrated order, as stipulated in the Directive. (For a full discussion of Directives, see § 700.62.)</P> <P>(b) <E T="03">Program identification symbols.</E> Program identification symbols indicate which approved program is being supported by a rated order. The list of approved programs and their identification symbols are listed in Schedule I. For example, A1 identifies defense aircraft programs and A7 signifies defense electronic programs. Program identification symbols, in themselves, do not connote any priority.</P> <P>(c) <E T="03">Priority ratings</E>. A priority rating consists of the rating symbol—DO and DX—and the program identification symbol, such as A1, C2, or N1. Thus, a contract for the production of an aircraft will contain a DO-A1 or DX-A1 priority rating. A contract for a radar set will contain a DO-A7 or DX-A7 priority rating.</P> <CITA>[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as amended at 63 FR 31922, June 11, 1998; 71 FR 39528, July 13, 2006]</CITA> </SECTION> <SECTION> <SECTNO>§ 700.12</SECTNO> <SUBJECT>Elements of a rated order.</SUBJECT> <P>Each rated order must include:</P> <P>(a) The appropriate priority rating (e.g. DO-A1, DX-A4, DO-H1);</P> <P>(b) A required delivery date or dates. The words “immediately” or “as soon as possible” do not constitute a delivery date. A “requirements contract”, “basic ordering agreement”, “prime vendor contract”, or similar procurement document bearing a priority rating may contain no specific delivery date or dates and may provide for the furnishing of items from time-to-time or within a stated period against specific purchase orders, such as “calls”, “requisitions”, and “delivery orders”. These purchase orders must specify a required delivery date or dates and are to be considered as rated as of the date of their receipt by the supplier and not as of the date of the original procurement document;</P> <P>(c) The written signature on a manually placed order, or the digital signature or name on an electronically <PRTPAGE P="86"/>placed order, of an individual authorized to sign rated orders for the person placing the order. The signature or use of the name certifies that the rated order is authorized under this part and that the requirements of this part are being followed; and</P> <P>(d) A statement that reads in substance: </P> <EXTRACT> <P>This is a rated order certified for national defense use, and you are required to follow all the provisions of the Defense Priorities and Allocations System regulation (15 CFR part 700).</P> </EXTRACT> <CITA>[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as amended at 63 FR 31922, June 11, 1998]</CITA> </SECTION> <SECTION> <SECTNO>§ 700.13</SECTNO> <SUBJECT>Acceptance and rejection of rated orders.</SUBJECT> <P>(a) <E T="03">Mandatory acceptance.</E> (1) Except as otherwise specified in this section, a person shall accept every rated order received and must fill such orders regardless of any other rated or unrated orders that have been accepted.</P> <P>(2) A person shall not discriminate against rated orders in any manner such as by charging higher prices or by imposing different terms and conditions than for comparable unrated orders.</P> <P>(b) <E T="03">Mandatory rejection.</E> Unless otherwise directed by Commerce:</P> <P>(1) A person shall not accept a rated order for delivery on a specific date if unable to fill the order by that date. However, the person must inform the customer of the earliest date on which delivery can be made and offer to accept the order on the basis of that date. Scheduling conflicts with previously accepted lower rated or unrated orders are not sufficient reason for rejection under this section.</P> <P>(2) A person shall not accept a DO rated order for delivery on a date which would interfere with delivery of any previously accepted DO or DX rated orders. However, the person must offer to accept the order based on the earliest delivery date otherwise possible.</P> <P>(3) A person shall not accept a DX rated order for delivery on a date which would interfere with delivery of any previously accepted DX rated orders, but must offer to accept the order based on the earliest delivery date otherwise possible.</P> <P>(4) If a person is unable to fill all the rated orders of equal priority status received on the same day, the person must accept, based upon the earliest delivery dates, only those orders which can be filled, and reject the other orders. For example, a person must accept order A requiring delivery on December 15 before accepting order B requiring delivery on December 31. However, the person must offer to accept the rejected orders based on the earliest delivery dates otherwise possible.</P> <P>(c) <E T="03">Optional rejection.</E> Unless otherwise directed by Commerce, rated orders may be rejected in any of the following cases as long as a supplier does not discriminate among customers:</P> <P>(1) If the person placing the order is unwilling or unable to meet regularly established terms of sale or payment;</P> <P>(2) If the order is for an item not supplied or for a service not performed;</P> <P>(3) If the order is for an item produced, acquired, or provided only for the supplier's own use for which no orders have been filled for two years prior to the date of receipt of the rated order. If, however, a supplier has sold some of these items, the supplier is obligated to accept rated orders up to that quantity or portion of production, whichever is greater, sold within the past two years;</P> <P>(4) If the person placing the rated order, other than the U.S. Government, makes the item or performs the service being ordered;</P> <P>(5) If acceptance of a rated order or performance against a rated order would violate any other regulation, official action, or order of the Department of Commerce issued under the authority of the Defense Production Act or the Selective Service Act and related statutes [See § 700.75].</P> <P>(d) <E T="03">Customer notification requirements.</E> (1) A person must accept or reject a rated order and transmit the acceptance or rejection in writing (hard copy), or in electronic format, within fifteen (15) working days after receipt of a DO rated order and within ten (10) working days after receipt of a DX rated order. If the order is rejected, the person must also provide the reasons <PRTPAGE P="87"/>for the rejection, pursuant to paragraphs (b) and (c) of this section, in writing (hard copy) or electronic format.</P> <P>(2) If a person has accepted a rated order and subsequently finds that shipment or performance will be delayed, the person must notify the customer immediately, give the reasons for the delay, and advise of a new shipment or performance date. If notification is given verbally, written or electronic confirmation must be provided within five (5) working days.</P> <APPRO>(The information collection requirements in paragraphs (d)(1) and (d)(2) are approved by the Office of Management and Budget under OMB control number 0694-0053)</APPRO> <CITA>[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as amended at 63 FR 31922, June 11, 1998; 70 FR 10864, Mar. 7, 2005]</CITA> </SECTION> <SECTION> <SECTNO>§ 700.14</SECTNO> <SUBJECT>Preferential scheduling.</SUBJECT> <P>(a) A person must schedule operations, including the acquisition of all needed production items, in a timely manner to satisfy the delivery requirements of each rated order. Modifying production or delivery schedules is necessary only when required delivery dates for rated orders cannot otherwise be met.</P> <P>(b) DO rated orders must be given production preference over unrated orders, if necessary to meet required delivery dates, even if this requires the diversion of items being processed or ready for delivery against unrated orders. Similarly, DX rated orders must be given preference over DO rated orders and unrated orders. </P> <EXAMPLE> <HD SOURCE="HED">Examples:</HD> <P>If a person receives a DO rated order with a delivery date of June 3 and if meeting that date would mean delaying production or delivery of an item for an unrated order, the unrated order must be delayed. If a DX rated order is received calling for delivery on July 15 and a person has a DO rated order requiring delivery on June 2 and operations can be scheduled to meet both deliveries, there is no need to alter production schedules to give any additional preference to the DX rated order.</P> </EXAMPLE> <P>(c) <E T="03">Conflicting rated orders.</E> (1) If a person finds that delivery or performance against any accepted rated orders conflicts with the delivery or performance against other accepted rated orders of equal priority status, the person shall give preference to the conflicting orders in the sequence in which they are to be delivered or performed (not to the receipt dates). If the conflicting rated orders are scheduled to be delivered or performed on the same day, the person shall give preference to those orders which have the earliest receipt dates.</P> <P>(2) If a person is unable to resolve rated order delivery or performance conflicts under this section, the person should promptly seek special priorities assistance as provided in §§ 700.50 through 700.54. If the person's customer objects to the rescheduling of delivery or performance of a rated order, the customer should promptly seek special priorities assistance as provided in §§ 700.50 through 700.54. For any rated order against which delivery or performance will be delayed, the person must notify the customer as provided in § 700.13(d)(2).</P> <P>(d) If a person is unable to purchase needed production items in time to fill a rated order by its required delivery date, the person must fill the rated order by using inventoried production items. A person who uses inventoried items to fill a rated order may replace those items with the use of a rated order as provided in § 700.17(b).</P> <CITA>[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as amended at 63 FR 31922, June 11, 1998]</CITA> </SECTION> <SECTION> <SECTNO>§ 700.15</SECTNO> <SUBJECT>Extension of priority ratings.</SUBJECT> <P>(a) A person must use rated orders with suppliers to obtain items needed to fill a rated order. The person must use the priority rating indicated on the customer's rated order, except as otherwise provided in this regulation or as directed by the Department of Commerce. </P> <EXTRACT> <P>For example, if a person is in receipt of a DO-A3 rated order for a navigation system and needs to purchase semiconductors for its manufacture, that person must use a DO-A3 rated order to obtain the needed semiconductors.</P> </EXTRACT> <P>(b) The priority rating must be included on each successive order placed to obtain items needed to fill a customer's rated order. This continues from contractor to subcontractor to supplier throughout the entire procurement chain.</P> </SECTION> <SECTION> <PRTPAGE P="88"/> <SECTNO>§ 700.16</SECTNO> <SUBJECT>Changes or cancellations of priority ratings and rated orders.</SUBJECT> <P>(a) The priority rating on a rated order may be changed or cancelled by:</P> <P>(1) An official action of the Department of Commerce; or</P> <P>(2) Written notification from the person who placed the rated order (including a Delegate Agency).</P> <P>(b) If an unrated order is amended so as to make it a rated order, or a DO, rating is changed to a DX rating, the supplier must give the appropriate preferential treatment to the order as of the date the change is received by the supplier.</P> <P>(c) An amendment to a rated order that significantly alters a supplier's original production or delivery schedule shall constitute a new rated order as of the date of its receipt. The supplier must accept or reject the amended order according to the provisions of § 700.13.</P> <P>(d) The following amendments do not constitute a new rated order: a change in shipping destination; a reduction in the total amount of the order; an increase in the total amount of the order which has negligible impact upon deliveries; a minor variation in size or design; or a change which is agreed upon between the supplier and the customer.</P> <P>(e) If a person no longer needs items to fill a rated order, any rated orders placed with suppliers for the items, or the priority rating on those orders, must be cancelled.</P> <P>(f) When a priority rating is added to an unrated order, or is changed or cancelled, all suppliers must be promptly notified in writing.</P> </SECTION> <SECTION> <SECTNO>§ 700.17</SECTNO> <SUBJECT>Use of rated orders.</SUBJECT> <P>(a) A person must use rated orders to obtain:</P> <P>(1) Items which will be physically incorporated into other items to fill rated orders, including that portion of such items normally consumed, or converted into scrap or by-products, in the course of processing;</P> <P>(2) Containers or other packaging materials required to make delivery of the finished items against rated orders;</P> <P>(3) Services, other than contracts of employment, needed to fill rated orders; and</P> <P>(4) MRO needed to produce the finished items to fill rated orders. However, for MRO, the priority rating used must contain the program identification symbol H7 along with the rating symbol contained on the customer's rated order. For example, a person in receipt of a DO-A3 rated order, who needs MRO, would place a DO-H7 rated order with the person's supplier.</P> <P>(b) A person may use a rated order to replace inventoried items (including finished items) if such items were used to fill rated orders, as follows:</P> <P>(1) The order must be placed within 90 days of the date of use of the inventory.</P> <P>(2) A DO rating symbol and the program identification symbol indicated on the customer's rated order must be used on the order. A DX rating symbol may not be used even if the inventory was used to fill a DX rated order.</P> <P>(3) If the priority ratings on rated orders from one customer or several customers contain different program identification symbols, the rated orders may be combined. In this case, the program identification symbol H1 must be used (i.e., DO-H1).</P> <P>(c) A person may combine DX and DO rated orders from one customer or several customers if the items covered by each level of priority are identified separately and clearly. If different program identification symbols are indicated on those rated orders of equal priority, the person must use the program identification symbol H1 (i.e., DO-H1 or DX-H1).</P> <P>(d) <E T="03">Combining rated and unrated orders.</E> (1) A person may combine rated and unrated order quantities on one purchase order provided that:</P> <P>(i) The rated quantities are separately and clearly identified; and</P> <P>(ii) The four elements of a rated order, as required by § 700.12, are included on the order with the statement required in § 700.12(d) modified to read in substance: </P> <EXTRACT> <P>This purchase order contains rated order quantities certified for national defense use, and you are required to follow all the provisions of the Defense Priorities and Allocations System regulation (15 CFR part 700) only as it pertains to the rated quantities.</P> </EXTRACT> <P>(2) A supplier must accept or reject the rated portion of the purchase order <PRTPAGE P="89"/>as provided in § 700.13 and give preferential treatment only to the rated quantities as required by this part. This part may not be used to give preferential treatment to the unrated portion of the order.</P> <P>(3) Any supplier who believes that rated and unrated orders are being combined in a manner contrary to the intent of this regulation or in a fashion that causes undue or exceptional hardship may submit a request for adjustment or exception under § 700.80.</P> <P>(e) A person may place a rated order for the minimum commercially procurable quantity even if the quantity needed to fill a rated order is less than that minimum. However, a person must combine rated orders as provided in paragraph (c) of this section, if possible, to obtain minimum procurable quantities.</P> <P>(f) A person is not required to place a priority rating on an order for less than $50,000, or one half of the Federal Acquisition Regulation (FAR) Simplified Acquisition Threshold (see FAR 2.101), whichever amount is larger, provided that delivery can be obtained in a timely fashion without the use of the priority rating.</P> <CITA>[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as amended at 63 FR 31923, June 11, 1998]</CITA> </SECTION> <SECTION> <SECTNO>§ 700.18</SECTNO> <SUBJECT>Limitations on placing rated orders.</SUBJECT> <P>(a) <E T="03">General limitations.</E> (1) A person may not place a DO or DX rated order unless entitled to do so under this regulation.</P> <P>(2) Rated orders may not be used to obtain:</P> <P>(i) Delivery on a date earlier than needed;</P> <P>(ii) A greater quantity of the item than needed, except to obtain a minimum procurable quantity. Separate rated orders may not be placed solely for the purpose of obtaining minimum procurable quantities on each order;</P> <P>(iii) Items in advance of the receipt of a rated order, <E T="03">except</E> as specifically authorized by Commerce (see § 700.51(c) for information on obtaining authorization for a priority rating in advance of a rated order); or</P> <P>(iv) Any of the following items unless specific priority rating authority has been obtained from a Delegate Agency or Commerce:</P> <P>(A) Items for plant improvement, expansion or construction, unless they will be physically incorporated into a construction project covered by a rated order; and</P> <P>(B) Production or construction equipment or items to be used for the manufacture of production equipment. [For information on requesting priority rating authority, see § 700.51.]</P> <P>(v) Any items related to the development of chemical or biological warfare capabilities or the production of chemical or biological weapons, unless such development or production has been authorized by the President or the Secretary of Defense.</P> <P>(b) <E T="03">Jurisdiction limitations</E>. (1) The priorities and allocations authority for certain items have been delegated under Executive Orders 12919 and 12742, other executive order, or Interagency Memoranda of Understanding to other agencies. Unless otherwise agreed to by the concerned agencies, the provisions of this part are not applicable to these items which include:</P> <P>(i) Food resources, food resource facilities, and the domestic distribution of farm equipment and commercial fertilizer (Department of Agriculture) (The Department of Agriculture and the Department of Commerce have agreed that the Department of Defense may place rated contracts and orders for food resources in support of troops, including but not limited to, meals ready to eat (MREs), “tray-packs” (T-rations), A-rations, and B-rations);</P> <P>(ii) All forms of energy, including radioisotopes, stable isotopes, source material, and special nuclear material produced in Government-owned plants or facilities operated by or for the Department of Energy (Department of Energy);</P> <P>(iii) Health resources (Department of Health and Human Services);</P> <P>(iv) All forms of civil transportation (Department of Transportation);</P> <P>(v) Water resources (Department of Defense/U.S. Army Corps of Engineers); and</P> <P>(vi) Communications services (National Communications System under Executive Order 12472 of April 3, 1984).<PRTPAGE P="90"/> </P> <P>(2) The jurisdiction of the Department of Commerce and the Departments of Energy and Agriculture over certain specific items included in the categories listed above has been clarified by Interagency Memoranda of Understanding.</P> <P>(3) The following items under the jurisdiction of Commerce are currently excluded from the rating provisions of this regulation; however, these items are subject to Commerce Directives. These excluded items are: </P> <EXTRACT> <FP SOURCE="FP-1">Copper raw materials</FP> <FP SOURCE="FP-1">Crushed stone</FP> <FP SOURCE="FP-1">Gravel</FP> <FP SOURCE="FP-1">Sand</FP> <FP SOURCE="FP-1">Scrap</FP> <FP SOURCE="FP-1">Slag</FP> <FP SOURCE="FP-1">Steam heat, central</FP> <FP SOURCE="FP-1">Waste paper</FP> </EXTRACT> <CITA>[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as amended at 63 FR 31923, June 11, 1998; 71 FR 39528, July 13, 2006]</CITA> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart E—Industrial Priorities for Energy Programs</HD> <SECTION> <SECTNO>§ 700.20</SECTNO> <SUBJECT>Use of priority ratings.</SUBJECT> <P>(a) Section 101(c) of the Defense Production Act authorizes the use of priority ratings for projects which maximize domestic energy supplies.</P> <P>(b) Projects which maximize domestic energy supplies include those which maintain or further domestic energy exploration, production, refining, and transportation; maintain or further the conservation of energy; or are involved in the construction or maintenance of energy facilities.</P> </SECTION> <SECTION> <SECTNO>§ 700.21</SECTNO> <SUBJECT>Application for priority rating authority.</SUBJECT> <P>(a) For projects believed to maximize domestic energy supplies, a person may request priority rating authority for scarce, critical, and essential supplies of materials, equipment, and services (related to the production of materials or equipment, or the installation, repair, or maintenance of equipment) by submitting DOE Form PR 437 to the Department of Energy. Blank applications and further information may be obtained from the U.S. Department of Energy, Office of Clearance and Support, Field/Headquarters Support Division, Forrestal Building, 1000 Independence Avenue, S.W., Washington, D.C. 20585; Attn.: PR-132.</P> <P>(b) On receipt of the application, the Department of Energy will:</P> <P>(1) Determine if the project maximizes domestic energy supplies; and</P> <P>(2) Find whether the materials, equipment, or services involved in the application are critical and essential to the project.</P> <P>(c) If the Department of Energy notifies Commerce that the project maximizes domestic energy supplies and that the materials, equipment, or services are critical and essential, Commerce must find whether the items in question are scarce and whether there is a need to use the priorities and allocations authorities.</P> <P>(1) Scarcity implies an unusual difficulty in obtaining the materials, equipment, or services in a timeframe consistent with the timely completion of the energy project. Among the factors to be used in making the scarcity finding will be the following:</P> <P>(i) Value and volume of material or equipment shipments;</P> <P>(ii) Consumption of material and equipment;</P> <P>(iii) Volume and market trends of imports and exports;</P> <P>(iv) Domestic and foreign sources of supply;</P> <P>(v) Normal levels of inventories;</P> <P>(vi) Rates of capacity utilization;</P> <P>(vii) Volume of new orders; and</P> <P>(viii) Lead times for new orders.</P> <P>(2) In finding whether there is a need to use the priorities and allocations authorities, Commerce will consider alternative supply solutions and other measures.</P> <P>(d) If Commerce does not find that the items of materials, equipment, or services are scarce, it will not proceed to analyze the need to use the priorities and allocations authorities.</P> <P>(e) Commerce will inform the Department of Energy of the results of its analysis. If Commerce has made the two required findings, it will authorize the Department of Energy to grant the use of a priority rating to the applicant.</P> <P>(f) Schedule I includes a list of approved programs to support the maximization of domestic energy supplies. A Department of Energy regulation <PRTPAGE P="91"/>setting forth the procedures and criteria used by the Department of Energy in making its determination and findings is published in 10 CFR part 216.</P> <CITA>[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as amended at 63 FR 31923, June 11, 1998]</CITA> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart F—National Emergency Preparedness and Critical Items</HD> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>63 FR 31923, June 11, 1998, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>§ 700.30</SECTNO> <SUBJECT>Priorities and allocations in a national emergency.</SUBJECT> <P>(a) In the event of a national emergency, special rules may be established as needed to supplement this part, thus ensuring rapid industrial response and the timely availability of critical industrial items and facilities to meet the urgent national defense requirements, including domestic emergency preparedness requirements, of approved programs.</P> <P>(1) <E T="03">Emergency official actions.</E> (i) As needed, this part may be supplemented to include additional definitions to cover civilian emergency preparedness industrial items, support for essential civilian programs, and provisions for the taking of certain emergency official actions under sections §§ 700.60 through 700.63.</P> <P>(ii) Emergency official actions may include:</P> <P>(A) Controlling inventories of critical and scarce defense and/or emergency preparedness items;</P> <P>(B) Restricting the purchase, use, or distribution of critical and scarce defense and/or emergency preparedness items, or the use of production or distribution facilities, for non-essential purposes; and</P> <P>(C) Converting the production or distribution of non-essential items to the production or distribution of critical and scarce defense and/or emergency preparedness items.</P> <P>(2) <E T="03">Allocation of critical and scarce items and facilities.</E> (i) As needed, this part may be supplemented to establish special rules for the allocation of scarce and critical items and facilities to ensure the timely availability of these items and facilities for approved programs, and to provide for an equitable and orderly distribution of requirements for such items among all suppliers of the items. These rules may provide for the allocation of individual items or they may be broad enough to direct general industrial activity as required in support of emergency requirements.</P> <P>(ii) Allocation rules (i.e., controlled materials programs) were established in response to previous periods of national security emergency such as World War II and the Korean Conflict. The basic elements of the controlled materials programs were the set-aside (the amount of an item for which a producer or supplier must reserve order book space in anticipation of the receipt of rated orders), the production directive (requires a producer to supply a specific quantity, size, shape, and type of an item within a specific time period), and the allotment (the maximum quantity of an item authorized for use in a specific program or application). These elements can be used to assure the availability of any scarce and critical item for approved programs. Currently, a set-aside applies only to metalworking machines (see § 700.31).</P> <P>(3) In the event that certain critical items become scarce, and approved program requirements for these items cannot be met without creating a significant dislocation in the civilian market place so as to create appreciable hardship, Commerce may establish special rules under section 101(b) of the Defense Production Act to control the general distribution of such items in the civilian market.</P> <P>(b) [Reserved]</P> <CITA>[63 FR 31923, June 11, 1998, as amended at 71 FR 39528, July 13, 2006]</CITA> </SECTION> <SECTION> <SECTNO>§ 700.31</SECTNO> <SUBJECT>Metalworking machines.</SUBJECT> <P>(a) “Metalworking machines” include power driven, manual or automatic, metal cutting and metal forming machines and complete machines not supported in the hands of an operator when in use. Basic machines with a list price of $2,500 or less are not covered by this section.</P> <P>(b) Metalworking machines covered by this section include: </P> <EXTRACT> <FP SOURCE="FP-1">Bending and forming machines<PRTPAGE P="92"/> </FP> <FP SOURCE="FP-1">Boring machines</FP> <FP SOURCE="FP-1">Broaching machines</FP> <FP SOURCE="FP-1">Drilling and tapping machines</FP> <FP SOURCE="FP-1">Electrical discharge, ultrasonic and chemical erosion machines</FP> <FP SOURCE="FP-1">Forging machinery and hammers</FP> <FP SOURCE="FP-1">Gear cutting and finishing machines</FP> <FP SOURCE="FP-1">Grinding machines</FP> <FP SOURCE="FP-1">Hydraulic and pneumatic presses, power driven</FP> <FP SOURCE="FP-1">Machining centers and way-type machines</FP> <FP SOURCE="FP-1">Manual presses</FP> <FP SOURCE="FP-1">Mechanical presses, power driven</FP> <FP SOURCE="FP-1">Milling machines</FP> <FP SOURCE="FP-1">Miscellaneous machine tools</FP> <FP SOURCE="FP-1">Miscellaneous secondary metal forming and cutting machines</FP> <FP SOURCE="FP-1">Planers and shapers</FP> <FP SOURCE="FP-1">Polishing, lapping, boring, and finishing machines</FP> <FP SOURCE="FP-1">Punching and shearing machines</FP> <FP SOURCE="FP-1">Riveting machines</FP> <FP SOURCE="FP-1">Saws and filing machines</FP> <FP SOURCE="FP-1">Turning machines, lathes, including automatic</FP> <FP SOURCE="FP-1">Wire and metal ribbon forming machines</FP> </EXTRACT> <P>(c) A metalworking machine producer is not required to accept DO rated orders calling for delivery in any month of a total quantity of any size of machine in excess of 60 percent of scheduled production of that size of machine for that month, or any DO rated orders received less than three months prior to the beginning of the month for which delivery is requested. However, DX rated orders must be accepted without regard to a set-aside or the lead time, if delivery can be made by the required date.</P> <CITA>[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989. Further redesignated at 63 FR 31924, June 11, 1998]</CITA> </SECTION> </SUBPART> <SUBPART> <RESERVED>Subpart G [Reserved]</RESERVED> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart H—Special Priorities Assistance</HD> <SECTION> <SECTNO>§ 700.50</SECTNO> <SUBJECT>General provisions.</SUBJECT> <P>(a) The DPAS is designed to be largely self-executing. However, it is anticipated that from time-to-time problems will occur. In this event, a person should immediately contact the appropriate contract administration officer for guidance or assistance. If additional formal aid is needed, special priorities assistance should be sought from the Delegate Agency through the contract administration officer. If the Delegate Agency is unable to resolve the problem or to authorize the use of a priority rating and believes additional assistance is warranted, the Delegate Agency may forward the request to the Department of Commerce for action. Special priorities assistance is a service provided to alleviate problems that do arise.</P> <P>(b) Special priorities assistance can be provided for any reason in support of this regulation, such as assisting in obtaining timely deliveries of items needed to satisfy rated orders or authorizing the use of priority ratings on orders to obtain items not automatically ratable under this regulation.</P> <P>(c) A request for special priorities assistance or priority rating authority must be submitted on Form BIS-999 (OMB control number 0694-0057) to the local contract administration representative. Form BIS-999 may be obtained from the Delegate Agency representative or from the Department of Commerce. A sample Form BIS-999 is attached at Appendix I.</P> <CITA>[49 FR 30414, July 30, 1984; 49 FR 50171, Dec. 27, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as amended at 63 FR 31924, June 11, 1998]</CITA> </SECTION> <SECTION> <SECTNO>§ 700.51</SECTNO> <SUBJECT>Requests for priority rating authority.</SUBJECT> <P>(a) If a rated order is likely to be delayed because a person is unable to obtain items not normally rated under this regulation, the person may request the authority to use a priority rating in ordering the needed items. Examples of items for which priority ratings can be authorized include:</P> <P>(1) Production or construction equipment;</P> <P>(2) Computers when not used as production items; and</P> <P>(3) Expansion, rebuilding or replacing plant facilities.</P> <P>(b) <E T="03">Rating authority for production or construction equipment.</E> (1) A request for priority rating authority for production or construction equipment must be submitted to the appropriate Delegate Agency. The Delegate Agency may establish particular forms to be used for these requests (<E T="03">e.g.,</E> Department of Defense Form DD 691.)</P> <P>(2) When the use of a priority rating is authorized for the procurement of production or construction equipment, <PRTPAGE P="93"/>a rated order may be used either to purchase or to lease such equipment. However, in the latter case, the equipment may be leased only from a person engaged in the business of leasing such equipment or from a person willing to lease rather than sell.</P> <P>(c) <E T="03">Rating authority in advance of a rated prime contract.</E> (1) In certain cases and upon specific request, Commerce, in order to promote the national defense, may authorize a person to place a priority rating on an order to a supplier in advance of the issuance of a rated prime contract. In these instances, the person requesting advance rating authority must obtain sponsorship of the request from the appropriate Delegate Agency. The person shall also assume any business risk associated with the placing of rated orders if these orders have to be cancelled in the event the rated prime contract is not issued.</P> <P>(2) The person must state the following in the request: </P> <EXTRACT> <P>It is understood that the authorization of a priority rating in advance of our receiving a rated prime contract from a Delegate Agency and our use of that priority rating with our suppliers in no way commits the Delegate Agency, the Department of Commerce or any other government agency to enter into a contract or order or to expend funds. Further, we understand that the Federal Government shall not be liable for any cancellation charges, termination costs, or other damages that may accrue if a rated prime contract is not eventually placed and, as a result, we must subsequently cancel orders placed with the use of the priority rating authorized as a result of this request.</P> </EXTRACT> <P>(3) In reviewing requests for rating authority in advance of a rated prime contract, Commerce will consider, among other things, the following criteria:</P> <P>(i) The probability that the prime contract will be awarded;</P> <P>(ii) The impact of the resulting rated orders on suppliers and on other authorized programs;</P> <P>(iii) Whether the contractor is the sole source;</P> <P>(iv) Whether the item being produced has a long lead time;</P> <P>(v) The political sensitivity of the project; and</P> <P>(vi) The time period for which the rating is being requested.</P> <P>(4) Commerce may require periodic reports on the use of the rating authority granted under paragraph (c) of this section.</P> <P>(5) If a rated prime contract is not issued, the person shall promptly notify all suppliers who have received rated orders pursuant to the advanced rating authority that the priority rating on those orders is cancelled.</P> </SECTION> <SECTION> <SECTNO>§ 700.52</SECTNO> <SUBJECT>Examples of assistance.</SUBJECT> <P>(a) While special priorities assistance may be provided for any reason in support of this regulation, it is usually provided in situations where:</P> <P>(1) A person is experiencing difficulty in obtaining delivery against a rated order by the required delivery date; or</P> <P>(2) A person cannot locate a supplier for an item needed to fill a rated order.</P> <P>(b) Other examples of special priorities assistance include:</P> <P>(1) Ensuring that rated orders receive preferential treatment by suppliers;</P> <P>(2) Resolving production or delivery conflicts between various rated orders;</P> <P>(3) Assisting in placing rated orders with suppliers;</P> <P>(4) Verifying the urgency of rated orders; and</P> <P>(5) Determining the validity of rated orders.</P> </SECTION> <SECTION> <SECTNO>§ 700.53</SECTNO> <SUBJECT>Criteria for assistance.</SUBJECT> <P>Requests for special priorities assistance should be timely, <E T="03">i.e.,</E> the request has been submitted promptly and enough time exists for the Delegate Agency or Commerce to effect a meaningful resolution to the problem, and must establish that:</P> <P>(a) There is an urgent need for the item; and</P> <P>(b) The applicant has made a reasonable effort to resolve the problem.</P> </SECTION> <SECTION> <SECTNO>§ 700.54</SECTNO> <SUBJECT>Instances where assistance will not be provided.</SUBJECT> <P>Special priorities assistance is provided at the discretion of the Delegate Agencies and Commerce when it is determined that such assistance is warranted to meet the objectives of this regulation. Examples where assistance may not be provided include situations when a person is attempting to:</P> <P>(a) Secure a price advantage;<PRTPAGE P="94"/> </P> <P>(b) Obtain delivery prior to the time required to fill a rated order;</P> <P>(c) Gain competitive advantage;</P> <P>(d) Disrupt an industry apportionment program in a manner designed to provide a person with an unwarranted share of scarce items; or</P> <P>(e) Overcome a supplier's regularly established terms of sale or conditions of doing business.</P> <CITA>[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as amended at 63 FR 31924, June 11, 1998]</CITA> </SECTION> <SECTION> <SECTNO>§ 700.55</SECTNO> <SUBJECT>Assistance programs with Canada and other nations.</SUBJECT> <P>(a) To promote military assistance to foreign nations, this section provides for authorizing priority ratings to persons in Canada and in other foreign nations to obtain items in the United States in support of approved programs. Although priority ratings have no legal authority outside of the United States, this section also provides information on how persons in the United States may obtain informal assistance in Canada, Italy, The Netherlands, Sweden, and the United Kingdom in support of approved programs.</P> <P>(b) <E T="03">Canada.</E> (1) The joint U.S.-Canadian military arrangements for the defense of North America and the integrated nature of their defense industries as set forth in the <E T="03">U.S.-Canadian Statement of Principles for Economic Cooperation</E> (October 26, 1950) require close coordination and the establishment of a means to provide mutual assistance to the defense industries located in both countries.</P> <P>(2) The Department of Commerce coordinates with the Canadian Public Works and Government Services Canada on all matters of mutual concern relating to the administration of this regulation.</P> <P>(3) Any person in the United States ordering defense items in Canada in support of an approved program should inform the Canadian supplier that the items being ordered are to be used to fill a rated order. The Canadian supplier should be informed that if production materials are needed from the United States by the supplier or the supplier's vendor to fill the order, the supplier or vendor should contact the Canadian Public Works and Government Services Canada, for authority to place rated orders in the United States: Public Works and Government Services Canada, Acquisitions Branch, Business Management Directorate, Phase 3, Place du Portage, Level 0A1, 11 Laurier Street, Gatineau, Quebec, K1A 0S5, Canada; telephone: (819) 956-6825; Fax: (819) 956-7827.</P> <P>(4) Any person in Canada producing defense items for the Canadian government may also obtain priority rating authority for items to be purchased in the United States by applying to the Canadian Public Works and Government Services Canada, Acquisitions Branch, Business Management Directorate, in accordance with its procedures.</P> <P>(5) Persons in Canada needing special priorities assistance in obtaining defense items in the United States may apply to the Canadian Public Works and Government Services Canada, Acquisitions Branch, Business Management Directorate, for such assistance. Public Works and Government Services Canada will forward appropriate requests to the U.S. Department of Commerce.</P> <P>(6) Any person in the United States requiring assistance in obtaining items in Canada must submit a request through the Delegate Agency to Commerce on Form BIS-999. Commerce will forward appropriate requests to the Canadian Public Works and Government Services Canada.</P> <P>(c) <E T="03">Foreign nations.</E> (1) Any person in a foreign nation other than Canada requiring assistance in obtaining defense items in the United States or priority rating authority for defense items to be purchased in the United States, should submit a request for such assistance or rating authority to the Office of the Deputy Under Secretary of Defense (Industrial Policy): Office of the Deputy Under Secretary of Defense (Industrial Policy), 3330 Defense Pentagon, Washington, DC 20301; telephone: (703) 697-0051; Fax: (703) 695-4277.</P> <P>(i) If the end product is being acquired by a U.S. government agency, the request should be submitted to the Office of the Deputy Under Secretary of Defense (Industrial Policy) through the U.S. contract administration representative.<PRTPAGE P="95"/> </P> <P>(ii) If the end product is being acquired by a foreign nation, the request must be sponsored prior to its submission to the Office of the Deputy Under Secretary of Defense (Industrial Policy) by the government of the foreign nation that will use the end product.</P> <P>(2) If the Department of Defense endorses the request, it will be forwarded to Commerce for appropriate action.</P> <P>(d) <E T="03">Requesting assistance in Italy, The Netherlands, Sweden, and the United Kingdom.</E> </P> <P>(1) The U.S. Department of Defense has entered into bilateral security of supply arrangements with Italy, The Netherlands, Sweden, and the United Kingdom that allow the U.S. Department of Defense to request the priority delivery for U.S. Department of Defense contracts, subcontracts, and orders from companies in these countries.</P> <P>(2) Any person in the United States requiring assistance in obtaining the priority delivery of a contract, subcontract, or order in Italy, The Netherlands, Sweden, or the United Kingdom to support an approved program should contact the Office of the Deputy Under Secretary of Defense (Industrial Policy) for assistance. Persons in Italy, The Netherlands, Sweden, and the United Kingdom should request assistance in accordance with § 700.55(c)(1).</P> <CITA>[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as amended at 63 FR 31924, June 11, 1998; 71 FR 39528, July 13, 2006; 71 FR 54904, Sept. 20, 2006]</CITA> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart I—Official Actions</HD> <SECTION> <SECTNO>§ 700.60</SECTNO> <SUBJECT>General provisions.</SUBJECT> <P>(a) Commerce may, from time-to-time, take specific official actions to implement or enforce the provisions of this regulation.</P> <P>(b) Several of these official actions (Rating Authorizations, Directives, and Letters of Understanding) are discussed in this subpart. Other official actions which pertain to compliance (Administrative Subpoenas, Demands for Information, and Inspection Authorizations) are discussed in § 700.71(c).</P> <CITA>[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as amended at 71 FR 39528, July 13, 2006]</CITA> </SECTION> <SECTION> <SECTNO>§ 700.61</SECTNO> <SUBJECT>Rating Authorizations.</SUBJECT> <P>(a) A Rating Authorization is an official action granting specific priority rating authority that:</P> <P>(1) Permits a person to place a priority rating on an order for an item not normally ratable under this regulation; or</P> <P>(2) Authorizes a person to modify a priority rating on a specific order or series of contracts or orders.</P> <P>(b) To request priority rating authority, see § 700.51.</P> </SECTION> <SECTION> <SECTNO>§ 700.62</SECTNO> <SUBJECT>Directives.</SUBJECT> <P>(a) A Directive is an official action which requires a person to take or refrain from taking certain actions in accordance with its provisions.</P> <P>(b) A person must comply with each Directive issued. However, a person may not use or extend a Directive to obtain any items from a supplier, unless expressly authorized to do so in the Directive.</P> <P>(c) Directives take precedence over all DX rated orders, DO rated orders, and unrated orders previously or subsequently received, unless a contrary instruction appears in the Directive.</P> </SECTION> <SECTION> <SECTNO>§ 700.63</SECTNO> <SUBJECT>Letters of Understanding.</SUBJECT> <P>(a) A Letter of Understanding is an official action which may be issued in resolving special priorities assistance cases to reflect an agreement reached by all parties (Commerce, the Delegate Agency, the supplier, and the customer).</P> <P>(b) A Letter of Understanding is not used to alter scheduling between rated orders, to authorize the use of priority ratings, to impose restrictions under this regulation, or to take other official actions. Rather, Letters of Understanding are used to confirm production or shipping schedules which do not require modifications to other rated orders.</P> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart J—Compliance</HD> <SECTION> <SECTNO>§ 700.70</SECTNO> <SUBJECT>General provisions.</SUBJECT> <P>(a) Compliance actions may be taken for any reason necessary or appropriate to the enforcement or the administration of the Defense Production Act, the <PRTPAGE P="96"/>Selective Service Act and related statutes, this regulation, or an official action. Such actions include audits, investigations, or other inquiries.</P> <P>(b) Any person who places or receives a rated order should be thoroughly familiar with, and must comply with, the provisions of this regulation.</P> <P>(c) Willful violation of any of the provisions of Title I or section 705 of the Defense Production Act, this regulation, or an official action of the Department of Commerce, is a criminal act, punishable as provided in the Defense Production Act and as set forth in § 700.74 of this regulation.</P> <CITA>[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as amended at 63 FR 31924, June 11, 1998]</CITA> </SECTION> <SECTION> <SECTNO>§ 700.71</SECTNO> <SUBJECT>Audits and investigations.</SUBJECT> <P>(a) Audits and investigations are official examinations of books, records, documents, other writings and information to ensure that the provisions of the Defense Production Act, the Selective Service Act and related statutes, this regulation, and official actions have been properly followed. An audit or investigation may also include interviews and a systems evaluation to detect problems or failures in the implementation of this regulation.</P> <P>(b) When undertaking an audit, investigation, or other inquiry, the Department of Commerce shall:</P> <P>(1) Define the scope and purpose in the official action given to the person under investigation, and</P> <P>(2) Have ascertained that the information sought or other adequate and authoritative data are not available from any Federal or other responsible agency.</P> <P>(c) In administering this regulation, Commerce may issue the following documents which constitute official actions:</P> <P>(1) <E T="03">Administrative Subpoenas.</E> An Administrative Subpoena requires a person to appear as a witness before an official designated by the Department of Commerce to testify under oath on matters of which that person has knowledge relating to the enforcement or the administration of the Defense Production Act, the Selective Service Act and related statutes, this regulation, or official actions. An Administrative Subpoena may also require the production of books, papers, records, documents and physical objects or property.</P> <P>(2) <E T="03">Demand for Information.</E> A Demand for Information requires a person to furnish to a duly authorized representative of the Department of Commerce any information necessary or appropriate to the enforcement or the administration of the Defense Production Act, the Selective Service Act and related statutes, this regulation, or official actions.</P> <P>(3) <E T="03">Inspection Authorizations.</E> An Inspection Authorization requires a person to permit a duly authorized representative of Commerce to interview the person's employees or agents, to inspect books, records, documents, other writings and information in the person's possession or control at the place where that person usually keeps them, and to inspect a person's property when such interviews and inspections are necessary or appropriate to the enforcement or the administration of the Defense Production Act, the Selective Service Act and related statutes, this regulation, or official actions.</P> <P>(d) The production of books, records, documents, other writings and information will not be required at any place other than where they are usually kept if, prior to the return date specified in the Administrative Subpoena or Demand for Information, a duly authorized official of Commerce is furnished with copies of such material that are certified under oath to be true copies. As an alternative, a person may enter into a stipulation with a duly authorized official of Commerce as to the content of the material.</P> <P>(e) An Administrative Subpoena, Demand for Information, or Inspection Authorization, shall include the name, title or official position of the person to be served, the evidence sought to be adduced, and its general relevance to the scope and purpose of the audit, investigation, or other inquiry. If employees or agents are to be interviewed; if books, records, documents, other writings, or information are to be produced; or if property is to be inspected; the Administrative Subpoena, Demand <PRTPAGE P="97"/>for Information, or Inspection Authorization will describe them with particularity.</P> <P>(f) Service of documents shall be made in the following manner:</P> <P>(1) Service of a Demand for Information or Inspection Authorization shall be made personally, or by Certified Mail—Return Receipt Requested at the person's last known address. Service of an Administrative Subpoena shall be made personally. Personal service may also be made by leaving a copy of the document with someone of suitable age and discretion at the person's last known dwelling or place of business.</P> <P>(2) Service upon other than an individual may be made by serving a partner, corporate officer, or a managing or general agent authorized by appointment or by law to accept service of process. If an agent is served, a copy of the document shall be mailed to the person named in the document.</P> <P>(3) Any individual 18 years of age or over may serve an Administrative Subpoena, Demand for Information, or Inspection Authorization. When personal service is made, the individual making the service shall prepare an affidavit as to the manner in which service was made and the identity of the person served, and return the affidavit, and in the case of subpoenas, the original document, to the issuing officer. In case of failure to make service, the reasons for the failure shall be stated on the original document.</P> <CITA>[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as amended at 63 FR 31924, June 11, 1998]</CITA> </SECTION> <SECTION> <SECTNO>§ 700.72</SECTNO> <SUBJECT>Compulsory process.</SUBJECT> <P>(a) If a person refuses to permit a duly authorized representative of Commerce to have access to any premises or source of information necessary to the administration or the enforcement of the Defense Production Act, the Selective Service Act and related statutes, this regulation, or official actions, the Commerce representative may seek compulsory process. Compulsory process means the institution of appropriate legal action, including <E T="03">ex parte</E> application for an inspection warrant or its equivalent, in any forum of appropriate jurisdiction.</P> <P>(b) Compulsory process may be sought in advance of an audit, investigation, or other inquiry, if, in the judgment of the Director of the Office of Strategic Industries and Economic Security, U.S. Department of Commerce, in consultation with the Chief Counsel for Industry and Security, U.S. Department of Commerce, there is reason to believe that a person will refuse to permit an audit, investigation, or other inquiry, or that other circumstances exist which make such process desirable or necessary.</P> <CITA>[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as amended at 63 FR 31924, June 11, 1998; 67 FR 45633, July 10, 2002; 71 FR 39528, July 13, 2006]</CITA> </SECTION> <SECTION> <SECTNO>§ 700.73</SECTNO> <SUBJECT>Notification of failure to comply.</SUBJECT> <P>(a) At the conclusion of an audit, investigation, or other inquiry, or at any other time, Commerce may inform the person in writing where compliance with the requirements of the Defense Production Act, the Selective Service Act and related statutes, this regulation, or an official action were not met.</P> <P>(b) In cases where Commerce determines that failure to comply with the provisions of the Defense Production Act, the Selective Service Act and related statutes, this regulation, or an official action was inadvertent, the person may be informed in writing of the particulars involved and the corrective action to be taken. Failure to take corrective action may then be construed as a willfull violation of the Defense Production Act, this regulation, or an official action.</P> <CITA>[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as amended at 63 FR 31924, June 11, 1998]</CITA> </SECTION> <SECTION> <SECTNO>§ 700.74</SECTNO> <SUBJECT>Violations, penalties, and remedies.</SUBJECT> <P>(a) Willful violation of the provisions of Title I or Sections 705 or 707 of the Defense Production Act, the priorities provisions of the Selective Service Act and related statutes, this part, or an official action, is a crime and upon conviction, a person may be punished by fine or imprisonment, or both. The maximum penalty provided by the Defense Production Act is a $10,000 fine, or one year in prison, or both. The <PRTPAGE P="98"/>maximum penalty provided by the Selective Service Act and related statutes is a $50,000 fine, or three years in prison, or both.</P> <P>(b) The government may also seek an injunction from a court of appropriate jurisdiction to prohibit the continuance of any violation of, or to enforce compliance with, the Defense Production Act, this regulation, or an official action.</P> <P>(c) In order to secure the effective enforcement of the Defense Production Act, this regulation, and official actions, the following are prohibited (see section 704 of the Defense Production Act; see also, for example, sections 2 and 371 of Title 18, United States Code):</P> <P>(1) No person may solicit, influence or permit another person to perform any act prohibited by, or to omit any act required by, the Defense Production Act, this regulation, or an official action.</P> <P>(2) No person may conspire or act in concert with any other person to perform any act prohibited by, or to omit any act required by, the Defense Production Act, this regulation, or an official action.</P> <P>(3) No person shall deliver any item if the person knows or has reason to believe that the item will be accepted, redelivered, held, or used in violation of the Defense Production Act, this regulation, or an official action. In such instances, the person must immediately notify the Department of Commerce that, in accordance with this provision, delivery has not been made.</P> <CITA>[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as amended at 63 FR 31924, June 11, 1998]</CITA> </SECTION> <SECTION> <SECTNO>§ 700.75</SECTNO> <SUBJECT>Compliance conflicts.</SUBJECT> <P>If compliance with any provision of the Defense Production Act, the Selective Service Act and related statutes, this regulation, or an official action would prevent a person from filling a rated order or from complying with another provision of the Defense Production Act, this regulation, or an official action, the person must immediately notify the Department of Commerce for resolution of the conflict.</P> <CITA>[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as amended at 63 FR 31924, June 11, 1998]</CITA> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart K—Adjustments, Exceptions, and Appeals</HD> <SECTION> <SECTNO>§ 700.80</SECTNO> <SUBJECT>Adjustments or exceptions.</SUBJECT> <P>(a) A person may submit a request to the Office of Strategic Industries and Economic Security, U.S. Department of Commerce, for an adjustment or exception on the ground that:</P> <P>(1) A provision of this regulation or an official action results in an undue or exceptional hardship on that person not suffered generally by others in similar situations and circumstances; or</P> <P>(2) The consequence of following a provision of this regulation or an official action is contrary to the intent of the Defense Production Act, the Selective Service Act and related statutes, or this regulation.</P> <P>(b) Each request for adjustment or exception must be in writing and contain a complete statement of all the facts and circumstances related to the provision of this regulation or official action from which adjustment is sought and a full and precise statement of the reasons why relief should be provided.</P> <P>(c) The submission of a request for adjustment or exception shall not relieve any person from the obligation of complying with the provision of this regulation or official action in question while the request is being considered unless such interim relief is granted in writing by the Office of Strategic Industries and Economic Security.</P> <P>(d) A decision of the Office of Strategic Industries and Economic Security under this section may be appealed to the Assistant Secretary for Export Administration, U.S. Department of Commerce. (For information on the appeal procedure, see § 700.81.)</P> <CITA>[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as amended at 63 FR 31924, 31925, June 11, 1998]</CITA> </SECTION> <SECTION> <SECTNO>§ 700.81</SECTNO> <SUBJECT>Appeals.</SUBJECT> <P>(a) Any person who has had a request for adjustment or exception denied by the Office of Strategic Industries and Economic Security under § 700.80, may appeal to the Assistant Secretary for <PRTPAGE P="99"/>Export Administration, U.S. Department of Commerce, who shall review and reconsider the denial.</P> <P>(b) An appeal must be received by the Office of the Assistant Secretary for Export Administration, Bureau of Industry and Security, U.S. Department of Commerce, Washington, D. C. 20230, Ref: DPAS, no later than 45 days after receipt of a written notice of denial from the Office of Strategic Industries and Economic Security. After this 45-day period, an appeal may be accepted at the discretion of the Assistant Secretary for Export Administration for good cause shown.</P> <P>(c) Each appeal must be in writing and contain a complete statement of all the facts and circumstances related to the action appealed from and a full and precise statement of the reasons the decision should be modified or reversed.</P> <P>(d) In addition to the written materials submitted in support of an appeal, an appellant may request, in writing, an opportunity for an informal hearing. This request may be granted or denied at the discretion of the Assistant Secretary for Export Administration.</P> <P>(e) When a hearing is granted, the Assistant Secretary for Export Administration may designate an employee of the Department of Commerce to conduct the hearing and to prepare a report. The hearing officer shall determine all procedural questions and impose such time or other limitations deemed reasonable. In the event that the hearing officer decides that a printed transcript is necessary, all expenses shall be borne by the appellant.</P> <P>(f) When determining an appeal, the Assistant Secretary for Export Administration may consider all information submitted during the appeal as well as any recommendations, reports, or other relevant information and documents available to the Department of Commerce, or consult with any other persons or groups.</P> <P>(g) The submission of an appeal under this section shall not relieve any person from the obligation of complying with the provision of this regulation or official action in question while the appeal is being considered unless such relief is granted in writing by the Assistant Secretary for Export Administration.</P> <P>(h) The decision of the Assistant Secretary for Export Administration shall be made within a reasonable time after receipt of the appeal and shall be the final administrative action. It shall be issued to the appellant in writing with a statement of the reasons for the decision.</P> <CITA>[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as amended at 63 FR 31925, June 11, 1998; 71 FR 39528, July 13, 2006]</CITA> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart L—Miscellaneous Provisions</HD> <SECTION> <SECTNO>§ 700.90</SECTNO> <SUBJECT>Protection against claims.</SUBJECT> <P>A person shall not be held liable for damages or penalties for any act or failure to act resulting directly or indirectly from compliance with any provision of this regulation, or an official action, notwithstanding that such provision or action shall subsequently be declared invalid by judicial or other competent authority.</P> </SECTION> <SECTION> <SECTNO>§ 700.91</SECTNO> <SUBJECT>Records and reports.</SUBJECT> <P>(a) Persons are required to make and preserve for at least three years, accurate and complete records of any transaction covered by this regulation (OMB control number 0694-0053) or an official action.</P> <P>(b) Records must be maintained in sufficient detail to permit the determination, upon examination, of whether each transaction complies with the provisions of this regulation or any official action. However, this regulation does not specify any particular method or system to be used.</P> <P>(c) Records required to be maintained by this regulation must be made available for examination on demand by duly authorized representatives of Commerce as provided in § 700.71.</P> <P>(d) In addition, persons must develop, maintain, and submit any other records and reports to Commerce that may be required for the administration of the Defense Production Act, the Selective Service Act and related statutes, and this regulation.</P> <P>(e) Section 705(e) of the Defense Production Act provides that information obtained under this section which the <PRTPAGE P="100"/>President deems confidential, or with reference to which a request for confidential treatment is made by the person furnishing such information, shall not be published or disclosed unless the President determines that the withholding of this information is contrary to the interest of the national defense. Information required to be submitted to Commerce in connection with the enforcement or administration of the Act, this regulation, or an official action, is deemed to be confidential under section 705(e) of the Act and shall not be published or disclosed except as required by law.</P> <CITA>[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as amended at 63 FR 31924, 31925, June 11, 1998]</CITA> </SECTION> <SECTION> <SECTNO>§ 700.92</SECTNO> <SUBJECT>Applicability of this regulation and official actions.</SUBJECT> <P>(a) This regulation and all official actions, unless specifically stated otherwise, apply to transactions in any state, territory, or possession of the United States and the District of Columbia.</P> <P>(b) This regulation and all official actions apply not only to deliveries to other persons but also include deliveries to affiliates and subsidiaries of a person and deliveries from one branch, division, or section of a single entity to another branch, division, or section under common ownership or control.</P> <P>(c) This regulation and its schedules shall not be construed to affect any administrative actions taken by Commerce, or any outstanding contracts or orders placed pursuant to any of the regulations, orders, schedules or delegations of authority under the Defense Materials System and Defense Priorities System previously issued by Commerce. Such actions, contracts, or orders shall continue in full force and effect under this regulation unless modified or terminated by proper authority.</P> <P>(d) The repeal of the regulations, orders, schedules and delegations of authority of the Defense Materials System (DMS) and Defense Priorities System (DPS) shall not have the effect to release or extinguish any penalty or liability incurred under the DMS/DPS. The DMS/DPS shall be treated as still remaining in force for the purpose of sustaining any action for the enforcement of such penalty or liability.</P> </SECTION> <SECTION> <SECTNO>§ 700.93</SECTNO> <SUBJECT>Communications.</SUBJECT> <P>All communications concerning this regulation, including requests for copies of the regulation and explanatory information, requests for guidance or clarification, and requests for adjustment or exception shall be addressed to the Office of Strategic Industries and Economic Security, Room 3876, U.S. Department of Commerce, Washington, DC 20230, Ref: DPAS; telephone: (202) 482-3634 or fax: (202) 482-5650.</P> <CITA>[71 FR 39528, July 13, 2006]</CITA> </SECTION> <APPENDIX> <EAR>Pt. 700, Sched. I</EAR> <HD SOURCE="HED">Schedule I to Part 700—Approved Programs and Delegate Agencies</HD> <P>The programs listed in this schedule have been approved for priorities and allocations support under this part. They have equal preferential status. The Department of Commerce has authorized the Delegate Agencies to use this part in support of those programs assigned to them, as indicated below.</P> <GPOTABLE CDEF="xs100,r50,xs100" COLS="3" OPTS="L2,i1"> <BOXHD> <CHED H="1">Program identification symbol</CHED> <CHED H="1">Approved program</CHED> <CHED H="1">Delegate agency</CHED> </BOXHD> <ROW> <ENT I="11">Defense programs:</ENT> </ROW> <ROW> <ENT I="03">A1</ENT> <ENT>Aircraft</ENT> <ENT>Department of Defense.<SU>1</SU> </ENT> </ROW> <ROW> <ENT I="03">A2</ENT> <ENT>Missiles</ENT> <ENT>Do.</ENT> </ROW> <ROW> <ENT I="03">A3</ENT> <ENT>Ships</ENT> <ENT>Do.</ENT> </ROW> <ROW> <ENT I="03">A4</ENT> <ENT>Tank—Automotive</ENT> <ENT>Do.</ENT> </ROW> <ROW> <ENT I="03">A5</ENT> <ENT>Weapons</ENT> <ENT>Do.</ENT> </ROW> <ROW> <ENT I="03">A6</ENT> <ENT>Ammunition</ENT> <ENT>Do.</ENT> </ROW> <ROW> <ENT I="03">A7</ENT> <ENT>Electronic and communications equipment</ENT> <ENT>Do.</ENT> </ROW> <ROW> <ENT I="03">B1</ENT> <ENT>Military building supplies</ENT> <ENT>Do.</ENT> </ROW> <ROW> <ENT I="03">B8</ENT> <ENT>Production equipment (for defense contractor's account)</ENT> <ENT>Do.</ENT> </ROW> <ROW> <ENT I="03">B9</ENT> <ENT>Production equipment (Government owned)</ENT> <ENT>Do.</ENT> </ROW> <ROW> <ENT I="03">C1</ENT> <ENT>Food resources (combat rations)</ENT> <ENT>Do.</ENT> </ROW> <ROW> <ENT I="03">C2</ENT> <ENT>Department of Defense construction</ENT> <ENT>Do.</ENT> </ROW> <ROW> <PRTPAGE P="101"/> <ENT I="03">C3</ENT> <ENT>Maintenance, repair, and operating supplies (MRO) for Department of Defense facilities</ENT> <ENT>Do.</ENT> </ROW> <ROW> <ENT I="03">C9</ENT> <ENT>Miscellaneous</ENT> <ENT>Do.</ENT> </ROW> <ROW> <ENT I="11">International defense programs:</ENT> </ROW> <ROW> <ENT I="13">Canada:</ENT> </ROW> <ROW> <ENT I="05">D1</ENT> <ENT>Canadian military programs</ENT> <ENT>Department of Commerce.</ENT> </ROW> <ROW> <ENT I="05">D2</ENT> <ENT>Canadian production and construction</ENT> <ENT>Do.</ENT> </ROW> <ROW> <ENT I="05">D3</ENT> <ENT>Canadian atomic energy program</ENT> <ENT>Do.</ENT> </ROW> <ROW> <ENT I="13">Other Foreign Nations:</ENT> </ROW> <ROW> <ENT I="05">G1</ENT> <ENT>Certain munitions items purchased by foreign governments through domestic commercial channels for export</ENT> <ENT>Department of Commerce.</ENT> </ROW> <ROW> <ENT I="05">G2</ENT> <ENT>Certain direct defense needs of foreign governments other than Canada</ENT> <ENT>Do.</ENT> </ROW> <ROW> <ENT I="05">G3</ENT> <ENT>Foreign nations (other than Canada) production and construction</ENT> <ENT>Do.</ENT> </ROW> <ROW> <ENT I="13">Co-Production:</ENT> </ROW> <ROW> <ENT I="05">J1</ENT> <ENT>F-16 Co-Production Program</ENT> <ENT>Departments of Commerce and Defense.</ENT> </ROW> <ROW> <ENT I="11">Atomic energy programs:</ENT> </ROW> <ROW> <ENT I="03">E1</ENT> <ENT>Construction</ENT> <ENT>Department of Energy.</ENT> </ROW> <ROW> <ENT I="03">E2</ENT> <ENT>Operations—including maintenance, repair, and operating supplies (MRO)</ENT> <ENT>Do.</ENT> </ROW> <ROW> <ENT I="03">E3</ENT> <ENT>Privately owned facilities</ENT> <ENT>Do.</ENT> </ROW> <ROW> <ENT I="11">Domestic energy programs:</ENT> </ROW> <ROW> <ENT I="03">F1</ENT> <ENT>Exploration, production, refining, and transportation</ENT> <ENT>Department of Energy.</ENT> </ROW> <ROW> <ENT I="03">F2</ENT> <ENT>Conservation</ENT> <ENT>Do.</ENT> </ROW> <ROW> <ENT I="03">F3</ENT> <ENT>Construction, repair, and maintenance</ENT> <ENT>Do.</ENT> </ROW> <ROW> <ENT I="11">Other defense, energy, and related programs:</ENT> </ROW> <ROW> <ENT I="03">H1</ENT> <ENT>Certain combined orders (see section 700.17(c))</ENT> <ENT>Department of Commerce.</ENT> </ROW> <ROW> <ENT I="03">H5</ENT> <ENT>Private domestic production</ENT> <ENT>Do.</ENT> </ROW> <ROW> <ENT I="03">H6</ENT> <ENT>Private domestic construction</ENT> <ENT>Do.</ENT> </ROW> <ROW> <ENT I="03">H7</ENT> <ENT>Maintenance, repair, and operating supplies (MRO)</ENT> <ENT>Do.</ENT> </ROW> <ROW> <ENT I="03">H8</ENT> <ENT>Designated Programs</ENT> <ENT>Do.</ENT> </ROW> <ROW> <ENT I="03">K1</ENT> <ENT>Federal supply items</ENT> <ENT>General Services Administration.</ENT> </ROW> <ROW> <ENT I="11">Homeland security programs:</ENT> </ROW> <ROW> <ENT I="03">N1</ENT> <ENT>Federal emergency preparedness, mitigation, response, and recovery</ENT> <ENT>Department of Homeland Security.</ENT> </ROW> <ROW> <ENT I="03">N2</ENT> <ENT>State, local, tribal government emergency preparedness, mitigation, response, and recovery</ENT> <ENT>Do.</ENT> </ROW> <ROW> <ENT I="03">N3</ENT> <ENT>Intelligence and warning systems</ENT> <ENT>Do.</ENT> </ROW> <ROW> <ENT I="03">N4</ENT> <ENT>Border and transportation security</ENT> <ENT>Do.</ENT> </ROW> <ROW> <ENT I="03">N5</ENT> <ENT>Domestic and counter-terrorism, including law enforcement</ENT> <ENT>Do.</ENT> </ROW> <ROW> <ENT I="03">N6</ENT> <ENT>Chemical, biological, radiological, and nuclear countermeasures</ENT> <ENT>Do.</ENT> </ROW> <ROW> <ENT I="03">N7</ENT> <ENT>Critical infrastructure protection and restoration</ENT> <ENT>Do.</ENT> </ROW> <ROW> <ENT I="03">N8</ENT> <ENT>Miscellaneous</ENT> <ENT>Do.</ENT> </ROW> <TNOTE> <SU>1</SU> Department of Defense includes: The Office of the Secretary of Defense, the Military Departments, the Joint Staff, the Combatant Commands, the Defense Agencies, the Defense Field Activities, all other organizational entities in the Department of Defense, and, for purposes of this regulation, the Central Intelligence Agency and the National Aeronautics and Space Administration as Associated Agencies.</TNOTE> </GPOTABLE> <CITA>[63 FR 31925, June 11, 1998, as amended at 71 FR 39529, July 13, 2006]</CITA> </APPENDIX> <APPENDIX> <PRTPAGE P="102"/> <HD SOURCE="HED">Appendix I to Part 700—Form </HD> <EAR>Pt. 700, App. IBIS-999—Request for Special Priorities Assistance</EAR> <GPH DEEP="433" SPAN="2"> <GID>ER13JY06.000</GID> </GPH> <PRTPAGE P="103"/> <GPH DEEP="425" SPAN="2"> <GID>ER13JY06.001</GID> </GPH> <PRTPAGE P="104"/> <GPH DEEP="438" SPAN="2"> <GID>ER13JY06.002</GID> </GPH> <PRTPAGE P="105"/> <GPH DEEP="440" SPAN="2"> <GID>ER13JY06.003</GID> </GPH> <CITA>[71 FR 39529, July 13, 2006]</CITA> </APPENDIX> </SUBPART> </PART> <PART> <PRTPAGE P="106"/> <EAR>Pt. 701</EAR> <HD SOURCE="HED">PART 701—REPORTING OF OFFSETS AGREEMENTS IN SALES OF WEAPON SYSTEMS OR DEFENSE-RELATED ITEMS TO FOREIGN COUNTRIES OR FOREIGN FIRMS</HD> <CONTENTS> <SECHD>Sec.</SECHD> <SECTNO>701.1</SECTNO> <SUBJECT>Purpose.</SUBJECT> <SECTNO>701.2</SECTNO> <SUBJECT>Definitions.</SUBJECT> <SECTNO>701.3</SECTNO> <SUBJECT>Applicability and scope.</SUBJECT> <SECTNO>701.4</SECTNO> <SUBJECT>Procedures.</SUBJECT> <SECTNO>701.5</SECTNO> <SUBJECT>Confidentiality.</SUBJECT> </CONTENTS> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>Title I, sec. 124, Pub. L 102-558, 106 Stat. 4207 (50 U.S.C App. 2099).</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>59 FR 61796, Dec. 2, 1994, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>§ 701.1</SECTNO> <SUBJECT>Purpose.</SUBJECT> <P>The Defense Production Act Amendments of 1992 require the Secretary of Commerce to promulgate regulations for U.S. firms entering into contracts for the sale of defense articles or defense services to foreign countries or foreign firms that are subject to offset agreements exceeding $5,000,000 in value to furnish information regarding such agreements. The Secretary of Commerce has designated the Bureau of Industry and Security as the organization responsible for implementing this provision. The information provided by U.S. firms will be aggregated and used to determine the impact of offset transactions on the defense preparedness, industrial competitiveness, employment, and trade of the United States. Summary reports will be submitted annually to the Congress pursuant Section 309 of the Defense Production Act of 1950, as amended.</P> </SECTION> <SECTION> <SECTNO>§ 701.2</SECTNO> <SUBJECT>Definitions.</SUBJECT> <P>(a) <E T="03">Offsets</E>—Compensation practices required as a condition of purchase in either government-to-government or commercial sales of defense articles and/or defense services as defined by the Arms Export Control Act and the International Traffic in Arms Regulations.</P> <P>(b) <E T="03">Military Export Sales</E>—Exports that are either Foreign Military Sales (FMS) or commercial (direct) sales of defense articles and/or defense services as defined by the Arms Export Control Act and International Traffic in Arms Regulations.</P> <P>(c) <E T="03">Prime Contractor</E>—A firm that has a sales contract with a foreign entity or with the U.S. Government for military export sales.</P> <P>(d) <E T="03">United States</E>—Includes the 50 states, the District of Columbia, Puerto Rico, and U.S. territories.</P> <P>(e) <E T="03">Offset Agreement</E>—Any offset as defined above that the U.S. firm agrees to in order to conclude a military export sales contract. This includes all offsets, whether they are “best effort” agreements or are subject to penalty clauses.</P> <P>(f) <E T="03">Offset Transaction</E>—Any activity for which the U.S. firm claims credit for full or partial fulfillment of the offset agreement. Activities to implement offset agreements may include, but are not limited to, coproduction, licensed production, subcontractor production, overseas investment, technology transfer countertrade, barter, counterpurchase, and buy back.</P> <P>(g) <E T="03">Direct Offset</E>—Contractual arrangements that involve defense articles and services referenced in the sales agreement for military exports.</P> <P>(h) <E T="03">Indirect Offset</E>—Contractual arrangements that involve defense goods and services unrelated to the exports referenced in the sales agreement.</P> </SECTION> <SECTION> <SECTNO>§ 701.3</SECTNO> <SUBJECT>Applicability and scope.</SUBJECT> <P>(a) This rule applies to U.S. firms entering contracts for the sale of defense articles or defense services (as defined in the Arms Export Control Act and International Traffic in Arms Regulations) to a foreign country or foreign firm for which the contract is subject to an offset agreement exceeding $5,000,000 in value.</P> <P>(b) This rule applies to all offset transactions completed in performance of existing offset commitments since January 1, 1993 for which offset credit of $250,000 or more has been claimed from the foreign representative, and new offset agreements entered into since that time.</P> </SECTION> <SECTION> <SECTNO>§ 701.4</SECTNO> <SUBJECT>Procedures.</SUBJECT> <P>(a) To avoid double counting, firms should report only offset transactions for which they are directly responsible for reporting to the foreign customer (i.e., prime contractors should report <PRTPAGE P="107"/>for their subcontractors if the subcontractors are not a direct party to the offset agreement).</P> <P>(b) Reports should be delivered to the Offsets Program Manager, U.S. Department of Commerce, Office of Strategic Industries and Economic Security, Bureau of Industry and Security, Room 3878, 14th Street and Pennsylvania Avenue, N.W., Washington DC 20230. The first industry reports should be submitted to the Bureau of Industry and Security not later than March 15, 1995 and should cover offset transactions completed during the calendar year 1993, as well as information regarding unfulfilled offset agreements. After this initial submission, companies should provide information once yearly not later than June 15 covering the preceding calendar year. All submissions should include a point of contact (name and telephone number) and should be by a company official authorized to provide such information.</P> <P>(c) Companies may submit this information in computerized spreadsheet/database format (e.g., Lotus 1-2-3, Quattro Pro, dbase IV) using a 3.5 inch 1.44 megabyte diskette, accompanied by a printed copy.</P> <P>(d) <E T="03">Offset Transaction Reporting.</E> (1) Reports should include an itemized list of offset transactions completed during the reporting period, including the following data elements (Estimates are acceptable when actual figures are unavailable; estimated figures should be followed by the letter “E”):</P> <P>(i) Name of Country—Country of entity purchasing the weapon system, defense item or service subject to offset.</P> <P>(ii) Name or Description of Weapon system, Defense Item, or Service Subject to Offset.</P> <P>(iii) Name of Offset Fulfilling Entity—Entity fulfilling offset transaction (including first tier subcontractors).</P> <P>(iv) Name of Offset Receiving Entity—Entity receiving benefits from offset transaction.</P> <P>(v) Offset Credit Value—Dollar value credits claimed by fulfilling entity including any intangible factors/multipliers.</P> <P>(vi) Actual Offset Value—Dollar value of the offset transaction without multipliers/intangible factors.</P> <P>(vii) Description of Offset Product/Service—Short description of the type of offset (e.g., coproduction, technology transfer, subcontract activity, training, purchase, cash payment, etc.).</P> <P>(viii) Broad Industry Category—Broad classification of the industry in which the offset transaction was fulfilled (e.g., aerospace, electronics, chemicals, industrial machinery, textiles, etc.). Firms may request a list of the Standard Industry Classification (SIC) codes to assist in identifying an appropriate industry category. Forward such requests to the Offsets Program Manager, U.S. Department of Commerce, Office of Strategic Industries and Economic Security, Bureau of Industry and Security, Room 3878, 14th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20230 or Fax 202-482-5650.</P> <P>(ix) Direct or Indirect Offset—Specify whether the offset transaction was direct or indirect offset.</P> <P>(x) Name of Country in Which Offset was Fulfilled—United States, purchasing country, or third country.</P> <P>(2) Offset transactions of the same type (same fulfilling entity, receiving entity, and offset product/service) completed during the same reporting period may be combined.</P> <P>(3) Any necessary comments or explanations relating to the above information should be footnoted and supplied on separate sheets attached to the report.</P> <P>(e) <E T="03">Reporting on Offset Agreements Entered Into.</E> (1) In addition to the itemized list of offset transactions completed during the year as specified above, U.S. firms should provide information regarding <E T="03">new offset agreements entered</E> into during the year, including the following elements:</P> <P>(i) Name of Country—Country of entity purchasing the weapon system, defense item, or service subject to offset;</P> <P>(ii) Name or Description of Weapon System, Defense Item, or Service Subject to Offset;</P> <P>(iii) Names/Titles of Signatories to the Offset Agreement;</P> <P>(iv) Value of Export Sale Subject to Offset (approximate);</P> <P>(v) Total Value of the Offset Agreement;<PRTPAGE P="108"/> </P> <P>(vi) Term of Offset Agreement (months);</P> <P>(vii) Description of Performance Measures—(e.g., “Best Efforts,” Liquidated Damages, (describe)).</P> <P>(2) [Reserved]</P> </SECTION> <SECTION> <SECTNO>§ 701.5</SECTNO> <SUBJECT>Confidentiality.</SUBJECT> <P>(a) As provided by § 309(c) of the Defense Production Act of 1950, as amended, BIS shall not publicly disclose the information it receives pursuant to this part, unless the firm furnishing the information subsequently specifically authorizes public disclosure.</P> <P>(b) Public disclosure must be authorized in writing by an official of the firm competent to make such an authorization.</P> <P>(c) Nothing in this provision shall prevent the use of data aggregated from information provided pursuant to this part in the summary report to the Congress described in § 701.1.</P> </SECTION> </PART> <PART> <RESERVED>PARTS 702-704 [RESERVED]</RESERVED> </PART> <PART> <EAR>Pt. 705</EAR> <HD SOURCE="HED">PART 705—EFFECT OF IMPORTED ARTICLES ON THE NATIONAL SECURITY</HD> <CONTENTS> <SECHD>Sec.</SECHD> <SECTNO>705.1</SECTNO> <SUBJECT>Definitions.</SUBJECT> <SECTNO>705.2</SECTNO> <SUBJECT>Purpose.</SUBJECT> <SECTNO>705.3</SECTNO> <SUBJECT>Commencing an investigation.</SUBJECT> <SECTNO>705.4</SECTNO> <SUBJECT>Criteria for determining effect of imports on the national security.</SUBJECT> <SECTNO>705.5</SECTNO> <SUBJECT>Request or application for an investigation.</SUBJECT> <SECTNO>705.6</SECTNO> <SUBJECT>Confidential information.</SUBJECT> <SECTNO>705.7</SECTNO> <SUBJECT>Conduct of an investigation.</SUBJECT> <SECTNO>705.8</SECTNO> <SUBJECT>Public hearings.</SUBJECT> <SECTNO>705.9</SECTNO> <SUBJECT>Emergency action.</SUBJECT> <SECTNO>705.10</SECTNO> <SUBJECT>Report of an investigation and recommendation.</SUBJECT> <SECTNO>705.11</SECTNO> <SUBJECT>Determination by the President and adjustment of imports.</SUBJECT> <SECTNO>705.12</SECTNO> <SUBJECT>Disposition of an investigation and report to the Congress.</SUBJECT> </CONTENTS> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>Sec. 232, Trade Expansion Act of 1962, as amended (19 U.S.C. 1862).</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>47 FR 14693, Apr. 6, 1982, unless otherwise noted. Redesignated at 54 FR 601, Jan. 9, 1989.</P> </SOURCE> <SECTION> <SECTNO>§ 705.1</SECTNO> <SUBJECT>Definitions.</SUBJECT> <P>As used in this part:</P> <P> <E T="03">Department</E> means the United States Department of Commerce and includes the Secretary of Commerce and the Secretary's designees.</P> <P> <E T="03">Secretary</E> means the Secretary of Commerce or the Secretary's designees.</P> <P> <E T="03">Applicant</E> means the person or entity submitting a request or application for an investigation pursuant to this part.</P> </SECTION> <SECTION> <SECTNO>§ 705.2</SECTNO> <SUBJECT>Purpose.</SUBJECT> <P>These regulations set forth the procedures by which the Department shall commence and conduct an investigation to determine the effect on the national security of the imports of any article. Based on this investigation, the Secretary shall make a report and recommendation to the President for action or inaction regarding an adjustment of the imports of the article.</P> </SECTION> <SECTION> <SECTNO>§ 705.3</SECTNO> <SUBJECT>Commencing an investigation.</SUBJECT> <P>(a) Upon request of the head of any government department or agency, upon application of an interested party, or upon motion of the Secretary, the Department shall immediately conduct an investigation to determine the effect on the national security of the imports of any article.</P> <P>(b) The Secretary shall immediately provide notice to the Secretary of Defense of any investigation initiated under this part.</P> <CITA>[47 FR 14693, Apr. 6, 1982. Redesignated at 54 FR 601, Jan. 9, 1989, and amended at 63 FR 31623, June 10, 1998]</CITA> </SECTION> <SECTION> <SECTNO>§ 705.4</SECTNO> <SUBJECT>Criteria for determining effect of imports on the national security.</SUBJECT> <P>(a) To determine the effect on the national security of the imports of the article under investigation, the Department shall consider the quantity of the article in question or other circumstances related to its import. With regard for the requirements of national security, the Department shall also consider the following:</P> <P>(1) Domestic production needed for projected national defense requirements;</P> <P>(2) The capacity of domestic industries to meet projected national defense requirements;</P> <P>(3) The existing and anticipated availabilities of human resources, products, raw materials, production equipment and facilities, and other <PRTPAGE P="109"/>supplies and services essential to the national defense;</P> <P>(4) The growth requirements of domestic industries to meet national defense requirements and the supplies and services including the investment, exploration and development necessary to assure such growth; and</P> <P>(5) Any other relevant factors.</P> <P>(b) In recognition of the close relation between the strength of our national economy and the capacity of the United States to meet national security requirements, the Department shall also, with regard for the quantity, availability, character and uses of the imported article under investigation, consider the following:</P> <P>(1) The impact of foreign competition on the economic welfare of any domestic industry essential to our national security;</P> <P>(2) The displacement of any domestic products causing substantial unemployment, decrease in the revenues of government, loss of investment or specialized skills and productive capacity, or other serious effects; and</P> <P>(3) Any other relevant factors that are causing or will cause a weakening of our national economy.</P> </SECTION> <SECTION> <SECTNO>§ 705.5</SECTNO> <SUBJECT>Request or application for an investigation.</SUBJECT> <P>(a) A request or application for an investigation shall be in writing. The original and 1 copy shall be filed with the Director, Office of Strategic Industries and Economic Security, Room 3876, U.S. Department of Commerce, Washington, DC 20230.</P> <P>(b) When a request, application or motion is under investigation, or when an investigation has been completed pursuant to § 705.10 of this part, any subsequently filed request or application concerning imports of the same or related article that does not raise new or different issues may be either consolidated with the investigation in progress as provided in § 705.7(e) of this part, or rejected. In either event, an explanation for taking such action shall be promptly given to the applicant. If the request or application is rejected, it will not be returned unless requested by the applicant.</P> <P>(c) Requests or applications shall describe how the quantity, availability, character, and uses of a particular imported article, or other circumstances related to its import, affect the national security, and shall contain the following information to the fullest extent possible:</P> <P>(1) Identification of the applicant;</P> <P>(2) A precise description of the article;</P> <P>(3) Description of the domestic industry affected, including pertinent information regarding companies and their plants, locations, capacity and current output of the industry;</P> <P>(4) Pertinent statistics on imports and domestic production showing the quantities and values of the article;</P> <P>(5) Nature, sources, and degree of the competition created by imports of the article;</P> <P>(6) The effect that imports of the article may have upon the restoration of domestic production capacity in the event of national emergency;</P> <P>(7) Employment and special skills involved in the domestic production of the article;</P> <P>(8) Extent to which the national economy, employment, investment, specialized skills, and productive capacity is or will be adversely affected;</P> <P>(9) Revenues of Federal, State, or local Governments which are or may be adversely affected;</P> <P>(10) National security supporting uses of the article including data on applicable contracts or sub-contracts, both past and current; and</P> <P>(11) Any other information or advice relevant and material to the subject matter of the investigation.</P> <P>(d) Statistical material presented should be, if possible, on a calendar-year basis for sufficient periods of time to indicate trends. Monthly or quarterly data for the latest complete years should be included as well as any other breakdowns which may be pertinent to show seasonal or short-term factors.</P> <CITA>[47 FR 14693, Apr. 6, 1982. Redesignated at 54 FR 601, Jan. 9, 1989, and amended at 63 FR 31623, June 10, 1998; 65 FR 62600, Oct. 19, 2000]</CITA> </SECTION> <SECTION> <SECTNO>§ 705.6</SECTNO> <SUBJECT>Confidential information.</SUBJECT> <P>(a) Any information or material which the applicant or any other party desires to submit in confidence at any stage of the investigation that would <PRTPAGE P="110"/>disclose national security classified information or business confidential information (trade secrets, commercial or financial information, or any other information considered senstitive or privileged), shall be submitted on separate sheets with the clear legend “National Security Classified” or “Business Confidential,” as appropriate, marked at the top of each sheet. Any information or material submitted that is identified as national security classified must be accompanied at the time of filing by a statement indicating the degree of classification, the authority for the classification, and the identity of the classifying entity. By submitting information or material identified as business confidential, the applicant or other party represents that the information is exempted from public disclosure, either by the Freedom of Information Act (5 U.S.C. 552 et seq.) or by some other specific statutory exemption. Any request for business confidential treatment must be accompanied at the time of filing by a statement justifying non-disclosure and referring to the specific legal authority claimed.</P> <P>(b) The Department may refuse to accept as business confidential any information or material it considers not intended to be protected under the legal authority claimed by the applicant, or under other applicable legal authority. Any such information or material so refused shall be promptly returned to the submitter and will not be considered. However, such information or material may be resubmitted as non-confidential in which case it will be made part of the public record.</P> </SECTION> <SECTION> <SECTNO>§ 705.7</SECTNO> <SUBJECT>Conduct of an investigation.</SUBJECT> <P>(a) If the Department determines that it is appropriate to afford interested parties an opportunity to present information and advice relevant and material to an investigation, a public notice shall be published in the <E T="04">Federal Register</E> soliciting from any interested party written comments, opinions, data, information or advice relative to the investigation. This material shall be submitted as directed within a reasonable time period to be specified in the notice. All material shall be submitted with 6 copies. In addition, public hearings may be held pursuant to § 705.8 of this part.</P> <P>(b) All requests and applications filed and all material submitted by interested parties, except information on material that is classified or determined to be confidential as provided in § 705.6 of this part, will be available for public inspection and copying in the Bureau of Industry and SecurityFreedom of Information Records Inspection Facility, Room H-4525, U.S. Department of Commerce, Washington, DC 20230, in accordance with regulations published in part 4 of title 15, Code of Federal Regulations.</P> <P>(c) Further information may be requested by the Department from other sources through the use of questionnaires, correspondence, or other appropriate means.</P> <P>(d) The Department shall, as part of an investigation, seek information and advice from, and consult with, appropriate officers of the United States or their designees, as shall be determined. The Department shall also consult with the Secretary of Defense regarding the methodological and policy questions raised in the investigation. Upon the request of the Secretary, the Secretary of Defense shall provide the Secretary with an assessment of the defense requirements of the article in question. Communications received from agencies of the U.S. government or foreign governments will not be made available for public inspection.</P> <P>(e) Any request or application that is filed while an investigation is in progress, concerning imports of the same or related article and raising similar issues, may be consolidated with the request, application or motion that initiated the investigation.</P> <CITA>[47 FR 14693, Apr. 6, 1982. Redesignated at 54 FR 601, Jan. 9, 1989 and amended at 54 FR 19355, May 5, 1989; 63 FR 31623, June 10, 1998]</CITA> </SECTION> <SECTION> <SECTNO>§ 705.8</SECTNO> <SUBJECT>Public hearings.</SUBJECT> <P>(a) If it is deemed appropriate by the Department, public hearings may be held to elicit further information.</P> <P>(1) A notice of hearing shall be published in the <E T="04">Federal Register</E> describing the date, time, place, the subject matter of each hearing and any <PRTPAGE P="111"/>other information relevant to the conduct of the hearing. The name of a person to contact for additional information or to request time to speak at the hearing shall also be included. Public hearings may be held in more than one location.</P> <P>(2) Hearings shall be open to the public unless national security classified information will be presented. In that event the presiding officer at the hearing shall close the hearing, as necessary, to all persons not having appropriate security clearances or not otherwise authorized to have access to such information. If it is known in sufficient time prior to the hearing that national security classified information will be presented the notice of hearing published in the <E T="04">Federal Register</E> shall state that national security classified information will be presented and that the hearing will be open only to those persons having appropriate security clearances or otherwise specifically authorized to have access to such information.</P> <P>(b) Hearings shall be conducted as follows:</P> <P>(1) The Department shall appoint the presiding officer;</P> <P>(2) The presiding officer shall determine all procedural matters during the hearing;</P> <P>(3) Interested parties may appear, either in person or by representation, and produce oral or written information relevant and material to the subject matter of the investigation;</P> <P>(4) Hearings will be fact-finding proceedings without formal pleadings or adverse parties. Formal rules of evidence will not apply;</P> <P>(5) After a witness has testified, the presiding officer may question the witness. Questions submitted to the presiding officer in writing by any interested party may, at the discretion of the presiding officer, be posed to the witness. No cross examination of any witness by a party shall be allowed.</P> <P>(6) Each hearing will be stenographically reported. Transcripts of the hearing, excluding any national security classified information, may be purchased from the Department at actual cost of duplication, and will be available for public inspection in the Bureau of Industry and Security Freedom of Information Records Inspection Facility, Room H-4525, U.S. Department of Commerce, Washington, DC 20230.</P> <CITA>[47 FR 14693, Apr. 6, 1982. Redesignated at 54 FR 601, Jan. 9, 1989 and amended at 54 FR 19355, May 5, 1989; 63 FR 31623, June 10, 1998]</CITA> </SECTION> <SECTION> <SECTNO>§ 705.9</SECTNO> <SUBJECT>Emergency action.</SUBJECT> <P>In emergency situations, or when in the judgment of the Department, national security interests require it, the Department may vary or dispense with any or all of the procedures set forth in § 705.7 of this part.</P> </SECTION> <SECTION> <SECTNO>§ 705.10</SECTNO> <SUBJECT>Report of an investigation and recommendation.</SUBJECT> <P>(a) When an investigation conducted pursuant to this part is completed, a report of the investigation shall be promptly prepared.</P> <P>(b) The Secretary shall report to the President the findings of the investigation and a recommendation for action or inaction within 270 days after beginning an investigation under this part.</P> <P>(c) An Executive Summary of the Secretary's report to the President of an investigation, excluding any classified or proprietary information, shall be published in the <E T="04">Federal Register.</E> Copies of the full report, excluding any classified or proprietary information, will be available for public inspection and copying in the Bureau of Industry and Security Freedom of Information Records Inspection Facility, Room H-4525, U.S. Department of Commerce, 14th Street, N.W., Washington, D.C. 20230; tel. (202) 482-5653.</P> <CITA>[63 FR 31623, June 10, 1998]</CITA> </SECTION> <SECTION> <SECTNO>§ 705.11</SECTNO> <SUBJECT>Determination by the President and adjustment of imports.</SUBJECT> <P>(a) Upon the submission of a report to the President by the Secretary under § 705.10(b) of this part, in which the Department has found that an article is being imported into the United States in such quantities or under such circumstances as to threaten to impair the national security, the President is required by Section 232(c) of the Trade Expansion Act of 1962, as amended (19 U.S.C. 1862(c)) to take the following action<PRTPAGE P="112"/> </P> <P>(1) Within 90 days after receiving the report from the Secretary, the President shall determine:</P> <P>(i) Whether the President concurs with the Department's finding; and</P> <P>(ii) If the President concurs, the nature and duration of the action that must be taken to adjust the imports of the article and its derivatives so that the such imports will not threaten to impair the national security.</P> <P>(2) If the President determines to take action under this section, such action must be taken no later than fifteen (15) days after making the determination.</P> <P>(3) By no later than thirty (30) days after making the determinations under paragraph (a)(1) of this section, the President shall submit to the Congress a written statement of the reasons why the President has decided to take action, or refused to take action.</P> <P>(b) If the action taken by the President under this section is the negotiation of an agreement to limit or restrict the importation into the United States of the article in question, and either no such agreement is entered into within 180 days after making the determination to take action, or an executed agreement is not being carried out or is ineffective in eliminating the threat to the national security, the President shall either:</P> <P>(1) Take such other action as deemed necessary to adjust the imports of the article so that such imports will not threaten to impair the national security. Notice of any such additional action taken shall be published in the <E T="04">Federal Register</E>; or</P> <P>(2) Not take any additional action. This determination and the reasons on which it is based, shall be published in the <E T="04">Federal Register</E>.</P> <CITA>[63 FR 31623, June 10, 1998]</CITA> </SECTION> <SECTION> <SECTNO>§ 705.12</SECTNO> <SUBJECT>Disposition of an investigation and report to the Congress.</SUBJECT> <P>(a) Upon the disposition of each request, application, or motion made under this part, a report of such disposition shall be submitted by the Secretary to the Congress and published in the <E T="04">Federal Register</E>.</P> <P>(b) As required by Section 232(e) of the Trade Expansion Act of 1962, as amended (19 U.S.C. 1862(c)), the President shall submit to the Congress an annual report on the operation of this part.</P> <CITA>[63 FR 31623, June 10, 1998]</CITA> </SECTION> </PART> <PART> <RESERVED>PARTS 706-709 [RESERVED]</RESERVED> </PART> </SUBCHAP> <SUBCHAP TYPE="P"> <PRTPAGE P="113"/> <HD SOURCE="HED">SUBCHAPTER B—CHEMICAL WEAPONS CONVENTION REGULATIONS</HD> <PART> <EAR>Pt. 710</EAR> <HD SOURCE="HED">PART 710—GENERAL INFORMATION AND OVERVIEW OF THE CHEMICAL WEAPONS CONVENTION REGULATIONS (CWCR)</HD> <CONTENTS> <SECHD>Sec.</SECHD> <SECTNO>710.1</SECTNO> <SUBJECT>Definitions of terms used in the Chemical Weapons Convention Regulations (CWCR).</SUBJECT> <SECTNO>710.2</SECTNO> <SUBJECT>Scope of the CWCR.</SUBJECT> <SECTNO>710.3</SECTNO> <SUBJECT>Purposes of the Convention and CWCR.</SUBJECT> <SECTNO>710.4</SECTNO> <SUBJECT>Overview of scheduled chemicals and examples of affected industries.</SUBJECT> <SECTNO>710.5</SECTNO> <SUBJECT>Authority.</SUBJECT> <SECTNO>710.6</SECTNO> <SUBJECT>Relationship between the Chemical Weapons Convention Regulations and the Export Administration Regulations, the International Traffic in Arms Regulations, and the Alcohol, Tobacco, Firearms, and Explosives Regulations.</SUBJECT> <APP>Supplement No. 1 to Part 710—States Parties to the Convention on the Prohibition of the Development, Production, Stockpiling and Use of Chemical Weapons and on Their Destruction</APP> <APP>Supplement No. 2 to Part 710—Definitions of Production</APP> </CONTENTS> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>22 U.S.C. 6701 <E T="03">et seq.</E>; E.O. 13128, 64 FR 36703, 3 CFR 1999 Comp., p. 199.</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>71 FR 24929, Apr. 27, 2006, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>§ 710.1</SECTNO> <SUBJECT>Definitions of terms used in the Chemical Weapons Convention Regulations (CWCR).</SUBJECT> <P>The following are definitions of terms used in the CWCR (parts 710 through 729 of this subchapter, unless otherwise noted):</P> <P> <E T="03">Act (The).</E> Means the Chemical Weapons Convention Implementation Act of 1998 (22 U.S.C. 6701 <E T="03">et seq.</E>).</P> <P> <E T="03">Advance Notification.</E> Means a notice informing BIS of a company's intention to export to or import from a State Party a Schedule 1 chemical. This advance notification must be submitted to BIS at least 45 days prior to the date of export or import (except for transfers of 5 milligrams or less of saxitoxin for medical/diagnostic purposes, which must be submitted to BIS at least 3 days prior to export or import). BIS will inform the company in writing of the earliest date the shipment may occur under the advance notification procedure. This advance notification requirement is imposed in addition to any export license requirements under the Department of Commerce's Export Administration Regulations (15 CFR parts 730 through 799) or the Department of State's International Traffic in Arms Regulations (22 CFR parts 120 through 130) or any import license requirements under the Department of Justice's Bureau of Alcohol, Tobacco, Firearms and Explosives Regulations (27 CFR part 447).</P> <P> <E T="03">Bureau of Industry and Security (BIS).</E> Means the Bureau of Industry and Security of the United States Department of Commerce, including Export Administration and Export Enforcement.</P> <P> <E T="03">By-product.</E> Means any chemical substance or mixture produced without a separate commercial intent during the manufacture, processing, use or disposal of another chemical substance or mixture.</P> <P> <E T="03">Chemical Weapon.</E> Means the following, together or separately:</P> <P>(1) Toxic chemicals and their precursors, except where intended for purposes not prohibited under the Chemical Weapons Convention (CWC), provided that the type and quantity are consistent with such purposes;</P> <P>(2) Munitions and devices, specifically designed to cause death or other harm through the toxic properties of those toxic chemicals specified in paragraph (1) of this definition, which would be released as a result of the employment of such munitions and devices;</P> <P>(3) Any equipment specifically designed for use directly in connection with the employment of munitions or devices specified in paragraph (2) of this definition.</P> <P> <E T="03">Chemical Weapons Convention (CWC or Convention).</E> Means the Convention on the Prohibition of the Development, Production, Stockpiling and Use of Chemical Weapons and on Their Destruction, and its annexes opened for signature on January 13, 1993.<PRTPAGE P="114"/> </P> <P> <E T="03">Chemical Weapons Convention Regulations (CWCR).</E> Means the regulations contained in 15 CFR parts 710 through 729.</P> <P> <E T="03">Consumption.</E> Consumption of a chemical means its conversion into another chemical via a chemical reaction. Unreacted material must be accounted for as either waste or as recycled starting material.</P> <P> <E T="03">Declaration or report form.</E> Means a multi-purpose form to be submitted to BIS regarding activities involving Schedule 1, Schedule 2, Schedule 3, or unscheduled discrete organic chemicals. Declaration forms will be used by facilities that have data declaration obligations under the CWCR and are “declared” facilities whose facility-specific information will be transmitted to the OPCW. Report forms will be used by entities that are “undeclared” facilities or trading companies that have limited reporting requirements for only export and import activities under the CWCR and whose facility-specific information will not be transmitted to the OPCW. Information from declared facilities, undeclared facilities and trading companies will also be used to compile U.S. national aggregate figures on the production, processing, consumption, export and import of specific chemicals. See also related definitions of declared facility, undeclared facility and report.</P> <P> <E T="03">Declared facility or plant site.</E> Means a facility or plant site that submits declarations of activities involving Schedule 1, Schedule 2, Schedule 3, or unscheduled discrete organic chemicals above specified threshold quantities.</P> <P> <E T="03">Discrete organic chemical.</E> Means any chemical belonging to the class of chemical compounds consisting of all compounds of carbon, except for its oxides, sulfides, and metal carbonates, identifiable by chemical name, by structural formula, if known, and by Chemical Abstract Service registry number, if assigned. (Also see the definition for unscheduled discrete organic chemical.)</P> <P> <E T="03">Domestic transfer.</E> Means, with regard to declaration requirements for Schedule 1 chemicals under the CWCR, any movement of any amount of a Schedule 1 chemical outside the geographical boundary of a facility in the United States to another destination in the United States, for any purpose. Also means, with regard to declaration requirements for Schedule 2 and Schedule 3 chemicals under the CWCR, movement of a Schedule 2 or Schedule 3 chemical in quantities and concentrations greater than specified thresholds, outside the geographical boundary of a facility in the United States, to another destination in the United States, for any purpose. Domestic transfer includes movement between two divisions of one company or a sale from one company to another. Note that any movement to or from a facility outside the United States is considered an export or import for reporting purposes, not a domestic transfer. (Also see definition of United States.)</P> <P> <E T="03">EAR.</E> Means the Export Administration Regulations (15 CFR parts 730-799).</P> <P> <E T="03">Explosive.</E> Means a chemical (or a mixture of chemicals) that is included in Class 1 of the United Nations Organization hazard classification system.</P> <P> <E T="03">Facility.</E> Means any plant site, plant or unit.</P> <P> <E T="03">Facility Agreement.</E> Means a written agreement or arrangement between a State Party and the Organization relating to a specific facility subject to on-site verification pursuant to Articles IV, V, and VI of the Convention.</P> <P> <E T="03">Host Team.</E> Means the U.S. Government team that accompanies the inspection team from the Organization for the Prohibition of Chemical Weapons during a CWC inspection for which the regulations in the CWCR apply.</P> <P> <E T="03">Host Team Leader.</E> Means the representative from the Department of Commerce who heads the U.S. Government team that accompanies the Inspection Team during a CWC inspection for which the regulations in the CWCR apply.</P> <P> <E T="03">Hydrocarbon.</E> Means any organic compound that contains only carbon and hydrogen.</P> <P> <E T="03">Impurity.</E> Means a chemical substance unintentionally present with another chemical substance or mixture.</P> <P> <E T="03">Inspection Notification.</E> Means a written announcement to a plant site by the United States National Authority (USNA) or the BIS Host Team of an impending inspection under the Convention.<PRTPAGE P="115"/> </P> <P> <E T="03">Inspection Site.</E> Means any facility or area at which an inspection is carried out and which is specifically defined in the respective facility agreement or inspection request or mandate or inspection request as expanded by the alternative or final perimeter.</P> <P> <E T="03">Inspection Team.</E> Means the group of inspectors and inspection assistants assigned by the Director-General of the Technical Secretariat to conduct a particular inspection.</P> <P> <E T="03">Intermediate.</E> Means a chemical formed through chemical reaction that is subsequently reacted to form another chemical.</P> <P> <E T="03">ITAR.</E> Means the International Traffic in Arms Regulations (22 CFR parts 120-130).</P> <P> <E T="03">Organization for the Prohibition of Chemical Weapons (OPCW).</E> Means the international organization, located in The Hague, the Netherlands, that administers the CWC.</P> <P> <E T="03">Person.</E> Means any individual, corporation, partnership, firm, association, trust, estate, public or private institution, any State or any political subdivision thereof, or any political entity within a State, any foreign government or nation or any agency, instrumentality or political subdivision of any such government or nation, or other entity located in the United States.</P> <P> <E T="03">Plant.</E> Means a relatively self-contained area, structure or building containing one or more units with auxiliary and associated infrastructure, such as:</P> <P>(1) Small administrative area;</P> <P>(2) Storage/handling areas for feedstock and products;</P> <P>(3) Effluent/waste handling/treatment area;</P> <P>(4) Control/analytical laboratory;</P> <P>(5) First aid service/related medical section; and</P> <P>(6) Records associated with the movement into, around, and from the site, of declared chemicals and their feedstock or product chemicals formed from them, as appropriate.</P> <P> <E T="03">Plant site.</E> Means the local integration of one or more plants, with any intermediate administrative levels, which are under one operational control, and includes common infrastructure, such as:</P> <P>(1) Administration and other offices;</P> <P>(2) Repair and maintenance shops;</P> <P>(3) Medical center;</P> <P>(4) Utilities;</P> <P>(5) Central analytical laboratory;</P> <P>(6) Research and development laboratories;</P> <P>(7) Central effluent and waste treatment area; and</P> <P>(8) Warehouse storage.</P> <P> <E T="03">Precursor.</E> Means any chemical reactant which takes part, at any stage in the production, by whatever method, of a toxic chemical. The term includes any key component of a binary or multicomponent chemical system.</P> <P> <E T="03">Processing.</E> Means a physical process such as formulation, extraction and purification in which a chemical is not converted into another chemical.</P> <P> <E T="03">Production.</E> Means the formation of a chemical through chemical reaction, including biochemical or biologically mediated reaction (see Supplement No. 2 to this part).</P> <P>(1) Production of Schedule 1 chemicals means formation through chemical synthesis as well as processing to extract and isolate Schedule 1 chemicals.</P> <P>(2) Production of a Schedule 2 or Schedule 3 chemical means all steps in the production of a chemical in any units within the same plant through chemical reaction, including any associated processes (e.g., purification, separation, extraction, distillation, or refining) in which the chemical is not converted into another chemical. The exact nature of any associated process (e.g., purification, etc.) is not required to be declared.</P> <P> <E T="03">Production by synthesis</E>. Means production of a chemical from its reactants.</P> <P> <E T="03">Protective purposes in relation to Schedule 1 chemicals</E>. Means any purpose directly related to protection against toxic chemicals and to protection against chemical weapons. Further means the Schedule 1 chemical is used for determining the adequacy of defense equipment and measures.</P> <P> <E T="03">Purposes not prohibited by the CWC.</E> Means the following:</P> <P>(1) Any peaceful purpose related to an industrial, agricultural, research, medical or pharmaceutical activity or other activity;<PRTPAGE P="116"/> </P> <P>(2) Any purpose directly related to protection against toxic chemicals and to protection against chemical weapons;</P> <P>(3) Any military purpose of the United States that is not connected with the use of a chemical weapon and that is not dependent on the use of the toxic or poisonous properties of the chemical weapon to cause death or other harm; or</P> <P>(4) Any law enforcement purpose, including any domestic riot control purpose and including imposition of capital punishment.</P> <P> <E T="03">Report.</E> Means information due to BIS on exports and imports of Schedule 1, Schedule 2 or Schedule 3 chemicals above applicable thresholds. Such information is included in the national aggregate declaration transmitted to the OPCW. Facility-specific information is not included in the national aggregate declaration. Note: This definition does not apply to parts 719 and 720 of the CWCR (see the definition of “report” in § 719.1(b) of the CWCR).</P> <P> <E T="03">Schedules of Chemicals</E>. Means specific lists of toxic chemicals, groups of chemicals, and precursors contained in the CWC. See Supplements No. 1 to parts 712 through 714 of the CWCR.</P> <P> <E T="03">State Party</E>. Means a country for which the CWC is in force. See Supplement No. 1 to this part.</P> <P> <E T="03">Storage</E>. For purposes of Schedule 1 chemical reporting, means any quantity that is not accounted for under the categories of production, export, import, consumption or domestic transfer.</P> <P> <E T="03">Technical Secretariat</E>. Means the organ of the OPCW charged with carrying out administrative and technical support functions for the OPCW, including carrying out the verification measures delineated in the CWC.</P> <P> <E T="03">Toxic Chemical</E>. Means any chemical which, through its chemical action on life processes, can cause death, temporary incapacitation, or permanent harm to humans or animals. The term includes all such chemicals, regardless of their origin or of their method of production, and regardless of whether they are produced in facilities, in munitions, or elsewhere. Toxic chemicals that have been identified for the application of verification measures are in schedules contained in Supplements No. 1 to parts 712 through 714 of the CWCR.</P> <P> <E T="03">Trading company</E>. Means any person involved in the export and/or import of scheduled chemicals in amounts greater than specified thresholds, but not in the production, processing or consumption of such chemicals in amounts greater than threshold amounts requiring declaration. If such persons exclusively export or import scheduled chemicals in amounts greater than specified thresholds, they are subject to reporting requirements but are not subject to routine inspections. Such persons must be the principal party in interest of the exports or imports and may not delegate CWC reporting responsibilities to a forwarding or other agent.</P> <P> <E T="03">Transfer</E>. See domestic transfer.</P> <P> <E T="03">Transient intermediate</E>. Means any chemical which is produced in a chemical process but, because it is in a transition state in terms of thermodynamics and kinetics, exists only for a very short period of time, and cannot be isolated, even by modifying or dismantling the plant, or altering process operating conditions, or by stopping the process altogether.</P> <P> <E T="03">Undeclared facility or plant site</E>. Means a facility or plant site that is not subject to declaration requirements because of past or anticipated production, processing or consumption involving scheduled or unscheduled discrete organic chemicals above specified threshold quantities. However, such facilities and plant sites may have a reporting requirement for exports or imports of such chemicals.</P> <P> <E T="03">Unit</E>. Means the combination of those items of equipment, including vessels and vessel set up, necessary for the production, processing or consumption of a chemical.</P> <P> <E T="03">United States</E>. Means the several States of the United States, the District of Columbia, and the commonwealths, territories, and possessions of the United States, and includes all places under the jurisdiction or control of the United States, including any of the places within the provisions of paragraph (41) of section 40102 of Title 49 of the United States Code, any civil aircraft of the United States or public <PRTPAGE P="117"/>aircraft, as such terms are defined in paragraphs (1) and (37), respectively, of section 40102 of Title 49 of the United States Code, and any vessel of the United States, as such term is defined in section 3(b) of the Maritime Drug Enforcement Act, as amended (section 1903(b) of Title 46 App. of the United States Code).</P> <P> <E T="03">United States National Authority (USNA)</E>. Means the Department of State serving as the national focal point for the effective liaison with the Organization for the Prohibition of Chemical Weapons and other States Parties to the Convention and implementing the provisions of the Chemical Weapons Convention Implementation Act of 1998 in coordination with an interagency group designated by the President consisting of the Secretary of Commerce, Secretary of Defense, Secretary of Energy, the Attorney General, and the heads of other agencies considered necessary or advisable by the President, or their designees. The Secretary of State is the Director of the USNA.</P> <P> <E T="03">Unscheduled chemical</E>. Means a chemical that is not contained in Schedule 1, Schedule 2, or Schedule 3 (see Supplements No. 1 to parts 712 through 714 of the CWCR).</P> <P> <E T="03">Unscheduled Discrete Organic Chemical (UDOC)</E>. Means any “discrete organic chemical” that is not contained in the Schedules of Chemicals (see Supplements No. 1 to parts 712 through 714 of the CWCR) and subject to the declaration requirements of part 715 of the CWCR. Unscheduled discrete organic chemicals subject to declaration under the CWCR are those produced by synthesis that are isolated for use or sale as a specific end-product.</P> <P> <E T="03">You</E>. The term “you” or “your” means any person (see also definition of “person”). With regard to the declaration and reporting requirements of the CWCR, “you” refers to persons that have an obligation to report certain activities under the provisions of the CWCR.</P> </SECTION> <SECTION> <SECTNO>§ 710.2</SECTNO> <SUBJECT>Scope of the CWCR.</SUBJECT> <P>The Chemical Weapons Convention Regulations (parts 710 through 729 of this subchapter), or CWCR, implement certain obligations of the United States under the Convention on the Prohibition of the Development, Production, Stockpiling and Use of Chemical Weapons and on Their Destruction, known as the CWC or Convention.</P> <P>(a) <E T="03">Persons and facilities subject to the CWCR</E>. (1) The CWCR apply to all persons and facilities located in the United States, except the following U.S. Government facilities:</P> <P>(i) Department of Defense facilities;</P> <P>(ii) Department of Energy facilities; and</P> <P>(iii) Facilities of other U.S. Government agencies that notify the USNA of their decision to be excluded from the CWCR.</P> <P>(2) For purposes of the CWCR, “United States Government facilities” are those facilities owned and operated by a U.S. Government agency (including those operated by contractors to the agency), and those facilities leased to and operated by a U.S. Government agency (including those operated by contractors to the agency). “United States Government facilities” do not include facilities owned by a U.S. Government agency and leased to a private company or other entity such that the private company or entity may independently decide for what purposes to use the facilities.</P> <P>(b) <E T="03">Activities subject to the CWCR</E>. The activities subject to the CWCR (parts 710 through 729 of this subchapter) are activities, including production, processing, consumption, exports and imports, involving chemicals further described in parts 712 through 715 of the CWCR. These do not include activities involving inorganic chemicals other than those listed in the Schedules of Chemicals, or other specifically exempted unscheduled discrete organic chemicals.</P> </SECTION> <SECTION> <SECTNO>§ 710.3</SECTNO> <SUBJECT>Purposes of the Convention and CWCR.</SUBJECT> <P>(a) <E T="03">Purposes of the Convention</E>. (1) The Convention imposes upon the United States, as a State Party, certain declaration, inspection, and other obligations. In addition, the United States and other States Parties to the Convention undertake never under any circumstances to:</P> <P>(i) Develop, produce, otherwise acquire, stockpile, or retain chemical <PRTPAGE P="118"/>weapons, or transfer, directly or indirectly, chemical weapons to anyone;</P> <P>(ii) Use chemical weapons;</P> <P>(iii) Engage in any military preparations to use chemical weapons; or</P> <P>(iv) Assist, encourage or induce, in any way, anyone to engage in any activity prohibited by the Convention.</P> <P>(2) One objective of the Convention is to assure States Parties that lawful activities of chemical producers and users are not converted to unlawful activities related to chemical weapons. To achieve this objective and to give States Parties a mechanism to verify compliance, the Convention requires the United States and all other States Parties to submit declarations concerning chemical production, consumption, processing and other activities, and to permit international inspections within their borders.</P> <P>(b) <E T="03">Purposes of the Chemical Weapons Convention Regulations</E>. To fulfill the United States' obligations under the Convention, the CWCR (parts 710 through 729 of this subchapter) prohibit certain activities, and compel the submission of information from all facilities in the United States, except for Department of Defense and Department of Energy facilities and facilities of other U.S. Government agencies that notify the USNA of their decision to be excluded from the CWCR on activities, including exports and imports of scheduled chemicals and certain information regarding unscheduled discrete organic chemicals as described in parts 712 through 715 of the CWCR. U.S. Government facilities are those owned by or leased to the U.S. Government, including facilities that are contractor-operated. The CWCR also require access for on-site inspections and monitoring by the OPCW, as described in parts 716 and 717 of the CWCR.</P> </SECTION> <SECTION> <SECTNO>§ 710.4</SECTNO> <SUBJECT>Overview of scheduled chemicals and examples of affected industries.</SUBJECT> <P>The following provides examples of the types of industries that may be affected by the CWCR (parts 710 through 729 of this subchapter). These examples are not exhaustive, and you should refer to parts 712 through 715 of the CWCR to determine your obligations.</P> <P>(a) Schedule 1 chemicals are listed in Supplement No. 1 to part 712 of the CWCR. Schedule 1 chemicals have little or no use in industrial and agricultural industries, but may have limited use for research, pharmaceutical, medical, public health, or protective purposes.</P> <P>(b) Schedule 2 chemicals are listed in Supplement No. 1 to part 713 of the CWCR. Although Schedule 2 chemicals may be useful in the production of chemical weapons, they also have legitimate uses in areas such as:</P> <P>(1) Flame retardant additives and research;</P> <P>(2) Dye and photographic industries (e.g., printing ink, ball point pen fluids, copy mediums, paints, etc.);</P> <P>(3) Medical and pharmaceutical preparation (e.g., anticholinergics, arsenicals, tranquilizer preparations);</P> <P>(4) Metal plating preparations;</P> <P>(5) Epoxy resins; and</P> <P>(6) Insecticides, herbicides, fungicides, defoliants, and rodenticides.</P> <P>(c) Schedule 3 chemicals are listed in Supplement No. 1 to part 714 of the CWCR. Although Schedule 3 chemicals may be useful in the production of chemical weapons, they also have legitimate uses in areas such as:</P> <P>(1) The production of:</P> <P>(i) Resins;</P> <P>(ii) Plastics;</P> <P>(iii) Pharmaceuticals;</P> <P>(iv) Pesticides;</P> <P>(v) Batteries;</P> <P>(vi) Cyanic acid;</P> <P>(vii) Toiletries, including perfumes and scents;</P> <P>(viii) Organic phosphate esters (e.g., hydraulic fluids, flame retardants, surfactants, and sequestering agents); and</P> <P>(2) Leather tannery and finishing supplies.</P> <P>(d) Unscheduled discrete organic chemicals are used in a wide variety of commercial industries, and include acetone, benzoyl peroxide and propylene glycol.</P> </SECTION> <SECTION> <SECTNO>§ 710.5</SECTNO> <SUBJECT>Authority.</SUBJECT> <P>The CWCR (parts 710 through 729 of this subchapter) implement certain provisions of the Chemical Weapons Convention under the authority of the <PRTPAGE P="119"/>Chemical Weapons Convention Implementation Act of 1998 (Act), the National Emergencies Act, the International Emergency Economic Powers Act (IEEPA), as amended, and the Export Administration Act of 1979, as amended, by extending verification and trade restriction requirements under Article VI and related parts of the Verification Annex of the Convention to U.S. persons. In Executive Order 13128 of June 25, 1999, the President delegated authority to the Department of Commerce to promulgate regulations to implement the Act, and consistent with the Act, to carry out appropriate functions not otherwise assigned in the Act but necessary to implement certain reporting, monitoring and inspection requirements of the Convention and the Act.</P> </SECTION> <SECTION> <SECTNO>§ 710.6</SECTNO> <SUBJECT>Relationship between the Chemical Weapons Convention Regulations and the Export Administration Regulations, the International Traffic in Arms Regulations, and the Alcohol, Tobacco, Firearms and Explosives Regulations.</SUBJECT> <P>Certain obligations of the U.S. Government under the CWC pertain to exports and imports. The obligations on exports are implemented in the Export Administration Regulations (EAR) (15 CFR parts 730 through 799) and the International Traffic in Arms Regulations (ITAR) (22 CFR parts 120 through 130). See in particular §§ 742.2 and 742.18 and part 745 of the EAR, and Export Control Classification Numbers 1C350, 1C351, 1C355 and 1C395 of the Commerce Control List (Supplement No. 1 to part 774 of the EAR). The obligations on imports are implemented in the Chemical Weapons Convention Regulations (§§ 712.2 and 713.1) and the Alcohol, Tobacco, Firearms and Explosives Regulations in 27 CFR part 447.</P> </SECTION> <APPENDIX> <EAR>Pt. 710, Supp. 1</EAR> <HD SOURCE="HED">Supplement No. 1 to Part 710—States Parties to the Convention on the Prohibition of the Development, Production, Stockpiling, and Use of Chemical Weapons and on Their Destruction</HD> <HD SOURCE="HD1">List of States Parties as of March 25, 2006</HD> <SCOL2> <LI>Afghanistan</LI> <LI>Albania</LI> <LI>Algeria</LI> <LI>Andorra</LI> <LI>Antigua and Barbuda</LI> <LI>Argentina</LI> <LI>Armenia</LI> <LI>Australia</LI> <LI>Austria</LI> <LI>Azerbaijan</LI> <LI>Bahrain</LI> <LI>Bangladesh</LI> <LI>Belarus</LI> <LI>Belgium</LI> <LI>Belize</LI> <LI>Benin</LI> <LI>Bhutan</LI> <LI>Bolivia</LI> <LI>Bosnia-Herzegovina</LI> <LI>Botswana</LI> <LI>Brazil</LI> <LI>Brunei Darussalam*</LI> <LI>Bulgaria</LI> <LI>Burkina Faso</LI> <LI>Burundi</LI> <LI>Cambodia</LI> <LI>Cameroon</LI> <LI>Canada</LI> <LI>Cape Verde</LI> <LI>Chad</LI> <LI>Chile</LI> <LI>China***</LI> <LI>Colombia</LI> <LI>Congo (Democratic Republic of the)</LI> <LI>Cook Islands**</LI> <LI>Costa Rica</LI> <LI>Cote d'Ivoire (Ivory Coast)</LI> <LI>Croatia</LI> <LI>Cuba</LI> <LI>Cyprus</LI> <LI>Czech Republic</LI> <LI>Denmark</LI> <LI>Djibouti</LI> <LI>Dominica</LI> <LI>Ecuador</LI> <LI>El Salvador</LI> <LI>Equatorial Guinea</LI> <LI>Eritrea</LI> <LI>Estonia</LI> <LI>Ethiopia</LI> <LI>Fiji</LI> <LI>Finland</LI> <LI>France</LI> <LI>Gabon</LI> <LI>Gambia</LI> <LI>Georgia</LI> <LI>Germany</LI> <LI>Ghana</LI> <LI>Greece</LI> <LI>Grenada</LI> <LI>Guatemala</LI> <LI>Guinea</LI> <LI>Guyana</LI> <LI>Haiti</LI> <LI>Holy See*</LI> <LI>Honduras</LI> <LI>Hungary</LI> <LI>Iceland</LI> <LI>India</LI> <LI>Indonesia</LI> <LI>Iran (Islamic Republic of)</LI> <LI>Ireland</LI> <LI>Italy</LI> <LI>Jamaica</LI> <LI>Japan</LI> <LI>Jordan</LI> <LI>Kazakhstan</LI> <LI>Kenya</LI> <LI>Kiribati</LI> <LI>Korea (Republic of)</LI> <LI>Kuwait</LI> <LI>Kyrgyzstan</LI> <LI>Laos (P.D.R.)*</LI> <LI>Latvia</LI> <LI>Lesotho</LI> <LI>Liberia</LI> <LI>Libya</LI> <LI>Liechtenstein</LI> <LI>Lithuania</LI> <LI>Luxembourg</LI> <LI>Macedonia (The Former Yugoslav Republic of)</LI> <LI>Madagascar</LI> <LI>Malawi</LI> <LI>Malaysia</LI> <LI>Maldives</LI> <LI>Mali</LI> <LI>Malta</LI> <LI>Marshall Islands</LI> <LI>Mauritania</LI> <LI>Mauritius</LI> <LI>Mexico</LI> <LI>Micronesia (Federated States of)</LI> <LI>Moldova (Republic of)*</LI> <LI>Monaco</LI> <LI>Mongolia</LI> <LI>Morocco</LI> <LI>Mozambique</LI> <LI>Namibia</LI> <LI>Nauru</LI> <LI>Nepal</LI> <LI>Netherlands***</LI> <LI>New Zealand</LI> <LI>Nicaragua</LI> <LI>Niger</LI> <LI>Nigeria</LI> <LI>Niue**</LI> <LI>Norway</LI> <LI>Oman</LI> <LI>Pakistan</LI> <LI>Palau</LI> <LI>Panama</LI> <LI>Papua New Guinea</LI> <LI>Paraguay</LI> <LI>Peru</LI> <LI>Philippines</LI> <LI>Poland</LI> <LI>Portugal</LI> <LI>Qatar<PRTPAGE P="120"/> </LI> <LI>Romania</LI> <LI>Russian Federation</LI> <LI>Rwanda</LI> <LI>Saint Kitts and Nevis</LI> <LI>Saint Lucia</LI> <LI>Saint Vincent and the Grenadines</LI> <LI>Samoa</LI> <LI>San Marino</LI> <LI>Sao Tome and Principe</LI> <LI>Saudi Arabia</LI> <LI>Senegal</LI> <LI>Serbia and Montenegro</LI> <LI>Seychelles</LI> <LI>Sierra Leone</LI> <LI>Singapore</LI> <LI>Slovak Republic*</LI> <LI>Slovenia</LI> <LI>Solomon Islands</LI> <LI>South Africa</LI> <LI>Spain</LI> <LI>Sri Lanka</LI> <LI>Sudan</LI> <LI>Suriname</LI> <LI>Swaziland</LI> <LI>Sweden</LI> <LI>Switzerland</LI> <LI>Tajikistan</LI> <LI>Tanzania, United Republic of</LI> <LI>Thailand</LI> <LI>Timor Leste (East Timor)</LI> <LI>Togo</LI> <LI>Tonga</LI> <LI>Trinidad and Tobago</LI> <LI>Tunisia</LI> <LI>Turkey</LI> <LI>Turkmenistan</LI> <LI>Tuvalu</LI> <LI>Uganda</LI> <LI>Ukraine</LI> <LI>United Arab Emirates</LI> <LI>United Kingdom</LI> <LI>United States</LI> <LI>Uruguay</LI> <LI>Uzbekistan</LI> <LI>Vanuatu</LI> <LI>Venezuela</LI> <LI>Vietnam</LI> <LI>Yemen</LI> <LI>Zambia</LI> <LI>Zimbabwe</LI> </SCOL2> <P>* For export control purposes, these destinations are identified using a different nomenclature under the Commerce Country Chart in Supplement No. 1 to part 738 of the Export Administration Regulations (EAR) (15 CFR parts 730-799).</P> <P>** For export control purposes, Cook Islands and Niue are not identified on the Commerce Country Chart in Supplement No. 1 to part 738 of the EAR and are treated the same as New Zealand, in accordance with § 738.3(b) of the EAR.</P> <P>*** For CWC States Parties purposes, a territory, possession, or department of any country that is listed in this Supplement as a State Party to the CWC, is treated the same as the country of which it is a territory, possession, or department (e.g., China includes Hong Kong and Macau; the Netherlands includes Aruba and the Netherlands Antilles).</P> </APPENDIX> <APPENDIX> <EAR>Pt. 710, Supp. 2</EAR> <HD SOURCE="HED">Supplement No. 2 to Part 710—Definitions of Production</HD> <GPOTABLE CDEF="xl75,xl75,xl75" COLS="3" OPTS="L1"> <TTITLE>Supplement No. 2 to Part 710—Definitions of Production</TTITLE> <BOXHD> <CHED H="1">Schedule 1 chemicals</CHED> <CHED H="1">Schedule 2 and Schedule 3 chemicals</CHED> <CHED H="1">Unscheduled discrete organic chemicals (UDOCs)</CHED> </BOXHD> <ROW EXPSTB="01" RUL="s"> <ENT I="21">Produced by a biochemical or biologically mediated reaction</ENT> <ENT>Produced by synthesis*</ENT> </ROW> <ROW EXPSTB="00"> <ENT I="01">Formation through chemical synthesis.<LI>Processing to extract and isolate Schedule 1 chemicals.</LI> </ENT> <ENT>All production steps in any units within the same plant which includes associated processes—purification, separation, extraction distillation or refining.**</ENT> </ROW> <TNOTE>* Intermediates used in a single or multi-step process to produce another declared UDOC are not declarable.</TNOTE> <TNOTE>** Intermediates are subject to declaration, except “transient intermediates,” which are those chemicals in a transition state in terms of thermodynamics and kinetics, that exist only for a very short period of time, and cannot be isolated, even by modifying or dismantling the plant, or by altering process operating conditions, or by stopping the process altogether are not subject to declaration.</TNOTE> </GPOTABLE> </APPENDIX> </PART> <PART> <EAR>Pt. 711</EAR> <HD SOURCE="HED">PART 711—GENERAL INFORMATION REGARDING DECLARATION, REPORTING, AND ADVANCE NOTIFICATION REQUIREMENTS, AND THE ELECTRONIC FILING OF DECLARATIONS AND REPORTS</HD> <CONTENTS> <SECHD>Sec.</SECHD> <SECTNO>711.1</SECTNO> <SUBJECT>Overviews of declaration, reporting, and advance notification requirements.</SUBJECT> <SECTNO>711.2</SECTNO> <SUBJECT>Who submits declarations, reports, and advance notifications?</SUBJECT> <SECTNO>711.3</SECTNO> <SUBJECT>Compliance review.</SUBJECT> <SECTNO>711.4</SECTNO> <SUBJECT>Assistance in determining your obligations.</SUBJECT> <SECTNO>711.5</SECTNO> <SUBJECT>Numerical precision of submitted data.</SUBJECT> <SECTNO>711.6</SECTNO> <SUBJECT>Where to obtain forms.</SUBJECT> <SECTNO>711.7</SECTNO> <SUBJECT>Where to submit declarations, reports, and advance notifications.</SUBJECT> <SECTNO>711.8</SECTNO> <SUBJECT>How to request authorization from BIS to make electronic submissions of declarations or reports.</SUBJECT> </CONTENTS> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>22 U.S.C. 6701 <E T="03">et seq.</E>; E.O. 13128, 64 FR 36703, 3 CFR 1999 Comp., p. 199.</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>71 FR 24929, Apr. 27, 2006, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>§ 711.1</SECTNO> <SUBJECT>Overviews of declaration, reporting, and advance notification requirements.</SUBJECT> <P>Parts 712 through 715 of the CWCR (parts 710 through 729 of this subchapter) describe the declaration, advance notification and reporting requirements for Schedule 1, 2 and 3 chemicals and for unscheduled discrete organic chemicals (UDOCs). For each <PRTPAGE P="121"/>type of chemical, the Convention requires annual declarations. If, after reviewing parts 712 through 715 of the CWCR, you determine that you have declaration, advance notification or reporting requirements, you may obtain the appropriate forms by contacting the Bureau of Industry and Security (BIS) (see § 711.6 of the CWCR).</P> </SECTION> <SECTION> <SECTNO>§ 711.2</SECTNO> <SUBJECT>Who submits declarations, reports, and advance notifications.</SUBJECT> <P>The owner, operator, or senior management official of a facility subject to declaration, reporting, or advance notification requirements under the CWCR (parts 710 through 729 of this subchapter) is responsible for the submission of all required documents in accordance with all applicable provisions of the CWCR.</P> </SECTION> <SECTION> <SECTNO>§ 711.3</SECTNO> <SUBJECT>Compliance review.</SUBJECT> <P>Periodically, BIS will request information from persons and facilities subject to the CWCR to determine compliance with the reporting, declaration and notification requirements set forth herein. Information requested may relate to the production, processing, consumption, export, import, or other activities involving scheduled chemicals and unscheduled discrete organic chemicals described in parts 712 through 715 of the CWCR. Any person or facility subject to the CWCR and receiving such a request for information will be required to provide a response to BIS within 30 working days of receipt of the request. This requirement does not, in itself, impose a requirement to create new records or maintain existing records in a manner other than that directed by the recordkeeping provisions set forth in part 721 of the CWCR.</P> </SECTION> <SECTION> <SECTNO>§ 711.4</SECTNO> <SUBJECT>Assistance in determining your obligations.</SUBJECT> <P>(a) <E T="03">Determining if your chemical is subject to declaration, reporting or advance notification requirements.</E> (1) If you need assistance in determining if your chemical is classified as a Schedule 1, Schedule 2, or Schedule 3 chemical, or is an unscheduled discrete organic chemical, submit your written request for a chemical determination to BIS. Such requests may be sent via facsimile to (703) 605-4425, e-mailed to <E T="03">cdr@cwc.gov,</E> or mailed to the Treaty Compliance Division, Bureau of Industry and Security, U.S. Department of Commerce, 1555 Wilson Boulevard, Suite 700, Arlington, Virginia 22209-2405, and must be marked, “ATTN: Chemical Determination.” Your request should include the information noted in paragraph (a)(2) of this section to ensure an accurate determination. Also include any additional information that you feel is relevant to the chemical or process involved (see part 718 of the CWCR for provisions regarding treatment of confidential business information). If you are unable to provide all of the information required in paragraph (a)(2) of this section, you should include an explanation identifying the reasons or deficiencies that preclude you from supplying the information. If BIS cannot make a determination based upon the information submitted, BIS will return the request to you and identify the additional information that is necessary to complete a chemical determination. BIS will provide a written response to your chemical determination request within 10 working days of receipt of the request.</P> <P>(2) Include the following information in each chemical determination request:</P> <P>(i) Date of request;</P> <P>(ii) Company name and complete street address;</P> <P>(iii) Point of contact;</P> <P>(iv) Phone and facsimile number of contact;</P> <P>(v) E-mail address of contact, if you want an acknowledgment of receipt sent via e-mail;</P> <P>(vi) Chemical Name;</P> <P>(vii) Structural formula of the chemical, if the chemical is not specifically identified by name and chemical abstract service registry number in Supplements No. 1 to parts 712 through 714 of the CWCR; and</P> <P>(viii) Chemical Abstract Service registry number, if assigned.</P> <P>(b) <E T="03">Other inquiries.</E> If you need assistance in interpreting the provisions of the CWCR or need assistance with declaration, forms, reporting, advance notification, inspection or facility agreement issues, contact BIS's Treaty <PRTPAGE P="122"/>Compliance Division by phone at (703) 605-4400. If you require a response from BIS in writing, submit a detailed request to BIS that explains your question, issue, or request. Send the request to the address or facsimile included in paragraph (a) of this section, or e-mail the request to <E T="03">cwcqa@cwc.gov.</E> Your request must be marked, “ATTN: CWCR Assistance.”</P> </SECTION> <SECTION> <SECTNO>§ 711.5</SECTNO> <SUBJECT>Numerical precision of submitted data.</SUBJECT> <P>Numerical information submitted in declarations and reports is to be provided per applicable rounding rules in each part (<E T="03">i.e.</E>, parts 712 through 715 of the CWCR) with a precision equal to that which can be reasonably provided using existing documentation, equipment, and measurement techniques.</P> </SECTION> <SECTION> <SECTNO>§ 711.6</SECTNO> <SUBJECT>Where to obtain forms.</SUBJECT> <P>(a) Forms to complete declarations and reports required by the CWCR may be obtained by contacting: Treaty Compliance Division, Bureau of Industry and Security, U.S. Department of Commerce, 1555 Wilson Blvd., Suite 700, Arlington, VA 22209-2405, Telephone: (703) 605-4400. Forms and forms software may also be downloaded from the Internet at www.cwc.gov.</P> <P>(b) If the amount of information you are required to submit is greater than the given form will allow, multiple copies of forms may be submitted.</P> </SECTION> <SECTION> <SECTNO>§ 711.7</SECTNO> <SUBJECT>Where to submit declarations, reports and advanced notifications.</SUBJECT> <P>Declarations, reports and advance notifications required by the CWCR must be sent to: Treaty Compliance Division, Bureau of Industry and Security, U.S. Department of Commerce, 1555 Wilson Blvd., Suite 700, Arlington, VA 22209-2405, Telephone: (703) 605-4400. Advanced notifications may also be sent by facsimile to (703) 235-1481. Specific types of declarations and reports and due dates are outlined in Supplement No. 2 to parts 712 through 715 of the CWCR.</P> </SECTION> <SECTION> <SECTNO>§ 711.8</SECTNO> <SUBJECT>How to request authorization from BIS to make electronic submissions of declarations or reports.</SUBJECT> <P>(a) <E T="03">Scope.</E> This section provides an optional method of submitting declarations or reports. Specifically, this section applies to the electronic submission of declarations and reports required under the CWCR. If you choose to submit declarations and reports by electronic means, all such electronic submissions must be made through the Web-Data Entry System for Industry (Web-DESI), which can be accessed on the CWC web site at www.cwc.gov.</P> <P>(b) <E T="03">Authorization.</E> If you or your company has a facility, plant site, or trading company that has been assigned a U.S. Code Number (USC Number), you may submit declarations and reports electronically, once you have received authorization from BIS to do so. An authorization to submit declarations and reports electronically may be limited or withdrawn by BIS at any time. There are no prerequisites for obtaining permission to submit electronically, nor are there any limitations with regard to the types of declarations or reports that are eligible for electronic submission. However, BIS may direct, for any reason, that any electronic declaration or report be resubmitted in writing, either in whole or in part.</P> <P>(1) <E T="03">Requesting approval to submit declarations and reports electronically.</E> To submit declarations and reports electronically, you or your company must submit a written request to BIS at the address identified in § 711.6 of the CWCR. Both the envelope and letter must be marked, “ATTN: Electronic Declaration or Report Request.” Your request should be on company letterhead and must contain your name or the company's name, your mailing address at the company, the name of the facility, plant site or trading company and its U.S. Code Number, the address of the facility, plant site or trading company (this address may be different from the mailing address), the list of persons who are authorized to view, edit, and/or submit declarations and reports on behalf of your company, and the telephone number and name and title of the owner, operator, or senior management official responsible for certifying that each person listed in the request is authorized to view, edit, and/or submit declarations and reports on behalf of you or your company (<E T="03">i.e.</E>, <PRTPAGE P="123"/>the certifying official). Additional information required for submitting electronic declarations and reports may be found on BIS's Web site at <E T="03">www.cwc.gov.</E> Once you have completed and submitted the necessary certifications, BIS will review your request for authorization to view, edit, and/or submit declarations and reports electronically. BIS will notify you if additional information is required and/or upon completion of its review. </P> <NOTE> <HD SOURCE="HED">Note to § 711.8(<E T="01">b</E>)(1):</HD> <P>You must submit a separate request for each facility, plant site or trading company owned by your company (e.g., each site that is assigned a unique U.S. Code Number).</P> </NOTE> <P>(2) <E T="03">Assignment and use of passwords for facilities, plant sites and trading companies (USC password) and Web-DESI user accounts (user name and password).</E> (i) Each person, facility, plant site or trading company authorized to submit declarations and reports electronically will be assigned a password (USC password) that must be used in conjunction with the U.S.C. Number. Each person authorized by BIS to view, edit, and/or submit declarations and reports electronically for a facility, plant site or trading company will be assigned a Web-DESI user account (user name and password) telephonically by BIS. A Web-DESI user account will be assigned to you only if your company has certified to BIS that you are authorized to act for it in viewing, editing, and/or submitting electronic declarations and reports under the CWCR. </P> <NOTE> <HD SOURCE="HED">Note to § 711.8(<E T="01">b</E>)(2)(<E T="01">I</E>):</HD> <P>When persons must have access to multiple Web-DESI accounts, their companies must identify such persons on the approval request for each of these Web-DESI accounts. BIS will coordinate with such persons to ensure that the assigned user name and password is the same for each account.</P> </NOTE> <P>(ii) Your company may reveal the facility, plant site or trading company password (USC password) only to Web-DESI users with valid passwords, their supervisors, and employees or agents of the company with a commercial justification for knowing the password.</P> <P>(iii) If you are an authorized Web-DESI account user, you may not:</P> <P>(A) Disclose your user name or password to anyone;</P> <P>(B) Record your user name or password, either in writing or electronically;</P> <P>(C) Authorize another person to use your user name or password; or</P> <P>(D) Use your user name or password following termination, either by BIS or by your company, of your authorization or approval for Web-DESI use.</P> <P>(iv) To prevent misuse of the Web-DESI account:</P> <P>(A) If Web-DESI user account information (i.e., user name and password) is lost, stolen or otherwise compromised, the company and the user must report the loss, theft or compromise of the user account information, immediately, by calling BIS at (703) 235-1335. Within two business days of making the report, the company and the user must submit written confirmation to BIS at the address provided in § 711.6 of the CWCR.</P> <P>(B) Your company is responsible for immediately notifying BIS whenever a Web-DESI user leaves the employ of the company or otherwise ceases to be authorized by the company to submit declarations and reports electronically on its behalf.</P> <P>(v) No person may use, copy, appropriate or otherwise compromise a Web-DESI account user name or password assigned to another person. No person, except a person authorized access by the company, may use or copy the facility, plant site or trading company password (USC password), nor may any person steal or otherwise compromise this password.</P> <P>(c) <E T="03">Electronic submission of declarations and reports</E>—(1) <E T="03">General instructions.</E> Upon submission of the required certifications and approval of the company's request to use electronic submission, BIS will provide instructions on both the method for transmitting declarations and reports electronically and the process for submitting required supporting documents, if any. These instructions may be modified by BIS from time to time.</P> <P>(2) <E T="03">Declarations and reports.</E> The electronic submission of a declaration or report will constitute an official document as required under parts 712 <PRTPAGE P="124"/>through 715 of the CWCR. Such submissions must provide the same information as written declarations and reports and are subject to the recordkeeping provisions of part 720 of the CWCR. The company and Web-DESI user submitting the declaration or report will be deemed to have made all representations and certifications as if the submission were made in writing by the company and signed by the certifying official. Electronic submission of a declaration or report will be considered complete upon transmittal to BIS.</P> <P>(d) <E T="03">Updating.</E> A company approved for electronic submission of declarations or reports under Web-DESI must promptly notify BIS of any change in its name, ownership or address. If your company wishes to have a person added as a Web-DESI user, your company must inform BIS and follow the instructions provided by BIS. Your company should conduct periodic reviews to ensure that the company's designated certifying official and Web-DESI users are persons whose current responsibilities make it necessary and appropriate that they act for the company in either capacity.</P> </SECTION> </PART> <PART> <EAR>Pt. 712</EAR> <HD SOURCE="HED">PART 712—ACTIVITIES INVOLVING SCHEDULE 1 CHEMICALS</HD> <CONTENTS> <SECHD>Sec.</SECHD> <SECTNO>712.1</SECTNO> <SUBJECT>Round to zero rule that applies to activities involving Schedule 1 chemicals.</SUBJECT> <SECTNO>712.2</SECTNO> <SUBJECT>Restrictions on activities involving Schedule 1 chemicals.</SUBJECT> <SECTNO>712.3</SECTNO> <SUBJECT>Initial declaration requirements for declared facilities which are engaged in the production of Schedule 1 chemicals for purposes not prohibited by the CWC.</SUBJECT> <SECTNO>712.4</SECTNO> <SUBJECT>New Schedule 1 production facility.</SUBJECT> <SECTNO>712.5</SECTNO> <SUBJECT>Annual declaration requirements for facilities engaged in the production of Schedule 1 chemicals for purposes not prohibited by the CWC.</SUBJECT> <SECTNO>712.6</SECTNO> <SUBJECT>Advance notification and annual report of all exports and imports of Schedule 1 chemicals to, or from, other States Parties.</SUBJECT> <SECTNO>712.7</SECTNO> <SUBJECT>Amended declaration or report.</SUBJECT> <SECTNO>712.8</SECTNO> <SUBJECT>Declarations and reports returned without action by BIS.</SUBJECT> <SECTNO>712.9</SECTNO> <SUBJECT>Deadlines for submission of Schedule 1 declarations, reports, advance notifications, and amendments.</SUBJECT> <APP>Supplement No. 1 to Part 712—Schedule 1 Chemicals</APP> <APP>Supplement No. 2 to Part 712—Deadlines for Submission of Schedule 1 Declarations, Reports, Advance Notifications, Reports, and Amendments</APP> </CONTENTS> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>22 U.S.C. 6701 <E T="03">et seq.</E>; 50 U.S.C. 1601 <E T="03">et seq.</E>; 50 U.S.C. 1701 <E T="03">et seq.</E>; E.O. 12938, 59 FR 59099, 3 CFR, 1994 Comp., p. 950, as amended by E.O. 13094, 63 FR 40803, 3 CFR, 1998 Comp., p. 200; E.O. 13128, 64 FR 36703, 3 CFR 1999 Comp., p. 199.</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>71 FR 24929, Apr. 27, 2006, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>§ 712.1</SECTNO> <SUBJECT>Round to zero rule that applies to activities involving Schedule 1 chemicals.</SUBJECT> <P>Facilities that produce, export or import mixtures containing less than 0.5% aggregate quantities of Schedule 1 chemicals (see Supplement No. 1 to this part) as unavoidable by-products or impurities may round to zero and are not subject to the provisions of this part 712. Schedule 1 content may be calculated by volume or weight, whichever yields the lesser percent. Note that such mixtures may be subject to the regulatory requirements of other federal agencies.</P> </SECTION> <SECTION> <SECTNO>§ 712.2</SECTNO> <SUBJECT>Restrictions on activities involving Schedule 1 chemicals.</SUBJECT> <P>(a) You may not produce Schedule 1 chemicals for protective purposes.</P> <P>(b) You may not import any Schedule 1 chemical unless:</P> <P>(1) The import is from a State Party;</P> <P>(2) The import is for research, medical, pharmaceutical, or protective purposes;</P> <P>(3) The import is in types and quantities strictly limited to those that can be justified for such purposes; and</P> <P>(4) You have notified BIS at least 45 calendar days prior to the import, pursuant to § 712.6 of the CWCR.</P> <NOTE> <HD SOURCE="HED">Note 1 to § 712.2(<E T="01">b</E>):</HD> <P>Pursuant to § 712.6, advance notifications of import of saxitoxin of 5 milligrams or less for medical/diagnostic purposes must be submitted to BIS at least 3 days prior to import.</P> </NOTE> <NOTE> <HD SOURCE="HED">Note 2 to § 712.2(<E T="01">b</E>):</HD> <P>For specific provisions relating to the prior advance notification of exports of all Schedule 1 chemicals, see § 745.1 of the Export Administration Regulations (EAR) (15 CFR parts 730 through 799). For specific provisions relating to license requirements for exports of Schedule 1 chemicals, see § 742.2 and § 742.18 of the EAR for Schedule 1 chemicals subject to the jurisdiction of the Department of Commerce and see <PRTPAGE P="125"/>the International Traffic in Arms Regulations (22 CFR parts 120 through 130) for Schedule 1 chemicals subject to the jurisdiction of the Department of State.</P> </NOTE> <P>(c)(1) The provisions of paragraphs (a) and (b) of this section do not apply to the retention, ownership, possession, transfer, or receipt of a Schedule 1 chemical by a department, agency, or other entity of the United States, or by a person described in paragraph (c)(2) of this section, pending destruction of the Schedule 1 chemical;</P> <P>(2) A person referred to in paragraph (c)(1) of this section is:</P> <P>(i) Any person, including a member of the Armed Forces of the United States, who is authorized by law or by an appropriate officer of the United States to retain, own, possess transfer, or receive the Schedule 1 chemical; or</P> <P>(ii) In an emergency situation, any otherwise non-culpable person if the person is attempting to seize or destroy the Schedule 1 chemical.</P> </SECTION> <SECTION> <SECTNO>§ 712.3</SECTNO> <SUBJECT>Initial declaration requirements for declared facilities which are engaged in the production of Schedule 1 chemicals for purposes not prohibited by the CWC.</SUBJECT> <P>Initial declarations submitted in February 2000 remain valid until amended or rescinded. If you plan to change/amend the technical description of your facility submitted with your initial declaration, you must submit an amended initial declaration to BIS 200 calendar days prior to implementing the change (see § 712.5(b)(1)(ii) of the CWCR).</P> </SECTION> <SECTION> <SECTNO>§ 712.4</SECTNO> <SUBJECT>New Schedule 1 production facility.</SUBJECT> <P>(a) <E T="03">Establishment of a new Schedule 1 production facility.</E> (1) If your facility has never before been declared under § 712.5 of the CWCR, or the initial declaration for your facility has been withdrawn pursuant to § 712.5(g) of the CWCR, and you intend to begin production of Schedule 1 chemicals at your facility in quantities greater than 100 grams aggregate per year for research, medical, or pharmaceutical purposes, you must provide an initial declaration (with a current detailed technical description of your facility) to BIS in no less than 200 calendar days in advance of commencing such production. Such facilities are considered to be “new Schedule 1 production facilities” and are subject to an initial inspection within 200 calendar days of submitting an initial declaration.</P> <P>(2) New Schedule 1 production facilities that submit an initial declaration pursuant to paragraph (a)(1) of this section are considered approved Schedule 1 production facilities for purposes of the CWC, unless otherwise notified by BIS within 30 days of receipt by BIS of that initial declaration.</P> <P>(b) <E T="03">Types of declaration forms required.</E> If your new Schedule 1 production facility will produce in excess of 100 grams aggregate of Schedule 1 chemicals, you must complete the Certification Form, Form 1-1 and Form A. You must also provide a detailed technical description of the new facility or its relevant parts, and a detailed diagram of the declared areas in the facility.</P> <P>(c) Two hundred days after a new Schedule 1 production facility submits its initial declaration, it is subject to the declaration requirements in § 712.5(a)(1) and (a)(2) and § 712.5(b)(1)(ii) of the CWCR.</P> </SECTION> <SECTION> <SECTNO>§ 712.5</SECTNO> <SUBJECT>Annual declaration requirements for facilities engaged in the production of Schedule 1 chemicals for purposes not prohibited by the CWC.</SUBJECT> <P>(a) <E T="03">Declaration requirements</E>—(1) <E T="03">Annual declaration on past activities.</E> You must complete the forms specified in paragraph (b)(2) of this section if you produced at your facility in excess of 100 grams aggregate of Schedule 1 chemicals in the previous calendar year. As a declared Schedule 1 facility, in addition to declaring the production of each Schedule 1 chemical that comprises your aggregate production of Schedule 1 chemicals, you must also declare any Schedule 1, Schedule 2, or Schedule 3 precursor used to produce the declared Schedule 1 chemical. You must further declare each Schedule 1 chemical used (consumed) and stored at your facility, and domestically transferred from your facility during the previous calendar year, whether or not you produced that Schedule 1 chemical at your facility.</P> <P>(2) <E T="03">Annual declaration on anticipated activities.</E> You must complete the forms <PRTPAGE P="126"/>specified in paragraph (b)(3) of this section if you anticipate that you will produce at your facility more than 100 grams aggregate of Schedule 1 chemicals in the next calendar year. If you are not already a declared facility, you must complete an initial declaration (see § 712.4 of the CWCR) 200 calendar days before commencing operations or increasing production which will result in production of more than 100 grams aggregate of Schedule 1 chemicals.</P> <P>(b) <E T="03">Declaration forms to be used</E>—(1) <E T="03">Initial declaration.</E> (i) You must have completed the Certification Form, Form 1-1 and Form A if you produced at your facility in excess of 100 grams aggregate of Schedule 1 chemicals in calendar years 1997, 1998, or 1999. You must have provided a detailed current technical description of your facility or its relevant parts including a narrative statement, and a detailed diagram of the declared areas in the facility.</P> <P>(ii) If you plan to change the technical description of your facility from your initial declaration completed and submitted pursuant to § 712.3 or § 712.4 of the CWCR, you must submit an amended initial declaration to BIS 200 calendar days prior to the change. Such amendments to your initial declaration must be made by completing a Certification Form, Form 1-1 and Form A, including the new description of the facility. See § 712.7 of the CWCR for additional instructions on amending Schedule 1 declarations.</P> <P>(2) <E T="03">Annual declaration on past activities.</E> If you are subject to the declaration requirement of paragraph (a)(1) of this section, you must complete the Certification Form and Forms 1-1, 1-2, 1-2A, 1-2B, and Form A if your facility was involved in the production of Schedule 1 chemicals in the previous calendar year. Form B is optional.</P> <P>(3) <E T="03">Annual declaration on anticipated activities.</E> If you anticipate that you will produce at your facility in excess of 100 grams aggregate of Schedule 1 chemicals in the next calendar year you must complete the Certification Form and Forms 1-1, 1-4, and Form A. Form B is optional.</P> <P>(c) <E T="03">Quantities to be declared.</E> If you produced in excess of 100 grams aggregate of Schedule 1 chemicals in the previous calendar year, you must declare the entire quantity of such production, rounded to the nearest gram. You must also declare the quantity of any Schedule 1, Schedule 2 or Schedule 3 precursor used to produce the declared Schedule 1 chemical, rounded to the nearest gram. You must further declare the quantity of each Schedule 1 chemical consumed or stored by, or domestically transferred from, your facility, whether or not the Schedule 1 chemical was produced by your facility, rounded to the nearest gram. In calculating the amount of Schedule 1 chemical you produced, consumed or stored, count only the amount of the Schedule 1 chemical(s) in a mixture, not the total weight of the mixture (i.e., do not count the weight of the solution, solvent, or container).</P> <P>(d) For the purpose of determining if a Schedule 1 chemical is subject to declaration, you must declare a Schedule 1 chemical that is an intermediate, but not a transient intermediate.</P> <P>(e) <E T="03">“Declared” Schedule 1 facilities and routine inspections.</E> Only facilities that submitted a declaration pursuant to paragraph (a)(1) or (a)(2) of this section or § 712.4 of the CWCR are considered “declared” Schedule 1 facilities. A “declared” Schedule 1 facility is subject to initial and routine inspection by the OPCW (see part 716 of the CWCR).</P> <P>(f) <E T="03">Approval of declared Schedule 1 production facilities.</E> Facilities that submit declarations pursuant to this section are considered approved Schedule 1 production facilities for purposes of the CWC, unless otherwise notified by BIS within 30 days of receipt by BIS of an annual declaration on past activities or annual declaration on anticipated activities (see paragraphs (a)(1) and (a)(2) of this section). If your facility does not produce more than 100 grams aggregate of Schedule 1 chemicals, no approval by BIS is required.</P> <P>(g) <E T="03">Withdrawal of Schedule 1 initial declarations.</E> A facility subject to §§ 712.3, 712.4 and 712.5 of the CWCR may withdraw its initial declaration at any time by notifying BIS in writing. A notification requesting the withdrawal of the initial declaration should be sent on company letterhead to the address <PRTPAGE P="127"/>in § 711.6 of the CWCR. BIS will acknowledge receipt of the withdrawal of the initial declaration. Facilities withdrawing their initial declaration may not produce subsequently in excess of 100 grams aggregate of Schedule 1 chemicals within a calendar year unless pursuant to § 712.4.</P> </SECTION> <SECTION> <SECTNO>§ 712.6</SECTNO> <SUBJECT>Advance notification and annual report of all exports and imports of Schedule 1 chemicals to, or from, other States Parties.</SUBJECT> <P>Pursuant to the Convention, the United States is required to notify the OPCW not less than 30 days in advance of every export or import of a Schedule 1 chemical, in any quantity, to or from another State Party. In addition, the United States is required to provide a report of all exports and imports of Schedule 1 chemicals to or from other States Parties during each calendar year. If you plan to export or import any quantity of a Schedule 1 chemical from or to your declared facility, undeclared facility or trading company, you must notify BIS in advance of the export or import and complete an annual report of exports and imports that actually occurred during the previous calendar year. The United States will transmit to the OPCW the advance notifications and a detailed annual declaration of each actual export or import of a Schedule 1 chemical from/to the United States. Note that the advance notification and annual report requirements of this section do not relieve you of any requirement to obtain a license for export of Schedule 1 chemicals subject to the EAR or ITAR or a license for import of Schedule 1 chemicals from the Department of Justice under the Alcohol, Tobacco, Firearms and Explosives Regulations in 27 CFR part 447. Only “declared” facilities, as defined in § 712.5(e) of the CWCR, are subject to initial and routine inspections pursuant to part 716 of the CWCR.</P> <P>(a) <E T="03">Advance notification of exports and imports.</E> You must notify BIS at least 45 calendar days prior to exporting or importing any quantity of a Schedule 1 chemical, except for exports or imports of 5 milligrams or less of Saxitoxin—B (7)—for medical/diagnostic purposes, listed in Supplement No. 1 to this part to or from another State Party. Advance notification of export or import of 5 milligrams or less of Saxitoxin for medical/diagnostic purposes only, must be submitted to BIS at least 3 calendar days prior to export or import. Note that advance notifications for exports may be sent to BIS prior to or after submission of a license application to BIS for Schedule 1 chemicals subject to the EAR and controlled under ECCN 1C351 or to the Department of State for Schedule 1 chemicals controlled under the ITAR. Such advance notifications must be submitted separately from license applications.</P> <P>(1) Advance notifications should be on company letterhead or must clearly identify the reporting entity by name of company, complete address, name of contact person and telephone and facsimile numbers, along with the following information:</P> <P>(i) Chemical name;</P> <P>(ii) Structural formula of the chemical;</P> <P>(iii) Chemical Abstract Service (CAS) Registry Number;</P> <P>(iv) Quantity involved in grams;</P> <P>(v) Planned date of export or import;</P> <P>(vi) Purpose (end-use) of export or import (i.e., research, medical, pharmaceutical, or protective purposes);</P> <P>(vii) Name(s) of exporter and importer;</P> <P>(viii) Complete street address(es) of exporter and importer;</P> <P>(ix) U.S. export license or control number, if known; and</P> <P>(x) Company identification number, once assigned by BIS.</P> <P>(2) Send the advance notification by facsimile to (703) 235-1481 or to the following address for mail and courier deliveries: Treaty Compliance Division, Bureau of Industry and Security, Department of Commerce, 1555 Wilson Boulevard, Suite 700, Arlington, VA 22209-2405, Attn: “Advance Notification of Schedule 1 Chemical [Export] [Import].”</P> <P>(3) Upon receipt of the advance notification, BIS will inform the exporter or importer of the earliest date after which the shipment may occur under the advance notification procedure. To export a Schedule 1 chemical subject to an export license requirement either <PRTPAGE P="128"/>under the EAR or the ITAR, the exporter must have applied for and been granted a license (see § 742.2 and § 742.18 of the EAR, or the ITAR at 22 CFR parts 120 through 130).</P> <P>(b) <E T="03">Annual report requirements for exports and imports of Schedule 1 chemicals.</E> Any person subject to the CWCR that exported or imported any quantity of Schedule 1 chemical to or from another State Party during the previous calendar year has a reporting requirement under this section.</P> <P>(1) <E T="03">Annual report on exports and imports.</E> Declared and undeclared facilities, trading companies, and any other person subject to the CWCR that exported or imported any quantity of a Schedule 1 chemical to or from another State Party in a previous calendar year must submit an annual report on exports and imports.</P> <P>(2) <E T="03">Report forms to submit.</E>—(i) <E T="03">Declared Schedule 1 facilities.</E> (A) If your facility declared production of a Schedule 1 chemical and you also exported or imported any amount of that same Schedule 1 chemical, you must report the export or import by submitting either:</P> <P>(<E T="03">1</E>) <E T="03">Combined declaration and report.</E> Submit, along with your declaration, Form 1-3 for that same Schedule 1 chemical to be reported. Attach Form A, as appropriate; Form B is optional; or</P> <P>(2) <E T="03">Report.</E> Submit, separately from your declaration, a Certification Form, Form 1-1, and a Form 1-3 for each Schedule 1 chemical to be reported. Attach Form A, as appropriate; Form B is optional.</P> <P>(B) If your facility declared production of a Schedule 1 chemical and exported or imported any amount of a different Schedule 1 chemical, you must report the export or import by submitting either:</P> <P>(<E T="03">1</E>) <E T="03">Combined declaration and report.</E> Submit, along with your declaration, a Form 1-3 for each Schedule 1 chemical to be reported. Attach Form A, as appropriate; Form B is optional; or</P> <P>(<E T="03">2</E>) <E T="03">Report.</E> Submit, separately from your declaration, a Certification Form, Form 1-1, and a Form 1-3 for each Schedule 1 chemical to be reported. Attach Form A, as appropriate; Form B is optional.</P> <P>(ii) If you are an undeclared facility, trading company, or any other person subject to the CWCR, and you exported or imported any amount of a Schedule 1 chemical, you must report the export or import by submitting a Certification Form, Form 1-1, and a Form 1-3 for each Schedule 1 chemical to be reported. Attach Form A, as appropriate; Form B is optional.</P> <P>(c) Paragraph (a) of this section does not apply to the activities and persons set forth in § 712.2(b) of the CWCR.</P> </SECTION> <SECTION> <SECTNO>§ 712.7</SECTNO> <SUBJECT>Amended declaration or report.</SUBJECT> <P>In order for BIS to maintain accurate information on previously submitted facility declarations, including information necessary to facilitate inspection notifications and activities or to communicate declaration or report requirements, amended declarations or reports will be required under the following circumstances described in this section. This section applies only to annual declarations on past activities and annual reports on exports and imports submitted for the previous calendar year or annual declarations on anticipated activities covering the current calendar year, unless specified otherwise in a final inspection report.</P> <P>(a) <E T="03">Changes to information that directly affect inspection of a declared facility's Annual Declaration of Past Activities (ADPA) or Annual Declaration on Anticipated Activities (ADAA).</E> You must submit an amended declaration or report to BIS within 15 days of any change in the following information:</P> <P>(1) Types of Schedule 1 chemicals produced (e.g., additional Schedule 1 chemicals);</P> <P>(2) Quantities of Schedule 1 chemicals produced;</P> <P>(3) Activities involving Schedule 1 chemicals; and</P> <P>(4) End-use of Schedule 1 chemicals (e.g., additional end-use(s)).</P> <P>(b) <E T="03">Changes to export or import information submitted in Annual Reports on Exports and Imports from undeclared facilities, trading companies and U.S. persons.</E> You must submit an amended report or amended combined declaration and report for changes to export or import information within 15 days of any change in the following export or import information:<PRTPAGE P="129"/> </P> <P>(1) Types of Schedule 1 chemicals exported or imported (e.g., additional Schedule 1 chemicals);</P> <P>(2) Quantities of Schedule 1 chemicals exported or imported;</P> <P>(3) Destination(s) of Schedule 1 chemicals exported;</P> <P>(4) Source(s) of Schedule 1 chemicals imported;</P> <P>(5) Activities involving exports and imports of Schedule 1 chemicals; and</P> <P>(6) End-use(s) of Schedule 1 chemicals exported or imported (e.g., additional end-use(s)).</P> <P>(c) <E T="03">Changes to company and facility information previously submitted to BIS in the ADPA, the ADAA, and the Annual Report on Exports and Imports</E>—(1) <E T="03">Internal company changes.</E> You must submit an amended declaration or report to BIS within 30 days of any change in the following information:</P> <P>(i) Name of declaration/report point of contact (D-POC), including telephone number, facsimile number, and e-mail address;</P> <P>(ii) Name(s) of inspection point(s) of contact (I-POC), including telephone number(s), and facsimile number(s);</P> <P>(iii) Company name (see § 712.7(c)(2) of the CWCR for other company changes);</P> <P>(iv) Company mailing address;</P> <P>(v) Facility name;</P> <P>(vi) Facility owner, including telephone number, and facsimile number; and</P> <P>(vii) Facility operator, including telephone number, and facsimile number.</P> <P>(2) <E T="03">Change in ownership of company or facility.</E> If you sold or purchased a declared facility or trading company, you must submit an amended declaration or report to BIS, either before the effective date of the change or within 30 days after the effective date of the change. The amended declaration or report must include the following information:</P> <P>(i) Information that must be submitted to BIS by the company selling a declared facility:</P> <P>(A) Name of seller (<E T="03">i.e.</E>, name of the company selling a declared facility);</P> <P>(B) Name of the declared facility and U.S. Code Number for that facility;</P> <P>(C) Name of purchaser (<E T="03">i.e.</E>, name of the new company purchasing a declared facility) and identity of contact person for the purchaser, if known;</P> <P>(D) Date of ownership transfer or change;</P> <P>(E) Additional details on sale of the declared facility relevant to ownership or operational control over any portion of that facility (e.g., whether the entire facility or only a portion of the declared facility has been sold to a new owner); and</P> <P>(F) Details regarding whether the new owner will submit the next declaration or report for the entire calendar year during which the ownership change occurred, or whether the previous owner and new owner will submit separate declarations or reports for the periods of the calendar year during which each owned the facility or trading company.</P> <P>(<E T="03">1</E>) If the new owner is responsible for submitting the declaration or report for the entire current year, it must have in its possession the records for the period of the year during which the previous owner owned the facility.</P> <P>(<E T="03">2</E>) If the previous owner and new owner will submit separate declarations for the periods of the calendar year during which each owned the facility (“part-year declarations”), and if, at the time of transfer of ownership, the previous owner's activities are not above the declaration thresholds set forth in §§ 712.4 and 712.5 of the CWCR, the previous owner and the new owner must still submit declarations to BIS with the below threshold quantities indicated.</P> <P>(<E T="03">3</E>) If the part-year declarations submitted by the previous owner and the new owner are not, when combined, above the declaration threshold set forth in §§ 712.4 and 712.5 of the CWCR, BIS will return the declarations without action as set forth in § 712.8 of the CWCR.</P> <P>(<E T="03">4</E>) If part-year reports are submitted by the previous owner and the new owner as required in § 712.5 of the CWCR, BIS will submit both reports in the OPCW.</P> <P>(ii) Information that must be submitted to BIS by the company purchasing a declared facility:</P> <P>(A) Name of purchaser (<E T="03">i.e.</E>, name of company purchasing a declared facility;<PRTPAGE P="130"/> </P> <P>(B) Mailing address of purchaser;</P> <P>(C) Name of declaration point of contact (D-POC) for the purchaser, including telephone number, facsimile number, and e-mail address;</P> <P>(D) Name of inspection points of contact (I-POC) for the purchaser, including telephone number(s), facsimile number(s) and e-mail address(es);</P> <P>(E) Name of the declared facility and U.S. Code Number for that facility;</P> <P>(F) Location of the declared facility;</P> <P>(G) Owner and operator of the declared facility, including telephone number, and facsimile number; and</P> <P>(H) Details on the next declaration or report submission on whether the new owner will submit the declaration or report for the entire calendar year during which the ownership change occurred, or whether the previous owner and new owner will submit separate declarations or reports for the periods of the calendar year during which each owned the facility or trading company.</P> <P>(<E T="03">1</E>) If the new owner is taking responsibility for submitting the declaration or report for the entire current year, it must have in its possession the records for the period of the year during which the previous owner owned the facility.</P> <P>(<E T="03">2</E>) If the previous owner and new owner will submit separate declarations for the periods of the calendar year during which each owned the facility, and, at the time of transfer of ownership, the previous owner's activities are not above the declaration thresholds set forth in §§ 712.4 and 712.5 of the CWCR, the previous owner and the new owner must still submit declarations to BIS with the below threshold quantities indicated.</P> <P>(<E T="03">3</E>) If the part-year declarations submitted by the previous owner and the new owner are not, when combined, above the declaration threshold set forth in §§ 712.4 and 712.5 of the CWCR, BIS will return the declarations without action as set forth in § 712.8 of the CWCR.</P> <P>(<E T="03">4</E>) If part-year reports are submitted by the previous owner and the new owner as required in § 712.5 of the CWCR, BIS will submit both reports to the OPCW.</P> <NOTE> <HD SOURCE="HED">Note 1 to § 712.7(<E T="01">c</E>):</HD> <P>You must submit an amendment to your most recently submitted declaration or report for declaring changes to internal company information (e.g., company name change) or changes in ownership of a facility or trading company that have occurred since the submission of this declaration or report. BIS will process the amendment to ensure current information is on file regarding the facility or trading company (e.g., for inspection notifications and correspondence) and will also forward the amended declaration to the OPCW to ensure that they also have current information on file regarding your facility or trading company.</P> </NOTE> <NOTE> <HD SOURCE="HED">Note 2 to § 712.7(<E T="01">c</E>):</HD> <P>You may notify BIS of change in ownership via a letter to the address given in § 711.6 of the CWCR. If you are submitting an amended declaration or report, use Form B to address details regarding the sale of the declared facility or trading company.</P> </NOTE> <NOTE> <HD SOURCE="HED">Note 3 to § 712.7(<E T="01">c</E>):</HD> <P>For ownership changes, the declared facility or trading company will maintain its original U.S. Code Number, unless the facility or trading company is sold to multiple owners, at which time BIS will assign new U.S. Code Numbers for the new facilities.</P> </NOTE> <P>(d) <E T="03">Inspection-related amendments.</E> If, following completion of an inspection (see parts 716 and 717 of the CWCR), you are required to submit an amended declaration based on the final inspection report, BIS will notify you in writing of the information that will be required pursuant to §§ 716.10 and 717.5 of the CWCR. You must submit an amended declaration to BIS no later than 45 days following your receipt of the BIS post-inspection letter.</P> <P>(e) <E T="03">Non-substantive changes.</E> If, subsequent to the submission of your declaration or report to BIS, you discover one or more non-substantive typographical errors in your declaration or report, you are not required to submit an amended declaration or report to BIS. Instead, you may correct these errors in a subsequent declaration or report.</P> <P>(f) <E T="03">Documentation required for amended declarations or reports.</E> If you are required to submit an amended declaration or report to BIS pursuant to paragraph (a), (b), (c), or (d) of this section, you must submit either:</P> <P>(1) A letter containing all of the corrected information required, in accordance with the provisions of this section, to amend your declaration or report; or</P> <P>(2) Both of the following:<PRTPAGE P="131"/> </P> <P>(i) A new Certification Form (<E T="03">i.e.</E>, Form 1-1); and</P> <P>(ii) The specific forms (e.g., annual declaration on past activities) containing the corrected information required, in accordance with the provisions of this part 712, to amend your declaration or report.</P> </SECTION> <SECTION> <SECTNO>§ 712.8</SECTNO> <SUBJECT>Declarations and reports returned without action by BIS.</SUBJECT> <P>If you submit a declaration or report and BIS determines that the information contained therein is not required by the CWCR, BIS will return the original declaration or report to you, without action, accompanied by a letter explaining BIS's decision. In order to protect your confidential business information, BIS will not maintain a copy of any declaration or report that is returned without action (RWA). However, BIS will maintain a copy of the RWA letter.</P> </SECTION> <SECTION> <SECTNO>§ 712.9</SECTNO> <SUBJECT>Deadlines for submission of Schedule 1 declarations, reports, advance notifications, and amendments.</SUBJECT> <P>Declarations, reports, advance notifications, and amendments required under this part must be postmarked by the appropriate date identified in Supplement No. 2 to this part 712. Required declarations, reports, advance notifications, and amendments include:</P> <P>(a) Annual declaration on past activities (Schedule 1 chemical production during the previous calendar year);</P> <P>(b) Annual report on exports and imports of Schedule 1 chemicals from facilities, trading companies, and other persons (during the previous calendar year);</P> <P>(c) Combined declaration and report (production of Schedule 1 chemicals, as well as exports or imports of the same or different Schedule 1 chemicals, by a declared facility during the previous calendar year);</P> <P>(d) Annual declaration on anticipated activities (anticipated production of Schedule 1 chemicals in the next calendar year);</P> <P>(e) Advance notification of any export to or import from another State Party;</P> <P>(f) Initial declaration of a new Schedule 1 chemical production facility; and</P> <P>(g) Amended declaration or report, including combined declaration and report.</P> </SECTION> <APPENDIX> <EAR>Pt. 712, Supp. 1</EAR> <HD SOURCE="HED">Supplement No. 1 to Part 712—Schedule 1 Chemicals</HD> <GPOTABLE CDEF="s200,13" COLS="2" OPTS="L2"> <BOXHD> <CHED H="1"/> <CHED H="1">(CAS registry number)</CHED> </BOXHD> <ROW> <ENT I="22">A. Toxic chemicals:</ENT> </ROW> <ROW> <ENT I="03" O="xl">(1) O-Alkyl (≤C<E T="52">10</E>, incl. cycloalkyl) alkyl (Me, Et, n-Pr or i-Pr)-phosphonofluoridates</ENT> </ROW> <ROW> <ENT I="05">e.g. Sarin: O-Isopropyl methylphosphonofluoridate</ENT> <ENT>(107-44-8)</ENT> </ROW> <ROW> <ENT I="05">Soman: O-Pinacolyl methylphosphonofluoridate</ENT> <ENT>(96-64-0)</ENT> </ROW> <ROW> <ENT I="03">(2) O-Alkyl (≤C<E T="52">10</E>, incl. cycloalkyl) N,N-dialkyl (Me, Et, n-Pr or i-Pr) phosphoramidocyanidates e.g. Tabun: O-Ethyl N,N-dimethyl phosphoramidocyanidate</ENT> <ENT>(77-81-6)</ENT> </ROW> <ROW> <ENT I="03">(3) O-Alkyl (H or ≤C<E T="52">10</E>, incl. cycloalkyl) S-2-dialkyl (Me, Et, n-Pr or i-Pr)-aminoethyl alkyl (Me, Et, n-Pr or i-Pr) phosphonothiolates and corresponding alkylated or protonated salts e.g. VX: O-Ethyl S-2-diisopropylaminoethyl methyl phosphonothiolate</ENT> <ENT>(50782-69-9)</ENT> </ROW> <ROW> <ENT I="03" O="xl">(4) Sulfur mustards:</ENT> </ROW> <ROW> <ENT I="05">2-Chloroethylchloromethylsulfide</ENT> <ENT>(2625-76-5)</ENT> </ROW> <ROW> <ENT I="05">Mustard gas: Bis(2-chloroethyl)sulfide</ENT> <ENT>(505-60-2)</ENT> </ROW> <ROW> <ENT I="05">Bis(2-chloroethylthio)methane</ENT> <ENT>(63869-13-6)</ENT> </ROW> <ROW> <ENT I="05">Sesquimustard: 1,2-Bis(2-chloroethylthio)ethane</ENT> <ENT>(3563-36-8)</ENT> </ROW> <ROW> <ENT I="05">1,3-Bis(2-chloroethylthio)-n-propane</ENT> <ENT>(63905-10-2)</ENT> </ROW> <ROW> <ENT I="05">1,4-Bis(2-chloroethylthio)-n-butane</ENT> <ENT>(142868-93-7)</ENT> </ROW> <ROW> <ENT I="05">1,5-Bis(2-chloroethylthio)-n-pentane</ENT> <ENT>(142868-94-8)</ENT> </ROW> <ROW> <ENT I="05">Bis(2-chloroethylthiomethyl)ether</ENT> <ENT>(63918-90-1)</ENT> </ROW> <ROW> <ENT I="05">O-Mustard: Bis(2-chloroethylthioethyl)ether</ENT> <ENT>(63918-89-8)</ENT> </ROW> <ROW> <ENT I="03" O="xl">(5) Lewisites:</ENT> </ROW> <ROW> <ENT I="05">Lewisite 1: 2-Chlorovinyldichloroarsine</ENT> <ENT>(541-25-3)</ENT> </ROW> <ROW> <ENT I="05">Lewisite 2: Bis(2-chlorovinyl)chloroarsine</ENT> <ENT>(40334-69-8)</ENT> </ROW> <ROW> <ENT I="05">Lewisite 3: Tris(2-chlorovinyl)arsine</ENT> <ENT>(40334-70-1)</ENT> </ROW> <ROW> <ENT I="03" O="xl">(6) Nitrogen mustards:</ENT> </ROW> <ROW> <ENT I="05">HN1: Bis(2-chloroethyl)ethylamine</ENT> <ENT>(538-07-8)</ENT> </ROW> <ROW> <ENT I="05">HN2: Bis(2-chloroethyl)methylamine</ENT> <ENT>(51-75-2)</ENT> </ROW> <ROW> <ENT I="05">HN3: Tris(2-chloroethyl)amine</ENT> <ENT>(555-77-1)</ENT> </ROW> <ROW> <ENT I="03">(7) Saxitoxin</ENT> <ENT>(35523-89-8)</ENT> </ROW> <ROW> <ENT I="03">(8) Ricin</ENT> <ENT>(9009-86-3)</ENT> </ROW> <ROW> <PRTPAGE P="132"/> <ENT I="22">B. Precursors:</ENT> </ROW> <ROW> <ENT I="03">(9) Alkyl (Me, Et, n-Pr or i-Pr) phosphonyldifluorides e.g. DF: Methylphosphonyldifluoride</ENT> <ENT>(676-99-3)</ENT> </ROW> <ROW> <ENT I="03">(10) O-Alkyl (H or ≤C<E T="52">10</E>, incl. cycloalkyl) O-2-dialkyl (Me, Et, n-Pr or i-Pr)-aminoethyl alkyl (Me, Et, N-Pr or i-Pr) phosphonites and corresponding alkylated or protonated salts e.g. QL: O-Ethyl O-2-diisopropylaminoethyl methylphosphonite</ENT> <ENT>(57856-11-8)</ENT> </ROW> <ROW> <ENT I="03">(11) Chlorosarin: O-Isopropyl methylphosphonochloridate</ENT> <ENT>(1445-76-7)</ENT> </ROW> <ROW> <ENT I="03">(12) Chlorosoman: O-Pinacolyl methylphosphonochloridate</ENT> <ENT>(7040-57-5)</ENT> </ROW> <TNOTE>Notes to Supplement No. 1</TNOTE> <TNOTE> <E T="02">Note 1:</E> Note that the following Schedule 1 chemicals are controlled for export purposes under the Export Administration Regulations (see part 774 of the EAR, the Commerce Control List): Saxitoxin (35523-89-8) and Ricin (9009-86-3).</TNOTE> <TNOTE> <E T="02">Note 2:</E> All Schedule 1 chemicals not listed in Note 1 to this Supplement are controlled for export purposes by the Directorate of Defense Trade Controls of the Department of State under the International Traffic in Arms Regulations (22 CFR parts 120 through 130).</TNOTE> </GPOTABLE> </APPENDIX> <APPENDIX> <EAR>Pt. 712, Supp. 2</EAR> <HD SOURCE="HED">Supplement No. 2 to Part 712—Deadlines for Submission of Schedule 1 Declarations, Advance Notifications, Reports, and Amendments</HD> <GPOTABLE CDEF="s75,r75,r75" COLS="3" OPTS="L2"> <BOXHD> <CHED H="1">Declarations, advance notifications and reports</CHED> <CHED H="1">Applicable forms</CHED> <CHED H="1">Due dates</CHED> </BOXHD> <ROW> <ENT I="01">Annual Declaration on Past Activities (previous calendar year)—Declared facility (past production)</ENT> <ENT>Certification, 1-1, 1-2,1-2A,1-2B, A (as appropriate), B (optional)</ENT> <ENT>February 28th of the year following any calendar year in which more than 100 grams aggregate of Schedule 1 chemicals were produced,</ENT> </ROW> <ROW> <ENT I="01">Annual report on exports and imports (previous calendar year) (facility, trading company, other persons)</ENT> <ENT>Certification, 1-1,1-3, A (as appropriate), B (optional)</ENT> <ENT>February 28th of the year following any calendar year in which Schedule 1 chemicals were exported or imported.</ENT> </ROW> <ROW> <ENT I="01">Combined Declaration and Report</ENT> <ENT>Certification, 1-1, 1-2, 1-2A, 1-2B, 1-3, A (as appropriate), B (optional)</ENT> <ENT>February 28th of the year following any calendar year in which Schedule 1 chemicals were produced, exported, or imported.</ENT> </ROW> <ROW> <ENT I="01">Annual Declaration of Anticipated Activities (next calendar year)</ENT> <ENT>Certification, 1-1, 1-4, A (as appropriate), B (optional)</ENT> <ENT>September 3rd of the year prior to any calendar year in which Schedule 1 activities are anticipated to occur.</ENT> </ROW> <ROW> <ENT I="01">Advance Notification of any export to or import from another State Party</ENT> <ENT>Notify on letterhead. See § 712.6 of the CWCR</ENT> <ENT>45 calendar days prior to any export or import of Schedule 1 chemicals, except 3 days prior to export or import of 5 milligrams or less of saxitoxin for medical/diagnositc purposes.</ENT> </ROW> <ROW> <ENT I="01">Initial Declaration of a new Schedule 1 facility (technical description)</ENT> <ENT>Certification, 1-1, A (as appropriate), B (optional)</ENT> <ENT>200 calendar days prior to producing in excess of 100 grams aggregate of Schedule 1 chemicals.</ENT> </ROW> <ROW> <ENT I="01">Amended Declaration</ENT> <ENT>Certification, 1-1, 1-2, 1-2A</ENT> </ROW> <ROW> <ENT I="03">—Chemicals/Activities: § 712.7(a)</ENT> <ENT/> <ENT>—15 calendar days after change in information.</ENT> </ROW> <ROW> <ENT I="03">—Company information: § 712.7(c)</ENT> <ENT/> <ENT>—30 calendar days after change in information.</ENT> </ROW> <ROW> <ENT I="03">—Post-inspection letter: § 712.7(d)</ENT> <ENT/> <ENT>—45 calendar days after receipt of letter.</ENT> </ROW> <ROW> <ENT I="01">Amended Report § 712.7(b)</ENT> <ENT>Certification, 1-1, 1-3, A (as appropriate), B (optional)</ENT> <ENT>—15 calendar days after change in information.</ENT> </ROW> <ROW> <ENT I="01">Amended Combined Declaration & Report</ENT> <ENT>Certification, 1-1, 1-2, 1-2A, 1-3, A (as appropriate), B (optional)</ENT> <ENT>—15 calendar days after change in information.</ENT> </ROW> </GPOTABLE> </APPENDIX> </PART> <PART> <EAR>Pt. 713</EAR> <HD SOURCE="HED">PART 713—ACTIVITIES INVOLVING SCHEDULE 2 CHEMICALS</HD> <CONTENTS> <SECHD>Sec.</SECHD> <SECTNO>713.1</SECTNO> <SUBJECT>Prohibition on exports and imports of Schedule 2 chemicals to and from States not Party to the CWC.</SUBJECT> <SECTNO>713.2</SECTNO> <SUBJECT>Annual declaration requirements for plant sites that produce, process or consume Schedule 2 chemicals in excess of specified thresholds.</SUBJECT> <SECTNO>713.3</SECTNO> <SUBJECT>Annual declaration and reporting requirements for exports and imports of Schedule 2 chemicals.</SUBJECT> <SECTNO>713.4</SECTNO> <SUBJECT>Advance declaration requirements for additionally planned production, processing or consumption of Schedule 2 chemicals.</SUBJECT> <SECTNO>713.5</SECTNO> <SUBJECT>Amended declaration or report.</SUBJECT> <SECTNO>713.6</SECTNO> <SUBJECT>Declarations and reports returned without action by BIS.</SUBJECT> <SECTNO>713.7</SECTNO> <SUBJECT>Deadlines for submission of Schedule 2 declarations, reports, and amendments.</SUBJECT> <APP>Supplement No. 1 to Part 713—Schedule 2 Chemicals<PRTPAGE P="133"/> </APP> <APP>Supplement No. 2 to Part 713—Deadlines for Submission of Schedule 2 Declarations, Reports, and Amendments</APP> </CONTENTS> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>22 U.S.C. 6701 <E T="03">et seq.</E>; 50 U.S.C. 1601 <E T="03">et seq.</E>; 50 U.S.C. 1701 <E T="03">et seq;</E> E.O. 12938 59 FR 59099, 3 CFR, 1994 Comp., p. 950, as amended by E.O. 13094, 63 FR 40803, 3 CFR, 1998 Comp., p. 200; E.O. 13128, 64 FR 36703, 3 CFR 1999 Comp., p. 199.</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>71 FR 24929, Apr. 27, 2006, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>§ 713.1</SECTNO> <SUBJECT>Prohibition on exports and imports of Schedule 2 chemicals to and from States not Party to the CWC.</SUBJECT> <P>(a) You may not export any Schedule 2 chemical (see Supplement No. 1 to this part) to any destination or import any Schedule 2 chemical from any destination other than a State Party to the Convention. See Supplement No. 1 to part 710 of the CWCR for a list of States that are party to the Convention.</P> <NOTE> <HD SOURCE="HED">Note to § 713.1(<E T="01">a</E>):</HD> <P>See § 742.18 of the Export Administration Regulations (EAR) (15 CFR part 742) for prohibitions that apply to exports of Schedule 2 chemicals to States not Party to the CWC.</P> </NOTE> <P>(b) Paragraph (a) of this section does not apply to:</P> <P>(1) The export or import of a Schedule 2 chemical to or from a State not Party to the CWC by a department, agency, or other entity of the United States, or by any person, including a member of the Armed Forces of the United States, who is authorized by law, or by an appropriate officer of the United States to transfer or receive the Schedule 2 chemical;</P> <P>(2) Mixtures containing Schedule 2A chemicals, if the concentration of each Schedule 2A chemical in the mixture is 1% or less by weight (note, however, that such mixtures may be subject to the regulatory requirements of other federal agencies);</P> <P>(3) Mixtures containing Schedule 2B chemicals if the concentration of each Schedule 2B chemical in the mixture is 10% or less by weight (note, however, that such mixtures may be subject to the regulatory requirements of other federal agencies); or</P> <P>(4) Products identified as consumer goods packaged for retail sale for personal use or packaged for individual use.</P> </SECTION> <SECTION> <SECTNO>§ 713.2</SECTNO> <SUBJECT>Annual declaration requirements for plant sites that produce, process or consume Schedule 2 chemicals in excess of specified thresholds.</SUBJECT> <P>(a) <E T="03">Declaration of production, processing or consumption of Schedule 2 chemicals for purposes not prohibited by the CWC</E>—(1) <E T="03">Quantities of production, processing or consumption that trigger declaration requirements.</E> You must complete the forms specified in paragraph (b) of this section if you have been or will be involved in the following activities:</P> <P>(i) <E T="03">Annual declaration on past activities.</E> (A) You produced, processed or consumed at one or more plants on your plant site during any of the previous three calendar years, a Schedule 2 chemical in excess of any of the following declaration threshold quantities:</P> <P>(<E T="03">1</E>) 1 kilogram of chemical BZ: 3-Quinuclidinyl benzilate (see Schedule 2, paragraph A.3 in Supplement No. 1 to this part);</P> <P>(<E T="03">2</E>) 100 kilograms of chemical PFIB: 1,1,3,3,3-Pentafluoro-2(trifluoromethyl)-1-propene or 100 kilograms of chemical Amiton: 0,0-Diethyl S-[2-(diethylamino) ethyl] phosphorothiolate and corresponding alkylated or protonated salts (see Schedule 2, paragraphs A.1 and A.2 in Supplement No. 1 to this part); or</P> <P>(<E T="03">3</E>) 1 metric ton of any chemical listed in Schedule 2, Part B (see Supplement No. 1 to this part).</P> <P>(B) In order to trigger a declaration requirement for a past activity (i.e., production, processing or consumption) involving a Schedule 2 chemical, a plant on your plant site must have exceeded the applicable declaration threshold for that particular activity during one or more of the previous three calendar years. For example, if a plant on your plant site produced 800 kilograms of thiodiglycol and consumed 300 kilograms of the same Schedule 2 chemical, during the previous calendar year, you would not have a declaration requirement based on these activities, because neither activity at your plant would have exceeded the declaration threshold of 1 metric ton for that Schedule 2 chemical. However, a declaration requirement would <PRTPAGE P="134"/>apply if an activity involving a Schedule 2 chemical at the plant exceeded the declaration threshold in an earlier year (i.e., during the course of any other calendar year within the past three calendar years), as indicated in the example provided in the note to this paragraph. </P> <NOTE> <HD SOURCE="HED">Note to § 713.2<E T="01">(a)(1)(i)(B)</E>:</HD> <P>To determine whether or not you have an annual declaration on past activities requirement for Schedule 2 chemicals, you must determine whether you produced, processed or consumed a Schedule 2 chemical above the applicable threshold at one or more plants on your plant site in any one of the three previous calendar years. For example, for the 2004 annual declaration on past activities period, if you determine that one plant on your plant site produced greater than 1 kilogram of the chemical BZ in calendar year 2002, and no plants on your plant site produced, processed or consumed any Schedule 2 chemical above the applicable threshold in calendar years 2003 or 2004, you still have a declaration requirement under this paragraph for the previous calendar year (2004). However, you must only declare on Form 2-3 (question 2-3.1), production data for calendar year 2004. You would declare “0” production because you did not produce BZ above the applicable threshold in calendar year 2004. Since the plant site did not engage in any other declarable activity (i.e., consumption, processing) in the 2002-2004 declaration period, you would leave blank questions 2-3.2 and 2-3.3 on Form 2-3. Note that declaring a “0” production quantity for 2004, as opposed to leaving the question blank, permits BIS to distinguish the activity that triggered the declaration requirement from activities that were not declarable during that period.</P> </NOTE> <P>(ii) <E T="03">Annual declaration on anticipated activities</E>. You anticipate that you will produce, process or consume at one or more plants on your plant site during the next calendar year, a Schedule 2 chemical in excess of the applicable declaration threshold set forth in paragraphs (a)(1)(i)(A)(<E T="03">1</E>) through (<E T="03">3</E>) of this section. </P> <NOTE> <HD SOURCE="HED">Note to § 713.2<E T="01">(a)(1)(ii)</E>:</HD> <P>A null “0” declaration is not required if you do not plan to produce, process or consume a Schedule 2 chemical in the next calendar year.</P> </NOTE> <P>(2) <E T="03">Schedule 2 chemical production</E>. (i) For the purpose of determining Schedule 2 production, you must include all steps in the production of a chemical in any units within the same plant through chemical reaction, including any associated processes (e.g., purification, separation, extraction, distillation, or refining) in which the chemical is not converted into another chemical. The exact nature of any associated process (e.g., purification, etc.) is not required to be declared.</P> <P>(ii) For the purpose of determining if a Schedule 2 chemical is subject to declaration, you must declare an intermediate Schedule 2 chemical, but not a transient intermediate Schedule 2 chemical.</P> <P>(3) <E T="03">Mixtures containing a Schedule 2 chemical</E>. (i) <E T="03">Mixtures that must be counted</E>. You must count the quantity of each Schedule 2 chemical in a mixture, when determining the total quantity of a Schedule 2 chemical produced, processed, or consumed at a plant on your plant site, if the concentration of each Schedule 2 chemical in the mixture is 30% or more by volume or by weight, whichever yields the lesser percent. Do not count a Schedule 2 chemical in the mixture that represents less than 30% by volume or by weight.</P> <P>(ii) <E T="03">How to count the quantity of each Schedule 2 chemical in a mixture</E>. If your mixture contains 30% or more concentration of a Schedule 2 chemical, you must count the quantity (weight) of each Schedule 2 chemical in the mixture, not the total weight of the mixture. You must separately declare each Schedule 2 chemical with a concentration in the mixture that is 30% or more and exceeds the quantity threshold detailed in paragraphs (a)(1)(i)(A)(<E T="03">1</E>) through (<E T="03">3</E>) of this section.</P> <P>(iii) <E T="03">Determining declaration requirements for production, processing and consumption</E>. If the total quantity of a Schedule 2 chemical produced, processed or consumed at a plant on your plant site, including mixtures that contain 30% or more concentration of a Schedule 2 chemical, exceeds the applicable declaration threshold set forth in paragraphs (a)(1)(i)(A)(<E T="03">1</E>) through (<E T="03">3</E>) of this section, you have a declaration requirement. For example, if during calendar year 2001, a plant on your plant site produced a mixture containing 300 kilograms of thiodiglycol in a concentration of 32% and also produced 800 kilograms of thiodiglycol, the total amount of thiodiglycol produced at that plant for CWCR purposes would be <PRTPAGE P="135"/>1100 kilograms, which exceeds the declaration threshold of 1 metric ton for that Schedule 2 chemical. You must declare past production of thiodiglycol at that plant site for calendar year 2001. If, on the other hand, a plant on your plant site processed a mixture containing 300 kilograms of thiodiglycol in a concentration of 25% and also processed 800 kilograms of thiodiglycol in other than mixture form, the total amount of thiodiglycol processed at that plant for CWCR purposes would be 800 kilograms and would not trigger a declaration requirement. This is because the concentration of thiodiglycol in the mixture is less than 30% and therefore did not have to be “counted” and added to the other 800 kilograms of processed thiodiglycol at that plant.</P> <P>(b) <E T="03">Types of declaration forms to be used</E>—(1) <E T="03">Annual declaration on past activities</E>. You must complete the Certification Form and Forms 2-1, 2-2, 2-3, 2-3A, and Form A if one or more plants on your plant site produced, processed or consumed more than the applicable threshold quantity of a Schedule 2 chemical described in paragraphs (a)(1)(i)(A)(<E T="03">1</E>) through (<E T="03">3</E>) of this section in any of the three previous calendar years. Form B is optional. If you are subject to annual declaration requirements, you must include data for the previous calendar year only.</P> <P>(2) <E T="03">Annual declaration on anticipated activities</E>. You must complete the Certification Form and Forms 2-1, 2-2, 2-3, 2-3A, 2-3C, and Form A if you plan to produce, process, or consume at any plant on your plant site a Schedule 2 chemical above the applicable threshold set forth in paragraphs (a)(1)(i)(A)(<E T="03">1</E>) through (<E T="03">3</E>) of this section during the following calendar year. Form B is optional.</P> <P>(c) <E T="03">Quantities to be declared</E>—(1) <E T="03">Production, processing and consumption of a Schedule 2 chemical above the declaration threshold</E>—(i) <E T="03">Annual declaration on past activities</E>. If you are required to complete forms pursuant to paragraph (a)(1)(i) of this section, you must declare the aggregate quantity resulting from each type of activity (production, processing or consumption) from each plant on your plant site that exceeds the applicable threshold for that Schedule 2 chemical. Do not include in these aggregate production, processing, and consumption quantities any data from plants on the plant site that did not individually produce, process or consume a Schedule 2 chemical in amounts greater than the applicable threshold. For example, if a plant on your plant site produced a Schedule 2 chemical in an amount greater than the applicable declaration threshold during the previous calendar year, you would have to declare only the production quantity from that plant, provided that the total amount of the Schedule 2 chemical processed or consumed at the plant did not exceed the applicable declaration threshold during any one of the previous three calendar years. If in the previous calendar year your production, processing and consumption activities all were below the applicable declaration threshold, but your declaration requirement is triggered because of production activities occurring in an earlier year, you would declare “0” only for the declared production activities.</P> <P>(ii) <E T="03">Annual declaration on anticipated activities</E>. If you are required to complete forms pursuant to paragraph (a)(1)(ii) of this section, you must declare the aggregate quantity of any Schedule 2 chemical that you plan to produce, process or consume at any plant(s) on your plant site above the applicable thresholds set forth in paragraphs (a)(1)(i)(A)(<E T="03">1</E>) through (<E T="03">3</E>) of this section during the next calendar year. Do not include in these anticipated aggregate production, processing, and consumption quantities any data from plants on the plant site that you do not anticipate will individually produce, process or consume a Schedule 2 chemical in amounts greater than the applicable thresholds.</P> <P>(2) <E T="03">Rounding</E>. For the chemical BZ, report quantities to the nearest hundredth of a kilogram (10 grams). For PFIB and the Amiton family, report quantities to the nearest 1 kilogram. For all other Schedule 2 chemicals, report quantities to the nearest 10 kilograms.</P> <P>(d) <E T="03">“Declared” Schedule 2 plant site</E>. A plant site that submitted a declaration pursuant to paragraph (a)(1) of this section is a “declared” plant site.<PRTPAGE P="136"/> </P> <P>(e) <E T="03">Declared Schedule 2 plant sites subject to initial and routine inspections</E>. A “declared” Schedule 2 plant site is subject to initial and routine inspection by the Organization for the Prohibition of Chemical Weapons if it produced, processed or consumed in any of the three previous calendar years, or is anticipated to produce, process or consume in the next calendar year, in excess of ten times the applicable declaration threshold set forth in paragraphs (a)(1)(i)(A)(<E T="03">1</E>) through (<E T="03">3</E>) of this section (see part 716 of the CWCR). A “declared” Schedule 2 plant site that has received an initial inspection is subject to routine inspection.</P> </SECTION> <SECTION> <SECTNO>§ 713.3</SECTNO> <SUBJECT>Annual declaration and reporting requirements for exports and imports of Schedule 2 chemicals.</SUBJECT> <P>(a) <E T="03">Declarations and reports of exports and imports of Schedule 2 chemicals</E>—(1) <E T="03">Declarations</E>. A Schedule 2 plant site that is declared because it produced, processed or consumed a Schedule 2 chemical at one or more plants above the applicable threshold set forth in paragraph (b) of this section, and also exported from or imported to the plant site that same Schedule 2 chemical above the applicable threshold, must submit export and import information as part of its declaration.</P> <P>(2) <E T="03">Reports</E>. The following persons must submit a report if they individually exported or imported a Schedule 2 chemical above the applicable threshold indicated in paragraph (b) of this section:</P> <P>(i) A declared plant site that exported or imported a Schedule 2 chemical that was different than the Schedule 2 chemical produced, processed or consumed at one or more plants at the plant site above the applicable declaration threshold;</P> <P>(ii) An undeclared plant site;</P> <P>(iii) A trading company; or</P> <P>(iv) Any other person subject to the CWCR. </P> <NOTE> <HD SOURCE="HED">Note to § 713.3(<E T="01">a</E>)(1) and (<E T="01">a</E>)(2)(<E T="01">I</E>):</HD> <P>A declared Schedule 2 plant site may need to declare exports or imports of Schedule 2 chemicals that it produced, processed or consumed above the applicable threshold and also report exports or imports of different Schedule 2 chemicals that it did not produce, process or consume above the applicable threshold quantities. The report may be submitted to BIS either with or separately from the annual declaration on past activities (see § 713.3(d) of the CWCR).</P> </NOTE> <NOTE> <HD SOURCE="HED">Note to § 713.3(<E T="01">a</E>)(2):</HD> <P>The U.S. Government will not submit to the OPCW company-specific information relating to the export or import of Schedule 2 chemicals contained in reports. The U.S. Government will add all export and import information contained in reports to export and import information contained in declarations to establish the U.S. national aggregate declaration on exports and imports.</P> </NOTE> <NOTE> <HD SOURCE="HED">Note to § 713.3(<E T="01">a</E>)(1) <E T="01">and</E> (2):</HD> <P>Declared and undeclared plant sites must count, for declaration or reporting purposes, all exports from and imports to the <E T="03">entire</E> plant site, not only from or to individual plants on the plant site.</P> </NOTE> <P>(b) <E T="03">Quantities of exports or imports that trigger a declaration or reporting requirement</E>. (1) You have a declaration or reporting requirement and must complete the forms specified in paragraph (d) of this section if you exported or imported a Schedule 2 chemical in excess of the following threshold quantities:</P> <P>(i) 1 kilogram of chemical BZ: 3-Quinuclidinyl benzilate (See Schedule 2, paragraph A.3 included in Supplement No. 1 to this part);</P> <P>(ii) 100 kilograms of chemical PFIB: 1,1,3,3,3-Pentafluoro-2(trifluoromethyl)-1-propene or 100 kilograms of Amiton: O,O Diethyl S-[2(diethylamino)ethyl] phosphorothiolate <E T="03">and</E> corresponding alkylated or protonated salts (see Schedule 2, paragraphs A.1 and A.2 included in Supplement No.1 to this part); or</P> <P>(iii) 1 metric ton of any chemical listed in Schedule 2, Part B (see Supplement No.1 to this part).</P> <P>(2) <E T="03">Mixtures containing a Schedule 2 chemical</E>. The quantity of each Schedule 2 chemical contained in a mixture must be counted for the declaration or reporting of an export or import only if the concentration of each Schedule 2 chemical in the mixture is 30% or more by volume or by weight, whichever yields the lesser percent. You must declare separately each Schedule 2 chemical whose concentration in the mixture is 30% or more. </P> <NOTE> <HD SOURCE="HED">Note 1 to § 713.3(<E T="01">b</E>)(2):</HD> <P>See § 713.2(a)(2)(ii) of the CWCR for information on counting amounts of Schedule 2 chemicals contained <PRTPAGE P="137"/>in mixtures and determining declaration and reporting requirements.</P> </NOTE> <NOTE> <HD SOURCE="HED">Note 2 to § 713.3(<E T="01">b</E>)(2):</HD> <P>The “30% and above” mixtures rule applies only for declaration and reporting purposes. This rule does not apply for purposes of determining whether the export of your mixture to a non-State Party requires an End-Use Certificate or for determining whether you need an export license from BIS (see § 742.2, § 742.18 and § 745.2 of the Export Administration Regulations) or from the Department of State (see the International Traffic in Arms Regulations (22 CFR parts 120 through130)).</P> </NOTE> <P>(c) <E T="03">Declaration and reporting requirements</E>—(1) <E T="03">Annual declaration on past activities</E>. A plant site described in paragraph (a)(1) of this section that has an annual declaration requirement for the production, processing, or consumption of a Schedule 2 chemical for the previous calendar year also must declare the export and/or import of that same Schedule 2 chemical if the amount exceeded the applicable threshold set forth in paragraph (b) of this section. The plant site must declare such export or import information as part of its annual declaration of past activities.</P> <P>(2) <E T="03">Annual report on exports and imports</E>. Declared plant sites described in paragraph (a)(2)(i) of this section, and undeclared plant sites, trading companies or any other person (described in paragraphs (a)(2)(ii) through (iv) of this section) subject to the CWCR that exported or imported a Schedule 2 chemical in a previous calendar year in excess of the applicable thresholds set forth in paragraph (b) of this section must submit an annual report on such exports or imports.</P> <P>(d) <E T="03">Types of declaration and reporting forms to be used</E>—(1) <E T="03">Annual declaration on past activities</E>. If you are a declared Schedule 2 plant site, as described in paragraph (a)(1) of this section, you must complete Form 2-3B, in addition to the forms required by § 713.2(b)(1) of the CWCR, for each declared Schedule 2 chemical exported or imported above the applicable threshold in the previous calendar year.</P> <P>(2) <E T="03">Annual report on exports and imports</E>. (i) If you are a declared plant site, as described in paragraph (a)(2)(i) of this section, you may fulfill your annual reporting requirements by:</P> <P>(A) Submitting, <E T="03">with</E> your annual declaration on past activities, a Form 2-3B for each Schedule 2 chemical you exported or imported above the applicable threshold. Attach Form A, as appropriate; Form B is optional; or</P> <P>(B) Submitting, <E T="03">separately from</E> your annual declaration on past activities, a Certification Form, Form 2-1, and Form 2-3B for each Schedule 2 chemical you exported or imported above the applicable threshold. Attach Form A, as appropriate; Form B is optional.</P> <P>(ii) If you are an undeclared plant site, trading company or any other person subject to the CWCR, you must complete the Certification Form, Form 2-1, and Form 2-3B for each Schedule 2 chemical you exported or imported above the applicable threshold. Attach Form A, as appropriate; Form B is optional.</P> <P>(e) <E T="03">Quantities to be declared</E>—(1) <E T="03">Calculations</E>. If you exported from or imported to your plant site, trading company, or other location more than the applicable threshold of a Schedule 2 chemical in the previous calendar year, you must declare or report all exports and imports of that chemical by country of destination or country of origin, respectively, and indicate the total amount exported to or imported from each country.</P> <P>(2) <E T="03">Rounding</E>. For purposes of declaring or reporting exports and imports of a Schedule 2 chemical, you must total all exports and imports per calendar year per recipient or source and then round as follows: For the chemical BZ, the total quantity for each country of destination or country of origin (source) should be reported to the nearest hundredth of a kilogram (10 grams); for PFIB and Amiton and corresponding alkylated or protonated salts, the quantity for each destination or source should be reported to the nearest 1 kilogram; and for all other Schedule 2 chemicals, the total quantity for each destination or source should be reported to the nearest 10 kilograms.</P> </SECTION> <SECTION> <PRTPAGE P="138"/> <SECTNO>§ 713.4</SECTNO> <SUBJECT>Advance declaration requirements for additionally planned production, processing, or consumption of Schedule 2 chemicals.</SUBJECT> <P>(a) <E T="03">Declaration requirements for additionally planned activities.</E> (1) You must declare additionally planned production, processing, or consumption of Schedule 2 chemicals after the annual declaration on anticipated activities for the next calendar year has been delivered to BIS if:</P> <P>(i) You plan that a previously undeclared plant on your plant site under § 713.2(a)(1)(ii) of the CWCR will produce, process, or consume a Schedule 2 chemical above the applicable declaration threshold;</P> <P>(ii) You plan to produce, process, or consume at a plant declared under § 713.2(a)(1)(ii) of the CWCR an additional Schedule 2 chemical above the applicable declaration threshold;</P> <P>(iii) You plan an additional activity (production, processing, or consumption) at your declared plant above the applicable declaration threshold for a chemical declared under § 713.2(a)(1)(ii) of the CWCR;</P> <P>(iv) You plan to increase the production, processing, or consumption of a Schedule 2 chemical by a plant declared under § 713.2(a)(1)(ii) of the CWCR from the amount exceeding the applicable declaration threshold to an amount exceeding the applicable inspection threshold (see § 716.1(b)(2) of the CWCR);</P> <P>(v) You plan to change the starting or ending date of anticipated production, processing, or consumption declared under § 713.2(a)(1)(ii) of the CWCR by more than three months; or</P> <P>(vi) You plan to increase your production, processing, or consumption of a Schedule 2 chemical by a declared plant site by 20 percent or more above that declared under § 713.2(a)(1)(ii) of the CWCR.</P> <P>(2) If you must submit a declaration on additionally planned activities because you plan to engage in any of the activities listed in paragraphs (a)(1)(i) through (vi) of this section, you also should declare changes to your declaration relating to the following activities. You do not have to submit an additionally planned declaration if you are only changing the following non-quantitative activities:</P> <P>(i) Changes to the plant's production capacity;</P> <P>(ii) Changes or additions to the product group codes for the plant site or the plant(s);</P> <P>(iii) Changes to the plant's activity status (i.e., dedicated, multipurpose, or other status);</P> <P>(iv) Changes to the plant's multipurpose activities;</P> <P>(v) Changes to the plant site's status relating to domestic transfer of the chemical;</P> <P>(vi) Changes to the plant site's purposes for which the chemical will be produced, processed or consumed; or</P> <P>(vii) Changes to the plant site's status relating to exports of the chemical or the addition of new countries for export.</P> <P>(b) <E T="03">Declaration forms to be used.</E> If you are required to declare additionally planned activities pursuant to paragraph (a) of this section, you must complete the Certification Form and Forms 2-1, 2-2, 2-3, and 2-3C as appropriate. Such forms are due to BIS at least 15 days prior to beginning the additional activity.</P> </SECTION> <SECTION> <SECTNO>§ 713.5</SECTNO> <SUBJECT>Amended declaration or report.</SUBJECT> <P>In order for BIS to maintain accurate information on previously submitted plant site declarations, including information necessary to facilitate inspection notifications and activities or to communicate declaration or reporting requirements, amended declarations or reports will be required under the circumstances described in this section. This section applies only to annual declarations on past activities submitted for the three previous calendar years, annual reports on exports and imports for the previous calendar year or annual declarations on anticipated activities covering the current calendar year, unless specified otherwise in a final inspection report.</P> <P>(a) <E T="03">Changes to information that directly affect inspection of a declared plant site's Annual Declaration of Past Activities (ADPA) or Combined Annual Declaration and Report.</E> You must submit an amended declaration or report to BIS within 15 days of any change in the following information:<PRTPAGE P="139"/> </P> <P>(1) Types of Schedule 2 chemicals produced, processed, or consumed;</P> <P>(2) Quantities of Schedule 2 chemicals produced, processed, or consumed;</P> <P>(3) Activities involving Schedule 2 chemicals (production, processing, consumption);</P> <P>(4) End-use of Schedule 2 chemicals (e.g., additional end-use(s));</P> <P>(5) Product group codes for Schedule 2 chemicals produced, processed, or consumed;</P> <P>(6) Production capacity for manufacturing a specific Schedule 2 chemical at particular plant site;</P> <P>(7) Exports or imports (e.g., changes in the types of Schedule 2 chemicals exported or imported or in the quantity, recipients, or sources of such chemicals);</P> <P>(8) Domestic transfers (e.g., changes in the types of Schedule 2 chemicals, types of destinations, or product group codes); and</P> <P>(9) Addition of new plant(s) for the production, processing, or consumption of Schedule 2 chemicals.</P> <P>(b) <E T="03">Changes to export or import information submitted in Annual Reports on Exports and Imports from undeclared plant sites, trading companies and U.S. persons.</E> You must submit an amended report or amended combined declaration and report to BIS within 15 days of any change in the following export or import information:</P> <P>(1) Types of Schedule 2 chemicals exported or imported (additional Schedule 2 chemicals);</P> <P>(2) Quantities of Schedule 2 chemicals exported or imported;</P> <P>(3) Destination(s) of Schedule 2 chemicals exported; and</P> <P>(4) Source(s) of Schedule 2 chemicals imported.</P> <P>(c) <E T="03">Changes to company and plant site information that must be maintained by BIS for the ADPA, Annual Declaration on Anticipated Activities (ADAA), and the Annual Report on Exports and Imports</E>—(1) <E T="03">Internal company changes.</E> You must submit an amended declaration or report to BIS within 30 days of any change in the following information:</P> <P>(i) Name of declaration/report point of contact (D-POC), including telephone number, facsimile number, and e-mail address;</P> <P>(ii) Name(s) of inspection point(s) of contact (I-POC), including telephone number(s), facsimile number(s) and e-mail address(es);</P> <P>(iii) Company name (see paragraph (c)(2) of this section for other company changes);</P> <P>(iv) Company mailing address;</P> <P>(v) Plant site name;</P> <P>(vi) Plant site owner, including telephone number, and facsimile number;</P> <P>(vii) Plant site operator, including telephone number, and facsimile number;</P> <P>(viii) Plant name;</P> <P>(ix) Plant owner, including telephone number, and facsimile number; and</P> <P>(x) Plant operator, including telephone number and facsimile number.</P> <P>(2) <E T="03">Change in ownership of company, plant site, or plant.</E> If you sold <E T="03">or</E> purchased a declared plant site, plant, or trading company you must submit an amended declaration or report to BIS, either before the effective date of the change or within 30 days after the effective date of the change. The amended declaration or report must include the following information:</P> <P>(i) Information that must be submitted to BIS by the company selling a declared plant site:</P> <P>(A) Name of seller (i.e., name of the company selling a declared plant site);</P> <P>(B) Name of the declared plant site and U.S. Code Number for that plant site;</P> <P>(C) Name of purchaser (i.e., name of the new company/owner purchasing a declared plant site) and identity of contact person for the purchaser, if known;</P> <P>(D) Date of ownership transfer or change;</P> <P>(E) Additional (e.g., unique) details on the sale of the declared plant site relevant to ownership or operational control over any portion of the declared plant site (e.g., whether the entire plant site or only a portion of the declared plant site has been sold to a new owner); and</P> <P>(F) Details regarding whether the new owner will submit the next declaration or report for the entire calendar year during which the ownership change occurred, or whether the previous owner and new owner will submit separate declarations or reports for the <PRTPAGE P="140"/>periods of the calendar year during which each owned the plant site or trading company.</P> <P>(<E T="03">1</E>) If the new owner is responsible for submitting the declaration or report for the entire current year, it must have in its possession the records for the period of the year during which the previous owner owned the plant site.</P> <P>(<E T="03">2</E>) If the previous owner and new owner will submit separate declarations or reports for the periods of the calendar year during which each owned the plant site, and, if at the time of transfer of ownership, the previous owner's activities are not above the declaration or reporting thresholds set forth in § 713.2(a)(1)(i)(A)(<E T="03">1</E>) through (<E T="03">3</E>) and § 713.3(b)(1)(i) through (iii) of the CWCR, respectively, the previous owner and the new owner must still submit declarations to BIS with the below threshold quantities indicated.</P> <P>(<E T="03">3</E>) If the part-year declarations submitted by the previous owner and the new owner are not, when combined, above the declaration thresholds set forth in § 713.2(a)(1)(i)(A)(<E T="03">1</E>) through (<E T="03">3</E>) of the CWCR, BIS will return the declarations without action as set forth in § 713.6 of the CWCR.</P> <P>(<E T="03">4</E>) If part-year reports submitted by the previous owner and the new owner are not, when combined, above the thresholds in §§ 713.3(b)(1)(i) through (iii) of the CWCR, BIS will return the reports without action as set forth in § 713.6 of the CWCR.</P> <P>(ii) Information that must be submitted to BIS by the company purchasing a declared plant site:</P> <P>(A) Name of purchaser (i.e., name of individual or company purchasing a declared plant site);</P> <P>(B) Mailing address of purchaser;</P> <P>(C) Name of declaration point of contact (D-POC) for the purchaser, including telephone number, facsimile number, and e-mail address;</P> <P>(D) Name of inspection point(s) of contact (I-POC) for the purchaser, including telephone number(s), facsimile number(s) and e-mail address(es);</P> <P>(E) Name of the declared plant site and U.S. Code Number for that plant site;</P> <P>(F) Location of the declared plant site;</P> <P>(G) Owner of the declared plant site, including telephone number, and facsimile number;</P> <P>(H) Operator of the declared plant site, including telephone number, and facsimile number;</P> <P>(I) Name of plant(s) where Schedule 2 activities exceed the applicable declaration threshold;</P> <P>(J) Owner and operator of plant(s) where Schedule 2 activities exceed the applicable declaration threshold, including telephone numbers, and facsimile numbers;</P> <P>(K) Location of the plant where Schedule 2 activities exceed the applicable declaration threshold; and</P> <P>(L) Details on the next declaration or report submission on whether the new owner will submit the declaration or report for the entire calendar year during which the ownership change occurred, or whether the previous owner and new owner will submit separate declarations or reports for the periods of the calendar year during which each owned the plant site or trading company. </P> <NOTE> <HD SOURCE="HED">Note 1 to § 713.5(<E T="01">c</E>):</HD> <P>You must submit an amendment to your most recently submitted declaration or report for declaring changes to internal company information (e.g., company name change) or changes in ownership of a facility or trading company that have occurred since the submission of this declaration or report. BIS will process the amendment to ensure current information is on file regarding the facility or trading company (e.g., for inspection notifications and correspondence) and will also forward the amended declaration to the OPCW to ensure that they also have current information on file regarding your facility or trading company.</P> </NOTE> <NOTE> <HD SOURCE="HED">Note 2 to § 713.5(<E T="01">c</E>):</HD> <P>You may notify BIS of change in ownership via a letter to the address given in § 711.6 of the CWCR. If you are submitting an amended declaration or report, use Form B to address details regarding the sale of the declared plant site or trading company.</P> </NOTE> <NOTE> <HD SOURCE="HED">Note 3 to § 713.5(<E T="01">c</E>):</HD> <P>For ownership changes, the declared facility or trading company will maintain its original U.S. Code Number, unless the plant site or trading company is sold to multiple owners, at which time BIS will assign new U.S. Code Numbers.</P> </NOTE> <P>(d) <E T="03">Inspection-related amendments.</E> If, following the completion of an inspection (see parts 716 and 717 of the CWCR), you are required to submit an amended declaration based on the final <PRTPAGE P="141"/>inspection report, BIS will notify you in writing of the information that will be required pursuant to §§ 716.10 and 717.5 of the CWCR. You must submit an amended declaration to BIS no later than 45 days following your receipt of BIS's post-inspection letter.</P> <P>(e) <E T="03">Non-substantive changes.</E> If, subsequent to the submission of your declaration or report to BIS, you discover one or more non-substantive typographical errors in your declaration or report, you are not required to submit an amended declaration or report to BIS. Instead, you may correct these errors in a subsequent declaration or report.</P> <P>(f) <E T="03">Documentation required for amended declarations or reports.</E> If you are required to submit an amended declaration or report to BIS pursuant to paragraph (a), (b), (c), or (d) of this section, you must submit either:</P> <P>(1) A letter containing all of the corrected information required, in accordance with the provisions of this section, to amend your declaration or report; or</P> <P>(2) Both of the following:</P> <P>(i) A new Certification Form; and</P> <P>(ii) The specific forms required for the declaration or report type being amended (e.g., annual declaration on past activities) containing the corrected information required, in accordance with the requirements of this section, to amend your declaration or report.</P> </SECTION> <SECTION> <SECTNO>§ 713.6</SECTNO> <SUBJECT>Declarations and reports returned without action by BIS.</SUBJECT> <P>If you submit a declaration or report and BIS determines that the information contained therein is not required by the CWCR, BIS will return the original declaration or report to you, without action, accompanied by a letter explaining BIS's decision. In order to protect your confidential business information, BIS will not maintain a copy of any declaration or report that is returned without action (RWA). However, BIS will maintain a copy of the RWA letter.</P> </SECTION> <SECTION> <SECTNO>§ 713.7</SECTNO> <SUBJECT>Deadlines for submission of Schedule 2 declarations, reports, and amendments.</SUBJECT> <P>Declarations, reports, and amendments required under this part must be postmarked by the appropriate date identified in Supplement No. 2 to this part 713. Required declarations, reports, and amendments include:</P> <P>(a) Annual declaration on past activities (production, processing, or consumption of Schedule 2 chemicals during the previous calendar year);</P> <P>(b) Annual report on exports and imports of Schedule 2 chemicals by plant sites, trading companies, and other persons subject to the CWCR (during the previous calendar year);</P> <P>(c) Combined declaration and report (production, processing, or consumption of Schedule 2 chemicals, as well as exports or imports of the same or different Schedule 2 chemicals, by a declared plant site during the previous calendar year);</P> <P>(d) Annual declaration on anticipated activities (production, processing or consumption) involving Schedule 2 chemicals during the next calendar year;</P> <P>(e) Declaration on Additionally Planned Activities (production, processing or consumption) involving Schedule 2 chemicals; and</P> <P>(f) Amended declaration and report, including combined declaration and report.</P> </SECTION> <APPENDIX> <EAR>Pt. 713, Supp. 1</EAR> <HD SOURCE="HED">Supplement No. 1 to Part 713—Schedule 2 Chemicals</HD> <GPOTABLE CDEF="s200,13" COLS="2" OPTS="L2"> <BOXHD> <CHED H="1"/> <CHED H="1">(CAS registry number)</CHED> </BOXHD> <ROW> <ENT I="22">A. Toxic chemicals:</ENT> </ROW> <ROW> <ENT I="03">(1) Amiton: O,O-Diethyl S-[2-(diethylamino)ethyl] phosphorothiolate and corresponding alkylated or protonated salts</ENT> <ENT>(78-53-5)</ENT> </ROW> <ROW> <ENT I="03">(2) PFIB: 1,1,3,3,3-Pentafluoro-2-(trifluoromethyl)-1-propene</ENT> <ENT>(382-21-8)</ENT> </ROW> <ROW> <ENT I="03">(3) BZ: 3-Quinuclidinyl benzilate</ENT> <ENT>(6581-06-2)</ENT> </ROW> <ROW> <ENT I="22">B. Precursors:</ENT> </ROW> <ROW> <ENT I="03">(4) Chemicals, except for those listed in Schedule 1, containing a phosphorus atom to which is bonded one methyl, ethyl or propyl (normal or iso) group but not further carbon atoms, e.g. Methylphosphonyl dichloride</ENT> <ENT>(676-97-1)</ENT> </ROW> <ROW> <PRTPAGE P="142"/> <ENT I="05">Dimethyl methylphosphonate</ENT> <ENT>(756-79-6)</ENT> </ROW> <ROW> <ENT I="05">Exemption: Fonofos: O-Ethyl S-phenyl ethylphosphono-thiolothionate</ENT> <ENT>(944-22-9)</ENT> </ROW> <ROW> <ENT I="03" O="xl">(5) N,N-Dialkyl (Me, Et, n-Pr or i-Pr) phosphoramidic dihalides</ENT> </ROW> <ROW> <ENT I="03" O="xl">(6) Dialkyl (Me, Et, n-Pr or i-Pr) N,N-dialkyl (Me, Et, n-Pr or i-Pr)-phosphoramidates</ENT> </ROW> <ROW> <ENT I="03">(7) Arsenic trichloride</ENT> <ENT>(7784-34-1)</ENT> </ROW> <ROW> <ENT I="03">(8) 2,2-Diphenyl-2-hydroxyacetic acid</ENT> <ENT>(76-93-7)</ENT> </ROW> <ROW> <ENT I="03">(9) Quinuclidine-3-ol</ENT> <ENT>(1619-34-7)</ENT> </ROW> <ROW> <ENT I="03" O="xl">(10) N,N-Dialkyl (Me, Et, n-Pr or i-Pr) aminoethyl-2-chlorides and corresponding protonated salts</ENT> </ROW> <ROW> <ENT I="03" O="xl">(11) N,N-Dialkyl (Me, Et, n-Pr or i-Pr) aminoethane-2-ols and corresponding protonated salts</ENT> </ROW> <ROW> <ENT I="05">Exemptions: N,N-Dimethylaminoethanol and corresponding protonated salts</ENT> <ENT>(108-01-0)</ENT> </ROW> <ROW> <ENT I="05">N,N-Diethylaminoethanol and corresponding protonated salts</ENT> <ENT>(100-37-8)</ENT> </ROW> <ROW> <ENT I="03" O="xl">(12) N,N-Dialkyl (Me, Et, n-Pr or i-Pr) aminoethane-2-thiols and corresponding protonated salts</ENT> </ROW> <ROW> <ENT I="03">(13) Thiodiglycol: Bis(2-hydroxyethyl)sulfide</ENT> <ENT>(111-48-8)</ENT> </ROW> <ROW> <ENT I="03">(14) Pinacolyl alcohol: 3,3-Dimethylbutane-2-ol</ENT> <ENT>(464-07-3)</ENT> </ROW> <TNOTE>Notes to Supplement No. 1</TNOTE> <TNOTE> <E T="02">Note 1:</E> Note that the following Schedule 2 chemicals are controlled for export purposes by the Directorate of Defense Trade Controls of the Department of State under the International Traffic in Arms Regulations (22 CFR parts 120 through 130): Amiton: O,O-Diethyl S-[2-(diethylamino)ethyl] phosphorothiolate and corresponding alkylated or protonated salts (78-53-5); BZ: 3-Quinuclidinyl benzilate 6581-06-2); and Methylphosphonyl dichloride (676-97-1).</TNOTE> <TNOTE> <E T="02">Note 2:</E> All Schedule 2 chemicals not listed in Note 1 to this Supplement are controlled for export purposes under the Export Administration Regulations (see part 774 of the EAR, the Commerce Control List).</TNOTE> </GPOTABLE> </APPENDIX> <APPENDIX> <EAR>Pt. 713, Supp. 2</EAR> <HD SOURCE="HED">Supplement No. 2 to Part 713—Deadlines for Submission of Schedule 2 Declarations, Reports, and Amendments</HD> <GPOTABLE CDEF="s75,r75,r75" COLS="3" OPTS="L2"> <BOXHD> <CHED H="1">Declarations and reports</CHED> <CHED H="1">Applicable forms</CHED> <CHED H="1">Due dates</CHED> </BOXHD> <ROW> <ENT I="01">Annual Declaration on Past Activities (previous calendar year)—Declared plant site (production, processing, or consumption)</ENT> <ENT>Certification, 2-1, 2-2, 2-3, 2-3A, 2-3B (if also exported or imported), A (as appropriate), B (optional)</ENT> <ENT>February 28 of the year following any calendar year in which the production, processing, or consumption of a Schedule 2 chemical exceeded the applicable declaration thresholds in § 713.2(a)(1)(i) of the CWCR.</ENT> </ROW> <ROW> <ENT I="01">Annual Report on Exports and Imports (previous calendar year)—Plant site, trading company, other persons</ENT> <ENT>Certification, 2-1, 2-3B, A (as appropriate), B (optional)</ENT> <ENT>February 28 of the year following any calendar year in which exports or imports of a Schedule 2 chemical by a plant site, trading company, or other person subject to the CWCR (as described in § 713.3(a)(2) of the CWCR) exceeded the applicable thresholds in § 713.3(b)(1) of the CWCR.</ENT> </ROW> <ROW> <ENT I="01">Combined Declaration & Report—Declared plant site (production, processing, or consumption; exports and imports)</ENT> <ENT>Certification, 2-1, 2-2, 2-3, 2-3A, 2-3B, A (as appropriate), B (optional)</ENT> <ENT>February 28 of the year following any calendar year in which the production, processing, or consumption of a Schedule 2 chemical and the export or import of the same or a different Schedule 2 chemical by a declared plant site exceeded the applicable thresholds in §§ 713.2(a)(1)(i) and 713.3(b)(1), respectively, of the CWCR.</ENT> </ROW> <ROW> <ENT I="01">Annual Declaration on Anticipated Activities (next calendar year)</ENT> <ENT>Certification, 2-1, 2-2, 2-3, 2-3A, 2-3C, A (as appropriate), B (optional)</ENT> <ENT>September 3 of the year prior to any calendar year in which Schedule 2 activities are anticipated to occur.</ENT> </ROW> <ROW> <ENT I="01">Declaration on Additionally Planned Activities (production, processing and consumption)</ENT> <ENT>Certification, 2-1, 2-2, 2-3, 2-3A, 2-3C, A (as appropriate), B (optional)</ENT> <ENT>15 calendar days before the additionally planned activity begins.</ENT> </ROW> <ROW> <ENT I="01">Amended Declaration</ENT> <ENT>Certification, 2-1, 2-2, 2-3 2-3A, 2-3B (if also exported or imported), A (as appropriate), B (optional)</ENT> </ROW> <ROW> <ENT I="03">—Declaration information</ENT> <ENT/> <ENT>—15 calendar days after change in information.</ENT> </ROW> <ROW> <ENT I="03">—Company information</ENT> <ENT/> <ENT>—30 calendar days after change in information.</ENT> </ROW> <ROW> <ENT I="03">—Post-inspection letter</ENT> <ENT/> <ENT>—45 calendar days after receipt of letter.</ENT> </ROW> <ROW> <ENT I="01">Amended Report</ENT> <ENT>Certification, 2-1, 2-3B, A (as appropriate), B (optional)</ENT> <ENT>—15 calendar days after change in information.</ENT> </ROW> <ROW> <ENT I="01">Amended Combined Declaration & Report</ENT> <ENT>Certification, 2-1, 2-2, 2-3, 2-3A, 2-3B, A (as appropriate), B (optional)</ENT> <ENT>—15 calendar days after change in information.</ENT> </ROW> </GPOTABLE> </APPENDIX> </PART> <PART> <PRTPAGE P="143"/> <EAR>Pt. 714</EAR> <HD SOURCE="HED">PART 714—ACTIVITIES INVOLVING SCHEDULE 3 CHEMICALS</HD> <CONTENTS> <SECHD>Sec.</SECHD> <SECTNO>714.1</SECTNO> <SUBJECT>Annual declaration requirements for plant sites that produce a Schedule 3 chemical in excess of 30 metric tons.</SUBJECT> <SECTNO>714.2</SECTNO> <SUBJECT>Annual reporting requirements for exports and imports in excess of 30 metric tons of Schedule 3 chemicals.</SUBJECT> <SECTNO>714.3</SECTNO> <SUBJECT>Advance declaration requirements for additionally planned production of Schedule 3 chemicals.</SUBJECT> <SECTNO>714.4</SECTNO> <SUBJECT>Amended declaration or report.</SUBJECT> <SECTNO>714.5</SECTNO> <SUBJECT>Declarations and reports returned without action by BIS.</SUBJECT> <SECTNO>714.6</SECTNO> <SUBJECT>Deadlines for submission of Schedule 3 declarations, reports, and amendments.</SUBJECT> <APP>Supplement No. 1 to Part 714—Schedule 3 Chemicals</APP> <APP>Supplement No. 2 to Part 714—Deadlines for Submission of Schedule 3 Declarations, Reports, and Amendments</APP> </CONTENTS> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>22 U.S.C. 6701 <E T="03">et seq.</E>; E.O. 13128, 64 FR 36703, 3 CFR 1999 Comp., p. 199.</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>71 FR 24929, Apr. 27, 2006, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>§ 714.1</SECTNO> <SUBJECT>Annual declaration requirements for plant sites that produce a Schedule 3 chemical in excess of 30 metric tons.</SUBJECT> <P>(a) <E T="03">Declaration of production of Schedule 3 chemicals for purposes not prohibited by the CWC</E>—(1) <E T="03">Production quantities that trigger the declaration requirement.</E> You must complete the appropriate forms specified in paragraph (b) of this section if you have produced or anticipate producing a Schedule 3 chemical (see Supplement No. 1 to this part) as follows:</P> <P>(i) <E T="03">Annual declaration on past activities.</E> You produced at one or more plants on your plant site in excess of 30 metric tons of any single Schedule 3 chemical during the previous calendar year.</P> <P>(ii) <E T="03">Annual declaration on anticipated activities.</E> You anticipate that you will produce at one or more plants on your plant site in excess of 30 metric tons of any single Schedule 3 chemical in the next calendar year.</P> <P>(2) <E T="03">Schedule 3 chemical production.</E> (i) For the purpose of determining Schedule 3 production, you must include all steps in the production of a chemical in any units within the same plant through chemical reaction, including any associated processes (e.g., purification, separation, extraction, distillation, or refining) in which the chemical is not converted into another chemical. The exact nature of any associated process (e.g., purification, etc.) is not required to be declared.</P> <P>(ii) For the purpose of determining if a Schedule 3 chemical is subject to declaration, you must declare an intermediate Schedule 3 chemical, but not a transient intermediate Schedule 3 chemical.</P> <P>(3) <E T="03">Mixtures containing a Schedule 3 chemical.</E> (i) <E T="03">When you must count the quantity of a Schedule 3 chemical in a mixture for declaration purposes.</E> The quantity of each Schedule 3 chemical contained in a mixture must be counted for declaration purposes only if the concentration of each Schedule 3 chemical in the mixture is 80% or more by volume or by weight, whichever yields the lesser percent.</P> <P>(ii) <E T="03">How to count the amount of a Schedule 3 chemical in a mixture.</E> If your mixture contains 80% or more concentration of a Schedule 3 chemical, you must count only the amount (weight) of the Schedule 3 chemical in the mixture, not the total weight of the mixture.</P> <P>(b) <E T="03">Types of declaration forms to be used</E>—(1) <E T="03">Annual declaration on past activities.</E> You must complete the Certification Form and Forms 3-1, 3-2, 3-3, and Form A if one or more plants on your plant site produced in excess of 30 metric tons of any single Schedule 3 chemical during the previous calendar year. Form B is optional.</P> <P>(2) <E T="03">Annual declaration on anticipated activities.</E> You must complete the Certification Form, and Forms 3-1 and 3-3 if you anticipate that you will produce at one or more plants on your plant site in excess of 30 metric tons of any single Schedule 3 chemical in the next calendar year.</P> <P>(c) <E T="03">Quantities to be declared</E>—(1) <E T="03">Production of a Schedule 3 chemical in excess of 30 metric tons.</E> If your plant site is subject to the declaration requirements of paragraph (a) of this section, you must declare the range within which the production at your plant site falls (30 to 200 metric tons, 200 to 1,000 metric tons, etc.) as specified on Form 3-3. When specifying the range of production for your plant site, you must <PRTPAGE P="144"/>aggregate the production quantities of all plants on the plant site that produced the Schedule 3 chemical in amounts greater than 30 metric tons. Do not aggregate amounts of production from plants on the plant site that did not individually produce a Schedule 3 chemical in amounts greater than 30 metric tons. You must complete a separate Form 3-3 for each Schedule 3 chemical for which production at your plant site exceeds 30 metric tons.</P> <P>(2) <E T="03">Rounding.</E> To determine the production range into which your plant site falls, add all the production of the declared Schedule 3 chemical during the calendar year from all plants on your plant site that produced the Schedule 3 chemical in amounts exceeding 30 metric tons, and round to the nearest ten metric tons.</P> <P>(d) <E T="03">“Declared” Schedule 3 plant site.</E> A plant site that submitted a declaration pursuant to paragraph (a)(1) of this section is a “declared” Schedule 3 plant site.</P> <P>(e) <E T="03">Routine inspections of declared Schedule 3 plant sites.</E> A “declared” Schedule 3 plant site is subject to routine inspection by the Organization for the Prohibition of Chemical Weapons (see part 716 of the CWCR) if:</P> <P>(1) The declared plants on your plant site produced in excess of 200 metric tons aggregate of any Schedule 3 chemical during the previous calendar year; or</P> <P>(2) You anticipate that the declared plants on your plant site will produce in excess of 200 metric tons aggregate of any Schedule 3 chemical during the next calendar year.</P> </SECTION> <SECTION> <SECTNO>§ 714.2</SECTNO> <SUBJECT>Annual reporting requirements for exports and imports in excess of 30 metric tons of Schedule 3 chemicals.</SUBJECT> <P>(a) Any person subject to the CWCR that exported from or imported into the United States in excess of 30 metric tons of any single Schedule 3 chemical during the previous calendar year has a reporting requirement under this section.</P> <P>(1) <E T="03">Annual report on exports and imports.</E> Declared plant sites, undeclared plant sites, trading companies, or any other person subject to the CWCR that exported from or imported into the United States in excess of 30 metric tons of any single Schedule 3 chemical during the previous calendar year must submit an annual report on exports and imports. </P> <NOTE> <HD SOURCE="HED">Note 1 to § 714.2(<E T="01">a</E>)(1):</HD> <P>Declared and undeclared plant sites must count, for reporting purposes, all exports from and imports to the entire plant site, not only from or to individual plants on the plant site.</P> </NOTE> <NOTE> <HD SOURCE="HED">Note 2 to § 714.2(<E T="01">a</E>)(1):</HD> <P>The U.S. Government will not submit to the OPCW company-specific information relating to the export or import of Schedule 3 chemicals contained in reports. The U.S. Government will add all export and import information contained in reports to establish the U.S. national aggregate declaration on exports and imports.</P> </NOTE> <P>(2) <E T="03">Mixtures containing a Schedule 3 chemical.</E> The quantity of a Schedule 3 chemical contained in a mixture must be counted for reporting an export or import only if the concentration of the Schedule 3 chemical in the mixture is 80% or more by volume or by weight, whichever yields the lesser percent. For reporting purposes, only count the weight of the Schedule 3 chemical in the mixture, not the entire weight of the mixture. </P> <NOTE> <HD SOURCE="HED">Note to § 714.2(<E T="01">a</E>)(2):</HD> <P>The “80% and above” mixtures rule applies only for reporting purposes. This rule does not apply for purposes of determining whether the export of your mixture to a non-State Party requires an End-Use Certificate or for determining whether you need an export license from BIS (see 15 CFR 742.2, 742.18 and 745.2 of the Export Administration Regulations) or from the Department of State (see the International Traffic in Arms Regulations (22 CFR parts 120 through 130)).</P> </NOTE> <P>(b) <E T="03">Types of forms to be used.</E>—(1) <E T="03">Declared Schedule 3 plant sites.</E> (i) If your plant site is declared for production of a Schedule 3 chemical (and has completed questions 3-3.1 and 3-3.2 on Form 3-3) and you also exported from or imported to your plant site in excess of 30 metric tons of that same Schedule 3 chemical, you must report the export or import by either:</P> <P>(A) Completing question 3-3.3 on Form 3-3 on your declaration for that same Schedule 3 chemical; or</P> <P>(B) Submitting, separately from your declaration, a Certification Form, Form 3-1, and a Form 3-3 for each Schedule 3 chemical to be reported, completing only question 3-3.3. Attach <PRTPAGE P="145"/>Form A, as appropriate; Form B is optional.</P> <P>(ii) If your plant site is declared for production of a Schedule 3 chemical and you exported or imported in excess of 30 metric tons of a different Schedule 3 chemical, you must report the export or import by either:</P> <P>(A) Submitting, along with your declaration, a Form 3-3 for each Schedule 3 chemical to be reported, completing only question 3-3.3. Attach Form A, as appropriate; Form B is optional; or</P> <P>(B) Submitting, separately from your declaration, a Certification Form, Form 3-1 and a Form 3.3 for each Schedule 3 chemical to be reported, completing only question 3-3.3. Attach Form A, as appropriate; Form B is optional.</P> <P>(2) If you are an undeclared plant site, a trading company, or any other person subject to the CWCR, you must submit a Certification Form, Form 3-1, and a Form 3-3 for each Schedule 3 chemical to be reported, completing only question 3-3.3. Attach Form A, as appropriate; Form B is optional.</P> <P>(c) <E T="03">Quantities to be reported</E>—(1) <E T="03">Calculations.</E> If you exported from or imported to your plant site or trading company more than 30 metric tons of a Schedule 3 chemical in the previous calendar year, you must report all exports and imports of that chemical by country of destination or country of origin, respectively, and indicate the total amount exported to or imported from each country.</P> <P>(2) <E T="03">Rounding.</E> For purposes of reporting exports and imports of a Schedule 3 chemical, you must total all exports and imports per calendar year per recipient or source and then round to the nearest 0.1 metric tons. </P> <NOTE> <HD SOURCE="HED">Note to § 714.2(<E T="01">c</E>):</HD> <P>Under the Convention, the United States is obligated to provide the OPCW a national aggregate annual declaration of the quantities of each Schedule 3 chemical exported and imported, with a quantitative breakdown for each country or destination involved. The U.S. Government will <E T="03">not</E> submit your company-specific information relating to the export or import of a Schedule 3 chemical reported under this § 714.2. The U.S. Government will add all export and import information submitted by various facilities under this section to produce a national aggregate annual declaration of destination-by-destination trade for each Schedule 3 chemical.</P> </NOTE> </SECTION> <SECTION> <SECTNO>§ 714.3</SECTNO> <SUBJECT>Advance declaration requirements for additionally planned production of Schedule 3 chemicals.</SUBJECT> <P>(a) <E T="03">Declaration requirements.</E> (1) You must declare additionally planned production of Schedule 3 chemicals after the annual declaration on anticipated activities for the next calendar year has been delivered to BIS if:</P> <P>(i) You plan that a previously undeclared plant on your plant site under § 714.1(a)(1)(ii) of the CWCR will produce a Schedule 3 chemical above the declaration threshold;</P> <P>(ii) You plan to produce at a plant declared under § 714.1(a)(1)(ii) of the CWCR an additional Schedule 3 chemical above the declaration threshold;</P> <P>(iii) You plan to increase the production of a Schedule 3 chemical by declared plants on your plant site from the amount exceeding the applicable declaration threshold to an amount exceeding the applicable inspection threshold (see § 716.1(b)(3) of the CWCR); or</P> <P>(iv) You plan to increase the aggregate production of a Schedule 3 chemical at a declared plant site to an amount above the upper limit of the range previously declared under § 714.1(a)(1)(ii) of the CWCR.</P> <P>(2) If you must submit a declaration on additionally planned activities because you plan to engage in any of the activities listed in paragraphs (a)(1)(i) through (iv) of this section, you also should declare any changes to the anticipated purposes of production or product group codes. You do not have to submit a declaration on additionally planned activities if you are only changing your purposes of production or product group codes.</P> <P>(b) <E T="03">Declaration forms to be used.</E> If you are required to declare additionally planned activities pursuant to paragraph (a) of this section, you must complete the Certification Form and Forms 3-1, 3-2, and 3-3 as appropriate. Such forms are due to BIS at least 15 days in advance of the beginning of the additional or new activity.</P> </SECTION> <SECTION> <SECTNO>§ 714.4</SECTNO> <SUBJECT>Amended declaration or report.</SUBJECT> <P>In order for BIS to maintain accurate information on previously submitted <PRTPAGE P="146"/>plant site declarations, including information necessary to facilitate inspection notifications and activities or to communicate declaration or reporting requirements, amended declarations or reports will be required under the following circumstances described in this section. This section applies only to annual declarations on past activities and annual reports on exports and imports submitted for the previous calendar year or annual declarations on anticipated activities covering the current calendar year, unless specified otherwise in a final inspection report.</P> <P>(a) <E T="03">Changes to information that directly affects a declared plant site's Annual Declaration of Past Activities (ADPA) or Combined Annual Declaration or Report which was previously submitted to BIS.</E> You must submit an amended declaration or report to BIS within 15 days of determining that there has been a change in any of the following information that you have previously declared or reported:</P> <P>(1) Types of Schedule 3 chemicals produced (e.g., production of additional Schedule 3 chemicals);</P> <P>(2) Production range (e.g., from 30 to 200 metric tons to above 200 to 1000 metric tons) of Schedule 3 chemicals;</P> <P>(3) Purpose of Schedule 3 chemical production (e.g., additional end-uses); or</P> <P>(4) Addition of new plant(s) for production of Schedule 3 chemicals.</P> <P>(b) <E T="03">Changes to export or import information submitted in Annual Reports on Exports and Imports from undeclared plant sites, trading companies and U.S. persons.</E> You must submit an amended report or amended combined declaration and report to BIS within 15 days of any change in the following export or import information:</P> <P>(1) Types of Schedule 3 chemicals exported or imported (additional Schedule 3 chemicals);</P> <P>(2) Quantities of Schedule 3 chemicals exported or imported;</P> <P>(3) Destination(s) of Schedule 3 chemicals exported; and</P> <P>(4) Source(s) of Schedule 3 chemicals imported.</P> <P>(c) <E T="03">Changes to company and plant site information submitted in the ADPA, the Annual Declaration of Anticipated Activities, and the Annual Report on Exports and Imports</E>—(1) <E T="03">Internal company changes.</E> You must submit an amended declaration or report to BIS within 30 days of any change in the following information:</P> <P>(i) Name of declaration/report point of contact (D-POC), including telephone number, facsimile number, and e-mail address;</P> <P>(ii) Name(s) of inspection point(s) of contact (I-POC), including telephone number, and facsimile number, and e-mail address(es);</P> <P>(iii) Company name (see 714.4(c)(2) for other company changes);</P> <P>(iv) Company mailing address;</P> <P>(v) Plant site name;</P> <P>(vi) Plant site owner, including telephone number and facsimile number;</P> <P>(vii) Plant site operator, including telephone number and facsimile number;</P> <P>(viii) Plant name;</P> <P>(xi) Plant owner, including telephone number and facsimile number; and</P> <P>(x) Plant operator, including telephone number and facsimile number.</P> <P>(2) <E T="03">Change in ownership of company, plant site, or plant.</E> If you sold or purchased a declared company, plant site or plant, you must submit an amended declaration or report to BIS, either before the effective date of the change or within 30 days after the effective date of the change. The amended declaration or report must include the following information.</P> <P>(i) Information that must be submitted to BIS by a company selling a declared plant site:</P> <P>(A) Name of seller (i.e., name of the company selling a declared plant site);</P> <P>(B) Name of declared plant site and U.S. Code Number for that plant site;</P> <P>(C) Name of purchaser (i.e., name of company purchasing a declared plant site) and identity of the new owner and contact person for the purchaser, if known;</P> <P>(D) Date of ownership transfer;</P> <P>(E) Additional (e.g., unique) details on the sale of the plant site relevant to ownership or operational control over any portion of the declared plant site (e.g., whether the entire plant site or only a portion of the declared plant site has been sold to a new owner); and</P> <P>(F) Details regarding whether the new owner will submit the declaration <PRTPAGE P="147"/>or report for the entire calendar year during which the ownership change occurred, or whether the previous owner and the new owner will submit separate declarations or reports for the periods of the calendar year during which each owned the plant site or trading company.</P> <P>(<E T="03">1</E>) If the new owner is responsible for submitting the declaration or report for the entire current year, it must have in its possession the records for the period of the year during which the previous owner owned the plant site or trading company.</P> <P>(<E T="03">2</E>) If the previous owner and new owner will submit separate declarations or reports for the periods of the calendar year during which each owned the plant site or trading company, and, at the time of transfer of ownership, the previous owner's activities are not above the declaration or reporting thresholds set forth in § 714.1(a)(1) and § 714.2(a)(1) of the CWCR, respectively, the previous owner and the new owner must still submit declarations to BIS with the below threshold quantities indicated.</P> <P>(<E T="03">3</E>) If the part-year declarations submitted by the previous owner and the new owner are not, when combined, above the declaration threshold set forth in § 714.1(a)(1) of the CWCR, BIS will return the declarations without action as set forth in § 714.5 of the CWCR.</P> <P>(<E T="03">4</E>) If part-year reports are not, when combined, above the reporting threshold set forth in § 714.2(a)(1) of the CWCR, BIS will return the reports without action as set forth in § 714.5 of the CWCR.</P> <P>(ii) Information that must be submitted to BIS by the company purchasing a declared plant site:</P> <P>(A) Name of purchaser (i.e., name of individual or company purchasing a declared plant site);</P> <P>(B) Mailing address of purchaser;</P> <P>(C) Name of declaration point of contact (D-POC) for the purchaser, including telephone number, facsimile number, and e-mail address;</P> <P>(D) Name(s) of inspection point(s)s of contact (I-POC) for the purchaser, including telephone number, facsimile number, and e-mail address(es);</P> <P>(E) Name of the declared plant site and U.S. Code Number for that plant site;</P> <P>(F) Location of the declared plant site;</P> <P>(G) Operator of the declared plant site, including telephone number, and facsimile number;</P> <P>(H) Name of plant where Schedule 3 production exceeds the declaration threshold;</P> <P>(I) Owner of plant where Schedule 3 production exceeds the declaration threshold;</P> <P>(J) Operator of plant where Schedule 3 production exceeds the declaration threshold; and</P> <P>(K) Details on the next declaration or report submission on whether the new owner will submit the declaration or report for the entire calendar year during which the ownership change occurred, or whether the previous owner and new owner will submit separate declarations or reports for the periods of the calendar year during which each owned the plant site or trading company. </P> <NOTE> <HD SOURCE="HED">Note 1 to § 714.4(<E T="01">c</E>):</HD> <P>You must submit an amendment to your most recently submitted declaration or report for declaring changes to internal company information (e.g., company name change) or changes in ownership of a facility or trading company that have occurred since the submission of this declaration or report. BIS will process the amendment to ensure current information is on file regarding the facility or trading company (e.g., for inspection notifications and correspondence) and will also forward the amended declaration to the OPCW to ensure that they also have current information on file regarding your facility or trading company.</P> </NOTE> <NOTE> <HD SOURCE="HED">Note 2 to § 714.4(<E T="01">c</E>):</HD> <P>You may notify BIS of change in ownership via a letter to the address given in § 711.6 of the CWCR. If you are submitting an amended declaration or report, use Form B to address details regarding the sale of the declared plant site or trading company.</P> </NOTE> <NOTE> <HD SOURCE="HED">Note 3 to § 714.4(<E T="01">c</E>):</HD> <P>For ownership changes, the declared plant site or trading company will maintain its original U.S. Code Number, unless the plant site or trading company is sold to multiple owners, at which time BIS will assign new U.S. Code Numbers.</P> </NOTE> <P>(d) <E T="03">Inspection-related amendments.</E> If, following the completion of an inspection (see parts 716 and 717 of the CWCR), you are required to submit an amended declaration based on the final <PRTPAGE P="148"/>inspection report, BIS will notify you in writing of the information to be amended pursuant to §§ 716.10 and 717.5(b) of the CWCR. Amended declarations must be submitted to BIS no later than 45 days following your receipt of BIS's post-inspection letter.</P> <P>(e) <E T="03">Non-substantive changes.</E> If, subsequent to the submission of your declaration or report to BIS, you discover one or more non-substantive typographical errors in your declaration or report, you are not required to submit an amended declaration or report to BIS. Instead, you may correct these errors in a subsequent declaration or report.</P> <P>(f) <E T="03">Documentation required for amended declarations or reports.</E> If you are required to submit an amended declaration or report to BIS pursuant to paragraph (a), (b), (c), or (d) of this section, you must submit either:</P> <P>(1) A letter containing all of the corrected information required, in accordance with the provisions of this section, to amend your declaration or report; or</P> <P>(2) Both of the following:</P> <P>(i) A new Certification Form; and</P> <P>(ii) The specific forms required for the declaration or report type being amended (e.g., annual declaration on past activities) containing the corrected information required, in accordance with the requirements of this section, to amend your declaration or report.</P> </SECTION> <SECTION> <SECTNO>§ 714.5</SECTNO> <SUBJECT>Declarations and reports returned without action by BIS.</SUBJECT> <P>If you submit a declaration or report and BIS determines that the information contained therein is not required by the CWCR, BIS will return the original declaration or report to you, without action, accompanied by a letter explaining BIS's decision. In order to protect your confidential business information, BIS will not maintain a copy of any declaration or report that is returned without action. However, BIS will maintain a copy of the RWA letter.</P> </SECTION> <SECTION> <SECTNO>§ 714.6</SECTNO> <SUBJECT>Deadlines for submission of Schedule 3 declarations, reports, and amendments.</SUBJECT> <P>Declarations, reports, and amendments required under this part must be postmarked by the appropriate date identified in Supplement No. 2 to this part 714 of the CWCR. Required declarations, reports, and amendments include:</P> <P>(a) Annual declaration on past activities (production of Schedule 3 chemicals during the previous calendar year);</P> <P>(b) Annual report on exports and imports of Schedule 3 chemicals from plant sites, trading companies, and other persons subject to the CWCR (during the previous calendar year);</P> <P>(c) Combined declaration and report (production of Schedule 3 chemicals, as well as exports or imports of the same or different Schedule 3 chemicals, by a declared plant site during the previous calendar year);</P> <P>(d) Annual declaration on anticipated activities (anticipated production of Schedule 3 chemicals during the next calendar year);</P> <P>(e) Declaration on Additionally Planned Activities (additionally planned production of Schedule 3 chemicals); and</P> <P>(f) Amended declaration and report, including combined declaration and report.</P> </SECTION> <APPENDIX> <EAR>Pt. 714, Supp. 1</EAR> <HD SOURCE="HED">Supplement No. 1 to Part 714—Schedule 3 Chemicals</HD> <GPOTABLE CDEF="s200,13" COLS="2" OPTS="L2"> <BOXHD> <CHED H="1"/> <CHED H="1">(CAS registry number)</CHED> </BOXHD> <ROW> <ENT I="22">A. Toxic chemicals:</ENT> </ROW> <ROW> <ENT I="03">(1) Phosgene: Carbonyl dichloride</ENT> <ENT>(75-44-5)</ENT> </ROW> <ROW> <ENT I="03">(2) Cyanogen chloride</ENT> <ENT>(506-77-4)</ENT> </ROW> <ROW> <ENT I="03">(3) Hydrogen cyanide</ENT> <ENT>(74-90-8)</ENT> </ROW> <ROW> <ENT I="03">(4) Chloropicrin: Trichloronitromethane</ENT> <ENT>(76-06-2)</ENT> </ROW> <ROW> <ENT I="22">B. Precursors:</ENT> </ROW> <ROW> <ENT I="03">(5) Phosphorus oxychloride</ENT> <ENT>(10025-87-3)</ENT> </ROW> <ROW> <ENT I="03">(6) Phosphorus trichloride</ENT> <ENT>(7719-12-2)</ENT> </ROW> <ROW> <ENT I="03">(7) Phosphorus pentachloride</ENT> <ENT>(10026-13-8)</ENT> </ROW> <ROW> <ENT I="03">(8) Trimethyl phosphite</ENT> <ENT>(121-45-9)</ENT> </ROW> <ROW> <PRTPAGE P="149"/> <ENT I="03">(9) Triethyl phosphite</ENT> <ENT>(122-52-1)</ENT> </ROW> <ROW> <ENT I="03">(10) Dimethyl phosphite</ENT> <ENT>(868-85-9)</ENT> </ROW> <ROW> <ENT I="03">(11) Diethyl phosphite</ENT> <ENT>(762-04-9)</ENT> </ROW> <ROW> <ENT I="03">(12) Sulfur monochloride</ENT> <ENT>(10025-67-9)</ENT> </ROW> <ROW> <ENT I="03">(13) Sulfur dichloride</ENT> <ENT>(10545-99-0)</ENT> </ROW> <ROW> <ENT I="03">(14) Thionyl chloride</ENT> <ENT>(7719-09-7)</ENT> </ROW> <ROW> <ENT I="03">(15) Ethyldiethanolamine</ENT> <ENT>(139-87-7)</ENT> </ROW> <ROW> <ENT I="03">(16) Methyldiethanolamine</ENT> <ENT>(105-59-9)</ENT> </ROW> <ROW> <ENT I="03">(17) Triethanolamine</ENT> <ENT>(102-71-6)</ENT> </ROW> <TNOTE> <E T="02">Note to Supplement No. 1:</E> Refer to Supplement No. 1 to part 774 of the Export Administration Regulations (the Commerce Control List), ECCNs 1C350 and 1C355, for export controls related to Schedule 3 chemicals.</TNOTE> </GPOTABLE> </APPENDIX> <APPENDIX> <EAR>Pt. 714, Supp. 2</EAR> <HD SOURCE="HED">Supplement No. 2 to Part 714—Deadlines for Submission of Schedule 3 Declarations, Reports, and Amendments</HD> <GPOTABLE CDEF="s75,r75,r75" COLS="3" OPTS="L2"> <BOXHD> <CHED H="1">Declarations</CHED> <CHED H="1">Applicable forms</CHED> <CHED H="1">Due dates</CHED> </BOXHD> <ROW> <ENT I="01">Annual Declaration on Past Activities (previous calendar year)—Declared plant site (production)</ENT> <ENT>Certification, 3-1, 3-2, 3-3 (if also exported or imported), A (as appropriate), B (optional)</ENT> <ENT>February 28 of the year following any calendar year in which the production of a Schedule 3 chemical exceeded the declaration threshold in § 714.1(a)(1)(i) of the CWCR.</ENT> </ROW> <ROW> <ENT I="01">Annual Report on Exports and Imports (previous calendar year)—Plant site, trading company, other persons</ENT> <ENT>Certification, 3-1, 3-3.3 and 3-3.4, A (as appropriate), B (optional)</ENT> <ENT>February 28 of the year following any calendar year in which exports or imports of a Schedule 3 chemical by a plant site, trading company, or other person subject to the CWCR (as described in § 714.2(a) of the CWCR) exceeded the threshold in § 714.2(a) of the CWCR.</ENT> </ROW> <ROW> <ENT I="01">Combined Declaration & Report</ENT> <ENT>Certification, 3-1, 3-2, and 3-3, A (as appropriate), B (optional)</ENT> <ENT>February 28 of the year following any calendar year in which the production of a Schedule 3 chemical and the export or import of the same or a different Schedule 3 chemical by a declared plant site exceeded the applicable thresholds in §§ 714.1(a)(1)(i) and 714.2(a), respectively, of the CWCR.</ENT> </ROW> <ROW> <ENT I="01">Annual Declaration on Anticipated Activities (Production) (next calendar year)</ENT> <ENT>Certification, 3-1, 3-2, 3-3.2, A (as appropriate), B (optional)</ENT> <ENT>September 3 of the year prior to any calendar year in which Schedule 3 production is anticipated to occur.</ENT> </ROW> <ROW> <ENT I="01">Declaration on Additionally Planned Activities</ENT> <ENT>Certification, 3-1, 3-3.1 and 3-3.2, A (as appropriate), B (optional)</ENT> <ENT>15 calendar days before the additionally planned activity begins.</ENT> </ROW> <ROW> <ENT I="01">Amended Declaration</ENT> <ENT>Certification, 3-1, 3-2, 3-3</ENT> </ROW> <ROW> <ENT I="03">—Declaration information</ENT> <ENT/> <ENT>—15 calendar days after change in information.</ENT> </ROW> <ROW> <ENT I="03">—Company information</ENT> <ENT/> <ENT>—30 calendar days after change in information.</ENT> </ROW> <ROW> <ENT I="03">—Post-inspection letter</ENT> <ENT/> <ENT>—45 calendar days after receipt of letter.</ENT> </ROW> <ROW> <ENT I="01">Amended Report</ENT> <ENT>Certification, 3-1, 3-2, 3-3, A (as appropriate), B (optional)</ENT> <ENT>—15 calendar days after change in information.</ENT> </ROW> <ROW> <ENT I="01">Amended Combined Declaration & Report</ENT> <ENT>Certification, 3-1, 3-2, 3-3, A (as appropriate), B (optional)</ENT> <ENT>—15 calendar days after change in information.</ENT> </ROW> </GPOTABLE> </APPENDIX> </PART> <PART> <EAR>Pt. 715</EAR> <HD SOURCE="HED">PART 715—ACTIVITIES INVOLVING UNSCHEDULED DISCRETE ORGANIC CHEMICALS (UDOCs)</HD> <CONTENTS> <SECHD>Sec.</SECHD> <SECTNO>715.1</SECTNO> <SUBJECT>Annual declaration requirements for production by synthesis of unscheduled discrete organic chemicals (UDOCs).</SUBJECT> <SECTNO>715.2</SECTNO> <SUBJECT>Amended declaration.</SUBJECT> <SECTNO>715.3</SECTNO> <SUBJECT>Declarations returned without action by BIS.</SUBJECT> <SECTNO>715.4</SECTNO> <SUBJECT>Deadlines for submitting UDOC declarations, no changes authorization forms, and amendments.</SUBJECT> <APP>Supplement No. 1 to Part 715—Definition of an Unscheduled Discrete Organic Chemical</APP> <APP>Supplement No. 2 to Part 715—Examples of Unscheduled Discrete Organic Chemicals (UDOCS) and UDOC Production</APP> <APP>Supplement No. 3 to Part 715—Deadlines for Submission of Declarations, No Changes Authorization Forms, and <PRTPAGE P="150"/>Amendments for Unscheduled Discrete Organic Chemical (UDOC) Facilities</APP> </CONTENTS> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>22 U.S.C. 6701 <E T="03">et seq.</E>; E.O. 13128, 64 FR 36703, 3 CFR 1999 Comp., p. 199.</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>71 FR 24929, Apr. 27, 2006, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>§ 715.1</SECTNO> <SUBJECT>Annual declaration requirements for production by synthesis of unscheduled discrete organic chemicals (UDOCs).</SUBJECT> <P>(a) <E T="03">Declaration of production by synthesis of UDOCs for purposes not prohibited by the CWC.</E>—(1) <E T="03">Production quantities that trigger the declaration requirement.</E> See § 711.6 of the CWCR for information on obtaining the forms you will need to declare production of unscheduled discrete organic chemicals. You must complete the forms specified in paragraph (b) of this section if your plant site produced by synthesis:</P> <P>(i) In excess of 200 metric tons aggregate of all UDOCs (including all UDOCs containing the elements phosphorus, sulfur or fluorine, referred to as “PSF chemicals”) during the previous calendar year; or</P> <P>(ii) In excess of 30 metric tons of an individual PSF chemical at one or more plants at your plant site during the previous calendar year. </P> <NOTE> <HD SOURCE="HED">Note to § 715.1(<E T="01">a)(1)(ii</E>):</HD> <P>In calculating the aggregate production quantity of each individual PSF chemical produced by a PSF plant, do not include production of a PSF chemical that was produced in quantities less than 30 metric tons. Include only production quantities from those PSF plants that produced more than 30 metric tons of an individual PSF chemical.</P> </NOTE> <P>(2) <E T="03">UDOCs subject to declaration requirements under this part.</E> (i) UDOCs subject to declaration requirements under this part are those produced by synthesis that have been isolated for:</P> <P>(A) Use; or</P> <P>(B) Sale as a specific end product.</P> <P>(ii) <E T="03">Exemptions.</E> (A) Polymers and oligomers consisting of two or more repeating units;</P> <P>(B) Chemicals and chemical mixtures produced through a biological or biomediated process;</P> <P>(C) Products from the refining of crude oil, including sulfur-containing crude oil;</P> <P>(D) Metal carbides (i.e., chemicals consisting only of metal and carbon); and</P> <P>(E) UDOCs produced by synthesis that are ingredients or by-products in foods designed for consumption by humans and/or animals. </P> <NOTE> <HD SOURCE="HED">Note to § 715.1(<E T="01">a</E>)(2):</HD> <P>See Supplement No. 2 to this part 715 for examples of UDOCs subject to the declaration requirements of this part, and for examples of activities that are not considered production by synthesis.</P> </NOTE> <P>(3) <E T="03">Exemptions for UDOC plant sites.</E> UDOC plant sites that exclusively produced hydrocarbons or explosives are exempt from UDOC declaration requirements. For the purposes of this part, the following definitions apply for hydrocarbons and explosives:</P> <P>(i) Hydrocarbon means any organic compound that contains only carbon and hydrogen; and</P> <P>(ii) Explosive means a chemical (or a mixture of chemicals) that is included in Class 1 of the United Nations Organization hazard classification system.</P> <P>(b) <E T="03">Types of declaration forms to be used</E>—(1) <E T="03">Annual declaration on past activities.</E> You must complete the <E T="03">Certification Form and Form UDOC</E> (consisting of two pages), unless there are no changes from the previous year's declaration and you submit a <E T="03">No Changes Authorization Form</E> pursuant to paragraph (b)(2) of this section. Attach Form A as appropriate; Form B is optional.</P> <P>(2) <E T="03">No Changes Authorization Form.</E> You may complete the <E T="03">No Changes Authorization Form</E> if there are no updates or changes to any information (except the certifying official and dates signed and submitted) in your plant site's previously submitted annual declaration on past activities. Your plant site's activities will be declared to the OPCW and subject to inspection, if applicable, based upon the data reported in the most recent UDOC Declaration that you submitted to BIS. </P> <NOTE> <HD SOURCE="HED">Note to § 715.1(<E T="01">b</E>)(2):</HD> <P>If, after submitting the <E T="03">No Changes Authorization Form,</E> you have changes to information, you must submit a complete amendment to the annual declaration on past activities. See § 715.2 of the CWCR.</P> </NOTE> <P>(c) <E T="03">“Declared” UDOC plant site.</E> A plant site that submitted a declaration pursuant to paragraph (a)(1) of this section is a “declared” UDOC plant site.</P> <P>(d) <E T="03">Routine inspections of declared UDOC plant sites.</E> A “declared” UDOC <PRTPAGE P="151"/>plant site is subject to routine inspection by the Organization for the Prohibition of Chemical Weapons (see part 716 of the CWCR) if it produced by synthesis more than 200 metric tons aggregate of UDOCs during the previous calendar year.</P> </SECTION> <SECTION> <SECTNO>§ 715.2</SECTNO> <SUBJECT>Amended declaration.</SUBJECT> <P>In order for BIS to maintain accurate information on previously submitted plant site declarations, including current information necessary to facilitate inspection notifications and activities or to communicate declaration requirements, amended declarations will be required under the following circumstances described in this section. This section applies only to annual declarations on past activities submitted for the previous calendar year, unless specified otherwise in a final inspection report.</P> <P>(a) <E T="03">Changes to information that directly affects a declared plant site's Annual Declaration of Past Activities (ADPA) which was previously submitted to BIS.</E> You must submit an amended declaration to BIS within 15 days of any change in the following information:</P> <P>(1) Product group codes for UDOCs produced in quantities exceeding the applicable declaration threshold specified in § 715.1(a)(1) of the CWCR;</P> <P>(2) Approximate number of plants at the declared plant site that produced any amount of UDOCs (including all PSF chemicals);</P> <P>(3) Aggregate amount of production (by production range) of UDOCs produced by all plants at the declared plant site;</P> <P>(4) Exact number of plants at the declared plant site that individually produced more than 30 metric tons of a single PSF chemical; and</P> <P>(5) Production range of each plant at the declared plant site that individually produced more than 30 metric tons of a single PSF chemical.</P> <P>(b) <E T="03">Changes to company and plant site information submitted in the ADPA that must be maintained by BIS.</E>—(1) <E T="03">Internal company changes.</E> You must submit an amended declaration to BIS within 30 days of any change in the following information:</P> <P>(i) Name of declaration point of contact (D-POC), including telephone number, facsimile number, and e-mail address;</P> <P>(ii) Name(s) of inspection point(s) of contact (I-POC), including telephone number, facsimile number(s) and e-mail address(es);</P> <P>(iii) Company name (see 715.2(b)(2) for other company changes);</P> <P>(iv) Company mailing address;</P> <P>(v) Plant site name;</P> <P>(vi) Plant site owner, including telephone number and facsimile number; and</P> <P>(vii) Plant site operator, including telephone number and facsimile number.</P> <P>(2) <E T="03">Change in ownership of company or plant site.</E> If you sold or purchased a declared plant site, you must submit an amended declaration to BIS, either before the effective date of the change or within 30 days after the effective date of the change. The amended declaration must include the following information.</P> <P>(i) Information that must be submitted to BIS by the company selling a declared plant site:</P> <P>(A) Name of seller (i.e., name of company selling a declared plant site);</P> <P>(B) Name of declared plant site name and U.S. Code Number for that plant site;</P> <P>(C) Name of purchaser (i.e., name of new company purchasing a declared plant site) and identity of contact person for the purchaser, if known;</P> <P>(D) Date of ownership transfer or change;</P> <P>(E) Additional details on the sale of the declared plant site relevant to ownership or operational control over any portion of the declared plant site (e.g., whether the entire plant site or only a portion of the declared plant site has been sold to a new owner); and</P> <P>(F) Details regarding whether the new owner will submit the declaration for the entire calendar year during which the ownership change occurred, or whether the previous owner and new owner will submit separate declarations for the periods of the calendar year during which each owned the plant site.</P> <P>(<E T="03">1</E>) If the new owner is responsible for submitting the declaration for the entire current year, it must have in its possession the records for the period of <PRTPAGE P="152"/>the year during which the previous owner owned the plant site.</P> <P>(<E T="03">2</E>) If the previous owner and new owner will submit separate declarations for the periods of the calendar year during which each owned the plant site, and, if at the time of transfer of ownership, the previous owner's activities are not above the declaration thresholds set forth in § 715.1(a)(1) of the CWCR, the previous owner and the new owner must still submit declarations to BIS with the below threshold quantities indicated.</P> <P>(<E T="03">3</E>) If the part-year declarations submitted by the previous owner and the new owner are not, when combined, above the declaration threshold set forth in § 715.1(a)(1) of the CWCR, BIS will return the declarations without action as set forth in § 715.3 of the CWCR.</P> <P>(ii) Information that must be submitted to BIS by the company purchasing a declared plant site:</P> <P>(A) Name of purchaser (i.e., name of individual or company purchasing a declared plant site);</P> <P>(B) Mailing address of purchaser;</P> <P>(C) Name of declaration point of contact (D-POC) for the purchaser, including telephone number, facsimile number, and e-mail address;</P> <P>(D) Name(s) of inspection point(s) of contact (I-POC) for the purchaser, including telephone number(s), facsimile number(s), and e-mail address(es);</P> <P>(E) Name of the declared plant site and U.S. Code Number for that plant site;</P> <P>(F) Location of the declared plant site;</P> <P>(G) Name of plant site where the production of UDOCs exceeds the applicable declaration threshold;</P> <P>(H) Owner of plant site where the production of UDOCs exceeds the applicable declaration threshold, including telephone number and facsimile number;</P> <P>(I) Operator of plant site where the production of UDOCs exceeds the applicable declaration threshold, including telephone number and facsimile number; and</P> <P>(J) Details on the next declaration or report submission on whether the new owner will submit the declaration or report for the entire calendar year during which the ownership change occurred, or whether the previous owner and new owner will submit separate declarations or report for the periods of the calendar year during which each owned the plant site. </P> <NOTE> <HD SOURCE="HED">Note 1 to § 715.2(<E T="01">b</E>):</HD> <P>You must submit an amendment to your most recently submitted declaration or report for declaring changes to internal company information (e.g., company name change) or changes in ownership of a facility or trading company that have occurred since the submission of this declaration or report. BIS will process the amendment to ensure current information is on file regarding the facility or trading company (e.g., for inspection notifications and correspondence) and will also forward the amended declaration to the OPCW to ensure that they also have current information on file regarding your facility or trading company.</P> </NOTE> <NOTE> <HD SOURCE="HED">Note 2 to § 715.2(<E T="01">b</E>):</HD> <P>You may notify BIS of change in ownership via a letter to the address given in § 711.6 of the CWCR. If you are submitting an amended declaration, use Form B to address details regarding the sale of the declared plant site.</P> </NOTE> <NOTE> <HD SOURCE="HED">Note 3 to § 715.2(<E T="01">b</E>):</HD> <P>For ownership changes, the declared plant site will maintain its original U.S. Code Number, unless the plant site is sold to multiple owners, at which time BIS will assign new U.S. Code Numbers.</P> </NOTE> <P>(c) <E T="03">Inspection-related amendments.</E> If, following completion of an inspection (see part 716 or 717 of the CWCR), you are required to submit an amended declaration based on the final inspection report, BIS will notify you in writing of the information that will be required pursuant to §§ 716.10 and 717.5 of the CWCR. You must submit an amended declaration to BIS no later than 45 days following your receipt of BIS's post-inspection letter.</P> <P>(d) <E T="03">Non-substantive changes.</E> If, subsequent to the submission of your declaration to BIS, you discover one or more non-substantive typographical errors in your declaration, you are not required to submit an amended declaration to BIS. Instead, you may correct these errors in a subsequent declaration.</P> <P>(e) <E T="03">Documentation required for amended declarations.</E> If you are required to submit an amended declaration to BIS pursuant to paragraph (a), (b), or (c) of this section, you must submit either:<PRTPAGE P="153"/> </P> <P>(1) A letter containing all of the corrected information required, in accordance with the provisions of this section, to amend your declaration; or</P> <P>(2) Both of the following:</P> <P>(i) A new Certification Form; and</P> <P>(ii) The specific form required for the declaration containing the corrected information required, in accordance with the requirements of this section, to amend your declaration.</P> </SECTION> <SECTION> <SECTNO>§ 715.3</SECTNO> <SUBJECT>Declarations returned without action by BIS.</SUBJECT> <P>If you submit a declaration and BIS determines that the information contained therein is not required by the CWCR, BIS will return the original declaration to you, without action, accompanied by a letter explaining BIS's decision. In order to protect your confidential business information, BIS will not maintain a copy of any declaration that is returned without action. However, BIS will maintain a copy of the RWA letter.</P> </SECTION> <SECTION> <SECTNO>§ 715.4</SECTNO> <SUBJECT>Deadlines for submitting UDOC declarations, no changes authorization forms, and amendments.</SUBJECT> <P>Declarations, no changes authorization forms, and amendments required under this part must be postmarked by the appropriate dates identified in Supplement No. 3 to this part 715 of the CWCR. Required documents under this part include:</P> <P>(a) <E T="03">Annual Declaration on Past Activities</E> (UDOC production during the previous calendar year);</P> <P>(b) <E T="03">No Changes Authorization Form</E> (may be completed and submitted to BIS when there are no changes to any information in your plant site's previously submitted annual declaration on past activities, except the certifying official and the dates signed and submitted); and</P> <P>(c) Amended declaration.</P> </SECTION> <APPENDIX> <EAR>Pt. 715, Supp. 1</EAR> <HD SOURCE="HED">Supplement No. 1 to Part 715—Definition of an Unscheduled Discrete Organic Chemical</HD> <P>Unscheduled discrete organic chemical means any chemical: (1) Belonging to the class of chemical compounds consisting of all compounds of carbon except for its oxides, sulfides and metal carbonates identifiable by chemical name, by structural formula, if known, and by Chemical Abstract Service registry number, if assigned; and (2) that is not contained in the Schedules of Chemicals (see Supplements No. 1 to parts 712 through 714 of the CWCR). Unscheduled discrete organic chemicals subject to declaration under this part are those produced by synthesis that are isolated for use or sale as a specific end-product.</P> <NOTE> <HD SOURCE="HED">Note:</HD> <P>Carbon oxides consist of chemical compounds that contain only the elements carbon and oxygen and have the chemical formula C<E T="52">X</E>O<E T="52">y</E>, where x and y denote integers. The two most common carbon oxides are carbon monoxide (CO) and carbon dioxide (CO<E T="52">2</E>). Carbon sulfides consist of chemical compounds that contain only the elements carbon and sulfur, and have the chemical formula C<E T="52">a</E>S<E T="52">b</E>, where a and b denote integers. The most common carbon sulfide is carbon disulfide (CS<E T="52">2</E>). Metal carbonates consist of chemical compounds that contain a metal (i.e., the Group I Alkalis, Groups II Alkaline Earths, the Transition Metals, or the elements aluminum, gallium, indium, thallium, tin, lead, bismuth or polonium), and the elements carbon and oxygen. Metal carbonates have the chemical formula M<E T="52">d</E>(CO<E T="52">3</E>)<E T="52">e</E>, where d and e denote integers and M represents a metal. Common metal carbonates are sodium carbonate (Na<E T="52">2</E>CO<E T="52">3</E>) and calcium carbonate (C<E T="52">a</E>CO<E T="52">3</E>). In addition, metal carbides or other compounds consisting of only a metal, as described in this Note, and carbon (e.g., calcium carbide (C<E T="52">a</E>C<E T="52">2</E>)), are exempt from declaration requirements (see § 715.1(a)(2)(ii)(D) of the CWCR).</P> </NOTE> </APPENDIX> <APPENDIX> <EAR>Pt. 715, Supp. 2</EAR> <HD SOURCE="HED">Supplement No. 2 to Part 715—Examples of Unscheduled Discrete Organic Chemicals (UDOCs) and UDOC Production</HD> <P>(1) Examples of UDOCs not subject to declaration include:</P> <P>(i) UDOCs produced coincidentally as by-products that are not isolated for use or sale as a specific end product, and are routed to, or escape from, the waste stream of a stack, incinerator, or waste treatment system or any other waste stream;</P> <P>(ii) UDOCs, contained in mixtures, which are produced coincidentally and not isolated for use or sale as a specific end-product;</P> <P>(iii) UDOCs produced by recycling (i.e., involving one of the processes listed in paragraph (3) of this supplement) of previously declared UDOCs;</P> <P>(iv) UDOCs produced by the mixing (i.e., the process of combining or blending into one mass) of previously declared UDOCs; and</P> <P>(v) UDOCs that are intermediates and that are used in a single or multi-step process to produce another declared UDOC.</P> <P>(2) Examples of UDOCs that you must declare under part 715 of the CWCR include, but are not limited to, the following, unless <PRTPAGE P="154"/>they are not isolated for use or sale as a specific end product:</P> <P>(i) Acetophenone (CAS #98-86-2);</P> <P>(ii) 6-Chloro-2-methyl aniline (CAS #87-63-8);</P> <P>(iii) 2-Amino-3-hydroxybenzoic acid (CAS #548-93-6); and</P> <P>(iv) Acetone (CAS #67-64-1).</P> <P>(3) Examples of activities that are not considered “production by synthesis” under part 715 of the CWCR, which means the end products resulting from such activities would not be declared under part 715, are as follows:</P> <P>(i) Fermentation;</P> <P>(ii) Extraction;</P> <P>(iii) Purification;</P> <P>(iv) Distillation; and</P> <P>(v) Filtration.</P> </APPENDIX> <APPENDIX> <EAR>Pt. 715, Supp. 3</EAR> <HD SOURCE="HED">Supplement No. 3 to Part 715—Deadlines for Submission of Declarations, No Changes Authorization Forms, and Amendments for Unscheduled Discrete Organic Chemical (UDOC) Facilities</HD> <GPOTABLE CDEF="s75,r75,r75" COLS="3" OPTS="L2"> <BOXHD> <CHED H="1">Declarations</CHED> <CHED H="1">Applicable forms</CHED> <CHED H="1">Due dates</CHED> </BOXHD> <ROW> <ENT I="01">Annual Declaration on Past Activities (previous calendar year)—Declared plant site</ENT> <ENT>Certification, UDOC, A (as appropriate), B (optional)</ENT> <ENT>February 28 of the year following any calendar year in which the production of UDOCs exceeded the applicable declaration threshold in § 715.1(a)(1) of the CWCR.</ENT> </ROW> <ROW> <ENT I="01">No Changes Authorization Form (declaration required, but no changes to data contained in previously submitted annual declaration on past activities (previous calendar year)—Declared plant site</ENT> <ENT>No Changes Authorization Form</ENT> <ENT>February 28 of the year following any calendar year in which the production of UDOCs exceeded the applicable declaration threshold in § 715.1(a)(1) of the CWCR.</ENT> </ROW> <ROW> <ENT I="01">Amended Declaration</ENT> <ENT>Certification, UDOC, A (as appropriate), B (optional)</ENT> <ENT/> </ROW> <ROW> <ENT I="03">—Declaration information</ENT> <ENT/> <ENT>—15 calendar days after change in information.</ENT> </ROW> <ROW> <ENT I="03">—Company information</ENT> <ENT/> <ENT>—30 calendar days after change in information.</ENT> </ROW> <ROW> <ENT I="03">—Post-inspection letter</ENT> <ENT/> <ENT>—45 calendar days after receipt of letter.</ENT> </ROW> </GPOTABLE> </APPENDIX> </PART> <PART> <EAR>Pt. 716</EAR> <HD SOURCE="HED">PART 716—INITIAL AND ROUTINE INSPECTIONS OF DECLARED FACILITIES</HD> <CONTENTS> <SECHD>Sec.</SECHD> <SECTNO>716.1</SECTNO> <SUBJECT>General information on the conduct of initial and routine inspections.</SUBJECT> <SECTNO>716.2</SECTNO> <SUBJECT>Purposes and types of inspections of declared facilities.</SUBJECT> <SECTNO>716.3</SECTNO> <SUBJECT>Consent to inspections; warrants for inspections.</SUBJECT> <SECTNO>716.4</SECTNO> <SUBJECT>Scope and conduct of inspections.</SUBJECT> <SECTNO>716.5</SECTNO> <SUBJECT>Notification, duration and frequency of inspections.</SUBJECT> <SECTNO>716.6</SECTNO> <SUBJECT>Facility agreements.</SUBJECT> <SECTNO>716.7</SECTNO> <SUBJECT>Samples.</SUBJECT> <SECTNO>716.8</SECTNO> <SUBJECT>On-site monitoring of Schedule 1 facilities.</SUBJECT> <SECTNO>716.9</SECTNO> <SUBJECT>Report of inspection-related costs.</SUBJECT> <SECTNO>716.10</SECTNO> <SUBJECT>Post-inspection activities.</SUBJECT> <APP>Supplement No. 1 to Part 716—Notification, Duration, and Frequency of Inspections</APP> <APP>Supplement Nos. 2-3 to Part 716 [Reserved]</APP> </CONTENTS> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>22 U.S.C. 6701 et seq.; E.O. 13128, 64 FR 36703, 3 CFR 1999 Comp., p. 199.</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>71 FR 24929, Apr. 27, 2006, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>§ 716.1</SECTNO> <SUBJECT>General information on the conduct of initial and routine inspections.</SUBJECT> <P>This part provides general information about the conduct of initial and routine inspections of declared facilities subject to inspection under CWC Verification Annex Part VI(E), Part VII(B), Part VIII(B) and Part IX(B). See part 717 of the CWCR for provisions concerning challenge inspections.</P> <P>(a) <E T="03">Overview.</E> Each State Party to the CWC, including the United States, has agreed to allow certain inspections of declared facilities by inspection teams employed by the Organization for the Prohibition of Chemical Weapons (OPCW) to ensure that activities are consistent with obligations under the Convention. BIS is responsible for leading, hosting and escorting inspections of all facilities subject to the provisions of the CWCR (see § 710.2 of the CWCR).<PRTPAGE P="155"/> </P> <P>(b) <E T="03">Declared facilities subject to initial and routine inspections</E>—(1) <E T="03">Schedule 1 facilities.</E> (i) Your declared facility is subject to inspection if it produced in excess of 100 grams aggregate of Schedule 1 chemicals in the previous calendar year or anticipates producing in excess of 100 grams aggregate of Schedule 1 chemicals during the next calendar year.</P> <P>(ii) If you are a new Schedule 1 production facility pursuant to § 712.4 of the CWCR, your facility is subject to an initial inspection within 200 days of submitting an initial declaration. </P> <NOTE> <HD SOURCE="HED">Note to § 716.1(<E T="01">b</E>)(1):</HD> <P>All Schedule 1 facilities submitting a declaration are subject to inspection.</P> </NOTE> <P>(2) <E T="03">Schedule 2 plant sites</E>—(i) <E T="03">Inspection thresholds for Schedule 2 plant sites.</E> Your declared plant site is subject to inspection if at least one plant on your plant site produced, processed or consumed, in any of the three previous calendar years, or you anticipate that at least one plant on your plant site will produce, process or consume in the next calendar year, any Schedule 2 chemical in excess of the following:</P> <P>(A) 10 kg of chemical BZ: 3-Quinuclidinyl benzilate (see Schedule 2, Part A, paragraph 3 in Supplement No. 1 to part 713 of the CWCR);</P> <P>(B) 1 metric ton of chemical PFIB: 1,1,3,3,3-Pentafluoro-2(trifluoromethyl)-1-propene or any chemical belonging to the Amiton family (see Schedule 2, Part A, paragraphs 1 and 2 in Supplement No. 1 to part 713 of the CWCR); or</P> <P>(C) 10 metric tons of any chemical listed in Schedule 2, Part B (see Supplement No. 1 to part 713 of the CWCR).</P> <P>(ii) <E T="03">Initial inspection for new Schedule 2 plant sites.</E> Your declared plant site is subject to an initial inspection within the first year after submitting a declaration, if at least one plant on your plant site produced, processed or consumed in any of the three previous years, or you anticipate that at least one plant on your plant site will produce, process or consume in the next calendar year, any Schedule 2 chemical in excess of the threshold quantities set forth in paragraphs (b)(2)(i)(A) through (C) of this section. </P> <NOTE> <HD SOURCE="HED">Note to § 716.1(<E T="01">b</E>)(2):</HD> <P>The applicable inspection threshold for Schedule 2 plant sites is ten times higher than the applicable declaration threshold. Only declared plant sites, comprising at least one declared plant that exceeds the applicable inspection threshold, are subject to inspection.</P> </NOTE> <P>(3) <E T="03">Schedule 3 plant sites.</E> Your declared plant site is subject to inspection if the declared plants on your plant site produced during the previous calendar year, or you anticipate they will produce in the next calendar year, in excess of 200 metric tons aggregate of any Schedule 3 chemical. </P> <NOTE> <HD SOURCE="HED">Note to § 716.1(<E T="01">b</E>)(3):</HD> <P>The methodology for determining a declarable and inspectable plant site is different. A Schedule 3 plant site that submits a declaration is subject to inspection only if the aggregate production of a Schedule 3 chemical at all declared plants on the plant site exceeds 200 metric tons.</P> </NOTE> <P>(4) <E T="03">Unscheduled discrete organic chemical plant sites.</E> Your declared plant site is subject to inspection if it produced by synthesis more than 200 metric tons aggregate of unscheduled discrete organic chemicals (UDOC) during the previous calendar year. </P> <NOTE> <HD SOURCE="HED">Note 1 to § 716.1(<E T="01">b</E>)(4):</HD> <P>You must include amounts of unscheduled discrete organic chemicals containing phosphorus, sulfur or fluorine in the calculation of your plant site's aggregate production of unscheduled discrete organic chemicals.</P> </NOTE> <NOTE> <HD SOURCE="HED">Note 2 to § 716.1(<E T="01">b</E>)(4):</HD> <P>All UDOC plant sites that submit a declaration based on § 715.1(a)(1)(i) of the CWCR are subject to a routine inspection.</P> </NOTE> <P>(c) <E T="03">Responsibilities of the Department of Commerce.</E> As the host and escort for the international Inspection Team for all inspections of facilities subject to the provisions of the CWCR under this part, BIS will:</P> <P>(1) Lead on-site inspections;</P> <P>(2) Provide Host Team notification to the facility of an impending inspection;</P> <P>(3) Take appropriate action to obtain an administrative warrant in the event the facility does not consent to the inspection;</P> <P>(4) Dispatch an advance team to the vicinity of the site to provide administrative and logistical support for the impending inspection and, upon request, to assist the facility with inspection preparation;</P> <P>(5) Escort the Inspection Team on-site throughout the inspection process;<PRTPAGE P="156"/> </P> <P>(6) Assist the Inspection Team with verification activities;</P> <P>(7) Negotiate the development of a site-specific facility agreement, if appropriate (see § 716.6); and</P> <P>(8) Ensure that an inspection adheres to the Convention, the Act and any warrant issued thereunder, and a site-specific facility agreement, if concluded.</P> </SECTION> <SECTION> <SECTNO>§ 716.2</SECTNO> <SUBJECT>Purposes and types of inspections of declared facilities.</SUBJECT> <P>(a) <E T="03">Schedule 1 facilities</E>—(1) <E T="03">Purposes of inspections.</E> The aim of inspections of Schedule 1 facilities is to verify that:</P> <P>(i) The facility is not used to produce any Schedule 1 chemical, except for the declared Schedule 1 chemicals;</P> <P>(ii) The quantities of Schedule 1 chemicals produced, processed or consumed are correctly declared and consistent with needs for the declared purpose; and</P> <P>(iii) The Schedule 1 chemical is not diverted or used for purposes other than those declared.</P> <P>(2) <E T="03">Types of inspections</E>—(i) <E T="03">Initial inspections.</E> (A) During initial inspections of declared Schedule 1 facilities, in addition to the verification activities listed in paragraph (a)(1) of this section, the Host Team and the Inspection Team will draft site-specific facility agreements (see § 716.6 of the CWCR) for the conduct of routine inspections.</P> <P>(B) For new Schedule 1 production facilities declared pursuant to § 712.4 of the CWCR, the U.S. National Authority, in coordination with BIS, will conclude a facility agreement with the OPCW before the facility begins producing above 100 grams aggregate of Schedule 1 chemicals.</P> <P>(ii) <E T="03">Routine inspections.</E> During routine inspections of declared Schedule 1 facilities, the verification activities listed in paragraph (a)(1) of this section will be carried out pursuant to site-specific facility agreements (see § 716.6 of the CWCR) developed during the initial inspections and concluded between the U.S. Government and the OPCW pursuant to the Convention.</P> <P>(b) <E T="03">Schedule 2 plant sites</E>—(1) <E T="03">Purposes of inspections.</E> (i) The general aim of inspections of declared Schedule 2 plant sites is to verify that activities are in accordance with obligations under the Convention and consistent with the information provided in declarations. Particular aims of inspections of declared Schedule 2 plant sites are to verify:</P> <P>(A) The absence of any Schedule 1 chemical, especially its production, except in accordance with the provisions of the Convention;</P> <P>(B) Consistency with declarations of production, processing or consumption of Schedule 2 chemicals; and</P> <P>(C) Non-diversion of Schedule 2 chemicals for activities prohibited under the Convention.</P> <P>(ii) During initial inspections, Inspection Teams shall collect information to determine the frequency and intensity of subsequent inspections by assessing the risk to the object and purpose of the Convention posed by the relevant chemicals, the characteristics of the plant site and the nature of the activities carried out there. The Inspection Team will take the following criteria into account, inter alia:</P> <P>(A) The toxicity of the scheduled chemicals and of the end-products produced with them, if any;</P> <P>(B) The quantity of the scheduled chemicals typically stored at the inspected site;</P> <P>(C) The quantity of feedstock chemicals for the scheduled chemicals typically stored at the inspected site;</P> <P>(D) The production capacity of the Schedule 2 plants; and</P> <P>(E) The capability and convertibility for initiating production, storage and filling of toxic chemicals at the inspected site.</P> <P>(2) <E T="03">Types of inspections</E>—(i) <E T="03">Initial inspections.</E> During initial inspections of declared Schedule 2 plant sites, in addition to the verification activities listed in paragraph (b)(1) of this section, the Host Team and the Inspection Team will generally draft site-specific facility agreements for the conduct of routine inspections (see § 716.6 of the CWCR).</P> <P>(ii) <E T="03">Routine inspections.</E> During routine inspections of declared Schedule 2 plant sites, the verification activities listed in paragraph (b)(1) of this section will be carried out pursuant to any appropriate site-specific facility agreements developed during the initial inspections (see § 716.6 of the CWCR), and <PRTPAGE P="157"/>concluded between the U.S. Government and the OPCW pursuant to the Convention and the Act.</P> <P>(c) <E T="03">Schedule 3 plant sites</E>—(1) <E T="03">Purposes of inspections.</E> The general aim of inspections of declared Schedule 3 plant sites is to verify that activities are consistent with the information provided in declarations. The particular aim of inspections is to verify the absence of any Schedule 1 chemical, especially its production, except in accordance with the Convention.</P> <P>(2) <E T="03">Routine inspections.</E> During routine inspections of declared Schedule 3 plant sites, in addition to the verification activities listed in paragraph (c)(1) of this section, the Host Team and the Inspection Team may draft site-specific facility agreements for the conduct of subsequent routine inspections (see § 716.6 of the CWCR). Although the Convention does not require facility agreements for declared Schedule 3 plant sites, the owner, operator, occupant or agent in charge of a plant site may request one. The Host Team will not seek a facility agreement if the owner, operator, occupant or agent in charge of the plant site does not request one. Subsequent routine inspections will be carried out pursuant to site-specific facility agreements, if applicable.</P> <P>(d) <E T="03">Unscheduled discrete organic chemical plant sites</E>—(1) <E T="03">Purposes of inspections.</E> The general aim of inspections of declared UDOC plant sites is to verify that activities are consistent with the information provided in declarations. The particular aim of inspections is to verify the absence of any Schedule 1 chemical, especially its production, except in accordance with the Convention.</P> <P>(2) <E T="03">Routine inspections.</E> During routine inspections of declared UDOC plant sites, in addition to the verification activities listed in paragraph (d)(1) of this section, the Host Team and the Inspection Team may develop draft site-specific facility agreements for the conduct of subsequent routine inspections (see § 716.6 of the CWCR). Although the Convention does not require facility agreements for declared UDOC plant sites, the owner, operator, occupant or agent in charge of a plant site may request one. The Host Team will not seek a facility agreement if the owner, operator, occupant or agent in charge of the plant site does not request one. Subsequent routine inspections will be carried out pursuant to site-specific facility agreements, if applicable.</P> </SECTION> <SECTION> <SECTNO>§ 716.3</SECTNO> <SUBJECT>Consent to inspections; warrants for inspections.</SUBJECT> <P>(a) The owner, operator, occupant or agent in charge of a facility may consent to an initial or routine inspection. The individual giving consent on behalf of the facility represents that he or she has the authority to make this decision for the facility.</P> <P>(b) In instances where consent is not provided by the owner, operator, occupant or agent in charge for an initial or routine inspection, BIS will seek administrative warrants as provided by the Act.</P> </SECTION> <SECTION> <SECTNO>§ 716.4</SECTNO> <SUBJECT>Scope and conduct of inspections.</SUBJECT> <P>(a) <E T="03">General.</E> Each inspection shall be limited to the purposes described in § 716.2 of the CWCR and shall be conducted in the least intrusive manner, consistent with the effective and timely accomplishment of its purpose as provided in the Convention.</P> <P>(b) <E T="03">Scope</E>—(1) <E T="03">Description of inspections.</E> During inspections, the Inspection Team:</P> <P>(i) Will receive a pre-inspection briefing from facility representatives;</P> <P>(ii) Will visually inspect the facilities or plants producing scheduled chemicals or UDOCs, which may include storage areas, feed lines, reaction vessels and ancillary equipment, control equipment, associated laboratories, first aid or medical sections, and waste and effluent handling areas, as necessary to accomplish their inspection;</P> <P>(iii) May visually inspect other parts or areas of the plant site to clarify an ambiguity that has arisen during the inspection;</P> <P>(iv) May take photographs or conduct formal interviews of facility personnel;</P> <P>(v) May examine relevant records; and</P> <P>(vi) May take samples as provided by the Convention, the Act and consistent with the requirements set forth by the Director of the United States National <PRTPAGE P="158"/>Authority, at 22 CFR part 103, and the facility agreement, if applicable.</P> <P>(2) <E T="03">Scope of consent.</E> When an owner, operator, occupant, or agent in charge of a facility consents to an initial or routine inspection, he or she is consenting to provide access to the Inspection Team and Host Team to any area of the facility, any item located on the facility, interviews with facility personnel, and any records necessary for the Inspection Team to complete its mission pursuant to paragraph (a) of this section, except for information subject to export control under ITAR (22 CFR parts 120 through 130) (see paragraph (b)(3) of this section). When consent is granted for an inspection, the owner, operator, occupant, or agent in charge agrees to provide the same degree of access provided for under section 305 of the Act. The determination of whether the Inspection Team's request to inspect any area, building, item or record is reasonable is the responsibility of the Host Team Leader.</P> <P>(3) <E T="03">ITAR-controlled technology.</E> ITAR-controlled technology shall not be divulged to the Inspection Team without U.S. Government authorization (such technology includes, but is not limited to technical data related to Schedule 1 chemicals or Schedule 2 chemicals identified in Note 2 to Supplement No. 1 to Part 712 or Note 1 to Supplement No. 1 to Part 713, respectively, of the CWCR; also see 22 CFR Section 121.1, i.e., the United States Munitions List). Facilities being inspected are responsible for the identification of ITAR-controlled technology to the BIS Host Team, if known.</P> <P>(c) <E T="03">Pre-inspection briefing.</E> Upon arrival of the Inspection Team and Host Team at the inspection site and before commencement of the inspection, facility representatives will provide the Inspection Team and Host Team with a pre-inspection briefing on the facility, the activities carried out there, safety measures, and administrative and logistical arrangements necessary for the inspection, which may be aided with the use of maps and other documentation as deemed appropriate by the facility. The time spent for the briefing will be limited to the minimum necessary and may not exceed three hours.</P> <P>(1) The pre-inspection briefing will address:</P> <P>(i) Facility health and safety issues and requirements, and associated alarm systems;</P> <P>(ii) Declared facility activities, business and manufacturing operations;</P> <P>(iii) Physical layout;</P> <P>(iv) Delimitation of declared facility;</P> <P>(v) Scheduled chemicals on the facility (declared and undeclared);</P> <P>(vi) Block flow diagram or simplified process flow diagram;</P> <P>(vii) Plants and units specific to declared operations;</P> <P>(viii) Administrative and logistic information; and</P> <P>(ix) Data declaration updates/revisions.</P> <P>(2) The pre-inspection briefing may also address, inter alia:</P> <P>(i) Introduction of key facility personnel;</P> <P>(ii) Management, organization and history;</P> <P>(iii) Confidential business information concerns;</P> <P>(iv) Types and location of records/documents;</P> <P>(v) Draft facility agreement, if applicable; and</P> <P>(vi) Proposed inspection plan.</P> <P>(d) <E T="03">Visual plant inspection.</E> The Inspection Team may visually inspect the declared plant or facility and other areas or parts of the plant site as agreed by the Host Team Leader after consulting with the facility representative.</P> <P>(e) <E T="03">Records review.</E> The facility must provide the Inspection Team with access to all supporting materials and documentation used by the facility to prepare declarations and to comply with the CWCR (see §§ 721.1 and 721.2 of the CWCR) and with appropriate accommodations in which the Inspection Team can review these supporting materials and documentation. Such access will be provided in appropriate formats (e.g., paper copies, electronic remote access by computer, microfilm, or microfiche) through the U.S. Government Host Team to Inspection Teams during the inspection period or as otherwise agreed upon by the Inspection Team and Host Team Leader. If a facility does not have access to records for activities that took place under previous ownership, because such records <PRTPAGE P="159"/>were not transferred to the current owner of the facility by the previous owner (e.g., as part of the contract involving the sale of the facility), the previous owner must make such records available to the Host Team for provision to the Inspection Team in accordance with section 305 of the Act. However, the current owner of a facility, upon receiving notification of an inspection (see § 716.5 of the CWCR), is responsible for informing BIS if the previous owner did not transfer records for activities that took place under the previous ownership—this will allow BIS to contact the previous owner of the facility, to arrange for access to such records, if BIS deems them relevant to the inspection activities.</P> <P>(f) <E T="03">Effect of facility agreements.</E> Routine inspections at facilities for which the United States has concluded a facility agreement with the OPCW will be conducted in accordance with the facility agreement. The existence of a facility agreement does not in any way limit the right of the owner, operator, occupant, or agent in charge of the facility to withhold consent to an inspection request.</P> <P>(g) <E T="03">Hours of inspections.</E> Consistent with the provisions of the Convention, the Host Team will ensure, to the extent possible, that each inspection is commenced, conducted, and concluded during ordinary working hours, but no inspection shall be prohibited or otherwise disrupted from commencing, continuing or concluding during other hours.</P> <P>(h) <E T="03">Health and safety regulations and requirements.</E> In carrying out their activities, the Inspection Team and Host Team shall observe federal, state, and local health and safety regulations and health and safety requirements established at the inspection site, including those for the protection of controlled environments within a facility and for personal safety. Such health and safety regulations and requirements will be set forth in, but will not necessarily be limited to, the facility agreement, if applicable.</P> <P>(i) <E T="03">Preliminary findings.</E> Upon completion of an inspection, the Inspection Team will meet with the Host Team and facility personnel to review the written preliminary findings of the Inspection Team and to clarify ambiguities. The Host Team will discuss the preliminary findings with the facility, and the Host Team Leader will take into consideration the facility's input when providing official comments on the preliminary findings to the Inspection Team. This meeting will be completed not later than 24 hours after the completion of the inspection.</P> </SECTION> <SECTION> <SECTNO>§ 716.5</SECTNO> <SUBJECT>Notification, duration and frequency of inspections.</SUBJECT> <P>(a) <E T="03">Inspection notification</E>—(1)(i) <E T="03">Content of notice.</E> Inspections of facilities may be made only upon issuance of written notice by the United States National Authority (USNA) to the owner and to the operator, occupant or agent in charge of the premises to be inspected. BIS will also provide a separate inspection notification to the inspection point of contact identified in declarations submitted by the facility. If the United States is unable to provide actual written notice to the owner and to the operator, occupant or agent in charge, BIS (or the Federal Bureau of Investigation, if BIS is unable) may post notice prominently at the facility to be inspected. The notice shall include all appropriate information provided by the OPCW to the USNA concerning:</P> <P>(A) The type of inspection;</P> <P>(B) The basis for the selection of the facility or location for the type of inspection sought;</P> <P>(C) The time and date that the inspection will begin and the period covered by the inspection; and</P> <P>(D) The names and titles of the Inspection Team members.</P> <P>(ii) <E T="03">Consent to inspection.</E> In addition to appropriate information provided by the OPCW in its notification to the USNA, BIS's inspection notification will request that the facility indicate whether it will consent to an inspection, and will state whether an advance team is available to assist the site in preparation for the inspection. If an advance team is available, facilities that request advance team assistance are not required to reimburse the U.S. Government for costs associated with these activities. If a facility does not agree to provide consent to an inspection within four hours of receipt of the <PRTPAGE P="160"/>inspection notification, BIS will seek an administrative warrant. The current owner of a facility, upon receiving notification of an inspection, is also responsible for informing BIS if the previous owner did not transfer (to the current owner) records for activities that took place under the previous ownership (see § 716.4(e) of the CWCR)—this will allow BIS to contact the previous owner of the facility, to arrange for access to such records, if BIS deems them relevant to the inspection activities.</P> <P>(iii) The following table sets forth the notification procedures for inspection:</P> <GPOTABLE CDEF="s75,r75,r75" COLS="3" OPTS="L2"> <TTITLE>Table to § 716.5(<E T="01">a</E>)(1)</TTITLE> <BOXHD> <CHED H="1">Activity</CHED> <CHED H="1">Agency action</CHED> <CHED H="1">Facility action</CHED> </BOXHD> <ROW> <ENT I="01">(A) OPCW notification inspection</ENT> <ENT>(<E T="03">1</E>) U.S. National Authority transmits actual written notice and inspection authorization to the owner and operator, occupant, or agent in charge via facsimile within 6 hours</ENT> <ENT>Acknowledges receipt of facsimile.</ENT> </ROW> <ROW> <ENT I="22"/> <ENT>(<E T="03">2</E>) Upon notification from the U.S. National Authority, BIS immediately transmits inspection notification via facsimile to the inspection point of contract to ascertain whether the facility (<E T="03">i</E>) grants consent and (<E T="03">ii</E>) requests assistance in preparing for the inspection. In absence of consent within four hours of facility receipt, BIS intends to seek an administrative warrant</ENT> <ENT>(<E T="03">A</E>) Indicated whether it grants consent.<LI>(<E T="03">B</E>) May request advance team support. No requirement for reimbursement of U.S. Government's services.</LI> </ENT> </ROW> <ROW> <ENT I="01">(B) Preparation for inspection</ENT> <ENT>(<E T="03">1</E>) BIS advance team generally arrives in the vicinity of the facility to be inspected 1-2 days after OPCW notification for logistical and administrative preparations</ENT> <ENT>If advance team support is provided, facility works with the advance team on inspection-related issues.</ENT> </ROW> <ROW> <ENT I="22"/> <ENT>(<E T="03">2</E>) If records for activities that took place under the previous ownership of the facility are deemed relevant to the inspection, BIS will contact the previous owner of the facility to arrange for access to any such records required under the CWCR that have not been transferred to the current owner</ENT> <ENT>The current owner of the facility must inform BIS if the previous owner of the facility did not transfer (to the current owner) records for activities that took place under the previous ownership.</ENT> </ROW> </GPOTABLE> <P>(2) <E T="03">Timing of notice.</E>—(i) <E T="03">Schedule 1 facilities.</E> For declared Schedule 1 facilities, the Technical Secretariat will notify the USNA of an initial inspection not less than 72 hours prior to arrival of the Inspection Team in the United States, and will notify the USNA of a routine inspection not less than 24 hours prior to arrival of the Inspection Team in the United States. The USNA will provide written notice to the owner and to the operator, occupant or agent in charge of the premises within six hours of receiving notification from the OPCW Technical Secretariat or as soon as possible thereafter. BIS will provide Host Team notice to the inspection point of contact of the facility as soon as possible after the OPCW notifies the USNA of the inspection.</P> <P>(ii) <E T="03">Schedule 2 plant sites.</E> For declared Schedule 2 plant sites, the Technical Secretariat will notify the USNA of an initial or routine inspection not less than 48 hours prior to arrival of the Inspection Team at the plant site to be inspected. The USNA will provide written notice to the owner and to the operator, occupant or agent in charge of the premises within six hours of receiving notification from the OPCW Technical Secretariat or as soon as possible thereafter. BIS will provide Host Team notice to the inspection point of contact at the plant site as soon as possible after the OPCW notifies the USNA of the inspection.</P> <P>(iii) <E T="03">Schedule 3 and UDOC plant sites.</E> For declared Schedule 3 and UDOC plant sites, the Technical Secretariat will notify the USNA of a routine inspection not less than 120 hours prior to arrival of the Inspection Team at the plant site to be inspected. The <PRTPAGE P="161"/>USNA will provide written notice to the owner and to the operator, occupant or agent in charge of the premises within six hours of receiving notification from the OPCW Technical Secretariat or as soon as possible thereafter. BIS will provide Host Team notice to the inspection point of contact of the plant site as soon as possible after the OPCW notifies the USNA of the inspection.</P> <P>(b) <E T="03">Period of inspections</E>—(1) <E T="03">Schedule 1 facilities.</E> For a declared Schedule 1 facility, the Convention does not specify a maximum duration for an initial inspection. The estimated period of routine inspections will be as stated in the facility agreement, unless extended by agreement between the Inspection Team and the Host Team Leader, and will be based on the risk to the object and purpose of the Convention posed by the quantities of chemicals produced, the characteristics of the facility and the nature of the activities carried out there. The Host Team Leader will consult with the inspected facility on any request for extension of an inspection prior to making an agreement with the Inspection Team. Activities involving the pre-inspection briefing and preliminary findings are in addition to inspection activities. See § 716.4(c) and (i) of the CWCR for a description of these activities.</P> <P>(2) <E T="03">Schedule 2 plant sites.</E> For declared Schedule 2 plant sites, the maximum duration of initial and routine inspections shall be 96 hours, unless extended by agreement between the Inspection Team and the Host Team Leader. The Host Team Leader will consult with the inspected plant site on any request for extension of an inspection prior to making an agreement with the Inspection Team. Activities involving the pre-inspection briefing and preliminary findings are in addition to inspection activities. See § 716.4(c) and (i) of the CWCR for a description of these activities.</P> <P>(3) <E T="03">Schedule 3 and UDOC plant sites.</E> For declared Schedule 3 or UDOC plant sites, the maximum duration of routine inspections shall be 24 hours, unless extended by agreement between the Inspection Team and the Host Team Leader. The Host Team Leader will consult with the inspected plant site on any request for extension of an inspection prior to making an agreement with the Inspection Team. Activities involving the pre-inspection briefing and preliminary findings are in addition to inspection activities. See § 716.4(c) and (i) of the CWCR for a description of these activities.</P> <P>(c) <E T="03">Frequency of inspections.</E> The frequency of inspections is as follows:</P> <P>(1) <E T="03">Schedule 1 facilities.</E> As provided by the Convention, the frequency of inspections at declared Schedule 1 facilities is determined by the OPCW based on the risk to the object and purpose of the Convention posed by the quantities of chemicals produced, the characteristics of the facility and the nature of the activities carried out at the facility. The frequency of inspections will be stated in the facility agreement.</P> <P>(2) <E T="03">Schedule 2 plant sites.</E> As provided by the Convention and the Act, the maximum number of inspections at declared Schedule 2 plant sites is two per calendar year per plant site. The OPCW will determine the frequency of routine inspections for each declared Schedule 2 plant site based on the Inspection Team's assessment of the risk to the object and purpose of the Convention posed by the relevant chemicals, the characteristics of the plant site, and the nature of the activities carried out there. The frequency of inspections will be stated in the facility agreement, if applicable.</P> <P>(3) <E T="03">Schedule 3 plant sites.</E> As provided by the Convention, no declared Schedule 3 plant site may receive more than two inspections per calendar year and the combined number of inspections of Schedule 3 and UDOC plant sites in the United States may not exceed 20 per calendar year.</P> <P>(4) <E T="03">UDOC plant sites.</E> As provided by the Convention, no declared UDOC plant site may receive more than two inspections per calendar year and the combined number of inspections of Schedule 3 and UDOC plant sites in the United States may not exceed 20 per calendar year.</P> </SECTION> <SECTION> <SECTNO>§ 716.6</SECTNO> <SUBJECT>Facility agreements.</SUBJECT> <P>(a) <E T="03">Description and requirements.</E> A facility agreement is a site-specific agreement between the U.S. Government and the OPCW. Its purpose is to <PRTPAGE P="162"/>define procedures for inspections of a specific declared facility that is subject to inspection because of the type or amount of chemicals it produces, processes or consumes.</P> <P>(1) <E T="03">Schedule 1 facilities.</E> The Convention requires that facility agreements be concluded between the United States and the OPCW for all declared Schedule 1 facilities. For new Schedule 1 production facilities declared pursuant to § 712.4 of the CWCR, the USNA, in coordination with the Department of Commerce, will conclude a facility agreement with the OPCW before the facility begins producing above 100 grams aggregate of Schedule 1 chemicals.</P> <P>(2) <E T="03">Schedule 2 plant sites.</E> The USNA will ensure that such facility agreements are concluded with the OPCW unless the owner, operator, occupant or agent in charge of the plant site and the OPCW Technical Secretariat agree that such a facility agreement is not necessary.</P> <P>(3) <E T="03">Schedule 3 and UDOC plant sites.</E> If the owner, operator, occupant or agent in charge of a declared Schedule 3 or UDOC plant site requests a facility agreement, the USNA will ensure that a facility agreement for such a plant site is concluded with the OPCW.</P> <P>(b) <E T="03">Notification; negotiation of draft and final facility agreements; and conclusion of facility agreements.</E> Prior to the development of a facility agreement, BIS shall notify the owner, operator, occupant, or agent in charge of the facility, and if the owner, operator, occupant or agent in charge so requests, the notified person may participate in preparations with BIS representatives for the negotiation of such an agreement. During the initial or routine inspection of a declared facility, the Inspection Team and the Host Team will negotiate a draft facility agreement or amendment to a facility agreement. To the maximum extent practicable consistent with the Convention, the owner and the operator, occupant or agent in charge of the facility may observe facility agreement negotiations between the U.S. Government and OPCW. As a general rule, BIS will consult with the affected facility on the contents of the agreements and take the facility's views into consideration during negotiations. BIS will participate in the negotiation of, and approve, all final facility agreements with the OPCW. Facilities will be notified of and have the right to observe final facility agreement negotiations between the United States and the OPCW to the maximum extent practicable, consistent with the Convention. Prior to the conclusion of a final facility agreement, the affected facility will have an opportunity to comment on the facility agreement. BIS will give consideration to such comments prior to approving final facility agreements with the OPCW. The USNA shall ensure that facility agreements for Schedule 1, Schedule 2, Schedule 3 and UDOC facilities are concluded, as appropriate, with the OPCW in coordination with BIS.</P> <P>(c) [Reserved]</P> <P>(d) <E T="03">Further information.</E> For further information about facility agreements, please write or call: Treaty Compliance Division, Bureau of Industry and Security, U.S. Department of Commerce, 1555 Wilson Boulevard, Suite 700, Arlington, VA 22209, Telephone: (703) 605-4400.</P> </SECTION> <SECTION> <SECTNO>§ 716.7</SECTNO> <SUBJECT>Samples.</SUBJECT> <P>The owner, operator, occupant or agent in charge of a facility must provide a sample as provided for in the Convention and the Act and consistent with requirements set forth by the Director of the United States National Authority in 22 CFR part 103. Analysis will be restricted to verifying the absence of undeclared scheduled chemicals, unless otherwise agreed after consultation with the facility representative.</P> </SECTION> <SECTION> <SECTNO>§ 716.8</SECTNO> <SUBJECT>On-site monitoring of Schedule 1 facilities.</SUBJECT> <P>Declared Schedule 1 facilities are subject to verification by monitoring with on-site instruments as provided by the Convention. For facilities subject to the CWCR, however, such monitoring is not anticipated. The U.S. Government will ensure that any monitoring that may be requested by the OPCW is carried out pursuant to the Convention and U.S. law.</P> </SECTION> <SECTION> <PRTPAGE P="163"/> <SECTNO>§ 716.9</SECTNO> <SUBJECT>Report of inspection-related costs.</SUBJECT> <P>Pursuant to section 309(b)(5) of the Act, any facility that has undergone any inspections pursuant to the CWCR during a given calendar year must report to BIS within 90 days of an inspection on its total costs related to that inspection. Although not required, such reports should identify categories of costs separately if possible, such as personnel costs (production-line, administrative, legal), costs of producing records, and costs associated with shutting down chemical production or processing during inspections, if applicable. This information should be reported to BIS on company letterhead at the address given in § 716.6(d) of the CWCR, with the following notation: “Attn: Report of inspection-related costs.”</P> </SECTION> <SECTION> <SECTNO>§ 716.10</SECTNO> <SUBJECT>Post-inspection activities.</SUBJECT> <P>BIS will forward a copy of the final inspection report to the inspected facility for their review upon receipt from the OPCW. Facilities may submit comments on the final inspection report to BIS, within the time-frame specified by BIS (<E T="03">i.e.</E>, at least 7 working days from receipt of the report), and BIS will consider them, to the extent possible, when commenting on the final report. BIS will also send facilities a post-inspection letter detailing the issues that require follow-up action, e.g., amended declaration requirement (see §§ 712.7(d), 713.5(d), 714.4(d), and 715.2(c) of the CWCR), information on the status of the draft facility agreement, if applicable, and the date on which the report on inspection-related costs (see § 716.9 of the CWCR) is due to BIS.</P> </SECTION> <APPENDIX> <EAR>Pt. 716, Supp. 1</EAR> <HD SOURCE="HED">Supplement No. 1 to Part 716—Notification, Duration and Frequency of Inspections</HD> <GPOTABLE CDEF="s50,r50,r50,r50,r50" COLS="5" OPTS="L2"> <BOXHD> <CHED H="1"/> <CHED H="1">Schedule 1</CHED> <CHED H="1">Schedule 2</CHED> <CHED H="1">Schedule 3</CHED> <CHED H="1">Unscheduled discrete organic chemicals</CHED> </BOXHD> <ROW> <ENT I="01">Notice of initial or routine inspection to USNA</ENT> <ENT>72 hours prior to arrival of Inspection Team at the point of entry (initial); 24 hours prior to arrival of Inspection Team at the point of entry (routine)</ENT> <ENT>48 hours prior to arrival of Inspection Team at the plant site</ENT> <ENT>120 hours prior to arrival of Inspection Team at the plant site</ENT> <ENT>120 hours prior to arrival of Inspection Team at the plant site.</ENT> </ROW> <ROW> <ENT I="01">Duration of inspection</ENT> <ENT>As specified in facility agreement</ENT> <ENT>96 hours</ENT> <ENT>24 hours</ENT> <ENT>24 hours.</ENT> </ROW> <ROW RUL="n,s"> <ENT I="01">Maximum number of inspections</ENT> <ENT>Determined by OPCW based on characteristics of facility and the nature of the activities carried out at the facility</ENT> <ENT>2 per calendar year per plant site</ENT> <ENT>2 per calendar year per plant site</ENT> <ENT>2 per calendar year per plant site.</ENT> </ROW> <ROW> <ENT I="01">Notification of challenge inspection to USNA*</ENT> <ENT A="03">12 hours prior to arrival of inspection team at the point of entry.</ENT> </ROW> <ROW> <ENT I="01">Duration of Challenge inspection*</ENT> <ENT A="03">84 hours.</ENT> </ROW> <TNOTE>* See part 717 of the CWCR.</TNOTE> </GPOTABLE> </APPENDIX> <APPENDIX> <PRTPAGE P="164"/> <RESERVED>Supplement Nos. 2-3 to Part 716 [Reserved]</RESERVED> </APPENDIX> </PART> <PART> <EAR>Pt. 717</EAR> <HD SOURCE="HED">PART 717—CWC CLARIFICATION PROCEDURES (CONSULTATIONS AND CHALLENGE INSPECTIONS)</HD> <CONTENTS> <SECHD>Sec.</SECHD> <SECTNO>717.1</SECTNO> <SUBJECT>Clarification procedures; challenge inspection requests pursuant to Article IX of the Convention.</SUBJECT> <SECTNO>717.2</SECTNO> <SUBJECT>Challenge inspections.</SUBJECT> <SECTNO>717.3</SECTNO> <SUBJECT>Samples.</SUBJECT> <SECTNO>717.4</SECTNO> <SUBJECT>Report of inspection-related costs.</SUBJECT> <SECTNO>717.5</SECTNO> <SUBJECT>Post-inspection activities.</SUBJECT> </CONTENTS> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>22 U.S.C. 6701 <E T="03">et seq.</E>, 2681; E.O. 13128, 64 FR 36703, 3 CFR 1999 Comp., p. 199.</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>71 FR 24929, Apr. 27, 2006, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>§ 717.1</SECTNO> <SUBJECT>Clarification procedures; challenge inspection requests pursuant to Article IX of the Convention.</SUBJECT> <P>(a) Article IX of the Convention sets forth procedures for clarification, between States Parties, of issues about compliance with the Convention. States Parties may attempt to resolve such issues through consultation between themselves or through the Organization for the Prohibition of Chemical Weapons (OPCW). A State Party may also request the OPCW to conduct an on-site challenge inspection of any facility or location in the territory or in any other place under the jurisdiction or control of any other State Party. Such an on-site challenge inspection request shall be for the sole purpose of clarifying and resolving any questions concerning possible non-compliance with the Convention.</P> <P>(b) In the event that BIS receives a request for clarification, pursuant to Article IX of the Convention, concerning possible non-compliance with the CWC, any person or facility subject to the CWCR (parts 710 through 729 of this subchapter) that receives an official written request from BIS for clarification must, within five working days from receipt of such request, provide BIS with any relevant information required to respond to the OPCW or the State Party(ies) who requested clarification under Article IX. BIS will contact the person or facility subject to the Article IX clarification, as early as practicable, prior to issuing an official written request for clarification to the person or facility.</P> </SECTION> <SECTION> <SECTNO>§ 717.2</SECTNO> <SUBJECT>Challenge inspections.</SUBJECT> <P>Persons or facilities, other than U.S. Government facilities as defined in § 710.2(a) of the CWCR, may be subject to a challenge inspection by the OPCW concerning possible non-compliance with the requirements of the Convention, irrespective of whether or not they are required to submit declarations or reports under the CWCR. BIS will host and escort the international Inspection Team for challenge inspections in the United States of such persons or facilities.</P> <P>(a) <E T="03">Consent to challenge inspections; warrants for challenge inspections.</E> (1) The owner, operator, occupant or agent in charge of a facility may consent to a challenge inspection. The individual giving consent on behalf of the facility represents that he or she has the authority to make this decision for the facility. The facility must respond to the notice of inspection, which includes within it a request for consent to the inspection, within four hours of the facility's receipt of the notice of inspection from BIS.</P> <P>(2) In instances where the owner, operator, occupant or agent in charge of a facility does not consent to a challenge inspection, BIS will assist the Department of Justice in seeking a criminal warrant as provided by the Act. The existence of a facility agreement does not in any way limit the right of the operator of the facility to withhold consent to a challenge inspection request.</P> <P>(b) <E T="03">Notice of challenge inspection.</E> Challenge inspections may be made only upon issuance of written notice by the United States National Authority (USNA) to the owner and to the operator, occupant or agent in charge of the premises. BIS will provide notice of inspection to the inspection point of contact at such time that a person or facility has been clearly established, if possible, and when notification is deemed appropriate. If the United States is unable to provide actual written notice to the owner and to the operator, occupant or agent in charge, BIS (or another appropriate agency, if <PRTPAGE P="165"/>BIS is unable) may post notice prominently at the plant, plant site or other facility or location to be inspected.</P> <P>(1) <E T="03">Timing.</E> The OPCW will notify the USNA of a challenge inspection not less than 12 hours before the planned arrival of the Inspection Team at the U.S. point of entry. Written notice will be provided to the owner and to the operator, occupant, or agent in charge of the premises at any appropriate time determined by the USNA after receipt of notification from the OPCW Technical Secretariat.</P> <P>(2)(i) <E T="03">Content of notice.</E> The notice of inspection shall include all appropriate information provided by the OPCW to the United States National Authority concerning:</P> <P>(A) The type of inspection;</P> <P>(B) The basis for the selection of the facility or locations for the type of inspection sought;</P> <P>(C) The time and date that the inspection will begin and the period covered by the inspection;</P> <P>(D) The names and titles of the Inspection Team members; and</P> <P>(E) All appropriate evidence or reasons provided by the requesting State Party for seeking the inspection.</P> <P>(ii) In addition to appropriate information provided by the OPCW in its notification to the USNA, the notice of inspection that BIS delivers to the facility will request the facility to indicate whether it will consent to an inspection and will state whether an advance team is available to assist the site in preparation for the inspection. If an advance team is available, facilities that request advance team assistance are not required to reimburse the U.S. Government for costs associated with these activities. If a facility does not agree to provide consent to an inspection within four hours of receipt of the inspection notification, BIS will assist the Department of Justice in seeking a criminal warrant.</P> <P>(c) <E T="03">Period of inspection.</E> Challenge inspections will not exceed 84 hours, unless extended by agreement between the Inspection Team and the Host Team Leader.</P> <P>(d) <E T="03">Scope and conduct of inspections</E>—(1) <E T="03">General.</E> Each inspection shall be limited to the purposes described in this section and conducted in the least intrusive manner, consistent with the effective and timely accomplishment of its purpose as provided in the Convention.</P> <P>(2) <E T="03">Scope of inspections.</E> If an owner, operator, occupant, or agent in charge of a facility consents to a challenge inspection, the inspection will be conducted under the authority of the Act and in accordance with the provisions of Article IX and applicable provisions of the Verification Annex of the Convention. If consent is not granted, the inspection will be conducted pursuant to the terms of a criminal warrant issued under the authority of the Act.</P> <P>(3) <E T="03">Hours of inspections.</E> Consistent with the provisions of the Convention, the Host Team will ensure, to the extent possible, that each inspection is commenced, conducted, and concluded during ordinary working hours, but no inspection shall be prohibited or otherwise disrupted from commencing, continuing or concluding during other hours.</P> <P>(4) <E T="03">Health and safety regulations and requirements.</E> In carrying out their activities, the Inspection Team and Host Team shall observe federal, state, and local health and safety regulations and health and safety requirements established at the inspection site, including those for the protection of controlled environments within a facility and for personal safety.</P> <P>(5) <E T="03">Pre-inspection briefing.</E> Upon arrival of the Inspection Team and the Host Team in the vicinity of the inspection site and before commencement of the inspection, facility representatives will provide the Inspection Team and the Host Team with a pre-inspection briefing concerning the facility, the activities carried out there, safety measures, and administrative and logistical arrangements necessary for the inspection, which may be aided with the use of maps and other documentation as deemed appropriate by the facility. The time spent for the briefing may not exceed three hours.</P> </SECTION> <SECTION> <SECTNO>§ 717.3</SECTNO> <SUBJECT>Samples.</SUBJECT> <P>If requested by the Inspection Team, the owner, operator, occupant or agent in charge of a facility must provide a sample, as provided for in the Convention and the Act and consistent with <PRTPAGE P="166"/>requirements set forth by the Director of the United States National Authority in 22 CFR part 103. This may be done by providing a sample, taken in the presence of the Inspection Team, to the U.S. Host Team leader, who will then release it to the Inspection Team for analysis. Analysis of the sample may be restricted to verifying the presence or absence of Schedule 1, 2, or 3 chemicals, or appropriate degradation products, unless agreed otherwise.</P> </SECTION> <SECTION> <SECTNO>§ 717.4</SECTNO> <SUBJECT>Report of inspection-related costs.</SUBJECT> <P>Pursuant to section 309(b)(5) of the Act, any facility that has undergone any inspections pursuant to the CWCR during a given calendar year must report to BIS within 90 days of an inspection on its total costs related to that inspection. Although not required, such reports should identify categories of costs separately if possible, such as personnel costs (production-line, administrative, legal), costs of producing records, and costs associated with shutting down chemical production or processing during inspections, if applicable. This information should be reported to BIS on company letterhead at the address given in § 716.6(d) of the CWCR, with the following notation: “AATTN: Report of Inspection-related Costs.”</P> </SECTION> <SECTION> <SECTNO>§ 717.5</SECTNO> <SUBJECT>Post-inspection activities.</SUBJECT> <P>BIS will forward a copy of the final inspection report to the inspected facility for their review upon receipt from the OPCW. Facilities may submit comments on the final inspection report to BIS, and BIS will consider them, to the extent possible, when commenting on the final report. BIS will also send facilities a post-inspection letter detailing the issues that require follow-up action and the date on which the report on inspection-related costs (see § 717.4 of the CWCR) is due to BIS.</P> </SECTION> </PART> <PART> <EAR>Pt. 718</EAR> <HD SOURCE="HED">PART 718—CONFIDENTIAL BUSINESS INFORMATION</HD> <CONTENTS> <SECHD>Sec.</SECHD> <SECTNO>718.1</SECTNO> <SUBJECT>Definition.</SUBJECT> <SECTNO>718.2</SECTNO> <SUBJECT>Identification of confidential business information.</SUBJECT> <SECTNO>718.3</SECTNO> <SUBJECT>Disclosure of confidential business information.</SUBJECT> <APP>Supplement No. 1 to Part 718—Confidential Business Information Declared or Reported</APP> </CONTENTS> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>22 U.S.C. 6701 <E T="03">et seq.</E>; E.O. 13128, 64 FR 36703, 3 CFR 1999 Comp., p. 199.</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>71 FR 24929, Apr. 27, 2006, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>§ 718.1</SECTNO> <SUBJECT>Definition.</SUBJECT> <P>The Chemical Weapons Convention Implementation Act of 1998 (“the Act”) defines confidential business information as information included in categories specifically identified in sections 103(g)(1) and 304(e)(2) of the Act and other trade secrets as follows:</P> <P>(a) Financial data;</P> <P>(b) Sales and marketing data (other than shipment data);</P> <P>(c) Pricing data;</P> <P>(d) Personnel data;</P> <P>(e) Research data;</P> <P>(f) Patent data;</P> <P>(g) Data maintained for compliance with environmental or occupational health and safety regulations;</P> <P>(h) Data on personnel and vehicles entering and personnel and personal passenger vehicles exiting the site;</P> <P>(i) Any chemical structure;</P> <P>(j) Any plant design, process, technology or operating method;</P> <P>(k) Any operating requirement, input, or result that identifies any type or quantity of chemicals used, processed or produced;</P> <P>(l) Any commercial sale, shipment or use of a chemical; or</P> <P>(m) Information that qualifies as a trade secret under 5 U.S.C. 552(b)(4) (Freedom of Information Act), provided such trade secret is obtained from a U.S. person or through the U.S. Government.</P> </SECTION> <SECTION> <SECTNO>718.2</SECTNO> <SUBJECT>Identification of confidential business information.</SUBJECT> <P>(a) <E T="03">General.</E> Certain confidential business information submitted to BIS in declarations and reports does not need to be specifically identified and marked by the submitter, as described in paragraph (b) of this section. Other <PRTPAGE P="167"/>confidential business information submitted to BIS in declarations and reports and confidential business information provided to the Host Team during inspections must be identified by the inspected facility so that the Host Team can arrange appropriate marking and handling.</P> <P>(b) <E T="03">Confidential business information contained in declarations and reports.</E> (1) BIS has identified those data fields on the declaration and report forms that request “confidential business information” as defined by the Act. These data fields are identified in the table provided in Supplement No. 1 to this part.</P> <P>(2) You must specifically identify in a cover letter submitted with your declaration or report any additional information on a declaration or report form (i.e., information not provided in one of the data fields listed in the table included in Supplement No. 1 to this part), including information provided in attachments to Form A or Form B, that you believe is confidential business information, as defined by the Act, and must describe how disclosure would likely result in competitive harm. </P> <NOTE> <HD SOURCE="HED">Note to § 718.2(<E T="01">b</E>):</HD> <P>BIS has also determined that descriptions of Schedule 1 facilities submitted with Initial Declarations as attachments to Form A contain confidential business information, as defined by the Act.</P> </NOTE> <P>(c) <E T="03">Confidential business information contained in advance notifications.</E> Information contained in advance notifications of exports and imports of Schedule 1 chemicals is not subject to the confidential business information provisions of the Act. You must identify information in your advance notifications of Schedule 1 imports that you consider to be privileged and confidential, and describe how disclosure would likely result in competitive harm. See § 718.3(b) of the CWCR for provisions on disclosure to the public of such information by the U.S. Government.</P> <P>(d) <E T="03">Confidential business information related to inspections disclosed to, reported to, or otherwise acquired by, the U.S. Government.</E> (1) During inspections, certain confidential business information, as defined by the Act, may be disclosed to the Host Team. Facilities being inspected are responsible for identifying confidential business information to the Host Team, so that if it is disclosed to the Inspection Team, appropriate marking and handling can be arranged, in accordance with the provisions of the Convention (see § 718.3(c)(1)(ii) of the CWCR). Confidential business information not related to the purpose of an inspection or not necessary for the accomplishment of an inspection, as determined by the Host Team, may be removed from sight, shrouded, or otherwise not disclosed.</P> <P>(2) Before or after inspections, confidential business information related to an inspection that is contained in any documents or that is reported to, or otherwise acquired by, the U.S. Government, such as facility information for pre-inspection briefings, facility agreements, and inspection reports, must be identified by the facility so that it may be appropriately marked and handled. If the U.S. Government creates derivative documents from such documents or reported information, they will also be marked and handled as confidential business information.</P> </SECTION> <SECTION> <SECTNO>§ 718.3</SECTNO> <SUBJECT>Disclosure of confidential business information.</SUBJECT> <P>(a) <E T="03">General.</E> Confidentiality of information will be maintained by BIS consistent with the non-disclosure provisions of the Act, the Export Administration Regulations (15 CFR parts 730 through 799), the International Traffic in Arms Regulations (22 CFR parts 120 through 130), and applicable exemptions under the Freedom of Information Act, as appropriate.</P> <P>(b) <E T="03">Disclosure of confidential business information contained in advance notifications.</E> Information contained in advance notifications of exports and imports of Schedule 1 chemicals is not subject to the confidential business information provisions of the Act. Disclosure of such information will be in accordance with the provisions of the relevant statutory and regulatory authorities as follows:</P> <P>(1) <E T="03">Exports of Schedule 1 chemicals.</E> Confidentiality of all information contained in these advance notifications will be maintained consistent with the non-disclosure provisions of the Export Administration Regulations (15 CFR <PRTPAGE P="168"/>parts 730 through 799), the International Traffic in Arms Regulations (22 CFR parts 120 through 130), and applicable exemptions under the Freedom of Information Act, as appropriate; and</P> <P>(2) <E T="03">Imports of Schedule 1 chemicals.</E> Confidentiality of information contained in these advance notifications will be maintained pursuant to applicable exemptions under the Freedom of Information Act.</P> <P>(c) <E T="03">Disclosure of confidential business information pursuant to § 404(b) of the Act</E>—(1) <E T="03">Disclosure to the Organization for the Prohibition of Chemical Weapons (OPCW).</E> (i) As provided by Section 404(b)(1) of the Act, the U.S. Government will disclose or otherwise provide confidential business information to the Technical Secretariat of the OPCW or to other States Parties to the Convention, in accordance with provisions of the Convention, particularly with the provisions of the Annex on the Protection of Confidential Information (Confidentiality Annex).</P> <P>(ii) <E T="03">Convention provisions.</E> (A) The Convention provides that States Parties may designate information submitted to the Technical Secretariat as confidential, and requires the OPCW to limit access to, and prevent disclosure of, information so designated, except that the OPCW may disclose certain confidential information submitted in declarations to other States Parties if requested. The OPCW has developed a classification system whereby States Parties may designate the information they submit in their declarations as “restricted,” “protected,” or “highly protected,” depending on the sensitivity of the information. Other States Parties are obligated, under the Convention, to store and restrict access to information which they receive from the OPCW in accordance with the level of confidentiality established for that information.</P> <P>(B) The OPCW Inspection Team members are prohibited, under the terms of their employment contracts and pursuant to the Confidentiality Annex of the Convention, from disclosing to any unauthorized persons, during their employment and for five years after termination of their employment, any confidential information coming to their knowledge or into their possession in the performance of their official duties.</P> <P>(iii) <E T="03">U.S. Government designation of information to the Technical Secretariat</E>. It is the policy of the U.S. Government to designate all facility information it provides to the Technical Secretariat in declarations, reports and Schedule 1 advance notifications as “protected.” It is the policy of the U.S. Government to designate confidential business information that it discloses to Inspection Teams during inspections as “protected” or “highly protected,” depending on the sensitivity of the information. The Technical Secretariat is responsible for storing and limiting access to any confidential business information contained in a document according to its established procedures.</P> <P>(2) <E T="03">Disclosure to Congress.</E> Section 404(b)(2) of the Act provides that the U.S. Government must disclose confidential business information to any committee or subcommittee of Congress with appropriate jurisdiction upon the written request of the chairman or ranking minority member of such committee or subcommittee. No such committee or subcommittee, and no member and no staff member of such committee or subcommittee, may disclose such information or material except as otherwise required or authorized by law.</P> <P>(3) <E T="03">Disclosure to other Federal agencies for law enforcement actions and disclosure in enforcement proceedings under the Act.</E> Section 404(b)(3) of the Act provides that the U.S. Government must disclose confidential business information to other Federal agencies for enforcement of the Act or any other law, and must disclose such information when relevant in any proceeding under the Act. Disclosure will be made in such manner as to preserve confidentiality to the extent practicable without impairing the proceeding. Section 719.14(b) of the CWCR provides that all hearings will be closed, unless the Administrative Law Judge for good cause shown determines otherwise. Section 719.20 of the CWCR provides that parties may request that the administrative law judge segregate and restrict access to confidential business information contained in material in the record of an enforcement proceeding.<PRTPAGE P="169"/> </P> <P>(4) <E T="03">Disclosure to the public; national interest determination.</E> Section 404(c) of the Act provides that confidential business information, as defined by the Act, that is in the possession of the U.S. Government, is exempt from public disclosure in response to a Freedom of Information Act request, except when such disclosure is determined to be in the national interest.</P> <P>(i) <E T="03">National interest determination.</E> The United States National Authority (USNA), in coordination with the CWC interagency group, shall determine on a case-by-case basis if disclosure of confidential business information in response to a Freedom of Information Act request is in the national interest.</P> <P>(ii) <E T="03">Notification of intent to disclose pursuant to a national interest determination.</E> The Act provides for notification to the affected person of intent to disclose confidential business information based on the national interest, unless such notification of intent to disclose is contrary to national security or law enforcement needs. If, after coordination with the agencies that constitute the CWC interagency group, the USNA does not determine that such notification of intent to disclose is contrary to national security or law enforcement needs, the USNA will notify the person that submitted the information and the person to whom the information pertains of the intent to disclose the information.</P> </SECTION> <APPENDIX> <EAR>Pt. 718, Supp. 1</EAR> <HD SOURCE="HED">Supplement No. 1 to Part 718—Confidential Business Information Declared or Reported *</HD> <GPOTABLE CDEF="s50,r50" COLS="2" OPTS="L2"> <BOXHD> <CHED H="1"/> <CHED H="1">Fields containing<LI>confidential business</LI> <LI>information</LI> </CHED> </BOXHD> <ROW> <ENT I="22">Schedule 1 Forms:</ENT> </ROW> <ROW> <ENT I="02">Certification Form</ENT> <ENT>NONE.</ENT> </ROW> <ROW> <ENT I="02">Form 1-1</ENT> <ENT>NONE.</ENT> </ROW> <ROW> <ENT I="02">Form 1-2</ENT> <ENT>All fields.</ENT> </ROW> <ROW> <ENT I="02">Form 1-2A</ENT> <ENT>All fields.</ENT> </ROW> <ROW> <ENT I="02">Form 1-2B</ENT> <ENT>All fields.</ENT> </ROW> <ROW> <ENT I="02">Form 1-3</ENT> <ENT>All fields.</ENT> </ROW> <ROW> <ENT I="02">Form 1-4</ENT> <ENT>All fields.</ENT> </ROW> <ROW> <ENT I="22">Schedule 2 Forms:</ENT> </ROW> <ROW> <ENT I="02">Certification Form</ENT> <ENT>NONE.</ENT> </ROW> <ROW> <ENT I="02">Form 2-1</ENT> <ENT>NONE.</ENT> </ROW> <ROW> <ENT I="02">Form 2-2</ENT> <ENT>Question 2-2.9</ENT> </ROW> <ROW> <ENT I="02">Form 2-3</ENT> <ENT>All fields.</ENT> </ROW> <ROW> <ENT I="02">Form 2-3A</ENT> <ENT>All fields.</ENT> </ROW> <ROW> <ENT I="02">Form 2-3B</ENT> <ENT>All fields.</ENT> </ROW> <ROW> <ENT I="02">Form 2-3C</ENT> <ENT>All fields.</ENT> </ROW> <ROW> <ENT I="02">Form 2-4</ENT> <ENT>All fields.</ENT> </ROW> <ROW> <ENT I="22">Schedule 3 Forms:</ENT> </ROW> <ROW> <ENT I="02">Certification Form</ENT> <ENT>NONE.</ENT> </ROW> <ROW> <ENT I="02">Form 3-1</ENT> <ENT>NONE.</ENT> </ROW> <ROW> <ENT I="02">Form 3-2</ENT> <ENT>NONE.</ENT> </ROW> <ROW> <ENT I="02">Form 3-3</ENT> <ENT>All fields.</ENT> </ROW> <ROW> <ENT I="02">Form 3-4</ENT> <ENT>All fields.</ENT> </ROW> <ROW> <ENT I="22">Unscheduled Discrete Organic Chemicals Forms:</ENT> </ROW> <ROW> <ENT I="02">Certification Form</ENT> <ENT>NONE.</ENT> </ROW> <ROW> <ENT I="02">Form UDOC</ENT> <ENT>NONE.</ENT> </ROW> <ROW> <ENT I="01">FORMS A and B and attachments (all Schedules and UDOCs)</ENT> <ENT>Case-by-case; must be identified by submitter.</ENT> </ROW> <TNOTE>* This table lists those data fields on the Declaration and Report Forms that request “confidential business information” (CBI) as defined by the Act (sections 103(g) and 304(e)(2)). As provided by section 404(a) of the Act, CBI is exempt from disclosure in response to a Freedom of Information Act (FOIA) request under sections 552(b)(3) and 552(b)(4) (5 U.S.C.A. 552(b)(3)-(4)), unless a determination is made, pursuant to section 404(c) of the Act, that such disclosure is in the national interest. Other FOIA exemptions to disclosure may also apply. You must identify CBI provided in Form A and/or Form B attachments, and provide the reasons supporting your claim of confidentiality, except that Schedule 1 facility technical descriptions submitted with initial declarations are always considered to include CBI. If you believe that information you are submitting in a data field marked “none” in the Table is CBI, as defined by the Act, you must identify the specific information and provide the reasons supporting your claim of confidentiality in a cover letter.</TNOTE> </GPOTABLE> </APPENDIX> </PART> <PART> <EAR>Pt. 719</EAR> <HD SOURCE="HED">PART 719—ENFORCEMENT</HD> <CONTENTS> <SECHD>Sec.</SECHD> <SECTNO>719.1</SECTNO> <SUBJECT>Scope and definitions.</SUBJECT> <SECTNO>719.2</SECTNO> <SUBJECT>Violations of the Act subject to administrative and criminal enforcement proceedings.</SUBJECT> <SECTNO>719.3</SECTNO> <SUBJECT>Violations of the IEEPA subject to judicial enforcement proceedings.</SUBJECT> <SECTNO>719.4</SECTNO> <SUBJECT>Violations and sanctions under the Act not subject to proceedings under the CWCR.</SUBJECT> <SECTNO>719.5</SECTNO> <SUBJECT>Initiation of administrative proceedings.</SUBJECT> <SECTNO>719.6</SECTNO> <SUBJECT>Request for hearing and answer.</SUBJECT> <SECTNO>719.7</SECTNO> <SUBJECT>Representation.</SUBJECT> <SECTNO>719.8</SECTNO> <SUBJECT>Filing and service of papers other than the NOVA.<PRTPAGE P="170"/> </SUBJECT> <SECTNO>719.9</SECTNO> <SUBJECT>Summary decision.</SUBJECT> <SECTNO>719.10</SECTNO> <SUBJECT>Discovery.</SUBJECT> <SECTNO>719.11</SECTNO> <SUBJECT>Subpoenas.</SUBJECT> <SECTNO>719.12</SECTNO> <SUBJECT>Matters protected against disclosure.</SUBJECT> <SECTNO>719.13</SECTNO> <SUBJECT>Prehearing conference.</SUBJECT> <SECTNO>719.14</SECTNO> <SUBJECT>Hearings.</SUBJECT> <SECTNO>719.15</SECTNO> <SUBJECT>Procedural stipulations.</SUBJECT> <SECTNO>719.16</SECTNO> <SUBJECT>Extension of time.</SUBJECT> <SECTNO>719.17</SECTNO> <SUBJECT>Post-hearing submissions.</SUBJECT> <SECTNO>719.18</SECTNO> <SUBJECT>Decisions.</SUBJECT> <SECTNO>719.19</SECTNO> <SUBJECT>Settlement.</SUBJECT> <SECTNO>719.20</SECTNO> <SUBJECT>Record for decision.</SUBJECT> <SECTNO>719.21</SECTNO> <SUBJECT>Payment of final assessment.</SUBJECT> <SECTNO>719.22</SECTNO> <SUBJECT>Reporting a violation.</SUBJECT> </CONTENTS> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>22 U.S.C. 6701 <E T="03">et seq.</E>; 50 U.S.C. 1601 <E T="03">et seq.</E>; 50 U.S.C. 1701 <E T="03">et seq.</E>; E.O. 12938, 59 FR 59099, 3 CFR 1994, Comp., p. 950; E.O. 13128, 64 FR 36703, 3 CFR 1999 Comp., p. 199.</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>71 FR 24929, Apr. 27, 2006, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>§ 719.1</SECTNO> <SUBJECT>Scope and definitions.</SUBJECT> <P>(a) <E T="03">Scope.</E> This part 719 describes the various sanctions that apply to violations of the Act and the CWCR. It also establishes detailed administrative procedures for certain violations of the Act. The three categories of violations are as follows:</P> <P>(1) <E T="03">Violations of the Act subject to administrative and criminal enforcement proceedings.</E> Section 719.2 of the CWCR sets forth violations for which the statutory basis is the Act. BIS investigates these violations and, for administrative proceedings, prepares charges, provides legal representation to the U.S. Government, negotiates settlements, and makes recommendations to officials of the Department of State with respect to the initiation and resolution of proceedings. The administrative procedures applicable to these violations are found in §§ 719.5 through 719.22 of the CWCR. The Department of State gives notice of initiation of administrative proceedings and issues orders imposing penalties pursuant to 22 CFR part 103, subpart C.</P> <P>(2) <E T="03">Violations of the International Emergency Economic Powers Act (IEEPA) subject to judicial enforcement proceedings.</E> Section 719.3 of the CWCR sets forth violations of the Chemical Weapons Convention for which the statutory basis is the IEEPA. BIS refers these violations to the Department of Justice for civil or criminal judicial enforcement.</P> <P>(3) <E T="03">Violations and sanctions under the Act not subject to proceedings under the CWCR.</E> Section 719.4 of the CWCR sets forth violations and sanctions under the Act that are not violations of the CWCR and that are not subject to proceedings under the CWCR. This section is included solely for informational purposes. BIS may assist in investigations of these violations, but has no authority to initiate any enforcement action under the CWCR. </P> <NOTE> <HD SOURCE="HED">Note to § 719.1(<E T="01">a</E>):</HD> <P>This part 719 does not apply to violations of the export requirements imposed pursuant to the Chemical Weapons Convention and set forth in the Export Administration Regulations (EAR) (15 CFR parts 730 through 799) and in the International Traffic in Arms Regulations (ITAR) (22 CFR parts 120 through 130).</P> </NOTE> <P>(b) <E T="03">Definitions.</E> The following are definitions of terms as used only in parts 719 and 720 of the CWCR. For definitions of terms applicable to parts 710 through 718 and parts 721 and 722 of the CWCR, <E T="03">see</E> part 710 of the CWCR.</P> <P> <E T="03">Act (The)</E>. The Chemical Weapons Convention Implementation Act of 1998 (22 U.S.C. 6701-6777).</P> <P> <E T="03">Assistant Secretary for Export Enforcement.</E> The Assistant Secretary for Export Enforcement, Bureau of Industry and Security, United States Department of Commerce.</P> <P> <E T="03">Final decision.</E> A decision or order assessing a civil penalty, or otherwise disposing of or dismissing a case, which is not subject to further administrative review, but which may be subject to collection proceedings or judicial review in an appropriate Federal court as authorized by law.</P> <P> <E T="03">IEEPA.</E> The International Emergency Economic Powers Act, as amended (50 U.S.C. 1701-1706).</P> <P> <E T="03">Office of Chief Counsel.</E> The Office of Chief Counsel for Industry and Security, United States Department of Commerce.</P> <P> <E T="03">Report.</E> For purposes of parts 719 and 720 of the CWCR, the term “report” means any declaration, report, or advance notification required under parts 712 through 715 of the CWCR.</P> <P> <E T="03">Respondent.</E> Any person named as the subject of a letter of intent to charge, or a Notice of Violation and Assessment (NOVA) and proposed order.</P> <P> <E T="03">Under Secretary, Bureau of Industry and Security.</E> The Under Secretary, Bureau of Industry and Security, United States Department of Commerce.</P> </SECTION> <SECTION> <PRTPAGE P="171"/> <SECTNO>§ 719.2</SECTNO> <SUBJECT>Violations of the Act subject to administrative and criminal enforcement proceedings.</SUBJECT> <P>(a) <E T="03">Violations</E>—(1) <E T="03">Refusal to permit entry or inspection.</E> No person may willfully fail or refuse to permit entry or inspection, or disrupt, delay or otherwise impede an inspection, authorized by the Act.</P> <P>(2) <E T="03">Failure to establish or maintain records.</E> No person may willfully fail or refuse:</P> <P>(i) To establish or maintain any record required by the Act or the CWCR; or</P> <P>(ii) To submit any report, notice, or other information to the United States Government in accordance with the Act or the CWCR; or</P> <P>(iii) To permit access to or copying of any record required to be established or maintained by the Act or the CWCR, including any record that is exempt from disclosure under the Act or the CWCR.</P> <P>(b) <E T="03">Civil penalties.</E>—(1) <E T="03">Civil penalty for refusal to permit entry or inspection.</E> Any person that is determined to have willfully failed or refused to permit entry or inspection, or to have disrupted, delayed or otherwise impeded an authorized inspection, as set forth in paragraph (a)(1) of this section, shall pay a civil penalty in an amount not to exceed $25,000 for each violation. Each day the violation continues constitutes a separate violation.</P> <P>(2) <E T="03">Civil penalty for failure to establish or maintain records.</E> Any person that is determined to have willfully failed or refused to establish or maintain any record or submit any report, notice, or other information required by the Act or the CWCR, or to have willfully failed or refused to permit access to or copying of any record, including any record exempt from disclosure under the Act or the CWCR as set forth in paragraph (a)(2) of this section, shall pay a civil penalty in an amount not to exceed $5,000 for each violation.</P> <P>(c) <E T="03">Criminal penalty.</E> Any person that knowingly violates the Act by willfully failing or refusing to permit entry or inspection authorized by the Act; or by willfully disrupting, delaying or otherwise impeding an inspection authorized by the Act; or by willfully failing or refusing to establish or maintain any required record, or to submit any required report, notice, or other information; or by willfully failing or refusing to permit access to or copying of any record, including records exempt from disclosure under the Act or the CWCR, shall, in addition to or in lieu of any civil penalty that may be imposed, be fined under Title 18 of the United States Code, be imprisoned for not more than one year, or both.</P> <P>(d) <E T="03">Denial of export privileges.</E> Any person in the United States or any U.S. national may be subject to a denial of export privileges after notice and opportunity for hearing pursuant to part 720 of the CWCR if that person has been convicted under Title 18, section 229 of the United States Code.</P> </SECTION> <SECTION> <SECTNO>§ 719.3</SECTNO> <SUBJECT>Violations of the IEEPA subject to judicial enforcement proceedings.</SUBJECT> <P>(a) <E T="03">Violations</E>—(1) <E T="03">Import restrictions involving Schedule 1 chemicals.</E> Except as otherwise provided in § 712.2 of the CWCR, no person may import any Schedule 1 chemical (See Supplement No. 1 to part 712 of the CWCR) unless:</P> <P>(i) The import is from a State Party;</P> <P>(ii) The import is for research, medical, pharmaceutical, or protective purposes;</P> <P>(iii) The import is in types and quantities strictly limited to those that can be justified for such purposes; and</P> <P>(iv) The importing person has notified BIS not less than 45 calendar days before the import pursuant to § 712.6 of the CWCR.</P> <P>(2) <E T="03">Import restrictions involving Schedule 2 chemicals.</E> Except as otherwise provided in § 713.1 of the CWCR, no person may, on or after April 29, 2000, import any Schedule 2 chemical (see Supplement No. 1 to part 713 of the CWCR) from any destination other than a State Party.</P> <P>(b) <E T="03">Civil penalty.</E> A civil penalty not to exceed $11,000 may be imposed in accordance with this part on any person for each violation of this section.<SU>1</SU> <FTREF/> </P> <FTNT> <P> <SU>1</SU> The maximum civil penalty allowed under the International Emergency Economic Powers Act is $11,000 for any violation committed on or after October 23, 1996 (15 CFR 6.4(a)(3)).</P> </FTNT> <P>(c) <E T="03">Criminal penalty.</E> Whoever willfully violates paragraph (a)(1) or (2) of <PRTPAGE P="172"/>this section shall, upon conviction, be fined not more than $50,000, or, if a natural person, imprisoned for not more than ten years, or both; and any officer, director, or agent of any corporation who knowingly participates in such violation may be punished by like fine, imprisonment, or both.<SU>2</SU> <FTREF/> </P> <FTNT> <P> <SU>2</SU> Alternatively, sanctions may be imposed under 18 U.S.C. 3571, a criminal code provision that establishes a maximum criminal fine for a felony that is the greatest of: (1) The amount provided by the statute that was violated; (2) an amount not more than $250,000 for an individual, or not more than $500,000 for an organization; or (3) an amount based on gain or loss from the offense.</P> </FTNT> </SECTION> <SECTION> <SECTNO>§ 719.4</SECTNO> <SUBJECT>Violations and sanctions under the Act not subject to proceedings under the CWCR.</SUBJECT> <P>(a) <E T="03">Criminal penalties for development or use of a chemical weapon.</E> Any person who violates 18 U.S.C. 229 shall be fined, or imprisoned for any term of years, or both. Any person who violates 18 U.S.C. 229 and by whose action the death of another person is the result shall be punished by death or imprisoned for life.</P> <P>(b) <E T="03">Civil penalty for development or use of a chemical weapon.</E> The Attorney General may bring a civil action in the appropriate United States district court against any person who violates 18 U.S.C. 229 and, upon proof of such violation by a preponderance of the evidence, such person shall be subject to pay a civil penalty in an amount not to exceed $100,000 for each such violation.</P> <P>(c) <E T="03">Criminal forfeiture.</E> (1) Any person convicted under section 229A(a) of Title 18 of the United States Code shall forfeit to the United States irrespective of any provision of State law:</P> <P>(i) Any property, real or personal, owned, possessed, or used by a person involved in the offense;</P> <P>(ii) Any property constituting, or derived from, and proceeds the person obtained, directly or indirectly, as the result of such violation; and</P> <P>(iii) Any of the property used in any manner or part, to commit, or to facilitate the commission of, such violation.</P> <P>(2) In lieu of a fine otherwise authorized by section 229A(a) of Title 18 of the United States Code, a defendant who derived profits or other proceeds from an offense may be fined not more than twice the gross profits or other proceeds.</P> <P>(d) <E T="03">Injunction.</E> (1) The United States may, in a civil action, obtain an injunction against:</P> <P>(i) The conduct prohibited under section 229 or 229C of Title 18 of the United States Code; or</P> <P>(ii) The preparation or solicitation to engage in conduct prohibited under section 229 or 229D of Title 18 of the United States Code.</P> <P>(2) In addition, the United States may, in a civil action, restrain any violation of section 306 or 405 of the Act, or compel the taking of any action required by or under the Act or the Convention.</P> </SECTION> <SECTION> <SECTNO>§ 719.5</SECTNO> <SUBJECT>Initiation of administrative proceedings.</SUBJECT> <P>(a) <E T="03">Letter of intent to charge.</E> The Director of the Office of Export Enforcement, Bureau of Industry and Security, may notify a respondent by letter of the intent to charge. This letter of intent to charge will advise a respondent that BIS has conducted an investigation and intends to recommend that the Secretary of State issue a Notice of Violation and Assessment (NOVA). The letter of intent to charge will be accompanied by a draft NOVA and proposed order, and will give the respondent a specified period of time to contact BIS to discuss settlement of the allegations set forth in the draft NOVA. An administrative enforcement proceeding is not initiated by a letter of intent to charge. If the respondent does not contact BIS within the specified time, or if the respondent requests it, BIS will make its request for initiation of an administrative enforcement proceeding to the Secretary of State in accordance with paragraph (b) of this section.</P> <P>(b) <E T="03">Request for Notice of Violation and Assessment (NOVA).</E> The Director of the Office of Export Enforcement, Bureau of Industry and Security, may request that the Secretary of State initiate an administrative enforcement proceeding under this § 719.5 and 22 CFR 103.7. If the request is in accordance with applicable law, the Secretary of State will initiate an administrative enforcement <PRTPAGE P="173"/>proceeding by issuing a NOVA. The Office of Chief Counsel shall serve the NOVA as directed by the Secretary of State.</P> <P>(c) <E T="03">Content of NOVA.</E> The NOVA shall constitute a formal complaint, and will set forth the basis for the issuance of the proposed order. It will set forth the alleged violation(s) and the essential facts with respect to the alleged violation(s), reference the relevant statutory, regulatory or other provisions, and state the amount of the civil penalty to be assessed. The NOVA will inform the respondent of the right to request a hearing pursuant to § 719.6 of the CWCR, inform the respondent that failure to request such a hearing shall result in the proposed order becoming final and unappealable on signature of the Secretary of State, and provide payment instructions. A copy of the regulations that govern the administrative proceedings will accompany the NOVA.</P> <P>(d) <E T="03">Proposed order.</E> A proposed order shall accompany every NOVA, letter of intent to charge, and draft NOVA. It will briefly set forth the substance of the alleged violation(s) and the statutory, regulatory or other provisions violated. It will state the amount of the civil penalty to be assessed.</P> <P>(e) <E T="03">Notice.</E> Notice of the intent to charge or of the initiation of formal proceedings shall be given to the respondent (or respondent's agent for service of process, or attorney) by sending relevant documents, via first class mail, facsimile, or by personal delivery.</P> </SECTION> <SECTION> <SECTNO>§ 719.6</SECTNO> <SUBJECT>Request for hearing and answer.</SUBJECT> <P>(a) <E T="03">Time to answer.</E> If the respondent wishes to contest the NOVA and proposed order issued by the Secretary of State, the respondent must request a hearing in writing within 15 business days from the postmarked date of the NOVA. If the respondent requests a hearing, the respondent must answer the NOVA within 30 days from the date of the request for hearing. The request for hearing and answer must be filed with the Administrative Law Judge (ALJ), along with a copy of the NOVA and proposed order, and served on the Office of Chief Counsel, and any other address(es) specified in the NOVA, in accordance with § 719.8 of the CWCR.</P> <P>(b) <E T="03">Content of answer.</E> The respondent's answer must be responsive to the NOVA and proposed order, and must fully set forth the nature of the respondent's defense(s). The answer must specifically admit or deny each separate allegation in the NOVA; if the respondent is without knowledge, the answer will so state and will operate as a denial. Failure to deny or controvert a particular allegation will be deemed an admission of that allegation. The answer must also set forth any additional or new matter the respondent contends supports a defense or claim of mitigation. Any defense or partial defense not specifically set forth in the answer shall be deemed waived, and evidence thereon may be refused, except for good cause shown.</P> <P>(c) <E T="03">English required.</E> The request for hearing, answer, and all other papers and documentary evidence must be submitted in English.</P> <P>(d) <E T="03">Waiver.</E> The failure of the respondent to file a request for a hearing and an answer within the times provided constitutes a waiver of the respondent's right to appear and contest the allegations set forth in the NOVA and proposed order. If no hearing is requested and no answer is provided, the proposed order will be signed and become final and unappealable.</P> </SECTION> <SECTION> <SECTNO>§ 719.7</SECTNO> <SUBJECT>Representation.</SUBJECT> <P>A respondent individual may appear and participate in person, a corporation by a duly authorized officer or employee, and a partnership by a partner. If a respondent is represented by counsel, counsel shall be a member in good standing of the bar of any State, Commonwealth or Territory of the United States, or of the District of Columbia, or be licensed to practice law in the country in which counsel resides, if not the United States. The U.S. Government will be represented by the Office of Chief Counsel. A respondent personally, or through counsel or other representative who has the power of attorney to represent the respondent, shall file a notice of appearance with the ALJ, or, in cases where settlement negotiations occur before any filing with <PRTPAGE P="174"/>the ALJ, with the Office of Chief Counsel.</P> </SECTION> <SECTION> <SECTNO>§ 719.8</SECTNO> <SUBJECT>Filing and service of papers other than the NOVA.</SUBJECT> <P>(a) <E T="03">Filing.</E> All papers to be filed with the ALJ shall be addressed to “CWC Administrative Enforcement Proceedings” at the address set forth in the NOVA, or such other place as the ALJ may designate. Filing by United States mail (first class postage prepaid), by express or equivalent parcel delivery service, via facsimile, or by hand delivery, is acceptable. Filing from a foreign country shall be by airmail or via facsimile. A copy of each paper filed shall be simultaneously served on all parties.</P> <P>(b) <E T="03">Service.</E> Service shall be made by United States mail (first class postage prepaid), by express or equivalent parcel delivery service, via facsimile, or by hand delivery of one copy of each paper to each party in the proceeding. The Department of State is a party to cases under the CWCR, but will be represented by the Office of Chief Counsel. Therefore, service on the government party in all proceedings shall be addressed to Office of Chief Counsel for Industry and Security, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Room H-3839, Washington, DC 20230, or sent via facsimile to (202) 482-0085. Service on a respondent shall be to the address to which the NOVA and proposed order was sent, or to such other address as the respondent may provide. When a party has appeared by counsel or other representative, service on counsel or other representative shall constitute service on that party.</P> <P>(c) <E T="03">Date.</E> The date of filing or service is the day when the papers are deposited in the mail or are delivered in person, by delivery service, or by facsimile. Refusal by the person to be served, or by the person's agent or attorney, of service of a document or other paper will be considered effective service of the document or other paper as of the date of such refusal.</P> <P>(d) <E T="03">Certificate of service.</E> A certificate of service signed by the party making service, stating the date and manner of service, shall accompany every paper, other than the NOVA and proposed order, filed and served on the parties.</P> <P>(e) <E T="03">Computation of time.</E> In computing any period of time prescribed or allowed by this part, the day of the act, event, or default from which the designated period of time begins to run is not to be included. The last day of the period so computed is to be included unless it is a Saturday, a Sunday, or a legal holiday (as defined in Rule 6(a) of the Federal Rules of Civil Procedure), in which case the period runs until the end of the next day which is neither a Saturday, a Sunday, nor a legal holiday. Intermediate Saturdays, Sundays, and legal holidays are excluded from the computation when the period of time prescribed or allowed is 7 days or less.</P> </SECTION> <SECTION> <SECTNO>§ 719.9</SECTNO> <SUBJECT>Summary decision.</SUBJECT> <P>The ALJ may render a summary decision disposing of all or part of a proceeding on the motion of any party to the proceeding, provided that there is no genuine issue as to any material fact and the party is entitled to summary decision as a matter of law.</P> </SECTION> <SECTION> <SECTNO>§ 719.10</SECTNO> <SUBJECT>Discovery.</SUBJECT> <P>(a) <E T="03">General.</E> The parties are encouraged to engage in voluntary discovery regarding any matter, not privileged, which is relevant to the subject matter of the pending proceeding. The provisions of the Federal Rules of Civil Procedure relating to discovery apply to the extent consistent with this part and except as otherwise provided by the ALJ or by waiver or agreement of the parties. The ALJ may make any order which justice requires to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense. These orders may include limitations on the scope, method, time and place of discovery, and provisions for protecting the confidentiality of classified or otherwise sensitive information, including Confidential Business Information (CBI) as defined by the Act.</P> <P>(b) <E T="03">Interrogatories and requests for admission or production of documents.</E> A party may serve on any party interrogatories, requests for admission, or requests for production of documents for inspection and copying, and a party <PRTPAGE P="175"/>concerned may apply to the ALJ for such enforcement or protective order as that party deems warranted with respect to such discovery. The service of a discovery request shall be made at least 20 days before the scheduled date of the hearing unless the ALJ specifies a shorter time period. Copies of interrogatories, requests for admission and requests for production of documents and responses thereto shall be served on all parties and a copy of the certificate of service shall be filed with the ALJ. Matters of fact or law of which admission is requested shall be deemed admitted unless, within a period designated in the request (at least 10 days after service, or within such additional time as the ALJ may allow), the party to whom the request is directed serves upon the requesting party a sworn statement either denying specifically the matters of which admission is requested or setting forth in detail the reasons why the party to whom the request is directed cannot truthfully either admit or deny such matters.</P> <P>(c) <E T="03">Depositions.</E> Upon application of a party and for good cause shown, the ALJ may order the taking of the testimony of any person by deposition and the production of specified documents or materials by the person at the deposition. The application shall state the purpose of the deposition and set forth the facts sought to be established through the deposition.</P> <P>(d) <E T="03">Enforcement.</E> The ALJ may order a party to answer designated questions, to produce specified documents or things or to take any other action in response to a proper discovery request. If a party does not comply with such an order, the ALJ may make a determination or enter any order in the proceeding as the ALJ deems reasonable and appropriate. The ALJ may strike related charges or defenses in whole or in part or may take particular facts relating to the discovery request to which the party failed or refused to respond as being established for purposes of the proceeding in accordance with the contentions of the party seeking discovery. In addition, enforcement by any district court of the United States in which venue is proper may be sought as appropriate.</P> </SECTION> <SECTION> <SECTNO>§ 719.11</SECTNO> <SUBJECT>Subpoenas.</SUBJECT> <P>(a) <E T="03">Issuance.</E> Upon the application of any party, supported by a satisfactory showing that there is substantial reason to believe that the evidence would not otherwise be available, the ALJ may issue subpoenas to any person requiring the attendance and testimony of witnesses and the production of such books, records or other documentary or physical evidence for the purpose of the hearing, as the ALJ deems relevant and material to the proceedings, and reasonable in scope. Witnesses shall be paid the same fees and mileage that are paid to witnesses in the courts of the United States. In case of contempt, challenge or refusal to obey a subpoena served upon any person pursuant to this paragraph, any district court of the United States, in which venue is proper, has jurisdiction to issue an order requiring any such person to comply with such subpoena. Any failure to obey such order of the court is punishable by the court as a contempt thereof.</P> <P>(b) <E T="03">Service.</E> Subpoenas issued by the ALJ may be served by any of the methods set forth in § 719.8(b) of the CWCR.</P> <P>(c) <E T="03">Timing.</E> Applications for subpoenas must be submitted at least 10 days before the scheduled hearing or deposition, unless the ALJ determines, for good cause shown, that extraordinary circumstances warrant a shorter time.</P> </SECTION> <SECTION> <SECTNO>§ 719.12</SECTNO> <SUBJECT>Matters protected against disclosure.</SUBJECT> <P>(a) <E T="03">Protective measures.</E> The ALJ may limit discovery or introduction of evidence or issue such protective or other orders as in the ALJ's judgment may be needed to prevent undue disclosure of classified or sensitive documents or information, including Confidential Business Information as defined by the Act. Where the ALJ determines that documents containing classified or sensitive matter must be made available to a party in order to avoid prejudice, the ALJ may direct the other party to prepare an unclassified and nonsensitive summary or extract of the documents. The ALJ may compare the extract or summary with the original to ensure that it is supported by the source document and that it omits <PRTPAGE P="176"/>only so much as must remain undisclosed. The summary or extract may be admitted as evidence in the record.</P> <P>(b) <E T="03">Arrangements for access.</E> If the ALJ determines that the summary procedure outlined in paragraph (a) of this section is unsatisfactory, and that classified or otherwise sensitive matter must form part of the record in order to avoid prejudice to a party, the ALJ may provide the parties opportunity to make arrangements that permit a party or a representative to have access to such matter without compromising sensitive information. Such arrangements may include obtaining security clearances or giving counsel for a party access to sensitive information and documents subject to assurances against further disclosure, including a protective order, if necessary.</P> </SECTION> <SECTION> <SECTNO>§ 719.13</SECTNO> <SUBJECT>Prehearing conference.</SUBJECT> <P>(a) On the ALJ's own motion, or on request of a party, the ALJ may direct the parties to participate in a prehearing conference, either in person or by telephone, to consider:</P> <P>(1) Simplification of issues;</P> <P>(2) The necessity or desirability of amendments to pleadings;</P> <P>(3) Obtaining stipulations of fact and of documents to avoid unnecessary proof; or</P> <P>(4) Such other matters as may expedite the disposition of the proceedings.</P> <P>(b) The ALJ may order the conference proceedings to be recorded electronically or taken by a reporter, transcribed and filed with the ALJ.</P> <P>(c) If a prehearing conference is impracticable, the ALJ may direct the parties to correspond with the ALJ to achieve the purposes of such a conference.</P> <P>(d) The ALJ will prepare a summary of any actions agreed on or taken pursuant to this section. The summary will include any written stipulations or agreements made by the parties.</P> </SECTION> <SECTION> <SECTNO>§ 719.14</SECTNO> <SUBJECT>Hearings.</SUBJECT> <P>(a) <E T="03">Scheduling.</E> Upon receipt of a written and dated request for a hearing, the ALJ shall, by agreement with all the parties or upon notice to all parties of at least 30 days, schedule a hearing. All hearings will be held in Washington, DC, unless the ALJ determines, for good cause shown, that another location would better serve the interest of justice.</P> <P>(b) <E T="03">Hearing procedure.</E> Hearings will be conducted in a fair and impartial manner by the ALJ. All hearings will be closed, unless the ALJ for good cause shown determines otherwise. The rules of evidence prevailing in courts of law do not apply, and all evidentiary material deemed by the ALJ to be relevant and material to the proceeding and not unduly repetitious will be received and given appropriate weight, except that any evidence of settlement which would be excluded under Rule 408 of the Federal Rules of Evidence is not admissible. Witnesses will testify under oath or affirmation, and shall be subject to cross-examination.</P> <P>(c) <E T="03">Testimony and record.</E> (1) A verbatim record of the hearing and of any other oral proceedings will be taken by reporter or by electronic recording, and filed with the ALJ. If any party wishes to obtain a written copy of the transcript, that party shall pay the costs of transcription. The parties may share the costs if both wish a transcript.</P> <P>(2) Upon such terms as the ALJ deems just, the ALJ may direct that the testimony of any person be taken by deposition and may admit an affidavit or declaration as evidence, provided that any affidavits or declarations have been filed and served on the parties sufficiently in advance of the hearing to permit a party to file and serve an objection thereto on the grounds that it is necessary that the affiant or declarant testify at the hearing and be subject to cross-examination.</P> <P>(d) <E T="03">Failure to appear.</E> If a party fails to appear in person or by counsel at a scheduled hearing, the hearing may nevertheless proceed. The party's failure to appear will not affect the validity of the hearing or any proceeding or action taken thereafter.</P> </SECTION> <SECTION> <SECTNO>§ 719.15</SECTNO> <SUBJECT>Procedural stipulations.</SUBJECT> <P>Unless otherwise ordered and subject to § 719.16 of the CWCR, a written stipulation agreed to by all parties and filed with the ALJ will modify the procedures established by this part.</P> </SECTION> <SECTION> <PRTPAGE P="177"/> <SECTNO>§ 719.16</SECTNO> <SUBJECT>Extension of time.</SUBJECT> <P>The parties may extend any applicable time limitation by stipulation filed with the ALJ before the time limitation expires, or the ALJ may, on the ALJ's own initiative or upon application by any party, either before or after the expiration of any applicable time limitation, extend the time , except that the requirement that a hearing be demanded within 15 days, and the requirement that a final agency decision be made within 30 days, may not be modified.</P> </SECTION> <SECTION> <SECTNO>§ 719.17</SECTNO> <SUBJECT>Post-hearing submissions.</SUBJECT> <P>All parties shall have the opportunity to file post-hearing submissions that may include findings of fact and conclusions of law, supporting evidence and legal arguments, exceptions to the ALJ's rulings or to the admissibility of evidence, and proposed orders and settlements.</P> </SECTION> <SECTION> <SECTNO>§ 719.18</SECTNO> <SUBJECT>Decisions.</SUBJECT> <P>(a) <E T="03">Initial decision.</E> After considering the entire record in the case, the ALJ will issue an initial decision based on a preponderance of the evidence. The decision will include findings of fact, conclusions of law, and a decision based thereon as to whether the respondent has violated the Act. If the ALJ finds that the evidence of record is insufficient to sustain a finding that a violation has occurred with respect to one or more allegations, the ALJ shall order dismissal of the allegation(s) in whole or in part, as appropriate. If the ALJ finds that one or more violations have been committed, the ALJ shall issue an order imposing administrative sanctions.</P> <P>(b) <E T="03">Factors considered in assessing penalties.</E> In determining the amount of a civil penalty, the ALJ shall take into account the nature, circumstances, extent and gravity of the violation(s), and, with respect to the respondent, the respondent's ability to pay the penalty, the effect of a civil penalty on the respondent's ability to continue to do business, the respondent's history of prior violations, the respondent's degree of culpability, the existence of an internal compliance program, and such other matters as justice may require.</P> <P>(c) <E T="03">Certification of initial decision.</E> The ALJ shall immediately certify the initial decision and order to the Executive Director of the Office of Legal Adviser, U.S. Department of State, 2201 C Street, NW., Room 5519, Washington, DC 20520, to the Office of Chief Counsel at the address in § 719.8, and to the respondent, by personal delivery or overnight mail.</P> <P>(d) <E T="03">Review of initial decision.</E> The initial decision shall become the final agency decision and order unless, within 30 days, the Secretary of State modifies or vacates it, with or without conditions, in accordance with 22 CFR 103.8.</P> </SECTION> <SECTION> <SECTNO>§ 719.19</SECTNO> <SUBJECT>Settlement.</SUBJECT> <P>(a) <E T="03">Settlements before issuance of a NOVA.</E> When the parties have agreed to a settlement of the case, the Director of the Office of Export Enforcement will recommend the settlement to the Secretary of State, forwarding a proposed settlement agreement and order, which, in accordance with 22 CFR 103.9(a), the Secretary of State will approve and sign if the recommended settlement is in accordance with applicable law.</P> <P>(b) <E T="03">Settlements following issuance of a NOVA.</E> The parties may enter into settlement negotiations at any time during the time a case is pending before the ALJ. If necessary, the parties may extend applicable time limitations or otherwise request that the ALJ stay the proceedings while settlement negotiations continue. When the parties have agreed to a settlement of the case, the Office of Chief Counsel will recommend the settlement to the Secretary of State, forwarding a proposed settlement agreement and order, which, in accordance with 22 CFR 103.9(b), the Secretary will approve and sign if the recommended settlement is in accordance with applicable law.</P> <P>(c) <E T="03">Settlement scope.</E> Any respondent who agrees to an order imposing any administrative sanction does so solely for the purpose of resolving the claims in the administrative enforcement proceeding brought under this part. This reflects the fact that the government <PRTPAGE P="178"/>officials involved have neither the authority nor the responsibility for initiating, conducting, settling, or otherwise disposing of criminal proceedings. That authority and responsibility are vested in the Attorney General and the Department of Justice.</P> <P>(d) <E T="03">Finality.</E> Cases that are settled may not be reopened or appealed.</P> </SECTION> <SECTION> <SECTNO>§ 719.20</SECTNO> <SUBJECT>Record for decision.</SUBJECT> <P>(a) <E T="03">The record.</E> The transcript of hearings, exhibits, rulings, orders, all papers and requests filed in the proceedings, and, for purposes of any appeal under § 719.18 or under 22 CFR 103.8, the decision of the ALJ and such submissions as are provided for under § 719.18 or 22 CFR 103.8 will constitute the record and the exclusive basis for decision. When a case is settled, the record will consist of any and all of the foregoing, as well as the NOVA or draft NOVA, settlement agreement, and order.</P> <P>(b) <E T="03">Restricted access.</E> On the ALJ's own motion, or on the motion of any party, the ALJ may direct that there be a restricted access portion of the record for any material in the record to which public access is restricted by law or by the terms of a protective order entered in the proceedings. A party seeking to restrict access to any portion of the record is responsible, prior to the close of the proceeding, for submitting a version of the document(s) proposed for public availability that reflects the requested deletion. The restricted access portion of the record will be placed in a separate file and the file will be clearly marked to avoid improper disclosure and to identify it as a portion of the official record in the proceedings. The ALJ may act at any time to permit material that becomes declassified or unrestricted through passage of time to be transferred to the unrestricted access portion of the record.</P> <P>(c) <E T="03">Availability of documents.</E>—(1) <E T="03">Scope.</E> All NOVAs and draft NOVAs, answers, settlement agreements, decisions and orders disposing of a case will be displayed on the BIS Freedom of Information Act (FOIA) Web site, at <E T="03">http://www.bis.doc.gov/foia,</E> which is maintained by the Office of Administration, Bureau of Industry and Security, U.S. Department of Commerce. This office does not maintain a separate inspection facility. The complete record for decision, as defined in paragraphs (a) and (b) of this section will be made available on request.</P> <P>(2) <E T="03">Timing.</E> The record for decision will be available only after the final administrative disposition of a case. Parties may seek to restrict access to any portion of the record under paragraph (b) of this section.</P> </SECTION> <SECTION> <SECTNO>§ 719.21</SECTNO> <SUBJECT>Payment of final assessment.</SUBJECT> <P>(a) <E T="03">Time for payment.</E> Full payment of the civil penalty must be made within 30 days of the effective date of the order or within such longer period of time as may be specified in the order. Payment shall be made in the manner specified in the NOVA.</P> <P>(b) <E T="03">Enforcement of order.</E> The government party may, through the Attorney General, file suit in an appropriate district court if necessary to enforce compliance with a final order issued under the CWCR. This suit will include a claim for interest at current prevailing rates from the date payment was due or ordered.</P> <P>(c) <E T="03">Offsets.</E> The amount of any civil penalty imposed by a final order may be deducted from any sum(s) owed by the United States to a respondent.</P> </SECTION> <SECTION> <SECTNO>§ 719.22</SECTNO> <SUBJECT>Reporting a violation.</SUBJECT> <P>If a person learns that a violation of the Convention, the Act, or the CWCR has occurred or may occur, that person may notify: Office of Export Enforcement, Bureau of Industry and Security, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Room H-4520, Washington, DC 20230; Tel: (202) 482-1208; Facsimile: (202) 482-0964.</P> </SECTION> </PART> <PART> <EAR>Pt. 720</EAR> <HD SOURCE="HED">PART 720—DENIAL OF EXPORT PRIVILEGES</HD> <CONTENTS> <SECHD>Sec.</SECHD> <SECTNO>720.1</SECTNO> <SUBJECT>Denial of export privileges for convictions under 18 U.S.C. 229.</SUBJECT> <SECTNO>720.2</SECTNO> <SUBJECT>Initiation of administrative action denying export privileges.</SUBJECT> <SECTNO>720.3</SECTNO> <SUBJECT>Final decision on administrative action denying export privileges.</SUBJECT> <SECTNO>720.4</SECTNO> <SUBJECT>Effect of denial.</SUBJECT> </CONTENTS> <AUTH> <PRTPAGE P="179"/> <HD SOURCE="HED">Authority:</HD> <P>22 U.S.C. 6701 <E T="03">et seq.</E>; E.O. 13128, 64 FR 36703, 3 CFR 1999 Comp., p. 199.</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>71 FR 24929, Apr. 27, 2006, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>§ 720.1</SECTNO> <SUBJECT>Denial of export privileges for convictions under 18 U.S.C. 229.</SUBJECT> <P>Any person in the United States or any U.S. national may be denied export privileges after notice and opportunity for hearing if that person has been convicted under Title 18, Section 229 of the United States Code of knowingly:</P> <P>(a) Developing, producing, otherwise acquiring, transferring directly or indirectly, receiving, stockpiling, retaining, owning, possessing, or using, or threatening to use, a chemical weapon; or</P> <P>(b) Assisting or inducing, in any way, any person to violate paragraph (a) of this section, or attempting or conspiring to violate paragraph (a) of this section.</P> </SECTION> <SECTION> <SECTNO>§ 720.2</SECTNO> <SUBJECT>Initiation of administrative action denying export privileges.</SUBJECT> <P>(a) <E T="03">Notice.</E> BIS will notify any person convicted under Section 229, Title 18, United States Code, of BIS's intent to deny that person's export privileges. The notification letter shall reference the person's conviction, specify the number of years for which BIS intends to deny export privileges, set forth the statutory and regulatory authority for the action, state whether the denial order will be standard or non-standard pursuant to Supplement No. 1 to part 764 of the Export Administration Regulations (15 CFR parts 730 through 799), and provide that the person may request a hearing before the Administrative Law Judge within 30 days from the date of the notification letter.</P> <P>(b) <E T="03">Waiver.</E> The failure of the notified person to file a request for a hearing within the time provided constitutes a waiver of the person's right to contest the denial of export privileges that BIS intends to impose.</P> <P>(c) <E T="03">Order of Assistant Secretary.</E> If no hearing is requested, the Assistant Secretary for Export Enforcement will order that export privileges be denied as indicated in the notification letter.</P> </SECTION> <SECTION> <SECTNO>§ 720.3</SECTNO> <SUBJECT>Final decision on administrative action denying export privileges.</SUBJECT> <P>(a) <E T="03">Hearing.</E> Any hearing that is granted by the ALJ shall be conducted in accordance with the procedures set forth in § 719.14 of the CWCR.</P> <P>(b) <E T="03">Initial decision and order.</E> After considering the entire record in the proceeding, the ALJ will issue an initial decision and order, based on a preponderance of the evidence. The ALJ may consider factors such as the seriousness of the criminal offense that is the basis for conviction, the nature and duration of the criminal sanctions imposed, and whether the person has undertaken any corrective measures. The ALJ may dismiss the proceeding if the evidence is insufficient to sustain a denial of export privileges, or may issue an order imposing a denial of export privileges for the length of time the ALJ deems appropriate. An order denying export privileges may be standard or non-standard, as provided in Supplement No. 1 to part 764 of the Export Administration Regulations (15 CFR parts 730 through 799). The initial decision and order will be served on each party, and will be published in the <E T="04">Federal Register</E> as the final decision of BIS 30 days after service, unless an appeal is filed in accordance with paragraph (c) of this section.</P> <P>(c) <E T="03">Grounds for appeal.</E> (1) A party may, within 30 days of the ALJ's initial decision and order, petition the Under Secretary, Bureau of Industry and Security, for review of the initial decision and order. A petition for review must be filed with the Office of Under Secretary, Bureau of Industry and Security, Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230, and shall be served on the Office of Chief Counsel for Industry and Security or on the respondent. Petitions for review may be filed only on one or more of the following grounds:</P> <P>(i) That a necessary finding of fact is omitted, erroneous or unsupported by substantial evidence of record;</P> <P>(ii) That a necessary legal conclusion or finding is contrary to law;</P> <P>(iii) That prejudicial procedural error occurred; or<PRTPAGE P="180"/> </P> <P>(iv) That the decision or the extent of sanctions is arbitrary, capricious or an abuse of discretion.</P> <P>(2) The appeal must specify the grounds on which the appeal is based and the provisions of the order from which the appeal was taken.</P> <P>(d) <E T="03">Appeal procedure.</E> The Under Secretary, Bureau of Industry and Security, normally will not hold hearings or entertain oral arguments on appeals. A full written statement in support of the appeal must be filed with the appeal and be simultaneously served on all parties, who shall have 30 days from service to file a reply. At his/her discretion, the Under Secretary may accept new submissions, but will not ordinarily accept those submissions filed more than 30 days after the filing of the reply to the appellant's first submission.</P> <P>(e) <E T="03">Decisions.</E> The Under Secretary's decision will be in writing and will be accompanied by an order signed by the Under Secretary, Bureau of Industry and Security, giving effect to the decision. The order may either dispose of the case by affirming, modifying or reversing the order of the ALJ, or may refer the case back to the ALJ for further proceedings. Any order that imposes a denial of export privileges will be published in the <E T="04">Federal Register.</E> </P> </SECTION> <SECTION> <SECTNO>§ 720.4</SECTNO> <SUBJECT>Effect of denial.</SUBJECT> <P>Any person denied export privileges pursuant to this part shall be considered a “person denied export privileges” for purposes of the Export Administration Regulations (EAR) (15 CFR parts 730 through 799). Orders denying export privileges pursuant to Parts 764 and 766 of the EAR are published in the <E T="04">Federal Register</E> when they are issued and are legally controlling documents in accordance with their terms. BIS maintains unofficial compilations of persons denied export privileges on its Web site.</P> </SECTION> </PART> <PART> <EAR>Pt. 721</EAR> <HD SOURCE="HED">PART 721—INSPECTION OF RECORDS AND RECORDKEEPING</HD> <CONTENTS> <SECHD>Sec.</SECHD> <SECTNO>721.1</SECTNO> <SUBJECT>Inspection of records.</SUBJECT> <SECTNO>721.2</SECTNO> <SUBJECT>Recordkeeping.</SUBJECT> <SECTNO>721.3</SECTNO> <SUBJECT>Destruction or disposal of records.</SUBJECT> </CONTENTS> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>22 U.S.C. 6701 <E T="03">et seq.</E>; E.O. 13128, 64 FR 36703, 3 CFR 1999 Comp., p. 199.</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>71 FR 24929, Apr. 27, 2006, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>§ 721.1</SECTNO> <SUBJECT>Inspection of records.</SUBJECT> <P>Upon request by BIS or any other agency of competent jurisdiction, you must permit access to and copying of any record relating to compliance with the requirements of the CWCR. This requires that you make available the equipment and, if necessary, knowledgeable personnel for locating, reading, and reproducing any record.</P> </SECTION> <SECTION> <SECTNO>§ 721.2</SECTNO> <SUBJECT>Recordkeeping.</SUBJECT> <P>(a) <E T="03">Requirements.</E> Each person, facility, plant site or trading company required to submit a declaration, report, or advance notification under parts 712 through 715 of the CWCR must retain all supporting materials and documentation used by a unit, plant, facility, plant site or trading company to prepare such declaration, report, or advance notification to determine production processing, consumption, export or import of chemicals. In the event that a declared facility is sold, the previous owner of the facility must retain all such supporting materials and documentation that were not transferred to the current owner of the facility (e.g., as part of the contract involving the sale of the facility)—otherwise, the current owner of the facility is responsible for retaining such supporting materials and documentation. Whenever the previous owner of a declared facility retains such supporting materials and documentation, the owner must inform BIS of any subsequent change in address or other contact information, so that BIS will be able to contact the previous owner of the facility, to arrange for access to such records, if BIS deems them relevant to inspection activities involving the facility (see § 716.4 of the CWCR).</P> <P>(b) <E T="03">Five year retention period.</E> All supporting materials and documentation required to be kept under paragraph (a) of this section must be retained for five years from the due date of the applicable declaration, report, or advance notification, or for five years from the date of submission of the applicable <PRTPAGE P="181"/>declaration, report or advance notification, whichever is later. Due dates for declarations, reports and advance notifications are provided in parts 712 through 715 of the CWCR.</P> <P>(c) <E T="03">Location of records.</E> If a facility is subject to inspection under part 716 of the CWCR, records retained under this section must be maintained at the facility or must be accessible electronically at the facility for purposes of inspection of the facility by Inspection Teams. If a facility is not subject to inspection under part 716 of the CWCR, records retained under this section may be maintained either at the facility subject to a declaration, report, or advance notification requirement, or at a remote location, but all records must be accessible to any authorized agent, official or employee of the U.S. Government under § 721.1 of the CWCR.</P> <P>(d) <E T="03">Reproduction of original records.</E> (1) You may maintain reproductions instead of the original records provided all of the requirements of paragraph (b) of this section are met.</P> <P>(2) If you must maintain records under this part, you may use any photostatic, miniature photographic, micrographic, automated archival storage, or other process that completely, accurately, legibly and durably reproduces the original records (whether on paper, microfilm, or through electronic digital storage techniques). The process must meet all of the following requirements, which are applicable to all systems:</P> <P>(i) The system must be capable of reproducing all records on paper.</P> <P>(ii) The system must record and be able to reproduce all marks, information, and other characteristics of the original record, including both obverse and reverse sides (unless blank) of paper documents in legible form.</P> <P>(iii) When displayed on a viewer, monitor, or reproduced on paper, the records must exhibit a high degree of legibility and readability. For purposes of this section, legible and legibility mean the quality of a letter or numeral that enable the observer to identify it positively and quickly to the exclusion of all other letters or numerals. Readable and readability mean the quality of a group of letters or numerals being recognized as complete words or numbers.</P> <P>(iv) The system must preserve the initial image (including both obverse and reverse sides, unless blank, of paper documents) and record all changes, who made them and when they were made. This information must be stored in such a manner that none of it may be altered once it is initially recorded.</P> <P>(v) You must establish written procedures to identify the individuals who are responsible for the operation, use and maintenance of the system.</P> <P>(vi) You must keep a record of where, when, by whom, and on what equipment the records and other information were entered into the system.</P> <P>(3) <E T="03">Requirements applicable to a system based on digital images.</E> For systems based on the storage of digital images, the system must provide accessibility to any digital image in the system. The system must be able to locate and reproduce all records according to the same criteria that would have been used to organize the records had they been maintained in original form.</P> <P>(4) <E T="03">Requirements applicable to a system based on photographic processes.</E> For systems based on photographic, photostatic, or miniature photographic processes, the records must be maintained according to an index of all records in the system following the same criteria that would have been used to organize the records had they been maintained in original form.</P> </SECTION> <SECTION> <SECTNO>§ 721.3</SECTNO> <SUBJECT>Destruction or disposal of records.</SUBJECT> <P>If BIS or other authorized U.S. government agency makes a formal or informal request for a certain record or records, such record or records may not be destroyed or disposed of without the written authorization of the requesting entity.</P> </SECTION> </PART> <PART> <RESERVED>PART 722—INTERPRETATIONS [RESERVED]</RESERVED> <NOTE> <HD SOURCE="HED">Note:</HD> <P>This part is reserved for interpretations of parts 710 through 721 and also for applicability of decisions by the Organization for the Prohibition of Chemical Weapons (OPCW).</P> </NOTE> </PART> <PART> <PRTPAGE P="182"/> <RESERVED>PARTS 723-729 [RESERVED]</RESERVED> </PART> </SUBCHAP> <SUBCHAP TYPE="P"> <PRTPAGE P="183"/> <HD SOURCE="HED">SUBCHAPTER C—EXPORT ADMINISTRATION REGULATIONS</HD> <PART> <EAR>Pt. 730</EAR> <HD SOURCE="HED">PART 730—GENERAL INFORMATION</HD> <CONTENTS> <SECHD>Sec.</SECHD> <SECTNO>730.1</SECTNO> <SUBJECT>What these regulations cover.</SUBJECT> <SECTNO>730.2</SECTNO> <SUBJECT>Statutory authority.</SUBJECT> <SECTNO>730.3</SECTNO> <SUBJECT>Dual use exports.</SUBJECT> <SECTNO>730.4</SECTNO> <SUBJECT>Other control agencies and departments.</SUBJECT> <SECTNO>730.5</SECTNO> <SUBJECT>Coverage of more than exports.</SUBJECT> <SECTNO>730.6</SECTNO> <SUBJECT>Control purposes.</SUBJECT> <SECTNO>730.7</SECTNO> <SUBJECT>License requirements and exceptions.</SUBJECT> <SECTNO>730.8</SECTNO> <SUBJECT>How to proceed and where to get help.</SUBJECT> <SECTNO>730.9</SECTNO> <SUBJECT>Organization of the Bureau of Industry and Security.</SUBJECT> <SECTNO>730.10</SECTNO> <SUBJECT>Advisory information.</SUBJECT> <APP>Supplement No. 1 to Part 730—Information Collection Requirements Under the Paperwork Reduction Act: OMB Control Numbers</APP> <APP>Supplement No. 2 to Part 730—Technical Advisory Committees</APP> <APP>Supplement No. 3 to Part 730—Other U.S. Government Departments and Agencies With Export Control Responsibilities</APP> </CONTENTS> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>50 U.S.C. app. 2401 <E T="03">et seq.</E>; 50 U.S.C. 1701 <E T="03">et seq.</E>; 10 U.S.C. 7420; 10 U.S.C. 7430(e); 22 U.S.C. 287c; 22 U.S.C. 2151 note, Pub. L. 108-175; 22 U.S.C. 3201 <E T="03">et seq.</E>; 22 U.S.C. 6004; 30 U.S.C. 185(s), 185(u); 42 U.S.C. 2139a; 42 U.S.C. 6212; 43 U.S.C. 1354; 46 U.S.C. app. 466c; 50 U.S.C. app. 5; Sec. 901-911, Pub. L. 106-387; Sec. 221, Pub. L. 107-56; E.O. 11912, 41 FR 15825, 3 CFR, 1976 Comp., p. 114; E.O. 12002, 42 FR 35623, 3 CFR, 1977 Comp., p.133; E.O. 12058, 43 FR 20947, 3 CFR, 1978 Comp., p. 179; E.O. 12214, 45 FR 29783, 3 CFR, 1980 Comp., p. 256; E.O. 12851, 58 FR 33181, 3 CFR, 1993 Comp., p. 608; E.O. 12854, 58 FR 36587, 3 CFR, 1993 Comp., p. 179; E.O. 12918, 59 FR 28205, 3 CFR, 1994 Comp., p. 899; E.O. 12938, 59 FR 59099, 3 CFR, 1994 Comp., p. 950; E.O. 12947, 60 FR 5079, 3 CFR, 1995 Comp., p. 356; E.O. 12981, 60 FR 62981, 3 CFR, 1995 Comp., p. 419; 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. 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; E.O. 13338, 69 FR 26751, May 13, 2004; Notice of October 25, 2005, 70 FR 62027 (October 27, 2005); Notice of August 3, 2006, 71 FR 44551 (August 7, 2006).</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>61 FR 12734, Mar. 25, 1996, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>§ 730.1</SECTNO> <SUBJECT>What these regulations cover.</SUBJECT> <P>In this part, references to the Export Administration Regulations (EAR) are references to 15 CFR chapter VII, subchapter C. The EAR are issued by the United States Department of Commerce, Bureau of Industry and Security (BIS) under laws relating to the control of certain exports, reexports, and activities. In addition, the EAR implement antiboycott law provisions requiring regulations to prohibit specified conduct by United States persons that has the effect of furthering or supporting boycotts fostered or imposed by a country against a country friendly to United States. Supplement No. 1 to part 730 lists the control numbers assigned to information collection requirements under the EAR by the Office of Management and Budget pursuant to the Paperwork Reduction Act of 1995.</P> </SECTION> <SECTION> <SECTNO>§ 730.2</SECTNO> <SUBJECT>Statutory authority.</SUBJECT> <P>The EAR have been designed primarily to implement the Export Administration Act of 1979, as amended, 50 U.S.C. app. 2401-2420 (EAA). There are numerous other legal authorities underlying the EAR. These are listed in the <E T="04">Federal Register</E> documents promulgating the EAR and at the beginning of each part of the EAR in the Code of Federal Regulations (CFR). From time to time, the President has exercised authority under the International Emergency Economic Powers Act with respect to the EAR (50 U.S.C. 1701-1706 (IEEPA)). The EAA is not permanent legislation, and when it has lapsed, Presidential executive orders under IEEPA have directed and authorized the continuation in force of the EAR.</P> </SECTION> <SECTION> <SECTNO>§ 730.3</SECTNO> <SUBJECT>Dual use exports.</SUBJECT> <P>The convenient term <E T="03">dual use</E> is sometimes used to distinguish the types of items covered by the EAR from those that are covered by the regulations of certain other U.S. government departments and agencies with export licensing responsibilities. In general, the term dual use serves to distinguish EAR-controlled items that can be used both in military and other strategic uses (e.g., nuclear) and commercial applications. In general, the <PRTPAGE P="184"/>term dual use serves to distinguish EAR-controlled items that can be used both in military and other strategic uses and in civil applications from those that are weapons and military related use or design and subject to the controls of the Department of State or subject to the nuclear related controls of the Department of Energy or the Nuclear Regulatory Commission. Note, however, that although the short-hand term dual use may be employed to refer to the entire scope of the EAR, the EAR also apply to some items that have solely civil uses.</P> </SECTION> <SECTION> <SECTNO>§ 730.4</SECTNO> <SUBJECT>Other control agencies and departments.</SUBJECT> <P>In addition to the departments and agencies mentioned in § 730.3 of this part, other departments and agencies have jurisdiction over certain narrower classes of exports and reexports. These include the Department of Treasury's Office of Foreign Assets Control (OFAC), which administers controls against certain countries that are the object of sanctions affecting not only exports and reexports, but also imports and financial dealings. For your convenience, Supplement No. 3 to part 730 identifies other departments and agencies with regulatory jurisdiction over certain types of exports and reexports. This is not a comprehensive list, and the brief descriptions are only generally indicative of the types of controls administered and/or enforced by each agency.</P> </SECTION> <SECTION> <SECTNO>§ 730.5</SECTNO> <SUBJECT>Coverage of more than exports.</SUBJECT> <P>The core of the export control provisions of the EAR concerns exports from the United States. You will find, however, that some provisions give broad meaning to the term “export”, apply to transactions outside of the United States, or apply to activities other than exports.</P> <P>(a) <E T="03">Reexports.</E> Commodities, software, and technology that have been exported from the United States are generally subject to the EAR with respect to reexport. Many such reexports, however, may go to many destinations without a license or will qualify for an exception from licensing requirements.</P> <P>(b) <E T="03">Foreign products.</E> In some cases, authorization to export technology from the United States will be subject to assurances that items produced abroad that are the direct product of that technology will not be exported to certain destinations without authorization from BIS.</P> <P>(c) <E T="03">Scope of “exports”.</E> Certain actions that you might not regard as an “export” in other contexts do constitute an export subject to the EAR. The release of technology to a foreign national in the United States through such means as demonstration or oral briefing is deemed an export. Other examples of exports under the EAR include the return of foreign equipment to its country of origin after repair in the United States, shipments from a U.S. foreign trade zone, and the electronic transmission of non-public data that will be received abroad.</P> <P>(d) <E T="03">U.S. person activities.</E> To counter the proliferation of weapons of mass destruction, the EAR restrict the involvement of “United States persons” anywhere in the world in exports of foreign-origin items, or in providing services or support, that may contribute to such proliferation. The EAR also restrict technical assistance by U.S. persons with respect to encryption commodities or software.</P> <CITA>[61 FR 12734, Mar. 25, 1996, as amended at 61 FR 68577, Dec. 30, 1996]</CITA> </SECTION> <SECTION> <SECTNO>§ 730.6</SECTNO> <SUBJECT>Control purposes.</SUBJECT> <P>The export control provisions of the EAR are intended to serve the national security, foreign policy, nonproliferation, and short supply interests of the United States and, in some cases, to carry out its international obligations. Some controls are designed to restrict access to dual use items by countries or persons that might apply such items to uses inimical to U.S. interests. These include controls designed to stem the proliferation of weapons of mass destruction and controls designed to limit the military and terrorism support capability of certain countries. The effectiveness of many of the controls under the EAR is enhanced by their being maintained as part of multilateral control arrangements. Multilateral export control cooperation is sought through arrangements such as <PRTPAGE P="185"/>the Nuclear Suppliers Group, the Australia Group, and the Missile Technology Control Regime. The EAR also include some export controls to protect the United States from the adverse impact of the unrestricted export of commodities in short supply.</P> </SECTION> <SECTION> <SECTNO>§ 730.7</SECTNO> <SUBJECT>License requirements and exceptions.</SUBJECT> <P>A relatively small percentage of exports and reexports subject to the EAR require an application to BIS for a license. Many items are not on the Commerce Control List (CCL) (Supplement No. 1 to § 774.1 of the EAR), or, if on the CCL, require a license to only a limited number of countries. Other transactions may be covered by one or more of the License Exceptions in the EAR. In such cases no application need be made to BIS.</P> </SECTION> <SECTION> <SECTNO>§ 730.8</SECTNO> <SUBJECT>How to proceed and where to get help.</SUBJECT> <P>(a) <E T="03">How the EAR are organized.</E> The Export Administration Regulations (EAR) are structured in a logical manner. In dealing with the EAR you may find it helpful to be aware of the overall organization of these regulations. In order to determine what the rules are and what you need to do, review the titles and the introductory sections of the parts of the EAR.</P> <P>(1) <E T="03">How do you go about determining your obligations under the EAR?</E> Part 732 of the EAR provides steps you may follow to determine your obligations under the EAR. You will find guidance to enable you to tell whether or not your transaction is subject to the EAR and, if it is, whether it qualifies for a License Exception or must be authorized through issuance of a license.</P> <P>(2) <E T="03">Are your items or activities subject to the EAR at all?</E> Part 734 of the EAR defines the items and activities that are subject to the EAR. Note that the definition of “items subject to the EAR” includes, but is not limited to, items listed on the Commerce Control List in part 774 of the EAR.</P> <P>(3) <E T="03">If subject to the EAR, what do the EAR require?</E> Part 736 of the EAR lists all the prohibitions that are contained in the EAR. Note that certain prohibitions (General Prohibitions One through Three) apply to items as indicated on the CCL, and others (General Prohibitions Four through Ten) prohibit certain activities and apply to all items subject to the EAR unless otherwise indicated.</P> <P>(4) <E T="03">Do you need a license for your item or activity? What policies will BIS apply if you do need to submit license application?</E> The EAR have four principal ways of describing license requirements:</P> <P>(i) The EAR may require a license to a country if your item is listed on the CCL and the Country Chart in part 738 of the EAR tells that a license is required to that country. Virtually all Export Control Classification Numbers (ECCN) on the CCL are covered by the Country Chart in part 738 of the EAR. That part identifies the limited number of entries that are not included on the Chart. These ECCNs will state the specific countries that require a license or refer you to a self-contained section, i.e., Short Supply in part 754 of the EAR, or Embargoes in part 746 of the EAR. If a license is required, you should consult part 740 of the EAR which describes the License Exception that may be available for items on the CCL. Part 742 of the EAR describes the licensing policies that BIS will apply in reviewing an application you file. Note that part 754 of the EAR on short supply controls and part 746 on embargoes are self-contained parts that include the available exceptions and licensing policy.</P> <P>(ii) A license requirement may be based on the end-use or end-user in a transaction, primarily for proliferation reasons. Part 744 of the EAR describes such requirements and relevant licensing policies and includes both restrictions on items and restrictions on the activities of U.S. persons.</P> <P>(iii) A license is required for virtually all exports to embargoed destinations, such as Cuba. Part 746 of the EAR describes all the licensing requirements, license review policies and License Exceptions that apply to such destinations. If your transaction involves one of these countries, you should first look at this part. This part also describes controls that may be maintained under the EAR to implement UN sanctions.<PRTPAGE P="186"/> </P> <P>(iv) In addition, under §§ 736.2(b)(9) and (10) of the EAR, you may not engage in a transaction knowing a violation is about to occur or violate any orders, terms, and conditions under the EAR. Part 764 of the EAR describes prohibited transactions with a person denied export privileges or activity that violates the terms or conditions of a denial order.</P> <P>(5) <E T="03">How do you file a license application and what will happen to the application once you do file it? What if you need authorization for multiple transactions?</E> Parts 748 and 750 of the EAR provide information on license submission and processing. Part 752 of the EAR provides for a Special Comprehensive License that authorizes multiple transactions. If your application is denied, part 756 of the EAR provides rules for filing appeals.</P> <P>(6) <E T="03">How do you clear shipments with the U.S. Customs Service?</E> Part 758 of the EAR describes the requirements for clearance of exports.</P> <P>(7) <E T="03">Where do you find the rules on restrictive trade practices and boycotts?</E> Part 760 of the EAR deals with restrictive trade practices and boycotts.</P> <P>(8) <E T="03">Where are the rules on recordkeeping and enforcement?</E> Part 762 of the EAR sets out your recordkeeping requirements, and parts 764 and 766 of the EAR deal with violations and enforcement proceedings.</P> <P>(9) <E T="03">What is the effect of foreign availability?</E> Part 768 of the EAR provides rules for determining foreign availability of items subject to controls.</P> <P>(10) <E T="03">Do the EAR provide definitions and interpretations?</E> Part 770 of the EAR contains interpretations and part 772 of the EAR lists definitions used.</P> <P>(b) <E T="03">Why the EAR are so detailed.</E> Some people will find the great length of the EAR and their extensive use of technical terms intimidating. BIS believes, however, that such detail and precision can and does serve the interests of the public. The detailed listing of technical parameters in the CCL establishes precise, objective criteria. This should, in most cases, enable you to ascertain the appropriate control status. Broader, more subjective criteria would leave exporters and reexporters more dependent upon interpretations and rulings by BIS officials. Moreover, much of the detail in the CCL is derived from multilaterally adopted lists, and the specificity serves to enhance the uniformity and effectiveness of international control practices and to promote a “level playing field”. The detailed presentation of such elements as licensing and export clearance procedures enables you to find in one place what you need to know to comply with pertinent requirements. Of special importance is the detailed listing of License Exception criteria, as these will enable you to determine quickly, and with confidence, that you may proceed with a transaction without delay. Finally, some of the detail results from the need to draft the EAR with care in order to avoid loop-holes and to permit effective enforcement.</P> <P>(c) <E T="03">Where to get help.</E> Throughout the EAR you will find information on offices you can contact for various purposes and types of information. General information including assistance in understanding the EAR, information on how to obtain forms, electronic services, publications, and information on training programs offered by BIS, is available from the Office of Exporter Services at the following locations: </P> <EXTRACT> <FP SOURCE="FP-1">Outreach and Educational Services Division, U.S. Department of Commerce, 14th and Pennsylvania Avenue, NW., Room H1099D, Washington, DC 20230, Tel: (202) 482-4811, Fax: (202) 482-2927, and</FP> <FP SOURCE="FP-1">Western Regional Office, U.S. Department of Commerce, 3300 Irvine Avenue, Suite 345, Newport Beach, California 92660, Tel: (949) 660-0144, Fax: (949) 660-9347, and</FP> <FP SOURCE="FP-1">U.S. Export Assistance Center, Bureau of Industry and Security, 152 N. Third Street, Suite 550, San Jose, California 95112-5591, Tel: (408) 998-7402, Fax: (408) 998-7470.</FP> </EXTRACT> <CITA>[61 FR 12734, Mar. 25, 1996, as amended at 69 FR 5687, Feb. 6, 2004; 70 FR 14386, Mar. 22, 2005; 70 FR 22249, Apr. 29, 2005]</CITA> </SECTION> <SECTION> <SECTNO>§ 730.9</SECTNO> <SUBJECT>Organization of the Bureau of Industry and Security.</SUBJECT> <P>The head of the Bureau of Industry and Security is the Under Secretary for Industry and Security. The Under Secretary is assisted by a Deputy Under Secretary for Industry and Security, the Assistant Secretary for Export Administration, the Assistant Secretary for Export Enforcement, the Director of Administration, the Director of the <PRTPAGE P="187"/>Office of Congressional and Public Affairs, the Chief Information Officer, and the Director of the Office of International Programs. The functions and authorities of the Under Secretary are described in the Department's Organizational Order 10-16. The Department's organizational and administrative orders are available via Office of Management and Organization's Web page on the Department's Web site at <E T="03">http://www.osec.doc.gov/omo/DMPHome.htm.</E> The principal functions of the Bureau that directly affect the public are carried out by two units: Export Administration and Export Enforcement.</P> <P>(a) Export Administration is headed by the Assistant Secretary for Export Administration, who is assisted by a Deputy Assistant Secretary. Its substantive work is carried out by five sub-units: the Office of Nonproliferation and Treaty Compliance, the Office of National Security and Technology Transfer Controls, the Office of Exporter Services, the Operating Committee, and the Office of Strategic Industries and Economic Security. The functions of the Operating Committee are described in § 750.4(f)(1) of the EAR. The roles of the other units are described on BIS's Web site at <E T="03">http://www.bis.doc.gov/about/programoffices.htm.</E> </P> <P>(b) Export Enforcement is headed by the Assistant Secretary for Export Enforcement who is assisted by a Deputy Assistant Secretary. Its substantive work is carried out by three sub-units: the Office of Export Enforcement, the Office of Enforcement Analysis and the Office of Antiboycott Compliance. The roles of these units are described on BIS's Web site at <E T="03">http://www.bis.doc.gov/about/programoffices.htm.</E> </P> <P>(c) BIS is also assisted in its work by six technical advisory committees. The procedures and criteria for establishing and operating the technical advisory committees is at supplement No. 2 to this part. Information about the specific roles of each committee, meeting schedules, and membership selection is available on BIS's Web site at <E T="03">http://tac.bis.doc.gov/.</E> </P> <CITA>[70 FR 8248, Feb. 18, 2005]</CITA> </SECTION> <SECTION> <SECTNO>§ 730.10</SECTNO> <SUBJECT>Advisory information.</SUBJECT> <P>The general information in this part is just that—general. To achieve brevity, so as to give you a quick overview, the information in this part is selective, incomplete, and not expressed with regulatory precision. The controlling language is the language of succeeding parts of the EAR and of any other laws or regulations referred to or applicable. The content of this part is not to be construed as modifying or interpreting any other language or as in any way, limiting the authority of BIS, any of its components or any other government department or agency. You should not take any action based solely on what you read in this part.</P> </SECTION> <APPENDIX> <EAR>Pt. 730, Supp. 1</EAR> <HD SOURCE="HED">Supplement No. 1 to Part 730—Information Collection Requirements Under the Paperwork Reduction Act: OMB Control Numbers</HD> <P>This supplement lists the control numbers assigned to the information collection requirements for the Bureau of Industry and Security by the Office of Management and Budget (OMB), pursuant to the Paperwork Reduction Act of 1995. This supplement complies with the requirements of section 3506(c)(1)(B)(i) of the Paperwork Reduction Act requiring agencies to display current control numbers assigned by the Director of OMB for each agency information collection requirement.</P> <GPOTABLE CDEF="s25,r50,r50" COLS="3" OPTS="L2"> <BOXHD> <CHED H="1">Collection number</CHED> <CHED H="1">Title</CHED> <CHED H="1">Reference in the EAR</CHED> </BOXHD> <ROW> <ENT I="01">0694-0004</ENT> <ENT>Foreign Availability Procedures and Criteria</ENT> <ENT>part 768.</ENT> </ROW> <ROW> <ENT I="01">0694-0009</ENT> <ENT>Approval of Triangular Transactions Involving Commodities Covered by a U.S. Import Certificate</ENT> <ENT>§ 748.10(e).</ENT> </ROW> <ROW> <ENT I="01">0694-0012</ENT> <ENT>Report of Requests for Restrictive Trade Practice or Boycott—Single or Multiple Transactions</ENT> <ENT>part 760 and § 762.2(b).</ENT> </ROW> <ROW> <ENT I="01">0694-0013</ENT> <ENT>Computers and Related Equipment EAR Supplement 2 to Part 748</ENT> <ENT>part 774.</ENT> </ROW> <ROW> <ENT I="01">0694-0016</ENT> <ENT>Delivery Verification Certificate</ENT> <ENT>§§ 748.13 and 762.2(b).</ENT> </ROW> <ROW> <ENT I="01">0694-0017</ENT> <ENT>International Import Certificate</ENT> <ENT>§ 748.10</ENT> </ROW> <ROW> <ENT I="01">0694-0021</ENT> <ENT>Statement by Ultimate Consignee and Purchaser</ENT> <ENT>§§ 748.11 and 762.2(b).</ENT> </ROW> <ROW> <PRTPAGE P="188"/> <ENT I="01">0694-0023</ENT> <ENT>Written Assurance Requirement of License Exception TSR (Technology and Software Under Restriction)</ENT> <ENT>§§ 740.3(d) and 740.4(c).</ENT> </ROW> <ROW> <ENT I="01">0694-0025</ENT> <ENT>Short Supply Regulations—Unprocessed Western Red Cedar</ENT> <ENT>§§ 754.4 and 762.2(b).</ENT> </ROW> <ROW> <ENT I="01">0694-0026</ENT> <ENT>Short Supply Regulations—Petroleum Products</ENT> <ENT>§ 754.3.</ENT> </ROW> <ROW> <ENT I="01">0694-0027</ENT> <ENT>Short Supply Regulations Petroleum (Crude Oil)</ENT> <ENT>§ 754.2.</ENT> </ROW> <ROW> <ENT I="01">0694-0029</ENT> <ENT>License Exception TMP: Special Requirements</ENT> <ENT>§ 740.9(a)(2)(viii)(B).</ENT> </ROW> <ROW> <ENT I="01">0694-0033</ENT> <ENT>License Exception, Humanitarian Donations</ENT> <ENT>§§ 740.12(b)(7), 762.2(b), Supp. No. 2 to part 740.</ENT> </ROW> <ROW> <ENT I="01">0694-0047</ENT> <ENT>Technology Letter of Explanation</ENT> <ENT>Supplement No. 2 to part 748, paragraph (o)(2).</ENT> </ROW> <ROW> <ENT I="01">0694-0058</ENT> <ENT>Procedure for Voluntary Self-Disclosure of Violations</ENT> <ENT>§§ 762.2(b) and 764.5.</ENT> </ROW> <ROW> <ENT I="01">0694-0073</ENT> <ENT>Export Controls of High Performance Computers</ENT> <ENT>Supplement No. 2 to part 748, paragraph (c)(2), and § 762.2(b).</ENT> </ROW> <ROW> <ENT I="01">0694-0086</ENT> <ENT>Report of Sample Shipments of Chemical Weapon Precursors</ENT> <ENT>Supplement No. 1 to part 774.</ENT> </ROW> <ROW> <ENT I="01">0694-0088</ENT> <ENT>Simplified Network Application Processing+ System (SNAP+) and the Multipurpose Export License Application</ENT> <ENT>parts 746, 748, and 752; § 762.2(b).</ENT> </ROW> <ROW> <ENT I="01">0694-0089</ENT> <ENT>Special Comprehensive License Procedure</ENT> <ENT>part 752 and § 762.2(b).</ENT> </ROW> <ROW> <ENT I="01">0694-0093</ENT> <ENT>Import Certificates And End-User Certificates</ENT> <ENT>§§ 748.9, 748.10, 762.5(d), 762.6 764.2(g)(2).</ENT> </ROW> <ROW> <ENT I="01">0694-0096</ENT> <ENT>Five Year Records Retention Period</ENT> <ENT>part 760, § 762.6(a).</ENT> </ROW> <ROW> <ENT I="01">0694-0100</ENT> <ENT>Requests for Appointment of Technical Advisory Committee</ENT> <ENT>Supplement No. 1 to part 730.</ENT> </ROW> <ROW> <ENT I="01">0694-0101</ENT> <ENT>One-Time Report For Foreign Software or Technology Eligible For De Minimis Exclusion</ENT> <ENT>§ 734.4.</ENT> </ROW> <ROW> <ENT I="01">0694-0102</ENT> <ENT>Registration of U.S. Agricultural Commodities For Exemption From Short Supply Limitations on Export”, and “Petitions For The Imposition of Monitoring Or Controls On Recyclable Metallic matrials; Public Hearings</ENT> <ENT>§§ 754.6 and 754.7.</ENT> </ROW> <ROW> <ENT I="01">0694-0104</ENT> <ENT>Review, Reporting, and Notification of Commercial Encryption Items</ENT> <ENT>§§ 740.9(c), 740.13(e), 740.17 and 742.15(b).</ENT> </ROW> <ROW> <ENT I="01">0694-0106</ENT> <ENT>Reporting and Recordkeeping Requirements under the Wassenaar Arrangement</ENT> <ENT>§ 743.1.</ENT> </ROW> <ROW> <ENT I="01">0694-0107</ENT> <ENT>National Defense Authorization Act (NDAA)</ENT> <ENT>§§ 740.7, 742.12.</ENT> </ROW> <ROW> <ENT I="01">0694-0117</ENT> <ENT>Chemical Weapons Convention Provisions of the Export Administration Regulations (Schedule 1 Advance Notifications and Reports and Schedule 3 End-use Certificates)</ENT> <ENT>Part 745.</ENT> </ROW> <ROW> <ENT I="01">0694-0122</ENT> <ENT>Licensing Responsibilities and Enforcement</ENT> <ENT>Part 758, and § 748.4.</ENT> </ROW> <ROW> <ENT I="01">0694-0123</ENT> <ENT>Prior Notification of Exports under License Exception AGR</ENT> <ENT>§ 740.18.</ENT> </ROW> <ROW> <ENT I="01">0694-0125</ENT> <ENT>BIS Seminar Evaluation</ENT> <ENT>N/A</ENT> </ROW> <ROW> <ENT I="01">0694-0126</ENT> <ENT>Export License Services—Transfer of License Ownership, Requests for a Duplicate License</ENT> <ENT>§ 750.9.</ENT> </ROW> <ROW> <ENT I="01">0694-0129</ENT> <ENT>Export and Reexport Controls For Iraq</ENT> <ENT>§ 732.3, 738, 744.18, 746.3(b)(1), 747, 750, 758, 762, 772, 774.</ENT> </ROW> <ROW> <ENT I="01">0607-0152</ENT> <ENT>Shipper's Export Declaration (SED)/Automated Export System (AES) Program FORMS: 7525-V AES</ENT> <ENT>§§ 740.1(d) 740.3(a)(3), 752.7(b), §§ 752.15(a).<LI>§§ 754.2(h) and 754.4(c), 758.1, §§ 758.2, and 758.3 of the EAR.</LI> </ENT> </ROW> </GPOTABLE> <CITA>[61 FR 12734, Mar. 25, 1996, as amended at 70 FR 14386, Mar. 22, 2005; 71 FR 20883, Apr. 24, 2006]</CITA> </APPENDIX> <APPENDIX> <EAR>Pt. 730, Supp. 2</EAR> <HD SOURCE="HED">Supplement No. 2 to Part 730—Technical Advisory Committees</HD> <P>(a) <E T="03">Purpose.</E> The purpose of this supplement is to describe the procedures and criteria for the establishment and operation of Technical Advisory Committees.</P> <P>(b) <E T="03">Technical advisory committees.</E> Any producer of articles, materials, or supplies, including technology, software, and other information, that are subject to export controls, or are being considered for such controls because of their significance to the national security of the United States, may request the Secretary of Commerce to establish a technical advisory committee, under the provisions of section 5(h) of the Export Administration Act of 1979, as amended (EAA) to advise and assist the Department of <PRTPAGE P="189"/>Commerce and other appropriate U.S. Government agencies or officials with respect to questions involving technical matters; worldwide availability and actual utilization of production technology; licensing procedures that affect the level of export controls applicable to a clearly defined grouping of articles, materials, or supplies, including technology, software, or other information; and exports and reexports subject to all controls that the United States maintains including proposed revisions of any such controls. If producers of articles, materials, or supplies, including technology, software, and other information, that are subject to export controls because of their significance to the national security of the United States, wish a trade association or other representative to submit a written request on their behalf for the appointment to a TAC, such request shall be submitted in accordance with paragraph (b)(4) of this supplement.</P> <P>(1) <E T="03">Form and substance of requests.</E> Each request for the appointment of a TAC shall be submitted in writing to: Assistant Secretary for Export Administration, P.O. Box 273, Washington, DC 20044.</P> <P>The request shall include:</P> <P>(i) A description of the articles, materials, or supplies including technology and software, in terms of a clear, cohesive grouping (citing the applicable Export Control Classification Numbers where practical);</P> <P>(ii) A statement of the reasons for requesting the appointment of a TAC; and</P> <P>(iii) Any information in support of any contention that may be made that the request meets the criteria described in paragraph (b)(2) of this supplement.</P> <P>(2) <E T="03">Consideration of request for establishment of a TAC.</E> The Department of Commerce will review all requests for the establishment of a TAC to determine if the following criteria are met:</P> <P>(i) That a substantial segment of the industry producing the specified articles, materials, or supplies including technology desires such a committee; and</P> <P>(ii) That the evaluation of such articles, materials, or supplies including technology and software for export control purposes is difficult because of questions involving technical matters, worldwide availability and actual utilization of production and software technology, or licensing procedures.</P> <P>(3) <E T="03">Requests by a substantial segment of an industry.</E> In determining whether or not a substantial segment of any industry has requested the appointment of a TAC, the Department of Commerce will consider:</P> <P>(i) The number of persons or firms requesting the establishment of a TAC for a particular grouping of commodities, software and technology in relation to the total number of U.S. producers of such items; and</P> <P>(ii) The volume of annual production by such persons or firms of each item in the grouping in relation to the total U.S. production. Generally, a substantial segment of an industry (for purposes of this supplement) shall consist of:</P> <P>(A) Not less than 30 percent of the total number of U.S. producers of the items concerned; or</P> <P>(B) Three or more U.S. producers who produce a combined total of not less than 30 percent of the total U.S. annual production, by dollar value of the items concerned; or</P> <P>(C) Not less than 20 percent of the total number of U.S. producers of the items concerned, provided that the total of their annual production thereof is not less than 20 percent of the total U.S. annual production, by dollar value.</P> <P>(iii) If it is determined that a substantial segment of the industry concerned has requested the establishment of a TAC concerning a specific grouping of items that the Department of Commerce determines difficult to evaluate for export control purposes, BIS will establish and use the TAC requested.</P> <P>(4) <E T="03">Requests from trade associations or other representatives.</E> Requests from trade associations or other representatives of U.S. producers for the establishment of a TAC must comply with the provisions of paragraphs (b) (1) through (3) of this supplement. In addition, in order to assist BIS in determining whether the criteria described in paragraph (b)(3) of this supplement have been met, a trade association or other representative submitting a request for the establishment of a TAC should include the following information:</P> <P>(i) The total number of firms in the particular industry;</P> <P>(ii) The total number of firms in the industry that have authorized the trade association or other representative to act in their behalf in this matter;</P> <P>(iii) The approximate amount of total U.S. annual production by dollar value of the items concerned produced by those firms that have authorized the trade association or other representative to act in their behalf; and</P> <P>(iv) A description of the method by which authorization to act on behalf of these producers was obtained.</P> <P>(5) <E T="03">Nominations for membership on TACs.</E> When the Department of Commerce determines that the establishment of a TAC is warranted, it will request nominations for membership on the committee among the producers of the items and from any other sources that may be able to suggest well-qualified nominees.</P> <P>(6) <E T="03">Selection of industry members of committee.</E> Industry members of a TAC will be selected by the Department of Commerce from a list of the nominees who have indicated <PRTPAGE P="190"/>their availability for service on the committee. To the extent feasible, the Department of Commerce will select a committee balanced to represent all significant facets of the industry involved, taking into consideration such factors as the size of the firms, their geographical distribution, and their product lines. No industry representative shall serve on a TAC for more than four consecutive years. The membership of a member who is absent from four consecutive meetings shall be terminated.</P> <P>(7) <E T="03">Government members.</E> Government members of a TAC will be selected by the Department of Commerce from the agencies having an interest in the subject matter concerned.</P> <P>(8) <E T="03">Invitation to serve on committee.</E> Invitations to serve on a TAC will be sent by letter to the selected nominees.</P> <P>(9) <E T="03">Election of Chair.</E> The Chair of each TAC shall be elected by a vote of the majority of the members of the committee present and voting.</P> <P>(c) <E T="03">Charter.</E> (1) No TAC established pursuant to this supplement shall meet or take any action until an advisory committee charter has been filed with the Assistant Secretary for Export Administration of the Department of Commerce and with the standing committees of the Senate and of the House of Representatives having legislative jurisdiction over the Department. Such charter shall contain the following information:</P> <P>(i) The committee's official designation;</P> <P>(ii) The committee's objectives and the scope of its activities;</P> <P>(iii) The period of time necessary for the committee to carry out its purposes;</P> <P>(iv) The agency or official to whom the committee reports;</P> <P>(v) The agency responsible for providing the necessary support for the committee;</P> <P>(vi) A description of the duties for which the committee is responsible, and, if such duties are not solely advisory, a specification of the authority for such functions;</P> <P>(vii) The estimated annual operating costs in dollars and years for such committee;</P> <P>(viii) The estimated number and frequency of committee meetings;</P> <P>(ix) The committee's termination date, if less than two years from the date of the committee's establishment; and</P> <P>(x) The date the charter is filed.</P> <P>(d) <E T="03">Meetings.</E> (1) Each TAC established under the provisions of the EAA and paragraph (b) of this supplement shall meet at least once every three months at the call of its Chair unless it is specifically determined by the Chair, in consultation with other members of the committee, that a particular meeting is not necessary.</P> <P>(2) No TAC may meet except at the call of its Chair.</P> <P>(3) Each meeting of a TAC shall be conducted in accordance with an agenda approved by a designated Federal government employee.</P> <P>(4) No TAC shall conduct a meeting in the absence of a designated Federal government employee who shall be authorized to adjourn any advisory committee meeting, whenever the Federal government employee determines adjournment to be in the public interest.</P> <P>(e) <E T="03">Public notice.</E> Notice to the public of each meeting of a TAC will be issued at least 20 days in advance and will be published in the <E T="04">Federal Register.</E> The notice will include the time and place of the meeting and the agenda.</P> <P>(f) <E T="03">Public attendance and participation.</E> (1) Any member of the public who wishes to do so may file a written statement with any TAC before or after any meeting of a committee.</P> <P>(2) A request for an opportunity to deliver an oral statement relevant to matters on the agenda of a meeting of a TAC will be granted to the extent that the time available for the meeting permits. A committee may establish procedures requiring such persons to obtain advance approval for such participation.</P> <P>(3) Attendance at meetings of TACs will be open to the public unless it is determined pursuant to section 10(d) of the Federal Advisory Committee Act to be necessary to close all, or some portion, of the meeting to the public. A determination that a meeting or portion thereof be closed to the public may be made if all or a specific portion of a meeting of a TAC is concerned with matters described in section 552(b) of Title 5, U.S.C.</P> <P>(4) Participation by members of the public in open TAC meetings or questioning of committee members or other participants shall not be permitted except in accordance with procedures established by the committee.</P> <P>(5) Every effort will be made to accommodate all members of the public who wish to attend.</P> <P>(g) <E T="03">Minutes.</E> (1) Detailed minutes of each meeting of each TAC will be kept and will contain a record of the persons present, a complete and accurate description of the matters discussed and conclusions reached, and copies of all reports received, issued, or approved by the TAC.</P> <P>(2) The accuracy of all the minutes will be certified to by the TAC Chair.</P> <P>(h) <E T="03">Records.</E> (1) Subject to section 552 of Title 5, U.S.C. and Department of Commerce Administrative Order 205-12, “Public Information,” and “Public Information” regulations issued by the Department of Commerce that are contained in 15 CFR part 4, Subtitle A, the records, reports, transcripts, minutes, appendices, working papers, draft, studies, agenda, or other documents that were made available to or prepared for or by each TAC will be available for public inspection and copying.<PRTPAGE P="191"/> </P> <P>(2) Each TAC will prepare once each year a report describing its membership, functions, activities, and such related matters as would be informative to the public consistent with the policy of section 552(b) of Title 5, U.S.C.</P> <P>(3)(i) Requests for records should be addressed to: Bureau of Industry and Security, Freedom of Information, Records Inspection Facility, U.S. Department of Commerce, Room 4513, Washington, DC 20230, Telephone (202) 482-2593.</P> <P>(ii) Rules concerning the use of the Records Inspection Facility are contained in 15 CFR part 4, Subtitle A, or may be obtained from this facility.</P> <P>(i) <E T="03">Compensation.</E> If the Department of Commerce deems it appropriate, a member of a TAC may be reimbursed for travel, subsistence, and other necessary expenses incurred in connection with the member's duties.</P> <P>(j) <E T="03">Scope of advisory committee functions.</E> All TACs are limited to the functions described in their charters.</P> <P>(k) <E T="03">Duration of committees.</E> Each TAC will terminate at the end of two years from the date the committee was established or two years from the effective date of its most recent extension, whichever is later. Committees may be continued only for successive two-year periods by appropriate action taken by the authorized officer of the Department of Commerce prior to the date on which such advisory committee would otherwise terminate. TACs may be extended or terminated only after consultation with the committee.</P> <P>(l) <E T="03">Miscellaneous.</E> (1) TACs established in accordance with paragraph (b) of this supplement must conform to the provisions of the Federal Advisory Committee Act (Pub. L. 92-463), Office of Management and Budget Circular A-63 (Revision of March 1974), “Advisory Committee Management,” Department of Commerce Administrative Order 205-12, “Public Information,” the applicable provisions of the EAA, and any other applicable Department of Commerce regulations or procedures affecting the establishment or operation of advisory committees.</P> <P>(2) Whenever the Department of Commerce desires the advice or assistance of a particular segment of an industry with respect to any export control problem for which the service of a TAC, as described in paragraph (b) of this supplement is either unavailable or impracticable, an advisory committee may be established pursuant to the provisions of section 9 of the Federal Advisory Committee Act. Such committees will be subject to the requirements of the Federal Advisory Committee Act, OMB Circular A-63 (Revision of March 1974), “Advisory Committee Management,” Department of Commerce Administrative Order 205-12, “Public Information,” and any other applicable Department of Commerce regulations or procedures affecting the establishment or operation of advisory committees.</P> <P>(3) Nothing in the provisions of this supplement shall be construed to restrict in any manner the right of any person or firm to discuss any export control matter with the Department of Commerce or to offer advice or information on export control matters. Similarly, nothing in these provisions shall be construed to restrict the Department of Commerce in consulting any person or firm relative to any export control matter.</P> </APPENDIX> <APPENDIX> <EAR>Pt. 730, Supp. 3</EAR> <HD SOURCE="HED">Supplement No. 3 to Part 730—Other U.S. Government Departments and Agencies With Export Control Responsibilities</HD> <NOTE> <HD SOURCE="HED">Note:</HD> <P>The departments and agencies identified with an asterisk control exports for foreign policy or national security reasons and, in certain cases, such controls may overlap with the controls described in the EAR (see part 734 of the EAR).</P> </NOTE> <HD SOURCE="HD2">Defense Services and Defense Articles</HD> <FP SOURCE="FP-1">* Department of State, Directorate of Defense Trade Controls, Tel. (703) 875-6644, Fax: (703) 875-6647.</FP> <P>22 CFR parts 120 through 130.</P> <HD SOURCE="HD2">Drugs, Chemicals and Precursors</HD> <FP SOURCE="FP-1">Drug Enforcement Administration, International Chemical Control Unit, Tel. (202) 307-7202, Fax: (202) 307-8570.</FP> <P>21 CFR parts 1311 through 1313.</P> <FP SOURCE="FP-1">Controlled Substances: Drug Enforcement Administration, International Drug Unit, Tel. (202) 307-2414, Fax: (202) 307-8570.</FP> <P>21 CFR 1311 through 1313.</P> <FP SOURCE="FP-1">Drugs and Biologics: Food and Drug Administration, Import/Export, Tel. (301) 594-3150, Fax: (301) 594-0165.</FP> <P>21 U.S.C. 301 <E T="03">et seq.</E> </P> <FP SOURCE="FP-1">Investigational drugs permitted: Food and Drug Administration, International Affairs, Tel. (301) 443-4480, Fax: (301) 443-0235.</FP> <P>21 CFR 312.1106.</P> <HD SOURCE="HD2">Fish and Wildlife Controls; Endangered Species</HD> <P>Department of the Interior, Chief Office of Management Authority, Tel. (703) 358-2093, Fax: (703) 358-2280.</P> <P>50 CFR 17.21, 17.22, 17.31, 17.32.</P> <HD SOURCE="HD2">Foreign Assets and Transactions Controls</HD> <FP SOURCE="FP-1">* Department of Treasury, Office of Foreign Assets Control, Licensing, Tel. (202) 622-2480, Fax: (202) 622-1657.</FP> <P>31 CFR parts 500 through 590.</P> <HD SOURCE="HD2">Medical Devices</HD> <FP SOURCE="FP-1">Food and Drug Administration, Office of Compliance, Tel. (301) 594-4699, Fax: (301) 594-4715.<PRTPAGE P="192"/> </FP> <P>21 U.S.C. 301 <E T="03">et seq.</E> </P> <HD SOURCE="HD2">Natural Gas and Electric Power</HD> <FP SOURCE="FP-1">Department of Energy, Office of Fuels Programs, Tel. (202) 586-9482, Fax: (202) 586-6050.</FP> <P>10 CFR 205.300 through 205.379 and part 590.</P> <HD SOURCE="HD2">Nuclear Materials and Equipment</HD> <FP SOURCE="FP-1">* Nuclear Regulatory Commission, Office of International Programs, Tel. (301) 415-2344, Fax: (301) 415-2395.</FP> <P>10 CFR part 110.</P> <HD SOURCE="HD2">Nuclear Technologies and Services Which Contribute to the Production of Special Nuclear Material (Snm). Technologies Covered Include Nuclear Reactors, Enrichment, Reprocessing, Fuel Fabrication, and Heavy Water Production.</HD> <FP SOURCE="FP-1">Department of Energy Office of Export Control Policy & Cooperation (NA-24) Tel. (202) 586-2331, Fax (202) 586-1348.</FP> <P>10 CFR part 810.</P> <HD SOURCE="HD2">Ocean Freight Forwarders</HD> <FP SOURCE="FP-1">Federal Maritime Commission, Office of Freight Forwarders, Tel. (202) 523-5843, Fax: (202) 523-5830.</FP> <P>46 CFR part 510.</P> <HD SOURCE="HD2">Patent Filing Data Sent Abroad</HD> <FP SOURCE="FP-1">* Department of Commerce, Patent and Trademark Office, Licensing and Review; Tel. (703) 308-1722, Fax: (703) 305-3603, 3604.</FP> <P>37 CFR part 5.</P> <HD SOURCE="HD2">U.S. Flagged or U.S. Manufactured Vessels Over 1,000 Gross Tons</HD> <FP SOURCE="FP-1">U.S. Maritime Administration, Division of Vessel Transfer and Disposal, Tel. (202) 366-5821, Fax: (202) 366-3889.</FP> <P>46 CFR part 221.</P> <CITA>[61 FR 12734, Mar. 25, 1996, as amended at 65 FR 38149, June 19, 2000; 69 FR 5687, Feb. 6, 2004]</CITA> </APPENDIX> </PART> <PART> <EAR>Pt. 732</EAR> <HD SOURCE="HED">PART 732—STEPS FOR USING THE EAR</HD> <CONTENTS> <SECHD>Sec.</SECHD> <SECTNO>732.1</SECTNO> <SUBJECT>Steps overview.</SUBJECT> <SECTNO>732.2</SECTNO> <SUBJECT>Steps regarding scope of the EAR.</SUBJECT> <SECTNO>732.3</SECTNO> <SUBJECT>Steps regarding the ten general prohibitions.</SUBJECT> <SECTNO>732.4</SECTNO> <SUBJECT>Steps regarding License Exceptions.</SUBJECT> <SECTNO>732.5</SECTNO> <SUBJECT>Steps regarding Shipper's Export Declaration or Automated Export System record, Destination Control Statements, and recordkeeping.</SUBJECT> <SECTNO>732.6</SECTNO> <SUBJECT>Steps for other requirements.</SUBJECT> <APP>Supplement No. 1 to Part 732—Decision Tree</APP> <APP>Supplement No. 2 to Part 732—Am I subject to the EAR?</APP> <APP>Supplement No. 3 to Part 732—BIS's “Know Your Customer” Guidance and Red Flags</APP> </CONTENTS> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>50 U.S.C. app. 2401 <E T="03">et seq.</E>; 50 U.S.C. 1701 <E T="03">et seq.</E>; E.O. 13026, 61 FR 58767, 3 CFR, 1996 Comp., p. 228; E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 783; Notice of August 2, 2005, 70 FR 45273 (August 5, 2005).</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>61 FR 12740, Mar. 25, 1996, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>§ 732.1</SECTNO> <SUBJECT>Steps overview.</SUBJECT> <P>(a)(1) <E T="03">Introduction.</E> In this part, references to the EAR are references to 15 CFR chapter VII, subchapter C. This part is intended to help you determine your obligations under the EAR by listing logical steps in § 732.2 through § 732.5 of this part that you can take in reviewing these regulations. A flow chart describing these steps is contained in Supplement No. 1 to part 732. By cross-references to the relevant provisions of the EAR, this part describes the suggested steps for you to determine applicability of the following:</P> <P>(i) The scope of the EAR (part 734 of the EAR);</P> <P>(ii) Each of the general prohibitions (part 736 of the EAR);</P> <P>(iii) The License Exceptions (part 740 of the EAR); and</P> <P>(iv) Other requirements such as clearing your export with the U.S. Customs Service, keeping records, and completing and documenting license applications.</P> <P>(2) These steps describe the organization of the EAR, the relationship among the provisions of the EAR, and the appropriate order for you to consider the various provisions of the EAR.</P> <P>(b) <E T="03">Facts about your transaction.</E> The following five types of facts determine your obligations under the EAR and will be of help to you in reviewing these steps:</P> <P>(1) <E T="03">What is it?</E> What an item is, for export control purposes, depends on its <E T="03">classification,</E> which is its place on the Commerce Control List (see part 774 of the EAR).</P> <P>(2) <E T="03">Where is it going?</E> The <E T="03">country of ultimate destination</E> for an export or reexport also determines licensing requirements (see parts 738 and 774 of the EAR <PRTPAGE P="193"/>concerning the Country Chart and the Commerce Control List).</P> <P>(3) <E T="03">Who will receive it?</E> The <E T="03">ultimate end-user</E> of your item cannot be a bad end-user. See General Prohibition Four (Denial Orders) in § 736.2(b)(4) and parts 744 and 764 of the EAR for a reference to the list of persons you may not deal with.</P> <P>(4) <E T="03">What will they do with it?</E> The <E T="03">ultimate end-use</E> of your item cannot be a bad end-use. See General Prohibition Five (End-Use End-User) in § 736.2(b)(5) and part 744 of the EAR for general end-use and end-user restrictions.</P> <P>(5) <E T="03">What else do they do? Conduct</E> such as contracting, financing, and freight forwarding in support of a proliferation project (as described in § 744.6 of the EAR) may prevent you from dealing with someone.</P> <P>(c) <E T="03">Are your items and activities subject to the EAR?</E> You should first determine whether your commodity, software, or technology is subject to the EAR (see part 734 of the EAR concerning scope), and Steps 1 through 6 help you do that. For exports from the United States, only Steps 1 and 2 are relevant. If you already know that your item or activity is subject to the EAR, you should go on to consider the ten general prohibitions in part 736 of the EAR. If your item or activity is not subject to the EAR, you have no obligations under the EAR and may skip the remaining steps.</P> <P>(d) <E T="03">Does your item or activity require a license under one or more of the ten general prohibitions?</E>—(1) <E T="03">Brief summary of the ten general prohibitions.</E> The general prohibitions are found in part 736 of the EAR and referred to in these steps. They consist, very briefly, of the following:</P> <P>(i) General Prohibition One (Exports and Reexports): Export and reexport of controlled items to listed countries.</P> <P>(ii) General Prohibition Two (Parts and Components Reexports): Reexport and export from abroad of foreign-made items incorporating more than a <E T="03">de minimis</E> amount of controlled U.S. content.</P> <P>(iii) General Prohibition Three (Foreign-produced Direct Product Reexports): Reexport and export from abroad of the foreign-produced direct product of U.S. technology and software.</P> <P>(iv) General Prohibition Four (Denial Orders): Engaging in actions prohibited by a denial order.</P> <P>(v) General Prohibition Five (End-Use End-User): Export or reexport to prohibited end-user or end-users.</P> <P>(vi) General Prohibition Six (Embargo): Export or reexport to embargoed destinations.</P> <P>(vii) General Prohibition Seven (U.S. Person Proliferation Activity): Support of proliferation activities.</P> <P>(viii) General Prohibition Eight (In-Transit): In-transit shipments and items to be unladen from vessels and aircraft.</P> <P>(ix) General Prohibition Nine (Orders, Terms and Conditions): Violation of any orders, terms, or conditions.</P> <P>(x) General Prohibition Ten (Knowledge Violation to Occur): Proceeding with transactions with knowledge that a violation has occurred or is about to occur.</P> <P>(2) <E T="03">Controls on items on the Commerce Control List (CCL).</E> If your item or activity is subject to the EAR, you should determine whether any one or more of the ten general prohibitions require a license for your export, reexport, or activity. Steps 7 through 11 refer to classification of your item on the Commerce Control List (CCL) (part 774 of the EAR) and how to use the Country Chart (Supplement No. 1 to part 738 of the EAR) to determine whether a license is required based upon the classification of your item. These steps refer to General Prohibitions One (Exports and Reexports), Two (Parts and Components Reexports), and Three (Foreign-Produced Direct Product Reexports) for all countries except: Cuba and Iran. For these countries, you may skip Steps 7 through 11 and go directly to Step 12.</P> <P>(3) <E T="03">Controls on activities.</E> Steps 12 through 18 refer to General Prohibitions Four through Ten. Those general prohibitions apply to all items subject to the EAR, not merely those items listed on the CCL in part 774 of the EAR. For example, they refer to the general prohibitions for persons denied export privileges, prohibited end-uses and end-users, countries subject to a comprehensive embargoed (e.g., Cuba <PRTPAGE P="194"/>and Iran), prohibited activities of U.S. persons in support of proliferation of weapons of mass destruction, prohibited unlading of shipments, compliance with orders, terms and conditions, and activities when a violation has occurred or is about to occur.</P> <P>(4) <E T="03">General prohibitions.</E> If none of the ten general prohibitions applies, you should skip the steps concerning License Exceptions and for exports from the United States, review Steps 27 through 29 concerning Shipper's Export Declarations to be filed with the U.S. Customs Service, Destination Control Statements for export control documents, and recordkeeping requirements.</P> <P>(e) <E T="03">Is a License Exception available to overcome the license requirement?</E> If you decide by reviewing the CCL in combination with the Country Chart that a license is required for your destination, you should determine whether a License Exception will except you from that requirement. Steps 20 through 24 help you determine whether a License Exception is available. Note that generally License Exceptions are not available to overcome General Prohibitions Four through Ten. However, selected License Exceptions for embargoed destinations are specified in part 746 of the EAR and License Exceptions for short supply controls are specified in part 754 of the EAR. If a License Exception is available and the export is from the United States, you should review Steps 26 through 28 concerning Shipper's Export Declarations to be filed with the U.S. Customs Service, Destination Control Statements for export control documents and recordkeeping requirements. If a License Exception is not available, go on to Steps 25 through 29.</P> <P>(f) <E T="03">How do you apply for a license?</E> If you must file a license application, you should review the requirements of part 748 of the EAR as suggested by Step 26. Then you should review Steps 27 through 29 concerning Shipper's Export Declarations to be filed with the U.S. Customs Service, Destination Control Statements for export control documents, and recordkeeping requirements.</P> <CITA>[61 FR 12740, Mar. 25, 1996, as amended at 62 FR 25453, May 9, 1997; 65 FR 38150, June 19, 2000; 69 FR 23628, Apr. 29, 2004; 69 FR 46074, July 30, 2004]</CITA> </SECTION> <SECTION> <SECTNO>§ 732.2</SECTNO> <SUBJECT>Steps regarding scope of the EAR.</SUBJECT> <P>Steps 1 though 6 are designed to aid you in determining the scope of the EAR. A flow chart describing these steps is contained in Supplement No. 2 to part 732.</P> <P>(a) <E T="03">Step 1: Items subject to the exclusive jurisdiction of another Federal agency.</E> This step is relevant for both exports and reexports. Determine whether your item is subject to the exclusive jurisdiction of another Federal Agency as provided in § 734.3 of the EAR.</P> <P>(1) If your item is subject to the exclusive jurisdiction of another Federal agency, comply with the regulations of that agency. You need not comply with the EAR and may skip the remaining steps.</P> <P>(2) If your item is not subject to the exclusive jurisdiction of another federal agency, then proceed to Step 2 in paragraph (b) of this section.</P> <P>(b) <E T="03">Step 2: Publicly available technology and software.</E> This step is relevant for both exports and reexports. Determine if your technology or software is publicly available as defined and explained at part 734 of the EAR. Supplement No. 1 to part 734 of the EAR contains several practical examples describing publicly available technology and software that is outside the scope of the EAR. The examples are illustrative, not comprehensive. Note that encryption software controlled for EI reasons under ECCN 5D002 on the Commerce Control List (refer to Supplement No.1 to part 774 of the EAR) shall be subject to the EAR even if publicly available. Accordingly, the provisions of the EAR concerning the public availability of items are not applicable to encryption items controlled for “EI” reasons under ECCN 5D002.</P> <P>(1) If your technology or software is publicly available, and therefore outside the scope of the EAR, you may proceed with the export or reexport if you are not a U.S. person subject to General Prohibition Seven. If you are a <PRTPAGE P="195"/>U.S. person, go to Step 15 at § 732.3(j) of this part. If you are a U.S. person and General Prohibition Seven concerning proliferation activity of U.S. persons does not apply, then you may proceed with the export or reexport of your publicly available technology or software. Note that all U.S. persons are subject to the provisions of General Prohibition Seven.</P> <P>(2) If your technology or software is not publicly available and you are exporting from the United States, skip to Step 7 in § 732.3(b) of this part concerning the general prohibitions.</P> <P>(3) If you are exporting items from a foreign country, you should then proceed to Step 3 in paragraph (c) of this section and the other steps concerning the scope of the EAR.</P> <P>(c) <E T="03">Step 3: Reexport of U.S.-origin items.</E> This step is appropriate only for reexporters. For an item in a foreign country, you should determine whether the item is of U.S. origin. If it is of U.S.-origin, skip to Step 7 in § 732.3(b) of this part. If it is not of U.S. origin, then proceed to Step 4 in paragraph (d) of this section.</P> <P>(d) <E T="03">Step 4:</E> <E T="03">Foreign-made items incorporating less than the de minimis level of U.S. parts, components, and materials</E>. This step is appropriate only for items that are made outside the United States and not currently in the United States. Special requirements and restrictions apply to items that incorporate U.S. origin encryption items (see § 734.4(a)(2) and (b) of the EAR).</P> <P>(1) For an item made in a foreign country, you should determine whether controlled U.S.-origin parts, components, or materials are incorporated as provided in § 734.4 of the EAR. Also, determine the value of the U.S.-origin controlled content as provided in Supplement No. 2 to part 734 of the EAR.</P> <P>(2) To determine the value of the U.S.-origin controlled content, you should classify the U.S.-origin content on the CCL, determine those items that would require a license from BIS for reexport to the ultimate destination of the foreign-made product if such parts, components, or materials were reexported to that destination in the form received, and divide the total value of the controlled U.S. parts, components, and materials incorporated into the foreign-made item by the sale price of the foreign-made item.</P> <P>(3) If no U.S. parts, components, or materials are incorporated or if the incorporated U.S. parts, components, and materials are below the <E T="03">de minimis</E> level described in § 734.4 of the EAR, then the foreign-made item is not subject to the EAR by reason of the parts and components rule, the classification of a foreign-made item is irrelevant in determining the scope of the EAR, and you should skip Step 4 and go on to consider Step 6 regarding the foreign-produced direct product rule.</P> <P>(4) If controlled parts, components, or materials are incorporated and are above the <E T="03">de minimis</E> level, then you should go on to Step 5.</P> <P>(e) <E T="03">Step 5: Foreign-made items incorporating more than the de minimis level of U.S. parts, components, or materials.</E> This step is appropriate only for foreign-made items incorporating certain U.S. parts. If the incorporated U.S. parts exceed the relevant <E T="03">de minimis</E> level, then your export from abroad is subject to the EAR. You then should skip to Step 7 at § 732.3 of this part and consider the steps regarding all other general prohibitions, License Exceptions, and other requirements.</P> <P>(f) <E T="03">Step 6: Foreign-made items produced with certain U.S. technology for export to specified destinations.</E> This step is appropriate for foreign-made items in foreign countries.</P> <P>(1) If your foreign-produced item is described in an entry on the CCL and the Country Chart requires a license to your export or reexport destination for national security reasons, you should determine whether your item is subject to General Prohibition Three (Foreign-Produced Direct Product Reexports) (§ 736.2(b)(3) of the EAR). Your item is subject to the EAR if it is captured by General Prohibition Three (Foreign-Produced Direct Product Reexports), and that prohibition applies if your transaction meets each of the following conditions:</P> <P>(i) <E T="03">Country scope of prohibition.</E> Your export or reexport destination for the direct product is Cuba or a destination in Country Group D:1 (see Supplement No. 1 to part 740 of the EAR) (reexports <PRTPAGE P="196"/>of foreign-produced direct products exported to other destinations are not subject to General Prohibition Three);</P> <P>(ii) <E T="03">Scope of technology or software used to create direct products subject to the prohibition.</E> Technology or software that was used to create the foreign-produced direct product, and such technology or software that was subject to the EAR and required a written assurance as a supporting document for a license or as a precondition for the use of License Exception TSR in § 740.6 of the EAR (reexports of foreign-produced direct products created with other technology and software are not subject to General Prohibition Three); and</P> <P>(iii) <E T="03">Scope of direct products subject to the prohibition.</E> The foreign-produced direct products are subject to national security controls as designated on the proper ECCN of the Commerce Control List in part 774 of the EAR (reexports of foreign-produced direct products not subject to national security controls are not subject to General Prohibition Three).</P> <P>(2) <E T="03">License Exceptions.</E> Each License Exception described in part 740 of the EAR overcomes this General Prohibition Three if all terms and conditions of a given License Exception are met by the exporter or reexporter.</P> <P>(3) <E T="03">Subject to the EAR.</E> If your item is captured by the foreign-produced direct product control at General Prohibition Three, then your export from abroad is subject to the EAR. You should next consider the steps regarding all other general prohibitions, License Exceptions, and other requirements. If your item is not captured by General Prohibition Three, then your export from abroad is not subject to the EAR. You have completed the steps necessary to determine whether your transaction is subject to the EAR, and you may skip the remaining steps. Note that in summary, items in foreign countries are subject to the EAR when they are:</P> <P>(i) U.S.-origin commodities, software and technology unless controlled for export exclusively by another Federal agency or unless publicly available;</P> <P>(ii) Foreign-origin commodities, software, and technology that are within the scope of General Prohibition Two (Parts and Components Reexports), or General Prohibition Three (Foreign-Produced Direct Product Reexports). (However, such foreign-made items are also outside the scope of the EAR if they are controlled for export exclusively by another Federal agency or publicly available.)</P> <CITA>[61 FR 12740, Mar. 25, 1996, as amended at 61 FR 64274, Dec. 4, 1996; 61 FR 68577, Dec. 30, 1996; 62 FR 25453, May 9, 1997; 63 FR 50520, Sept. 22, 1998; 65 FR 38150, June 19, 2000; 65 FR 62604, Oct. 19, 2000; 67 FR 38860, June 6, 2002; 69 FR 23628, Apr. 29, 2004; 69 FR 71359, Dec. 9, 2004]</CITA> </SECTION> <SECTION> <SECTNO>§ 732.3</SECTNO> <SUBJECT>Steps regarding the ten general prohibitions.</SUBJECT> <P>(a) <E T="03">Introduction.</E> If your item or activity is subject to the scope of the EAR, you should then consider each of the ten general prohibitions listed in part 736 of the EAR. General Prohibitions One ((Exports and Reexports), Two (Parts and Components Reexports), and Three (Foreign-Produced Direct Product Reexports) (§ 736.2(b) (1), (2), and (3) of the EAR) are product controls that are shaped and limited by parameters specified on the CCL and Country Chart. General Prohibitions Four through Ten are prohibitions on certain activities that are not allowed without authorization from BIS, and these prohibitions apply to all items subject to the EAR unless otherwise specified (§ 736.2(b) (4) through (10) of the EAR).</P> <P>(b) <E T="03">Step 7: Classification.</E> (1) You should classify your items in the relevant entry on the CCL, and you may do so on your own without the assistance of BIS. You are responsible for doing so correctly, and your failure to correctly classify your items does not relieve you of the obligation to obtain a license when one is required by the EAR.</P> <P>(2) You have a right to request the applicable classification of your item from BIS, and BIS has a duty to provide that classification to you. For further information on how to obtain classification assistance from BIS, see part 748 of the EAR.</P> <P>(3) For items subject to the EAR but not listed on the CCL, the proper classification is EAR99. This number is a “basket” for items not specified under <PRTPAGE P="197"/>any CCL entry and appears at the end of each Category on the CCL.</P> <P>(c) <E T="03">Step 8: Country of ultimate destination.</E> You should determine the country of ultimate destination. The country of destination determines the applicability of several general prohibitions, License Exceptions, and other requirements. Note that part 754 of the EAR concerning short supply controls is self-contained and is the only location in the EAR that contains both the prohibitions and exceptions applicable to short supply controls.</P> <P>(d) <E T="03">Step 9: Reason for control and the Country Chart</E>—(1) <E T="03">Reason for control and column identifier within the Export Control Classification Number (ECCN).</E> Once you have determined that your item is controlled by a specific ECCN, you must use information contained in the “License Requirements” section of that ECCN in combination with the Country Chart to decide whether a license is required under General Prohibitions One, Two, or Three to a particular destination. The CCL and the Country Chart are taken together to define these license requirements. The applicable ECCN will indicate the reason or reasons for control for items within that ECCN. For example, ECCN 6A007 is controlled for national security, missile technology, and anti-terrorism reasons.</P> <P>(2) <E T="03">Reason for control within the Country Chart.</E> With each of the applicable Country Chart column identifiers noted in the correct ECCN, turn to the Country Chart. Locate the correct Country Chart column identifier on the horizontal axis, and determine whether an “X” is marked in the cell next to the destination in question. Consult § 738.4 of the EAR for comprehensive instructions on using the Country Chart and a detailed example.</P> <P>(i) An “X” in the cell or cells for the relevant country and reason(s) for control column indicates that a license is required for General Prohibitions One (Exports and Reexports in the Form Received), Two (Parts and Components Reexports), and Three (Foreign-Produced Direct Product Reexports). (See § 736.2 (b)(1), (b)(2), and (b)(3) of the EAR).</P> <P>(ii) If one or more cells have an “X” in the relevant column, a license is required unless you qualify for a License Exception described in part 740 of the EAR. If a cell does not contain an “X” for your destination in one or more relevant columns, a license is not required under the CCL and the Country Chart.</P> <P>(iii) Additional controls may apply to your export. You must go on to steps 12 through 18 described in paragraphs (g) to (m) of this section to determine whether additional limits described in General Prohibition Two (Parts and Components Reexports) and General Prohibition Three (Foreign-Produced Direct Product Reexports ) apply to your proposed transaction. If you are exporting an item from the United States, you should skip Step 10 and Step 11. Proceed directly to Step 12 in paragraph (g) of this section.</P> <P>(3) <E T="03">License requirements not on the Country Chart.</E> There are two instances where the Country Chart cannot be used to determine if a license is required. Items controlled for short supply reasons are not governed by the Country Chart. Part 754 of the EAR contains license requirements and License Exceptions for items subject to short supply controls. A limited number of ECCNs contained on the CCL do not identify a Country Chart column identifier. In these instances, the ECCN states whether a license is required and for which destinations. See § 738.3(a) of the EAR for a list of the ECCNs for which you do not need to consult the Country Chart to determine licensing requirements.</P> <P>(4) <E T="03">Destinations subject to embargo provisions.</E> The Country Chart does not apply to Cuba and Iran; and for those countries you should review the embargo provisions at part 746 of the EAR and may skip this step concerning the Country Chart. For Iraq and Rwanda, the Country Chart provides for certain license requirements, and part 746 of the EAR provides additional requirements.</P> <P>(5) <E T="03">Items subject to the EAR but not on the CCL.</E> Items subject to the EAR that are not on the CCL are properly classified EAR99. For such items, you may skip this step and proceed directly with Step 12 in paragraph (g) of this section.</P> <P>(e) <E T="03">Step 10: Foreign-made items incorporating U.S.-origin items and the de <PRTPAGE P="198"/>minimis rule</E>—(1) <E T="03">Parts and components rule.</E> The following considerations are appropriate for items abroad and are the same steps necessary to determine whether a foreign-made item incorporating U.S. parts, components, or materials is subject to the EAR. If your foreign-made item is described in an entry on the CCL and the Country Chart requires a license to your export or reexport destination, you should determine whether the controlled U.S.-origin commodities, software, or technology incorporated into the foreign-made item exceeds the <E T="03">de minimis</E> level applicable to the ultimate destination of the foreign-made item, as follows:</P> <P>(i) A 10% <E T="03">de minimis</E> level to embargoed and terrorist-supporting countries; or</P> <P>(ii) A 25% <E T="03">de minimis</E> level to all other countries.</P> <P>(2) <E T="03">Guidance for calculations.</E> For guidance on how to calculate the U.S.-controlled content, refer to Supplement No. 2 to part 734 of the EAR. Note that under certain rules issued by the Office of Foreign Assets Control, certain exports from abroad by U.S.-owned or controlled entities may be prohibited notwithstanding the <E T="03">de minimis</E> provisions of the EAR. In addition, the <E T="03">de minimis</E> exclusions from the parts and components rule do not relieve U.S. persons of the obligation to refrain from supporting the proliferation of weapons of mass-destruction and missiles as provided in General Prohibition Seven (U.S. Person Proliferation Activity) described in § 736.2(b)(7) of the EAR. Note that foreign-made items that incorporate U.S.-origin items controlled for “EI” reasons under ECCN 5A002, 5D002 or 5E002 on the Commerce Control List (Supplement No.1 to Part 774 of the EAR) are subject to the EAR even if they incorporate less than the <E T="03">de minimis</E> level of U.S. content. However, exporters may, as part of a review request, ask that certain 5A002 and 5D002 parts, components and software also be made eligible for <E T="03">de minimis</E> treatment (see § 734.4(b) of the EAR).</P> <P>(f) <E T="03">Step 11: Foreign-produced direct product.</E> The following considerations are appropriate for items abroad and are the same considerations necessary to determine whether a foreign-produced direct product is subject to the EAR under Step 6 in § 732.2(f) of this part.</P> <P>(1) If your foreign-produced item is described in an entry on the CCL and the Country Chart requires a license to your export or reexport destination for national security reasons, you must determine whether your item is subject to General Prohibition Three (Foreign-Produced Direct Product Reexports) (§ 736.2(b)(3) of the EAR). Your item is subject to this general prohibition if your transaction meets each of the following conditions:</P> <P>(i) <E T="03">Country scope of prohibition.</E> Your export or reexport destination for the direct product is Cuba or a destination in Country Group D:1 (see Supplement No. 1 to part 740 of the EAR) (reexports of foreign-produced direct products exported to other destinations are not subject to General Prohibition Three described in § 736.2(b)(3) of the EAR);</P> <P>(ii) <E T="03">Scope of technology or software used to create direct products subject to the prohibition.</E> Technology or software that was used to create the foreign-produced direct product, and such technology or software that was subject to the EAR and required a written assurance as a supporting document for a license or as a precondition for the use of License Exception TSR in § 740.6 of the EAR (reexports of foreign-produced direct products created with other technology and software are not subject to General Prohibition Three); and</P> <P>(iii) <E T="03">Scope of direct products subject to the prohibition.</E> The foreign-produced direct products are controlled for national security reasons indicated in an ECCN on the CCL (reexports of foreign-produced direct products not subject to national security controls are not subject to General Prohibition Three).</P> <P>(2) <E T="03">License Exceptions.</E> Each License Exception described in part 740 of the EAR overcomes General Prohibition Three (Foreign-Produced Direct Product Reexports) if all terms and conditions of a given License Exception are met by the exporter or reexporter.</P> <P>(g) <E T="03">Step 12: Persons denied export privileges.</E> (1) Determine whether your transferee, ultimate end-user, any intermediate consignee, or any other party to a transaction is a person denied export privileges (see part 764 of the EAR). It is a violation of the EAR <PRTPAGE P="199"/>to engage in any activity that violates the terms or conditions of a denial order. General Prohibition Four (Denial Orders) applies to all items subject to the EAR, <E T="03">i.e.,</E> both items on the CCL and within EAR99.</P> <P>(2) There are no License Exceptions to General Prohibition Four (Denial Orders). The prohibition concerning persons denied export privileges may be overcome only by a specific authorization from BIS, something that is rarely granted.</P> <P>(h) <E T="03">STEP 13: Prohibited end-uses and end-users.</E> (1) Review the end-uses and end-users prohibited under General Prohibition Five (End-Use and End-User) (§ 736.2(b)(5) of the EAR) described in part 744 of the EAR. Part 744 of the EAR contains all the end-use and end-user license requirements, and those are in addition to the license requirements under General Prohibitions One (Exports and Reexports), Two (Parts and Components Reexports), and Three (Foreign-produced Direct Product Reexports). Unless otherwise indicated, the license requirements of General Prohibition Five (End-Use and End-User) described in part 744 of the EAR apply to all items subject to the EAR, i.e. both items on the CCL and within EAR99. Moreover, the requirements of General Prohibition Five (End-Use and End-User) are in addition to various end-use and end-user limitations placed on certain License Exceptions.</P> <P>(2) Under License Exception TSU (§ 740.13 of the EAR), operation technology and software, sales technology, and software updates overcome General Prohibition Five (End-Use and End-User) (§ 736.2(b)(5) of the EAR) if all terms and conditions of these provisions are met by the exporter or reexporter.</P> <P>(i) <E T="03">Step 14: Embargoed countries and special destinations.</E> If your destination for any item is Cuba, Iran, Iraq, or Rwanda you must consider the requirements of parts 742 and 746 of the EAR. Unless otherwise indicated, General Prohibition Six (Embargo) applies to all items subject to the EAR, i.e. both items on the CCL and within EAR99. You may not make an export or reexport contrary to the provisions of part 746 of the EAR without a license unless:</P> <P>(1) You are exporting or reexporting only publicly available technology or software or other items outside the scope of the EAR, or</P> <P>(2) You qualify for a License Exception referenced in part 746 of the EAR concerning embargoed destinations. You may not use a License Exception described in part 740 of the EAR to overcome General Prohibition Six (Embargo) (§ 736.2(b)(6) of the EAR) unless it is specifically authorized in part 746 of the EAR. Note that part 754 of the EAR concerning short supply controls is self-contained and is the only location in the EAR for both the prohibitions and exceptions applicable to short supply controls.</P> <P>(j) <E T="03">Step 15: Proliferation activity of U.S. persons unrelated to exports and reexports.</E> (1) Review the scope of activity prohibited by General Prohibition Seven (U.S. Person Proliferation Activity) (§ 736.2(b)(7) of the EAR) as that activity is described in § 744.6 of the EAR. Keep in mind that such activity is not limited to exports and reexports and is not limited to items subject to General Prohibition One (Exports and Reexports), Two (Parts and Components Reexports), and Three (Foreign-Produced Direct Product Reexports). Moreover, such activity extends to services and dealing in wholly foreign-origin items in support of the specified proliferation activity and is not limited to items listed on the CCL or included in EAR99.</P> <P>(2) Review the definition of U.S. Person in part 744 of the EAR.</P> <P>(k) <E T="03">Step 16: In-transit.</E> Shippers and operators of vessels or aircraft should review General Prohibition Eight (In-Transit) to determine the countries in which you may not unladen or ship certain items in-transit. General Prohibition Eight applies to all items subject to the EAR, i.e. both items on the CCL and within EAR99.</P> <P>(l) <E T="03">Step 17: Review orders, terms, and conditions.</E> Review the orders, terms, and conditions applicable to your transaction. General Prohibition Nine (Orders, Terms, and Conditions) prohibits the violation of any orders, terms, and conditions imposed under the EAR. Terms and conditions are frequently contained in licenses. In addition, the ten general prohibitions (part <PRTPAGE P="200"/>736 of the EAR) and the License Exceptions (part 740 of the EAR) impose terms and conditions or limitations on your proposed transactions and use of License Exceptions. A given license or License Exception may not be used unless each relevant term or condition is met.</P> <P>(m) <E T="03">Step 18: Review the “Know Your Customer” Guidance and General Prohibition Ten (Knowledge Violation to Occur).</E> License requirements under the EAR are determined solely by the classification, end-use, end-user, ultimate destination, and conduct of U.S. persons. Supplement No. 1 to part 732 of the EAR is intended to provide helpful guidance regarding the process for the evaluation of information about customers, end-uses, and end-users. General Prohibition Ten (Knowledge Violation to Occur) prohibits anyone from proceeding with a transaction with knowledge that a violation of the EAR has occurred or is about to occur. It also prohibits related shipping, financing, and other services. General Prohibition Ten applies to all items subject to the EAR, i.e. both items on the CCL and within EAR99.</P> <P>(n) <E T="03">Step 19: Complete the review of the general prohibitions.</E> After completion of Steps described in this section and review of all ten general prohibitions in part 736 of the EAR, including cross-referenced regulations in the EAR, you will know which, if any, of the ten general prohibitions of the EAR apply to you and your contemplated transaction or activity.</P> <P>(1) If none of the ten general prohibitions is applicable to your export from the United States, no license from BIS is required, you do not need to qualify for a License Exception under part 740 of the EAR. You should skip the Steps in § 732.4 of this part regarding License Exceptions and proceed directly to the Steps in § 732.5 of this part regarding recordkeeping, clearing the Bureau of Customs and Border Protection with the appropriate Shipper's Export Declaration or Automated Export System record, and using the required Destination Control Statement.</P> <P>(2) If none of the ten general prohibitions is applicable to your reexport or export from abroad, no license is required and you should skip all remaining Steps.</P> <P>(3) If one or more of the ten general prohibitions are applicable, continue with the remaining steps.</P> <CITA>[61 FR 12740, Mar. 25, 1996, as amended at 61 FR 64274, Dec. 4, 1996; 61 FR 68577, Dec. 30, 1996; 62 FR 25453, May 9, 1997; 63 FR 50520, Sept. 22, 1998; 65 FR 38150, June 19, 2000; 65 FR 62604, Oct. 19, 2000; 67 FR 38860, June 6, 2002; 67 FR 54952, Aug. 27, 2002; 67 FR 70546, Nov. 25, 2002; 68 FR 50472, Aug. 21, 2003; 69 FR 3005, Jan. 22, 2004; 69 FR 5687, Feb. 6, 2004; 69 FR 23628, Apr. 29, 2004; 69 FR 46074, July 30, 2004]</CITA> </SECTION> <SECTION> <SECTNO>§ 732.4</SECTNO> <SUBJECT>Steps regarding License Exceptions.</SUBJECT> <P>(a) <E T="03">Introduction to Steps for License Exceptions.</E> If your export or reexport is subject to the EAR and is subject to General Prohibitions One (Exports and Reexports), Two (Parts and Components Reexports), or Three (Foreign-Produced Direct Product Reexports), consider the steps listed in paragraph (b) of this section. If your export or reexport is subject to General Prohibitions Four (Denial Orders), Seven (U.S. Person Proliferation Activity), Eight (In-Transit), Nine (Orders, Terms, and Conditions), or Ten (Knowledge Violation to Occur), there are no License Exceptions available for your export or reexport. If your export is subject to General Prohibition Five (End-Use End-User), consult part 744 of the EAR. If your export or reexport is subject to General Prohibition Six (Embargo), consult part 746 of the EAR for applicable License Exceptions.</P> <P>(b) <E T="03">Steps for License Exceptions</E>—(1) <E T="03">Step 20: Applicability of General Prohibitions.</E> Determine whether any one or more of the general prohibitions described in § 736.2(b) of the EAR apply to your export or reexport. If no general prohibition applies to your export or reexport, then you may proceed with your export or reexport and need not review part 740 of the EAR regarding License Exceptions. You are reminded of your recordkeeping obligations related to the clearance of the U.S. Customs Service provided in parts 762 and 758 of the EAR.</P> <P>(2) <E T="03">Step 21: Applicability of restrictions on all License Exceptions.</E> Determine whether any one or more of the restrictions in § 740.2 of the EAR applies to your export or reexport. If any one or <PRTPAGE P="201"/>more of these restrictions apply, there are no License Exceptions available to you, and you must either obtain a license or refrain from the export or reexport.</P> <P>(3) <E T="03">Step 22: Terms and conditions of the License Exceptions.</E> (i) If none of the restrictions in § 740.2 of the EAR applies, then review each of the License Exceptions to determine whether any one of them authorizes your export or reexport. Eligibility for License Exceptions is based on the item, the country of ultimate destination, the end-use, and the end-user, along with any special conditions imposed within a specific License Exception.</P> <P>(ii) You may meet the conditions for more than one License Exception. Moreover, although you may not qualify for some License Exceptions you may qualify for others. Review the broadest License Exceptions first, and use any License Exception available to you. You are not required to use the most restrictive applicable License Exception. If you fail to qualify for the License Exception that you first consider, you may consider any other License Exception until you have determined that no License Exception is available.</P> <P>(iii) License Exceptions TMP, RPL, BAG, AVS, GOV, and TSU authorize exports notwithstanding the provisions of the CCL. List-based License Exceptions (LVS, GBS, CIV, TSR, and APP) are available only to the extent specified on the CCL. Part 740 of the EAR provides authorization for reexports only to the extent each License Exception expressly authorizes reexports. License Exception APR authorizes reexports only.</P> <P>(iv) If you are exporting under License Exceptions GBS, CIV, LVS, APP, TSR, or GOV, you should review § 743.1 of the EAR to determine the applicability of certain reporting requirements.</P> <P>(4) <E T="03">Step 23: Scope of License Exceptions.</E> Some License Exceptions are limited by country or by type of item.</P> <P>(i) Countries are arranged in country groups for ease of reference. For a listing of country groups, please refer to Supplement No. 1 to part 740 of the EAR. Unless otherwise indicated in a License Exception, License Exceptions do not apply to any exports or reexports to embargoed destinations. If your export or reexport is subject to General Prohibition Six (Embargo) for embargoed destinations, License Exceptions are only available to the extent specifically provided in part 746 of the EAR concerning embargoed destinations.</P> <P>(ii) Special commodity controls apply to short supply items. No License Exceptions described in part 740 of the EAR may be used for items listed on the CCL as controlled for Short Supply reasons. License Exceptions for short supply items are found in part 754 of the EAR.</P> <P>(5) <E T="03">Step 24: Compliance with all terms and conditions.</E> If a License Exception is available, you may proceed with your export or reexport. However, you must meet all the terms and conditions required by the License Exception that you determined authorized your export or reexport. You must also consult part 758 and 762 of the EAR to determine your recordkeeping and documentation requirements.</P> <P>(6) <E T="03">Step 25: License requirements.</E> If no License Exception is available, then you must either obtain a license before proceeding with your export or reexport or you must refrain from the proposed export or reexport.</P> <P>(7) <E T="03">Step 26: License applications.</E> If you are going to file a license application with BIS, you should first review the requirements at part 748 of the EAR. Exporters, reexporters, and exporters from abroad should review the instructions concerning applications and required support documents prior to submitting an application for a license.</P> <CITA>[61 FR 12740, Mar. 25, 1996, as amended at 61 FR 64274, Dec. 4, 1996; 63 FR 2456, Jan. 15, 1998; 71 FR 20883, Apr. 24, 2006]</CITA> </SECTION> <SECTION> <SECTNO>§ 732.5</SECTNO> <SUBJECT>Steps regarding Shipper's Export Declaration or Automated Export System record, Destination Control Statements, and recordkeeping.</SUBJECT> <P>(a) <E T="03">Step 27: Shipper's Export Declaration (SED) or Automated Export System (AES) record.</E> Exporters or agents authorized to complete the Shipper's Export Declaration (SED), or to file SED information electronically using the Automated Export System (AES), <PRTPAGE P="202"/>should review § 758.1 of the EAR to determine when an SED is required and what export control information should be entered on the SED or AES record. More detailed information about how to complete an SED or file the SED information electronically using AES may be found in the Bureau of Census Foreign Trade Statistics Regulations (FTSR) at 15 CFR part 30. Reexporters and firms exporting from abroad may skip Steps 27 through 29 and proceed directly to § 732.6.</P> <P>(1) <E T="03">Entering license authority.</E> You must enter the correct license authority for your export on the SED or AES record (License number, License Exception symbol, or No License Required designator “NLR”) as appropriate. See § 758.1(g) of the EAR and 15 CFR 30.7(m) of the FTSR.</P> <P>(i) <E T="03">License number and expiration date.</E> If you are exporting under the authority of a license, you must enter the license number on the SED or AES record. The expiration date must be entered on paper versions of the SED only.</P> <P>(ii) <E T="03">License Exception.</E> If you are exporting under the authority of a License Exception, you must enter the correct License Exception symbol (<E T="03">e.g.,</E> LVS, GBS, CIV) on the SED or AES record. See § 740.1 and § 740.2 of the EAR.</P> <P>(iii) <E T="03">NLR.</E> If you are exporting items for which no license is required, you must enter the designator NLR. You should use the NLR designator in two circumstances: first, when the items to be exported are subject to the EAR but not listed on the Commerce Control List (CCL) (<E T="03">i.e.,</E> items that are classified as EAR99), and second, when the items to be exported are listed on the CCL but do not require a license. Use of the NLR designator is also a representation that no license is required under any of the General Prohibitions set forth in part 736 of the EAR.</P> <P>(2) <E T="03">Item description.</E> You must enter an item description identical to the item description on the license when a license is required, or enter an item description sufficient in detail to permit review by the U.S. Government and verification of the Schedule B Number (or Harmonized Tariff Schedule number) for License Exception shipments or shipments for which No License is Required (NLR). See § 758.1(g) of the EAR; and 15 CFR 30.7(l) of the FTSR.</P> <P>(3) <E T="03">Entering the ECCN.</E> You must enter the correct Export Control Classification Number (ECCN) on the SED or AES record for all licensed and License Exception shipments, and “No License Required” (NLR) shipments of items having a reason for control other than anti-terrorism (AT). The only exception to this requirement would be the return of unwanted foreign origin items, meeting the provisions of License Exception TMP, under § 740.9(b)(3). See § 758.1(g) of the EAR.</P> <P>(b) <E T="03">Step 28: Destination Control Statement.</E> The Destination Control Statement (DCS) must be entered on the invoice and on the bill of lading, air waybill, or other export control document that accompanies the shipment from its point of origin in the United States to the ultimate consignee or end-user abroad. The person responsible for preparation of those documents is responsible for entry of the DCS. The DCS is required for all exports from the United States of items on the Commerce Control List and is not required for items classified as EAR99, unless the export may be made under License Exception BAG or GFT (see part 740 of the EAR). Reexporters should review § 752.15 of the EAR for DCS requirements when using a Special Comprehensive License; otherwise, DCS requirements do not apply to reexports. See § 758.6 of the EAR.</P> <P>(c) <E T="03">Step 29: Recordkeeping.</E> Records of transactions subject to the EAR must be maintained for five years in accordance with the recordkeeping provisions of part 762 of the EAR.</P> <CITA>[65 FR 42568, July 10, 2000]</CITA> </SECTION> <SECTION> <SECTNO>§ 732.6</SECTNO> <SUBJECT>Steps for other requirements.</SUBJECT> <P>Sections 732.1 through 732.4 of this part are useful in determining the license requirements that apply to you. Other portions of the EAR impose other obligations and requirements. Some of them are:</P> <P>(a) Requirements relating to the use of a license in § 758.4 of the EAR.</P> <P>(b) Obligations of carriers, forwarders, exporters and others to take specific steps and prepare and deliver certain documents to assure that items <PRTPAGE P="203"/>subject to the EAR are delivered to the destination to which they are licensed or authorized by a License Exception or some other provision of the regulations in § 758.1 through § 758.6 of the EAR.</P> <P>(c) Duty of carriers to return or unload shipments at the direction of U.S. Government officials (see § 758.8 of the EAR).</P> <P>(d) Specific obligations imposed on parties to Special Comprehensive licenses in part 752 of the EAR.</P> <P>(e) Recordkeeping requirements imposed in part 762 of the EAR.</P> <P>(f) Requirements of part 764 of the EAR to disclose facts that may come to your attention after you file a license application or make other statements to the government concerning a transaction or proposed transaction that is subject to the EAR.</P> <P>(g) Certain obligations imposed by part 760 of the EAR on parties who receive requests to take actions related to foreign boycotts and prohibits certain actions relating to those boycotts.</P> <CITA>[61 FR 12740, Mar. 25, 1996, as amended at 65 FR 42568, July 10, 2000]</CITA> </SECTION> <APPENDIX> <PRTPAGE P="204"/> <EAR>Pt. 732, Supp. 1</EAR> <HD SOURCE="HED">Supplement 1 to Part 732</HD> <GPH DEEP="457" SPAN="2"> <GID>ER06FE04.000</GID> </GPH> <CITA>[69 FR 5687, Feb. 6, 2004]</CITA> </APPENDIX> <APPENDIX> <PRTPAGE P="205"/> <EAR>Pt. 732, Supp. 2</EAR> <HD SOURCE="HED">Supplement 2 to Part 732</HD> <GPH DEEP="441" SPAN="2"> <GID>ER06FE04.001</GID> </GPH> <CITA>[69 FR 5687, Feb. 6, 2004]</CITA> </APPENDIX> <APPENDIX> <PRTPAGE P="206"/> <EAR>Pt. 732, Supp. 3</EAR> <HD SOURCE="HED">Supplement No. 3 to Part 732—BIS's “Know Your Customer” Guidance and Red Flags</HD> <HD SOURCE="HD3">“Know Your Customer” Guidance</HD> <P>Various requirements of the EAR are dependent upon a person's knowledge of the end-use, end-user, ultimate destination, or other facts relating to a transaction or activity. These provisions include the nonproliferation-related “catch-all” sections and the prohibition against proceeding with a transaction with knowledge that a violation of the EAR has occurred or is about to occur.</P> <P>(a) BIS provides the following guidance on how individuals and firms should act under this knowledge standard. This guidance does not change or interpret the EAR.</P> <P>(1) <E T="03">Decide whether there are “red flags”.</E> Take into account any abnormal circumstances in a transaction that indicate that the export may be destined for an inappropriate end-use, end-user, or destination. Such circumstances are referred to as “red flags”. Included among examples of red flags are orders for items that are inconsistent with the needs of the purchaser, a customer declining installation and testing when included in the sales price or when normally requested, or requests for equipment configurations that are incompatible with the stated destination (e.g., 120 volts in a country with 220 volts). Commerce has developed lists of such red flags that are not all-inclusive but are intended to illustrate the types of circumstances that should cause reasonable suspicion that a transaction will violate the EAR.</P> <P>(2) <E T="03">If there are “red flags”, inquire.</E> If there are no “red flags” in the information that comes to your firm, you should be able to proceed with a transaction in reliance on information you have received. That is, absent “red flags” (or an express requirement in the EAR), there is no affirmative duty upon exporters to inquire, verify, or otherwise “go behind” the customer's representations. However, when “red flags” are raised in information that comes to your firm, you have a duty to check out the suspicious circumstances and inquire about the end-use, end-user, or ultimate country of destination. The duty to check out “red flags” is not confined to the use of License Exceptions affected by the “know” or “reason to know” language in the EAR. Applicants for licenses are required by part 748 of the EAR to obtain documentary evidence concerning the transaction, and misrepresentation or concealment of material facts is prohibited, both in the licensing process and in all export control documents. You can rely upon representations from your customer and repeat them in the documents you file unless red flags oblige you to take verification steps.</P> <P>(3) <E T="03">Do not self-blind.</E> Do not cut off the flow of information that comes to your firm in the normal course of business. For example, do not instruct the sales force to tell potential customers to refrain from discussing the actual end-use, end-user, and ultimate country of destination for the product your firm is seeking to sell. Do not put on blinders that prevent the learning of relevant information. An affirmative policy of steps to avoid “bad” information would not insulate a company from liability, and it would usually be considered an aggravating factor in an enforcement proceeding.</P> <P>(4) <E T="03">Employees need to know how to handle “red flags”.</E> Knowledge possessed by an employee of a company can be imputed to a firm so as to make it liable for a violation. This makes it important for firms to establish clear policies and effective compliance procedures to ensure that such knowledge about transactions can be evaluated by responsible senior officials. Failure to do so could be regarded as a form of self-blinding.</P> <P>(5) <E T="03">Reevaluate all the information after the inquiry.</E> The purpose of this inquiry and reevaluation is to determine whether the “red flags” can be explained or justified. If they can, you may proceed with the transaction. If the “red flags” cannot be explained or justified and you proceed, you run the risk of having had “knowledge” that would make your action a violation of the EAR.</P> <P>(6) <E T="03">Refrain from the transaction or advise BIS and wait.</E> If you continue to have reasons for concern after your inquiry, then you should either refrain from the transaction or submit all the relevant information to BIS in the form of an application for a license or in such other form as BIS may specify.</P> <P>(b) Industry has an important role to play in preventing exports and reexports contrary to the national security and foreign policy interests of the United States. BIS will continue to work in partnership with industry to make this front line of defense effective, while minimizing the regulatory burden on exporters. If you have any question about whether you have encountered a “red flag”, you may contact the Office of Export Enforcement at 1-800-424-2980 or the Office of Exporter Services at (202) 482-4532.</P> <HD SOURCE="HD1">Red Flags</HD> <P>Possible indicators that an unlawful diversion might be planned by your customer include the following:</P> <P>1. The customer or purchasing agent is reluctant to offer information about the end-use of a product.</P> <P>2. The product's capabilities do not fit the buyer's line of business; for example, a small bakery places an order for several sophisticated lasers.</P> <P>3. The product ordered is incompatible with the technical level of the country to <PRTPAGE P="207"/>which the product is being shipped. For example, semiconductor manufacturing equipment would be of little use in a country without an electronics industry.</P> <P>4. The customer has little or no business background.</P> <P>5. The customer is willing to pay cash for a very expensive item when the terms of the sale call for financing.</P> <P>6. The customer is unfamiliar with the product's performance characteristics but still wants the product.</P> <P>7. Routine installation, training or maintenance services are declined by the customer.</P> <P>8. Delivery dates are vague, or deliveries are planned for out-of-the-way destinations.</P> <P>9. A freight forwarding firm is listed as the product's final destination.</P> <P>10. The shipping route is abnormal for the product and destination.</P> <P>11. Packaging is inconsistent with the stated method of shipment or destination.</P> <P>12. When questioned, the buyer is evasive or unclear about whether the purchased product is for domestic use, export or reexport.</P> <CITA>[61 FR 12740, Mar. 25, 1996. Redesignated and amended at 62 FR 25453, 25456, May 9, 1997]</CITA> </APPENDIX> </PART> <PART> <EAR>Pt. 734</EAR> <HD SOURCE="HED">PART 734—SCOPE OF THE EXPORT ADMINISTRATION REGULATIONS</HD> <CONTENTS> <SECHD>Sec.</SECHD> <SECTNO>734.1</SECTNO> <SUBJECT>Introduction.</SUBJECT> <SECTNO>734.2</SECTNO> <SUBJECT>Important EAR terms and principles.</SUBJECT> <SECTNO>734.3</SECTNO> <SUBJECT>Items subject to the EAR.</SUBJECT> <SECTNO>734.4</SECTNO> <SUBJECT> <E T="03">De minimis</E> U.S. content.</SUBJECT> <SECTNO>734.5</SECTNO> <SUBJECT>Activities of U.S. and foreign persons subject to the EAR.</SUBJECT> <SECTNO>734.6</SECTNO> <SUBJECT>Assistance available from BIS for determining licensing and other requirements.</SUBJECT> <SECTNO>734.7</SECTNO> <SUBJECT>Published information and software.</SUBJECT> <SECTNO>734.8</SECTNO> <SUBJECT>Information resulting from fundamental research.</SUBJECT> <SECTNO>734.9</SECTNO> <SUBJECT>Educational information.</SUBJECT> <SECTNO>734.10</SECTNO> <SUBJECT>Patent applications.</SUBJECT> <SECTNO>734.11</SECTNO> <SUBJECT>Government-sponsored research covered by contract controls.</SUBJECT> <SECTNO>734.12</SECTNO> <SUBJECT>Effect on foreign laws and regulations.</SUBJECT> <APP>Supplement No. 1 to Part 734—Questions and Answers—Technology and Software Subject to the EAR</APP> <APP>Supplement No. 2 to Part 734—Calculation of Values for <E T="03">De Minimus</E> Rules</APP> </CONTENTS> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>50 U.S.C. app. 2401 <E T="03">et seq.</E>; 50 U.S.C. 1701 <E T="03">et seq.</E>; 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; Notice of October 25, 2005, 70 FR 62027 (October 27, 2005); Notice of August 3, 2006, 71 FR 44551 (August 7, 2006).</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>61 FR 12746, Mar. 25, 1996, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>§ 734.1</SECTNO> <SUBJECT>Introduction.</SUBJECT> <P>(a) In this part, references to the Export Administration Regulations (EAR) are references to 15 CFR chapter VII, subchapter C. This part describes the scope of the Export Administration Regulations (EAR) and explains certain key terms and principles used in the EAR. This part provides the rules you need to use to determine whether items and activities are subject to the EAR. This part is the first step in determining your obligations under the EAR. If neither your item nor your activity is subject to the EAR, then you do not have any obligations under the EAR and you do not need to review other parts of the EAR. If you already know that your item or activity is subject to the EAR, you do not need to review this part and you can go on to review other parts of the EAR to determine your obligations. This part also describes certain key terms and principles used in the EAR. Specifically, it includes the following terms: “subject to the EAR,” “items subject to the EAR,” “export,” and “reexport.” These and other terms are also included in part 772 of the EAR, Definitions of Terms, and you should consult part 772 of the EAR for the meaning of terms used in the EAR. Finally, this part makes clear that compliance with the EAR does not relieve any obligations imposed under foreign laws.</P> <P>(b) This part does not address any of the provisions set forth in part 760 of the EAR, Restrictive Trade Practices or Boycotts.</P> <P>(c) This part does not define the scope of legal authority to regulate exports, including reexports, or activities found in the Export Administration Act and other statutes. What this part does do is set forth the extent to which such legal authority has been exercised through the EAR.</P> <CITA>[61 FR 12746, Mar. 25, 1996, as amended at 69 FR 5690, Feb. 6, 2004]</CITA> </SECTION> <SECTION> <SECTNO>§ 734.2</SECTNO> <SUBJECT>Important EAR terms and principles.</SUBJECT> <P>(a) <E T="03">Subject to the EAR—Definition.</E> (1) “Subject to the EAR” is a term used in the EAR to describe those items and <PRTPAGE P="208"/>activities over which BIS exercises regulatory jurisdiction under the EAR. Conversely, items and activities that are not subject to the EAR are outside the regulatory jurisdiction of the EAR and are not affected by these regulations. The items and activities subject to the EAR are described in § 734.2 through § 734.5 of this part. You should review the Commerce Control List (CCL) and any applicable parts of the EAR to determine whether an item or activity is subject to the EAR. However, if you need help in determining whether an item or activity is subject to the EAR, see § 734.6 of this part. Publicly available technology and software not subject to the EAR are described in § 734.7 through § 734.11 and Supplement No. 1 to this part.</P> <P>(2) Items and activities subject to the EAR may also be controlled under export-related programs administered by other agencies. Items and activities subject to the EAR are not necessarily exempted from the control programs of other agencies. Although BIS and other agencies that maintain controls for national security and foreign policy reasons try to minimize overlapping jurisdiction, you should be aware that in some instances you may have to comply with more than one regulatory program.</P> <P>(3) The term “subject to the EAR” should not be confused with licensing or other requirements imposed in other parts of the EAR. Just because an item or activity is subject to the EAR does not mean that a license or other requirement automatically applies. A license or other requirement applies only in those cases where other parts of the EAR impose a licensing or other requirement on such items or activities.</P> <P>(b) <E T="03">Export and reexport</E>—(1) <E T="03">Definition of export.</E> “Export” means an actual shipment or transmission of items subject to the EAR out of the United States, or release of technology or software subject to the EAR to a foreign national in the United States, as described in paragraph (b)(2)(ii) of this section. See paragraph (b)(9) of this section for the definition that applies to exports of encryption source code and object code software subject to the EAR.</P> <P>(2) <E T="03">Export of technology or software.</E> (See paragraph (b)(9) for provisions that apply to encryption source code and object code software.) “Export” of technology or software, excluding encryption software subject to “EI” controls, includes:</P> <P>(i) Any release of technology or software subject to the EAR in a foreign country; or</P> <P>(ii) Any release of technology or source code subject to the EAR to a foreign national. Such release is deemed to be an export to the home country or countries of the foreign national. This deemed export rule does not apply to persons lawfully admitted for permanent residence in the United States and does not apply to persons who are protected individuals under the Immigration and Naturalization Act (8 U.S.C. 1324b(a)(3)). Note that the release of any item to any party with knowledge a violation is about to occur is prohibited by § 736.2(b)(10) of the EAR.</P> <P>(3) <E T="03">Definition of “release” of technology or software.</E> Technology or software is “released” for export through:</P> <P>(i) Visual inspection by foreign nationals of U.S.-origin equipment and facilities;</P> <P>(ii) Oral exchanges of information in the United States or abroad; or</P> <P>(iii) The application to situations abroad of personal knowledge or technical experience acquired in the United States.</P> <P>(4) <E T="03">Definition of reexport.</E> “Reexport” means an actual shipment or transmission of items subject to the EAR from one foreign country to another foreign country; or release of technology or software subject to the EAR to a foreign national outside the United States, as described in paragraph (b)(5) of this section.</P> <P>(5) <E T="03">Reexport of technology or software.</E> Any release of technology or source code subject to the EAR to a foreign national of another country is a deemed reexport to the home country or countries of the foreign national. However, this deemed reexport definition does not apply to persons lawfully admitted for permanent residence. The term “release” is defined in paragraph (b)(3) of this section. Note that the release of any item to any party with <PRTPAGE P="209"/>knowledge or reason to know a violation is about to occur is prohibited by § 736.2(b)(10) of the EAR.</P> <P>(6) For purposes of the EAR, the export or reexport of items subject to the EAR that will transit through a country or countries or be transshipped in a country or countries to a new country or are intended for reexport to the new country, are deemed to be exports to the new country.</P> <P>(7) If a territory, possession, or department of a foreign country is not listed on the Country Chart in Supplement No. 1 to part 738 of the EAR, the export or reexport of items subject to the EAR to such destination is deemed under the EAR to be an export to the foreign country. For example, a shipment to the Cayman Islands, a dependent territory of the United Kingdom, is deemed to be a shipment to the United Kingdom.</P> <P>(8) Export or reexport of items subject to the EAR does not include shipments among any of the states of the United States, the Commonwealth of Puerto Rico, or the Commonwealth of the Northern Mariana Islands or any territory, dependency, or possession of the United States. These destinations are listed in Schedules C & E, Classification of Country and Territory Designations for U.S. Export Statistics, issued by the Bureau of the Census.</P> <P>(9) <E T="03">Export of encryption source code and object code software.</E> (i) For purposes of the EAR, the export of encryption source code and object code software means:</P> <P>(A) An actual shipment, transfer, or transmission out of the United States (see also paragraph (b)(9)(ii) of this section); or</P> <P>(B) A transfer of such software in the United States to an embassy or affiliate of a foreign country.</P> <P>(ii) The export of encryption source code and object code software controlled for “EI” reasons under ECCN 5D002 on the Commerce Control List (see Supplement No. 1 to part 774 of the EAR) includes downloading, or causing the downloading of, such software to locations (including electronic bulletin boards, Internet file transfer protocol, and World Wide Web sites) outside the U.S., or making such software available for transfer outside the United States, over wire, cable, radio, electro-magnetic, photo optical, photoelectric or other comparable communications facilities accessible to persons outside the United States, including transfers from electronic bulletin boards, Internet file transfer protocol and World Wide Web sites, unless the person making the software available takes precautions adequate to prevent unauthorized transfer of such code. See § 740.13(e) of the EAR for notification requirements for exports or reexports of encryption source code and object code software considered to be publicly available consistent with the provisions of § 734.3(b)(3) of the EAR.</P> <P>(iii) Subject to the General Prohibitions described in part 736 of the EAR, such precautions for Internet transfers of products eligible for export under § 740.17 (b)(2) of the EAR (encryption software products, certain encryption source code and general purpose encryption toolkits) shall include such measures as:</P> <P>(A) The access control system, either through automated means or human intervention, checks the address of every system outside of the U.S. or Canada requesting or receiving a transfer and verifies such systems do not have a domain name or Internet address of a foreign government end-user (<E T="03">e.g.,</E> “.gov,” “.gouv,” “.mil” or similar addresses);</P> <P>(B) The access control system provides every requesting or receiving party with notice that the transfer includes or would include cryptographic software subject to export controls under the Export Administration Regulations, and anyone receiving such a transfer cannot export the software without a license or other authorization; and</P> <P>(C) Every party requesting or receiving a transfer of such software must acknowledge affirmatively that the software is not intended for use by a government end-user, as defined in part 772, and he or she understands the cryptographic software is subject to export controls under the Export Administration Regulations and anyone receiving the transfer cannot export the software without a license or other authorization. BIS will consider acknowledgments in electronic form provided they <PRTPAGE P="210"/>are adequate to assure legal undertakings similar to written acknowledgments.</P> <CITA>[61 FR 12746, Mar. 25, 1996, as amended at 61 FR 68578, Dec. 30, 1996; 63 FR 50520, Sept. 22, 1998; 64 FR 13339, Mar. 18, 1999; 65 FR 2496, Jan. 14, 2000; 67 FR 38860, June 6, 2002]</CITA> </SECTION> <SECTION> <SECTNO>§ 734.3</SECTNO> <SUBJECT>Items subject to the EAR.</SUBJECT> <P>(a) Except for items excluded in paragraph (b) of this section, the following items are subject to the EAR:</P> <P>(1) All items in the United States, including in a U.S. Foreign Trade Zone or moving intransit through the United States from one foreign country to another;</P> <P>(2) All U.S. origin items wherever located;</P> <P>(3) U.S. origin parts, components, materials or other commodities integrated abroad into foreign-made products, U.S. origin software commingled with foreign software, and U.S. origin technology commingled with foreign technology:</P> <P>(i) In any quantity, as described in section 734.4(a) of this part; or</P> <P>(ii) In quantities exceeding <E T="03">de minimis</E> levels as described in section 734.4(c) and Supplement No. 2 of this part;</P> <P>(4) Certain foreign-made direct products of U.S. origin technology or software, as described in § 736.2(b)(3) of the EAR. The term “direct product” means the immediate product (including processes and services) produced directly by the use of technology or software; and</P> <P>(5) Certain commodities produced by any plant or major component of a plant located outside the United States that is a direct product of U.S.-origin technology or software, as described in § 736.2(b)(3) of the EAR.</P> <P>(b) The following items are not subject to the EAR:</P> <P>(1) Items that are exclusively controlled for export or reexport by the following departments and agencies of the U.S. Government which regulate exports or reexports for national security or foreign policy purposes:</P> <P>(i) <E T="03">Department of State.</E> The International Traffic in Arms Regulations (22 CFR part 121) administered by the Directorate of Defense Trade Controls relate to defense articles and defense services on the U.S. Munitions List. Section 38 of the Arms Export Control Act (22 U.S.C. 2778).</P> <P>(ii) <E T="03">Treasury Department, Office of Foreign Assets Control (OFAC).</E> Regulations administered by OFAC implement broad controls and embargo transactions with certain foreign countries. These regulations include controls on exports and reexports to certain countries (31 CFR chapter V). Trading with the Enemy Act (50 U.S.C. app. section 1 <E T="03">et seq.</E>), and International Emergency Economic Powers Act (50 U.S.C. 1701, <E T="03">et seq.</E>)</P> <P>(iii) <E T="03">U.S. Nuclear Regulatory Commission (NRC).</E> Regulations administered by NRC control the export and reexport of commodities related to nuclear reactor vessels (10 CFR part 110). Atomic Energy Act of 1954, as amended (42 U.S.C. part 2011 <E T="03">et seq.</E>).</P> <P>(iv) <E T="03">Department of Energy (DOE).</E> Regulations administered by DOE control the export and reexport of technology related to the production of special nuclear materials (10 CFR part 810). Atomic Energy Act of 1954, as amended (42 U.S.C. section 2011 <E T="03">et seq.</E>).</P> <P>(v) <E T="03">Patent and Trademark Office (PTO).</E> Regulations administered by PTO provide for the export to a foreign country of unclassified technology in the form of a patent application or an amendment, modification, or supplement thereto or division thereof (37 CFR part 5). BIS has delegated authority under the Export Administration Act to the PTO to approve exports and reexports of such technology which is subject to the EAR. Exports and reexports of such technology not approved under PTO regulations must comply with the EAR.</P> <P>(2) Prerecorded phonograph records reproducing in whole or in part, the content of printed books, pamphlets, and miscellaneous publications, including newspapers and periodicals; printed books, pamphlets, and miscellaneous publications including bound newspapers and periodicals; children's picture and painting books; newspaper and periodicals, unbound, excluding waste; music books; sheet music; calendars and calendar blocks, paper; maps, hydrographical charts, atlases, gazetteers, globe covers, and globes (terrestrial and celestial); exposed and developed microfilm reproducing, in <PRTPAGE P="211"/>whole or in part, the content of any of the above; exposed and developed motion picture film and soundtrack; and advertising printed matter exclusively related thereto.</P> <P>(3) Publicly available technology and software, except software controlled for “EI” reasons under ECCN 5D002 on the Commerce Control List and mass market encryption software with symmetric key length exceeding 64-bits controlled under ECCN 5D992, that:</P> <P>(i) Are already published or will be published as described in § 734.7 of this part;</P> <P>(ii) Arise during, or result from, fundamental research, as described in § 734.8 of this part;</P> <P>(iii) Are educational, as described in § 734.9 of this part;</P> <P>(iv) Are included in certain patent applications, as described in § 734.10 of this part. </P> <NOTE> <HD SOURCE="HED">Note to paragraphs <E T="01">(b)(2)</E> and <E T="01">(b)(3)</E> of this section:</HD> <P>A printed book or other printed material setting forth encryption source code is not itself subject to the EAR (see § 734.3(b)(2)). However, notwithstanding § 734.3(b)(2), encryption source code in electronic form or media (e.g., computer diskette or CD ROM) remains subject to the EAR (see § 734.3(b)(3)).</P> </NOTE> <P>(4) Foreign made items that have less than the <E T="03">de minimis</E> percentage of controlled U.S. content based on the principles described in § 734.4 of this part.</P> <P>(c) “Items subject to the EAR” consist of the items listed on the Commerce Control List (CCL) in part 774 of the EAR and all other items which meet the definition of that term. For ease of reference and classification purposes, items subject to the EAR which are <E T="03">not</E> listed on the CCL are designated as “EAR99.”</P> <CITA>[61 FR 12746, Mar. 25, 1996, as amended at 61 FR 65464, Dec. 13, 1996; 61 FR 68578, Dec. 30, 1996; 62 FR 25456, May 9, 1997; 67 FR 38860, June 6, 2002; 69 FR 5690, Feb. 6, 2004; 69 FR 5929, Feb. 9, 2004]</CITA> </SECTION> <SECTION> <SECTNO>§ 734.4</SECTNO> <SUBJECT> <E T="7462">De minimis</E> U.S. content.</SUBJECT> <P>(a) <E T="03">Items for which there is no de minimis level.</E> (1) There is no <E T="03">de minimis</E> level for the export from a foreign country of a foreign-made computer with an Adjusted Peak Performance (APP) exceeding 0.75 Weighted TeraFLOPS (WT) containing U.S.-origin controlled semiconductors (other than memory circuits) classified under ECCN 3A001 to Computer Tier 3; or exceeding an APP of 0.002 WT containing U.S.-origin controlled semiconductors (other than memory circuits) classified under ECCN 3A001 or high speed interconnect devices (ECCN 4A994.j) to Cuba, Iran, North Korea, Sudan, and Syria.</P> <P>(2) Foreign produced encryption technology that incorporates U.S. origin encryption technology controlled by ECCN 5E002 is subject to the EAR regardless of the amount of U.S. origin content.</P> <P>(3) There is no <E T="03">de minimis</E> level for foreign-made:</P> <P>(i) Commercial Standby Instrument Systems (CSIS) of the type described in ECCN 7A994 on the Commerce Control List (Supplement No. 1 to part 774 the EAR) when the CSISs integrate QRS11-00100-100/101 Micromachined Angular Rate Sensors; and</P> <P>(ii) Aircraft of the type described in ECCN 9A991 when such aircraft incorporate a CSIS integrating a QRS11-00100-100/101 sensor. </P> <NOTE> <HD SOURCE="HED">Note to paragraph <E T="01">(a)(3)</E>:</HD> <P>QRS11 Micromachined Angular Rate Sensors are subject to the export licensing jurisdiction of the U.S. Department of State, Directorate of Defense Trade Controls, except when the QRS11-00100-100/101 version of the sensor is integrated into and included as an integral part of a CSIS of the type described in ECCN 7A994 or aircraft of the type described in ECCN 9A991 that incorporates a CSIS that has such a sensor integrated, or is exported solely for integration into such a system.</P> </NOTE> <P>(b) <E T="03">Special requirements for certain encryption items.</E> Foreign made items that incorporate U.S. origin items that are listed in this paragraph are subject to the EAR unless they meet the <E T="03">de minimis</E> level and destination requirements of paragraph (c) or (d) of this section and the requirements of this paragraph.</P> <P>(1) The U.S. origin commodities or software, if controlled under ECCNs 5A002.a.1, .a.2, .a.5, or .a.6, or 5D002, must have been:</P> <P>(i) Authorized for license exception TSU because of having met the notification requirements of § 740.13(e) of the EAR (ECCN 5D002 only);</P> <P>(ii) Authorized for License Exception ENC by BIS after a review pursuant to § 740.17(b)(3) of the EAR; or<PRTPAGE P="212"/> </P> <P>(iii) Authorized for License Exception ENC by BIS after a review pursuant to § 740.17(b)(2), and the foreign made product will not be sent to any destination in Country Group E:1 in Supplement No. 1 to part 740 of the EAR.</P> <P>(2) The U.S. origin encryption items, if controlled under ECCNs 5A992, 5D992, or 5E992 must:</P> <P>(i) Have met the notification requirements of § 742.15(b)(1) of the EAR; or</P> <P>(ii) Have been determined by BIS to be “mass market” commodities or software after a review in accordance with § 742.15(b)(2) of the EAR (ECCNs 5A992 and 5D992 only); or</P> <P>(iii) Be an item described in § 742.15(b)(3)(ii) or § 742.15(b)(3)(iii) of the EAR. </P> <NOTE> <HD SOURCE="HED">Note to paragraph <E T="01">(b)</E>:</HD> <P>See supplement No. 2 to this part for <E T="03">de minimis</E> calculation procedures and reporting requirements.</P> </NOTE> <P>(c) Except as provided in paragraphs(a) and (b)(1)(iii) and subject to the provisions of paragraphs (b)(1)(i), (b)(1)(ii) and (b)(2) of this section, the following reexports are not subject to the EAR when made to a terrorist-supporting country listed in Country Group E:1 (see Supplement No. 1 to part 740 of the EAR).</P> <P>(1) Reexports of a foreign-made commodity incorporating controlled U.S.-origin commodities valued at 10% or less of the total value of the foreign-made commodity;</P> <P>(2) Reexports of foreign-made software incorporating controlled U.S.-origin software valued at 10% or less of the total value of the foreign-made software; or</P> <P>(3) Reexports of foreign technology commingled with or drawn from controlled U.S.-origin technology valued at 10% or less of the total value of the foreign technology.</P> <P>(d) Except as provided in paragraph (a) of this section and subject to the provisions of paragraph (b) of this section, the following reexports are not subject to the EAR when made to countries other than those described in paragraph (c) of this section.</P> <P>(1) Reexports of a foreign-made commodity incorporating controlled U.S.-origin commodities valued at 25% or less of the total value of the foreign-made commodity;</P> <P>(2) Reexports of foreign-made software incorporating controlled U.S.-origin software valued at 25% or less of the total value of the foreign-made software; or</P> <P>(3) Reexports of foreign technology commingled with or drawn from controlled U.S.-origin technology valued at 25% or less of the total value of the foreign technology.</P> <P>(e) For purposes of determining <E T="03">de minimis</E> levels, technology and source code used to design or produce foreign-made commodities or software are not considered to be incorporated into such foreign-made commodities or software. Commodities subject only to short supply controls are not included in calculating U.S. content.</P> <P>(f) You are responsible for making the necessary calculations to determine whether the <E T="03">de minimis</E> provisions apply to your situation. See Supplement No. 2 to part 734 for guidance regarding calculation of U.S. controlled content.</P> <P>(g) See § 770.3 of the EAR for principles that apply to commingled U.S.-origin technology and software.</P> <P>(h) Notwithstanding the provisions of paragraphs (c) and (d) of this section, U.S.-origin technology controlled by ECCN 9E003a.1 through a.12, and .f, and related controls, and encryption software controlled for “EI” reasons under ECCN 5D002 or encryption technology controlled for “EI” reasons under ECCN 5E002 do not lose their U.S.-origin when redrawn, used, consulted, or otherwise commingled abroad in any respect with other software or technology of any other origin. Therefore, any subsequent or similar software or technology prepared or engineered abroad for the design, construction, operation, or maintenance of any plant or equipment, or part thereof, which is based on or uses any such U.S.-origin <PRTPAGE P="213"/>software or technology is subject to the EAR.</P> <CITA>[61 FR 12746, Mar. 25, 1996, as amended at 61 FR 54543, Oct. 21, 1996; 61 FR 65464, Dec. 13, 1996; 61 FR 68578, Dec. 30, 1996; 62 FR 25456, May 9, 1997; 63 FR 50520, Sept. 22, 1998; 64 FR 13339, Mar. 18, 1999; 64 FR 42011, Aug. 3, 1999; 65 FR 2496, Jan. 14, 2000; 65 FR 60854, Oct. 13, 2000; 65 FR 62604, Oct. 19, 2000; 66 FR 42109, Aug. 10, 2001; 67 FR 10610, 10613, Mar. 8, 2002; 67 FR 38860, June 6, 2002; 68 FR 35784, June 17, 2003; 69 FR 5690, Feb. 6, 2004; 69 FR 5929, Feb. 9, 2004; 69 FR 71359, Dec. 9, 2004; 71 FR 20883, Apr. 24, 2006; 71 FR 51717, Aug. 31, 2006]</CITA> </SECTION> <SECTION> <SECTNO>§ 734.5</SECTNO> <SUBJECT>Activities of U.S. and foreign persons subject to the EAR.</SUBJECT> <P>The following kinds of activities are subject to the EAR:</P> <P>(a) Certain activities of U.S. persons related to the proliferation of nuclear explosive devices, chemical or biological weapons, missile technology as described in § 744.6 of the EAR, and the proliferation of chemical weapons as described in part 745 of the EAR.</P> <P>(b) Activities of U.S. or foreign persons prohibited by any order issued under the EAR, including a Denial Order issued pursuant to part 766 of the EAR.</P> <P>(c) Technical assistance by U.S. persons with respect to encryption commodities or software as described in § 744.9 of the EAR.</P> <CITA>[61 FR 12746, Mar. 25, 1996, as amended at 61 FR 68578, Dec. 30, 1996; 64 FR 27141, May 18, 1999; 64 FR 47105, Aug. 30, 1999]</CITA> </SECTION> <SECTION> <SECTNO>§ 734.6</SECTNO> <SUBJECT>Assistance available from BIS for determining licensing and other requirements.</SUBJECT> <P>(a) If you are not sure whether a commodity, software, technology, or activity is subject to the EAR, or is subject to licensing or other requirements under the EAR, you may ask BIS for an advisory opinion, classification, or a determination whether a particular item or activity is subject to the EAR. In many instances, including those where the item is specially designed, developed, configured, adapted, or modified for military application, the item may fall under the licensing jurisdiction of the Department of State and may be subject to the controls of the International Traffic in Arms Regulations (22 CFR parts 120 through 130) (ITAR). In order to determine if the Department of State has licensing jurisdiction over an item, you should submit a request for a commodity jurisdiction determination to the Department of State, Directorate of Defense Trade Controls. Exporters should note that in a very limited number of cases, the categories of items may be subject to both the ITAR and the EAR. The relevant departments are working to eliminate any unnecessary overlaps that may exist.</P> <P>(b) As the agency responsible for administering the EAR, BIS is the only agency that has the responsibility for determining whether an item or activity is subject to the EAR and, if so, what licensing or other requirements apply under the EAR. Such a determination only affects EAR requirements, and does not affect the applicability of any other regulatory programs.</P> <P>(c) If you need help in determining BIS licensing or other requirements you may ask BIS for help by following the procedures described in § 748.3 of the EAR.</P> </SECTION> <SECTION> <SECTNO>§ 734.7</SECTNO> <SUBJECT>Published information and software.</SUBJECT> <P>(a) Information is “published” when it becomes generally accessible to the interested public in any form, including:</P> <P>(1) Publication in periodicals, books, print, electronic, or any other media available for general distribution to any member of the public or to a community of persons interested in the subject matter, such as those in a scientific or engineering discipline, either free or at a price that does not exceed the cost of reproduction and distribution (See Supplement No. 1 to this part, Questions A(1) through A(6));</P> <P>(2) Ready availability at libraries open to the public or at university libraries (See Supplement No. 1 to this part, Question A(6));</P> <P>(3) Patents and open (published) patent applications available at any patent office; and</P> <P>(4) Release at an open conference, meeting, seminar, trade show, or other open gathering.</P> <P>(i) A conference or gathering is “open” if all technically qualified members of the public are eligible to <PRTPAGE P="214"/>attend and attendees are permitted to take notes or otherwise make a personal record (not necessarily a recording) of the proceedings and presentations.</P> <P>(ii) All technically qualified members of the public may be considered eligible to attend a conference or other gathering notwithstanding a registration fee reasonably related to cost and reflecting an intention that all interested and technically qualified persons be able to attend, or a limitation on actual attendance, as long as attendees either are the first who have applied or are selected on the basis of relevant scientific or technical competence, experience, or responsibility (See Supplement No. 1 to this part, Questions B(1) through B(6)).</P> <P>(iii) “Publication” includes submission of papers to domestic or foreign editors or reviewers of journals, or to organizers of open conferences or other open gatherings, with the understanding that the papers will be made publicly available if favorably received. (See Supplement No. 1 to this part, Questions A(1) and A(3)).</P> <P>(b) Software and information is published when it is available for general distribution either for free or at a price that does not exceed the cost of reproduction and distribution. See Supplement No. 1 to this part, Questions G(1) through G(3).</P> <P>(c) Notwithstanding paragraphs (a) and (b) of this section, note that encryption software controlled under ECCN 5D002 for “EI” reasons on the Commerce Control List and mass market encryption software with symmetric key length exceeding 64-bits controlled under ECCN 5D992 remain subject to the EAR. <E T="03">See</E> § 740.13(e) of the EAR for certain exports and reexports under license exception.</P> <CITA>[61 FR 12746, Mar. 25, 1996, as amended at 61 FR 65464, Dec. 13, 1996; 61 FR 68578, Dec. 30, 1996; 65 FR 2496, Jan. 14, 2000; 67 FR 38861, June 6, 2002]</CITA> </SECTION> <SECTION> <SECTNO>§ 734.8</SECTNO> <SUBJECT>Information resulting from fundamental research.</SUBJECT> <P>(a) <E T="03">Fundamental research.</E> Paragraphs (b) through (d) of this section and § 734.11 of this part provide specific rules that will be used to determine whether research in particular institutional contexts qualifies as “fundamental research”. The intent behind these rules is to identify as “fundamental research” basic and applied research in science and engineering, where the resulting information is ordinarily published and shared broadly within the scientific community. Such research can be distinguished from proprietary research and from industrial development, design, production, and product utilization, the results of which ordinarily are restricted for proprietary reasons or specific national security reasons as defined in § 734.11(b) of this part. (See Supplement No. 1 to this part, Question D(8)). Note that the provisions of this section do not apply to encryption software controlled under ECCN 5D002 for “EI” reasons on the Commerce Control List (Supplement No. 1 to Part 774 of the EAR) or to mass market encryption software with symmetric key length exceeding 64-bits controlled under ECCN 5D992. <E T="03">See</E> § 740.13(e) of the EAR for certain exports and reexports under license exception.</P> <P>(b) <E T="03">University based research.</E> (1) Research conducted by scientists, engineers, or students at a university normally will be considered fundamental research, as described in paragraphs (b) (2) through (6) of this section. (“University” means any accredited institution of higher education located in the United States.)</P> <P>(2) Prepublication review by a sponsor of university research solely to insure that the publication would not inadvertently divulge proprietary information that the sponsor has furnished to the researchers does not change the status of the research as fundamental research. However, release of information from a corporate sponsor to university researchers where the research results are subject to prepublication review, is subject to the EAR. (See Supplement No. 1 to this part, Questions D(7), D(9), and D(10).)</P> <P>(3) Prepublication review by a sponsor of university research solely to ensure that publication would not compromise patent rights does not change the status of fundamental research, so long as the review causes no more than a temporary delay in publication of the research results.<PRTPAGE P="215"/> </P> <P>(4) The initial transfer of information from an industry sponsor to university researchers is subject to the EAR where the parties have agreed that the sponsor may withhold from publication some or all of the information so provided. (See Supplement No. 1 to this part, Question D(2).)</P> <P>(5) University based research is not considered “fundamental research” if the university or its researchers accept (at the request, for example, of an industrial sponsor) other restrictions on publication of scientific and technical information resulting from the project or activity. Scientific and technical information resulting from the research will nonetheless qualify as fundamental research once all such restrictions have expired or have been removed. (See Supplement No. 1 to this part, Question D(7) and D(9).)</P> <P>(6) The provisions of § 734.11 of this part will apply if a university or its researchers accept specific national security controls (as defined in § 734.11 of this part) on a research project or activity sponsored by the U.S. Government. (See Supplement No. 1 to this part, Questions E(1) and E(2).)</P> <P>(c) <E T="03">Research based at Federal agencies or FFRDCs.</E> Research conducted by scientists or engineers working for a Federal agency or a Federally Funded Research and Development Center (FFRDC) may be designated as “fundamental research” within any appropriate system devised by the agency or the FFRDC to control the release of information by such scientists and engineers. (See Supplement No. 1 to this part, Questions D(8) and D(11).)</P> <P>(d) <E T="03">Corporate research.</E> (1) Research conducted by scientists or engineers working for a business entity will be considered “fundamental research” at such time and to the extent that the researchers are free to make scientific and technical information resulting from the research publicly available without restriction or delay based on proprietary concerns or specific national security controls as defined in § 734.11(b) of this part.</P> <P>(2) Prepublication review by the company solely to ensure that the publication would compromise no proprietary information provided by the company to the researchers is not considered to be a proprietary restriction under paragraph (d)(1) of this section. However, paragraph (d)(1) of this section does not authorize the release of information to university researchers where the research results are subject to prepublication review. (See Supplement No. 1 to this part, Questions D(8), D(9), and D(10).)</P> <P>(3) Prepublication review by the company solely to ensure that prepublication would compromise no patent rights will not be considered a proprietary restriction for this purpose, so long as the review causes no more than a temporary delay in publication of the research results.</P> <P>(4) However, the initial transfer of information from a business entity to researchers is not authorized under the “fundamental research” provision where the parties have agreed that the business entity may withhold from publication some or all of the information so provided.</P> <P>(e) <E T="03">Research based elsewhere.</E> Research conducted by scientists or engineers who are not working for any of the institutions described in paragraphs (b) through (d) of this section will be treated as corporate research, as described in paragraph (d) of this section. (See Supplement No. 1 to this part, Question D(8).)</P> <CITA>[61 FR 12746, Mar. 25, 1996, as amended at 61 FR 68579, Dec. 30, 1996; 62 FR 25456, May 9, 1997; 65 FR 2496, Jan. 14, 2000; 67 FR 38861, June 6, 2002]</CITA> </SECTION> <SECTION> <SECTNO>§ 734.9</SECTNO> <SUBJECT>Educational information.</SUBJECT> <P>“Educational information” referred to in § 734.3(b)(3)(iii) of this part is not subject to the EAR if it is released by instruction in catalog courses and associated teaching laboratories of academic institutions. Dissertation research is discussed in § 734.8(b) of this part. (Refer to Supplement No. 1 to this part, Question C(1) through C(6)). Note that the provisions of this section do not apply to encryption software controlled under ECCN 5D002 for “EI” reasons on the Commerce Control List or to mass market encryption software with symmetric key length exceeding 64-bits controlled under ECCN 5D992. <PRTPAGE P="216"/> <E T="03">See</E> § 740.13(e) of the EAR for certain exports and reexports under license exception.</P> <CITA>[67 FR 38861, June 6, 2002]</CITA> </SECTION> <SECTION> <SECTNO>§ 734.10</SECTNO> <SUBJECT>Patent applications.</SUBJECT> <P>The information referred to in § 734.3(b)(3)(iv) of this part is:</P> <P>(a) Information contained in a patent application prepared wholly from foreign-origin technical data where the application is being sent to the foreign inventor to be executed and returned to the United States for subsequent filing in the U.S. Patent and Trademark Office;</P> <P>(b) Information contained in a patent application, or an amendment, modification, supplement or division of an application, and authorized for filing in a foreign country in accordance with the regulations of the Patent and Trademark Office, 37 CFR part 5; <SU>1</SU> <FTREF/> or</P> <FTNT> <P> <SU>1</SU> Regulations issued by the Patent and Trademark Office in 37 CFR part 5 provide for the export to a foreign country of unclassified technical data in the form of a patent application or an amendment, modification, or supplement thereto or division thereof.</P> </FTNT> <P>(c) Information contained in a patent application when sent to a foreign country before or within six months after the filing of a United States patent application for the purpose of obtaining the signature of an inventor who was in the United States when the invention was made or who is a co-inventor with a person residing in the United States.</P> </SECTION> <SECTION> <SECTNO>§ 734.11</SECTNO> <SUBJECT>Government-sponsored research covered by contract controls.</SUBJECT> <P>(a) If research is funded by the U.S. Government, and specific national security controls are agreed on to protect information resulting from the research, § 734.3(b)(3) of this part will not apply to any export or reexport of such information in violation of such controls. However, any export or reexport of information resulting from the research that is consistent with the specific controls may nonetheless be made under this provision.</P> <P>(b) Examples of “specific national security controls” include requirements for prepublication review by the Government, with right to withhold permission for publication; restrictions on prepublication dissemination of information to non-U.S. citizens or other categories of persons; or restrictions on participation of non-U.S. citizens or other categories of persons in the research. A general reference to one or more export control laws or regulations or a general reminder that the Government retains the right to classify is not a “specific national security control”. (See Supplement No. 1 to this part, Questions E(1) and E(2).)</P> </SECTION> <SECTION> <SECTNO>§ 734.12</SECTNO> <SUBJECT>Effect on foreign laws and regulations.</SUBJECT> <P>Any person who complies with any of the license or other requirements of the EAR is not relieved of the responsibility of complying with applicable foreign laws and regulations. Conversely, any person who complies with the license or other requirements of a foreign law or regulation is not relieved of the responsibility of complying with U.S. laws and regulations, including the EAR.</P> </SECTION> <APPENDIX> <EAR>Pt. 734, Supp. 1</EAR> <HD SOURCE="HED">Supplement No. 1 to Part 734—Questions and Answers—Technology and Software Subject to the EAR</HD> <P>This Supplement No. 1 contains explanatory questions and answers relating to technology and software that is subject to the EAR. It is intended to give the public guidance in understanding how BIS interprets this part, but is only illustrative, not comprehensive. In addition, facts or circumstances that differ in any material way from those set forth in the questions or answers will be considered under the applicable provisions of the EAR. Exporters should note that the provisions of this supplement do not apply to encryption software (including source code) transferred from the U.S. Munitions List to the Commerce Control List consistent with E.O. 13026 of November 15, 1996 (61 FR 58767) and pursuant to the Presidential Memorandum of that date. See § 742.15 of the EAR. This supplement is divided into nine sections according to topic as follows:</P> <P> <E T="03">Section A:</E> Publication of technology and exports and reexports of technology that has been or will be published.</P> <P> <E T="03">Section B:</E> Release of technology at conferences.</P> <P> <E T="03">Section C:</E> Educational instruction.</P> <P> <E T="03">Section D:</E> Research, correspondence, and informal scientific exchanges.<PRTPAGE P="217"/> </P> <P> <E T="03">Section E:</E> Federal contract controls.</P> <P> <E T="03">Section F:</E> Commercial consulting.</P> <P> <E T="03">Section G:</E> Software.</P> <P> <E T="03">Section H:</E> Availability in a public library.</P> <P> <E T="03">Section I:</E> Miscellaneous.</P> <HD SOURCE="HD2">Section A: Publication</HD> <P> <E T="03">Question A(1):</E> I plan to publish in a foreign journal a scientific paper describing the results of my research, which is in an area listed in the EAR as requiring a license to all countries except Canada. Do I need a license to send a copy to my publisher abroad?</P> <P> <E T="03">Answer:</E> No. This export transaction is not subject to the EAR. The EAR do not cover technology that is already publicly available, as well as technology that is made public by the transaction in question (§§ 734.3 and 734.7 of this part). Your research results would be made public by the planned publication. You would not need a license.</P> <P> <E T="03">Question A(2):</E> Would the answer differ depending on where I work or where I performed the research?</P> <P> <E T="03">Answer:</E> No. Of course, the result would be different if your employer or another sponsor of your research imposed restrictions on its publication (§ 734.8 of this part).</P> <P> <E T="03">Question (A)3:</E> Would I need a license to send the paper to the editors of a foreign journal for review to determine whether it will be accepted for publication?</P> <P> <E T="03">Answer:</E> No. This export transaction is not subject to the EAR because you are submitting the paper to the editors with the intention that the paper will be published if favorably received (§ 734.7(a)(4)(iii) of this part).</P> <P> <E T="03">Question A(4):</E> The research on which I will be reporting in my paper is supported by a grant from the Department of Energy (DOE). The grant requires prepublication clearance by DOE. Does that make any difference under the Export Administration Regulations?</P> <P> <E T="03">Answer:</E> No, the transaction is not subject to the EAR. But if you published in violation of any Department of Energy controls you have accepted in the grant, you may be subject to appropriate administrative, civil, or criminal sanctions under other laws.</P> <P> <E T="03">Question A(5):</E> We provide consulting services on the design, layout, and construction of integrated circuit plants and production lines. A major part of our business is the publication for sale to clients of detailed handbooks and reference manuals on key aspects on the design and manufacturing processes. A typical cost of publishing such a handbook and manual might be $500; the typical sales price is about $15,000. Is the publication and sale of such handbooks or manuals subject to the EAR?</P> <P> <E T="03">Answer:</E> Yes. The price is above the cost of reproduction and distribution (§ 734.7(a)(1) of this part). Thus, you would need to obtain a license or qualify for a License Exception before you could export or reexport any of these handbooks or manuals.</P> <P> <E T="03">Question A(6):</E> My Ph.D. thesis is on technology, listed in the EAR as requiring a license to all destinations except Canada, which has never been published for general distribution. However, the thesis is available at the institution from which I took the degree. Do I need a license to send another copy to a colleague overseas?</P> <P> <E T="03">Answer:</E> That may depend on where in the institution it is available. If it is not readily available in the university library (e.g., by filing in open stacks with a reference in the catalog), it is not “publicly available” and the export or reexport would be subject to the EAR on that ground. The export or reexport would not be subject to the EAR if your Ph.D. research qualified as “fundamental research” under § 734.8 of this part. If not, however, you will need to obtain a license or qualify for a License Exception before you can send a copy out of the country.</P> <P> <E T="03">Question A(7):</E> We sell electronically recorded information, including software and databases, at wholesale and retail. Our products are available by mail order to any member of the public, though intended for specialists in various fields. They are priced to maximize sales to persons in those fields. Do we need a license to sell our products to foreign customers?</P> <P> <E T="03">Answer:</E> You would not need a license for otherwise controlled technology or software if the technology and software are made publicly available at a price that does not exceed the cost of production and distribution to the technical community. Even if priced at a higher level, the export or reexport of the technology or software source code in a library accessible to the public is not subject to the EAR (§ 734.7(a) of this part).</P> <HD SOURCE="HD2">Section B: Conferences</HD> <P> <E T="03">Question B(1):</E> I have been invited to give a paper at a prestigious international scientific conference on a subject listed as requiring a license under the EAR to all countries, except Canada. Scientists in the field are given an opportunity to submit applications to attend. Invitations are given to those judged to be the leading researchers in the field, and attendance is by invitation only. Attendees will be free to take notes, but not make electronic or verbatim recordings of the presentations or discussions. Some of the attendees will be foreigners. Do I need a license to give my paper?</P> <P> <E T="03">Answer:</E> No. Release of information at an open conference and information that has been released at an open conference is not subject to the EAR. The conference you describe fits the definition of an open conference (§ 734.7(a) of this part).<PRTPAGE P="218"/> </P> <P> <E T="03">Question B(2):</E> Would it make any difference if there were a prohibition on making any notes or other personal record of what transpires at the conference?</P> <P> <E T="03">Answer:</E> Yes. To qualify as an “open” conference, attendees must be permitted to take notes or otherwise make a personal record (although not necessarily a recording). If note taking or the making of personal records is altogether prohibited, the conference would not be considered “open”.</P> <P> <E T="03">Question B(3):</E> Would it make any difference if there were also a registration fee?</P> <P> <E T="03">Answer:</E> That would depend on whether the fee is reasonably related to costs and reflects an intention that all interested and technically qualified persons should be able to attend (§ 734.7(a)(4)(ii) of this part).</P> <P> <E T="03">Question B(4):</E> Would it make any difference if the conference were to take place in another country?</P> <P> <E T="03">Answer:</E> No.</P> <P> <E T="03">Question B(5):</E> Must I have a license to send the paper I propose to present at such a foreign conference to the conference organizer for review?</P> <P> <E T="03">Answer:</E> No. A license is not required under the EAR to submit papers to foreign organizers of open conferences or other open gatherings with the intention that the papers will be delivered at the conference, and so made publicly available, if favorably received. The submission of the papers is not subject to the EAR (§ 734.7(a)(4)(iii) of this part).</P> <P> <E T="03">Question B(6):</E> Would the answers to any of the foregoing questions be different if my work were supported by the Federal Government?</P> <P> <E T="03">Answer:</E> No. You may export and reexport the papers, even if the release of the paper violates any agreements you have made with your government sponsor. However, nothing in the EAR relieves you of responsibility for conforming to any controls you have agreed to in your Federal grant or contract.</P> <HD SOURCE="HD2">Section C: Educational Instruction</HD> <P> <E T="03">Question C(1):</E> I teach a university graduate course on design and manufacture of very high-speed integrated circuitry. Many of the students are foreigners. Do I need a license to teach this course?</P> <P> <E T="03">Answer:</E> No. Release of information by instruction in catalog courses and associated teaching laboratories of academic institutions is not subject to the EAR (§ 734.9 of this part).</P> <P> <E T="03">Question C(2):</E> Would it make any difference if some of the students were from countries to which export licenses are required?</P> <P> <E T="03">Answer:</E> No.</P> <P> <E T="03">Question C(3):</E> Would it make any difference if I talk about recent and as yet unpublished results from my laboratory research?</P> <P> <E T="03">Answer:</E> No.</P> <P> <E T="03">Question C(4):</E> Even if that research is funded by the Government?</P> <P> <E T="03">Answer:</E> Even then, but you would not be released from any separate obligations you have accepted in your grant or contract.</P> <P> <E T="03">Question C(5):</E> Would it make any difference if I were teaching at a foreign university?</P> <P> <E T="03">Answer:</E> No.</P> <P> <E T="03">Question C(6):</E> We teach proprietary courses on design and manufacture of high-performance machine tools. Is the instruction in our classes subject to the EAR?</P> <P> <E T="03">Answer:</E> Yes. That instruction would not qualify as “release of educational information” under § 734.9 of this part because your proprietary business does not qualify as an “academic institution” within the meaning of § 734.9 of this part. Conceivably, however, the instruction might qualify as “release at an open * * * seminar, * * * or other open gathering” under § 734.7(a) of this part. The conditions for qualification of such a seminar or gathering as “open”, including a fee “reasonably related to costs (of the conference, not of producing the data) and reflecting an intention that all interested and technically qualified persons be able to attend,” would have to be satisfied.</P> <HD SOURCE="HD2">Section D: Research, Correspondence, and Informal Scientific Exchanges</HD> <P> <E T="03">Question D(1):</E> Do I need a license in order for a foreign graduate student to work in my laboratory?</P> <P> <E T="03">Answer:</E> Not if the research on which the foreign student is working qualifies as “fundamental research” under § 734.8 of this part. In that case, the research is not subject to the EAR.</P> <P> <E T="03">Question D(2):</E> Our company has entered into a cooperative research arrangement with a research group at a university. One of the researchers in that group is a PRC national. We would like to share some of our proprietary information with the university research group. We have no way of guaranteeing that this information will not get into the hands of the PRC scientist. Do we need to obtain a license to protect against that possibility?</P> <P> <E T="03">Answer:</E> No. The EAR do not cover the disclosure of information to any scientists, engineers, or students at a U.S. university in the course of industry-university research collaboration under specific arrangements between the firm and the university, provided these arrangements do not permit the sponsor to withhold from publication any of the information that he provides to the researchers. However, if your company and the researchers have agreed to a prohibition on publication, then you must obtain a license or qualify for a License Exception before <PRTPAGE P="219"/>transferring the information to the university. It is important that you as the corporate sponsor and the university get together to discuss whether foreign nationals will have access to the information, so that you may obtain any necessary authorization prior to transferring the information to the research team.</P> <P> <E T="03">Question D(3):</E> My university will host a prominent scientist from the PRC who is an expert on research in engineered ceramics and composite materials. Do I require a license before telling our visitor about my latest, as yet unpublished, research results in those fields?</P> <P> <E T="03">Answer:</E> Probably not. If you performed your research at the university, and you were subject to no contract controls on release of the research, your research would qualify as “fundamental research” (§ 734.8(a) of this part). Information arising during or resulting from such research is not subject to the EAR (§ 734.3(b)(3) of this part).</P> <P>You should probably assume, however, that your visitor will be debriefed later about anything of potential military value he learns from you. If you are concerned that giving such information to him, even though permitted, could jeopardize U.S. security interests, the Commerce Department can put you in touch with appropriate Government scientists who can advise you. Write to Department of Commerce, Bureau of Industry and Security, P.O. Box 273, Washington, DC 20044.</P> <P> <E T="03">Question D(4):</E> Would it make any difference if I were proposing to talk with a PRC expert in China?</P> <P> <E T="03">Answer:</E> No, if the information in question arose during or resulted from the same “fundamental research.”</P> <P> <E T="03">Question D(5):</E> Could I properly do some work with him in his research laboratory inside China?</P> <P> <E T="03">Answer:</E> Application abroad of personal knowledge or technical experience acquired in the United States constitutes an export of that knowledge and experience, and such an export may be subject to the EAR. If any of the knowledge or experience you export in this way requires a license under the EAR, you must obtain such a license or qualify for a License Exception.</P> <P> <E T="03">Question D(6):</E> I would like to correspond and share research results with an Iranian expert in my field, which deals with technology that requires a license to all destinations except Canada. Do I need a license to do so?</P> <P> <E T="03">Answer:</E> Not as long as we are still talking about information that arose during or resulted from research that qualifies as “fundamental” under the rules spelled out in § 734.8(a) of this part.</P> <P> <E T="03">Question D(7):</E> Suppose the research in question were funded by a corporate sponsor and I had agreed to prepublication review of any paper arising from the research?</P> <P> <E T="03">Answer:</E> Whether your research would still qualify as “fundamental” would depend on the nature and purpose of the prepublication review. If the review is intended solely to ensure that your publications will neither compromise patent rights nor inadvertently divulge proprietary information that the sponsor has furnished to you, the research could still qualify as “fundamental.” But if the sponsor will consider as part of its prepublication review whether it wants to hold your new research results as trade secrets or otherwise proprietary information (even if your voluntary cooperation would be needed for it to do so), your research would no longer qualify as “fundamental.” As used in these regulations it is the actual and intended openness of research results that primarily determines whether the research counts as “fundamental” and so is not subject to the EAR.</P> <P> <E T="03">Question D(8):</E> In determining whether research is thus open and therefore counts as “fundamental,” does it matter where or in what sort of institution the research is performed?</P> <P> <E T="03">Answer:</E> In principle, no. “Fundamental research” is performed in industry, Federal laboratories, or other types of institutions, as well as in universities. The regulations introduce some operational presumptions and procedures that can be used both by those subject to the regulations and by those who administer them to determine with some precision whether a particular research activity is covered. Recognizing that common and predictable norms operate in different types of institutions, the regulations use the institutional locus of the research as a starting point for these presumptions and procedures. Nonetheless, it remains the type of research, and particularly the intent and freedom to publish, that identifies “fundamental research,” not the institutional locus (§ 734.8(a) of this part).</P> <P> <E T="03">Question D(9):</E> I am doing research on high-powered lasers in the central basic-research laboratory of an industrial corporation. I am required to submit the results of my research for prepublication review before I can publish them or otherwise make them public. I would like to compare research results with a scientific colleague from Vietnam and discuss the results of the research with her when she visits the United States. Do I need a license to do so?</P> <P> <E T="03">Answer:</E> You probably do need a license (§ 734.8(d) of this part). However, if the only restriction on your publishing any of that information is a prepublication review solely to ensure that publication would compromise no patent rights or proprietary information provided by the company to the researcher your research may be considered “fundamental research,” in which case you <PRTPAGE P="220"/>may be able to share information because it is not subject to the EAR. Note that the information will be subject to the EAR if the prepublication review is intended to withhold the results of the research from publication.</P> <P> <E T="03">Question D(10):</E> Suppose I have already cleared my company's review process and am free to publish all the information I intend to share with my colleague, though I have not yet published?</P> <P> <E T="03">Answer:</E> If the clearance from your company means that you are free to make all the information publicly available without restriction or delay, the information is not subject to the EAR. (§ 734.8(d) of this part)</P> <P> <E T="03">Question D(11):</E> I work as a researcher at a Government-owned, contractor-operated research center. May I share the results of my unpublished research with foreign nationals without concern for export controls under the EAR?</P> <P> <E T="03">Answer:</E> That is up to the sponsoring agency and the center's management. If your research is designated “fundamental research” within any appropriate system devised by them to control release of information by scientists and engineers at the center, it will be treated as such by the Commerce Department, and the research will not be subject to the EAR. Otherwise, you would need to obtain a license or qualify for a License Exception, except to publish or otherwise make the information public (§ 734.8(c) of this part).</P> <HD SOURCE="HD2">Section E: Federal Contract Controls</HD> <P> <E T="03">Question E(1):</E> In a contract for performance of research entered into with the Department of Defense (DOD), we have agreed to certain national security controls. DOD is to have ninety days to review any papers we proposed before they are published and must approve assignment of any foreign nationals to the project. The work in question would otherwise qualify as “fundamental research” section under § 734.8 of this part. Is the information arising during or resulting from this sponsored research subject to the EAR?</P> <P> <E T="03">Answer:</E> Under § 734.11 of this part, any export or reexport of information resulting from government-sponsored research that is inconsistent with contract controls you have agreed to will not qualify as “fundamental research” and any such export or reexport would be subject to the EAR. Any such export or reexport that is consistent with the controls will continue to be eligible for export and reexport under the “fundamental research” rule set forth in § 734.8(a) of this part. Thus, if you abide by the specific controls you have agreed to, you need not be concerned about violating the EAR. If you violate those controls and export or reexport information as “fundamental research” under § 734.8(a) of this part, you may subject yourself to the sanctions provided for under the EAR, including criminal sanctions, in addition to administrative and civil penalties for breach of contract under other law.</P> <P> <E T="03">Question E(2):</E> Do the Export Administration Regulations restrict my