[Title 15 CFR ]
[Code of Federal Regulations (annual edition) - January 1, 2009 Edition]
[From the U.S. Government Printing Office]



[[Page i]]

          

          15


          Parts 300 to 799

                         Revised as of January 1, 2009


          Commerce and Foreign Trade
          



________________________

          Containing a codification of documents of general 
          applicability and future effect

          As of January 1, 2009
          With Ancillaries
                    Published by
                    Office of the Federal Register
                    National Archives and Records
                    Administration
                    A Special Edition of the Federal Register

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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                                                  63
          Chapter VII--Bureau of Industry and Security, 
          Department of Commerce                                    83
  Finding Aids:
      Table of CFR Titles and Chapters........................     867
      Alphabetical List of Agencies Appearing in the CFR......     887
      List of CFR Sections Affected...........................     897

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                     ----------------------------

                     Cite this Code: CFR
                     To cite the regulations in 
                       this volume use title, 
                       part and section number. 
                       Thus, 15 CFR 301.1 refers 
                       to title 15, part 301, 
                       section 1.

                     ----------------------------

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                               EXPLANATION

    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.
    Each volume of the Code is revised at least once each calendar year 
and issued on a quarterly basis approximately as follows:

Title 1 through Title 16.................................as of January 1
Title 17 through Title 27..................................as of April 1
Title 28 through Title 41...................................as of July 1
Title 42 through Title 50................................as of October 1

    The appropriate revision date is printed on the cover of each 
volume.

LEGAL STATUS

    The contents of the Federal Register are required to be judicially 
noticed (44 U.S.C. 1507). The Code of Federal Regulations is prima facie 
evidence of the text of the original documents (44 U.S.C. 1510).

HOW TO USE THE CODE OF FEDERAL REGULATIONS

    The Code of Federal Regulations is kept up to date by the individual 
issues of the Federal Register. These two publications must be used 
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    To determine whether a Code volume has been amended since its 
revision date (in this case, January 1, 2009), consult the ``List of CFR 
Sections Affected (LSA),'' which is issued monthly, and the ``Cumulative 
List of Parts Affected,'' which appears in the Reader Aids section of 
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Register page number of the latest amendment of any given rule.

EFFECTIVE AND EXPIRATION DATES

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OMB CONTROL NUMBERS

    The Paperwork Reduction Act of 1980 (Pub. L. 96-511) requires 
Federal agencies to display an OMB control number with their information 
collection request.

[[Page vi]]

Many agencies have begun publishing numerous OMB control numbers as 
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OBSOLETE PROVISIONS

    Provisions that become obsolete before the revision date stated on 
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INCORPORATION BY REFERENCE

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This material, like any other properly issued regulation, has the force 
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    What is a proper incorporation by reference? The Director of the 
Federal Register will approve an incorporation by reference only when 
the requirements of 1 CFR part 51 are met. Some of the elements on which 
approval is based are:
    (a) The incorporation will substantially reduce the volume of 
material published in the Federal Register.
    (b) The matter incorporated is in fact available to the extent 
necessary to afford fairness and uniformity in the administrative 
process.
    (c) The incorporating document is drafted and submitted for 
publication in accordance with 1 CFR part 51.
    What if the material incorporated by reference cannot be found? If 
you have any problem locating or obtaining a copy of material listed in 
the Finding Aids of this volume as an approved incorporation by 
reference, please contact the agency that issued the regulation 
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This index is based on a consolidation of the ``Contents'' entries in 
the daily Federal Register.
    A List of CFR Sections Affected (LSA) is published monthly, keyed to 
the revision dates of the 50 CFR titles.



[[Page vii]]


REPUBLICATION OF MATERIAL

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    Raymond A. Mosley,
    Director,
    Office of the Federal Register.
    January 1, 2009.







[[Page ix]]



                               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, 2009.

    For this volume, Jonn V. Lilyea was Chief Editor. The Code of 
Federal Regulations publication program is under the direction of 
Michael L. White, assisted by Ann Worley.


[[Page 1]]



                  TITLE 15--COMMERCE AND FOREIGN TRADE




                   (This book contains parts 300-799)

  --------------------------------------------------------------------
                                                                    Part

     Subtitle B--Regulations Relating to Commerce and Foreign Trade 
                                (Continued)

chapter iii--International Trade Administration, Department 
  of Commerce...............................................         301

chapter iv--Foreign-Trade Zones Board, Department of 
  Commerce..................................................         400

chapter vii--Bureau of Industry and Security, Department of 
  Commerce..................................................         700

[[Page 3]]

     Subtitle B--Regulations Relating to Commerce and Foreign Trade 
                               (Continued)

[[Page 5]]



 CHAPTER III--INTERNATIONAL TRADE ADMINISTRATION, DEPARTMENT OF COMMERCE




  --------------------------------------------------------------------

                 SUBCHAPTER A--MISCELLANEOUS REGULATIONS
Part                                                                Page
300             [Reserved]

301             Instruments and apparatus for educational 
                    and scientific institutions.............           7
302             [Reserved]

303             Watches, watch movements and jewelry program          19
310             Official U.S. Government recognition of and 
                    participation in international 
                    expositions held in the United States...          41
315             Determination of bona fide motor-vehicle 
                    manufacturer............................          46
325             Export trade certificates of review.........          47
335             Imports of worsted wool fabric..............          56
336             Imports of cotton woven fabric..............          60

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                 SUBCHAPTER A_MISCELLANEOUS REGULATIONS



                           PART 300 [RESERVED]



PART 301_INSTRUMENTS AND APPARATUS FOR EDUCATIONAL AND SCIENTIFIC 

INSTITUTIONS--Table of Contents




Sec.
301.1 General provisions.
301.2 Definitions.
301.3 Application for duty-free entry of scientific instruments.
301.4 Processing of applications by the Department of the Treasury (U.S. 
          Customs Service).
301.5 Processing of applications by the Department of Commerce.
301.6 Appeals.
301.7 Final disposition of an application.
301.8 Instructions for entering instruments through U.S. Customs under 
          subheading 9810.00.60, HTSUS.
301.9 Uses and disposition of instruments entered under subheading 
          9810.00.60, HTSUS.
301.10 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.

    Authority: Sec. 6(c), Pub. L. 89-651, 80 Stat. 897, 899; Sec. 2402, 
Pub. L. 106-36, 113 Stat. 127, 168.

    Source: 47 FR 32517, July 28, 1982, unless otherwise noted.



Sec. 301.1  General provisions.

    (a) Purpose. 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.
    (b) Background. (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.
    (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.
    (3) The Annex D provisions are implemented for U.S. purposes in 
Subchapter X, Chapter 98, Harmonized Tariff Schedule of the United 
States (HTSUS).
    (c) Summary of statutory procedures and requirements. (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 Sec. 
301.9(c).
    (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 
Federal Register 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 Federal Register. 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 Federal Register.
    (3) Repair components for instruments or apparatus admitted duty-
free

[[Page 8]]

under subheading 9810.00.60, HTSUS require no application and may be 
entered duty-free in accordance with the procedures prescribed in Sec. 
301.10.
    (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 
Sec. 301.10.
    (d) Authority and delegations. 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.

[47 FR 32517, July 28, 1982; 47 FR 34368, Aug. 9, 1982, as amended at 66 
FR 28832, May 25, 2001]



Sec. 301.2  Definitions.

    For the purposes of these regulations and the forms used to 
implement them:
    (a) Director means the Director of the Statutory Import Programs 
Staff, International Trade Administration, U.S. Department of Commerce.
    (b) Customs 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.
    (c) Customs Port or the Port 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.
    (d) Entry 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.
    (e) United States includes only the several States, the District of 
Columbia and the Commonwealth of Puerto Rico.
    (f) Instrument 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 Sec. 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:
    (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.
    (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.

[[Page 9]]

    (3) General purpose equipment such as air conditioners, electric 
typewriters, electric drills, refrigerators.
    (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.
    (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.
    (g) Domestic instrument means an instrument which is manufactured in 
the United States. A domestic instrument need not be made exclusively of 
domestic components or accessories.
    (h) Accessory 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.
    (i) Accompanying accessory 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.
    (j) Ancillary equipment 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.
    (k) Components 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.
    (l) Produced for stock means an instrument which is manufactured, on 
sale and available from a stock.
    (m) Produced on order 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.
    (n) Custom-made 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.
    (o) Same general category means the category in which an instrument 
is customarily classified in trade directories and product-source lists, 
e.g., scanning electron microscope, mass

[[Page 10]]

spectrometer, light microscope, x-ray spectrometer.
    (p) Comparable domestic instrument 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.
    (q) Specifications means the particulars of the structural, 
operational and performance characteristics or capabilities of a 
scientific instrument.
    (r) Guaranteed 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.
    (s) Pertinent 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.

[47 FR 32517, July 28, 1982; 47 FR 34368, Aug. 9, 1982, as amended at 66 
FR 28832, May 25, 2001]



Sec. 301.3  Application for duty-free entry of scientific instruments.

    (a) Who may apply. 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.
    (b) Application forms. 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

[[Page 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)
    (c) Where to apply. Applications must be filed with the U.S. Customs 
Service, Department of the Treasury, at the address specified on page 1 
of the form.
    (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.
    (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.
    (f) An application for components of an instrument to be assembled 
in the United States as described in Sec. 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 Sec. 301.2(k).
    (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.

[47 FR 32517, July 28, 1982, as amended at 50 FR 11501, Mar. 22, 1985; 
66 FR 28833, May 25, 2001]



Sec. 301.4  Processing of applications by the Department of the Treasury (U.S. 

Customs Service).

    (a) Review and determination. The Commissioner shall date each 
application when received by Customs. If the application appears to be 
complete, the Commissioner shall determine:
    (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;
    (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
    (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

[[Page 12]]

available to the public. For the purposes of this section, use of an 
instrument for the treatment of patients is considered noncommercial.

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.

    (b) Forwarding of applications to the Department of Commerce. 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 Sec. 301.8 of the regulations.

[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]



Sec. 301.5  Processing of applications by the Department of Commerce.

    (a) Public notice and opportunity to present views. (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 Federal 
Register 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.
    (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 Federal Register. 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.
    (3) Requirement for presentation of views (comments) by interested 
persons. 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 Federal Register. 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

[[Page 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 Sec. 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.
    (4) Comments by domestic manufacturers. Comments of domestic 
manufacturers opposing the granting of an application should:
    (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.
    (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 Sec. 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.
    (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.
    (iv) Where the justification for duty-free entry is based on 
excessive delivery time, show whether:
    (A) The domestic instrument is as a general rule either produced for 
stock, produced on order, or custom-made and;
    (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.
    (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.
    (5) Untimely comments. 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.
    (6) Provision of general comments. 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.
    (b) Additions to the record. 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.
    (c) Advice from technical consultants. (1) The Director shall 
consider any written advice from the Secretary of

[[Page 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.
    (2) After the comment period has ended (Sec. 301.5(a)(3)), the 
complete application and any comments received and related information 
are forwarded to appropriate technical consultants for their advice.
    (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.
    (d) Criteria for the determinations of the Department of Commerce--
(1) Scientific equivalency. (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 Sec. 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 Sec. 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.
    (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.
    (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).
    (2) Manufactured in the United States. An instrument shall be 
considered as being manufactured in the United

[[Page 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.
    (3) Burden of proof. 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.
    (4) Excessive delivery time. 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 Sec. 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.
    (5) Processing of applications for components. (i) The Director may 
process an application for components which

[[Page 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 
Sec. 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.
    (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.
    (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.
    (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.
    (2) If granted, extensions of time will generally be limited to 30 
days.
    (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.
    (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.
    (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.
    (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 Sec. 301.5(g).)
    (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.

[[Page 17]]

    (8) In the event an applicant fails to address the noted 
deficiencies in the response to the DWOP, the Director may deny the 
application.
    (f) Decisions on applications. 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 Federal Register for 
publication.
    (g) Withdrawal of applications. The Director shall discontinue 
processing an application withdrawn by the applicant and shall publish 
notice of such withdrawal in the Federal Register. 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 Sec. 301.7(c) below.
    (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.

[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]



Sec. 301.6  Appeals.

    (a) An appeal from a final decision made by the Director under Sec. 
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 Federal Register. 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.
    (b) An appeal may be taken by: (1) The institution which makes the 
application;
    (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;
    (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
    (4) An agent of any of the foregoing.
    (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.

[47 FR 32517, July 28, 1982, as amended at 66 FR 28834, May 25, 2001]



Sec. 301.7  Final disposition of an application.

    (a) Disposition of an application shall be final when 20 days have 
elapsed after publication of the Director's final decision in the 
Federal Register and no appeal has been taken pursuant to Sec. 301.6 of 
these regulations, of if such appeal has been taken, when final judgment 
is made and entered by the Court.
    (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.
    (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.

[47 FR 32517, July 28, 1982, as amended at 66 FR 28834, May 25, 2001]

[[Page 18]]



Sec. 301.8  Instructions for entering instruments through U.S. Customs under 

subheading 9810.00.60, HTSUS.

    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.
    (a) Entry procedures. (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.
    (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.
    (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 Sec. 301.4(b), is filed simultaneously with the entry.
    (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.
    (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 Sec. 301.7 of these regulations. Liquidation in such 
case shall be made under subheading 9810.00.60, HTSUS.
    (b) Normal Customs entry requirements. 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).)
    (c) Late filing. 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.
    (d) Payment of duties. 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

[[Page 19]]

(a)(4) of this section is due, the importer should contact Customs 
officials at the port of entry, not the Department of Commerce.

[47 FR 32517, July 28, 1982, as amended at 66 FR 28834, May 25, 2001]



Sec. 301.9  Uses and disposition of instruments entered under subheading 

9810.00.60, HTSUS.

    (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:
    (1) The name and address of the transferring institution.
    (2) The name and address of the transferee.
    (3) The date of transfer.
    (4) A detailed description of the instrument.
    (5) The serial number of the instrument and any accompanying 
accessories.
    (6) The entry number, date of entry, and port of entry of the 
instrument.
    (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.
    (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.

[47 FR 32517, July 28, 1982, as amended at 66 FR 28834, May 25, 2001]



Sec. 301.10  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.

    (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.
    (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.

[66 FR 28834, May 25, 2001]

                           PART 302 [RESERVED]



PART 303_WATCHES, WATCH MOVEMENTS AND JEWELRY PROGRAM--Table of Contents




                  Subpart A_Watches and Watch Movements

Sec.
303.1 Purpose.
303.2 Definitions and forms.
303.3 Determination of the total annual duty-exemption.
303.4 Determination of territorial distribution.
303.5 Application for annual allocations of duty-exemptions and duty-
          refunds.

[[Page 20]]

303.6 Allocation and reallocation of exemptions among producers.
303.7 Issuance of licenses and shipment permits.
303.8 Maintenance of duty-exemption entitlements.
303.9 Restrictions on the transfer of duty-exemptions.
303.10-303.11 [Reserved]
303.12 Issuance and use of production incentive certificates.
303.13 Appeals.
303.14 Allocation factors, duty refund calculations and miscellaneous 
          provisions.

                            Subpart B_Jewelry

303.15 Purpose.
303.16 Definitions and forms.
303.17 Application for annual duty-refunds.
303.18 Sale and transfer of business.
303.19 Issuance and use of production incentive certificates.
303.20 Duty refund.
303.21 Appeals.

    Authority: 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.

    Source: 49 FR 17740, Apr. 25, 1984, unless otherwise noted.

    Editorial Note: Nomenclature changes to part 303 appear at 68 FR 
56555, Oct. 1, 2003.



                  Subpart A_Watches and Watch Movements



Sec. 303.1  Purpose.

    (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.
    (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.
    (c) The amended law also provides for the issuance to producers of 
certificates entitling the holder (or any transferee) to obtain duty 
refunds on any article imported into 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. 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 additional U.S. note 5 to

[[Page 21]]

chapter 91 of the Harmonized Tariff Schedule of the United States, HTSUS 
and may cancel or restrict the license or certificate of any insular 
manufacturer found violating the regulations.

[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; 72 FR 16713, Apr. 5, 2007]



Sec. 303.2  Definitions and forms.

    (a) Definitions. Unless the context indicates otherwise:
    (1) Act 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.
    (2) Secretaries means the Secretary of Commerce and the Secretary of 
Interior or their delegates, acting jointly.
    (3) Director means the Director of the Statutory Import Programs 
Staff, International Trade Administration, U.S. Department of Commerce.
    (4) Sale or tranfer of a business 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.
    (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.
    (6) Producer means a duty-exemption holder which has maintained its 
eligibility for further allocations by complying with these regulations.
    (7) Established industry means all producers, including new 
entrants, that have maintained their eligibility for further 
allocations.
    (8) Territories, territorial, and insular possessions 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).
    (9) Duty-exemption 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.
    (10) Total annual duty-exemption refers to the entire quantity of 
watches or watch movements 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.
    (11) Territorial distribution refers to the apportionment by the 
Secretaries of the total annual duty-exemption among the separate 
territories; territorial share means the portion consigned to each 
territory by this apportionment.
    (12) Allocation refers to the distribution of all parts of a 
territorial share, or a portion thereof, among the several producers in 
a territory.
    (13) Creditable wages and associated, creditable fringe benefits and 
creditable duty differentials eligible for the duty refund benefit 
include, but are not limited to, the following:
    (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.
    (A) Wages paid for the repair of watches up to an amount equal to 85 
percent of the firm's total creditable wages.
    (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

[[Page 22]]

have complied with the laws and regulations governing the program.
    (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.
    (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.
    (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.
    (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.
    (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 130 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. Only during the time employees are earning 
creditable wages are they entitled to health and life insurance duty 
refund benefits under the program.
    (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 150 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. Only during the time employees are earning creditable 
wages are they entitled to health and life insurance duty refund 
benefits under the program.
    (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. Only during the time employees are earning 
creditable wages are they entitled to pension duty refund benefits under 
the program.
    (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

[[Page 23]]

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 duty-refund certificate and would not be used 
in the calculation of the mid-year duty-refund.
    (14) Non-creditable wages and associated non-creditable fringe 
benefits ineligible for the duty refund benefit include, but are not 
limited to, the following:
    (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.
    (A) Wages paid for the repair of watches in an amount over 85 
percent of the firm's total creditable wages.
    (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.
    (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.
    (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.
    (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.
    (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 130 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. Any health and life 
insurance costs during the time an employee is not earning creditable 
wages.
    (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 150 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. Any health and life 
insurance costs during the time an employee is not earning creditable 
wages.
    (B) Any pension benefits that were not based on associated 
creditable wages. 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 (see 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.
    (15) Non-91/5 watches and watch movements include, but are not 
limited to, watches and movements which are liquidated as dutiable by 
the Bureau of

[[Page 24]]

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).
    (16) Discrete movements and components means screws, parts, 
components 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.)
    (17) Permanent resident 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 
(i.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.
    (b) Forms--(1) ITA-334P ``Application for License to Enter Watches 
and Watch Movements into the Customs Territory of the United States.'' 
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.
    (2) ITA-333 ``License to Enter Watches and Watch Movements into the 
Customs Territory of the United States.'' 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.
    (3) ITA-340 ``Permit to Enter Watches and Watch Movements into the 
Customs Territory of the United States.'' 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.
    (4) ITA-360P ``Certificate of Entitlement to Secure the Refund of 
Duties on Articles that Entered the Customs Territory of The United 
State Duty Paid.'' 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.
    (5) ITA-361P ``Request for Refund of Duties on Articles that Entered 
the Customs Territory of the United States Duty Paid.'' 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 duty paid 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

[[Page 25]]

entitlement to another party. (See Sec. 303.12.)

(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)

[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; 72 FR 16714, Apr. 5, 2007; 73 FR 62881, Oct. 22, 
2008]



Sec. 303.3  Determination of the total annual duty-exemption.

    (a) Procedure for determination. 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 Federal 
Register a proposed limit on the quantity 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 Federal Register 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.
    (b) Standards for determination. (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.
    (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.
    (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.
    (c) Determinations based on consumption. (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.
    (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.

[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]



Sec. 303.4  Determination of territorial distribution.

    (a) Procedure for determination. The Secretaries shall determine the 
territorial shares concurrently with their determination of the total 
annual duty exemption, and in the same manner (see Sec. 303.3, above).
    (b) Standards for determination--(1) Limitations. 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.
    (2) Criteria for setting precise quantities. The Secretaries shall 
determine the precise quantities after considering, inter alia, 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.
    (3) Limitations on reduction of share. 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

[[Page 26]]

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.
    (4) Standby redistribution authority. 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.

[49 FR 17740, Apr. 25, 1984, as amended at 50 FR 7170, Feb. 21, 1985]



Sec. 303.5  Application for annual allocations of duty-exemptions and duty-

refunds.

    (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.
    (b) All data supplied are subject to verification by the Secretaries 
and no allocation or duty-refund certificate shall be made to producer 
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:
    (1) Work sheets used to answer all questions on the application 
form;
    (2) Original records from which such data are derived;
    (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;
    (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;
    (5) Customs, bank, payroll, including time cards, production 
records, and all shipping records including the importer of record 
number and proof of residency, as requested;
    (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
    (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.
    (8) All records pertaining to health insurance, life insurance and 
pension benefits for each employee; and
    (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.
    (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. It is the responsibility of each program producer to make 
the appropriate data available to the Departments' officials for the 
calendar year for which the annual verification is being performed and 
no further data, from the calendar year for which the audit is being 
completed, will be considered for benefits at any time after the audit 
has been completed. In the event of discrepancies between the 
application and substantiating data before the audit is complete, the 
Secretaries shall determine which data will be used in the calculation 
of the duty refund and allocations.
    (d) Records subject to the requirements of paragraph (b), above, 
shall be

[[Page 27]]

retained for a period of two years following their creation.

[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; 72 FR 16714, Apr. 5, 2007]



Sec. 303.6  Allocation and reallocation of exemptions among producers.

    (a) Interim allocations. 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.
    (b) Annual allocations. (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.
    (2) The excess of a producer's duty-exemption earned under the 
allocation 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 Federal Register.
    (c) Supplemental allocations. 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.
    (d) Allocations to new entrants. 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.
    (e) Special allocations. 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 Sec. 303.6(b)(1).
    (f) Reallocations. 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:

[[Page 28]]

    (1) The ability of the established industry to use the duty-
exemption;
    (2) Whether the duty-exemption is sufficient to support new entrant 
operations;
    (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
    (4) Whether additional new entrants offer the best prospect for 
adding economic benefits to the territory.
    (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.
    (h) The Secretaries may propose changes to Sec. 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 shall be given an opportunity to submit written 
comments on proposed changes.

[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]



Sec. 303.7  Issuance of licenses and shipment permits.

    (a) Issuance of Licenses (ITA-333). (1) Concurrently with annual 
allocations under Sec. 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 Sec. 303.6.
    (2) Annual duty-exemption licenses shall be for only that portion of 
a producer's annual duty-exemption not previously licensed.
    (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.
    (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.
    (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.
    (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.
    (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.
    (b) Shipment Permit Requirements (ITA-340). (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.
    (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

[[Page 29]]

of shipment, for confirmation that the producer's duty-exemption license 
has not been exceeded and that the permit is properly completed.
    (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.

[49 FR 17740, Apr. 25, 1984, as amended at 50 FR 43568, Oct. 28, 1985; 
61 FR 55885, Oct. 30, 1996]



Sec. 303.8  Maintenance of duty-exemption entitlements.

    (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:
    (1) At any time after June 30 of the calendar year:
    (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 allocation by the end of the calendar year, and
    (ii) The producer refuses a request from the Departments to 
relinquish that portion of its allocation which they conclude will not 
be used; or
    (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; or
    (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.
    (b) The Secretaries may also issue a show-cause order to reduce or 
cancel a producer's allocation or production incentive certificate (see 
Sec. 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.
    (c) If a firm's allocation is reduced or cancelled, or if a firm 
voluntarily relinquishes a part of its allocation, the Secretaries may:
    (1) Reallocate the allocation involved among the remaining producers 
in a manner best suited to contribute to the economy of the territory;
    (2) Reallocate the allocation or part thereof to a new entrant 
applicant; or
    (3) Do neither of the above if deemed in the best interest of the 
territories and the established industry.

[49 FR 17740, Apr. 25, 1984, as amended at 61 FR 55885, Oct. 31, 1996]



Sec. 303.9  Restrictions on the transfer of duty-exemptions.

    (a) The sale or transfer of a duty-exemption from one firm to 
another shall not be permitted.
    (b) The sale or transfer of a business together with its duty-
exemption shall

[[Page 30]]

be permitted with prior written notification to the Departments. Such 
notification shall be accompanied by certifications and representations, 
as appropriate, that:
    (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 vis-a-vis the territorial subsidiary;
    (2) The sale or transfer price for the business together with its 
duty-exemption does not include the capitalization of the duty-exemption 
per se;
    (3) The transferee is neither directly or indirectly affiliated with 
any other territorial duty-exemption holder in any territory;
    (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.
    (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.
    (d) Any transferee who is either unwilling or unable to make the 
certifications and representations specified in 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.

[49 FR 17740, Apr. 25, 1984, as amended at 50 FR 43568, Oct. 28, 1985]



Sec. Sec. 303.10-303.11  [Reserved]



Sec. 303.12  Issuance and use of production incentive certificates.

    (a) Issuance of certificates. (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, 
determined from the wages as reported on the employer's first two 
quarterly federal tax returns (941-SS), paid during the first six months 
of the calendar year, using the formula in Sec. 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 be based on verified creditable wages, 
duty-free shipments into the customs territory of the United States, 
creditable health insurance, life insurance and pension benefits and the 
duty differential, if watch tariffs have been reduced during the 
calendar year. 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.
    (2) Certificates shall not be issued to more than one company in the 
territories owned or controlled by the same corporate entity.
    (b) Securities and handling of certificates. (1) Certificate holders 
are responsible for the security of the certificates. The certificates 
shall be kept at

[[Page 31]]

the territorial address of the insular producer or at another location 
having the advance approval of the Departments.
    (2) All refund requests made pursuant to the certificates shall be 
entered on the reverse side of the certificate.
    (3) Certificates shall be returned by registered, certified or 
express carrier mail to the Departments when:
    (i) A refund is requested which exhausts the entitlement on the face 
of the certificate,
    (ii) The certificate expires, or
    (iii) The Departments request their return with good cause.
    (4) Certificate entitlements may be transferred according to the 
procedures described in (c) of this section.
    (c) The use and transfer of certificate entitlements. (1) Insular 
producers issued a certificate may request a refund by executing Form 
ITA-361P (see Sec. 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.
    (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 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.
    (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.
    (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).
    (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 Sec. 303.13 of this part.

[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; 72 FR 16714, Apr. 5, 2007]



Sec. 303.13  Appeals.

    (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.
    (b) Petitions shall bear the name and 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

[[Page 32]]

Administration, Washington, D.C. 20230, Attention: Statutory Import 
Programs Staff. Petitions shall contain the following:
    (1) A reference to the decision, action or rule which is the subject 
of the petition;
    (2) A short statement of the interest of the petitioner;
    (3) A statement of the facts as seen by the petitioner;
    (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;
    (5) A conclusion specifying the action that the petitioner believes 
the Secretaries should take.
    (c) The Secretaries may at their discretion schedule a hearing and 
invite the participation of other interested parties.
    (d) The Secretaries shall communicate their decision which shall be 
final, to the petitioner by registered mail.
    (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.

[49 FR 17740, Apr. 25, 1984, as amended at 56 FR 9622, Mar. 7, 1991; 72 
FR 16714, Apr. 5, 2007]



Sec. 303.14  Allocation factors, duty refund calculations and miscellaneous 

provisions.

    (a) The allocation formula. (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:
    (i) Fifty percent of the territorial share shall be allocated on the 
basis of 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
    (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.
    (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.
    (b) Minimum assembly requirements and prohibition of preferential 
supply relationship. (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.
    (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.
    (3) Watch movements and watches assembled from components with a 
value of more than $300 for watch movements and $3000 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).
    (4) No producer shall accept from any watch parts and components 
supplier advantages and preferences which

[[Page 33]]

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 Sec. 303.13(b).
    (c) Calculation of the value of the mid-year production incentive 
certificates. (1) The value of each producer's certificate shall equal 
the producer's average creditable wage per unit shipped during the first 
six months of the calendar year multiplied by the sum of:
    (i) The number of units shipped up to 300,000 units times a factor 
of 90%; plus
    (ii) Incremental units shipped up to 450,000 units times a factor of 
85%; plus
    (iii) Incremental units shipped up to 600,000 units times a factor 
of 80%; plus
    (iv) Incremental units shipped up to 750,000 units times a factor of 
75%.
    (2) Calculation of the value of the annual production incentive 
certificates. The value of each producer's certificate shall equal the 
producer's average creditable benefit per unit based on creditable 
wages, health insurance, life insurance and pension benefits plus any 
duty differential, if applicable, averaged from the amount of duty free 
units shipped during the calendar year multiplied by the sum of the 
following to obtain the total verified amount of the annual duty-refund 
per company. This amount would then be adjusted by deducting the amount 
of the mid-year duty-refund already issued.
    (i) The number of units shipped up to 300,000 units times a factor 
of 90%; plus
    (ii) Incremental units shipped up to 450,000 units times a factor of 
85%; plus
    (iii) Incremental units shipped up to 600,000 units times a factor 
of 80%; plus
    (iv) Incremental units shipped up to 750,000 units times a factor of 
75%.
    (3) The Departments may make adjustments for these data in the 
manner set forth in Sec. 303.5(c).
    (d) New entrant invitations. Applications from new firms are invited 
for any unused portion of any territorial share.
    (e) Territorial shares. 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.

[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; 
72 FR 16714, Apr. 5, 2007]



                            Subpart B_Jewelry

    Source: 64 FR 67150, Dec. 1, 1999, unless otherwise noted.



Sec. 303.15  Purpose.

    (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 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.
    (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 any article imported into 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. 
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 10,000,000 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

[[Page 34]]

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 (see 19 CFR 7.4).
    (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.

[49 FR 17740, Apr. 25, 1984, as amended at 70 FR 67648, Nov. 8, 2005; 72 
FR 16715, Apr. 5, 2007; 73 FR 34857, June 19, 2008]



Sec. 303.16  Definitions and forms.

    (a) Definitions. For purposes of the subpart, unless the context 
indicates otherwise:
    (1) Act 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.
    (2) Secretaries means the Secretary of Commerce and the Secretary of 
the Interior or their delegates, acting jointly.
    (3) Director means the Director of the Statutory Import Programs 
Staff, International Trade Administration, U.S. Department of Commerce.
    (4) Sale or transfer of a business 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.
    (5) New firm 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 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.
    (6) Jewelry producer means a company, located in one of the insular 
territories (see 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.
    (7) Unit of Jewelry means a single article (e.g., 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.
    (8) Territories, territorial and insular possessions refers to the 
insular possessions of the United States (i.e., the U.S. Virgin Islands, 
Guam, American Samoa and the Northern Mariana Islands).

[[Page 35]]

    (9) Creditable wages and associated creditable fringe benefits and 
creditable duty differentials eligible for the duty refund benefit 
include, but are not limited to, the following:
    (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.
    (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.
    (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.
    (C) Wages paid when a maximum of two program 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 (see Sec. 303.17(b)).
    (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.
    (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.
    (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 130 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. Only during the time employees are earning 
creditable wages are they entitled to health and life insurance duty 
refund benefits under the program.
    (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 150 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

[[Page 36]]

insurance allowed within this combined amount is $50,000 dollars for 
each employee. Only during the time employees are earning creditable 
wages are they entitled to health and life insurance duty refund 
benefits under the program.
    (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. Only during the time employees are earning 
creditable wages are they entitled to pension duty refund benefits under 
the program.
    (10) Non-creditable wages and associated non-creditable fringe 
benefits ineligible for the duty refund benefit include, but are not 
limited to, the following:
    (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.
    (A) Wages paid for the repair of jewelry in an amount over 50 
percent of the firm's total creditable wages.
    (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.
    (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.
    (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; wages paid to employees working with a non-program 
producer to create a single piece of HTSUS heading 7113 jewelry whether 
or not it entered the United States free of duty; and and wages paid to 
employees who do not qualify as permanent residents in accordance with 
the Departments' regulations.
    (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.
    (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 130 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. Any health and life 
insurance costs during the time an employee is not earning creditable 
wages.
    (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 150 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. Any health and life 
insurance costs during the time an employee is not earning creditable 
wages.
    (B) Any pension benefits that were not based on associated 
creditable wages. 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

[[Page 37]]

creditable wage allowed under the program (see 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.
    (11) Dutiable jewelry 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.
    (12) Permanent resident 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 
(i.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.
    (b) Forms. (1) ITA--334P ``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.
    (2) ITA-360P ``Certificate of Entitlement to Secure the Refund of 
Duties on Articles that Entered the Customs Territory of The United 
State Duty Paid.'' 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.
    (3) ITA-361P ``Request for Refund of Duties on Articles that Entered 
the Customs Territory of the United States Duty Paid.'' 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 duty paid 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 Sec. 303.19(c)).

(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)

[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; 72 FR 16715, Apr. 5, 2007; 73 FR 62881, Oct. 22, 2008]



Sec. 303.17  Application for annual duty-refunds.

    (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.
    (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:
    (1) Work sheets used to answer all questions on the application 
form, as specified by the instructions;
    (2) Original records from which such data are derived;
    (3) Records pertaining to ownership and control of the company;
    (4) Records pertaining to all duty-free and dutiable shipments of 
HTSUS 7113 jewelry, including Customs entry documents, or the 
certificate of origin

[[Page 38]]

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;
    (5) Records pertaining to corporate income taxes, gross receipts 
taxes and excise taxes paid by each producer in the territories;
    (6) Customs, bank, payroll, including time cards, production 
records, and all shipping records including the importer of record 
number and proof of residency, as requested;
    (7) All records pertaining to health insurance, life insurance and 
pension benefits for each employee;
    (8) Records on purchases of components and sales of jewelry, 
including proof of payment; and
    (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.
    (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.
    (d) Records subject to the requirements of paragraph (b) of this 
section, shall be retained for a period of two years following their 
creation.

[49 FR 17740, Apr. 25, 1984, as amended at 66 FR 34813, July 2, 2001; 70 
FR 67650, Nov. 8, 2005; 72 FR 16715, Apr. 5, 2007]



Sec. 303.18  Sale or transfer of business.

    (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:
    (1) The transferee is neither directly nor indirectly affiliated 
with any other territorial duty refund jewelry recipient in any 
territory;
    (2) The transferee will not modify the jewelry operations in a 
manner that will significantly diminish its economic contributions to 
the territory.
    (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.
    (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.



Sec. 303.19  Issuance and use of production incentive certificates.

    (a) Issuance of certificates. (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, 
determined from the wages as reported on the employer's first two 
quarterly federal tax returns (941-SS), paid during the first six month 
of the calendar year, using the formula in Sec. 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 be based on verified creditable wages, duty-free 
shipments into the customs territory of the United States, creditable 
health insurance, life insurance and pension benefits and the duty 
differential, if watch tariffs have been reduced during the calendar 
year.. The

[[Page 39]]

completed annual application (Form ITA-334P) shall be received by the 
Departments on or before 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.
    (2) Certificates shall not be issued to more than one jewelry 
company in the territories owned or controlled by the same corporate 
entity.
    (b) Security and handling of certificates. (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.
    (2) All refund requests made pursuant to the certificates shall be 
entered on the reverse side of the certificate.
    (3) Certificates shall be returned by registered, certified or 
express carrier mail to the Department of Commerce when:
    (i) A refund is requested which exhausts the entitlement on the face 
of the certificate,
    (ii) The certificate expires, or
    (iii) The Departments request their return with good cause.
    (4) Certificate entitlements may be transferred according to the 
procedures described in paragraph (c) of this section.
    (c) The use and transfer of certificate entitlements. (1) Insular 
producers issued a certificate may request a refund by executing Form 
ITA-361P (see Sec. 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.
    (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.
    (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.
    (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) of this section).
    (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 Sec. 303.21 of this part.

[49 FR 17740, Apr. 25, 1984, as amended at 66 FR 34813, July 2, 2001; 70 
FR 67650, Nov. 8, 2005; 72 FR 16715, Apr. 5, 2007]



Sec. 303.20   Duty refund calculations and miscellaneous provisions.

    (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

[[Page 40]]

duty-free entry under General Note 3 (a)(iv), HTSUS, and 19 CFR 7.3.
    (1) An article of jewelry is considered to be a product of a 
territory if:
    (i) The article is wholly the growth or product of the territory; or
    (ii) The article became a new and different article of commerce as a 
result of production or manufacture performed in the territories.
    (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.
    (b) Calculation of the value of the mid-year production incentive 
certificates. (1) The value of each producer's certificate shall equal 
the producer's average creditable wage per unit shipped during the first 
six months of the calendar year multiplied by the sum of:
    (i) The number of units shipped up to 300,000 units times a factor 
of 90%; plus
    (ii) Incremental units shipped up to 3,533,334 units times a factor 
of 85%; plus
    (iii) Incremental units shipped up to 6,766,667 units times a factor 
of 80%; plus
    (iv) Incremental units shipped up to 10,000,000 units times a factor 
of 75%.
    (2) Calculation of the value of the annual production incentive 
certificates. The value of each producer's certificate shall equal the 
producer's average creditable benefit per unit based on creditable 
wages, health insurance, life insurance and pension benefits averaged 
from the amount of duty free units shipped during the calendar year 
multiplied by the sum of the following to obtain the total verified 
amount of the annual duty-refund per company. This amount would then be 
adjusted by deducting the amount of the mid-year duty-refund already 
issued.
    (i) The number of units shipped up to 300,000 units times a factor 
of 90%; plus
    (ii) Incremental units shipped up to 3,533,334 units times a factor 
of 85%; plus
    (iii) Incremental units shipped up to 6,766,667 units times a factor 
of 80%; plus
    (iv) Incremental units shipped up to 10,000,000 units times a factor 
of 75%.

[64 FR 67150, Dec. 1, 1999, as amended at 70 FR 67650, Nov. 8, 2005; 72 
FR 16715, Apr. 5, 2007; 73 FR 34857, June 19, 2008]



Sec. 303.21  Appeals.

    (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.
    (b) Petitions shall bear the name and 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:
    (1) A reference to the decision, action or rule which is the subject 
of the petition;
    (2) A short statement of the interest of the petitioner;
    (3) A statement of the facts as seen by the petitioner;
    (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;
    (5) A conclusion specifying the action that the petitioner believes 
the Secretaries should take.

[[Page 41]]

    (c) The Secretaries may at their discretion schedule a hearing and 
invite the participation of other interested parties.
    (d) The Secretaries shall communicate their decision, which shall be 
final, to the petitioner by registered, certified or express mail.

[64 FR 67150, Dec. 1, 1999, as amended at 72 FR 16716]



PART 310_OFFICIAL U.S. GOVERNMENT RECOGNITION OF AND PARTICIPATION IN 

INTERNATIONAL EXPOSITIONS HELD IN THE UNITED STATES--Table of Contents




Sec.
310.1 Background and purpose.
310.2 Definitions.
310.3 Applications for Federal recognition.
310.4 Action on application.
310.5 Report of the Secretary on Federal recognition.
310.6 Recognition by the President.
310.7 Statement for Federal participation.
310.8 Proposed plan for Federal participation.
310.9 Report of the Secretary on Federal participation.

    Authority: Pub. L. 91-269, 84 Stat. 271 (22 U.S.C. 2801 et seq.).

    Source: 40 FR 34107, Aug. 14, 1975, unless otherwise noted. 
Redesignated at 46 FR 57457, Nov. 24, 1981.



Sec. 310.1  Background and purpose.

    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. \1\ 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).
---------------------------------------------------------------------------

    \1\ 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.
    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.
    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.)


[[Page 42]]



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.



Sec. 310.2  Definitions.

    For the purpose of this part, except where the context requires 
otherwise:
    (a) Act means Pub. L. 91-269.
    (b) Secretary means the Secretary of Commerce.
    (c) Commissioner General means the person appointed to act as the 
senior Federal official for the exposition as required by BIE rules and 
regulations.
    (d) Director means the Director of the International Expositions 
Staff, Office of the Deputy Assistant Secretary for Export Development, 
International Trade Administration, Department of Commerce.
    (e) Applicant 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.
    (f) State 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.
    (g) Exposition 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.

[40 FR 34107, Aug. 14, 1975. Redesignated and amended at 46 FR 57457, 
Nov. 24, 1981]



Sec. 310.3  Applications for Federal recognition.

    (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.
    (b) Every application, exhibit, or enclosure, except where 
specifically waived by the Director, shall be in quadruplicate, duly 
authenticated and referenced.
    (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.
    (d) Every application, except where specifically waived by the 
Director, shall be accompanied by the following exhibits:

    1. Exhibit No. 1. 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.
    2. Exhibit No. 2. 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.
    3. Exhibit No. 3. 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).

[[Page 43]]

    4. Exhibit No. 4. 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.)
    5. Exhibit No. 5. 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.
    6. Exhibit No. 6. 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 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.
    7. Exhibit No. 7. 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.).
    8. Exhibit No. 8. 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.
    9. Exhibit No. 9. 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.
    10. Exhibit No. 10. 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.).
    11. Exhibit No. 11. 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.
    12. Exhibit No. 12. 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.
    13. Exhibit No. 13. 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 Sec. 310.4, the 
applicant must have completed the required Environmental Impact 
Statement (EIS), in a form acceptable to the Department of Commerce.
    14. Exhibit No. 14. 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.

[[Page 44]]

    15. Exhibit No. 15. 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.

[40 FR 34107, Aug. 14, 1975. Redesignated and amended at 46 FR 57457, 
Nov. 24, 1981]



Sec. 310.4  Action on application.

    (a) Upon receipt of an application, the Director will analyze the 
application and all accompanying exhibits to insure compliance with the 
provisions of Sec. 310.3 and report his findings with respect thereto 
to the Secretary.
    (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:
    (1) The order of receipt of the applications by the Director, 
complete with all exhibits required by Sec. 310.3.
    (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.
    (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.
    (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.
    (d) If the Director, in his discretion, decides to hold a public 
hearing, notice of such hearing shall be published in the Federal 
Register, 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.
    (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.
    (f) Statements of interested parties may be presented orally at the 
hearing, or submitted in writing for the record.
    (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.



Sec. 310.5  Report of the Secretary on Federal recognition.

    If the Director's report recommends Federal recognition, the 
Secretary, within a reasonable time, shall submit a report to the 
President.
    (a) The Secretary's report shall include: (1) An evaluation of the 
purposes

[[Page 45]]

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.
    (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.



Sec. 310.6  Recognition by the President.

    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.



Sec. 310.7  Statement for Federal participation.

    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 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:

    1. Exhibit No. 1. A survey drawing of the proposed Federal pavilion 
site, showing its areas and boundaries, its grade elevations, and 
surface and subsoil conditions.
    2. Exhibit No. 2. 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.
    3. Exhibit No. 3. A certified copy of the building code which would 
be applicable should a pavilion be constructed.
    4. Exhibit No. 4. An engineering drawing showing the accessibility 
of the proposed pavilion site to utilities (e.g., sewerage, water, gas, 
electricity, etc.).
    5. Exhibit No. 5. 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.
    6. Exhibit No. 6. 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.''



Sec. 310.8  Proposed plan for Federal participation.

    (a) Upon receipt of the statement, and the exhibits referred to in 
Sec. 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.
    (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.
    (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.
    (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.
    (e) Upon completion of the proposed plan for Federal participation 
in the exposition, the Director shall submit the plan to the Secretary.

[[Page 46]]



Sec. 310.9  Report of the Secretary on Federal participation.

    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 Sec. 
310.8.



PART 315_DETERMINATION OF BONA FIDE MOTOR-VEHICLE MANUFACTURER--Table of 

Contents




Sec.
315.1 Scope and purpose.
315.2 Definitions.
315.3 Application.
315.4 Determination by the Under Secretary.
315.5 Maintenance and publication of a list of bona fide motor-vehicle 
          manufacturers.

    Authority: 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).

    Source: 45 FR 42214, June 23, 1980, unless otherwise noted. 
Redesignated at 53 FR 52115, Dec. 27, 1988.



Sec. 315.1  Scope and purpose.

    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).

[45 FR 42214, June 23, 1980. Redesignated and amended at 53 FR 52115, 
Dec. 27, 1988]



Sec. 315.2  Definitions.

    For the purpose of the regulations in this part and the forms issued 
to implement it:
    (a) Act means the Automotive Products Trade Act of 1965 (79 Stat. 
1016, 19 U.S.C. 2001 through 2033).
    (b) Under Secretary 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.
    (c) Motor vehicle 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.
    (d) Bona fide motor-vehicle manufacturer 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.

[[Page 47]]

    (e) Person includes any individual, corporation, partnership, 
association, company, or any kind of organization.
    (f) United States includes only the States, the District of Columbia 
and Puerto Rico.

[45 FR 42214, June 23, 1980. Redesignated and amended at 53 FR 52115, 
Dec. 27, 1988]



Sec. 315.3  Application.

    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:

U.S. Department of Commerce, International Trade Administration, Office 
of Automotive Industry Affairs--APTA, 14th and Constitution Avenue, NW., 
Room 4036, Washington, DC 20230.

[45 FR 42214, June 23, 1980. Redesignated and amended at 53 FR 52115, 
Dec. 27, 1988]



Sec. 315.4  Determination by the Under Secretary.

    (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.
    (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.
    (c) The Under Secretary will promptly notify each applicant in 
writing of the final action taken on his application.

[45 FR 42214, June 23, 1980. Redesignated and amended at 53 FR 52115, 
Dec. 27, 1988]



Sec. 315.5  Maintenance and publication of a list of bona fide motor-vehicle 

manufacturers.

    The Under Secretary shall maintain and publish from time to time in 
the Federal Register, a list of the names and addresses of bona fide 
motor vehicle manufacturers, and the effective dates from each 
determination.

[45 FR 42214, June 23, 1980. Redesignated and amended at 53 FR 52115, 
Dec. 27, 1988]



PART 325_EXPORT TRADE CERTIFICATES OF REVIEW--Table of Contents




Sec.
325.1 Scope.
325.2 Definitions.
325.3 Applying for a certificate of review.
325.4 Calculating time periods.
325.5 Issuing the certificate.
325.6 Publishing notices in the Federal Register.
325.7 Amending the certificate.
325.8 Expediting the certification process.
325.9 Reconsidering an application that has been denied.
325.10 Modifying or revoking a certificate.
325.11 Judicial review.
325.12 Returning the applicant's documents.
325.13 Nonadmissibility in evidence.
325.14 Submitting reports.
325.15 Relinquishing a certificate.
325.16 Protecting confidentiality of information.
325.17 Waiver.

    Authority: Title III of the Export Trading Company Act, Pub. L. 97-
290 (96 Stat. 1240-1245, 15 U.S.C. 4011-4021).

    Source: 50 FR 1806, Jan. 11, 1985, unless otherwise noted.



Sec. 325.1  Scope.

    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

[[Page 48]]

export conduct specified in the certificate and carried out during its 
effective period in compliance with its terms and conditions.



Sec. 325.2  Definitions.

    As used in this part:
    (a) Act means title III of Pub. L. 97-290, Export Trade Certificates 
of Review.
    (b) Antitrust laws 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.
    (c) Applicant means the person or persons who submit an application 
for a certificate.
    (d) Application means an application for a certificate to be issued 
under the Act.
    (e) Attorney General means the Attorney General of the United States 
or his designee.
    (f) Certificate means a certificate of review issued pursuant to the 
Act.
    (g) Control 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.
    (h) Controlling entity means an entity which directly or indirectly 
controls a member or applicant, and is not controlled by any other 
entity.
    (i) Export conduct means specified export trade activities and 
methods of operation carried out in specified export trade and export 
markets.
    (j) Export trade 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.
    (k) Export trade activities means activities or agreements in the 
course of export trade.
    (l) Member 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.
    (m) Method of operation means any method by which an applicant or 
member conducts or proposes to conduct export trade.
    (n) Person 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.
    (o) Secretary means the Secretary of Commerce or his designee.
    (p) Services means intangible economic output, including, but not 
limited to--
    (1) business, repair, and amusement services,
    (2) management, legal, engineering, architectural, and other 
professional services, and
    (3) financial, insurance, transportation, informational and any 
other data-based services, and communication services.
    (q) United States 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.



Sec. 325.3  Applying for a certificate of review.

    (a) Place of filing. 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

[[Page 49]]

not required, the applicant should consider using registered mail or 
some other delivery method that provides evidence of receipt.
    (b) Contents of application. 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.
    (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.
    (2) The name and principal address of each member, and of each 
member's controlling entity, if any.
    (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.
    (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.
    (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.
    (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.
    (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.
    (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.
    (iii) The foreign geographic areas to which the applicant and each 
member export or intend to export their goods and services.
    (8) For each class of the goods, wares, merchandise or services 
described in paragraph (b)(7) of this section:
    (i) The principal geographic area or areas in the United States in 
which the applicant and each member sell their goods and services.
    (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.
    (9) For each class of the goods, wares, merchandise or services 
described in paragraph (b)(7) of this section, the

[[Page 50]]

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.
    (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 which the applicant may wish to have certified will depend on 
its particular circumstances or business plans.).
    (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.
    (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.
    (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.
    (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 Federal Register.
    (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.
    (16) (Optional) A draft proposed certificate.
    (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.
    (d) Conformity with regulations. 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.
    (e) Review and acceptance. 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.
    (f) Withdrawal of application. The applicant may withdraw an 
application by written request at any time before the Secretary has 
determined whether

[[Page 51]]

to issue a certificate. An applicant who withdraws an application may 
submit a new application at any time.
    (g) Supplemental information. 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, 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.

(Information collection requirements in paragraph (a) approved by the 
Office of Management and Budget under control number 0625-0125)



Sec. 325.4  Calculating time periods.

    (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.
    (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.



Sec. 325.5  Issuing the certificate.

    (a) Time period. The Secretary shall determine whether to issue a 
certificate within ninety days after the application is deemed submitted 
(excluding any suspension pursuant to Sec. 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.
    (b) Determination. 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--
    (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;
    (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;
    (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
    (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.
    (c) Concurrence of the Attorney General. (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.

[[Page 52]]

    (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.
    (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.
    (d) Content of certificate. The certificate shall specify the export 
conduct and all persons or entities which are 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.
    (e) Certificate obtained by fraud. A certificate shall be void ab 
initio with respect to any export conduct for which a certificate was 
obtained by fraud.
    (f) Minimum thirty-day period. The Secretary may not issue a 
certificate until thirty days after the summary of the application is 
published in the Federal Register.



Sec. 325.6  Publishing notices in the Federal Register.

    (a) Within ten days after an application is deemed submitted, the 
Secretary shall deliver to the Federal Register 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 Federal Register, 
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.
    (b) If a certificate is issued, the Secretary shall publish a 
summary of the certification in the Federal Register. 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.
    (c) If the Secretary initiates proceedings to revoke or modify a 
certificate, he shall publish a notice of his final determination in the 
Federal Register.
    (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 Federal Register.



Sec. 325.7  Amending the certificate.

    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 Sec. 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.



Sec. 325.8  Expediting the certification process.

    (a) Request for expedited action. (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

[[Page 53]]

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.
    (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.
    (b) Time period. 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 Sec. 
325.3(f) of the time period for making a determination). The Secretary 
may not issue a certificate until thirty days after the summary of the 
application is published in the Federal Register.
    (c) Concurrence of the Attorney General. (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.
    (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.

(Information collection requirements in paragraph (a)(1) approved by the 
Office of Management and Budget under control number 0625-0125)



Sec. 325.9  Reconsidering an application that has been denied.

    (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.
    (b) Within thirty days after receiving a notice of denial, the 
applicant may request the Secretary to reconsider his determination.
    (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.
    (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.
    (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.
    (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.



Sec. 325.10  Modifying or revoking a certificate.

    (a) Action subject to modification or revocation. The Secretary 
shall revoke a certificate, in whole or in part, or modify it, as the 
Secretary or the Attorney General considers necessary, if:
    (1) The export conduct of a person or entity protected by the 
certificate no longer complies with the requirements set forth in Sec. 
325.4(b);
    (2) A person or entity protected by the certificate fails to comply 
with a

[[Page 54]]

request for information under paragraph (b) of this section; or
    (3) The certificate holder fails to file a complete annual report.
    (b) Request for information. 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 Sec. 
325.4(b), the Secretary shall request any information that he or the 
Attorney General considers to be necessary to resolve the matter.
    (c) Proceedings for the revocation or modification of a 
certificate--(1) Notification letter. 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.
    (2) Answer. 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.
    (3) Resolution of factual disputes. 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.
    (4) Final determination. 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 Sec. 
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 Federal Register of a revocation 
or modification or a decision not to revoke or modify.
    (d) Investigative information. In proceedings under this section, 
the Attorney General shall make available to the Secretary any 
information that has

[[Page 55]]

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.



Sec. 325.11  Judicial review.

    (a) Review of certain determinations. (1) Any person aggrieved by a 
final determination of the Secretary under Sec. 325.5, Sec. 325.7, 
Sec. 325.9, or Sec. 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 Federal Register, or, if the applicant seeks reconsideration, within 
thirty days after the Secretary publishes in the Federal Register notice 
of his determination after reconsideration.
    (b) For purposes of judicial review, determinations of the Secretary 
are final when notice is published in the Federal Register.
    (c) Record for judicial review. For purposes of judicial review, the 
record shall include all information presented to or obtained by the 
Secretary which 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.
    (d) Limitation of judicial review. Except as provided in paragraph 
(a) of this section, no agency action taken under the Act shall be 
subject to judicial review.



Sec. 325.12  Returning the applicant's documents.

    (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.
    (b) The Secretary and the Attorney General shall return the 
documents to the applicant within thirty days after they receive the 
applicant's request.



Sec. 325.13  Nonadmissibility in evidence.

    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.



Sec. 325.14  Submitting reports.

    (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.
    (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.
    (c) Failure to submit a complete annual report may be the basis for 
modification or revocation of a certificate.



Sec. 325.15  Relinquishing a certificate.

    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.



Sec. 325.16  Protecting confidentiality of information.

    (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).

[[Page 56]]

    (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.
    (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.
    (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--
    (i) Upon a request made by either House of Congress or a Committee 
of the Congress,
    (ii) In a judicial or administrative proceeding subject to issuance 
of an appropriate protective order,
    (iii) With the written consent of the person who submitted the 
information,
    (iv) When the Secretary considers disclosure of the information to 
be necessary for determining whether or not to issue, amend, or revoke a 
certificate, if--
    (A) The Secretary determines that a non-confidential summary of the 
information is inadequate; and
    (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,
    (v) In accordance with any requirement imposed by a statute of the 
United States.
    (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.



Sec. 325.17  Waiver.

    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.



PART 335_IMPORTS OF WORSTED WOOL FABRIC--Table of Contents




Sec.
335.1 Purpose.
335.2 Definitions.
335.3 Applications to receive allocation.
335.4 Allocation.
335.5 Licenses.
335.6 Surrender, reallocation and license utilization requirement.

    Authority: 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).

    Source: 66 FR 6461, Jan. 22, 2001, unless otherwise noted.



Sec. 335.1  Purpose.

    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.

[70 FR 25777, May 16, 2005]



Sec. 335.2  Definitions.

    For purposes of these regulations and the forms used to implement 
them:
    The Act means the Trade and Development Act of 2000 (Public Law No. 
106-200, 114 Stat 251).
    The Department means the United States Department of Commerce.
    HTS means the Harmonized Tariff Schedule of the United States.
    Imports 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).
    Licensee means an applicant for an allocation of the Tariff Rate 
Quotas that receives an allocation and a license.

[[Page 57]]

    Production means cutting and sewing garments in the United States.
    Tariff Rate Quota or Quotas 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).
    Tariff Rate Quota Year means a calendar year for which the Tariff 
Rate Quotas are in effect.
    Worsted Wool Fabric means fabric containing at least 85 percent by 
weight worsted wool.
    Worsted Wool Suits means men's and boys' worsted wool suits, 
containing at least 85 percent by weight worsted wool fabric.
    Worsted Wool Suit-Type Jackets mean men's and boys' worsted wool 
suit-type jackets, containing at least 85 percent by weight worsted wool 
fabric.
    Worsted Wool Trousers means men's and boys' worsted wool trousers, 
containing at least 85 percent by weight worsted wool fabric.

[66 FR 6461, Jan. 22, 2001, as amended at 70 FR 25777, May 16, 2005]



Sec. 335.3  Applications to receive allocation.

    (a) In each year prior to a Tariff Rate Quota Year, the Department 
will cause to be published a Federal Register notice soliciting 
applications to receive an allocation of the Tariff Rate Quotas.
    (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 Federal Register notice 
soliciting applications.
    (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.
    (d) An applicant must provide the following information in the 
format set forth in the application form provided by the Department:
    (1) Identification. 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.
    (2)(i) Production. 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

[[Page 58]]

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.
    (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.
    (3) Worsted Wool Fabric. Data indicating the quantity and value of 
the Worsted Wool Fabric used in reported production.
    (4) Certification. 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.
    (e) Confidentiality. 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.
    (f) Record Retention: The applicant shall retain records 
substantiating the information provided in Sec. 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.

[66 FR 6461, Jan. 22, 2001, as amended at 70 FR 25777, May 16, 2005]



Sec. 335.4  Allocation.

    (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.
    (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.
    (c) The Department will cause to be published in the Federal 
Register 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.

[66 FR 6461, Jan. 22, 2001, as amended at 70 FR 25777, May 16, 2005]



Sec. 335.5  Licenses.

    (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 Sec. 335.6.
    (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.

[[Page 59]]

    (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 (i.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.
    (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.
    (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 
license at the time of filing the entry summary or warehouse withdrawal 
for consumption (Customs Form 7501).
    (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.
    (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.
    (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.



Sec. 335.6  Surrender, reallocation and license utilization requirement.

    (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.
    (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.
    (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.
    (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.
    (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

[[Page 60]]

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.
    (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.

[66 FR 6461, Jan. 22, 2001, as amended at 70 FR 25777, May 16, 2005]



PART 336_ IMPORTS OF COTTON WOVEN FABRIC--Table of Contents




Sec.
336.1 Purpose.
336.2 Definitions.
336.3 Eligibility criteria and application requirements to receive 
          allocation.
336.4 Allocation.
336.5 Licenses.

    Authority: Section 406 Public Law 109-434. Tax Relief and Health 
Care Act of 2006. December 9, 2006.

    Source: 72 FR 40237, July 24, 2007, unless otherwise noted.



Sec. 336.1  Purpose.

    This part sets forth regulations regarding the issuance and effect 
of licenses for allocation of Cotton Woven Fabric under the Tariff Rate 
Quota established by Section 406 of the Act.



Sec. 336.2  Definitions.

    For purposes of these regulations:
    Act means the Tax Relief and Health Care Act of 2006 (Public Law 
109-434).
    Cotton Shirts means men's and boys' cotton shirts made from woven 
fabric containing 85 percent or more by weight of cotton.
    Cotton Woven Fabric means woven fabrics of cotton containing 85 
percent or more by weight of cotton.
    Department means the United Sates Department of Commerce.
    HTS means the Harmonized Tariff Schedule of the United States.
    Imports subject to Tariff Rate Quota are defined by date of 
presentation as defined in 19 CFR 132.1(d) and 19 CFR 132.11(a).
    Licensee means applicant for an allocation of the Tariff Rate Quota 
that receives an allocation and a license.
    Manufacturer means a person or entity that cuts and sews men's and 
boys' cotton woven shirts in the United States.
    Tariff Rate Quota or Quotas means the temporary duty reduction 
provided under Section 406 of the Act for limited quantities of cotton 
woven fabrics entered under HTS headings 9902.52.08 through 9902.52.19 
suitable for use in making men's and boys' cotton woven shirts.
    Tariff Rate Quota Year means a calendar year for which the Tariff 
Rate Quotas are in effect.



Sec. 336.3  Eligibility criteria and application requirements to receive 

allocation.

    (a) In each year prior to the Tariff Rate Quota Year, the Department 
will cause to be published a Federal Register notice soliciting 
applications to receive an allocation of the Tariff Rate Quotas.
    (b) An application for a Tariff Rate Quota must be received, or 
postmarked by the U.S. Postal Service, within 30 calendar days after the 
date of publication of the Federal Register notice soliciting 
applications.
    (c) Eligibility. The TRQ is available to manufacturers that during 
the calendar year of the date of application, have cut and sewed men's 
and boys' cotton woven shirts in the United States. Furthermore, an 
applicant must have, during calendar year 2000, cut and sewed men's and 
boy's cotton shirts in the United States from imported woven fabrics of 
cotton containing 85 percent or more by weight of cotton of the kind 
described in HTS headings 9902.52.08 through 9902.5219

[[Page 61]]

purchased by such manufacturer during calendar year 2000. The applicant 
may have cut or sewn these cotton shirts on its own behalf or had 
another person cut and sew the cotton shirts on the applicant's behalf, 
provided the applicant owned the fabric at the time it was cut and sewn. 
Any manufacturer who becomes a successor-of-interest to a manufacturer 
of the cotton shirts described in HTS headings 9902.52.08 through 
9902.52.19 during 2000 because of a reorganization or otherwise, shall 
be eligible to apply for a TRQ.
    (d) Application requirements. To receive consideration for a TRQ, an 
applicant must submit ITA Form ITA-4156P providing the following 
information:
    (1) Identification. Company name, address, contact telephone number, 
e-mail address, federal tax identification number, name of person 
submitting the application, and title, or capacity in which the person 
is acting for the applicant.
    (2) Manufacturing Facilities. The name and address of each plant or 
location in the United States where men's and boy's cotton shirts of 
imported woven fabric of the kind described in HTS headings 9902.52.08 
through 9902.52.19 was cut and sewn in calendar year 2000.
    (3) Date of purchase. The date of purchase shall be (a) the invoice 
date if the manufacturer is not the importer of record; and (b) the date 
of entry if the manufacturer is the importer of record.
    (4) Quantity of fabric. The quantity of imported woven fabrics of 
cotton containing 85 percent or more by weight of cotton purchased 
during calendar year 2000 for use in the cutting and sewing of men's and 
boys' shirts in the United States.
    (5) Affidavit. At the conclusion of the application an officer of 
the manufacturer must certify that the manufacturer is eligible to 
receive a license and stating the quantity of imported woven fabrics of 
cotton containing 85 percent or more by weight of cotton purchased 
during calendar year 2000 for use in the cutting and sewing of men's and 
boys' shirts in the United States and attest that all information 
contained in the application is complete and correct and no false 
claims, statements or representations have been made. Applicants should 
be aware that, generally, pursuant to 31 U.S.C. 3729 persons providing 
false or fraudulent claims, and pursuant to 18 U.S.C. 101, persons 
making materially false statement to representations, are subject to 
civil or criminal penalties, respectively.
    (6) Notarization. All application must be notarized by a licensed 
public notary.
    (e) Confidentiality. 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.
    (f) Record retention. The applicant shall retain records 
substantiating the information provided in Sec. 336.3(d)(2), and (3), 
and (4) for a period of 3 years and the records must be made available 
upon request by an appropriate government official.



Sec. 336.4  Allocation.

    (a) The Tariff Rate Quota licenses will be issued to eligible 
manufacturers on the basis of the percentage of each manufacturer's 
quantity of imported woven fabrics described under HTS headings 
9902.52.08 through 9902.52.19 during calendar year 2000, compared to the 
imports of such fabric by all manufacturers that qualify for a Tariff 
Rate Quota license.
    (b) The Department will cause to be published in the Federal 
Register its determination to allocate Tariff Rate Quotas and issue 
licenses to manufacturers within 60 days after the manufacturers file an 
application with the Department.



Sec. 336.5  Licenses.

    (a) Each Licensee will receive a license, which will include a 
unique control number.
    (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 licensee will be 
debited on the basis of date of entry for consumption or withdrawal from 
warehouse for consumption.
    (c) A Licensee may import fabric certified by the importer as 
suitable for

[[Page 62]]

use in making men's and boys' cotton shirts under the Tariff Rate Quota 
as specified in the license 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 Quota and to receive the Tariff Rate Quota duty 
rate.
    (d) The term of the 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.
    (e) The importer 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 license at the 
time of filing the entry summary or warehouse withdrawal for consumption 
(Customs Form 7501).
    (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.
    (g) The written authorization must include a unique number of the 
license, must specifically cover the type of fabric imported, and must 
be in 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. The authorization also must 
include the unique PIN assigned by the licensee to the importer. A copy 
of the authorization and PIN assigned to each importer must be provided 
to the Department by fax (202) 482-0667 or by mail to the Office of 
Textiles and Apparel, Room 3001, United States Department of Commerce, 
Washington, D.C. 20230 . The licensee also must advise the Department of 
each authorized importer's Importer of Record Identification Number.
    (h) It is the responsibility of the Licensee to safeguard the use of 
the license issued. The Department and U.S. Customs and Border 
Protection will not be liable for any improper use of the license.
    (i) The licensee should inform its authorized importers that if they 
enter an amount less than the exact amount requested and authorized by 
the Import Approval, the importer must annotate the Import Approval form 
and send a copy to the Department and to the licensee. This annotation 
will be used to correct the record of use of the license. Failure to 
provide such information could disrupt the orderly use of the license. 
Imports in excess of amount of import approval are not authorized.

[[Page 63]]



      CHAPTER IV--FOREIGN-TRADE ZONES BOARD, DEPARTMENT OF COMMERCE




  --------------------------------------------------------------------
Part                                                                Page
400             Regulations of the Foreign-Trade Zones Board          65

[[Page 65]]



PART 400_REGULATIONS OF THE FOREIGN-TRADE ZONES BOARD--Table of Contents




                     Subpart A_Scope and Definitions

Sec.
400.1 Scope.
400.2 Definitions.

                   Subpart B_Foreign-Trade Zones Board

400.11 Authority of the Board.
400.12 Responsibilities and authority of the Executive Secretary.
400.13 Board headquarters.

        Subpart C_Establishment and Modification of Zone Projects

400.21 Number and location of zones and subzones.
400.22 Eligible applicants.
400.23 Criteria for grants of authority for zones and subzones.
400.24 Application for zone.
400.25 Application for subzone.
400.26 Application for expansion or other modification to zone project.
400.27 Procedure for processing application.
400.28 Conditions, prohibitions and restrictions applicable to grants of 
          authority.
400.29 Application fees.

         Subpart D_Manufacturing and Processing Activity_Reviews

400.31 Manufacturing and processing activity; criteria.
400.32 Procedure for review of request for approval of manufacturing or 
          processing.
400.33 Restrictions on manufacturing and processing activity.

        Subpart E_Zone Operations and Administrative Requirements

400.41 Zone operations; general.
400.42 Requirements for commencement of operations in a zone project.
400.43 Restriction and prohibition of certain zone operations.
400.44 Zone-restricted merchandise.
400.45 Retail trade.
400.46 Accounts, records and reports.
400.47 Appeals to the Board from decisions of the Assistant Secretary 
          for Import Administration and the Executive Secretary.

           Subpart F_Notice, Hearings, Record and Information

400.51 Notice and hearings.
400.52 Official record; public access.
400.53 Information.

    Authority: 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)).

    Source: 56 FR 50798, Oct. 8, 1991, unless otherwise noted.



                     Subpart A_Scope and Definitions



Sec. 400.1  Scope.

    (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.
    (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.
    (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

[[Page 66]]

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 ad valorem 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.

[56 FR 50798, Oct. 8, 1991; 56 FR 56544, Nov. 5, 1991]



Sec. 400.2  Definitions.

    (a) Act means the Foreign-Trade Zones Act of 1934, as amended.
    (b) Board 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.
    (c) Customs Service means the United States Customs Service of the 
Department of the Treasury.
    (d) Executive Secretary is the Executive Secretary of the Foreign-
Trade Zones Board.
    (e) Foreign-trade zone 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.
    (f) Grant of authority 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.
    (g) Manufacturing, 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.
    (h) Port Director is normally the director of Customs for the 
Customs jurisdictional area in which the zone is located.
    (i) Port of entry 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).
    (j) Private corporation 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.
    (k) Processing, 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.
    (l) Public corporation means a state, a political subdivision 
(including a municipality) or public agency thereof, or a corporate 
municipal instrumentality of one or more states.
    (m) State includes any state of the United States, the District of 
Columbia, and Puerto Rico.
    (n) Subzone means a special-purpose zone established as an adjunct 
to a zone project for a limited purpose.
    (o) Zone 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) Zone grantee 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.
    (q) Zone operator 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.
    (r) Zone project means the zone plan, including all of the zone and 
subzone sites that the Board authorizes a single grantee to establish.
    (s) Zone site means the physical location of a zone or subzone.

[[Page 67]]

    (t) Zone user is a party using a zone under agreement with the zone 
grantee or operator.

[62 FR 53534, Oct. 15, 1997]



                   Subpart B_Foreign-Trade Zones Board



Sec. 400.11  Authority of the Board.

    (a) In general. In accordance with the Act and procedures of this 
part, the Board has authority to:
    (1) Prescribe rules and regulations concerning zones;
    (2) Issue grants of authority for zones and subzones, and approve 
modifications to the original zone project;
    (3) Approve manufacturing and processing activity in zones and 
subzones as described in subpart D of this part;
    (4) Make determinations on matters requiring Board decisions under 
this part;
    (5) Decide appeals in regard to certain decisions of the Commerce 
Department's Assistant Secretary for Import Administration or the 
Executive Secretary;
    (6) Inspect the premises, operations and accounts of zone grantees 
and operators;
    (7) Require zone grantees to report on zone operations;
    (8) Report annually to the Congress on zone operations;
    (9) Restrict or prohibit zone operations;
    (10) Impose fines for violations of the Act and this part;
    (11) Revoke grants of authority for cause; and
    (12) Determine, as appropriate, whether zone activity is or would be 
in the public interest or detrimental to the public interest.
    (b) Authority of the Chairman of the Board. The Chairman of the 
Board (Secretary of the Department of Commerce) has the authority to:
    (1) Appoint the Executive Secretary of the Board;
    (2) Call meetings of the Board, with reasonable notice given to each 
member; and
    (3) Submit to the Congress the Board's annual report as prepared by 
the Executive Secretary.
    (c) Alternates. Each member of the Board will designate an alternate 
with authority to act in an official capacity for that member.
    (d) Determinations of the Board. (1) The determination of the Board 
will be based on the unanimous vote of the members (or alternate 
members) of the Board.
    (2) All votes will be recorded.
    (3) The Board will issue its determination in proceedings under the 
regulations in the form of a Board order.

[56 FR 50798, Oct. 8, 1991, as amended at 62 FR 53535, Oct. 15, 1997]



Sec. 400.12  Responsibilities and authority of the Executive Secretary.

    The Executive Secretary has the following responsibilities and 
authority:
    (a) Represent the Board in administrative, regulatory, operational, 
and public affairs matters;
    (b) Serve as director of the Commerce Department's Foreign-Trade 
Zones staff;
    (c) Execute and implement orders of the Board;
    (d) Arrange meetings and direct circulation of action documents for 
the Board;
    (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;
    (f) Maintain custody of the seal, records, files and correspondence 
of the Board, with disposition subject to the regulations of the 
Department of Commerce;
    (g) Issue notices on zone matters for publication in the Federal 
Register;
    (h) Determine subzone sponsorship questions as provided in Sec. 
400.22(d);
    (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 
Sec. Sec. 400.24, 400.25, and 400.26;
    (j) Issue guidelines on information required for subzone 
applications under Sec. 400.25(a)(6);
    (k) Determine whether proposed modifications involve major changes 
under Sec. 400.26(a)(2);

[[Page 68]]

    (l) Determine whether applications meet prefiling requirements under 
Sec. 400.27(b);
    (m) Direct processing of applications, including designation of 
examiners and scheduling of hearings under Sec. Sec. 400.27 and 400.32;
    (n) Authorize minor modifications to zone projects under Sec. 
400.27(f);
    (o) Review changes in sourcing under Sec. 400.28(a)(3);
    (p) Direct monitoring of zone activity under Sec. 400.31(d);
    (q) Direct reviews and make recommendations on requests for 
manufacturing/processing approvals under Sec. 400.32(b);
    (r) Determine questions of scope under Sec. 400.32(c);
    (s) Accept rate schedules and determine their sufficiency under 
Sec. 400.42(b)(3);
    (t) Review and decide zone rate complaints cases under Sec. 
400.42(b)(5);
    (u) Make recommendations in cases involving questions as to whether 
zone activity should be prohibited or restricted for public interest 
reasons, including reviews under Sec. 400.43;
    (v) Authorize under certain circumstances the return of ``zone-
restricted merchandise'' for entry into Customs territory under Sec. 
400.44;
    (w) Authorize certain duty-paid retail trade under Sec. 400.45;
    (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 Sec. 400.46(d); and
    (y) Designate an acting Executive Secretary.



Sec. 400.13  Board headquarters.

    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.



        Subpart C_Establishment and Modification of Zone Projects



Sec. 400.21  Number and location of zones and subzones.

    (a) Number of zone projects--port of entry entitlement. (1) Provided 
that the other requirements of this subpart are met:
    (i) Each port of entry is entitled to at least one zone project;
    (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
    (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.
    (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).
    (b) Location of zones and subzones--port of entry adjacency 
requirements. (1) The Act provides that the Board may approve ``zones in 
or adjacent to ports of entry'' (19 U.S.C. 81b).
    (2) The ``adjacency'' requirement is satisfied if:
    (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;
    (ii) A subzone meets the following requirements relating to Customs 
supervision:
    (A) Proper Customs oversight can be accomplished with physical and 
electronic means; and
    (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
    (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.



Sec. 400.22  Eligible applicants.

    (a) In general. 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.
    (b) Public and non-profit corporations. The eligibility of public 
and non-profit

[[Page 69]]

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.
    (c) Private for-profit corporations. 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.
    (d) Applicants for subzones--(1) Eligibility. The following entities 
are eligible to apply for a grant of authority to establish a subzone:
    (i) The zone grantee of the closest zone project in the same state;
    (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
    (iii) A state agency specifically authorized to submit such an 
application by an act of the state legislature.
    (2) Complaints. If an application is submitted under paragraph 
(d)(1) (ii) or (iii) of this section, the Executive Secretary will:
    (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;
    (ii) Review such objections prior to filing the application to 
determine whether the proposed sponsorship is in the public interest, 
taking into account:
    (A) The complaining zone's structure and operation;
    (B) The views of State and local public agencies; and
    (C) The views of the proposed subzone operator;
    (iii) Notify the applicant and complainants in writing of the 
Executive Secretary's determination;
    (iv) If the Executive Secretary determines that the proposed 
sponsorship is in the public interest, file the application (see Sec. 
400.47 regarding appeals to decisions of the Executive Secretary).



Sec. 400.23  Criteria for grants of authority for zones and subzones.

    (a) Zones. The Board will consider the following factors in 
determining whether to issue a grant of authority for a zone project:
    (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;
    (2) The adequacy of the operational and financial plans and the 
suitability of the proposed sites and facilities, with justification for 
duplicative sites;
    (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;
    (4) The views of persons and firms likely to be affected by proposed 
zone activity; and
    (5) If the proposal involves manufacturing or processing activity, 
the criteria in Sec. 400.31.
    (b) Subzones. In reviewing proposals for subzones the Board will 
also consider:
    (1) Whether the operation could be located in or otherwise 
accommodated by the multi-purpose facilities of the zone project serving 
the area;
    (2) The specific zone benefits sought and the significant public 
benefit(s) involved supported by evidence to meet the requirement in 
Sec. 400.31(c); and
    (3) Whether the proposed activity is in the public interest, taking 
into account the criteria in Sec. 400.31.



Sec. 400.24  Application for zone.

    (a) In general. An application for a grant of authority to establish 
a zone project shall consist of a transmittal letter, an executive 
summary and five exhibits.
    (b) Letter of transmittal. The transmittal letter shall be currently 
dated and signed by an authorized officer of

[[Page 70]]

the corporation and bear the corporate seal.
    (c) Executive summary. The executive summary shall describe:
    (1) The corporation's legal authority to apply;
    (2) The type of authority requested from the Board;
    (3) The proposed zone site and facilities and the larger project of 
which the zone is a part;
    (4) The project background, including surveys and studies;
    (5) The relationship of the project to the community's and state's 
overall economic development plans and objectives;
    (6) The plans for operating and financing the project; and
    (7) Any additional pertinent information needed for a complete 
summary description of the proposal.
    (d) Exhibits. (1) Exhibit One (Legal Authority for the Application) 
shall consist of:
    (i) A certified copy of the state enabling legislation described in 
Sec. 400.22;
    (ii) A copy of pertinent sections of the applicant's charter or 
organization papers; and
    (iii) A certified copy of the resolution of the governing body of 
the corporation authorizing the official signing the application.
    (2) Exhibit Two (Site Description) shall consist of:
    (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;
    (ii) A summary description of the larger project of which the zone 
is a part, including type, size, location and address;
    (iii) A statement as to whether the zone is within or adjacent to a 
customs port of entry;
    (iv) A description of zone facilities and services, including 
dimensions and types of existing and proposed structures;
    (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;
    (vi) A description of current activities carried on in or contiguous 
to the project;
    (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
    (viii) A statement as to the possibilities and plans for zone 
expansion.
    (3) Exhibit Three (Operation and Financing) shall consist of:
    (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);
    (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);
    (iii) A brief explanation of the plans for providing facilities, 
physical security, and for satisfying the requirements for Customs 
automated systems;
    (iv) A summary of the plans for financing capital and operating 
costs, including a statement as to the source and use of funds; and
    (v) The estimated time schedule for construction and activation.
    (4) Exhibit Four (Economic Justification) shall include:
    (i) A statement of the community's overall economic goals and 
strategies in relation to those of the region and state;
    (ii) A reference to the plan or plans on which the goals are based 
and how they relate to the zone project;
    (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;
    (iv) A statement as to the role and objective of the zone project, 
and a justification for each of the proposed sites;

[[Page 71]]

    (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;
    (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
    (vii) A description of proposed manufacturing and processing 
operations, if applicable, with information covering the factors 
described in Sec. 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.
    (5) Exhibit Five (Maps) shall consist of:
    (i) The following maps and drawings:
    (A) State and county maps showing the general location of the zone 
in terms of the area's transportation network;
    (B) A local community map showing in red the location of the 
proposed zone; and
    (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.
    (ii) Proposals involving existing zones shall include a drawing 
showing existing zone sites and the proposed changes.
    (e) Additional information. The Board or the Executive Secretary may 
require additional information needed to adequately evaluate a proposal.
    (f) Amendment of application. The Board or the Executive Secretary 
may allow amendment of the application.
    (g) Drafts. Applicants may submit a draft application to the 
Executive Secretary for review.
    (h) Format and number of copies. Unless the Executive Secretary 
alters the requirements of this paragraph, submit an original and 8 
copies of the application on 8\1/2\ x 11 (216 x 
279 mm) paper. Exhibit Five of the original application shall contain 
full-sized maps, and copies shall contain letter-sized reductions.
    (i) Where to file. 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.

(Approved by the Office of Management and Budget under control number 
0625-0139)

[56 FR 50798, Oct. 8, 1991, as amended at 62 FR 53535, Oct. 15, 1997]



Sec. 400.25  Application for subzone.

    (a) In general. An application to establish a subzone as part of a 
proposed or existing zone shall be submitted in accordance with the 
format in Sec. 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:
    (1) A summary as to the reasons for the subzone and an explanation 
of its anticipated economic effects;
    (2) Identity of the subzone user and its corporate affiliation;
    (3) Description of the proposed activity, including:
    (i) Products;
    (ii) Materials and Components;
    (iii) Sourcing plans (domestic/foreign);
    (iv) Tariff rates and other import requirements or restrictions;
    (v) Information to assist the Board in making a determination under 
Sec. Sec. 400.31(b)(1)(iii) and 400.31(b)(2);
    (vi) Benefits to subzone user;
    (vii) Information required in Sec. 400.24(d)(4)(vii);
    (viii) Information as to whether alternative procedures have been 
considered as a means of obtaining the benefits sought;
    (ix) Information on the industry involved and extent of 
international competition; and
    (x) Economic impact of the operation on the area;
    (4) Reason operation cannot be conducted within a general-purpose 
zone;

[[Page 72]]

    (5) Statement as to environmental impact; and
    (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.
    (b) Burden of proof. An applicant for a subzone must demonstrate to 
the Board that the proposed operation meets the criteria in Sec. 
400.23(b).

(Approved by the Office of Management and Budget under control number 
0625-0139)



Sec. 400.26  Application for expansion or other modification to zone project.

    (a) In general. (1) A grantee may apply to the Board for authority 
to expand or otherwise modify its zone project.
    (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:
    (i) Substantially modify the plan originally approved by the Board; 
or
    (ii) Expand the physical dimensions of the approved zone area as 
related to the scope of operations envisioned in the original plan.
    (b) Major modification to zone project. An application for a major 
modification to an approved zone project shall be submitted in 
accordance with the format in Sec. 400.24, except that:
    (1) Reference may be made to current information in an application 
from the same applicant on file with the Board; and
    (2) The content of Exhibit Four shall relate specifically to the 
proposed change.
    (c) Minor modification to zone project. 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, Sec. 
400.27(f)).
    (d) Applications for other revisions to grants of authority. 
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 Sec. 400.32 shall apply. If not, 
the procedure set forth in Sec. 400.27(f) shall apply.

(Approved by the Office of Management and Budget under control number 
0625-0139)

[56 FR 50798, Oct. 8, 1991, as amended at 62 FR 53535, Oct. 15, 1997]



Sec. 400.27  Procedure for processing application.

    (a) In general. This section outlines the procedure followed in 
processing applications submitted under Sec. Sec. 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.
    (b) Prefiling review. Applications subject to Sec. 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 Sec. Sec. 400.22-400.24, 400.25, 400.26, 400.32, and 
other applicable provisions of this part.

[[Page 73]]

    (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.
    (2) If the application is sufficient, the Executive Secretary will 
within 45 days of receipt of the application:
    (i) Formally file the application, thereby initiating the proceeding 
or review;
    (ii) Assign a case docket number in cases requiring a Board order; 
and
    (iii) Notify the applicant.
    (c) Procedure--Executive Secretary responsibilities. After 
initiating a proceeding based on an application under Sec. Sec. 400.24-
400.25, or 400.26(b), the Executive Secretary will:
    (1) Designate an examiner to conduct a review and prepare a report 
with recommendations for the Board;
    (2) Publish in the Federal Register 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, Sec. 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;
    (3) Send copies of the filing and initiation notice and the 
application to the Commissioner of Customs and the Port Director, or a 
designee;
    (4) Arrange for hearings, as appropriate;
    (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
    (6) Notify the applicant in writing and publish notice in the 
Federal Register of the Board's determination.
    (d) Case reviews--procedure and time schedule--(1) Customs review. 
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.
    (2) Examiners reviews--non-manufacturing/processing. Examiners 
assigned to cases not involving manufacturing or processing activity 
shall conduct a review taking into account the factors enumerated in 
Sec. 400.23 and other appropriate sections of this part, which shall 
include:
    (i) Conducting or participating in necessary hearings scheduled by 
the Executive Secretary;
    (ii) Reviewing case records, including public comments;
    (iii) Requesting information and evidence from parties of record;
    (iv) Developing information and evidence necessary for evaluation 
and analysis of the application in accordance with the criteria of the 
Act and this part;
    (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).
    (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.
    (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 Federal Register after completion of the review of 
the response. The new material will be made available for public 
inspection and the Federal Register notice will invite further public 
comment for 30 days, with an additional 15-day period for rebuttal 
comments.
    (C) The Customs adviser shall be notified when necessary for further 
comments, which shall be submitted within 45 days after notification.

[[Page 74]]

    (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.
    (3) Examiners reviews--cases involving manufacturing or processing 
activity. Examiners shall conduct a review taking into account the 
factors enumerated in Sec. 400.23, Sec. 400.31, and other appropriate 
sections of this part, which shall include:
    (i) Conducting or participating in hearings scheduled by the 
Executive Secretary;
    (ii) Reviewing case records, including public comments;
    (iii) Requesting information and evidence from parties of record;
    (iv) Developing information and evidence necessary for analysis of 
the threshold factors and the economic factors enumerated in Sec. 
400.31;
    (v) Conducting an analysis to include:
    (A) An evaluation of policy considerations pursuant to Sec. Sec. 
400.31(b)(1)(i) and 400.31(b)(1)(ii);
    (B) An evaluation of the economic factors enumerated in Sec. Sec. 
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;
    (vi) Conducting appropriate industry surveys when necessary; and
    (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:
    (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.
    (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 Federal Register after completion of the review of 
the response. The new material will be made available for public 
inspection and the Federal Register notice will invite further public 
comment for 30 days, with an additional 15-day period for rebuttal 
comments.
    (e) Procedure--Completion of review--(1) The Executive Secretary 
will circulate the examiners report with recommendations to Board 
members for their review and votes (by resolution).
    (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, Sec. 400.11(d)).
    (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.
    (f) Procedure--Application for minor modification of zone project. 
(1) The Executive Secretary, with the concurrence of the Port Director, 
will make a determination in cases under Sec. 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 
Sec. 400.26(c).
    (2) The Port Director shall provide the decision as to concurrence 
within 20 days after being notified of the request or application.

[56 FR 50798, Oct. 8, 1991, as amended at 62 FR 53535, Oct. 15, 1997]



Sec. 400.28  Conditions, prohibitions and restrictions applicable to grants of 

authority.

    (a) In general. Grants of authority issued by the Board for the 
establishment of zones or subzones, including

[[Page 75]]

those already issued, are subject to the Act and this part and the 
following general conditions or limitations:
    (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
    (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.
    (3) Sourcing changes--(i) Notification requirement. 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--
    (A) Entries for consumption are not to be made at the lower duty 
rate; or
    (B) The product in which the foreign articles are to be incorporated 
is being produced for exportation.
    (ii) Notification procedure. 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.
    (iii) Reviews. (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 Sec. 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 Sec. 
400.32(b) shall be used in these situations when appropriate.
    (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.
    (C) The Executive Secretary shall direct reviews necessary to ensure 
that activity involved in these situations continues to be in the public 
interest.
    (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.
    (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:
    (i) A Board order (authorizing the zone or subzone) issued after 
November 7, 1991; or
    (ii) November 7, 1991.
    (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.
    (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.
    (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

[[Page 76]]

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.
    (9) A grant of authority will not be construed to make the zone 
grantee automatically liable for violations by operators, users, or 
other parties.
    (b) Additional conditions, prohibitions and restrictions. Other 
requirements, conditions or restrictions under Federal, State or local 
law may apply to the zone or subzone authorized by the grant of 
authority.
    (c) Revocation of grants of authority--(1) In general. 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.
    (2) Procedure. 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:
    (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;
    (ii) Conduct a hearing, if requested or otherwise if appropriate;
    (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
    (iv) If the Board's determination is affirmative, publish notice of 
revocation of the grant of authority in the Federal Register.
    (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.

[56 FR 50798, Oct. 8, 1991; 56 FR 65833, Dec. 19, 1991, as amended at 62 
FR 53535, Oct. 15, 1997]



Sec. 400.29  Application fees.

    (a) In general. 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.
    (b) Uniform system of user fee charges. 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.

(1) Additional general-purpose zones (Sec.  400.24; Sec.        $3,200
 400.21(a)(2)).................................................
(2) Special-purpose subzones (Sec.  400.25):
  (i) Non-manufacturing/processing or less than three products.    4,000
  (ii) Manufacturing/processing--three or more products........    6,500
(3) Expansions (Sec.  400.26(b))..............................    1,600
 

    (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.
    (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 
Sec. 400.27(b)(1), or withdrawn by applicants prior to formal filing, 
refunds will be made.



         Subpart D_Manufacturing and Processing Activity_Reviews



Sec. 400.31  Manufacturing and processing activity; criteria.

    (a) In general. 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 activity, 
either as proposed in an application, in a request for manufacturing/

[[Page 77]]

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.
    (b) Evaluation criteria--(1) Threshold factors. 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 Sec. 400.31(b)(2), the Board shall 
deny or restrict authority for proposed or ongoing activity if it 
determines that:
    (i) The activity is inconsistent with U.S. trade and tariff law, or 
policy which has been formally adopted by the Executive branch;
    (ii) Board approval of the activity under review would seriously 
prejudice U.S. tariff and trade negotiations or other initiatives; or
    (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.
    (2) Economic factors. 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:
    (i) Overall employment impact;
    (ii) Exports and reexports;
    (iii) Retention or creation of manufacturing or processing activity;
    (iv) Extent of value-added activity;
    (v) Overall effect on import levels of relevant products, including 
import displacement;
    (vi) Extent and nature of foreign competition in relevant products;
    (vii) Impact on related domestic industry, taking into account 
market conditions; and
    (viii) Other relevant information relating to public interest and 
net economic impact considerations, including technology transfers and 
investment effects.
    (c) Methodology and evidence--(1)(i) The first phase (Sec. 
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 Sec. 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 Sec. 
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.
    (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.
    (2) Contributory effect. 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.
    (3) Burden of proof. Applicants for subzones shall have the burden 
of submitting evidence establishing that the

[[Page 78]]

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.
    (d) Monitoring and post-approval reviews--(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 Sec. 400.31. The Board may prescribe special monitoring 
requirements in its decisions when appropriate.
    (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.
    (3) Upon review, if the Board finds that zone activity is no longer 
in the public interest, taking into account the provisions of Sec. 
400.31, it may restrict the activity in question. The appropriateness of 
a delayed effective date will be considered in such cases.

[56 FR 50798, Oct. 8, 1991; 56 FR 56544, Nov. 5, 1991]



Sec. 400.32  Procedure for review of request for approval of manufacturing or 

processing.

    (a) Request as part of application for grant of authority. A request 
for approval of proposed manufacturing or processing activity may be 
submitted as part of an application under Sec. Sec. 400.24-400.26(a). 
The Board will review the request taking into account the criteria in 
Sec. 400.31(b).
    (b) Request for manufacturing/processing in approved zone or 
subzone. 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 Sec. 400.31(a) by submitting a request in 
writing to the Executive Secretary (Sec. 400.28(a)(2)). Such requests 
shall include the information required by Sec. Sec. 400.24(d)(4)(vii) 
and 400.25.
    (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:
    (i) The proposed activity is the same, in terms of products 
involved, to activity recently approved by the Board and similar in 
circumstances; or
    (ii) The activity is for export only; or
    (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
    (iv) The Port Director determines that the activity could otherwise 
be conducted under Customs bonded procedures.
    (2) When the informal procedure in paragraph (b)(1) of this section 
is not appropriate--
    (i) The Executive Secretary will:
    (A) Assign a case docket number and give notice in the Federal 
Register inviting public comment;
    (B) Arrange a public hearing, if appropriate;
    (C) Appoint an examiner, if appropriate, to conduct a review and 
prepare a report with recommendations for the Board; and
    (D) Prepare and transmit a report with recommendations, or transmit 
the examiners report, to the Board for appropriate action; and

[[Page 79]]

    (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 
Federal Register.
    (c) Scope determinations. 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.

[56 FR 50798, Oct. 8, 1991, as amended at 62 FR 53535, Oct. 15, 1997]



Sec. 400.33  Restrictions on manufacturing and processing activity.

    (a) In general. 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 Sec. 400.32(b)(1).
    (b) Restrictions on items subject to antidumping and countervailing 
duty actions--(1) Board policy. Zone procedures shall not be used to 
circumvent antidumping (AD) and countervailing duty (CVD) actions under 
19 CFR parts 353 and 355.
    (2) Admission of items subject to AD/CVD actions. 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.



        Subpart E_Zone Operations and Administrative Requirements



Sec. 400.41  Zone operations; general.

    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.

[56 FR 50798, Oct. 8, 1991, as amended at 62 FR 53535, Oct. 15, 1997]



Sec. 400.42  Requirements for commencement of operations in a zone project.

    (a) In general. The following actions are required before operations 
in a zone may commence:
    (1) Approval by the Port Director of an application for activation 
is required as provided in 19 CFR part 146; and
    (2) The Executive Secretary will review proposed manufacturing or 
processing, pursuant to Sec. 400.32, and a zone schedule as provided in 
this section.
    (b) Zone schedule. (1) The zone grantee shall submit to the 
Executive Secretary and to the Port Director a zone schedule which sets 
forth:
    (i) Internal rules and regulations for the zone; and
    (ii) A statement of the rates and charges (fees) applicable to zone 
users.
    (2) A zone schedule shall consist of typed, loose-leaf, numbered, 
letter-sized pages, enclosed in covers, and shall contain:
    (i) A title page, with information to include:
    (A) The name of the zone grantee and operator(s);
    (B) Schedule identification;
    (C) Site description;
    (D) Date of original schedule; and
    (E) Name of the preparer;
    (ii) A table of contents;
    (iii) Administrative information;
    (iv) A statement of zone operating policy, rules and regulations, 
including uniform procedures regarding the construction of buildings and 
facilities; and
    (v) A section listing rates and charges for zones and subzones with 
information sufficient for the Board or the Executive Secretary to 
determine

[[Page 80]]

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.
    (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.
    (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.
    (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:
    (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
    (ii) In the case of subzones, the value of actual services rendered 
by the zone grantee or operator, and reasonable out-of-pocket expenses.

[56 FR 50798, Oct. 8, 1991, as amended at 62 FR 53535, Oct. 15, 1997]



Sec. 400.43  Restriction and prohibition of certain zone operations.

    (a) In general. 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.
    (b) Initiation of review. 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.



Sec. 400.44  Zone-restricted merchandise.

    (a) In general. 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).
    (b) Criteria. In making the determination described in paragraph (a) 
of this section, the Board will consider:
    (1) The intent of the parties;
    (2) Why the goods cannot be exported;
    (3) The public benefit involved in allowing their return; and
    (4) The recommendation of the Port Director.
    (c) Procedure. (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.
    (2) The Executive Secretary will investigate the request and prepare 
a report for the Board.
    (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

[[Page 81]]

are accompanied with a letter of concurrence from the Port Director.

[56 FR 50798, Oct. 8, 1991, as amended at 62 FR 53535, Oct. 15, 1997]



Sec. 400.45  Retail trade.

    (a) In general. 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.
    (b) Procedure. 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.
    (c) Criteria. In evaluating requests under this section, the Port 
Director and the Executive Secretary will consider:
    (1) Whether any public benefits would result from approval; and
    (2) The economic effect such activity would have on the retail trade 
outside the zone in the port of entry area.

[56 FR 50798, Oct. 8, 1991; 57 FR 2319, Jan. 21, 1992, as amended at 62 
FR 53535, Oct. 15, 1997]



Sec. 400.46  Accounts, records and reports.

    (a) Zone accounts. 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.
    (b) Records and forms. 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.
    (c) Maps and drawings. Zone grantees or operators, and Port 
Directors, shall keep current layout drawings of approved sites as 
described in Sec. 400.24(d)(5), showing activated portions, and a file 
showing required approvals. The zone grantee shall furnish necessary 
maps to the Port Director.
    (d) Annual reports. (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.
    (2) The Board shall submit an annual report to the Congress.

(Approved by the Office of Management and Budget under control number 
0625-0109)

[56 FR 50798, Oct. 8, 1991, as amended at 62 FR 53535, Oct. 15, 1997]



Sec. 400.47  Appeals to the Board from decisions of the Assistant Secretary 

for Import Administration and the Executive Secretary.

    (a) In general. Decisions of the Assistant Secretary for Import 
Administration and the Executive Secretary made pursuant to Sec. Sec. 
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.
    (b) Procedures. 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.



           Subpart F_Notice, Hearings, Record and Information



Sec. 400.51  Notice and hearings.

    (a) In general. The Executive Secretary will publish notice in the 
Federal Register inviting public comment on applications docketed for 
Board action (see, Sec. 400.27(c)), and with regard to other reviews or 
matters considered under this part when public comment is necessary. 
Applicants shall

[[Page 82]]

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.
    (b) Requests for hearings--(1) A directly affected party showing 
good cause may request a hearing during a proceeding or review.
    (2) The request must be made within 30 days of the beginning of the 
period for public comment (see, Sec. 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.
    (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.
    (c) Procedure for public hearings. The Board will publish notice in 
the Federal Register 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.



Sec. 400.52  Official record; public access.

    (a) Content. The Executive Secretary will maintain at the location 
stated in Sec. 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.
    (b) Opening and closing of official record. 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.
    (c) Protection of the official record. 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.



Sec. 400.53  Information.

    (a) Request for information. The Board may request submission of any 
information, including business proprietary information, and written 
argument necessary or appropriate to the proceeding.
    (b) Public information. 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.
    (c) Business proprietary information. 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.
    (d) Disclosure of information. 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.

[[Page 83]]



  CHAPTER VII--BUREAU OF INDUSTRY AND SECURITY, DEPARTMENT OF COMMERCE




  --------------------------------------------------------------------


  Editorial Note: Nomenclature changes to chapter VII appear at 67 FR 
20632, Apr. 26, 2002 and 69 FR 60546 and 60547, Oct. 12, 2004.

       SUBCHAPTER A--NATIONAL SECURITY INDUSTRIAL BASE REGULATIONS
Part                                                                Page
700             Defense priorities and allocations system...          85
701             Reporting of offsets agreements in sales of 
                    weapon systems or defense-related items 
                    to foreign countries or foreign firms...         110
702-704         [Reserved]

705             Effect of imported articles on the national 
                    security................................         112
706-709         [Reserved]

          SUBCHAPTER B--CHEMICAL WEAPONS CONVENTION REGULATIONS
710             General information and overview of the 
                    Chemical Weapons Convention Regulations 
                    (CWCR)..................................         117
711             General information regarding declaration, 
                    reporting, and advance notification 
                    requirements, and the electronic filing 
                    of declarations and reports.............         124
712             Activities involving Schedule 1 chemicals...         128
713             Activities involving Schedule 2 chemicals...         137
714             Activities involving Schedule 3 chemicals...         147
715             Activities involving Unscheduled Discrete 
                    Organic Chemicals (UDOCs)...............         154
716             Initial and routine inspections of declared 
                    facilities..............................         160
717             CWC Clarification procedures (consultations 
                    and challenge inspections)..............         169
718             Confidential business information...........         172
719             Enforcement.................................         175
720             Denial of export privileges.................         184
721             Inspection of records and recordkeeping.....         186
722             Interpretations [Reserved]

[[Page 84]]

723-729         [Reserved]

             SUBCHAPTER C--EXPORT ADMINISTRATION REGULATIONS
730             General information.........................         188
732             Steps for using the EAR.....................         197
734             Scope of the Export Administration 
                    regulations.............................         211
736             General prohibitions........................         228
738             Commerce Control List overview and the 
                    country chart...........................         234
740             License exceptions..........................         245
742             Control policy--CCL based controls..........         289
743             Special reporting...........................         329
744             Control policy: end-user and end-use based..         332
745             Chemical Weapons Convention requirements....         366
746             Embargoes and other special controls........         371
747             Special Iraq reconstruction license.........         379
748             Applications (classification, advisory, and 
                    license) and documentation..............         382
750             Application processing, issuance, and denial         422
752             Special comprehensive license...............         433
754             Short supply controls.......................         449
756             Appeals.....................................         462
758             Export clearance requirements...............         463
760             Restrictive trade practices or boycotts.....         472
762             Recordkeeping...............................         538
764             Enforcement and protective measures.........         543
766             Administrative enforcement proceedings......         554
768             Foreign availability determination 
                    procedures and criteria.................         578
770             Interpretations.............................         587
772             Definitions of terms........................         595
774             The Commerce Control List...................         621
775-780         [Reserved]

              SUBCHAPTER D--ADDITIONAL PROTOCOL REGULATIONS
781             General information and overview of the 
                    additional protocol regulations (APR)...         821
782             General information regarding reporting 
                    requirements and procedures.............         825
783             Civil nuclear fuel cycle-related activities 
                    not involving nuclear materials.........         827
784             Complementary access........................         848
785             Enforcement.................................         854
786             Records and recordkeeping...................         861
787-799         [Reserved]

[[Page 85]]



       SUBCHAPTER A_NATIONAL SECURITY INDUSTRIAL BASE REGULATIONS



PART 700_DEFENSE PRIORITIES AND ALLOCATIONS SYSTEM--Table of Contents




                            Subpart A_Purpose

Sec.
700.1 Purpose of this regulation.

                           Subpart B_Overview

700.2 Introduction.
700.3 Priority ratings and rated orders.
700.4 Priorities and allocations in a national emergency.
700.5 Special priorities assistance.
700.6 Official actions.
700.7 Compliance.

                          Subpart C_Definitions

700.8 Definitions.

                     Subpart D_Industrial Priorities

700.10 Delegation of authority.
700.11 Priority ratings.
700.12 Elements of a rated order.
700.13 Acceptance and rejection of rated orders.
700.14 Preferential scheduling.
700.15 Extension of priority ratings.
700.16 Changes or cancellations of priority ratings and rated orders.
700.17 Use of rated orders.
700.18 Limitations on placing rated orders.

           Subpart E_Industrial Priorities for Energy Programs

700.20 Use of priority ratings.
700.21 Application for priority rating authority.

      Subpart F_National emergency Preparedness and Critical Items

700.30 Priorities and allocations in a national emergency.
700.31 Metalworking machines.

Subpart G [Reserved]

                 Subpart H_Special Priorities Assistance

700.50 General provisions.
700.51 Requests for priority rating authority.
700.52 Examples of assistance.
700.53 Criteria for assistance.
700.54 Instances where assistance may not be provided.
700.55 Assistance programs with Canada and other nations.

                       Subpart I_Official Actions

700.60 General provisions.
700.61 Rating Authorizations.
700.62 Directives.
700.63 Letters of Understanding.

                          Subpart J_Compliance

700.70 General provisions.
700.71 Audits and investigations.
700.72 Compulsory process.
700.73 Notification of failure to comply.
700.74 Violations, penalties, and remedies.
700.75 Compliance conflicts.

             Subpart K_Adjustments, Exceptions, and Appeals

700.80 Adjustments or exceptions.
700.81 Appeals.

                   Subpart L_Miscellaneous Provisions

700.90 Protection against claims.
700.91 Records and reports.
700.92 Applicability of this regulation and official actions.
700.93 Communications.

Schedule I to Part 700--Approved Programs and Delegate Agencies
Appendix I to Part 700--Form BIS-999-Request for Special Priorities 
          Assistance

    Authority: Titles I and VII of the Defense Production Act of 1950, 
as amended (50 U.S.C. App. 2061, et seq.), Title VI of the Robert T. 
Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5195 et 
seq.), 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.

    Source: 49 FR 30414, July 30, 1984, unless otherwise noted. 
Redesignated at 54 FR 601, Jan. 9, 1989.



                            Subpart A_Purpose



Sec. 700.1  Purpose of this regulation.

    (a) Title I of the Defense Production Act of 1950, as amended (50 
U.S.C. App. 2061, et seq.) (Defense Production Act),

[[Page 86]]

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.
    (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.
    (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.''
    (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.
    (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.

[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]



                           Subpart B_Overview



Sec. 700.2  Introduction.

    (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.
    (b) The Department of Commerce administers the DPAS to ensure the 
timely delivery of industrial items to meet approved program 
requirements.
    (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.

[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]



Sec. 700.3  Priority ratings and rated orders.

    (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

[[Page 87]]

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.
    (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.
    (c) All rated orders must be scheduled to the extent possible to 
ensure delivery by the required delivery date.
    (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.
    (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.

[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as 
amended at 63 FR 31921, June 11, 1998]



Sec. 700.4  Priorities and allocations in a national emergency.

    (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.
    (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.

[63 FR 31921, June 11, 1998]



Sec. 700.5  Special priorities assistance.

    (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.
    (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.



Sec. 700.6  Official actions.

    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).



Sec. 700.7  Compliance.

    (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.
    (b) Any person who places or receives a rated order should be 
thoroughly familiar with, and must comply with, the provisions of this 
regulation.

[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as 
amended at 63 FR 31921, June 11, 1998]

[[Page 88]]



                          Subpart C_Definitions



Sec. 700.8  Definitions.

    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:
    Approved program. 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.
    Construction. 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.
    Delegate Agency. A government agency authorized by delegation from 
the Department of Commerce to place priority ratings on contracts or 
orders needed to support approved programs.
    Defense Production Act. the Defense Production Act of 1950, as 
amended (50 U.S.C. App. 2061, et seq.).
    Industrial resources--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.
    Item. 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.
    Maintenance and repair and operating supplies (MRO):
    (a) Maintenance is the upkeep necessary to continue any plant, 
facility, or equipment in working condition.
    (b) Repair 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.
    (c) Operating supplies 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.
    (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.
    Official action. 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.
    Person--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.
    Production equipment. 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.
    Rated order. A prime contract, a subcontract, or a purchase order in 
support of an approved program issued in accordance with the provisions 
of this regulation.

[[Page 89]]

    Selective Service Act and related statutes--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.
    Set-aside. The amount of an item for which a supplier must reserve 
order book space in anticipation of the receipt of rated orders.
    Stafford Act--Title VI (Emergency Preparedness) of the Robert T. 
Stafford Disaster Relief and Emergency Assistance Act, as amended (42 
U.S.C. 5195 et seq.).

[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]



                     Subpart D_Industrial Priorities



Sec. 700.10  Delegation of authority.

    (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).
    (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.

[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]



Sec. 700.11  Priority ratings.

    (a) Levels of priority. (1) There are two levels of priority 
established by this regulation, identified by the rating symbols ``DO'' 
and ``DX''.
    (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 Sec. 700.14(c).)
    (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 Sec. 
700.62.)
    (b) Program identification symbols. 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.
    (c) Priority ratings. 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.

[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]



Sec. 700.12  Elements of a rated order.

    Each rated order must include:
    (a) The appropriate priority rating (e.g. DO-A1, DX-A4, DO-H1);
    (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;
    (c) The written signature on a manually placed order, or the digital 
signature or name on an electronically

[[Page 90]]

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
    (d) A statement that reads in substance:

    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).

[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as 
amended at 63 FR 31922, June 11, 1998]



Sec. 700.13  Acceptance and rejection of rated orders.

    (a) Mandatory acceptance. (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.
    (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.
    (b) Mandatory rejection. Unless otherwise directed by Commerce:
    (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.
    (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.
    (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.
    (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.
    (c) Optional rejection. 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:
    (1) If the person placing the order is unwilling or unable to meet 
regularly established terms of sale or payment;
    (2) If the order is for an item not supplied or for a service not 
performed;
    (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;
    (4) If the person placing the rated order, other than the U.S. 
Government, makes the item or performs the service being ordered;
    (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 
Sec. 700.75].
    (d) Customer notification requirements. (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

[[Page 91]]

for the rejection, pursuant to paragraphs (b) and (c) of this section, 
in writing (hard copy) or electronic format.
    (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.

(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)

[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]



Sec. 700.14  Preferential scheduling.

    (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.
    (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.

    Examples: 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.

    (c) Conflicting rated orders. (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.
    (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 Sec. Sec. 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 Sec. Sec. 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 Sec. 700.13(d)(2).
    (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 Sec. 
700.17(b).

[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as 
amended at 63 FR 31922, June 11, 1998]



Sec. 700.15  Extension of priority ratings.

    (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.

    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.

    (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.

[[Page 92]]



Sec. 700.16  Changes or cancellations of priority ratings and rated orders.

    (a) The priority rating on a rated order may be changed or cancelled 
by:
    (1) An official action of the Department of Commerce; or
    (2) Written notification from the person who placed the rated order 
(including a Delegate Agency).
    (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.
    (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 Sec. 700.13.
    (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.
    (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.
    (f) When a priority rating is added to an unrated order, or is 
changed or cancelled, all suppliers must be promptly notified in 
writing.



Sec. 700.17  Use of rated orders.

    (a) A person must use rated orders to obtain:
    (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;
    (2) Containers or other packaging materials required to make 
delivery of the finished items against rated orders;
    (3) Services, other than contracts of employment, needed to fill 
rated orders; and
    (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.
    (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:
    (1) The order must be placed within 90 days of the date of use of 
the inventory.
    (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.
    (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).
    (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).
    (d) Combining rated and unrated orders. (1) A person may combine 
rated and unrated order quantities on one purchase order provided that:
    (i) The rated quantities are separately and clearly identified; and
    (ii) The four elements of a rated order, as required by Sec. 
700.12, are included on the order with the statement required in Sec. 
700.12(d) modified to read in substance:

    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.

    (2) A supplier must accept or reject the rated portion of the 
purchase order

[[Page 93]]

as provided in Sec. 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.
    (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 Sec. 700.80.
    (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.
    (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.

[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as 
amended at 63 FR 31923, June 11, 1998]



Sec. 700.18  Limitations on placing rated orders.

    (a) General limitations. (1) A person may not place a DO or DX rated 
order unless entitled to do so under this regulation.
    (2) Rated orders may not be used to obtain:
    (i) Delivery on a date earlier than needed;
    (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;
    (iii) Items in advance of the receipt of a rated order, except as 
specifically authorized by Commerce (see Sec. 700.51(c) for information 
on obtaining authorization for a priority rating in advance of a rated 
order); or
    (iv) Any of the following items unless specific priority rating 
authority has been obtained from a Delegate Agency or Commerce:
    (A) Items for plant improvement, expansion or construction, unless 
they will be physically incorporated into a construction project covered 
by a rated order; and
    (B) Production or construction equipment or items to be used for the 
manufacture of production equipment. [For information on requesting 
priority rating authority, see Sec. 700.51.]
    (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.
    (b) Jurisdiction limitations. (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:
    (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);
    (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);
    (iii) Health resources (Department of Health and Human Services);
    (iv) All forms of civil transportation (Department of 
Transportation);
    (v) Water resources (Department of Defense/U.S. Army Corps of 
Engineers); and
    (vi) Communications services (National Communications System under 
Executive Order 12472 of April 3, 1984).

[[Page 94]]

    (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.
    (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:

Copper raw materials
Crushed stone
Gravel
Sand
Scrap
Slag
Steam heat, central
Waste paper

[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]



           Subpart E_Industrial Priorities for Energy Programs



Sec. 700.20  Use of priority ratings.

    (a) Section 101(c) of the Defense Production Act authorizes the use 
of priority ratings for projects which maximize domestic energy 
supplies.
    (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.



Sec. 700.21  Application for priority rating authority.

    (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 a request to the Department of 
Energy. Further information may be obtained from the U.S. Department of 
Energy, Office of Electricity Delivery and Energy Reliability, 1000 
Independence Avenue, SW., Washington, DC 20585.
    (b) On receipt of the application, the Department of Energy will:
    (1) Determine if the project maximizes domestic energy supplies; and
    (2) Find whether the materials, equipment, or services involved in 
the application are critical and essential to the project.
    (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.
    (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:
    (i) Value and volume of material or equipment shipments;
    (ii) Consumption of material and equipment;
    (iii) Volume and market trends of imports and exports;
    (iv) Domestic and foreign sources of supply;
    (v) Normal levels of inventories;
    (vi) Rates of capacity utilization;
    (vii) Volume of new orders; and
    (viii) Lead times for new orders.
    (2) In finding whether there is a need to use the priorities and 
allocations authorities, Commerce will consider alternative supply 
solutions and other measures.
    (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.
    (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.
    (f) Schedule I includes a list of approved programs to support the 
maximization of domestic energy supplies. A Department of Energy 
regulation

[[Page 95]]

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.

[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as 
amended at 63 FR 31923, June 11, 1998; 73 FR 34, Jan. 2, 2008]



      Subpart F_National Emergency Preparedness and Critical Items

    Source: 63 FR 31923, June 11, 1998, unless otherwise noted.



Sec. 700.30  Priorities and allocations in a national emergency.

    (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.
    (1) Emergency official actions. (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 Sec. Sec. 700.60 through 700.63.
    (ii) Emergency official actions may include:
    (A) Controlling inventories of critical and scarce defense and/or 
emergency preparedness items;
    (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
    (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.
    (2) Allocation of critical and scarce items and facilities. (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.
    (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 Sec. 
700.31).
    (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.
    (b) [Reserved]

[63 FR 31923, June 11, 1998, as amended at 71 FR 39528, July 13, 2006]



Sec. 700.31  Metalworking machines.

    (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.
    (b) Metalworking machines covered by this section include:

Bending and forming machines

[[Page 96]]

Boring machines
Broaching machines
Drilling and tapping machines
Electrical discharge, ultrasonic and chemical erosion machines
Forging machinery and hammers
Gear cutting and finishing machines
Grinding machines
Hydraulic and pneumatic presses, power driven
Machining centers and way-type machines
Manual presses
Mechanical presses, power driven
Milling machines
Miscellaneous machine tools
Miscellaneous secondary metal forming and cutting machines
Planers and shapers
Polishing, lapping, boring, and finishing machines
Punching and shearing machines
Riveting machines
Saws and filing machines
Turning machines, lathes, including automatic
Wire and metal ribbon forming machines

    (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.

[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989. 
Further redesignated at 63 FR 31924, June 11, 1998]

Subpart G [Reserved]



                 Subpart H_Special Priorities Assistance



Sec. 700.50  General provisions.

    (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.
    (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.
    (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.

[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]



Sec. 700.51  Requests for priority rating authority.

    (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:
    (1) Production or construction equipment;
    (2) Computers when not used as production items; and
    (3) Expansion, rebuilding or replacing plant facilities.
    (b) Rating authority for production or construction equipment. (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.g., Department of Defense Form DD 691.)
    (2) When the use of a priority rating is authorized for the 
procurement of production or construction equipment,

[[Page 97]]

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.
    (c) Rating authority in advance of a rated prime contract. (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.
    (2) The person must state the following in the request:

    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.

    (3) In reviewing requests for rating authority in advance of a rated 
prime contract, Commerce will consider, among other things, the 
following criteria:
    (i) The probability that the prime contract will be awarded;
    (ii) The impact of the resulting rated orders on suppliers and on 
other authorized programs;
    (iii) Whether the contractor is the sole source;
    (iv) Whether the item being produced has a long lead time;
    (v) The political sensitivity of the project; and
    (vi) The time period for which the rating is being requested.
    (4) Commerce may require periodic reports on the use of the rating 
authority granted under paragraph (c) of this section.
    (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.



Sec. 700.52  Examples of assistance.

    (a) While special priorities assistance may be provided for any 
reason in support of this regulation, it is usually provided in 
situations where:
    (1) A person is experiencing difficulty in obtaining delivery 
against a rated order by the required delivery date; or
    (2) A person cannot locate a supplier for an item needed to fill a 
rated order.
    (b) Other examples of special priorities assistance include:
    (1) Ensuring that rated orders receive preferential treatment by 
suppliers;
    (2) Resolving production or delivery conflicts between various rated 
orders;
    (3) Assisting in placing rated orders with suppliers;
    (4) Verifying the urgency of rated orders; and
    (5) Determining the validity of rated orders.



Sec. 700.53  Criteria for assistance.

    Requests for special priorities assistance should be timely, i.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:
    (a) There is an urgent need for the item; and
    (b) The applicant has made a reasonable effort to resolve the 
problem.



Sec. 700.54  Instances where assistance will not be provided.

    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:
    (a) Secure a price advantage;

[[Page 98]]

    (b) Obtain delivery prior to the time required to fill a rated 
order;
    (c) Gain competitive advantage;
    (d) Disrupt an industry apportionment program in a manner designed 
to provide a person with an unwarranted share of scarce items; or
    (e) Overcome a supplier's regularly established terms of sale or 
conditions of doing business.

[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as 
amended at 63 FR 31924, June 11, 1998]



Sec. 700.55  Assistance programs with Canada and other nations.

    (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.
    (b) Canada. (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 U.S.-Canadian Statement of Principles for 
Economic Cooperation (October 26, 1950) require close coordination and 
the establishment of a means to provide mutual assistance to the defense 
industries located in both countries.
    (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.
    (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.
    (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.
    (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.
    (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.
    (c) Foreign nations. (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.
    (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.

[[Page 99]]

    (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.
    (2) If the Department of Defense endorses the request, it will be 
forwarded to Commerce for appropriate action.
    (d) Requesting assistance in Italy, The Netherlands, Sweden, and the 
United Kingdom.
    (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.
    (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 Sec. 700.55(c)(1).

[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]



                       Subpart I_Official Actions



Sec. 700.60  General provisions.

    (a) Commerce may, from time-to-time, take specific official actions 
to implement or enforce the provisions of this regulation.
    (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 Sec. 700.71(c).

[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as 
amended at 71 FR 39528, July 13, 2006]



Sec. 700.61  Rating Authorizations.

    (a) A Rating Authorization is an official action granting specific 
priority rating authority that:
    (1) Permits a person to place a priority rating on an order for an 
item not normally ratable under this regulation; or
    (2) Authorizes a person to modify a priority rating on a specific 
order or series of contracts or orders.
    (b) To request priority rating authority, see Sec. 700.51.



Sec. 700.62  Directives.

    (a) A Directive is an official action which requires a person to 
take or refrain from taking certain actions in accordance with its 
provisions.
    (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.
    (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.



Sec. 700.63  Letters of Understanding.

    (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).
    (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.



                          Subpart J_Compliance



Sec. 700.70  General provisions.

    (a) Compliance actions may be taken for any reason necessary or 
appropriate to the enforcement or the administration of the Defense 
Production Act, the

[[Page 100]]

Selective Service Act and related statutes, this regulation, or an 
official action. Such actions include audits, investigations, or other 
inquiries.
    (b) Any person who places or receives a rated order should be 
thoroughly familiar with, and must comply with, the provisions of this 
regulation.
    (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 Sec. 700.74 
of this regulation.

[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as 
amended at 63 FR 31924, June 11, 1998]



Sec. 700.71  Audits and investigations.

    (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.
    (b) When undertaking an audit, investigation, or other inquiry, the 
Department of Commerce shall:
    (1) Define the scope and purpose in the official action given to the 
person under investigation, and
    (2) Have ascertained that the information sought or other adequate 
and authoritative data are not available from any Federal or other 
responsible agency.
    (c) In administering this regulation, Commerce may issue the 
following documents which constitute official actions:
    (1) Administrative Subpoenas. 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.
    (2) Demand for Information. 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.
    (3) Inspection Authorizations. 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.
    (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.
    (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

[[Page 101]]

for Information, or Inspection Authorization will describe them with 
particularity.
    (f) Service of documents shall be made in the following manner:
    (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.
    (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.
    (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.

[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as 
amended at 63 FR 31924, June 11, 1998]



Sec. 700.72  Compulsory process.

    (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 ex parte application for an 
inspection warrant or its equivalent, in any forum of appropriate 
jurisdiction.
    (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.

[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]



Sec. 700.73  Notification of failure to comply.

    (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.
    (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.

[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as 
amended at 63 FR 31924, June 11, 1998]



Sec. 700.74  Violations, penalties, and remedies.

    (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

[[Page 102]]

maximum penalty provided by the Selective Service Act and related 
statutes is a $50,000 fine, or three years in prison, or both.
    (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.
    (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):
    (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.
    (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.
    (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.

[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as 
amended at 63 FR 31924, June 11, 1998]



Sec. 700.75  Compliance conflicts.

    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.

[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as 
amended at 63 FR 31924, June 11, 1998]



             Subpart K_Adjustments, Exceptions, and Appeals



Sec. 700.80  Adjustments or exceptions.

    (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:
    (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
    (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.
    (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.
    (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.
    (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 Sec. 700.81.)

[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as 
amended at 63 FR 31924, 31925, June 11, 1998]



Sec. 700.81  Appeals.

    (a) Any person who has had a request for adjustment or exception 
denied by the Office of Strategic Industries and Economic Security under 
Sec. 700.80, may appeal to the Assistant Secretary for

[[Page 103]]

Export Administration, U.S. Department of Commerce, who shall review and 
reconsider the denial.
    (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.
    (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.
    (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.
    (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.
    (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.
    (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.
    (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.

[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]



                   Subpart L_Miscellaneous Provisions



Sec. 700.90  Protection against claims.

    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.



Sec. 700.91  Records and reports.

    (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.
    (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.
    (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 Sec. 700.71.
    (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.
    (e) Section 705(e) of the Defense Production Act provides that 
information obtained under this section which the

[[Page 104]]

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.

[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as 
amended at 63 FR 31924, 31925, June 11, 1998]



Sec. 700.92  Applicability of this regulation and official actions.

    (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.
    (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.
    (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.
    (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.



Sec. 700.93  Communications.

    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.

[71 FR 39528, July 13, 2006]



  Sec. Schedule I to Part 700--Approved Programs and Delegate Agencies

    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.

----------------------------------------------------------------------------------------------------------------
       Program identification symbol            Approved program                    Delegate agency
----------------------------------------------------------------------------------------------------------------
Defense programs:
    A1....................................  Aircraft................  Department of Defense.\1\
    A2....................................  Missiles................   Do.
    A3....................................  Ships...................   Do.
    A4....................................  Tank--Automotive........   Do.
    A5....................................  Weapons.................   Do.
    A6....................................  Ammunition..............   Do.
    A7....................................  Electronic and             Do.
                                             communications
                                             equipment.
    B1....................................  Military building          Do.
                                             supplies.
    B8....................................  Production equipment       Do.
                                             (for defense
                                             contractor's account).
    B9....................................  Production equipment       Do.
                                             (Government owned).
    C1....................................  Food resources (combat     Do.
                                             rations).
    C2....................................  Department of Defense      Do.
                                             construction.

[[Page 105]]

 
    C3....................................  Maintenance, repair, and   Do.
                                             operating supplies
                                             (MRO) for Department of
                                             Defense facilities.
    C9....................................  Miscellaneous...........   Do.
International defense programs:
    Canada:
        D1................................  Canadian military         Department of Commerce.
                                             programs.
        D2................................  Canadian production and    Do.
                                             construction.
        D3................................  Canadian atomic energy     Do.
                                             program.
    Other Foreign Nations:
        G1................................  Certain munitions items   Department of Commerce.
                                             purchased by foreign
                                             governments through
                                             domestic commercial
                                             channels for export.
        G2................................  Certain direct defense     Do.
                                             needs of foreign
                                             governments other than
                                             Canada.
        G3................................  Foreign nations (other     Do.
                                             than Canada) production
                                             and construction.
    Co-Production:
        J1................................  F-16 Co-Production        Departments of Commerce and Defense.
                                             Program.
Atomic energy programs:
    E1....................................  Construction............  Department of Energy.
    E2....................................  Operations--including      Do.
                                             maintenance, repair,
                                             and operating supplies
                                             (MRO).
    E3....................................  Privately owned            Do.
                                             facilities.
Domestic energy programs:
    F1....................................  Exploration, production,  Department of Energy.
                                             refining, and
                                             transportation.
    F2....................................  Conservation............   Do.
    F3....................................  Construction, repair,      Do.
                                             and maintenance.
Other defense, energy, and related
 programs:
    H1....................................  Certain combined orders   Department of Commerce.
                                             (see section 700.17(c)).
    H5....................................  Private domestic           Do.
                                             production.
    H6....................................  Private domestic           Do.
                                             construction.
    H7....................................  Maintenance, repair, and   Do.
                                             operating supplies
                                             (MRO).
    H8....................................  Designated Programs.....   Do.
    K1....................................  Federal supply items....  General Services Administration.
Homeland security programs:
    N1....................................  Federal emergency         Department of Homeland Security.
                                             preparedness,
                                             mitigation, response,
                                             and recovery.
    N2....................................  State, local, tribal       Do.
                                             government emergency
                                             preparedness,
                                             mitigation, response,
                                             and recovery.
    N3....................................  Intelligence and warning   Do.
                                             systems.
    N4....................................  Border and                 Do.
                                             transportation security.
    N5....................................  Domestic counter-          Do.
                                             terrorism, including
                                             law enforcement.
    N6....................................  Chemical, biological,      Do.
                                             radiological, and
                                             nuclear countermeasures.
    N7....................................  Critical infrastructure    Do.
                                             protection and
                                             restoration.
    N8....................................  Miscellaneous...........   Do.
----------------------------------------------------------------------------------------------------------------
\1\ 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.


[63 FR 31925, June 11, 1998, as amended at 71 FR 39529, July 13, 2006; 
72 FR 3944, Jan. 29, 2007]

[[Page 106]]



     Sec. Appendix I to Part 700--Form BIS-999--Request for Special 
                          Priorities Assistance
[GRAPHIC] [TIFF OMITTED] TR13JY06.000


[[Page 107]]


[GRAPHIC] [TIFF OMITTED] TR13JY06.001


[[Page 108]]


[GRAPHIC] [TIFF OMITTED] TR13JY06.002


[[Page 109]]


[GRAPHIC] [TIFF OMITTED] TR13JY06.003


[71 FR 39529, July 13, 2006]

[[Page 110]]



PART 701_REPORTING OF OFFSETS AGREEMENTS IN SALES OF WEAPON SYSTEMS OR 

DEFENSE-RELATED ITEMS TO FOREIGN COUNTRIES OR FOREIGN FIRMS--Table of Contents




Sec.
701.1 Purpose.
701.2 Definitions.
701.3 Applicability and scope.
701.4 Procedures.
701.5 Confidentiality.

    Authority: Title I, sec. 124, Pub. L 102-558, 106 Stat. 4207 (50 
U.S.C App. 2099).

    Source: 59 FR 61796, Dec. 2, 1994, unless otherwise noted.



Sec. 701.1  Purpose.

    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.



Sec. 701.2  Definitions.

    (a) Offsets--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.
    (b) Military Export Sales--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.
    (c) Prime Contractor--A firm that has a sales contract with a 
foreign entity or with the U.S. Government for military export sales.
    (d) United States--Includes the 50 states, the District of Columbia, 
Puerto Rico, and U.S. territories.
    (e) Offset Agreement--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.
    (f) Offset Transaction--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.
    (g) Direct Offset--Contractual arrangements that involve defense 
articles and services referenced in the sales agreement for military 
exports.
    (h) Indirect Offset--Contractual arrangements that involve defense 
goods and services unrelated to the exports referenced in the sales 
agreement.



Sec. 701.3  Applicability and scope.

    (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.
    (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.



Sec. 701.4  Procedures.

    (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

[[Page 111]]

for their subcontractors if the subcontractors are not a direct party to 
the offset agreement).
    (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.
    (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.
    (d) Offset Transaction Reporting. (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''):
    (i) Name of Country--Country of entity purchasing the weapon system, 
defense item or service subject to offset.
    (ii) Name or Description of Weapon system, Defense Item, or Service 
Subject to Offset.
    (iii) Name of Offset Fulfilling Entity--Entity fulfilling offset 
transaction (including first tier subcontractors).
    (iv) Name of Offset Receiving Entity--Entity receiving benefits from 
offset transaction.
    (v) Offset Credit Value--Dollar value credits claimed by fulfilling 
entity including any intangible factors/multipliers.
    (vi) Actual Offset Value--Dollar value of the offset transaction 
without multipliers/intangible factors.
    (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.).
    (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.
    (ix) Direct or Indirect Offset--Specify whether the offset 
transaction was direct or indirect offset.
    (x) Name of Country in Which Offset was Fulfilled--United States, 
purchasing country, or third country.
    (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.
    (3) Any necessary comments or explanations relating to the above 
information should be footnoted and supplied on separate sheets attached 
to the report.
    (e) Reporting on Offset Agreements Entered Into. (1) In addition to 
the itemized list of offset transactions completed during the year as 
specified above, U.S. firms should provide information regarding new 
offset agreements entered into during the year, including the following 
elements:
    (i) Name of Country--Country of entity purchasing the weapon system, 
defense item, or service subject to offset;
    (ii) Name or Description of Weapon System, Defense Item, or Service 
Subject to Offset;
    (iii) Names/Titles of Signatories to the Offset Agreement;
    (iv) Value of Export Sale Subject to Offset (approximate);
    (v) Total Value of the Offset Agreement;

[[Page 112]]

    (vi) Term of Offset Agreement (months);
    (vii) Description of Performance Measures--(e.g., ``Best Efforts,'' 
Liquidated Damages, (describe)).
    (2) [Reserved]



Sec. 701.5  Confidentiality.

    (a) As provided by Sec. 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.
    (b) Public disclosure must be authorized in writing by an official 
of the firm competent to make such an authorization.
    (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 Sec. 701.1.

                        PARTS 702-704 [RESERVED]



PART 705_EFFECT OF IMPORTED ARTICLES ON THE NATIONAL SECURITY--Table of 

Contents




Sec.
705.1 Definitions.
705.2 Purpose.
705.3 Commencing an investigation.
705.4 Criteria for determining effect of imports on the national 
          security.
705.5 Request or application for an investigation.
705.6 Confidential information.
705.7 Conduct of an investigation.
705.8 Public hearings.
705.9 Emergency action.
705.10 Report of an investigation and recommendation.
705.11 Determination by the President and adjustment of imports.
705.12 Disposition of an investigation and report to the Congress.

    Authority: Sec. 232, Trade Expansion Act of 1962, as amended (19 
U.S.C. 1862).

    Source: 47 FR 14693, Apr. 6, 1982, unless otherwise noted. 
Redesignated at 54 FR 601, Jan. 9, 1989.



Sec. 705.1  Definitions.

    As used in this part:
    Department means the United States Department of Commerce and 
includes the Secretary of Commerce and the Secretary's designees.
    Secretary means the Secretary of Commerce or the Secretary's 
designees.
    Applicant means the person or entity submitting a request or 
application for an investigation pursuant to this part.



Sec. 705.2  Purpose.

    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.



Sec. 705.3  Commencing an investigation.

    (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.
    (b) The Secretary shall immediately provide notice to the Secretary 
of Defense of any investigation initiated under this part.

[47 FR 14693, Apr. 6, 1982. Redesignated at 54 FR 601, Jan. 9, 1989, and 
amended at 63 FR 31623, June 10, 1998]



Sec. 705.4  Criteria for determining effect of imports on the national 

security.

    (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:
    (1) Domestic production needed for projected national defense 
requirements;
    (2) The capacity of domestic industries to meet projected national 
defense requirements;
    (3) The existing and anticipated availabilities of human resources, 
products, raw materials, production equipment and facilities, and other

[[Page 113]]

supplies and services essential to the national defense;
    (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
    (5) Any other relevant factors.
    (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:
    (1) The impact of foreign competition on the economic welfare of any 
domestic industry essential to our national security;
    (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
    (3) Any other relevant factors that are causing or will cause a 
weakening of our national economy.



Sec. 705.5  Request or application for an investigation.

    (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 Technology Evaluation, Room H-1093, U.S. Department of 
Commerce, Washington, DC 20230.
    (b) When a request, application or motion is under investigation, or 
when an investigation has been completed pursuant to Sec. 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 Sec. 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.
    (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:
    (1) Identification of the applicant;
    (2) A precise description of the article;
    (3) Description of the domestic industry affected, including 
pertinent information regarding companies and their plants, locations, 
capacity and current output of the industry;
    (4) Pertinent statistics on imports and domestic production showing 
the quantities and values of the article;
    (5) Nature, sources, and degree of the competition created by 
imports of the article;
    (6) The effect that imports of the article may have upon the 
restoration of domestic production capacity in the event of national 
emergency;
    (7) Employment and special skills involved in the domestic 
production of the article;
    (8) Extent to which the national economy, employment, investment, 
specialized skills, and productive capacity is or will be adversely 
affected;
    (9) Revenues of Federal, State, or local Governments which are or 
may be adversely affected;
    (10) National security supporting uses of the article including data 
on applicable contracts or sub-contracts, both past and current; and
    (11) Any other information or advice relevant and material to the 
subject matter of the investigation.
    (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.

[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; 72 FR 
25195, May 4, 2007]



Sec. 705.6  Confidential information.

    (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

[[Page 114]]

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.
    (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.



Sec. 705.7  Conduct of an investigation.

    (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 Federal Register 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 Sec. 705.8 of this part.
    (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 Sec. 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.
    (c) Further information may be requested by the Department from 
other sources through the use of questionnaires, correspondence, or 
other appropriate means.
    (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.
    (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.

[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]



Sec. 705.8  Public hearings.

    (a) If it is deemed appropriate by the Department, public hearings 
may be held to elicit further information.
    (1) A notice of hearing shall be published in the Federal Register 
describing the date, time, place, the subject matter of each hearing and 
any

[[Page 115]]

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.
    (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 
Federal Register 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.
    (b) Hearings shall be conducted as follows:
    (1) The Department shall appoint the presiding officer;
    (2) The presiding officer shall determine all procedural matters 
during the hearing;
    (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;
    (4) Hearings will be fact-finding proceedings without formal 
pleadings or adverse parties. Formal rules of evidence will not apply;
    (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.
    (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.

[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]



Sec. 705.9  Emergency action.

    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 Sec. 705.7 of 
this part.



Sec. 705.10  Report of an investigation and recommendation.

    (a) When an investigation conducted pursuant to this part is 
completed, a report of the investigation shall be promptly prepared.
    (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.
    (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 Federal Register. 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.

[63 FR 31623, June 10, 1998]



Sec. 705.11  Determination by the President and adjustment of imports.

    (a) Upon the submission of a report to the President by the 
Secretary under Sec. 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

[[Page 116]]

    (1) Within 90 days after receiving the report from the Secretary, 
the President shall determine:
    (i) Whether the President concurs with the Department's finding; and
    (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.
    (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.
    (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.
    (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:
    (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 Federal Register; or
    (2) Not take any additional action. This determination and the 
reasons on which it is based, shall be published in the Federal 
Register.

[63 FR 31623, June 10, 1998]



Sec. 705.12  Disposition of an investigation and report to the Congress.

    (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 Federal Register.
    (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.

[63 FR 31623, June 10, 1998]

                        PARTS 706-709 [RESERVED]

[[Page 117]]



          SUBCHAPTER B_CHEMICAL WEAPONS CONVENTION REGULATIONS



PART 710_GENERAL INFORMATION AND OVERVIEW OF THE CHEMICAL WEAPONS CONVENTION 

REGULATIONS (CWCR)--Table of Contents




Sec.
710.1 Definitions of terms used in the Chemical Weapons Convention 
          Regulations (CWCR).
710.2 Scope of the CWCR.
710.3 Purposes of the Convention and CWCR.
710.4 Overview of scheduled chemicals and examples of affected 
          industries.
710.5 Authority.
710.6 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.

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
Supplement No. 2 to Part 710--Definitions of Production

    Authority: 22 U.S.C. 6701 et seq.; E.O. 13128, 64 FR 36703, 3 CFR 
1999 Comp., p. 199.

    Source: 71 FR 24929, Apr. 27, 2006, unless otherwise noted.



Sec. 710.1  Definitions of terms used in the Chemical Weapons Convention 

Regulations (CWCR).

    The following are definitions of terms used in the CWCR (parts 710 
through 729 of this subchapter, unless otherwise noted):
    Act (The). Means the Chemical Weapons Convention Implementation Act 
of 1998 (22 U.S.C. 6701 et seq.).
    Advance Notification. 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 774) 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).
    Bureau of Industry and Security (BIS). Means the Bureau of Industry 
and Security of the United States Department of Commerce, including 
Export Administration and Export Enforcement.
    By-product. 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.
    Chemical Weapon. Means the following, together or separately:
    (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;
    (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;
    (3) Any equipment specifically designed for use directly in 
connection with the employment of munitions or devices specified in 
paragraph (2) of this definition.
    Chemical Weapons Convention (CWC or Convention). 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.

[[Page 118]]

    Chemical Weapons Convention Regulations (CWCR). Means the 
regulations contained in 15 CFR parts 710 through 729.
    Consumption. 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.
    Declaration or report form. 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.
    Declared facility or plant site. 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.
    Discrete organic chemical. 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.)
    Domestic transfer. 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.)
    EAR. Means the Export Administration Regulations (15 CFR parts 730 
through 774).
    Explosive. Means a chemical (or a mixture of chemicals) that is 
included in Class 1 of the United Nations Organization hazard 
classification system.
    Facility. Means any plant site, plant or unit.
    Facility Agreement. 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.
    Host Team. 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.
    Host Team Leader. 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.
    Hydrocarbon. Means any organic compound that contains only carbon 
and hydrogen.
    Impurity. Means a chemical substance unintentionally present with 
another chemical substance or mixture.
    Inspection Notification. Means a written announcement to a plant 
site by the United States National Authority

[[Page 119]]

(USNA) or the BIS Host Team of an impending inspection under the 
Convention.
    Inspection Site. 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.
    Inspection Team. Means the group of inspectors and inspection 
assistants assigned by the Director-General of the Technical Secretariat 
to conduct a particular inspection.
    Intermediate. Means a chemical formed through chemical reaction that 
is subsequently reacted to form another chemical.
    ITAR. Means the International Traffic in Arms Regulations (22 CFR 
parts 120-130).
    Organization for the Prohibition of Chemical Weapons (OPCW). Means 
the international organization, located in The Hague, the Netherlands, 
that administers the CWC.
    Person. 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.
    Plant. Means a relatively self-contained area, structure or building 
containing one or more units with auxiliary and associated 
infrastructure, such as:
    (1) Small administrative area;
    (2) Storage/handling areas for feedstock and products;
    (3) Effluent/waste handling/treatment area;
    (4) Control/analytical laboratory;
    (5) First aid service/related medical section; and
    (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.
    Plant site. 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:
    (1) Administration and other offices;
    (2) Repair and maintenance shops;
    (3) Medical center;
    (4) Utilities;
    (5) Central analytical laboratory;
    (6) Research and development laboratories;
    (7) Central effluent and waste treatment area; and
    (8) Warehouse storage.
    Precursor. 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.
    Processing. Means a physical process such as formulation, extraction 
and purification in which a chemical is not converted into another 
chemical.
    Production. Means the formation of a chemical through chemical 
reaction, including biochemical or biologically mediated reaction (see 
Supplement No. 2 to this part).
    (1) Production of Schedule 1 chemicals means formation through 
chemical synthesis as well as processing to extract and isolate Schedule 
1 chemicals.
    (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.
    Production by synthesis. Means production of a chemical from its 
reactants.
    Protective purposes in relation to Schedule 1 chemicals. 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.
    Purposes not prohibited by the CWC. Means the following:

[[Page 120]]

    (1) Any peaceful purpose related to an industrial, agricultural, 
research, medical or pharmaceutical activity or other activity;
    (2) Any purpose directly related to protection against toxic 
chemicals and to protection against chemical weapons;
    (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
    (4) Any law enforcement purpose, including any domestic riot control 
purpose and including imposition of capital punishment.
    Report. 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 Sec. 719.1(b) of the CWCR).
    Schedules of Chemicals. 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.
    State Party. Means a country for which the CWC is in force. See 
Supplement No. 1 to this part.
    Storage. 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.
    Technical Secretariat. 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.
    Toxic Chemical. 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.
    Trading company. 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.
    Transfer. See domestic transfer.
    Transient intermediate. 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.
    Undeclared facility or plant site. 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.
    Unit. Means the combination of those items of equipment, including 
vessels and vessel set up, necessary for the production, processing or 
consumption of a chemical.
    United States. 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

[[Page 121]]

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 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).
    United States National Authority (USNA). 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.
    Unscheduled chemical. 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).
    Unscheduled Discrete Organic Chemical (UDOC). 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.
    You. 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.

[71 FR 24929, Apr. 27, 2006, as amended at 73 FR 78182, Dec. 22, 2008]



Sec. 710.2  Scope of the CWCR.

    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.
    (a) Persons and facilities subject to the CWCR. (1) The CWCR apply 
to all persons and facilities located in the United States, except the 
following U.S. Government facilities:
    (i) Department of Defense facilities;
    (ii) Department of Energy facilities; and
    (iii) Facilities of other U.S. Government agencies that notify the 
USNA of their decision to be excluded from the CWCR.
    (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.
    (b) Activities subject to the CWCR. 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.



Sec. 710.3  Purposes of the Convention and CWCR.

    (a) Purposes of the Convention. (1) The Convention imposes upon the 
United States, as a State Party, certain declaration, inspection, and 
other obligations. In addition, the United States

[[Page 122]]

and other States Parties to the Convention undertake never under any 
circumstances to:
    (i) Develop, produce, otherwise acquire, stockpile, or retain 
chemical weapons, or transfer, directly or indirectly, chemical weapons 
to anyone;
    (ii) Use chemical weapons;
    (iii) Engage in any military preparations to use chemical weapons; 
or
    (iv) Assist, encourage or induce, in any way, anyone to engage in 
any activity prohibited by the Convention.
    (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.
    (b) Purposes of the Chemical Weapons Convention Regulations. 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.



Sec. 710.4  Overview of scheduled chemicals and examples of affected 

industries.

    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.
    (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.
    (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:
    (1) Flame retardant additives and research;
    (2) Dye and photographic industries (e.g., printing ink, ball point 
pen fluids, copy mediums, paints, etc.);
    (3) Medical and pharmaceutical preparation (e.g., anticholinergics, 
arsenicals, tranquilizer preparations);
    (4) Metal plating preparations;
    (5) Epoxy resins; and
    (6) Insecticides, herbicides, fungicides, defoliants, and 
rodenticides.
    (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:
    (1) The production of:
    (i) Resins;
    (ii) Plastics;
    (iii) Pharmaceuticals;
    (iv) Pesticides;
    (v) Batteries;
    (vi) Cyanic acid;
    (vii) Toiletries, including perfumes and scents;
    (viii) Organic phosphate esters (e.g., hydraulic fluids, flame 
retardants, surfactants, and sequestering agents); and
    (2) Leather tannery and finishing supplies.
    (d) Unscheduled discrete organic chemicals are used in a wide 
variety of commercial industries, and include acetone, benzoyl peroxide 
and propylene glycol.

[[Page 123]]



Sec. 710.5  Authority.

    The CWCR (parts 710 through 729 of this subchapter) implement 
certain provisions of the Chemical Weapons Convention under the 
authority of the 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.



Sec. 710.6  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.

    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 774) 
and the International Traffic in Arms Regulations (ITAR) (22 CFR parts 
120 through 130). See in particular Sec. Sec. 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 (Sec. Sec. 712.2 and 713.1) and 
the Alcohol, Tobacco, Firearms and Explosives Regulations in 27 CFR part 
447.

[71 FR 24929, Apr. 27, 2006, as amended at 73 FR 78182, Dec. 22, 2008]



 Sec. 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 List of States Parties as of 

December 20, 2008

Afghanistan
Albania
Algeria
Andorra
Antigua and Barbuda
Argentina
Armenia
Australia
Austria
Azerbaijan
Bahrain
Bangladesh
Belarus
Belgium
Belize
Benin
Bhutan
Bolivia
Bosnia-Herzegovina
Botswana
Brazil
Brunei Darussalam*
Bulgaria
Burkina Faso
Burundi
Cambodia
Cameroon
Canada
Cape Verde
Central African Republic
Chad
Chile
China***
Colombia
Comoros
Congo (Democratic Republic of the)
Congo (Republic of the)
Cook Islands**
Costa Rica
Cote d'Ivoire (Ivory Coast)
Croatia
Cuba
Cyprus
Czech Republic
Denmark
Djibouti
Dominica
Ecuador
El Salvador
Equatorial Guinea
Eritrea
Estonia
Ethiopia
Fiji
Finland
France
Gabon
Gambia
Georgia
Germany
Ghana
Greece
Grenada
Guatemala
Guinea
Guinea-Bissau
Guyana
Haiti
Holy See*
Honduras
Hungary
Iceland
India
Indonesia
Iran (Islamic Republic of)
Ireland
Italy
Jamaica
Japan
Jordan
Kazakhstan
Kenya
Kiribati
Korea (Republic of)
Kuwait
Kyrgyzstan
Laos (P.D.R.)*
Latvia
Lebanon
Lesotho
Liberia
Libya
Liechtenstein
Lithuania
Luxembourg
Macedonia (The Former Yugoslav Republic of)
Madagascar
Malawi
Malaysia
Maldives
Mali
Malta
Marshall Islands
Mauritania
Mauritius

[[Page 124]]


Mexico
Micronesia (Federated States of)
Moldova (Republic of)*
Monaco
Mongolia
Montenegro
Morocco
Mozambique
Namibia
Nauru
Nepal
Netherlands***
New Zealand
Nicaragua
Niger
Nigeria
Niue**
Norway
Oman
Pakistan
Palau
Panama
Papua New Guinea
Paraguay
Peru
Philippines
Poland
Portugal
Qatar
Romania
Russian Federation
Rwanda
Saint Kitts and Nevis
Saint Lucia
Saint Vincent and the Grenadines
Samoa
San Marino
Sao Tome and Principe
Saudi Arabia
Senegal
Serbia
Seychelles
Sierra Leone
Singapore
Slovak Republic*
Slovenia
Solomon Islands
South Africa
Spain
Sri Lanka
Sudan
Suriname
Swaziland
Sweden
Switzerland
Tajikistan
Tanzania, United Republic of
Thailand
Timor Leste (East Timor)
Togo
Tonga
Trinidad and Tobago
Tunisia
Turkey
Turkmenistan
Tuvalu
Uganda
Ukraine
United Arab Emirates
United Kingdom
United States
Uruguay
Uzbekistan
Vanuatu
Venezuela
Vietnam
Yemen
Zambia
Zimbabwe

    * 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 through 774).
    ** 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 
Sec. 738.3(b) of the EAR.
    *** 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).

[71 FR 24929, Apr. 27, 2006, as amended at 72 FR 14408, Mar. 28, 2007; 
73 FR 78182, Dec. 22, 2008]

         Supplement No. 2 to Part 710--Definitions of Production

----------------------------------------------------------------------------------------------------------------
                                                                                Unscheduled discrete organic
        Schedule 1 chemicals           Schedule 2 and Schedule 3 chemicals            chemicals (UDOCs)
----------------------------------------------------------------------------------------------------------------
        Produced by a biochemical or biologically mediated reaction         Produced by synthesis*
----------------------------------------------------------------------------------------------------------------
Formation through chemical            All production steps in any units
 synthesis.                            within the same plant which
Processing to extract and isolate      includes associated processes--
 Schedule 1 chemicals.                 purification, separation,
                                       extraction distillation or
                                       refining.**
----------------------------------------------------------------------------------------------------------------
* Intermediates used in a single or multi-step process to produce another declared UDOC are not declarable.
** 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.



PART 711_GENERAL INFORMATION REGARDING DECLARATION, REPORTING, AND ADVANCE 

NOTIFICATION REQUIREMENTS, AND THE ELECTRONIC FILING OF DECLARATIONS AND 

REPORTS

Sec.
711.1 Overviews of declaration, reporting, and advance notification 
          requirements.
711.2 Who submits declarations, reports and advance notifications?
711.3 Compliance review.
711.4 Assistance in determining your obligations.
711.5 Numerical precision of submitted data.
711.6 Where to obtain forms.
711.7 Where to submit declarations, reports and advance notifications.
711.8 How to request authorization from BIS to make electronic 
          submissions of declarations or reports.


[[Page 125]]


    Authority: 22 U.S.C. 6701 et seq.; E.O. 13128, 64 FR 36703, 3 CFR 
1999 Comp., p. 199.

    Source: 71 FR 24929, Apr. 27, 2006, unless otherwise noted.



Sec. 711.1  Overviews of declaration, reporting, and advance notification 

requirements.

    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 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 Sec. 711.6 of the CWCR).



Sec. 711.2  Who submits declarations, reports, and advance notifications.

    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.



Sec. 711.3  Compliance review.

    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.



Sec. 711.4  Assistance in determining your obligations.

    (a) Determining if your chemical is subject to declaration, 
reporting or advance notification requirements. (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 must be sent via facsimile to (202) 
482-1731, e-mailed to cdr@bis.doc.gov, or mailed to the Treaty 
Compliance Division, Bureau of Industry and Security, U.S. Department of 
Commerce, Room 4515, 14th Street and Pennsylvania Avenue, NW., 
Washington, DC 20230, 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.
    (2) Include the following information in each chemical determination 
request:
    (i) Date of request;
    (ii) Company name and complete street address;
    (iii) Point of contact;
    (iv) Phone and facsimile number of contact;
    (v) E-mail address of contact, if you want an acknowledgment of 
receipt sent via e-mail;

[[Page 126]]

    (vi) Chemical Name;
    (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
    (viii) Chemical Abstract Service registry number, if assigned.
    (b) Other inquiries. 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 Compliance Division by phone at (202) 482-
1001. 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 cwcqa@bis.doc.gov. Your request must 
be marked, ``ATTN: CWCR Assistance.''

[71 FR 24929, Apr. 27, 2006, as amended at 73 FR 78182, Dec. 22, 2008]



Sec. 711.5  Numerical precision of submitted data.

    Numerical information submitted in declarations and reports is to be 
provided per applicable rounding rules in each part (i.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.



Sec. 711.6  Where to obtain forms.

    (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, Room 4515, 14th 
Street and Pennsylvania Avenue, NW., Washington, DC 20230, Telephone: 
(202) 482-1001. Forms and forms software may also be downloaded from the 
Internet at www.cwc.gov.
    (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.

[71 FR 24929, Apr. 27, 2006, as amended at 73 FR 78182, Dec. 22, 2008]



Sec. 711.7  Where to submit declarations, reports and advance notifications.

    Declarations, reports and advance notifications required by the CWCR 
must be sent either by fax to (202) 482-1731 or by mail or courier 
delivery to the following address: Treaty Compliance Division, Bureau of 
Industry and Security, U.S. Department of Commerce, Room 4515, 14th 
Street and Pennsylvania Avenue, NW., Washington, DC 20230, Telephone: 
(202) 482-1001. Specific types of declarations and reports and due dates 
are outlined in Supplement No. 2 to parts 712 through 715 of the CWCR.

[73 FR 78182, Dec. 22, 2008]



Sec. 711.8  How to request authorization from BIS to make electronic 

submissions of declarations or reports.

    (a) Scope. 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.
    (b) Authorization. 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.
    (1) Requesting approval to submit declarations and reports 
electronically. To submit declarations and reports electronically, you 
or your company must submit a written request to BIS at the address 
identified in Sec. 711.6 of the

[[Page 127]]

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 (i.e., the 
certifying official). Additional information required for submitting 
electronic declarations and reports may be found on BIS's Web site at 
www.cwc.gov. 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.

    Note to Sec. 711.8(b)(1): 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).

    (2) Assignment and use of passwords for facilities, plant sites and 
trading companies (USC password) and Web-DESI user accounts (user name 
and password). (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.

    Note to Sec. 711.8(b)(2)(i): 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.

    (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.
    (iii) If you are an authorized Web-DESI account user, you may not:
    (A) Disclose your user name or password to anyone;
    (B) Record your user name or password, either in writing or 
electronically;
    (C) Authorize another person to use your user name or password; or
    (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.
    (iv) To prevent misuse of the Web-DESI account:
    (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 (202) 482-1001. Within two 
business days of making the report, the company and the user must submit 
written confirmation to BIS at the address provided in Sec. 711.6 of 
the CWCR.
    (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.
    (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

[[Page 128]]

person steal or otherwise compromise this password.
    (c) Electronic submission of declarations and reports--(1) General 
instructions. 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.
    (2) Declarations and reports. The electronic submission of a 
declaration or report will constitute an official document as required 
under parts 712 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.
    (d) Updating. 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.

[71 FR 24929, Apr. 27, 2006, as amended at 73 FR 78182, Dec. 22, 2008]



PART 712_ACTIVITIES INVOLVING SCHEDULE 1 CHEMICALS--Table of Contents




Sec.
712.1 Round to zero rule that applies to activities involving Schedule 1 
          chemicals.
712.2 Restrictions on activities involving Schedule 1 chemicals.
712.3 Initial declaration requirements for declared facilities which are 
          engaged in the production of Schedule 1 chemicals for purposes 
          not prohibited by the CWC.
712.4 New Schedule 1 production facility.
712.5 Annual declaration requirements for facilities engaged in the 
          production of Schedule 1 chemicals for purposes not prohibited 
          by the CWC.
712.6 Advance notification and annual report of all exports and imports 
          of Schedule 1 chemicals to, or from, other States Parties.
712.7 Amended declaration or report.
712.8 Declarations and reports returned without action by BIS.
712.9 Deadlines for submission of Schedule 1 declarations, reports, 
          advance notifications, and amendments.

Supplement No. 1 to Part 712--Schedule 1 Chemicals
Supplement No. 2 to Part 712--Deadlines for Submission of Schedule 1 
          Declarations, Reports, Advance Notifications, Reports, and 
          Amendments

    Authority: 22 U.S.C. 6701 et seq.; 50 U.S.C. 1601 et seq.; 50 U.S.C. 
1701 et seq.; 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.

    Source: 71 FR 24929, Apr. 27, 2006, unless otherwise noted.



Sec. 712.1  Round to zero rule that applies to activities involving Schedule 1 

chemicals.

    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.



Sec. 712.2  Restrictions on activities involving Schedule 1 chemicals.

    (a) You may not produce Schedule 1 chemicals for protective 
purposes.
    (b) You may not import any Schedule 1 chemical unless:
    (1) The import is from a State Party;

[[Page 129]]

    (2) The import is for research, medical, pharmaceutical, or 
protective purposes;
    (3) The import is in types and quantities strictly limited to those 
that can be justified for such purposes; and
    (4) You have notified BIS at least 45 calendar days prior to the 
import, pursuant to Sec. 712.6 of the CWCR.
    Note 1 to Sec. 712.2(b): Pursuant to Sec. 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.

    Note 2 to Sec. 712.2(b): For specific provisions relating to the 
prior advance notification of exports of all Schedule 1 chemicals, see 
Sec. 745.1 of the Export Administration Regulations (EAR) (15 CFR parts 
730 through 774). For specific provisions relating to license 
requirements for exports of Schedule 1 chemicals, see Sec. 742.2 and 
Sec. 742.18 of the EAR for Schedule 1 chemicals subject to the 
jurisdiction of the Department of Commerce and see 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.

    (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;
    (2) A person referred to in paragraph (c)(1) of this section is:
    (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
    (ii) In an emergency situation, any otherwise non-culpable person if 
the person is attempting to seize or destroy the Schedule 1 chemical.

[71 FR 24929, Apr. 27, 2006, as amended at 73 FR 78183, Dec. 22, 2008]



Sec. 712.3  Initial declaration requirements for declared facilities which are 

engaged in the production of Schedule 1 chemicals for purposes not prohibited 

by the CWC.

    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 Sec. 712.5(b)(1)(ii) of the 
CWCR).



Sec. 712.4  New Schedule 1 production facility.

    (a) Establishment of a new Schedule 1 production facility. (1) If 
your facility has never before been declared under Sec. 712.5 of the 
CWCR, or the initial declaration for your facility has been withdrawn 
pursuant to Sec. 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.
    (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.
    (b) Types of declaration forms required. 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.
    (c) Two hundred days after a new Schedule 1 production facility 
submits its initial declaration, it is subject to the declaration 
requirements in Sec. 712.5(a)(1) and (a)(2) and Sec. 712.5(b)(1)(ii) 
of the CWCR.

[[Page 130]]



Sec. 712.5  Annual declaration requirements for facilities engaged in the 

production of Schedule 1 chemicals for purposes not prohibited by the CWC.

    (a) Declaration requirements--(1) Annual declaration on past 
activities. 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.
    (2) Annual declaration on anticipated activities. You must complete 
the forms 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 Sec. 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.
    (b) Declaration forms to be used--(1) Initial declaration. (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.
    (ii) If you plan to change the technical description of your 
facility from your initial declaration completed and submitted pursuant 
to Sec. 712.3 or Sec. 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 Sec. 712.7 of the CWCR for additional instructions 
on amending Schedule 1 declarations.
    (2) Annual declaration on past activities. 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.
    (3) Annual declaration on anticipated activities. 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.
    (c) Quantities to be declared. 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).
    (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.
    (e) ``Declared'' Schedule 1 facilities and routine inspections. Only 
facilities that submitted a declaration pursuant to paragraph (a)(1) or 
(a)(2) of this section

[[Page 131]]

or Sec. 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).
    (f) Approval of declared Schedule 1 production facilities. 
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.
    (g) Withdrawal of Schedule 1 initial declarations. A facility 
subject to Sec. Sec. 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 in Sec. 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 Sec. 712.4.



Sec. 712.6  Advance notification and annual report of all exports and imports 

of Schedule 1 chemicals to, or from, other States Parties.

    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 Sec. 712.5(e) of the 
CWCR, are subject to initial and routine inspections pursuant to part 
716 of the CWCR.
    (a) Advance notification of exports and imports. 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.
    (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:
    (i) Chemical name;
    (ii) Structural formula of the chemical;
    (iii) Chemical Abstract Service (CAS) Registry Number;
    (iv) Quantity involved in grams;
    (v) Planned date of export or import;

[[Page 132]]

    (vi) Purpose (end-use) of export or import (i.e., research, medical, 
pharmaceutical, or protective purposes);
    (vii) Name(s) of exporter and importer;
    (viii) Complete street address(es) of exporter and importer;
    (ix) U.S. export license or control number, if known; and
    (x) Company identification number, once assigned by BIS.
    (2) Send the advance notification either by fax to (202) 482-1731 or 
by mail or courier delivery to the following address: Treaty Compliance 
Division, Bureau of Industry and Security, U.S. Department of Commerce, 
Room 4515, 14th Street and Pennsylvania Avenue, NW., Washington, DC 
20230, and mark it ``Attn: Advance Notification of Schedule 1 Chemical 
[Export] [Import].''
    (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 under the EAR 
or the ITAR, the exporter must have applied for and been granted a 
license (see Sec. 742.2 and Sec. 742.18 of the EAR, or the ITAR at 22 
CFR parts 120 through 130).
    (b) Annual report requirements for exports and imports of Schedule 1 
chemicals. 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.
    (1) Annual report on exports and imports. 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.
    (2) Report forms to submit.--(i) Declared Schedule 1 facilities. (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:
    (1) Combined declaration and report. 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
    (2) Report. 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.
    (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:
    (1) Combined declaration and report. 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
    (2) Report. 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.
    (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.
    (c) Paragraph (a) of this section does not apply to the activities 
and persons set forth in Sec. 712.2(b) of the CWCR.

[71 FR 24929, Apr. 27, 2006, as amended at 73 FR 78183, Dec. 22, 2008]



Sec. 712.7  Amended declaration or report.

    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

[[Page 133]]

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.
    (a) 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). You must submit an 
amended declaration or report to BIS within 15 days of any change in the 
following information:
    (1) Types of Schedule 1 chemicals produced (e.g., additional 
Schedule 1 chemicals);
    (2) Quantities of Schedule 1 chemicals produced;
    (3) Activities involving Schedule 1 chemicals; and
    (4) End-use of Schedule 1 chemicals (e.g., additional end-use(s)).
    (b) Changes to export or import information submitted in Annual 
Reports on Exports and Imports from undeclared facilities, trading 
companies and U.S. persons. 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:
    (1) Types of Schedule 1 chemicals exported or imported (e.g., 
additional Schedule 1 chemicals);
    (2) Quantities of Schedule 1 chemicals exported or imported;
    (3) Destination(s) of Schedule 1 chemicals exported;
    (4) Source(s) of Schedule 1 chemicals imported;
    (5) Activities involving exports and imports of Schedule 1 
chemicals; and
    (6) End-use(s) of Schedule 1 chemicals exported or imported (e.g., 
additional end-use(s)).
    (c) Changes to company and facility information previously submitted 
to BIS in the ADPA, the ADAA, and the Annual Report on Exports and 
Imports--(1) Internal company changes. You must submit an amended 
declaration or report to BIS within 30 days of any change in the 
following information:
    (i) Name of declaration/report point of contact (D-POC), including 
telephone number, facsimile number, and e-mail address;
    (ii) Name(s) of inspection point(s) of contact (I-POC), including 
telephone number(s), and facsimile number(s);
    (iii) Company name (see Sec. 712.7(c)(2) of the CWCR for other 
company changes);
    (iv) Company mailing address;
    (v) Facility name;
    (vi) Facility owner, including telephone number, and facsimile 
number; and
    (vii) Facility operator, including telephone number, and facsimile 
number.
    (2) Change in ownership of company or facility. 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:
    (i) Information that must be submitted to BIS by the company selling 
a declared facility:
    (A) Name of seller (i.e., name of the company selling a declared 
facility);
    (B) Name of the declared facility and U.S. Code Number for that 
facility;
    (C) Name of purchaser (i.e., name of the new company purchasing a 
declared facility) and identity of contact person for the purchaser, if 
known;
    (D) Date of ownership transfer or change;
    (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
    (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.
    (1) 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

[[Page 134]]

the period of the year during which the previous owner owned the 
facility.
    (2) 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 Sec. Sec. 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.
    (3) 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 Sec. Sec. 712.4 and 712.5 of the CWCR, BIS will 
return the declarations without action as set forth in Sec. 712.8 of 
the CWCR.
    (4) If part-year reports are submitted by the previous owner and the 
new owner as required in Sec. 712.5 of the CWCR, BIS will submit both 
reports in the OPCW.
    (ii) Information that must be submitted to BIS by the company 
purchasing a declared facility:
    (A) Name of purchaser (i.e., name of company purchasing a declared 
facility;
    (B) Mailing address of purchaser;
    (C) Name of declaration point of contact (D-POC) for the purchaser, 
including telephone number, facsimile number, and e-mail address;
    (D) Name of inspection points of contact (I-POC) for the purchaser, 
including telephone number(s), facsimile number(s) and e-mail 
address(es);
    (E) Name of the declared facility and U.S. Code Number for that 
facility;
    (F) Location of the declared facility;
    (G) Owner and operator of the declared facility, including telephone 
number, and facsimile number; and
    (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.
    (1) 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.
    (2) 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 Sec. Sec. 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.
    (3) 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 Sec. Sec. 712.4 and 712.5 of the CWCR, BIS will 
return the declarations without action as set forth in Sec. 712.8 of 
the CWCR.
    (4) If part-year reports are submitted by the previous owner and the 
new owner as required in Sec. 712.5 of the CWCR, BIS will submit both 
reports to the OPCW.

    Note 1 to Sec. 712.7(c): 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.
    Note 2 to Sec. 712.7(c): You may notify BIS of change in ownership 
via a letter to the address given in Sec. 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.
    Note 3 to Sec. 712.7(c): 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.


[[Page 135]]


    (d) Inspection-related amendments. 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 Sec. Sec. 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.
    (e) Non-substantive changes. 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.
    (f) Documentation required for amended declarations or reports. 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:
    (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
    (2) Both of the following:
    (i) A new Certification Form (i.e., Form 1-1); and
    (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.



Sec. 712.8  Declarations and reports returned without action by BIS.

    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.



Sec. 712.9  Deadlines for submission of Schedule 1 declarations, reports, 

advance notifications, and amendments.

    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:
    (a) Annual declaration on past activities (Schedule 1 chemical 
production during the previous calendar year);
    (b) Annual report on exports and imports of Schedule 1 chemicals 
from facilities, trading companies, and other persons (during the 
previous calendar year);
    (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);
    (d) Annual declaration on anticipated activities (anticipated 
production of Schedule 1 chemicals in the next calendar year);
    (e) Advance notification of any export to or import from another 
State Party;
    (f) Initial declaration of a new Schedule 1 chemical production 
facility; and
    (g) Amended declaration or report, including combined declaration 
and report.



         Sec. Supplement No. 1 to Part 712--Schedule 1 Chemicals

------------------------------------------------------------------------
                                                          (CAS registry
                                                             number)
------------------------------------------------------------------------
A. Toxic chemicals:
    (1) O-Alkyl (<=C10, incl. cycloalkyl) alkyl (Me,
     Et, n-Pr or i-Pr)-phosphonofluoridates
        e.g. Sarin: O-Isopropyl                               (107-44-8)
         methylphosphonofluoridate.....................
        Soman: O-Pinacolyl methylphosphonofluoridate...        (96-64-0)
    (2) O-Alkyl (<=C10, incl. cycloalkyl) N,N-dialkyl          (77-81-6)
     (Me, Et, n-Pr or i-Pr) phosphoramidocyanidates
     e.g. Tabun: O-Ethyl N,N-dimethyl
     phosphoramidocyanidate............................

[[Page 136]]

 
    (3) O-Alkyl (H or <=C10, incl. cycloalkyl) S-2-         (50782-69-9)
     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.................................
    (4) Sulfur mustards:
        2-Chloroethylchloromethylsulfide...............      (2625-76-5)
        Mustard gas: Bis(2-chloroethyl)sulfide.........       (505-60-2)
        Bis(2-chloroethylthio)methane..................     (63869-13-6)
        Sesquimustard: 1,2-Bis(2-chloroethylthio)ethane      (3563-36-8)
        1,3-Bis(2-chloroethylthio)-n-propane...........     (63905-10-2)
        1,4-Bis(2-chloroethylthio)-n-butane............    (142868-93-7)
        1,5-Bis(2-chloroethylthio)-n-pentane...........    (142868-94-8)
        Bis(2-chloroethylthiomethyl)ether..............     (63918-90-1)
        O-Mustard: Bis(2-chloroethylthioethyl)ether....     (63918-89-8)
    (5) Lewisites:
        Lewisite 1: 2-Chlorovinyldichloroarsine........       (541-25-3)
        Lewisite 2: Bis(2-chlorovinyl)chloroarsine.....     (40334-69-8)
        Lewisite 3: Tris(2-chlorovinyl)arsine..........     (40334-70-1)
    (6) Nitrogen mustards:
        HN1: Bis(2-chloroethyl)ethylamine..............       (538-07-8)
        HN2: Bis(2-chloroethyl)methylamine.............        (51-75-2)
        HN3: Tris(2-chloroethyl)amine..................       (555-77-1)
    (7) Saxitoxin......................................     (35523-89-8)
    (8) Ricin..........................................      (9009-86-3)
B. Precursors:
    (9) Alkyl (Me, Et, n-Pr or i-Pr)                          (676-99-3)
     phosphonyldifluorides e.g. DF:
     Methylphosphonyldifluoride........................
    (10) O-Alkyl (H or <=C10, incl. cycloalkyl) O-2-        (57856-11-8)
     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.................................
    (11) Chlorosarin: O-Isopropyl                            (1445-76-7)
     methylphosphonochloridate.........................
    (12) Chlorosoman: O-Pinacolyl                           (7040-57-5)
     methylphosphonochloridate.........................
------------------------------------------------------------------------
Notes to Supplement No. 1
Note 1: 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).
Note 2: 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).



Sec. Supplement No. 2 to Part 712--Deadlines for Submission of Schedule 

     1 Declarations, Advance Notifications, Reports, and Amendments

------------------------------------------------------------------------
      Declarations, advance
    notifications and reports      Applicable forms        Due dates
------------------------------------------------------------------------
Annual Declaration on Past        Certification, 1-   February 28th of
 Activities (previous calendar     1, 1-2,1-2A,1-2B,   the year
 year)--Declared facility (past    A (as               following any
 production).                      appropriate), B     calendar year in
                                   (optional).         which more than
                                                       100 grams
                                                       aggregate of
                                                       Schedule 1
                                                       chemicals were
                                                       produced,
Annual report on exports and      Certification, 1-   February 28th of
 imports (previous calendar        1,1-3, A (as        the year
 year) (facility, trading          appropriate), B     following any
 company, other persons).          (optional).         calendar year in
                                                       which Schedule 1
                                                       chemicals were
                                                       exported or
                                                       imported.
Combined Declaration and Report.  Certification, 1-   February 28th of
                                   1, 1-2, 1-2A, 1-    the year
                                   2B, 1-3, A (as      following any
                                   appropriate), B     calendar year in
                                   (optional).         which Schedule 1
                                                       chemicals were
                                                       produced,
                                                       exported, or
                                                       imported.
Annual Declaration of             Certification, 1-   September 3rd of
 Anticipated Activities (next      1, 1-4, A (as       the year prior to
 calendar year).                   appropriate), B     any calendar year
                                   (optional).         in which Schedule
                                                       1 activities are
                                                       anticipated to
                                                       occur.
Advance Notification of any       Notify on           45 calendar days
 export to or import from          letterhead. See     prior to any
 another State Party.              Sec.  712.6 of     export or import
                                   the CWCR.           of Schedule 1
                                                       chemicals, except
                                                       3 days prior to
                                                       export or import
                                                       of 5 milligrams
                                                       or less of
                                                       saxitoxin for
                                                       medical/
                                                       diagnositc
                                                       purposes.
Initial Declaration of a new      Certification, 1-   200 calendar days
 Schedule 1 facility (technical    1, A (as            prior to
 description).                     appropriate), B     producing in
                                   (optional).         excess of 100
                                                       grams aggregate
                                                       of Schedule 1
                                                       chemicals.
Amended Declaration.............  Certification, 1-
                                   1, 1-2, 1-2A.
    --Chemicals/Activities: Sec. ..................  --15 calendar days
       712.7(a).                                       after change in
                                                       information.
    --Company information: Sec.  ..................  --30 calendar days
      712.7(c).                                        after change in
                                                       information.
    --Post-inspection letter:     ..................  --45 calendar days
     Sec.  712.7(d).                                  after receipt of
                                                       letter.

[[Page 137]]

 
Amended Report Sec.  712.7(b)..  Certification, 1-   --15 calendar days
                                   1, 1-3, A (as       after change in
                                   appropriate), B     information.
                                   (optional).
Amended Combined Declaration &    Certification, 1-   --15 calendar days
 Report.                           1, 1-2, 1-2A, 1-    after change in
                                   3, A (as            information.
                                   appropriate), B
                                   (optional).
------------------------------------------------------------------------



PART 713_ACTIVITIES INVOLVING SCHEDULE 2 CHEMICALS--Table of Contents




Sec.
713.1 Prohibition on exports and imports of Schedule 2 chemicals to and 
          from States not Party to the CWC.
713.2 Annual declaration requirements for plant sites that produce, 
          process or consume Schedule 2 chemicals in excess of specified 
          thresholds.
713.3 Annual declaration and reporting requirements for exports and 
          imports of Schedule 2 chemicals.
713.4 Advance declaration requirements for additionally planned 
          production, processing or consumption of Schedule 2 chemicals.
713.5 Amended declaration or report.
713.6 Declarations and reports returned without action by BIS.
713.7 Deadlines for submission of Schedule 2 declarations, reports, and 
          amendments.

Supplement No. 1 to Part 713--Schedule 2 Chemicals
Supplement No. 2 to Part 713--Deadlines for Submission of Schedule 2 
          Declarations, Reports, and Amendments

    Authority: 22 U.S.C. 6701 et seq.; 50 U.S.C. 1601 et seq.; 50 U.S.C. 
1701 et seq; 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.

    Source: 71 FR 24929, Apr. 27, 2006, unless otherwise noted.



Sec. 713.1  Prohibition on exports and imports of Schedule 2 chemicals to and 

from States not Party to the CWC.

    (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.
    Note to Sec. 713.1(a): See Sec. 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.

    (b) Paragraph (a) of this section does not apply to:
    (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;
    (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);
    (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
    (4) Products identified as consumer goods packaged for retail sale 
for personal use or packaged for individual use.



Sec. 713.2  Annual declaration requirements for plant sites that produce, 

process or consume Schedule 2 chemicals in excess of specified thresholds.

    (a) Declaration of production, processing or consumption of Schedule 
2 chemicals for purposes not prohibited by the CWC--(1) Quantities of 
production, processing or consumption that trigger declaration 
requirements. You must complete the forms specified in paragraph (b) of 
this section if you have been or will be involved in the following 
activities:
    (i) Annual declaration on past activities. (A) You produced, 
processed or consumed at one or more plants on

[[Page 138]]

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:
    (1) 1 kilogram of chemical BZ: 3-Quinuclidinyl benzilate (see 
Schedule 2, paragraph A.3 in Supplement No. 1 to this part);
    (2) 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
    (3) 1 metric ton of any chemical listed in Schedule 2, Part B (see 
Supplement No. 1 to this part).
    (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 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.

    Note to Sec. 713.2(a)(1)(i)(B): 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.

    (ii) Annual declaration on anticipated activities. 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)(1) through (3) of this section.

    Note to Sec. 713.2(a)(1)(ii): 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.

    (2) Schedule 2 chemical production. (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.
    (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.
    (3) Mixtures containing a Schedule 2 chemical--(i) Mixtures that 
must be counted. You must count the quantity of each Schedule 2 chemical 
in a mixture, when determining the total quantity of a Schedule 2 
chemical produced,

[[Page 139]]

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.
    (ii) How to count the quantity of each Schedule 2 chemical in a 
mixture. 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)(1) through (3) of 
this section.
    (iii) Determining declaration requirements for production, 
processing and consumption. 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)(1) through (3) 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 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.
    (b) Types of declaration forms to be used--(1) Annual declaration on 
past activities. 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)(1) through (3) 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.
    (2) Annual declaration on anticipated activities. 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)(1) through (3) of this section during the 
following calendar year. Form B is optional.
    (c) Quantities to be declared--(1) Production, processing and 
consumption of a Schedule 2 chemical above the declaration threshold--
(i) Annual declaration on past activities. 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

[[Page 140]]

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.
    (ii) Annual declaration on anticipated activities. 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)(1) through (3) 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.
    (2) Rounding. 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.
    (d) ``Declared'' Schedule 2 plant site. A plant site that submitted 
a declaration pursuant to paragraph (a)(1) of this section is a 
``declared'' plant site.
    (e) Declared Schedule 2 plant sites subject to initial and routine 
inspections. 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)(1) through 
(3) 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.



Sec. 713.3  Annual declaration and reporting requirements for exports and 

imports of Schedule 2 chemicals.

    (a) Declarations and reports of exports and imports of Schedule 2 
chemicals--(1) Declarations. 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.
    (2) Reports. 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:
    (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;
    (ii) An undeclared plant site;
    (iii) A trading company; or
    (iv) Any other person subject to the CWCR.

    Note to Sec. 713.3(a)(1) and (a)(2)(i): 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 Sec. 713.3(d) of 
the CWCR).
    Note to Sec. 713.3(a)(2): 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.
    Note to Sec. 713.3(a)(1) and (2): Declared and undeclared plant 
sites must count, for declaration or reporting purposes, all exports 
from and imports to the entire plant site, not only from or to 
individual plants on the plant site.


[[Page 141]]


    (b) Quantities of exports or imports that trigger a declaration or 
reporting requirement. (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:
    (i) 1 kilogram of chemical BZ: 3-Quinuclidinyl benzilate (See 
Schedule 2, paragraph A.3 included in Supplement No. 1 to this part);
    (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 and corresponding alkylated or 
protonated salts (see Schedule 2, paragraphs A.1 and A.2 included in 
Supplement No.1 to this part); or
    (iii) 1 metric ton of any chemical listed in Schedule 2, Part B (see 
Supplement No.1 to this part).
    (2) Mixtures containing a Schedule 2 chemical. 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.

    Note 1 to Sec. 713.3(b)(2): See Sec. 713.2(a)(2)(ii) of the CWCR 
for information on counting amounts of Schedule 2 chemicals contained in 
mixtures and determining declaration and reporting requirements.
    Note 2 to Sec. 713.3(b)(2): 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 Sec. 742.2, Sec. 
742.18 and Sec. 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)).

    (c) Declaration and reporting requirements--(1) Annual declaration 
on past activities. 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.
    (2) Annual report on exports and imports. 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.
    (d) Types of declaration and reporting forms to be used--(1) Annual 
declaration on past activities. 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 Sec. 
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.
    (2) Annual report on exports and imports. (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:
    (A) Submitting, with 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
    (B) Submitting, separately from 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.
    (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

[[Page 142]]

above the applicable threshold. Attach Form A, as appropriate; Form B is 
optional.
    (e) Quantities to be declared--(1) Calculations. 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.
    (2) Rounding. 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.



Sec. 713.4  Advance declaration requirements for additionally planned 

production, processing, or consumption of Schedule 2 chemicals.

    (a) Declaration requirements for additionally planned activities. 
(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:
    (i) You plan that a previously undeclared plant on your plant site 
under Sec. 713.2(a)(1)(ii) of the CWCR will produce, process, or 
consume a Schedule 2 chemical above the applicable declaration 
threshold;
    (ii) You plan to produce, process, or consume at a plant declared 
under Sec. 713.2(a)(1)(ii) of the CWCR an additional Schedule 2 
chemical above the applicable declaration threshold;
    (iii) You plan an additional activity (production, processing, or 
consumption) at your declared plant above the applicable declaration 
threshold for a chemical declared under Sec. 713.2(a)(1)(ii) of the 
CWCR;
    (iv) You plan to increase the production, processing, or consumption 
of a Schedule 2 chemical by a plant declared under Sec. 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 Sec. 716.1(b)(2) of the CWCR);
    (v) You plan to change the starting or ending date of anticipated 
production, processing, or consumption declared under Sec. 
713.2(a)(1)(ii) of the CWCR by more than three months; or
    (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 Sec. 713.2(a)(1)(ii) of the 
CWCR.
    (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:
    (i) Changes to the plant's production capacity;
    (ii) Changes or additions to the product group codes for the plant 
site or the plant(s);
    (iii) Changes to the plant's activity status (i.e., dedicated, 
multipurpose, or other status);
    (iv) Changes to the plant's multipurpose activities;
    (v) Changes to the plant site's status relating to domestic transfer 
of the chemical;
    (vi) Changes to the plant site's purposes for which the chemical 
will be produced, processed or consumed; or
    (vii) Changes to the plant site's status relating to exports of the 
chemical or the addition of new countries for export.
    (b) Declaration forms to be used. If you are required to declare 
additionally

[[Page 143]]

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.



Sec. 713.5  Amended declaration or report.

    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.
    (a) 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. You must submit an amended 
declaration or report to BIS within 15 days of any change in the 
following information:
    (1) Types of Schedule 2 chemicals produced, processed, or consumed;
    (2) Quantities of Schedule 2 chemicals produced, processed, or 
consumed;
    (3) Activities involving Schedule 2 chemicals (production, 
processing, consumption);
    (4) End-use of Schedule 2 chemicals (e.g., additional end-use(s));
    (5) Product group codes for Schedule 2 chemicals produced, 
processed, or consumed;
    (6) Production capacity for manufacturing a specific Schedule 2 
chemical at particular plant site;
    (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);
    (8) Domestic transfers (e.g., changes in the types of Schedule 2 
chemicals, types of destinations, or product group codes); and
    (9) Addition of new plant(s) for the production, processing, or 
consumption of Schedule 2 chemicals.
    (b) Changes to export or import information submitted in Annual 
Reports on Exports and Imports from undeclared plant sites, trading 
companies and U.S. persons. 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:
    (1) Types of Schedule 2 chemicals exported or imported (additional 
Schedule 2 chemicals);
    (2) Quantities of Schedule 2 chemicals exported or imported;
    (3) Destination(s) of Schedule 2 chemicals exported; and
    (4) Source(s) of Schedule 2 chemicals imported.
    (c) 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--(1) 
Internal company changes. You must submit an amended declaration or 
report to BIS within 30 days of any change in the following information:
    (i) Name of declaration/report point of contact (D-POC), including 
telephone number, facsimile number, and e-mail address;
    (ii) Name(s) of inspection point(s) of contact (I-POC), including 
telephone number(s), facsimile number(s) and e-mail address(es);
    (iii) Company name (see paragraph (c)(2) of this section for other 
company changes);
    (iv) Company mailing address;
    (v) Plant site name;
    (vi) Plant site owner, including telephone number, and facsimile 
number;
    (vii) Plant site operator, including telephone number, and facsimile 
number;
    (viii) Plant name;
    (ix) Plant owner, including telephone number, and facsimile number; 
and
    (x) Plant operator, including telephone number and facsimile number.
    (2) Change in ownership of company, plant site, or plant. If you 
sold or 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

[[Page 144]]

change or within 30 days after the effective date of the change. The 
amended declaration or report must include the following information:
    (i) Information that must be submitted to BIS by the company selling 
a declared plant site:
    (A) Name of seller (i.e., name of the company selling a declared 
plant site);
    (B) Name of the declared plant site and U.S. Code Number for that 
plant site;
    (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;
    (D) Date of ownership transfer or change;
    (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
    (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 plant site or trading company.
    (1) 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.
    (2) 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 Sec. 713.2(a)(1)(i)(A)(1) through 
(3) and Sec. 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.
    (3) 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 Sec. 713.2(a)(1)(i)(A)(1) through (3) of the 
CWCR, BIS will return the declarations without action as set forth in 
Sec. 713.6 of the CWCR.
    (4) If part-year reports submitted by the previous owner and the new 
owner are not, when combined, above the thresholds in Sec. Sec. 
713.3(b)(1)(i) through (iii) of the CWCR, BIS will return the reports 
without action as set forth in Sec. 713.6 of the CWCR.
    (ii) Information that must be submitted to BIS by the company 
purchasing a declared plant site:
    (A) Name of purchaser (i.e., name of individual or company 
purchasing a declared plant site);
    (B) Mailing address of purchaser;
    (C) Name of declaration point of contact (D-POC) for the purchaser, 
including telephone number, facsimile number, and e-mail address;
    (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);
    (E) Name of the declared plant site and U.S. Code Number for that 
plant site;
    (F) Location of the declared plant site;
    (G) Owner of the declared plant site, including telephone number, 
and facsimile number;
    (H) Operator of the declared plant site, including telephone number, 
and facsimile number;
    (I) Name of plant(s) where Schedule 2 activities exceed the 
applicable declaration threshold;
    (J) Owner and operator of plant(s) where Schedule 2 activities 
exceed the applicable declaration threshold, including telephone 
numbers, and facsimile numbers;
    (K) Location of the plant where Schedule 2 activities exceed the 
applicable declaration threshold; and
    (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

[[Page 145]]

owned the plant site or trading company.

    Note 1 to Sec. 713.5(c): 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.
    Note 2 to Sec. 713.5(c): You may notify BIS of change in ownership 
via a letter to the address given in Sec. 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.
    Note 3 to Sec. 713.5(c): 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.

    (d) Inspection-related amendments. 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 inspection report, BIS 
will notify you in writing of the information that will be required 
pursuant to Sec. Sec. 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.
    (e) Non-substantive changes. 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.
    (f) Documentation required for amended declarations or reports. 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:
    (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
    (2) Both of the following:
    (i) A new Certification Form; and
    (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.



Sec. 713.6  Declarations and reports returned without action by BIS.

    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.



Sec. 713.7  Deadlines for submission of Schedule 2 declarations, reports, and 

amendments.

    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:
    (a) Annual declaration on past activities (production, processing, 
or consumption of Schedule 2 chemicals during the previous calendar 
year);
    (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);
    (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);
    (d) Annual declaration on anticipated activities (production, 
processing or consumption) involving Schedule 2

[[Page 146]]

chemicals during the next calendar year;
    (e) Declaration on Additionally Planned Activities (production, 
processing or consumption) involving Schedule 2 chemicals; and
    (f) Amended declaration and report, including combined declaration 
and report.



         Sec. Supplement No. 1 to Part 713--Schedule 2 Chemicals

------------------------------------------------------------------------
                                                          (CAS registry
                                                             number)
------------------------------------------------------------------------
A. Toxic chemicals:
    (1) Amiton: O,O-Diethyl S-[2-(diethylamino)ethyl]          (78-53-5)
     phosphorothiolate and corresponding alkylated or
     protonated salts..................................
    (2) PFIB: 1,1,3,3,3-Pentafluoro-2-(trifluoromethyl)-      (382-21-8)
     1-propene.........................................
    (3) BZ: 3-Quinuclidinyl benzilate..................      (6581-06-2)
B. Precursors:
    (4) Chemicals, except for those listed in Schedule        (676-97-1)
     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.......................
        Dimethyl methylphosphonate.....................       (756-79-6)
        Exemption: Fonofos: O-Ethyl S-phenyl                  (944-22-9)
         ethylphosphono-thiolothionate.................
    (5) N,N-Dialkyl (Me, Et, n-Pr or i-Pr)
     phosphoramidic dihalides
    (6) Dialkyl (Me, Et, n-Pr or i-Pr) N,N-dialkyl (Me,
     Et, n-Pr or i-Pr)-phosphoramidates
    (7) Arsenic trichloride............................      (7784-34-1)
    (8) 2,2-Diphenyl-2-hydroxyacetic acid..............        (76-93-7)
    (9) Quinuclidine-3-ol..............................      (1619-34-7)
    (10) N,N-Dialkyl (Me, Et, n-Pr or i-Pr) aminoethyl-
     2-chlorides and corresponding protonated salts
    (11) N,N-Dialkyl (Me, Et, n-Pr or i-Pr) aminoethane-
     2-ols and corresponding protonated salts
        Exemptions: N,N-Dimethylaminoethanol and              (108-01-0)
         corresponding protonated salts................
        N,N-Diethylaminoethanol and corresponding             (100-37-8)
         protonated salts..............................
    (12) N,N-Dialkyl (Me, Et, n-Pr or i-Pr) aminoethane-
     2-thiols and corresponding protonated salts
    (13) Thiodiglycol: Bis(2-hydroxyethyl)sulfide......       (111-48-8)
    (14) Pinacolyl alcohol: 3,3-Dimethylbutane-2-ol....      (464-07-3)
------------------------------------------------------------------------
Notes to Supplement No. 1
Note 1: 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).
Note 2: 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).



Sec. Supplement No. 2 to Part 713--Deadlines for Submission of Schedule 

                 2 Declarations, Reports, and Amendments

------------------------------------------------------------------------
    Declarations and reports       Applicable forms        Due dates
------------------------------------------------------------------------
Annual Declaration on Past        Certification, 2-   February 28 of the
 Activities (previous calendar     1, 2-2, 2-3, 2-     year following
 year)--Declared plant site        3A, 2-3B (if also   any calendar year
 (production, processing, or       exported or         in which the
 consumption).                     imported), A (as    production,
                                   appropriate), B     processing, or
                                   (optional).         consumption of a
                                                       Schedule 2
                                                       chemical exceeded
                                                       the applicable
                                                       declaration
                                                       thresholds in
                                                       Sec.
                                                       713.2(a)(1)(i) of
                                                       the CWCR.
Annual Report on Exports and      Certification, 2-   February 28 of the
 Imports (previous calendar        1, 2-3B, A (as      year following
 year)--Plant site, trading        appropriate), B     any calendar year
 company, other persons.           (optional).         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 Sec.
                                                         713.3(a)(2) of
                                                       the CWCR)
                                                       exceeded the
                                                       applicable
                                                       thresholds in
                                                       Sec.
                                                       713.3(b)(1) of
                                                       the CWCR.
Combined Declaration & Report--   Certification, 2-   February 28 of the
 Declared plant site               1, 2-2, 2-3, 2-     year following
 (production, processing, or       3A, 2-3B, A (as     any calendar year
 consumption; exports and          appropriate), B     in which the
 imports).                         (optional).         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
                                                       Sec. Sec.
                                                       713.2(a)(1)(i)
                                                       and 713.3(b)(1),
                                                       respectively, of
                                                       the CWCR.

[[Page 147]]

 
Annual Declaration on             Certification, 2-   September 3 of the
 Anticipated Activities (next      1, 2-2, 2-3, 2-     year prior to any
 calendar year).                   3A, 2-3C, A (as     calendar year in
                                   appropriate), B     which Schedule 2
                                   (optional).         activities are
                                                       anticipated to
                                                       occur.
Declaration on Additionally       Certification, 2-   15 calendar days
 Planned Activities (production,   1, 2-2, 2-3, 2-     before the
 processing and consumption).      3A, 2-3C, A (as     additionally
                                   appropriate), B     planned activity
                                   (optional).         begins.
Amended Declaration.............  Certification, 2-
                                   1, 2-2, 2-3 2-3A,
                                   2-3B (if also
                                   exported or
                                   imported), A (as
                                   appropriate), B
                                   (optional).
    --Declaration information...  ..................  --15 calendar days
                                                       after change in
                                                       information.
    --Company information.......  ..................  --30 calendar days
                                                       after change in
                                                       information.
    --Post-inspection letter....  ..................  --45 calendar days
                                                       after receipt of
                                                       letter.
Amended Report..................  Certification, 2-   --15 calendar days
                                   1, 2-3B, A (as      after change in
                                   appropriate), B     information.
                                   (optional).
Amended Combined Declaration &    Certification, 2-   --15 calendar days
 Report.                           1, 2-2, 2-3, 2-     after change in
                                   3A, 2-3B, A (as     information.
                                   appropriate), B
                                   (optional).
------------------------------------------------------------------------



PART 714_ACTIVITIES INVOLVING SCHEDULE 3 CHEMICALS--Table of Contents




Sec.
714.1 Annual declaration requirements for plant sites that produce a 
          Schedule 3 chemical in excess of 30 metric tons.
714.2 Annual reporting requirements for exports and imports in excess of 
          30 metric tons of Schedule 3 chemicals.
714.3 Advance declaration requirements for additionally planned 
          production of Schedule 3 chemicals.
714.4 Amended declaration or report.
714.5 Declarations and reports returned without action by BIS.
714.6 Deadlines for submission of Schedule 3 declarations, reports, and 
          amendments.

Supplement No. 1 to Part 714--Schedule 3 Chemicals
Supplement No. 2 to Part 714--Deadlines for Submission of Schedule 3 
          Declarations, Reports, and Amendments

    Authority: 22 U.S.C. 6701 et seq.; E.O. 13128, 64 FR 36703, 3 CFR 
1999 Comp., p. 199.

    Source: 71 FR 24929, Apr. 27, 2006, unless otherwise noted.



Sec. 714.1  Annual declaration requirements for plant sites that produce a 

Schedule 3 chemical in excess of 30 metric tons.

    (a) Declaration of production of Schedule 3 chemicals for purposes 
not prohibited by the CWC--(1) Production quantities that trigger the 
declaration requirement. 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:
    (i) Annual declaration on past activities. 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.
    (ii) Annual declaration on anticipated activities. 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.
    (2) Schedule 3 chemical production. (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.
    (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.
    (3) Mixtures containing a Schedule 3 chemical--(i) When you must 
count the quantity of a Schedule 3 chemical in a mixture for declaration 
purposes. 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

[[Page 148]]

volume or by weight, whichever yields the lesser percent.
    (ii) How to count the amount of a Schedule 3 chemical in a mixture. 
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.
    (b) Types of declaration forms to be used--(1) Annual declaration on 
past activities. 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.
    (2) Annual declaration on anticipated activities. 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.
    (c) Quantities to be declared--(1) Production of a Schedule 3 
chemical in excess of 30 metric tons. 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 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.
    (2) Rounding. 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.
    (d) ``Declared'' Schedule 3 plant site. A plant site that submitted 
a declaration pursuant to paragraph (a)(1) of this section is a 
``declared'' Schedule 3 plant site.
    (e) Routine inspections of declared Schedule 3 plant sites. 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:
    (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
    (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.



Sec. 714.2  Annual reporting requirements for exports and imports in excess of 

30 metric tons of Schedule 3 chemicals.

    (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.
    (1) Annual report on exports and imports. 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.

    Note 1 to Sec. 714.2(a)(1): 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.
    Note 2 to Sec. 714.2(a)(1): 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.

    (2) Mixtures containing a Schedule 3 chemical. The quantity of a 
Schedule 3 chemical contained in a mixture must be counted for reporting 
an export or

[[Page 149]]

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.

    Note to Sec. 714.2(a)(2): 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)).

    (b) Types of forms to be used.--(1) Declared Schedule 3 plant sites. 
(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:
    (A) Completing question 3-3.3 on Form 3-3 on your declaration for 
that same Schedule 3 chemical; or
    (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.
    (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:
    (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
    (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.
    (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.
    (c) Quantities to be reported--(1) Calculations. 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.
    (2) Rounding. 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.

    Note to Sec. 714.2(c): 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 not submit your company-specific information 
relating to the export or import of a Schedule 3 chemical reported under 
this Sec. 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.



Sec. 714.3  Advance declaration requirements for additionally planned 

production of Schedule 3 chemicals.

    (a) Declaration requirements. (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:
    (i) You plan that a previously undeclared plant on your plant site 
under Sec. 714.1(a)(1)(ii) of the CWCR will produce a Schedule 3 
chemical above the declaration threshold;
    (ii) You plan to produce at a plant declared under Sec. 
714.1(a)(1)(ii) of the CWCR an additional Schedule 3 chemical above the 
declaration threshold;
    (iii) You plan to increase the production of a Schedule 3 chemical 
by declared plants on your plant site from

[[Page 150]]

the amount exceeding the applicable declaration threshold to an amount 
exceeding the applicable inspection threshold (see Sec. 716.1(b)(3) of 
the CWCR); or
    (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 Sec. 714.1(a)(1)(ii) of the CWCR.
    (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.
    (b) Declaration forms to be used. 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.



Sec. 714.4  Amended declaration or report.

    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 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.
    (a) 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. 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:
    (1) Types of Schedule 3 chemicals produced (e.g., production of 
additional Schedule 3 chemicals);
    (2) Production range (e.g., from 30 to 200 metric tons to above 200 
to 1000 metric tons) of Schedule 3 chemicals;
    (3) Purpose of Schedule 3 chemical production (e.g., additional end-
uses); or
    (4) Addition of new plant(s) for production of Schedule 3 chemicals.
    (b) Changes to export or import information submitted in Annual 
Reports on Exports and Imports from undeclared plant sites, trading 
companies and U.S. persons. 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:
    (1) Types of Schedule 3 chemicals exported or imported (additional 
Schedule 3 chemicals);
    (2) Quantities of Schedule 3 chemicals exported or imported;
    (3) Destination(s) of Schedule 3 chemicals exported; and
    (4) Source(s) of Schedule 3 chemicals imported.
    (c) 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--(1) Internal company changes. You must 
submit an amended declaration or report to BIS within 30 days of any 
change in the following information:
    (i) Name of declaration/report point of contact (D-POC), including 
telephone number, facsimile number, and e-mail address;
    (ii) Name(s) of inspection point(s) of contact (I-POC), including 
telephone number, and facsimile number, and e-mail address(es);
    (iii) Company name (see 714.4(c)(2) for other company changes);
    (iv) Company mailing address;
    (v) Plant site name;
    (vi) Plant site owner, including telephone number and facsimile 
number;
    (vii) Plant site operator, including telephone number and facsimile 
number;
    (viii) Plant name;

[[Page 151]]

    (xi) Plant owner, including telephone number and facsimile number; 
and
    (x) Plant operator, including telephone number and facsimile number.
    (2) Change in ownership of company, plant site, or plant. 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.
    (i) Information that must be submitted to BIS by a company selling a 
declared plant site:
    (A) Name of seller (i.e., name of the company selling a declared 
plant site);
    (B) Name of declared plant site and U.S. Code Number for that plant 
site;
    (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;
    (D) Date of ownership transfer;
    (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
    (F) Details regarding 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 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.
    (1) 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.
    (2) 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 Sec. 714.1(a)(1) and 
Sec. 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.
    (3) 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 Sec. 714.1(a)(1) of the CWCR, BIS will return 
the declarations without action as set forth in Sec. 714.5 of the CWCR.
    (4) If part-year reports are not, when combined, above the reporting 
threshold set forth in Sec. 714.2(a)(1) of the CWCR, BIS will return 
the reports without action as set forth in Sec. 714.5 of the CWCR.
    (ii) Information that must be submitted to BIS by the company 
purchasing a declared plant site:
    (A) Name of purchaser (i.e., name of individual or company 
purchasing a declared plant site);
    (B) Mailing address of purchaser;
    (C) Name of declaration point of contact (D-POC) for the purchaser, 
including telephone number, facsimile number, and e-mail address;
    (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);
    (E) Name of the declared plant site and U.S. Code Number for that 
plant site;
    (F) Location of the declared plant site;
    (G) Operator of the declared plant site, including telephone number, 
and facsimile number;
    (H) Name of plant where Schedule 3 production exceeds the 
declaration threshold;
    (I) Owner of plant where Schedule 3 production exceeds the 
declaration threshold;
    (J) Operator of plant where Schedule 3 production exceeds the 
declaration threshold; and
    (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

[[Page 152]]

declarations or reports for the periods of the calendar year during 
which each owned the plant site or trading company.

    Note 1 to Sec. 714.4(c): 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.
    Note 2 to Sec. 714.4(c): You may notify BIS of change in ownership 
via a letter to the address given in Sec. 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.
    Note 3 to Sec. 714.4(c): 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.

    (d) Inspection-related amendments. 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 inspection report, BIS 
will notify you in writing of the information to be amended pursuant to 
Sec. Sec. 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.
    (e) Non-substantive changes. 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.
    (f) Documentation required for amended declarations or reports. 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:
    (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
    (2) Both of the following:
    (i) A new Certification Form; and
    (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.



Sec. 714.5  Declarations and reports returned without action by BIS.

    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.



Sec. 714.6  Deadlines for submission of Schedule 3 declarations, reports, and 

amendments.

    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:
    (a) Annual declaration on past activities (production of Schedule 3 
chemicals during the previous calendar year);
    (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);
    (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);
    (d) Annual declaration on anticipated activities (anticipated 
production of

[[Page 153]]

Schedule 3 chemicals during the next calendar year);
    (e) Declaration on Additionally Planned Activities (additionally 
planned production of Schedule 3 chemicals); and
    (f) Amended declaration and report, including combined declaration 
and report.



         Sec. Supplement No. 1 to Part 714--Schedule 3 Chemicals

------------------------------------------------------------------------
                                                          (CAS registry
                                                             number)
------------------------------------------------------------------------
A. Toxic chemicals:
    (1) Phosgene: Carbonyl dichloride..................        (75-44-5)
    (2) Cyanogen chloride..............................       (506-77-4)
    (3) Hydrogen cyanide...............................        (74-90-8)
    (4) Chloropicrin: Trichloronitromethane............        (76-06-2)
B. Precursors:
    (5) Phosphorus oxychloride.........................     (10025-87-3)
    (6) Phosphorus trichloride.........................      (7719-12-2)
    (7) Phosphorus pentachloride.......................     (10026-13-8)
    (8) Trimethyl phosphite............................       (121-45-9)
    (9) Triethyl phosphite.............................       (122-52-1)
    (10) Dimethyl phosphite............................       (868-85-9)
    (11) Diethyl phosphite.............................       (762-04-9)
    (12) Sulfur monochloride...........................     (10025-67-9)
    (13) Sulfur dichloride.............................     (10545-99-0)
    (14) Thionyl chloride..............................      (7719-09-7)
    (15) Ethyldiethanolamine...........................       (139-87-7)
    (16) Methyldiethanolamine..........................       (105-59-9)
    (17) Triethanolamine...............................      (102-71-6)
------------------------------------------------------------------------
Note to Supplement No. 1: 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.



Sec. Supplement No. 2 to Part 714--Deadlines for Submission of Schedule 
                 3 Declarations, Reports, and Amendments

------------------------------------------------------------------------
          Declarations             Applicable forms        Due dates
------------------------------------------------------------------------
Annual Declaration on Past        Certification, 3-   February 28 of the
 Activities (previous calendar     1, 3-2, 3-3 (if     year following
 year)--Declared plant site        also exported or    any calendar year
 (production).                     imported), A (as    in which the
                                   appropriate), B     production of a
                                   (optional).         Schedule 3
                                                       chemical exceeded
                                                       the declaration
                                                       threshold in Sec.
                                                         714.1(a)(1)(i)
                                                       of the CWCR.
Annual Report on Exports and      Certification, 3-   February 28 of the
 Imports (previous calendar        1, 3-3.3 and 3-     year following
 year)--Plant site, trading        3.4, A (as          any calendar year
 company, other persons.           appropriate), B     in which exports
                                   (optional).         or imports of a
                                                       Schedule 3
                                                       chemical by a
                                                       plant site,
                                                       trading company,
                                                       or other person
                                                       subject to the
                                                       CWCR (as
                                                       described in Sec.
                                                         714.2(a) of the
                                                       CWCR) exceeded
                                                       the threshold in
                                                       Sec.  714.2(a)
                                                       of the CWCR.
Combined Declaration & Report...  Certification, 3-   February 28 of the
                                   1, 3-2, and 3-3,    year following
                                   A (as               any calendar year
                                   appropriate), B     in which the
                                   (optional).         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
                                                       Sec. Sec.
                                                       714.1(a)(1)(i)
                                                       and 714.2(a),
                                                       respectively, of
                                                       the CWCR.
Annual Declaration on             Certification, 3-   September 3 of the
 Anticipated Activities            1, 3-2, 3-3.2, A    year prior to any
 (Production) (next calendar       (as appropriate),   calendar year in
 year).                            B (optional).       which Schedule 3
                                                       production is
                                                       anticipated to
                                                       occur.
Declaration on Additionally       Certification, 3-   15 calendar days
 Planned Activities.               1, 3-3.1 and 3-     before the
                                   3.2, A (as          additionally
                                   appropriate), B     planned activity
                                   (optional).         begins.
Amended Declaration.............  Certification, 3-
                                   1, 3-2, 3-3.
    --Declaration information...  ..................  --15 calendar days
                                                       after change in
                                                       information.
    --Company information.......  ..................  --30 calendar days
                                                       after change in
                                                       information.
    --Post-inspection letter....  ..................  --45 calendar days
                                                       after receipt of
                                                       letter.
Amended Report..................  Certification, 3-   --15 calendar days
                                   1, 3-2, 3-3, A      after change in
                                   (as appropriate),   information.
                                   B (optional).

[[Page 154]]

 
Amended Combined Declaration &    Certification, 3-   --15 calendar days
 Report.                           1, 3-2, 3-3, A      after change in
                                   (as appropriate),   information.
                                   B (optional).
------------------------------------------------------------------------



PART 715_ACTIVITIES INVOLVING UNSCHEDULED DISCRETE ORGANIC CHEMICALS (UDOCs)--

Table of Contents




Sec.
715.1 Annual declaration requirements for production by synthesis of 
          unscheduled discrete organic chemicals (UDOCs).
715.2 Amended declaration.
715.3 Declarations returned without action by BIS.
715.4 Deadlines for submitting UDOC declarations, No Changes 
          Authorization Forms, Change in Inspection Status Forms, and 
          amendments.

Supplement No. 1 to Part 715--Definition of an Unscheduled Discrete 
          Organic Chemical
Supplement No. 2 to Part 715--Examples of Unscheduled Discrete Organic 
          Chemicals (UDOCS) and UDOC Production
Supplement No. 3 to Part 715--Deadlines for Submission of Declarations, 
          No Changes Authorization Forms, Amendments for Unscheduled 
          Discrete Organic Chemical (UDOC) Facilities, and Change in 
          Inspection Status Forms

    Authority: 22 U.S.C. 6701 et seq.; E.O. 13128, 64 FR 36703, 3 CFR 
1999 Comp., p. 199.

    Source: 71 FR 24929, Apr. 27, 2006, unless otherwise noted.



Sec. 715.1  Annual declaration requirements for production by synthesis of 

unscheduled discrete organic chemicals (UDOCs).

    (a) Declaration of production by synthesis of UDOCs for purposes not 
prohibited by the CWC--(1) Production quantities that trigger the 
declaration requirement. See Sec. 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:
    (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
    (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.

    Note to Sec. 715.1(a)(1)(ii): 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.

    (2) UDOCs subject to declaration requirements under this part. (i) 
UDOCs subject to declaration requirements under this part are those 
produced by synthesis that have been isolated for:
    (A) Use; or
    (B) Sale as a specific end product.
    (ii) Exemptions. (A) Polymers and oligomers consisting of two or 
more repeating units;
    (B) Chemicals and chemical mixtures produced through a biological or 
biomediated process;
    (C) Products from the refining of crude oil, including sulfur-
containing crude oil;
    (D) Metal carbides (i.e., chemicals consisting only of metal and 
carbon); and
    (E) UDOCs produced by synthesis that are ingredients or by-products 
in foods designed for consumption by humans and/or animals.

    Note to Sec. 715.1(a)(2): 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.

    (3) Exemptions for UDOC plant sites. 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:
    (i) Hydrocarbon means any organic compound that contains only carbon 
and hydrogen; and
    (ii) Explosive means a chemical (or a mixture of chemicals) that is 
included in Class 1 of the United Nations Organization hazard 
classification system.

[[Page 155]]

    (b) Types of declaration forms to be used--(1) Annual declaration on 
past activities. You must complete the Certification Form and Form UDOC 
(consisting of two pages), unless there are no changes from the previous 
year's declaration and you submit a No Changes Authorization Form 
pursuant to paragraph (b)(2) of this section. Attach Form A as 
appropriate; Form B is optional.

    Note to Sec. 715.1(b)(1): If there is a change in the inspection 
status of your plant site, as described in paragraph (d)(2) of this 
section, you may submit an Annual Declaration on Past Activities, in 
lieu of a Change in Inspection Status Form, under the circumstances 
described in Note 3 to paragraph (d)(2). In this case, the due date for 
submitting the Annual Declaration on Past Activities to BIS, covering 
UDOC production at your plant site during the current calendar year, 
would be December 15th of the current calendar year, instead of February 
28th of the next calendar year (also see Supplement No. 3 to this part). 
If you choose to submit your Annual Declaration on Past Activities to 
BIS by December 15th and, subsequently, you determine that the 
production by synthesis of UDOCs at your plant site actually exceeded 
the UDOC inspection threshold level specified in paragraph (d)(1) of 
this section, you must submit an amendment to your Annual Declaration on 
Past Activities (see Sec. 715.2 of the CWCR) and indicate, on Form B, 
the reason your plant site exceeded the UDOC inspection threshold.

    (2) No Changes Authorization Form. You may complete the No Changes 
Authorization Form 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.

    Note to Sec. 715.1(b)(2): If, after submitting the No Changes 
Authorization Form, you have changes to information, you must submit a 
complete amendment to the annual declaration on past activities. See 
Sec. 715.2 of the CWCR.

    (c) ``Declared'' UDOC plant site. A plant site that submitted a 
declaration pursuant to paragraph (a)(1) of this section is a 
``declared'' UDOC plant site.
    (d) Routine inspections of declared UDOC plant sites--(1) Inspection 
requirement. A ``declared'' UDOC plant site is subject to routine 
inspection by the Organization for the Prohibition of Chemical Weapons 
(OPCW) (see part 716 of the CWCR) if it produced by synthesis more than 
200 metric tons aggregate of UDOCs during the previous calendar year.
    (2) Change in inspection status. You may complete the Change in 
Inspection Status Form, to ensure that your facility does not remain 
subject to inspection during the first 90 days of the next calendar year 
(i.e., prior to the submission of the U.S. declaration to the OPCW), if:
    (i) Your plant site is currently subject to inspection, pursuant to 
paragraph (d)(1) of this section, based on your plant site's production 
by synthesis of UDOCs during the previous calendar year; and
    (ii) Your plant site's production by synthesis of UDOCs in the 
current calendar year will be below the inspection threshold level 
specified in paragraph (d)(1) of this section by the deadline indicated 
in Supplement No. 3 to this part, and is anticipated to remain below 
that threshold level through the remainder of the current calendar year.

    Note 1 to Sec. 715.1(d)(2): Upon receipt of the Change in 
Inspection Status Form, BIS will inform the Organization for the 
Prohibition of Chemical Weapons (OPCW) that your plant site is not 
subject to inspection during the next calendar year.
    Note 2 to Sec. 715.1(d)(2): If, after submitting your Change in 
Inspection Status Form to BIS, you determine that the production by 
synthesis of UDOCs at your plant site actually exceeded the UDOC 
inspection threshold level specified in paragraph (d)(1) of this 
section, you must indicate this fact when you submit your Annual 
Declaration on Past Activities to BIS and indicate, on Form B, the 
reason your plant site exceeded the UDOC inspection threshold.
    Note 3 to Sec. 715.1(d)(2): You may submit the Annual Declaration 
on Past Activities described in paragraph (b)(1) of this section, 
instead of the Change in Inspection Status Form, if you anticipate that 
UDOC production at your plant site during the current calendar year will 
be below the inspection threshold level specified in paragraph (d)(1) of 
this section, but you expect your plant site to remain subject to the 
UDOC declaration requirements in paragraph (a)(1) of this

[[Page 156]]

section. In this case, the due date for the Annual Declaration on Past 
Activities will be December 15th of the current calendar year, instead 
of February 28th of the next calendar year. Note that any changes to 
information contained in the Annual Declaration on Past Activities must 
be addressed in accordance with the amendment requirements in Sec. 
715.2 of the CWCR. For example, if subsequent to the submission of your 
Annual Declaration on Past Activities to BIS on December 15th, you 
determine that the production by synthesis of UDOCs at your plant site 
actually exceeded the UDOC inspection threshold level specified in 
paragraph (d)(1) of this section, you must submit an amendment to your 
Annual Declaration on Past Activities (see Sec. 715.2 of the CWCR) and 
indicate, on Form B, the reason your plant site exceeded the UDOC 
inspection threshold.
    Note 4 to Sec. 715.1(d)(2): Currently inspectable UDOC plant sites 
that do not submit either a Change in Inspection Status Form or Annual 
Declaration of Past Activities by December 15th of the current calendar 
year, in accordance with paragraph (d)(2) of this section, will remain 
subject to inspection through at least the 90-day period at the 
beginning of the next calendar year.

[71 FR 24929, Apr. 27, 2006, as amended at 72 FR 14408, Mar. 28, 2007]



Sec. 715.2  Amended declaration.

    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.
    (a) Changes to information that directly affects a declared plant 
site's Annual Declaration of Past Activities (ADPA) which was previously 
submitted to BIS. You must submit an amended declaration to BIS within 
15 days of any change in the following information:
    (1) Product group codes for UDOCs produced in quantities exceeding 
the applicable declaration threshold specified in Sec. 715.1(a)(1) of 
the CWCR;
    (2) Approximate number of plants at the declared plant site that 
produced any amount of UDOCs (including all PSF chemicals);
    (3) Aggregate amount of production (by production range) of UDOCs 
produced by all plants at the declared plant site;
    (4) Exact number of plants at the declared plant site that 
individually produced more than 30 metric tons of a single PSF chemical; 
and
    (5) Production range of each plant at the declared plant site that 
individually produced more than 30 metric tons of a single PSF chemical.
    (b) Changes to company and plant site information submitted in the 
ADPA that must be maintained by BIS--(1) Internal company changes. You 
must submit an amended declaration to BIS within 30 days of any change 
in the following information:
    (i) Name of declaration point of contact (D-POC), including 
telephone number, facsimile number, and e-mail address;
    (ii) Name(s) of inspection point(s) of contact (I-POC), including 
telephone number, facsimile number(s) and e-mail address(es);
    (iii) Company name (see 715.2(b)(2) for other company changes);
    (iv) Company mailing address;
    (v) Plant site name;
    (vi) Plant site owner, including telephone number and facsimile 
number; and
    (vii) Plant site operator, including telephone number and facsimile 
number.
    (2) Change in ownership of company or plant site. 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.
    (i) Information that must be submitted to BIS by the company selling 
a declared plant site:
    (A) Name of seller (i.e., name of company selling a declared plant 
site);
    (B) Name of declared plant site name and U.S. Code Number for that 
plant site;
    (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;

[[Page 157]]

    (D) Date of ownership transfer or change;
    (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
    (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.
    (1) 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 the year during which the previous owner owned the 
plant site.
    (2) 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 Sec. 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.
    (3) 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 Sec. 715.1(a)(1) of the CWCR, BIS will return 
the declarations without action as set forth in Sec. 715.3 of the CWCR.
    (ii) Information that must be submitted to BIS by the company 
purchasing a declared plant site:
    (A) Name of purchaser (i.e., name of individual or company 
purchasing a declared plant site);
    (B) Mailing address of purchaser;
    (C) Name of declaration point of contact (D-POC) for the purchaser, 
including telephone number, facsimile number, and e-mail address;
    (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);
    (E) Name of the declared plant site and U.S. Code Number for that 
plant site;
    (F) Location of the declared plant site;
    (G) Name of plant site where the production of UDOCs exceeds the 
applicable declaration threshold;
    (H) Owner of plant site where the production of UDOCs exceeds the 
applicable declaration threshold, including telephone number and 
facsimile number;
    (I) Operator of plant site where the production of UDOCs exceeds the 
applicable declaration threshold, including telephone number and 
facsimile number; and
    (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.

    Note 1 to Sec. 715.2(b): 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.
    Note 2 to Sec. 715.2(b): You may notify BIS of change in ownership 
via a letter to the address given in Sec. 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.
    Note 3 to Sec. 715.2(b): 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.

    (c) Inspection-related amendments. 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

[[Page 158]]

of the information that will be required pursuant to Sec. Sec. 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.
    (d) Non-substantive changes. 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.
    (e) Documentation required for amended declarations. 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:
    (1) A letter containing all of the corrected information required, 
in accordance with the provisions of this section, to amend your 
declaration; or
    (2) Both of the following:
    (i) A new Certification Form; and
    (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.



Sec. 715.3  Declarations returned without action by BIS.

    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.



Sec. 715.4  Deadlines for submitting UDOC declarations, No Changes 

Authorization Forms, Change in Inspection Status Forms, and amendments.

    Declarations, No Changes Authorization Forms, Change in Inspection 
Status 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:
    (a) Annual Declaration on Past Activities (UDOC production during 
the previous calendar year);
    (b) No Changes Authorization Form (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
    (c) Change in Inspection Status Form--May be completed and submitted 
to BIS if your plant site is currently subject to inspection, pursuant 
to Sec. 715.1(d)(1) of the CWCR, and you anticipate that the production 
of UDOCs at your plant site during the current calendar year will remain 
below the inspection threshold level indicated therein (i.e., 200 metric 
tons aggregate); and
    (d) Amended declaration.

[71 FR 24929, Apr. 27, 2006, as amended at 72 FR 14408, Mar. 28, 2007]



Sec. Supplement No. 1 to Part 715--Definition of an Unscheduled Discrete 
                            Organic Chemical

    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.

    Note: Carbon oxides consist of chemical compounds that contain only 
the elements carbon and oxygen and have the chemical formula 
CXOy, where x and y denote integers. The two most 
common carbon oxides are carbon monoxide (CO) and carbon dioxide 
(CO2). Carbon sulfides consist of chemical compounds that 
contain only the elements carbon and sulfur, and have the chemical 
formula CaSb, where a and b denote integers. The 
most common carbon sulfide is carbon disulfide (CS2). 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

[[Page 159]]

have the chemical formula Md(CO3)e, 
where d and e denote integers and M represents a metal. Common metal 
carbonates are sodium carbonate (Na2CO3) and 
calcium carbonate (CaCO3). In addition, metal 
carbides or other compounds consisting of only a metal, as described in 
this Note, and carbon (e.g., calcium carbide 
(CaC2)), are exempt from declaration requirements 
(see Sec. 715.1(a)(2)(ii)(D) of the CWCR).



  Sec. Supplement No. 2 to Part 715--Examples of Unscheduled Discrete 

              Organic Chemicals (UDOCs) and UDOC Production

    (1) Examples of UDOCs not subject to declaration include:
    (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;
    (ii) UDOCs, contained in mixtures, which are produced coincidentally 
and not isolated for use or sale as a specific end-product;
    (iii) UDOCs produced by recycling (i.e., involving one of the 
processes listed in paragraph (3) of this supplement) of previously 
declared UDOCs;
    (iv) UDOCs produced by the mixing (i.e., the process of combining or 
blending into one mass) of previously declared UDOCs; and
    (v) UDOCs that are intermediates and that are used in a single or 
multi-step process to produce another declared UDOC.
    (2) Examples of UDOCs that you must declare under part 715 of the 
CWCR include, but are not limited to, the following, unless they are not 
isolated for use or sale as a specific end product:
    (i) Acetophenone (CAS 98-86-2);
    (ii) 6-Chloro-2-methyl aniline (CAS 87-63-8);
    (iii) 2-Amino-3-hydroxybenzoic acid (CAS 548-93-6); and
    (iv) Acetone (CAS 67-64-1).
    (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:
    (i) Fermentation;
    (ii) Extraction;
    (iii) Purification;
    (iv) Distillation; and
    (v) Filtration.

       Supplement No. 3 to Part 715-- Deadlines for Submission of 
Declarations, No Changes Authorization Forms, Amendments for Unscheduled 
 Discrete Organic Chemical (UDOC) Facilities, and Change in Inspection 
                              Status Forms

------------------------------------------------------------------------
          Declarations             Applicable forms        Due dates
------------------------------------------------------------------------
Annual Declaration on Past        Certification,      February 28 of the
 Activities (previous calendar     UDOC, A (as         year following
 year).                            appropriate), B     any calendar year
Declared plant site.............   (optional).         in which the
                                                       production by
                                                       synthesis of
                                                       UDOCs exceeded
                                                       the applicable
                                                       declaration
                                                       threshold in Sec.
                                                         715.1(a)(1) of
                                                       the CWCR.*
No Changes Authorization Form     No Changes          February 28 of the
 (declaration required, but no     Authorization       year following
 changes to data contained in      Form.               any calendar year
 previously submitted annual                           in which the
 declaration on past activities--                      production by
 previous calendar year).                              synthesis of
Declared plant site.............                       UDOCs exceeded
                                                       the applicable
                                                       declaration
                                                       threshold in Sec.
                                                         715.1(a)(1) of
                                                       the CWCR.
Amended Declaration:............  Certification,      ..................
                                   UDOC, A (as
                                   appropriate), B
                                   (optional).
    --Declaration information...  ..................  --15 calendar days
                                                       after change in
                                                       information.
    --Company information.......  ..................  --30 calendar days
                                                       after change in
                                                       information.
    --Post-inspection letter....  ..................  --45 calendar days
                                                       after receipt of
                                                       letter.
Change in Inspection Status Form  Change in           December 15th of
 (applies only if your plant       Inspection Status   any calendar year
 site is currently subject to      Form.               in which the
 inspection, pursuant to Sec.                         production by
 715.1(d)(1) of the CWCR, and                          synthesis of
 you anticipate that the                               UDOCs is
 production by synthesis of                            anticipated to be
 UDOCs at your plant site during                       below the
 the current calendar year will                        inspection
 remain below the inspection                           threshold level
 threshold level specified                             specified in Sec.
 therein).                                               715.1(d)(1) of
                                                       the CWCR.*
------------------------------------------------------------------------
* You may submit the Annual Declaration on Past Activities (ADPA)
  described in Sec.  715.1(b)(1), instead of the Change in Inspection
  Status Form, if you anticipate that UDOC production at your plant site
  during the current calendar year will be below the inspection
  threshold level specified in Sec.  715.1(d)(1), but you expect your
  plant site to remain subject to the UDOC declaration requirements in
  Sec.  715.1(a)(1). In this case, the due date for the Annual
  Declaration on Past Activities will be December 15th of the current
  calendar year, instead of February 28th of the next calendar year.


[[Page 160]]


[72 FR 14408, Mar. 28, 2007]



PART 716_INITIAL AND ROUTINE INSPECTIONS OF DECLARED FACILITIES

Sec.
716.1 General information on the conduct of initial and routine 
          inspections.
716.2 Purposes and types of inspections of declared facilities.
716.3 Consent to inspections; warrants for inspections.
716.4 Scope and conduct of inspections.
716.5 Notification, duration and frequency of inspections.
716.6 Facility agreements.
716.7 Samples.
716.8 On-site monitoring of Schedule 1 facilities.
716.9 Report of inspection-related costs.
716.10 Post-inspection activities.

Supplement No. 1 to Part 716--Notification, Duration, and Frequency of 
          Inspections
Supplement Nos. 2-3 to Part 716 [Reserved]

    Authority: 22 U.S.C. 6701 et seq.; E.O. 13128, 64 FR 36703, 3 CFR 
1999 Comp., p. 199.

    Source: 71 FR 24929, Apr. 27, 2006, unless otherwise noted.



Sec. 716.1  General information on the conduct of initial and routine 

inspections.

    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.
    (a) Overview. 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 Sec. 710.2 of the CWCR).
    (b) Declared facilities subject to initial and routine inspections--
(1) Schedule 1 facilities. (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.
    (ii) If you are a new Schedule 1 production facility pursuant to 
Sec. 712.4 of the CWCR, your facility is subject to an initial 
inspection within 200 days of submitting an initial declaration.

    Note to Sec. 716.1(b)(1): All Schedule 1 facilities submitting a 
declaration are subject to inspection.

    (2) Schedule 2 plant sites--(i) Inspection thresholds for Schedule 2 
plant sites. 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:
    (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);
    (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
    (C) 10 metric tons of any chemical listed in Schedule 2, Part B (see 
Supplement No. 1 to part 713 of the CWCR).
    (ii) Initial inspection for new Schedule 2 plant sites. 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.

    Note to Sec. 716.1(b)(2): The applicable inspection threshold for 
Schedule 2 plant sites is

[[Page 161]]

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.

    (3) Schedule 3 plant sites. 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.

    Note to Sec. 716.1(b)(3): 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.

    (4) Unscheduled discrete organic chemical plant sites. 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.

    Note 1 to Sec. 716.1(b)(4): 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.

    Note 2 to Sec. 716.1(b)(4): All UDOC plant sites that submit a 
declaration based on Sec. 715.1(a)(1)(i) of the CWCR are subject to a 
routine inspection.
    Note 3 to paragraph (b)(4): Any UDOC plant site that is eligible, in 
accordance with Sec. 715.1(d)(2) of the CWCR, to submit a Change in 
Inspection Status Form or an Annual Declaration on Past Activities by 
December 15th of the current calendar year (i.e., a plant site that will 
be below the inspection threshold level indicated in paragraph (b)(4) of 
this section during the current calendar year), but that fails to do so, 
will remain subject to inspection through at least the 90-day period at 
the beginning of the next calendar year.

    (c) Responsibilities of the Department of Commerce. 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:
    (1) Lead on-site inspections;
    (2) Provide Host Team notification to the facility of an impending 
inspection;
    (3) Take appropriate action to obtain an administrative warrant in 
the event the facility does not consent to the inspection;
    (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;
    (5) Escort the Inspection Team on-site throughout the inspection 
process;
    (6) Assist the Inspection Team with verification activities;
    (7) Negotiate the development of a site-specific facility agreement, 
if appropriate (see Sec. 716.6); and
    (8) Ensure that an inspection adheres to the Convention, the Act and 
any warrant issued thereunder, and a site-specific facility agreement, 
if concluded.

[71 FR 24929, Apr. 27, 2006, as amended at 72 FR 14409, Mar. 28, 2007]



Sec. 716.2  Purposes and types of inspections of declared facilities.

    (a) Schedule 1 facilities--(1) Purposes of inspections. The aim of 
inspections of Schedule 1 facilities is to verify that:
    (i) The facility is not used to produce any Schedule 1 chemical, 
except for the declared Schedule 1 chemicals;
    (ii) The quantities of Schedule 1 chemicals produced, processed or 
consumed are correctly declared and consistent with needs for the 
declared purpose; and
    (iii) The Schedule 1 chemical is not diverted or used for purposes 
other than those declared.
    (2) Types of inspections--(i) Initial inspections. (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 Sec. 716.6 of the CWCR) for the conduct of routine 
inspections.
    (B) For new Schedule 1 production facilities declared pursuant to 
Sec. 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.
    (ii) Routine inspections. During routine inspections of declared 
Schedule 1 facilities, the verification activities

[[Page 162]]

listed in paragraph (a)(1) of this section will be carried out pursuant 
to site-specific facility agreements (see Sec. 716.6 of the CWCR) 
developed during the initial inspections and concluded between the U.S. 
Government and the OPCW pursuant to the Convention.
    (b) Schedule 2 plant sites--(1) Purposes of inspections. (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:
    (A) The absence of any Schedule 1 chemical, especially its 
production, except in accordance with the provisions of the Convention;
    (B) Consistency with declarations of production, processing or 
consumption of Schedule 2 chemicals; and
    (C) Non-diversion of Schedule 2 chemicals for activities prohibited 
under the Convention.
    (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:
    (A) The toxicity of the scheduled chemicals and of the end-products 
produced with them, if any;
    (B) The quantity of the scheduled chemicals typically stored at the 
inspected site;
    (C) The quantity of feedstock chemicals for the scheduled chemicals 
typically stored at the inspected site;
    (D) The production capacity of the Schedule 2 plants; and
    (E) The capability and convertibility for initiating production, 
storage and filling of toxic chemicals at the inspected site.
    (2) Types of inspections--(i) Initial inspections. 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 Sec. 
716.6 of the CWCR).
    (ii) Routine inspections. 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 Sec. 716.6 of the CWCR), and concluded between the 
U.S. Government and the OPCW pursuant to the Convention and the Act.
    (c) Schedule 3 plant sites--(1) Purposes of inspections. 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.
    (2) Routine inspections. 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 Sec. 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.
    (d) Unscheduled discrete organic chemical plant sites--(1) Purposes 
of inspections. 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.
    (2) Routine inspections. During routine inspections of declared UDOC 
plant

[[Page 163]]

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 Sec. 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.



Sec. 716.3  Consent to inspections; warrants for inspections.

    (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.
    (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.



Sec. 716.4  Scope and conduct of inspections.

    (a) General. Each inspection shall be limited to the purposes 
described in Sec. 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.
    (b) Scope--(1) Description of inspections. During inspections, the 
Inspection Team:
    (i) Will receive a pre-inspection briefing from facility 
representatives;
    (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;
    (iii) May visually inspect other parts or areas of the plant site to 
clarify an ambiguity that has arisen during the inspection;
    (iv) May take photographs or conduct formal interviews of facility 
personnel;
    (v) May examine relevant records; and
    (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 Authority, at 22 CFR part 103, and the facility 
agreement, if applicable.
    (2) Scope of consent. 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.
    (3) ITAR-controlled technology. 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.
    (c) Pre-inspection briefing. Upon arrival of the Inspection Team and 
Host Team at the inspection site and before

[[Page 164]]

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.
    (1) The pre-inspection briefing will address:
    (i) Facility health and safety issues and requirements, and 
associated alarm systems;
    (ii) Declared facility activities, business and manufacturing 
operations;
    (iii) Physical layout;
    (iv) Delimitation of declared facility;
    (v) Scheduled chemicals on the facility (declared and undeclared);
    (vi) Block flow diagram or simplified process flow diagram;
    (vii) Plants and units specific to declared operations;
    (viii) Administrative and logistic information; and
    (ix) Data declaration updates/revisions.
    (2) The pre-inspection briefing may also address, inter alia:
    (i) Introduction of key facility personnel;
    (ii) Management, organization and history;
    (iii) Confidential business information concerns;
    (iv) Types and location of records/documents;
    (v) Draft facility agreement, if applicable; and
    (vi) Proposed inspection plan.
    (d) Visual plant inspection. 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.
    (e) Records review. (1) The facility must provide the Inspection 
Team with access to all supporting materials and documentation used by 
the facility to prepare declarations and to otherwise comply with the 
requirements of the CWCR. These supporting materials and documentation 
shall include records related to activities that have taken place at the 
facility since the beginning of the previous calendar year, regardless 
of whether or not the facility has submitted its current year Annual 
Declaration on Past Activities to BIS at the time of the inspection. The 
facility shall also make available for inspection all records associated 
with the movement into, around, and from the facility of declared 
chemicals and their feedstock or any product chemicals formed from such 
chemicals and feedstock. All supporting materials and documentation 
subject to the requirements of this paragraph (e) must be retained by 
the facility in accordance with the requirements of Sec. 721.2 of the 
CWCR. The facility also must permit access to and copying of these 
records, upon request by BIS or any other agency of competent 
jurisdiction, in accordance with the requirements of Sec. 721.1 of the 
CWCR.
    (2) The facility must provide access to these supporting materials 
and documentation 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.
    (3) The facility must provide the Inspection Team with appropriate 
accommodations in which to review these supporting materials and 
documentation.
    (4) If a facility does not have access to supporting materials and 
documentation for activities that took place under previous ownership, 
because such records 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 Sec. 716.5 
of the CWCR), is responsible for informing BIS if the previous owner did 
not transfer records for activities that

[[Page 165]]

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.
    (f) Effect of facility agreements. 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.
    (g) Hours of inspections. 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.
    (h) Health and safety regulations and requirements. 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.
    (i) Preliminary findings. 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.

[71 FR 24929, Apr. 27, 2006, as amended at 72 FR 14409, Mar. 28, 2007]



Sec. 716.5  Notification, duration and frequency of inspections.

    (a) Inspection notification--(1)(i) Content of notice. 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:
    (A) The type of inspection;
    (B) The basis for the selection of the facility or location for the 
type of inspection sought;
    (C) The time and date that the inspection will begin and the period 
covered by the inspection; and
    (D) The names and titles of the Inspection Team members.
    (ii) Consent to inspection. 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 
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 Sec. 716.4(e) of the CWCR)--
this will allow BIS to contact the previous owner of the facility, to 
arrange

[[Page 166]]

for access to such records, if BIS deems them relevant to the inspection 
activities.
    (iii) The following table sets forth the notification procedures for 
inspection:

                       Table to Sec.  716.5(a)(1)
------------------------------------------------------------------------
            Activity                 Agency action      Facility action
------------------------------------------------------------------------
(A) OPCW notification inspection  (1) U.S. National   Acknowledges
                                   Authority           receipt of
                                   transmits actual    facsimile.
                                   written notice
                                   and inspection
                                   authorization to
                                   the owner and
                                   operator,
                                   occupant, or
                                   agent in charge
                                   via facsimile
                                   within 6 hours.
                                  (2) Upon            (A) Indicated
                                   notification from   whether it grants
                                   the U.S. National   consent.
                                   Authority, BIS     (B) May request
                                   immediately         advance team
                                   transmits           support. No
                                   inspection          requirement for
                                   notification via    reimbursement of
                                   facsimile to the    U.S. Government's
                                   inspection point    services.
                                   of contract to
                                   ascertain whether
                                   the facility (i)
                                   grants consent
                                   and (ii) requests
                                   assistance in
                                   preparing for the
                                   inspection. In
                                   absence of
                                   consent within
                                   four hours of
                                   facility receipt,
                                   BIS intends to
                                   seek an
                                   administrative
                                   warrant.
(B) Preparation for inspection..  (1) BIS advance     If advance team
                                   team generally      support is
                                   arrives in the      provided,
                                   vicinity of the     facility works
                                   facility to be      with the advance
                                   inspected 1-2       team on
                                   days after OPCW     inspection-
                                   notification for    related issues.
                                   logistical and
                                   administrative
                                   preparations.
                                  (2) If records for  The current owner
                                   activities that     of the facility
                                   took place under    must inform BIS
                                   the previous        if the previous
                                   ownership of the    owner of the
                                   facility are        facility did not
                                   deemed relevant     transfer (to the
                                   to the              current owner)
                                   inspection, BIS     records for
                                   will contact the    activities that
                                   previous owner of   took place under
                                   the facility to     the previous
                                   arrange for         ownership.
                                   access to any
                                   such records
                                   required under
                                   the CWCR that
                                   have not been
                                   transferred to
                                   the current owner.
------------------------------------------------------------------------

    (2) Timing of notice--(i) Schedule 1 facilities. 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.
    (ii) Schedule 2 plant sites. 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.
    (iii) Schedule 3 and UDOC plant sites. 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 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.

[[Page 167]]

    (b) Period of inspections--(1) Schedule 1 facilities. 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 Sec. 
716.4(c) and (i) of the CWCR for a description of these activities.
    (2) Schedule 2 plant sites. 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 Sec. 716.4(c) and (i) of the CWCR for a 
description of these activities.
    (3) Schedule 3 and UDOC plant sites. 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 Sec. 716.4(c) and (i) of the CWCR for a 
description of these activities.
    (c) Frequency of inspections. The frequency of inspections is as 
follows:
    (1) Schedule 1 facilities. 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.
    (2) Schedule 2 plant sites. 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.
    (3) Schedule 3 plant sites. 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.
    (4) UDOC plant sites. 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.



Sec. 716.6  Facility agreements.

    (a) Description and requirements. A facility agreement is a site-
specific agreement between the U.S. Government and the OPCW. Its purpose 
is to 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.
    (1) Schedule 1 facilities. The Convention requires that facility 
agreements be concluded between the United States and the OPCW for all 
declared Schedule 1 facilities. For new Schedule

[[Page 168]]

1 production facilities declared pursuant to Sec. 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.
    (2) Schedule 2 plant sites. 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.
    (3) Schedule 3 and UDOC plant sites. 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.
    (b) Notification; negotiation of draft and final facility 
agreements; and conclusion of facility agreements. 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.
    (c) [Reserved]
    (d) Further information. For further information about facility 
agreements, please write or call: Treaty Compliance Division, Bureau of 
Industry and Security, U.S. Department of Commerce, Room 4515, 14th 
Street and Pennsylvania Avenue, NW., Washington, DC 20230, Telephone: 
(202) 482-1001.

[71 FR 24929, Apr. 27, 2006, as amended at 73 FR 78183, Dec. 22, 2008]



Sec. 716.7  Samples.

    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.



Sec. 716.8  On-site monitoring of Schedule 1 facilities.

    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.



Sec. 716.9  Report of inspection-related costs.

    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

[[Page 169]]

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 Sec. 716.6(d) of the 
CWCR, with the following notation: ``Attn: Report of inspection-related 
costs.''



Sec. 716.10  Post-inspection activities.

    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 (i.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 Sec. Sec. 
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 Sec. 716.9 of the 
CWCR) is due to BIS.



Sec. Supplement No. 1 to Part 716--Notification, Duration and Frequency 
                             of Inspections

----------------------------------------------------------------------------------------------------------------
                                                                                                  Unscheduled
                                      Schedule 1          Schedule 2          Schedule 3       discrete organic
                                                                                                   chemicals
----------------------------------------------------------------------------------------------------------------
Notice of initial or routine      72 hours prior to   48 hours prior to   120 hours prior to  120 hours prior to
 inspection to USNA.               arrival of          arrival of          arrival of          arrival of
                                   Inspection Team     Inspection Team     Inspection Team     Inspection Team
                                   at the point of     at the plant site.  at the plant site.  at the plant
                                   entry (initial);                                            site.
                                   24 hours prior to
                                   arrival of
                                   Inspection Team
                                   at the point of
                                   entry (routine).
Duration of inspection..........  As specified in     96 hours..........  24 hours..........  24 hours.
                                   facility
                                   agreement.
Maximum number of inspections...  Determined by OPCW  2 per calendar      2 per calendar      2 per calendar
                                   based on            year per plant      year per plant      year per plant
                                   characteristics     site.               site.               site.
                                   of facility and
                                   the nature of the
                                   activities
                                   carried out at
                                   the facility.
                                 -------------------------------------------------------------------------------
Notification of challenge               12 hours prior to arrival of inspection team at the point of entry.
 inspection to USNA*.
Duration of Challenge                                                84 hours.
 inspection*.
----------------------------------------------------------------------------------------------------------------
* See part 717 of the CWCR.



             Sec. Supplement Nos. 2-3 to Part 716 [Reserved]



PART 717_CWC CLARIFICATION PROCEDURES (CONSULTATIONS AND CHALLENGE 

INSPECTIONS)--Table of Contents




Sec.
717.1 Clarification procedures; challenge inspection requests pursuant 
          to Article IX of the Convention.
717.2 Challenge inspections.
717.3 Samples.
717.4 Report of inspection-related costs.
717.5 Post-inspection activities.

    Authority: 22 U.S.C. 6701 et seq., 2681; E.O. 13128, 64 FR 36703, 3 
CFR 1999 Comp., p. 199.

    Source: 71 FR 24929, Apr. 27, 2006, unless otherwise noted.



Sec. 717.1  Clarification procedures; challenge inspection requests pursuant 

to Article IX of the Convention.

    (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

[[Page 170]]

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.
    (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.



Sec. 717.2  Challenge inspections.

    Persons or facilities, other than U.S. Government facilities as 
defined in Sec. 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.
    (a) Consent to challenge inspections; warrants for challenge 
inspections. (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.
    (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.
    (b) Notice of challenge inspection. 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 BIS is unable) may post notice 
prominently at the plant, plant site or other facility or location to be 
inspected.
    (1) Timing. 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.
    (2)(i) Content of notice. The notice of inspection shall include all 
appropriate information provided by the OPCW to the United States 
National Authority concerning:
    (A) The type of inspection;
    (B) The basis for the selection of the facility or locations for the 
type of inspection sought;
    (C) The time and date that the inspection will begin and the period 
covered by the inspection;
    (D) The names and titles of the Inspection Team members; and

[[Page 171]]

    (E) All appropriate evidence or reasons provided by the requesting 
State Party for seeking the inspection.
    (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.
    (c) Period of inspection. Challenge inspections will not exceed 84 
hours, unless extended by agreement between the Inspection Team and the 
Host Team Leader.
    (d) Scope and conduct of inspections--(1) General. 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.
    (2) Scope of inspections. 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.
    (3) Hours of inspections. 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.
    (4) Health and safety regulations and requirements. 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.
    (5) Pre-inspection briefing. 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.



Sec. 717.3  Samples.

    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 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.



Sec. 717.4  Report of inspection-related costs.

    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

[[Page 172]]

processing during inspections, if applicable. This information should be 
reported to BIS on company letterhead at the address given in Sec. 
716.6(d) of the CWCR, with the following notation: ``AATTN: Report of 
Inspection-related Costs.''



Sec. 717.5  Post-inspection activities.

    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 Sec. 717.4 of the CWCR) is 
due to BIS.



PART 718_CONFIDENTIAL BUSINESS INFORMATION--Table of Contents




Sec.
718.1 Definition.
718.2 Identification of confidential business information.
718.3 Disclosure of confidential business information.

Supplement No. 1 to Part 718--Confidential Business Information Declared 
          or Reported

    Authority: 22 U.S.C. 6701 et seq.; E.O. 13128, 64 FR 36703, 3 CFR 
1999 Comp., p. 199.

    Source: 71 FR 24929, Apr. 27, 2006, unless otherwise noted.



Sec. 718.1  Definition.

    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:
    (a) Financial data;
    (b) Sales and marketing data (other than shipment data);
    (c) Pricing data;
    (d) Personnel data;
    (e) Research data;
    (f) Patent data;
    (g) Data maintained for compliance with environmental or 
occupational health and safety regulations;
    (h) Data on personnel and vehicles entering and personnel and 
personal passenger vehicles exiting the site;
    (i) Any chemical structure;
    (j) Any plant design, process, technology or operating method;
    (k) Any operating requirement, input, or result that identifies any 
type or quantity of chemicals used, processed or produced;
    (l) Any commercial sale, shipment or use of a chemical; or
    (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.



718.2  Identification of confidential business information.

    (a) General. 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 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.
    (b) Confidential business information contained in declarations and 
reports. (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.
    (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.


[[Page 173]]


    Note to Sec. 718.2(b): 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.

    (c) Confidential business information contained in advance 
notifications. 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 Sec. 718.3(b) of the CWCR 
for provisions on disclosure to the public of such information by the 
U.S. Government.
    (d) Confidential business information related to inspections 
disclosed to, reported to, or otherwise acquired by, the U.S. 
Government. (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 Sec. 
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.
    (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.



Sec. 718.3  Disclosure of confidential business information.

    (a) General. 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 774), the 
International Traffic in Arms Regulations (22 CFR parts 120 through 
130), and applicable exemptions under the Freedom of Information Act, as 
appropriate.
    (b) Disclosure of confidential business information contained in 
advance notifications. 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:
    (1) Exports of Schedule 1 chemicals. 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 parts 730 through 774), the 
International Traffic in Arms Regulations (22 CFR parts 120 through 
130), and applicable exemptions under the Freedom of Information Act, as 
appropriate; and
    (2) Imports of Schedule 1 chemicals. Confidentiality of information 
contained in these advance notifications will be maintained pursuant to 
applicable exemptions under the Freedom of Information Act.
    (c) Disclosure of confidential business information pursuant to 
Sec. 404(b) of the Act--(1) Disclosure to the Organization for the 
Prohibition of Chemical Weapons (OPCW). (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).
    (ii) Convention provisions. (A) The Convention provides that States 
Parties may designate information submitted to the Technical Secretariat 
as

[[Page 174]]

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.
    (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.
    (iii) U.S. Government designation of information to the Technical 
Secretariat. 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.
    (2) Disclosure to Congress. 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.
    (3) Disclosure to other Federal agencies for law enforcement actions 
and disclosure in enforcement proceedings under the Act. 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.
    (4) Disclosure to the public; national interest determination. 
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.
    (i) National interest determination. 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.
    (ii) Notification of intent to disclose pursuant to a national 
interest determination. 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

[[Page 175]]

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.

[71 FR 24929, Apr. 27, 2006, as amended at 73 FR 78183, Dec. 22, 2008]



  Sec. Supplement No. 1 to Part 718--Confidential Business Information 
                         Declared or Reported *

------------------------------------------------------------------------
                                                  Fields containing
                                                confidential business
                                                     information
------------------------------------------------------------------------
Schedule 1 Forms:
  Certification Form......................  NONE.
  Form 1-1................................  NONE.
  Form 1-2................................  All fields.
  Form 1-2A...............................  All fields.
  Form 1-2B...............................  All fields.
  Form 1-3................................  All fields.
  Form 1-4................................  All fields.
Schedule 2 Forms:
  Certification Form......................  NONE.
  Form 2-1................................  NONE.
  Form 2-2................................  Question 2-2.9
  Form 2-3................................  All fields.
  Form 2-3A...............................  All fields.
  Form 2-3B...............................  All fields.
  Form 2-3C...............................  All fields.
  Form 2-4................................  All fields.
Schedule 3 Forms:
  Certification Form......................  NONE.
  Form 3-1................................  NONE.
  Form 3-2................................  NONE.
  Form 3-3................................  All fields.
  Form 3-4................................  All fields.
Unscheduled Discrete Organic Chemicals
 Forms:
  Certification Form......................  NONE.
  Form UDOC...............................  NONE.
FORMS A and B and attachments (all          Case-by-case; must be
 Schedules and UDOCs).                       identified by submitter.
------------------------------------------------------------------------
* 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.



PART 719_ENFORCEMENT--Table of Contents




Sec.
719.1 Scope and definitions.
719.2 Violations of the Act subject to administrative and criminal 
          enforcement proceedings.
719.3 Violations of the IEEPA subject to judicial enforcement 
          proceedings.
719.4 Violations and sanctions under the Act not subject to proceedings 
          under the CWCR.
719.5 Initiation of administrative proceedings.
719.6 Request for hearing and answer.
719.7 Representation.
719.8 Filing and service of papers other than the NOVA.
719.9 Summary decision.
719.10 Discovery.
719.11 Subpoenas.
719.12 Matters protected against disclosure.
719.13 Prehearing conference.
719.14 Hearings.
719.15 Procedural stipulations.
719.16 Extension of time.
719.17 Post-hearing submissions.
719.18 Decisions.
719.19 Settlement.
719.20 Record for decision.
719.21 Payment of final assessment.
719.22 Reporting a violation.

    Authority: 22 U.S.C. 6701 et seq.; 50 U.S.C. 1601 et seq.; 50 U.S.C. 
1701 et seq.; E.O. 12938, 59 FR 59099, 3 CFR 1994, Comp., p. 950; E.O. 
13128, 64 FR 36703, 3 CFR 1999 Comp., p. 199.

    Source: 71 FR 24929, Apr. 27, 2006, unless otherwise noted.



Sec. 719.1  Scope and definitions.

    (a) Scope. 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:
    (1) Violations of the Act subject to administrative and criminal 
enforcement proceedings. 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 
Sec. Sec. 719.5 through 719.22 of the CWCR. The Department of State 
gives notice of initiation of administrative proceedings and issues 
orders

[[Page 176]]

imposing penalties pursuant to 22 CFR part 103, subpart C.
    (2) Violations of the International Emergency Economic Powers Act 
(IEEPA) subject to judicial enforcement proceedings. 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.
    (3) Violations and sanctions under the Act not subject to 
proceedings under the CWCR. 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.

    Note to Sec. 719.1(a): 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 774) and in the International Traffic in Arms 
Regulations (ITAR) (22 CFR parts 120 through 130).

    (b) Definitions. 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, see part 710 of 
the CWCR.
    Act (The). The Chemical Weapons Convention Implementation Act of 
1998 (22 U.S.C. 6701-6777).
    Assistant Secretary for Export Enforcement. The Assistant Secretary 
for Export Enforcement, Bureau of Industry and Security, United States 
Department of Commerce.
    Final decision. 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.
    IEEPA. The International Emergency Economic Powers Act, as amended 
(50 U.S.C. 1701-1706).
    Office of Chief Counsel. The Office of Chief Counsel for Industry 
and Security, United States Department of Commerce.
    Report. 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.
    Respondent. Any person named as the subject of a letter of intent to 
charge, or a Notice of Violation and Assessment (NOVA) and proposed 
order.
    Under Secretary, Bureau of Industry and Security. The Under 
Secretary, Bureau of Industry and Security, United States Department of 
Commerce.

[71 FR 24929, Apr. 27, 2006, as amended at 73 FR 78183, Dec. 22, 2008]



Sec. 719.2  Violations of the Act subject to administrative and criminal 

enforcement proceedings.

    (a) Violations--(1) Refusal to permit entry or inspection. No person 
may willfully fail or refuse to permit entry or inspection, or disrupt, 
delay or otherwise impede an inspection, authorized by the Act.
    (2) Failure to establish or maintain records. No person may 
willfully fail or refuse:
    (i) To establish or maintain any record required by the Act or the 
CWCR; or
    (ii) To submit any report, notice, or other information to the 
United States Government in accordance with the Act or the CWCR; or
    (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.
    (b) Civil penalties--(1) Civil penalty for refusal to permit entry 
or inspection. 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.
    (2) Civil penalty for failure to establish or maintain records. Any 
person that is determined to have willfully failed or refused to 
establish or maintain any

[[Page 177]]

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.
    (c) Criminal penalty. 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.
    (d) Denial of export privileges. 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.



Sec. 719.3  Violations of the IEEPA subject to judicial enforcement 

proceedings.

    (a) Violations--(1) Import restrictions involving Schedule 1 
chemicals. Except as otherwise provided in Sec. 712.2 of the CWCR, no 
person may import any Schedule 1 chemical (See Supplement No. 1 to part 
712 of the CWCR) unless:
    (i) The import is from a State Party;
    (ii) The import is for research, medical, pharmaceutical, or 
protective purposes;
    (iii) The import is in types and quantities strictly limited to 
those that can be justified for such purposes; and
    (iv) The importing person has notified BIS not less than 45 calendar 
days before the import pursuant to Sec. 712.6 of the CWCR.
    (2) Import restrictions involving Schedule 2 chemicals. Except as 
otherwise provided in Sec. 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.
    (b) Civil penalty. A civil penalty not to exceed $50,000 may be 
imposed in accordance with this part on any person for each violation of 
this section.\1\
---------------------------------------------------------------------------

    \1\ The maximum civil penalty allowed under the International 
Emergency Economic Powers Act is $50,000 for any violation committed on 
or after October 23, 1996 (15 CFR 6.4(a)(5)).
---------------------------------------------------------------------------

    (c) Criminal penalty. Whoever willfully violates paragraph (a)(1) or 
(2) of 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.\2\
---------------------------------------------------------------------------

    \2\ 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.

[71 FR 24929, Apr. 27, 2006, as amended at 72 FR 14410, Mar. 28, 2007]



Sec. 719.4  Violations and sanctions under the Act not subject to proceedings 

under the CWCR.

    (a) Criminal penalties for development or use of a chemical weapon. 
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.
    (b) Civil penalty for development or use of a chemical weapon. 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

[[Page 178]]

to pay a civil penalty in an amount not to exceed $100,000 for each such 
violation.
    (c) Criminal forfeiture. (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:
    (i) Any property, real or personal, owned, possessed, or used by a 
person involved in the offense;
    (ii) Any property constituting, or derived from, and proceeds the 
person obtained, directly or indirectly, as the result of such 
violation; and
    (iii) Any of the property used in any manner or part, to commit, or 
to facilitate the commission of, such violation.
    (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.
    (d) Injunction. (1) The United States may, in a civil action, obtain 
an injunction against:
    (i) The conduct prohibited under section 229 or 229C of Title 18 of 
the United States Code; or
    (ii) The preparation or solicitation to engage in conduct prohibited 
under section 229 or 229D of Title 18 of the United States Code.
    (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.



Sec. 719.5  Initiation of administrative proceedings.

    (a) Letter of intent to charge. 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.
    (b) Request for Notice of Violation and Assessment (NOVA). 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 Sec. 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 
proceeding by issuing a NOVA. The Office of Chief Counsel shall serve 
the NOVA as directed by the Secretary of State.
    (c) Content of NOVA. 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 Sec. 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.
    (d) Proposed order. 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.
    (e) Notice. 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

[[Page 179]]

sending relevant documents, via first class mail, facsimile, or by 
personal delivery.



Sec. 719.6  Request for hearing and answer.

    (a) Time to answer. 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 Sec. 719.8 of the 
CWCR.
    (b) Content of answer. 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.
    (c) English required. The request for hearing, answer, and all other 
papers and documentary evidence must be submitted in English.
    (d) Waiver. 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.



Sec. 719.7  Representation.

    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 the ALJ, with 
the Office of Chief Counsel.



Sec. 719.8  Filing and service of papers other than the NOVA.

    (a) Filing. 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.
    (b) Service. 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

[[Page 180]]

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.
    (c) Date. 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.
    (d) Certificate of service. 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.
    (e) Computation of time. 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.



Sec. 719.9  Summary decision.

    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.



Sec. 719.10  Discovery.

    (a) General. 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.
    (b) Interrogatories and requests for admission or production of 
documents. A party may serve on any party interrogatories, requests for 
admission, or requests for production of documents for inspection and 
copying, and a party 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.
    (c) Depositions. 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.
    (d) Enforcement. The ALJ may order a party to answer designated 
questions,

[[Page 181]]

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.



Sec. 719.11  Subpoenas.

    (a) Issuance. 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.
    (b) Service. Subpoenas issued by the ALJ may be served by any of the 
methods set forth in Sec. 719.8(b) of the CWCR.
    (c) Timing. 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.



Sec. 719.12  Matters protected against disclosure.

    (a) Protective measures. 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 only so much as must remain undisclosed. The summary 
or extract may be admitted as evidence in the record.
    (b) Arrangements for access. 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.



Sec. 719.13  Prehearing conference.

    (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:
    (1) Simplification of issues;
    (2) The necessity or desirability of amendments to pleadings;
    (3) Obtaining stipulations of fact and of documents to avoid 
unnecessary proof; or
    (4) Such other matters as may expedite the disposition of the 
proceedings.

[[Page 182]]

    (b) The ALJ may order the conference proceedings to be recorded 
electronically or taken by a reporter, transcribed and filed with the 
ALJ.
    (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.
    (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.



Sec. 719.14  Hearings.

    (a) Scheduling. 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.
    (b) Hearing procedure. 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.
    (c) Testimony and record. (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.
    (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.
    (d) Failure to appear. 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.



Sec. 719.15  Procedural stipulations.

    Unless otherwise ordered and subject to Sec. 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.



Sec. 719.16  Extension of time.

    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.



Sec. 719.17  Post-hearing submissions.

    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.



Sec. 719.18  Decisions.

    (a) Initial decision. 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

[[Page 183]]

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.
    (b) Factors considered in assessing penalties. 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.
    (c) Certification of initial decision. 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 Sec. 719.8, and to the respondent, by personal delivery or 
overnight mail.
    (d) Review of initial decision. 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.



Sec. 719.19  Settlement.

    (a) Settlements before issuance of a NOVA. 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.
    (b) Settlements following issuance of a NOVA. 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.
    (c) Settlement scope. 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 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.
    (d) Finality. Cases that are settled may not be reopened or 
appealed.



Sec. 719.20  Record for decision.

    (a) The record. The transcript of hearings, exhibits, rulings, 
orders, all papers and requests filed in the proceedings, and, for 
purposes of any appeal under Sec. 719.18 or under 22 CFR 103.8, the 
decision of the ALJ and such submissions as are provided for under Sec. 
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.
    (b) Restricted access. 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

[[Page 184]]

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.
    (c) Availability of documents.--(1) Scope. 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 http://www.bis.doc.gov/foia, 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.
    (2) Timing. 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.



Sec. 719.21  Payment of final assessment.

    (a) Time for payment. 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.
    (b) Enforcement of order. 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.
    (c) Offsets. 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.



Sec. 719.22  Reporting a violation.

    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.



PART 720_DENIAL OF EXPORT PRIVILEGES--Table of Contents




Sec.
720.1 Denial of export privileges for convictions under 18 U.S.C. 229.
720.2 Initiation of administrative action denying export privileges.
720.3 Final decision on administrative action denying export privileges.
720.4 Effect of denial.

    Authority: 22 U.S.C. 6701 et seq.; E.O. 13128, 64 FR 36703, 3 CFR 
1999 Comp., p. 199.

    Source: 71 FR 24929, Apr. 27, 2006, unless otherwise noted.



Sec. 720.1  Denial of export privileges for convictions under 18 U.S.C. 229.

    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:
    (a) Developing, producing, otherwise acquiring, transferring 
directly or indirectly, receiving, stockpiling, retaining, owning, 
possessing, or using, or threatening to use, a chemical weapon; or
    (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.



Sec. 720.2  Initiation of administrative action denying export privileges.

    (a) Notice. 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 774),

[[Page 185]]

and provide that the person may request a hearing before the 
Administrative Law Judge within 30 days from the date of the 
notification letter.
    (b) Waiver. 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.
    (c) Order of Assistant Secretary. If no hearing is requested, the 
Assistant Secretary for Export Enforcement will order that export 
privileges be denied as indicated in the notification letter.

[71 FR 24929, Apr. 27, 2006, as amended at 73 FR 78183, Dec. 22, 2008]



Sec. 720.3  Final decision on administrative action denying export privileges.

    (a) Hearing. Any hearing that is granted by the ALJ shall be 
conducted in accordance with the procedures set forth in Sec. 719.14 of 
the CWCR.
    (b) Initial decision and order. 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 774). The initial decision and 
order will be served on each party, and will be published in the Federal 
Register as the final decision of BIS 30 days after service, unless an 
appeal is filed in accordance with paragraph (c) of this section.
    (c) Grounds for appeal. (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:
    (i) That a necessary finding of fact is omitted, erroneous or 
unsupported by substantial evidence of record;
    (ii) That a necessary legal conclusion or finding is contrary to 
law;
    (iii) That prejudicial procedural error occurred; or
    (iv) That the decision or the extent of sanctions is arbitrary, 
capricious or an abuse of discretion.
    (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.
    (d) Appeal procedure. 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.
    (e) Decisions. 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 Federal Register.

[71 FR 24929, Apr. 27, 2006, as amended at 73 FR 78183, Dec. 22, 2008]

[[Page 186]]



Sec. 720.4  Effect of denial.

    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 774). 
Orders denying export privileges pursuant to Parts 764 and 766 of the 
EAR are published in the Federal Register 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.

[71 FR 24929, Apr. 27, 2006, as amended at 73 FR 78183, Dec. 22, 2008]



PART 721_INSPECTION OF RECORDS AND RECORDKEEPING--Table of Contents




Sec.
721.1 Inspection of records.
721.2 Recordkeeping.
721.3 Destruction or disposal of records.

    Authority: 22 U.S.C. 6701 et seq.; E.O. 13128, 64 FR 36703, 3 CFR 
1999 Comp., p. 199.

    Source: 71 FR 24929, Apr. 27, 2006, unless otherwise noted.



Sec. 721.1  Inspection of records.

    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.



Sec. 721.2  Recordkeeping.

    (a) Requirements. 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. Each facility subject to inspection under 
Part 716 of the CWCR must retain all supporting materials and 
documentation associated with the movement into, around, and from the 
facility of declared chemicals and their feedstock or any product 
chemicals formed from such chemicals and feedstock. 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 Sec. 
716.4 of the CWCR).
    (b) Five year retention period. 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 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.
    (c) Location of records. 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 Sec. 721.1 of the CWCR.
    (d) Reproduction of original records. (1) You may maintain 
reproductions instead of the original records provided

[[Page 187]]

all of the requirements of paragraph (b) of this section are met.
    (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:
    (i) The system must be capable of reproducing all records on paper.
    (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.
    (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.
    (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.
    (v) You must establish written procedures to identify the 
individuals who are responsible for the operation, use and maintenance 
of the system.
    (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.
    (3) Requirements applicable to a system based on digital images. 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.
    (4) Requirements applicable to a system based on photographic 
processes. 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.

[71 FR 24929, Apr. 27, 2006, as amended at 72 FR 14410, Mar. 28, 2007]



Sec. 721.3  Destruction or disposal of records.

    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.

                   PART 722_INTERPRETATIONS [RESERVED]

    Note: 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).

                        PARTS 723-729 [RESERVED]

[[Page 188]]



             SUBCHAPTER C_EXPORT ADMINISTRATION REGULATIONS



PART 730_GENERAL INFORMATION--Table of Contents




Sec.
730.1 What these regulations cover.
730.2 Statutory authority.
730.3 Dual use exports.
730.4 Other control agencies and departments.
730.5 Coverage of more than exports.
730.6 Control purposes.
730.7 License requirements and exceptions.
730.8 How to proceed and where to get help.
730.9 Organization of the Bureau of Industry and Security.
730.10 Advisory information.

Supplement No. 1 to Part 730--Information Collection Requirements Under 
          the Paperwork Reduction Act: OMB Control Numbers
Supplement No. 2 to Part 730--Technical Advisory Committees
Supplement No. 3 to Part 730--Other U.S. Government Departments and 
          Agencies With Export Control Responsibilities

    Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; 10 
U.S.C. 7420; 10 U.S.C. 7430(e); 22 U.S.C. 287c; 22 U.S.C. 2151 note; 22 
U.S.C. 3201 et seq.; 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; 22 U.S.C. 7201 et seq.; 22 U.S.C. 7210; 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 July 23, 2008, 73 FR 43603 (July 25, 2008); Notice of 
November 10, 2008, 73 FR 67097 (November 12, 2008).

    Source: 61 FR 12734, Mar. 25, 1996, unless otherwise noted.



Sec. 730.1  What these regulations cover.

    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.



Sec. 730.2  Statutory authority.

    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 Federal Register 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.



Sec. 730.3  Dual use exports.

    The convenient term dual use 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

[[Page 189]]

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.



Sec. 730.4  Other control agencies and departments.

    In addition to the departments and agencies mentioned in Sec. 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.



Sec. 730.5  Coverage of more than exports.

    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.
    (a) Reexports. 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.
    (b) Foreign products. 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.
    (c) Scope of ``exports''. 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.
    (d) U.S. person activities. 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.

[61 FR 12734, Mar. 25, 1996, as amended at 61 FR 68577, Dec. 30, 1996]



Sec. 730.6  Control purposes.

    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

[[Page 190]]

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.



Sec. 730.7  License requirements and exceptions.

    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 Sec. 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.



Sec. 730.8  How to proceed and where to get help.

    (a) How the EAR are organized. 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.
    (1) How do you go about determining your obligations under the EAR? 
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.
    (2) Are your items or activities subject to the EAR at all? 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.
    (3) If subject to the EAR, what do the EAR require? 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.
    (4) Do you need a license for your item or activity? What policies 
will BIS apply if you do need to submit license application? The EAR 
have four principal ways of describing license requirements:
    (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.
    (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.
    (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.

[[Page 191]]

    (iv) In addition, under Sec. Sec. 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.
    (5) 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? 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.
    (6) How do you clear shipments with the U.S. Customs Service? Part 
758 of the EAR describes the requirements for clearance of exports.
    (7) Where do you find the rules on restrictive trade practices and 
boycotts? Part 760 of the EAR deals with restrictive trade practices and 
boycotts.
    (8) Where are the rules on recordkeeping and enforcement? Part 762 
of the EAR sets out your recordkeeping requirements, and parts 764 and 
766 of the EAR deal with violations and enforcement proceedings.
    (9) What is the effect of foreign availability? Part 768 of the EAR 
provides rules for determining foreign availability of items subject to 
controls.
    (10) Do the EAR provide definitions and interpretations? Part 770 of 
the EAR contains interpretations and part 772 of the EAR lists 
definitions used.
    (b) Why the EAR are so detailed. 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.
    (c) Where to get help. 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 Export Services at the following locations: 
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 Bureau of Industry and 
Security, Western Regional Office, U.S. Department of Commerce, 3300 
Irvine Avenue, Suite 345, Newport Beach, CA 92660, Tel: (949) 660-0144, 
Fax: (949) 660-9347, and Bureau of Industry and Security, Western 
Regional Office, Northern California Branch, U.S. Department of 
Commerce, 160 W. Santa Clara Street, Suite 725, San Jose, CA 95113, Tel: 
(408) 998-8806, Fax: (408) 998-8677.

[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; 72 FR 3945, Jan. 
29, 2007; 73 FR 35, Jan. 2, 2008; 73 FR 75944, Dec. 15, 2008]



Sec. 730.9  Organization of the Bureau of Industry and Security.

    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

[[Page 192]]

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 Office of Congressional 
and Public Affairs, and the Chief Information Officer. 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 http://
www.osec.doc.gov/omo/DMPHome.htm. The principal functions of the Bureau 
that directly affect the public are carried out by two units: Export 
Administration and Export Enforcement.
    (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 six 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, the Office of Strategic Industries and Economic 
Security, and the Office of Technology Evaluation. The functions of the 
Operating Committee are described in Sec. 750.4(f)(1) of the EAR. The 
roles of the other units are described on BIS's Web site at http://
www.bis.doc.gov/about/programoffices.htm.
    (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 http://www.bis.doc.gov/about/programoffices.htm.
    (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 
http://tac.bis.doc.gov/.

[70 FR 8248, Feb. 18, 2005, as amended at 72 FR 25196, May 4, 2007]



Sec. 730.10  Advisory information.

    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.



 Sec. Supplement No. 1 to Part 730--Information Collection Requirements 
         Under the Paperwork Reduction Act: OMB Control Numbers

    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.

------------------------------------------------------------------------
                                                       Reference in the
        Collection number                Title                EAR
------------------------------------------------------------------------
0694-0004.......................  Foreign             part 768.
                                   Availability
                                   Procedures and
                                   Criteria.
0694-0009.......................  Approval of         Sec.  748.10(e).
                                   Triangular
                                   Transactions
                                   Involving
                                   Commodities
                                   Covered by a U.S.
                                   Import
                                   Certificate.
0694-0012.......................  Report of Requests  part 760 and Sec.
                                   for Restrictive      762.2(b).
                                   Trade Practice or
                                   Boycott--Single
                                   or Multiple
                                   Transactions.
0694-0013.......................  Computers and       part 774.
                                   Related Equipment
                                   EAR Supplement 2
                                   to Part 748.
0694-0016.......................  Delivery            Sec. Sec.
                                   Verification        748.13 and
                                   Certificate.        762.2(b).
0694-0017.......................  International       Sec.  748.10
                                   Import
                                   Certificate.

[[Page 193]]

 
0694-0021.......................  Statement by        Sec. Sec.
                                   Ultimate            748.11 and
                                   Consignee and       762.2(b).
                                   Purchaser.
0694-0023.......................  Written Assurance   Sec. Sec.
                                   Requirement of      740.3(d) and
                                   License Exception   740.4(c).
                                   TSR (Technology
                                   and Software
                                   Under
                                   Restriction).
0694-0025.......................  Short Supply        Sec. Sec.  754.4
                                   Regulations--Unpr   and 762.2(b).
                                   ocessed Western
                                   Red Cedar.
0694-0026.......................  Short Supply        Sec.  754.3.
                                   Regulations--Petr
                                   oleum Products.
0694-0027.......................  Short Supply        Sec.  754.2.
                                   Regulations
                                   Petroleum (Crude
                                   Oil).
0694-0029.......................  License Exception   Sec.
                                   TMP: Special        740.9(a)(2)(viii)
                                   Requirements.       (B).
0694-0033.......................  License Exception,  Sec. Sec.
                                   Humanitarian        740.12(b)(7),
                                   Donations.          762.2(b), Supp.
                                                       No. 2 to part
                                                       740.
0694-0047.......................  Technology Letter   Supplement No. 2
                                   of Explanation.     to part 748,
                                                       paragraph (o)(2).
0694-0058.......................  Procedure for       Sec. Sec.
                                   Voluntary Self-     762.2(b) and
                                   Disclosure of       764.5.
                                   Violations.
0694-0073.......................  Export Controls of  Supplement No. 2
                                   High Performance    to part 748,
                                   Computers.          paragraph (c)(2),
                                                       and Sec.
                                                       762.2(b).
0694-0086.......................  Report of Sample    Supplement No. 1
                                   Shipments of        to part 774.
                                   Chemical Weapon
                                   Precursors.
0694-0088.......................  Simplified Network  parts 746, 748,
                                   Application         and 752; Sec.
                                   Processing+         762.2(b).
                                   System (SNAP+)
                                   and the
                                   Multipurpose
                                   Export License
                                   Application.
0694-0089.......................  Special             part 752 and Sec.
                                   Comprehensive        762.2(b).
                                   License Procedure.
0694-0093.......................  Import              Sec. Sec.
                                   Certificates And    748.9, 748.10,
                                   End-User            762.5(d), 762.6
                                   Certificates.       764.2(g)(2).
0694-0096.......................  Five Year Records   part 760, Sec.
                                   Retention Period.   762.6(a).
0694-0100.......................  Requests for        Supplement No. 1
                                   Appointment of      to part 730.
                                   Technical
                                   Advisory
                                   Committee.
0694-0101.......................  One-Time Report     Sec.  734.4 and
                                   For Foreign         Supp. No. 2 to
                                   Technology          part 734.
                                   Eligible For De
                                   Minimis Exclusion.
0694-0102.......................  Registration of     Sec. Sec.  754.6
                                   U.S. Agricultural   and 754.7.
                                   Commodities For
                                   Exemption From
                                   Short Supply
                                   Limitations on
                                   Export'', and
                                   ``Petitions For
                                   The Imposition of
                                   Monitoring Or
                                   Controls On
                                   Recyclable
                                   Metallic
                                   matrials; Public
                                   Hearings.
0694-0104.......................  Review, Reporting,  Sec. Sec.
                                   and Notification    740.9(c),
                                   of Commercial       740.13(e), 740.17
                                   Encryption Items.   and 742.15(b).
0694-0106.......................  Reporting and       Sec.  743.1.
                                   Recordkeeping
                                   Requirements
                                   under the
                                   Wassenaar
                                   Arrangement.
0694-0107.......................  National Defense    Sec. Sec.
                                   Authorization Act   740.7, 742.12.
                                   (NDAA).
0694-0117.......................  Chemical Weapons    Part 745.
                                   Convention
                                   Provisions of the
                                   Export
                                   Administration
                                   Regulations
                                   (Schedule 1
                                   Advance
                                   Notifications and
                                   Reports and
                                   Schedule 3 End-
                                   use Certificates).
0694-0122.......................  Licensing           Part 758, and Sec.
                                   Responsibilities      748.4.
                                   and Enforcement.
0694-0123.......................  Prior Notification  Sec.  740.18.
                                   of Exports under
                                   License Exception
                                   AGR.
0694-0125.......................  BIS Seminar         N/A
                                   Evaluation.
0694-0126.......................  Export License      Sec.  750.9.
                                   Services--Transfe
                                   r of License
                                   Ownership,
                                   Requests for a
                                   Duplicate License.
0694-0129.......................  Export and          Sec.  732.3, 738,
                                   Reexport Controls   744.18,
                                   For Iraq.           746.3(b)(1), 747,
                                                       750, 758, 762,
                                                       772, 774.
0694-0132.......................  Voluntary Self-     Sec.  764.8.
                                   Disclosure of
                                   Antiboycott
                                   Violations.
0694-0134.......................  Procedure for       Sec.  744.16
                                   parties on the
                                   Entity List to
                                   Request Removal
                                   or Modification
                                   of their Listing.
0607-0152.......................  Automated Export    Sec. Sec.
                                   System (AES)        740.1(d),
                                   Program.            740.3(a)(3),
                                                       752.7(b),
                                                       752.15(a),
                                                       754.2(h),
                                                       754.4(c), 758.1,
                                                       758.2 and 758.3
                                                       of the EAR.
------------------------------------------------------------------------


[61 FR 12734, Mar. 25, 1996, as amended at 70 FR 14386, Mar. 22, 2005; 
71 FR 20883, Apr. 24, 2006; 72 FR 39004, July 17, 2007; 73 FR 49321, 
Aug. 21, 2008; 73 FR 56967, Oct. 1, 2008; 73 FR 75944, Dec. 15, 2008]



    Sec. Supplement No. 2 to Part 730--Technical Advisory Committees

    (a) Purpose. The purpose of this supplement is to describe the 
procedures and criteria for the establishment and operation of Technical 
Advisory Committees.

[[Page 194]]

    (b) Technical advisory committees. 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 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.
    (1) Form and substance of requests. Each request for the appointment 
of a TAC shall be submitted in writing to: Assistant Secretary for 
Export Administration, 14th Street and Pennsylvania Ave., NW., Room 
2705, Washington, DC 20230.
    The request shall include:
    (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);
    (ii) A statement of the reasons for requesting the appointment of a 
TAC; and
    (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.
    (2) Consideration of request for establishment of a TAC. The 
Department of Commerce will review all requests for the establishment of 
a TAC to determine if the following criteria are met:
    (i) That a substantial segment of the industry producing the 
specified articles, materials, or supplies including technology desires 
such a committee; and
    (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.
    (3) Requests by a substantial segment of an industry. In determining 
whether or not a substantial segment of any industry has requested the 
appointment of a TAC, the Department of Commerce will consider:
    (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
    (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:
    (A) Not less than 30 percent of the total number of U.S. producers 
of the items concerned; or
    (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
    (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.
    (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.
    (4) Requests from trade associations or other representatives. 
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:
    (i) The total number of firms in the particular industry;
    (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;
    (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
    (iv) A description of the method by which authorization to act on 
behalf of these producers was obtained.

[[Page 195]]

    (5) Nominations for membership on TACs. 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.
    (6) Selection of industry members of committee. Industry members of 
a TAC will be selected by the Department of Commerce from a list of the 
nominees who have indicated 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.
    (7) Government members. Government members of a TAC will be selected 
by the Department of Commerce from the agencies having an interest in 
the subject matter concerned.
    (8) Invitation to serve on committee. Invitations to serve on a TAC 
will be sent by letter to the selected nominees.
    (9) Election of Chair. The Chair of each TAC shall be elected by a 
vote of the majority of the members of the committee present and voting.
    (c) Charter. (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:
    (i) The committee's official designation;
    (ii) The committee's objectives and the scope of its activities;
    (iii) The period of time necessary for the committee to carry out 
its purposes;
    (iv) The agency or official to whom the committee reports;
    (v) The agency responsible for providing the necessary support for 
the committee;
    (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;
    (vii) The estimated annual operating costs in dollars and years for 
such committee;
    (viii) The estimated number and frequency of committee meetings;
    (ix) The committee's termination date, if less than two years from 
the date of the committee's establishment; and
    (x) The date the charter is filed.
    (d) Meetings. (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.
    (2) No TAC may meet except at the call of its Chair.
    (3) Each meeting of a TAC shall be conducted in accordance with an 
agenda approved by a designated Federal government employee.
    (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.
    (e) Public notice. 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 
Federal Register. The notice will include the time and place of the 
meeting and the agenda.
    (f) Public attendance and participation. (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.
    (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.
    (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.
    (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.
    (5) Every effort will be made to accommodate all members of the 
public who wish to attend.
    (g) Minutes. (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.
    (2) The accuracy of all the minutes will be certified to by the TAC 
Chair.

[[Page 196]]

    (h) Records. (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.
    (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.
    (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.
    (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.
    (i) Compensation. 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.
    (j) Scope of advisory committee functions. All TACs are limited to 
the functions described in their charters.
    (k) Duration of committees. 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.
    (l) Miscellaneous. (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.
    (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.
    (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.

[61 FR 12734, Mar. 25, 1996, as amended at 73 FR 35, Jan. 2, 2008; 73 FR 
75945, Dec. 15, 2008]



Sec. Supplement No. 3 to Part 730--Other U.S. Government Departments and 
              Agencies With Export Control Responsibilities

    Note: 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).

                  Defense Services and Defense Articles

* Department of State, Directorate of Defense Trade Controls, Tel. (703) 
875-6644, Fax: (703) 875-6647.
    22 CFR parts 120 through 130.

                     Drugs, Chemicals and Precursors

Chemicals: Drug Enforcement Administration, Office of Diversion Control, 
Import-Export Unit, Tel. (202) 307-4916, Fax: 202-307-4702, Internet: 
http://www.deadiversion.usdoj.gov/imp--exp/index.html.

                     21 CFR Parts 1311 Through 1313

Controlled Substances: Drug Enforcement Administration, Office of 
Diversion Control, Import-Export Unit, Tel. (202) 307-7182 or (202) 307-
7181, Fax: (202) 307-7503, Internet: http://www.deadiversion.usdoj.gov/
imp--exp/index.html.
    21 CFR Parts 1311 Through 1313
Drugs and Biologics: Food and Drug Administration, Import/Export, Tel. 
(301) 594-3150, Fax: (301) 594-0165.
    21 U.S.C. 301 et seq .

[[Page 197]]

Investigational drugs permitted: Food and Drug Administration, 
International Affairs, Tel. (301) 443-4480, Fax: (301) 443-0235.
    21 CFR 312.1106

             Fish and Wildlife Controls; Endangered Species

    Department of the Interior, Chief Office of Management Authority, 
Tel. (703) 358-2093, Fax: (703) 358-2280.
    50 CFR 17.21, 17.22, 17.31, 17.32.

                Foreign Assets and Transactions Controls

* Department of Treasury, Office of Foreign Assets Control, Licensing, 
Tel. (202) 622-2480, Fax: (202) 622-1657.
    31 CFR parts 500 through 590.

                             Medical Devices

Food and Drug Administration, Office of Compliance, Tel. (301) 594-4699, 
Fax: (301) 594-4715.
    21 U.S.C. 301 et seq.

                     Natural Gas and Electric Power

Department of Energy, Office of Fuels Programs, Tel. (202) 586-9482, 
Fax: (202) 586-6050.
    10 CFR 205.300 through 205.379 and part 590.

                     Nuclear Materials and Equipment

* Nuclear Regulatory Commission, Office of International Programs, Tel. 
(301) 415-2344, Fax: (301) 415-2395.
    10 CFR part 110.

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.

Department of Energy Office of Export Control Policy & Cooperation (NA-
24) Tel. (202) 586-2331, Fax (202) 586-1348.
    10 CFR part 810.

                        Ocean Freight Forwarders

Federal Maritime Commission, Office of Freight Forwarders, Tel. (202) 
523-5843, Fax: (202) 523-5830.
    46 CFR part 510.

                     Patent Filing Data Sent Abroad

* Department of Commerce, Patent and Trademark Office, Licensing and 
Review; Tel. (703) 308-1722, Fax: (703) 305-3603, 3604.
    37 CFR part 5.

     U.S. Flagged or U.S. Manufactured Vessels Over 1,000 Gross Tons

U.S. Maritime Administration, Division of Vessel Transfer and Disposal, 
Tel. (202) 366-5821, Fax: (202) 366-3889.
    46 CFR part 221.

[61 FR 12734, Mar. 25, 1996, as amended at 65 FR 38149, June 19, 2000; 
69 FR 5687, Feb. 6, 2004; 72 FR 20222, Apr. 24, 2007]



PART 732_STEPS FOR USING THE EAR--Table of Contents




Sec.
732.1 Steps overview.
732.2 Steps regarding scope of the EAR.
732.3 Steps regarding the ten general prohibitions.
732.4 Steps regarding License Exceptions.
732.5 Steps regarding Shipper's Export Declaration or Automated Export 
          System record, Destination Control Statements, and 
          recordkeeping.
732.6 Steps for other requirements.

Supplement No. 1 to Part 732--Decision Tree
Supplement No. 2 to Part 732--Am I subject to the EAR?
Supplement No. 3 to Part 732--BIS's ``Know Your Customer'' Guidance and 
          Red Flags

    Authority: 50 U.S.C. app. 2401 et. seq.; 50 U.S.C. 1701 et. seq.; 
E.O. 13026, 61 FR 58767, 3 CFR, 1996 Comp., p. 228; E.O. 13222, 66 FR 
44025, 3 CFR, 2001 Comp., p. 783; Notice of July 23, 2008, 73 FR 43603 
(July 25, 2008).

    Source: 61 FR 12740, Mar. 25, 1996, unless otherwise noted.



Sec. 732.1  Steps overview.

    (a)(1) Introduction. 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 Sec. 732.2 through Sec. 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:
    (i) The scope of the EAR (part 734 of the EAR);
    (ii) Each of the general prohibitions (part 736 of the EAR);
    (iii) The License Exceptions (part 740 of the EAR); and
    (iv) Other requirements such as clearing your export with the U.S. 
Customs Service, keeping records, and completing and documenting license 
applications.

[[Page 198]]

    (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.
    (b) Facts about your transaction. The following five types of facts 
determine your obligations under the EAR and will be of help to you in 
reviewing these steps:
    (1) What is it? What an item is, for export control purposes, 
depends on its classification, which is its place on the Commerce 
Control List (see part 774 of the EAR).
    (2) Where is it going? The country of ultimate destination for an 
export or reexport also determines licensing requirements (see parts 738 
and 774 of the EAR concerning the Country Chart and the Commerce Control 
List).
    (3) Who will receive it? The ultimate end-user of your item cannot 
be a bad end-user. See General Prohibition Four (Denial Orders) in Sec. 
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.
    (4) What will they do with it? The ultimate end-use of your item 
cannot be a bad end-use. See General Prohibition Five (End-Use End-User) 
in Sec. 736.2(b)(5) and part 744 of the EAR for general end-use and 
end-user restrictions.
    (5) What else do they do? Conduct such as contracting, financing, 
and freight forwarding in support of a proliferation project (as 
described in Sec. 744.6 of the EAR) may prevent you from dealing with 
someone.
    (c) Are your items and activities subject to the EAR? 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.
    (d) Does your item or activity require a license under one or more 
of the ten general prohibitions?--(1) Brief summary of the ten general 
prohibitions. The general prohibitions are found in part 736 of the EAR 
and referred to in these steps. They consist, very briefly, of the 
following:
    (i) General Prohibition One (Exports and Reexports): Export and 
reexport of controlled items to listed countries.
    (ii) General Prohibition Two (Parts and Components Reexports): 
Reexport and export from abroad of foreign-made items incorporating more 
than a de minimis amount of controlled U.S. content.
    (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.
    (iv) General Prohibition Four (Denial Orders): Engaging in actions 
prohibited by a denial order.
    (v) General Prohibition Five (End-Use End-User): Export or reexport 
to prohibited end-user or end-users.
    (vi) General Prohibition Six (Embargo): Export or reexport to 
embargoed destinations.
    (vii) General Prohibition Seven (U.S. Person Proliferation 
Activity): Support of proliferation activities.
    (viii) General Prohibition Eight (In-Transit): In-transit shipments 
and items to be unladen from vessels and aircraft.
    (ix) General Prohibition Nine (Orders, Terms and Conditions): 
Violation of any orders, terms, or conditions.
    (x) General Prohibition Ten (Knowledge Violation to Occur): 
Proceeding with transactions with knowledge that a violation has 
occurred or is about to occur.
    (2) Controls on items on the Commerce Control List (CCL). 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.

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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, Iran, and North 
Korea. For these countries, you may skip Steps 7 through 11 and go 
directly to Step 12.
    (3) Controls on activities. 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, Iran, and 
North Korea), 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.
    (4) General prohibitions. 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.
    (e) Is a License Exception available to overcome the license 
requirement? 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.
    (f) How do you apply for a license? 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.

[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; 72 FR 3724, Jan. 26, 2007]



Sec. 732.2  Steps regarding scope of the EAR.

    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.
    (a) Step 1: Items subject to the exclusive jurisdiction of another 
Federal agency. 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 Sec. 734.3 of the EAR.
    (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.
    (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.
    (b) Step 2: Publicly available technology and software. 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 are outside the scope of the EAR.

[[Page 200]]

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) and mass 
market encryption software with symmetric key length exceeding 64-bits 
classified under ECCN 5D992 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 and mass market encryption software 
with symmetric key length exceeding 64-bits classified under ECCN 5D992.
    (c) Step 3: Reexport of U.S.-origin items. 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 Sec. 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.
    (d) Step 4: Foreign-made items incorporating controlled U.S.-origin 
items. This step is appropriate only for items that are made outside the 
United States and not currently located in the United States. Special 
requirements and restrictions apply to foreign-made items that 
incorporate U.S.-origin encryption items (see Sec. 734.4(a)(2), (b), 
and (g) of the EAR).
    (1) Determining whether your foreign made item is subject to the 
EAR. Using the guidance provided in Supplement No. 2 to part 734 of the 
EAR, determine whether controlled U.S.-origin items are incorporated 
into the foreign-made item and are above the de minimis level set forth 
in Sec. 734.4 of the EAR.
    (2) If no U.S.-origin controlled items are incorporated or if the 
percentage of incorporated U.S.-origin controlled items are equal to or 
below the de minimis level described in Sec. 734.4 of the EAR, then the 
foreign-made item is not subject to the EAR by reason of the de minimis 
rules, and you should go on to consider Step 6 regarding the foreign-
produced direct product rule.
    (3) If the foreign-made item incorporates more than the de minimis 
level of U.S.-origin items, then that item is subject to the EAR and you 
should skip to Step 7 at Sec. 732.3 of this part and consider the steps 
regarding all other general prohibitions, license exceptions, and other 
requirements to determine applicability of these provisions to the 
foreign-made item.
    (e) [Reserved]
    (f) Step 6: Foreign-made items produced with certain U.S. technology 
for export to specified destinations. This step is appropriate for 
foreign-made items in foreign countries.
    (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) (Sec. 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:
    (i) Country scope of prohibition. 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);
    (ii) Scope of technology or software used to create direct products 
subject to the prohibition. 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 Sec. 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
    (iii) Scope of direct products subject to the prohibition. 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).

[[Page 201]]

    (2) License Exceptions. 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.
    (3) Subject to the EAR. 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:
    (i) U.S.-origin commodities, software and technology unless 
controlled for export exclusively by another Federal agency or unless 
publicly available;
    (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.)

[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; 73 FR 56968, Oct. 1, 2008; 73 FR 57503, Oct. 3, 2008]



Sec. 732.3  Steps regarding the ten general prohibitions.

    (a) Introduction. 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) (Sec. 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 (Sec. 736.2(b) (4) through (10) of the EAR).
    (b) Step 7: Classification. (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.
    (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.
    (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 any CCL entry and appears at the end of each 
Category on the CCL.
    (c) Step 8: Country of ultimate destination. 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.
    (d) Step 9: Reason for control and the Country Chart--(1) Reason for 
control and column identifier within the Export Control Classification 
Number (ECCN). 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

[[Page 202]]

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.
    (2) Reason for control within the Country Chart. 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 Sec. 
738.4 of the EAR for comprehensive instructions on using the Country 
Chart and a detailed example.
    (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 Sec. 736.2 (b)(1), (b)(2), and (b)(3) of the 
EAR).
    (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.
    (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.
    (3) License requirements not on the Country Chart. 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 Sec. 
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.
    (4) Destinations subject to embargo provisions. The Country Chart 
does not apply to Cuba, Iran, and North Korea; 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.
    (5) Items subject to the EAR but not on the CCL. 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.
    (e) Step 10: Foreign-made items incorporating controlled U.S.-origin 
items and the de minimis rules--(1) De minimis rules. If your foreign-
made item abroad is a foreign-made commodity that incorporates 
controlled U.S.-origin commodities, a foreign-made commodity that is 
`bundled' with controlled U.S.-origin software, foreign-made software 
that is commingled with controlled U.S.-origin software, or foreign-made 
technology that is commingled with controlled U.S.-origin technology, 
then it is subject to the EAR if the U.S.-origin controlled content 
exceeds the de minimis levels described in Sec. 734.4 of the EAR.
    (2) Guidance for calculations. For guidance on how to calculate the 
U.S.-controlled content, refer to supplement no. 2 to part 734 of the 
EAR. Note, U.S.-origin technology controlled by ECCN 9E003.a.1 through 
a.11, and .h, and related controls, and encryption software controlled 
for ``EI'' reasons under ECCN 5D002 (not eligible for de minimis 
treatment pursuant to Sec. 734.4(b) of the EAR) or encryption 
technology controlled for ``EI'' reasons under ECCN

[[Page 203]]

5E002 (not eligible for de minimis treatment pursuant to Sec. 
734.4(a)(2) of the EAR) 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 software or technology is subject to the EAR.
    (f) Step 11: Foreign-produced direct product. 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 Sec. 732.2(f) of this 
part.
    (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) (Sec. 736.2(b)(3) of the EAR). Your item is 
subject to this general prohibition if your transaction meets each of 
the following conditions:
    (i) Country scope of prohibition. 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 Sec. 736.2(b)(3) of 
the EAR);
    (ii) Scope of technology or software used to create direct products 
subject to the prohibition. 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 Sec. 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
    (iii) Scope of direct products subject to the prohibition. 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).
    (2) License Exceptions. 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.
    (g) Step 12: Persons denied export privileges. (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 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, i.e., both items on the CCL and within EAR99.
    (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.
    (h) STEP 13: Prohibited end-uses and end-users. (1) Review the end-
uses and end-users prohibited under General Prohibition Five (End-Use 
and End-User) (Sec. 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.

[[Page 204]]

    (2) Under License Exception TSU (Sec. 740.13 of the EAR), operation 
technology and software, sales technology, and software updates overcome 
General Prohibition Five (End-Use and End-User) (Sec. 736.2(b)(5) of 
the EAR) if all terms and conditions of these provisions are met by the 
exporter or reexporter.
    (i) Step 14: Embargoed countries and special destinations. If your 
destination for any item is Cuba, Iran, Iraq, North Korea, 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:
    (1) You are exporting or reexporting only publicly available 
technology or software or other items outside the scope of the EAR, or
    (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) (Sec. 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.
    (j) Step 15: Proliferation activity of U.S. persons unrelated to 
exports and reexports. (1) Review the scope of activity prohibited by 
General Prohibition Seven (U.S. Person Proliferation Activity) (Sec. 
736.2(b)(7) of the EAR) as that activity is described in Sec. 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.
    (2) Review the definition of U.S. Person in part 744 of the EAR.
    (k) Step 16: In-transit. 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.
    (l) Step 17: Review orders, terms, and conditions. 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 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.
    (m) Step 18: Review the ``Know Your Customer'' Guidance and General 
Prohibition Ten (Knowledge Violation to Occur). 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.
    (n) Step 19: Complete the review of the general prohibitions. 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

[[Page 205]]

you and your contemplated transaction or activity.
    (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 Sec. 732.4 of this part regarding License 
Exceptions and proceed directly to the Steps in Sec. 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.
    (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.
    (3) If one or more of the ten general prohibitions are applicable, 
continue with the remaining steps.

[61 FR 12740, Mar. 25, 1996]

    Editorial Note: For Federal Register citations affecting Sec. 
732.3, see the List of CFR Sections Affected, which appears in the 
Finding Aids section of the printed volume and on GPO Access.



Sec. 732.4  Steps regarding License Exceptions.

    (a) Introduction to Steps for License Exceptions. 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.
    (b) Steps for License Exceptions--(1) Step 20: Applicability of 
General Prohibitions. Determine whether any one or more of the general 
prohibitions described in Sec. 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.
    (2) Step 21: Applicability of restrictions on all License 
Exceptions. Determine whether any one or more of the restrictions in 
Sec. 740.2 of the EAR applies to your export or reexport. If any one or 
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.
    (3) Step 22: Terms and conditions of the License Exceptions. (i) If 
none of the restrictions in Sec. 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.
    (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.
    (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

[[Page 206]]

only to the extent each License Exception expressly authorizes 
reexports. License Exception APR authorizes reexports only.
    (iv) If you are exporting under License Exceptions GBS, CIV, LVS, 
APP, TSR, or GOV, you should review Sec. 743.1 of the EAR to determine 
the applicability of certain reporting requirements.
    (4) Step 23: Scope of License Exceptions. Some License Exceptions 
are limited by country or by type of item.
    (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.
    (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.
    (5) Step 24: Compliance with all terms and conditions. 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.
    (6) Step 25: License requirements. 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.
    (7) Step 26: License applications. 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.

[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]



Sec. 732.5  Steps regarding Shipper's Export Declaration or Automated Export 

System record, Destination Control Statements, and recordkeeping.

    (a) Step 27: Shipper's Export Declaration (SED) or Automated Export 
System (AES) record. Exporters or agents authorized to complete the 
Shipper's Export Declaration (SED), or to file SED information 
electronically using the Automated Export System (AES), should review 
Sec. 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 Sec. 732.6.
    (1) Entering license authority. 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 Sec. 758.1(g) of the EAR and 15 CFR 30.7(m) of the 
FTSR.
    (i) License number and expiration date. 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.
    (ii) License Exception. If you are exporting under the authority of 
a License Exception, you must enter the correct License Exception symbol 
(e.g., LVS, GBS, CIV) on the SED or AES record. See Sec. 740.1 and 
Sec. 740.2 of the EAR.
    (iii) NLR. 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

[[Page 207]]

be exported are subject to the EAR but not listed on the Commerce 
Control List (CCL) (i.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.
    (2) Item description. 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 Sec. 758.1(g) of the EAR; and 
15 CFR 30.7(l) of the FTSR.
    (3) Entering the ECCN. 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 Sec. 740.9(b)(3). See Sec. 758.1(g) of the EAR.
    (b) Step 28: Destination Control Statement. 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 Sec. 752.15 of the EAR 
for DCS requirements when using a Special Comprehensive License; 
otherwise, DCS requirements do not apply to reexports. See Sec. 758.6 
of the EAR.
    (c) Step 29: Recordkeeping. 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.

[65 FR 42568, July 10, 2000]



Sec. 732.6  Steps for other requirements.

    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:
    (a) Requirements relating to the use of a license in Sec. 758.4 of 
the EAR.
    (b) Obligations of carriers, forwarders, exporters and others to 
take specific steps and prepare and deliver certain documents to assure 
that items 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 Sec. 758.1 through Sec. 758.6 of the 
EAR.
    (c) Duty of carriers to return or unload shipments at the direction 
of U.S. Government officials (see Sec. 758.8 of the EAR).
    (d) Specific obligations imposed on parties to Special Comprehensive 
licenses in part 752 of the EAR.
    (e) Recordkeeping requirements imposed in part 762 of the EAR.
    (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.
    (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.

[61 FR 12740, Mar. 25, 1996, as amended at 65 FR 42568, July 10, 2000]

[[Page 208]]



              Sec. Supplement 1 to Part 732--Decision Tree
[GRAPHIC] [TIFF OMITTED] TR06FE04.000


[69 FR 5687, Feb. 6, 2004]

[[Page 209]]



         Sec. Supplement 2 to Part 732--Am I Subject to the EAR?
[GRAPHIC] [TIFF OMITTED] TR06FE04.001


[69 FR 5687, Feb. 6, 2004]

[[Page 210]]



Sec. Supplement No. 3 to Part 732--BIS's ``Know Your Customer'' Guidance 
                              and Red Flags

                     ``Know Your Customer'' Guidance

    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.
    (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.
    (1) Decide whether there are ``red flags''. 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.
    (2) If there are ``red flags'', inquire. 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.
    (3) Do not self-blind. 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.
    (4) Employees need to know how to handle ``red flags''. 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.
    (5) Reevaluate all the information after the inquiry. 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.
    (6) Refrain from the transaction or advise BIS and wait. 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.
    (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.

                                Red Flags

    Possible indicators that an unlawful diversion might be planned by 
your customer include the following:
    1. The customer or purchasing agent is reluctant to offer 
information about the end-use of a product.
    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.
    3. The product ordered is incompatible with the technical level of 
the country to

[[Page 211]]

which the product is being shipped. For example, semiconductor 
manufacturing equipment would be of little use in a country without an 
electronics industry.
    4. The customer has little or no business background.
    5. The customer is willing to pay cash for a very expensive item 
when the terms of the sale call for financing.
    6. The customer is unfamiliar with the product's performance 
characteristics but still wants the product.
    7. Routine installation, training or maintenance services are 
declined by the customer.
    8. Delivery dates are vague, or deliveries are planned for out-of-
the-way destinations.
    9. A freight forwarding firm is listed as the product's final 
destination.
    10. The shipping route is abnormal for the product and destination.
    11. Packaging is inconsistent with the stated method of shipment or 
destination.
    12. When questioned, the buyer is evasive or unclear about whether 
the purchased product is for domestic use, export or reexport.

[61 FR 12740, Mar. 25, 1996. Redesignated and amended at 62 FR 25453, 
25456, May 9, 1997]



PART 734_SCOPE OF THE EXPORT ADMINISTRATION REGULATIONS--Table of Contents




Sec.
734.1 Introduction.
734.2 Important EAR terms and principles.
734.3 Items subject to the EAR.
734.4 De minimis U.S. content.
734.5 Activities of U.S. and foreign persons subject to the EAR.
734.6 Assistance available from BIS for determining licensing and other 
          requirements.
734.7 Published information and software.
734.8 Information resulting from fundamental research.
734.9 Educational information.
734.10 Patent applications.
734.11 Government-sponsored research covered by contract controls.
734.12 Effect on foreign laws and regulations.

Supplement No. 1 to Part 734--Questions and Answers--Technology and 
          Software Subject to the EAR
Supplement No. 2 to Part 734--Guidelines for De Minimus Rules

    Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; E.O. 
12938, 59 FR 59099, 3 CFR, 1994 Comp., p. 950; E.O. 13020, 61 FR 54079, 
3 CFR, 1996 Comp. p. 219; E.O. 13026, 61 FR 58767, 3 CFR, 1996 Comp., p. 
228; E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 783; Notice of July 
23, 2008, 73 FR 43603 (July 25, 2008); Notice of November 10, 2008, 73 
FR 67097 (November 12, 2008).



Sec. 734.1  Introduction.

    (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.
    (b) This part does not address any of the provisions set forth in 
part 760 of the EAR, Restrictive Trade Practices or Boycotts.
    (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.

[61 FR 12746, Mar. 25, 1996, as amended at 69 FR 5690, Feb. 6, 2004]



Sec. 734.2  Important EAR terms and principles.

    (a) Subject to the EAR--Definition. (1) ``Subject to the EAR'' is a 
term used in the EAR to describe those items and activities over which 
BIS exercises regulatory jurisdiction under the EAR.

[[Page 212]]

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 Sec. Sec. 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 Sec. 734.6 of this part. Publicly available 
technology and software not subject to the EAR are described in 
Sec. Sec. 734.7 through 734.11 and supplement no. 1 to this part.
    (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.
    (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.
    (b) Export and reexport--(1) Definition of export. ``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.
    (2) Export of technology or software. (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:
    (i) Any release of technology or software subject to the EAR in a 
foreign country; or
    (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 Sec. 
736.2(b)(10) of the EAR.
    (3) Definition of ``release'' of technology or software. Technology 
or software is ``released'' for export through:
    (i) Visual inspection by foreign nationals of U.S.-origin equipment 
and facilities;
    (ii) Oral exchanges of information in the United States or abroad; 
or
    (iii) The application to situations abroad of personal knowledge or 
technical experience acquired in the United States.
    (4) Definition of reexport. ``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.
    (5) Reexport of technology or software. 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

[[Page 213]]

knowledge or reason to know a violation is about to occur is prohibited 
by Sec. 736.2(b)(10) of the EAR.
    (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.
    (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.
    (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 Schedule C, Classification Codes and 
Descriptions for U.S. Export Statistics, issued by the Bureau of the 
Census.
    (9) Export of encryption source code and object code software. (i) 
For purposes of the EAR, the export of encryption source code and object 
code software means:
    (A) An actual shipment, transfer, or transmission out of the United 
States (see also paragraph (b)(9)(ii) of this section); or
    (B) A transfer of such software in the United States to an embassy 
or affiliate of a foreign country.
    (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 Sec. 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 Sec. 734.3(b)(3) of the EAR.
    (iii) Subject to the General Prohibitions described in part 736 of 
the EAR, such precautions for Internet transfers of products eligible 
for export under Sec. 740.17 (b)(2) of the EAR (encryption software 
products, certain encryption source code and general purpose encryption 
toolkits) shall include such measures as:
    (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.g., ``.gov,'' ``.gouv,'' ``.mil'' or similar 
addresses);
    (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
    (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

[[Page 214]]

are adequate to assure legal undertakings similar to written 
acknowledgments.

[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; 72 FR 3945, Jan. 29, 2007]



Sec. 734.3  Items subject to the EAR.

    (a) Except for items excluded in paragraph (b) of this section, the 
following items are subject to the EAR:
    (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;
    (2) All U.S. origin items wherever located;
    (3) Foreign-made commodities that incorporate controlled U.S.-origin 
commodities, foreign-made commodities that are `bundled' with controlled 
U.S.-origin software, foreign-made software that is commingled with 
controlled U.S.-origin software, and foreign-made technology that is 
commingled with controlled U.S.-origin technology:
    (i) In any quantity, as described in Sec. 734.4(a) of this part; or
    (ii) In quantities exceeding the de minimis levels, as described in 
Sec. 734.4(c) or Sec. 734.4(d) of this part;
    (4) Certain foreign-made direct products of U.S. origin technology 
or software, as described in Sec. 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

    Note to paragraph (a)(4): Certain foreign-manufactured items 
developed or produced from U.S.-origin encryption items exported 
pursuant to License Exception ENC are subject to the EAR. See sections 
740.17(a) and 740.17(b)(4)(ii) of the EAR.

    (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 Sec. 736.2(b)(3) of 
the EAR.
    (b) The following items are not subject to the EAR:
    (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:
    (i) Department of State. 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).
    (ii) Treasury Department, Office of Foreign Assets Control (OFAC). 
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 et seq.), and 
International Emergency Economic Powers Act (50 U.S.C. 1701, et seq.)
    (iii) U.S. Nuclear Regulatory Commission (NRC). 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 et seq.).
    (iv) Department of Energy (DOE). 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 et seq.).
    (v) Patent and Trademark Office (PTO). 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.
    (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

[[Page 215]]

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 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.
    (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:
    (i) Are already published or will be published as described in Sec. 
734.7 of this part;
    (ii) Arise during, or result from, fundamental research, as 
described in Sec. 734.8 of this part;
    (iii) Are educational, as described in Sec. 734.9 of this part;
    (iv) Are included in certain patent applications, as described in 
Sec. 734.10 of this part.

    Note to paragraphs (b)(2) and (b)(3) of this section:
    A printed book or other printed material setting forth encryption 
source code is not itself subject to the EAR (see Sec. 734.3(b)(2)). 
However, notwithstanding Sec. 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 Sec. 734.3(b)(3)).

    (4) Foreign made items that have less than the de minimis percentage 
of controlled U.S. content based on the principles described in Sec. 
734.4 of this part.
    (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 not listed 
on the CCL are designated as ``EAR99.''

[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; 73 FR 
56968, Oct. 1, 2008; 73 FR 57503, Oct. 3, 2008]



Sec. 734.4  De minimis U.S. content.

    (a) Items for which there is no de minimis level. (1) There is no de 
minimis 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.
    (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.
    (3) There is no de minimis level for foreign-made:
    (i) Commercial primary or standby instrument systems of the type 
described in ECCN 7A994 on the Commerce Control List (supplement no. 1 
to part 774 the EAR) when the systems integrate QRS11-00100-100/101 
Micromachined Angular Rate Sensors;
    (ii) Commercial automatic flight control systems when the systems 
integrate QRS11-00050-443/569 Micromachined Angular Rate Sensors; and
    (iii) Aircraft of the type described in ECCN 9A991 when such 
aircraft incorporate a primary or standby instrument system integrating 
a QRS11-00100-100/101 sensor or an automatic flight control system 
integrating a QRS11-00050-443/569 sensor.

    Note to paragraph (a)(3): 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

[[Page 216]]

part of a commercial primary or standby instrument system of the type 
described in ECCN 7A994, or aircraft of the type described in ECCN 9A991 
that incorporates a commercial primary or standby instrument that has 
such a sensor integrated, or is exported solely for integration into 
such systems; or when the QRS11-00050-443/569 is integrated into a 
commercial automatic flight control system of the type described in ECCN 
7A994, or aircraft of the type described in ECCN 9A991 that incorporates 
an automatic flight control system that has such a sensor integrated, or 
is exported solely for integration into such a system.

    (4) There is no de minimis level for U.S.-origin technology 
controlled by ECCN 9E003a.1 through a.11, and .h. when redrawn, used, 
consulted, or otherwise commingled abroad.
    (5) 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 de minimis provisions of 
the EAR. In addition, the de minimis rules 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 Sec. 744.6 of 
the EAR.
    (b) Special requirements for certain encryption items. Foreign made 
items that incorporate U.S. origin items that are listed in this 
paragraph are subject to the EAR unless they meet the de minimis level 
and destination requirements of paragraph (c) or (d) of this section and 
the requirements of this paragraph.
    (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:
    (i) Authorized for license exception TSU because of having met the 
notification requirements of Sec. 740.13(e) of the EAR (ECCN 5D002 
only);
    (ii) Authorized for License Exception ENC by BIS after a review 
pursuant to Sec. 740.17(b)(3) of the EAR; or
    (iii) Authorized for License Exception ENC by BIS after a review 
pursuant to Sec. 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.
    (2) The U.S. origin encryption items, if controlled under ECCNs 
5A992, 5D992, or 5E992 must:
    (i) Have met the notification requirements of Sec. 742.15(b)(1) of 
the EAR; or
    (ii) Have been determined by BIS to be ``mass market'' commodities 
or software after a review in accordance with Sec. 742.15(b)(2) of the 
EAR (ECCNs 5A992 and 5D992 only); or
    (iii) Be an item described in Sec. 742.15(b)(3)(ii) or Sec. 
742.15(b)(3)(iii) of the EAR.

    Note to paragraph (b): See supplement No. 2 to this part for de 
minimis calculation procedures and reporting requirements.

    (c) 10% De Minimis Rule. Except as provided in paragraphs (a) and 
(b)(1)(iii) of this section 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 any country in the 
world. See Supplement No. 2 of this part for guidance on calculating 
values.
    (1) Reexports of a foreign-made commodity incorporating controlled 
U.S.-origin commodities or ``bundled'' with U.S.-origin software valued 
at 10% or less of the total value of the foreign-made commodity;

    Notes to paragraph (c)(1): (1) U.S.-origin software is not eligible 
for the de minimis exclusion and is subject to the EAR when exported or 
reexported separately from (i.e., not bundled or incorporated with) the 
foreign-made item.
    (2) For the purposes of this section, `bundled' means software that 
is reexported together with the item and is configured for the item, but 
is not necessarily physically integrated into the item.
    (3) The de minimis exclusion under paragraph (c)(1) only applies to 
software that is listed on the Commerce Control List (CCL) and has a 
reason for control of anti-terrorism (AT) only or software that is 
designated as EAR99 (subject to the EAR, but not listed on the CCL). For 
all other software, an independent assessment of whether the software by 
itself is subject to the EAR must be performed.

    (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

[[Page 217]]

    (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. Before you may rely upon the de minimis 
exclusion for foreign-made technology commingled with controlled U.S.-
origin technology, you must file a one-time report. See Supplement No. 2 
to part 734 for submission requirements.
    (d) 25% De Minimis Rule. 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 listed in Country Group E:1 of Supplement No. 
1 to part 740 of the EAR. See Supplement No. 2 to this part for guidance 
on calculating values.
    (1) Reexports of a foreign-made commodity incorporating controlled 
U.S.-origin commodities or ``bundled'' with U.S.-origin software valued 
at 25% or less of the total value of the foreign-made commodity;

    NOTES to paragraph (d)(1): (1) U.S.-origin software is not eligible 
for the de minimis exclusion and is subject to the EAR when exported or 
reexported separately from (i.e., not bundled or incorporated with) the 
foreign-made item.
    (2) For the purposes of this section, ``bundled'' means software 
that is reexported together with the item and is configured for the 
item, but is not necessarily physically integrated into the item.
    (3) The de minimis exclusion under paragraph (d)(1) only applies to 
software that is listed on the Commerce Control List (CCL) and has a 
reason for control of anti-terrorism (AT) only or software that is 
classified as EAR99 (subject to the EAR, but not listed on the CCL). For 
all other software, an independent assessment of whether the software by 
itself is subject to the EAR must be performed.

    (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
    (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. Before you may rely upon the de minimis 
exclusion for foreign-made technology commingled with controlled U.S.-
origin technology, you must file a one-time report. See Supplement No. 2 
to part 734 for submission requirements.
    (e) You are responsible for making the necessary calculations to 
determine whether the de minimis provisions apply to your situation. See 
Supplement No. 2 to part 734 for guidance regarding calculation of U.S. 
controlled content.
    (f) See Sec. 770.3 of the EAR for principles that apply to 
commingled U.S.-origin technology and software.
    (g) Recordkeeping requirement. The method by which you determined 
the percentage of U.S. content in foreign software or technology must be 
documented and retained in your records in accordance with the 
recordkeeping requirements in part 762 of the EAR. Your records should 
indicate whether the values you used in your calculations are actual 
arms-length market prices or prices derived from comparable transactions 
or costs of production, overhead, and profit.

[61 FR 12746, Mar. 25, 1996]

    Editorial Note: For Federal Register citations affecting Sec. 
734.4, see the List of CFR Sections Affected, which appears in the 
Finding Aids section of the printed volume and on GPO Access.



Sec. 734.5  Activities of U.S. and foreign persons subject to the EAR.

    The following kinds of activities are subject to the EAR:
    (a) Certain activities of U.S. persons related to the proliferation 
of nuclear explosive devices, chemical or biological weapons, missile 
technology as described in Sec. 744.6 of the EAR, and the proliferation 
of chemical weapons as described in part 745 of the EAR.
    (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.
    (c) Technical assistance by U.S. persons with respect to encryption 
commodities or software as described in Sec. 744.9 of the EAR.

[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]

[[Page 218]]



Sec. 734.6  Assistance available from BIS for determining licensing and other 

requirements.

    (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.
    (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.
    (c) If you need help in determining BIS licensing or other 
requirements you may ask BIS for help by following the procedures 
described in Sec. 748.3 of the EAR.



Sec. 734.7  Published information and software.

    (a) Information is ``published'' when it becomes generally 
accessible to the interested public in any form, including:
    (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));
    (2) Ready availability at libraries open to the public or at 
university libraries (See Supplement No. 1 to this part, Question A(6));
    (3) Patents and open (published) patent applications available at 
any patent office; and
    (4) Release at an open conference, meeting, seminar, trade show, or 
other open gathering.
    (i) A conference or gathering is ``open'' if all technically 
qualified members of the public are eligible to attend and attendees are 
permitted to take notes or otherwise make a personal record (not 
necessarily a recording) of the proceedings and presentations.
    (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)).
    (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)).
    (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).
    (c) Notwithstanding paragraphs (a) and (b) of this section, note 
that

[[Page 219]]

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. See Sec. 740.13(e) of the EAR for certain 
exports and reexports under license exception.

[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]



Sec. 734.8  Information resulting from fundamental research.

    (a) Fundamental research. Paragraphs (b) through (d) of this section 
and Sec. 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 Sec. 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. See Sec. 740.13(e) of the EAR for certain 
exports and reexports under license exception.
    (b) University based research. (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.)
    (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).)
    (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.
    (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).)
    (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).)
    (6) The provisions of Sec. 734.11 of this part will apply if a 
university or its researchers accept specific national security controls 
(as defined in Sec. 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).)
    (c) Research based at Federal agencies or FFRDCs. Research conducted 
by scientists or engineers working for a Federal agency or a Federally 
Funded Research and Development Center

[[Page 220]]

(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).)
    (d) Corporate research. (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 Sec. 
734.11(b) of this part.
    (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).)
    (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.
    (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.
    (e) Research based elsewhere. 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).)

[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]



Sec. 734.9  Educational information.

    ``Educational information'' referred to in Sec. 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 Sec. 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. See 
Sec. 740.13(e) of the EAR for certain exports and reexports under 
license exception.

[67 FR 38861, June 6, 2002]



Sec. 734.10  Patent applications.

    The information referred to in Sec. 734.3(b)(3)(iv) of this part 
is:
    (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;
    (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; \1\ or
---------------------------------------------------------------------------

    \1\ 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.
---------------------------------------------------------------------------

    (c) Information contained in a patent application when sent to a 
foreign country before or within six months

[[Page 221]]

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.



Sec. 734.11  Government-sponsored research covered by contract controls.

    (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, Sec. 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.
    (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).)



Sec. 734.12  Effect on foreign laws and regulations.

    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.



Sec. Supplement No. 1 to Part 734--Questions and Answers--Technology and 
                       Software Subject to the EAR

    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 
classified under ECCN 5D002 for ``EI'' reasons on the Commerce Control 
List or to mass market encryption software with symmetric key length 
exceeding 64-bits classified under ECCN 5D992. This Supplement is 
divided into nine sections according to topic as follows:
    Section A: Publication of technology and exports and reexports of 
technology that has been or will be published.
    Section B: Release of technology at conferences.
    Section C: Educational instruction.
    Section D: Research, correspondence, and informal scientific 
exchanges.
    Section E: Federal contract controls.
    Section F: Commercial consulting.
    Section G: Software.
    Section H: Availability in a public library.
    Section I: Miscellaneous.

                         Section A: Publication

    Question A(1): 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?
    Answer: 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 
(Sec. Sec. 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.
    Question A(2): Would the answer differ depending on where I work or 
where I performed the research?
    Answer: No. Of course, the result would be different if your 
employer or another sponsor of your research imposed restrictions on its 
publication (Sec. 734.8 of this part).
    Question (A)3: 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?

[[Page 222]]

    Answer: 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 (Sec. 
734.7(a)(4)(iii) of this part).
    Question A(4): 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?
    Answer: 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.
    Question A(5): 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?
    Answer: Yes. The price is above the cost of reproduction and 
distribution (Sec. 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.
    Question A(6): 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?
    Answer: 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 Sec. 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.
    Question A(7): 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?
    Answer: 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 (Sec. 
734.7(a) of this part).

                         Section B: Conferences

    Question B(1): 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?
    Answer: 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 (Sec. 734.7(a) of this part).
    Question B(2): Would it make any difference if there were a 
prohibition on making any notes or other personal record of what 
transpires at the conference?
    Answer: 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''.
    Question B(3): Would it make any difference if there were also a 
registration fee?
    Answer: 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 (Sec. 734.7(a)(4)(ii) of 
this part).
    Question B(4): Would it make any difference if the conference were 
to take place in another country?
    Answer: No.
    Question B(5): Must I have a license to send the paper I propose to 
present at such a foreign conference to the conference organizer for 
review?
    Answer: 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 (Sec. 734.7(a)(4)(iii) of this part).

[[Page 223]]

    Question B(6): Would the answers to any of the foregoing questions 
be different if my work were supported by the Federal Government?
    Answer: 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.

                   Section C: Educational Instruction

    Question C(1): 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?
    Answer: No. Release of information by instruction in catalog courses 
and associated teaching laboratories of academic institutions is not 
subject to the EAR (Sec. 734.9 of this part).
    Question C(2): Would it make any difference if some of the students 
were from countries to which export licenses are required?
    Answer: No.
    Question C(3): Would it make any difference if I talk about recent 
and as yet unpublished results from my laboratory research?
    Answer: No.
    Question C(4): Even if that research is funded by the Government?
    Answer: Even then, but you would not be released from any separate 
obligations you have accepted in your grant or contract.
    Question C(5): Would it make any difference if I were teaching at a 
foreign university?
    Answer: No.
    Question C(6): We teach proprietary courses on design and 
manufacture of high-performance machine tools. Is the instruction in our 
classes subject to the EAR?
    Answer: Yes. That instruction would not qualify as ``release of 
educational information'' under Sec. 734.9 of this part because your 
proprietary business does not qualify as an ``academic institution'' 
within the meaning of Sec. 734.9 of this part. Conceivably, however, 
the instruction might qualify as ``release at an open * * * seminar, * * 
* or other open gathering'' under Sec. 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.

 Section D: Research, Correspondence, and Informal Scientific Exchanges

    Question D(1): Do I need a license in order for a foreign graduate 
student to work in my laboratory?
    Answer: Not if the research on which the foreign student is working 
qualifies as ``fundamental research'' under Sec. 734.8 of this part. In 
that case, the research is not subject to the EAR.
    Question D(2): 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?
    Answer: 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 
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.
    Question D(3): 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?
    Answer: 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'' 
(Sec. 734.8(a) of this part). Information arising during or resulting 
from such research is not subject to the EAR (Sec. 734.3(b)(3) of this 
part).
    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. Send written

[[Page 224]]

communications, via courier, to: Department of Commerce, Bureau of 
Industry and Security, Room 2705, 14th Street and Pennsylvania Ave., 
NW., Washington, DC 20230.
    Question D(4): Would it make any difference if I were proposing to 
talk with a PRC expert in China?
    Answer: No, if the information in question arose during or resulted 
from the same ``fundamental research.''
    Question D(5): Could I properly do some work with him in his 
research laboratory inside China?
    Answer: 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.
    Question D(6): 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?
    Answer: 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 Sec. 734.8(a) of this part.
    Question D(7): 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?
    Answer: 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.
    Question D(8): 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?
    Answer: 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 (Sec. 734.8(a) of this part).
    Question D(9): 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?
    Answer: You probably do need a license (Sec. 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 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.
    Question D(10): 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?
    Answer: 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. (Sec. 734.8(d) of 
this part)
    Question D(11): 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?
    Answer: 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

[[Page 225]]

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 (Sec. 734.8(c) of this part).

                  Section E: Federal Contract Controls

    Question E(1): 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 Sec. 734.8 
of this part. Is the information arising during or resulting from this 
sponsored research subject to the EAR?
    Answer: Under Sec. 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 Sec. 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 Sec. 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.
    Question E(2): Do the Export Administration Regulations restrict my 
ability to publish the results of my research?
    Answer: The Export Administration Regulations are not the means for 
enforcing the national security controls you have agreed to. If such a 
publication violates the contract, you would be subject to 
administrative, civil, and possible criminal penalties under other law.

                    Section F: Commercial Consulting

    Question F(1): I am a professor at a U.S. university, with expertise 
in design and creation of submicron devices. I have been asked to be a 
consultant for a ``third-world'' company that wishes to manufacture such 
devices. Do I need a license to do so?
    Answer: Quite possibly you do. Application abroad of personal 
knowledge or technical experience acquired in the United States 
constitutes an export of that knowledge and experience that is subject 
to the Export Administration Regulations. If any part of the knowledge 
or experience your export or reexport deals with technology that 
requires a license under the EAR, you will need to obtain a license or 
qualify for a License Exception.

                         Section G: Software \2\
---------------------------------------------------------------------------

    \2\ Exporters should note that these provisions do not apply to 
software controlled under the International Traffic in Arms Regulations 
(e.g., certain encryption software).
---------------------------------------------------------------------------

    Question G(1): Is the export or reexport of software in machine 
readable code subject to the EAR when the source code for such software 
is publicly available?
    Answer: If the source code of a software program is publicly 
available, then the machine readable code compiled from the source code 
is software that is publicly available and therefore not subject to the 
EAR.
    Question G(2): Is the export or reexport of software sold at a price 
that does not exceed the cost of reproduction and distribution subject 
to the EAR?
    Answer: Software in machine readable code is publicly available if 
it is available to a community at a price that does not exceed the cost 
of reproduction and distribution. Such reproduction and distribution 
costs may include variable and fixed allocations of overhead and normal 
profit for the reproduction and distribution functions either in your 
company or in a third party distribution system. In your company, such 
costs may not include recovery for development, design, or acquisition. 
In this case, the provider of the software does not receive a fee for 
the inherent value of the software.
    Question G(3): Is the export or reexport of software subject to the 
EAR if it is sold at a price BIS concludes in a classification letter to 
be sufficiently low so as not to subject it to the EAR?
    Answer: In response to classification requests, BIS may choose to 
classify certain software as not subject to the EAR even though it is 
sold at a price above the costs of reproduction and distribution as long 
as the price is nonetheless sufficiently low to qualify for such a 
classification in the judgment of BIS.

                Section H: Available in a Public Library

    Question H(1): Is the export or reexport of information subject to 
the EAR if it is available in a library and sold through an electronic 
or print service?
    Answer: Electronic and print services for the distribution of 
information may be relatively expensive in the marketplace because of 
the value vendors add in retrieving and organizing information in a 
useful way. If such information is also available in a library--itself 
accessible to the public--or has been published in any way, that 
information is ``publicly available'' for those reasons, and the 
information itself continues not to be subject to the EAR even though 
you access

[[Page 226]]

the information through an electronic or print service for which you or 
your employer pay a substantial fee.
    Question H(2): Is the export or reexport of information subject to 
the EAR if the information is available in an electronic form in a 
library at no charge to the library patron?
    Answer: Information available in an electronic form at no charge to 
the library patron in a library accessible to the public is information 
publicly available even though the library pays a substantial 
subscription fee for the electronic retrieval service.
    Question H(3): Is the export or reexport of information subject to 
the EAR if the information is available in a library and sold for more 
than the cost of reproduction and distribution?
    Answer: Information from books, magazines, dissertations, papers, 
electronic data bases, and other information available in a library that 
is accessible to the public is not subject to the EAR. This is true even 
if you purchase such a book at more than the cost of reproduction and 
distribution. In other words, such information is ``publicly available'' 
even though the author makes a profit on your particular purchase for 
the inherent value of the information.

                        Section I: Miscellaneous

    Question I(1): The manufacturing plant that I work at is planning to 
begin admitting groups of the general public to tour the plant 
facilities. We are concerned that a license might be required if the 
tour groups include foreign nationals. Would such a tour constitute an 
export? If so, is the export subject to the EAR?
    Answer: The EAR define exports and reexports of technology to 
include release through visual inspection by foreign nationals of U.S.-
origin equipment and facilities. Such an export or reexport qualifies 
under the ``publicly available'' provision and would not be subject to 
the EAR so long as the tour is truly open to all members of the public, 
including your competitors, and you do not charge a fee that is not 
reasonably related to the cost of conducting the tours. Otherwise, you 
will have to obtain a license, or qualify for a License Exception, prior 
to permitting foreign nationals to tour your facilities (Sec. 734.7 of 
this part).
    Question I(2): Is the export or reexport of information subject to 
the EAR if the information is not in a library or published, but sold at 
a price that does not exceed the cost of reproduction and distribution?
    Answer: Information that is not in a library accessible to the 
public and that has not been published in any way, may nonetheless 
become ``publicly available'' if you make it both available to a 
community of persons and if you sell it at no more than the cost of 
reproduction and distribution. Such reproduction and distribution costs 
may include variable and fixed cost allocations of overhead and normal 
profit for the reproduction and distribution functions either in your 
company or in a third party distribution system. In your company, such 
costs may not include recovery for development, design, or acquisition 
costs of the technology or software. The reason for this conclusion is 
that the provider of the information receives nothing for the inherent 
value of the information.
    Question I(3): Is the export or reexport of information contributed 
to an electronic bulletin board subject to the EAR?
    Answer: Assume each of the following:
    1. Information is uploaded to an electronic bulletin board by a 
person that is the owner or originator of the information;
    2. That person does not charge a fee to the bulletin board 
administrator or the subscribers of the bulletin board; and
    3. The bulletin board is available for subscription to any 
subscriber in a given community regardless of the cost of subscription.
    Such information is ``publicly available'' and therefore not subject 
to the EAR even if it is not elsewhere published and is not in a 
library. The reason for this conclusion is that the bulletin board 
subscription charges or line charges are for distribution exclusively, 
and the provider of the information receives nothing for the inherent 
value of the information.
    Question I(4): Is the export or reexport of patented information 
fully disclosed on the public record subject to the EAR?
    Answer: Information to the extent it is disclosed on the patent 
record open to the public is not subject to the EAR even though you may 
use such information only after paying a fee in excess of the costs of 
reproduction and distribution. In this case the seller does receive a 
fee for the inherent value of the technical data; however, the export or 
reexport of the information is nonetheless not subject to the EAR 
because any person can obtain the technology from the public record and 
further disclose or publish the information. For that reason, it is 
impossible to impose export controls that deny access to the 
information.

[61 FR 12746, Mar. 25, 1996, as amended at 61 FR 68579, Dec. 30, 1996; 
62 FR 25456, May 9, 1997; 73 FR 35, Jan. 2, 2008; 73 FR 57503, Oct. 3, 
2008]



   Sec. Supplement No. 2 to Part 734--Guidelines for De Minimis Rules

    (a) Calculation of the value of controlled U.S.-origin content in 
foreign-made items is to be performed for the purposes of Sec. 734.4 of 
this part, to determine whether the percentage of U.S.-origin content is 
de minimis. (Note that you do not need to make these

[[Page 227]]

calculations if the foreign made item does not require a license to the 
destination in question.) Use the following guidelines to perform such 
calculations:
    (1) U.S.-origin controlled content. To identify U.S.-origin 
controlled content for purposes of the de minimis rules, you must 
determine the Export Control Classification Number (ECCN) of each U.S.-
origin item incorporated into a foreign-made product. Then, you must 
identify which, if any, of those U.S.-origin items would require a 
license from BIS if they were to be exported or reexported (in the form 
in which you received them) to the foreign-made product's country of 
destination. For purposes of identifying U.S.-origin controlled content, 
you should consult the Commerce Country Chart in Supplement No. 1 to 
part 738 of the EAR and controls described in part 746 of the EAR. Part 
744 of the EAR should not be used to identify controlled U.S. content 
for purposes of determining the applicability of the de minimis rules. 
In identifying U.S.-origin controlled content, do not take account of 
commodities, software, or technology that could be exported or 
reexported to the country of destination without a license (designated 
as ``NLR'') or under License Exception GBS (see part 740 of the EAR). 
Commodities subject only to short supply controls are not included in 
calculating U.S. content.

    Note to paragraph (a)(1): U.S.-origin controlled content is 
considered `incorporated' for de minimis purposes if the U.S.-origin 
controlled item is: Essential to the functioning of the foreign 
equipment; customarily included in sales of the foreign equipment; and 
reexported with the foreign produced item. U.S.-origin software may be 
`bundled' with foreign produced commodities; see Sec. 734.4 of this 
part. For purposes of determining de minimis 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.

    (2) Value of U.S.-origin controlled content. The value of the U.S.-
origin controlled content shall reflect the fair market price of such 
content in the market where the foreign product is being produced. In 
most cases, this value will be the same as the actual cost to the 
foreign manufacturer of the U.S.-origin commodity, technology, or 
software. When the foreign manufacturer and the U.S. supplier are 
affiliated and have special arrangements that result in below-market 
pricing, the value of the U.S.-origin controlled content should reflect 
fair market prices that would normally be charged to unaffiliated 
customers in the same foreign market. If fair market value cannot be 
determined based upon actual arms-length transaction data for the U.S.-
origin controlled content in question, then you must determine another 
reliable valuation method to calculate or derive the fair market value. 
Such methods may include the use of comparable market prices or costs of 
production and distribution. The EAR do not require calculations based 
upon any one accounting system or U.S. accounting standards. However, 
the method you use must be consistent with your business practice.
    (3) Foreign-made product value-- (i) General. The value of the 
foreign-made product shall reflect the fair market price of such product 
in the market where the foreign product is sold. In most cases, this 
value will be the same as the actual cost to a buyer of the foreign-made 
product. When the foreign manufacturer and the buyer of their product 
are affiliated and have special arrangements that result in below-market 
pricing, the value of the foreign-made product should reflect fair 
market prices that would normally be charged to unaffiliated customers 
in the same foreign market. If fair market value cannot be determined 
based upon actual arms-length transaction data for the foreign-made 
product in question, then you must determine another reliable valuation 
method to calculate or derive the fair market value. Such methods may 
include the use of comparable market prices or costs of production and 
distribution. The EAR do not require calculations based upon any one 
accounting system or U.S. accounting standards. However, the method you 
use must be consistent with your business practice.
    (ii) Foreign-Made Software. In calculating the value of foreign-made 
software for purposes of the de minimis rules, you may make an estimate 
of future sales of that foreign software. The total value of foreign-
made software will be the sum of: The value of actual sales of that 
software based on orders received at the time the foreign software 
incorporates U.S.-origin content and, if applicable; and an estimate of 
all future sales of that software.

    Note to paragraph (a)(3): Regardless of the accounting systems, 
standard, or conventions you use in the operation of your business, you 
may not depreciate reported fair market values or otherwise reduce fair 
market values through related accounting conventions. Values may be 
historic or projected. However, you may rely on projected values only to 
the extent that they remain consistent with your documentation.

    (4) Calculating percentage value of U.S.-origin items. To determine 
the percentage value of U.S-origin controlled content incorporated in, 
commingled with, or ``bundled'' with the foreign produced item, divide 
the total value of the U.S.-origin controlled content by the foreign-
made item value, then multiply the resulting number times 100. If the 
percentage value of incorporated U.S.-origin items is equal to or less 
than the de

[[Page 228]]

minimis level described in Sec. 734.4 of the EAR, then the foreign-made 
item is not subject to the EAR.
    (b) One-time report. As stated in paragraphs (c) and (d) of Sec. 
734.4, a one-time report is required before reliance on the de minimis 
rules for technology. The purpose of the report is solely to permit the 
U.S. Government to evaluate whether U.S. content calculations were 
performed correctly.
    (1) Contents of report. You must include in your report a 
description of the scope and nature of the foreign technology that is 
the subject of the report and a description of its fair market value, 
along with the rationale and basis for the valuation of such foreign 
technology. Your report must indicate the country of destination for the 
foreign technology reexports when the U.S.-origin controlled content 
exceeds 10%, so that BIS can evaluate whether the U.S.-origin controlled 
content was correctly identified based on paragraph (a)(1) of this 
Supplement. The report does not require information regarding the end-
use or end-users of the reexported foreign technology. You must include 
in your report the name, title, address, telephone number, E-mail 
address, and facsimile number of the person BIS may contact concerning 
your report.
    (2) Submission of report. You must submit your report to BIS using 
one of the following methods:
    (i) E-mail: rpd2@bis.doc.gov;
    (ii) Fax: (202) 482-3355; or
    (iii) Mail or Hand Delivery/Courier: Regulatory Policy Division, 
U.S. Department of Commerce, Bureau of Industry and Security, Regulatory 
Policy Division, 14th and Pennsylvania Avenue, NW., Room 2705, 
Washington, DC 20230.
    (3) Report and wait. If you have not been contacted by BIS 
concerning your report within thirty days after filing the report with 
BIS, you may rely upon the calculations described in the report unless 
and until BIS contacts you and instructs you otherwise. BIS may contact 
you with questions concerning your report or to indicate that BIS does 
not accept the assumptions or rationale for your calculations. If you 
receive such a contact or communication from BIS within thirty days 
after filing the report with BIS, you may not rely upon the calculations 
described in the report, and may not use the de minimis rules for 
technology that are described in Sec. 734.4 of this part, until BIS has 
indicated that such calculations were performed correctly.

[73 FR 56969, Oct. 1, 2008]



PART 736_GENERAL PROHIBITIONS--Table of Contents




Sec.
736.1 Introduction.
736.2 General prohibitions and determination of applicability.

Supplement No. 1 to Part 736--General Orders
Supplement No. 2 to Part 736--Administrative Orders

    Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; 22 
U.S.C. 2151 note; E.O. 12938, 59 FR 59099, 3 CFR, 1994 Comp., p. 950; 
E.O. 13020, 61 FR 54079, 3 CFR, 1996 Comp. p. 219; E.O. 13026, 61 FR 
58767, 3 CFR, 1996 Comp., p. 228; E.O. 13222, 66 FR 44025, 3 CFR, 2001 
Comp., p. 783; E.O. 13338, 69 FR 26751, May 13, 2004; Notice of July 23, 
2008, 73 FR 43603 (July 25, 2008); Notice of November 10, 2008, 73 FR 
67097 (November 12, 2008).

    Source: 61 FR 12754, Mar. 25, 1996, unless otherwise noted.



Sec. 736.1  Introduction.

    In this part, references to the EAR are references to 15 CFR chapter 
VII, subchapter C. A person may undertake transactions subject to the 
EAR without a license or other authorization, unless the regulations 
affirmatively state such a requirement. As such, if an export, reexport, 
or activity is subject to the EAR, the general prohibitions contained in 
this part and the License Exceptions specified in part 740 of the EAR 
must be reviewed to determine if a license is necessary. In the case of 
all exports from the United States, you must document your export as 
described in part 762 of the EAR regarding recordkeeping and clear your 
export through the U.S. Customs Service as described in part 758 of the 
EAR regarding export clearance requirements. Also note that for short 
supply controls all prohibitions and License Exceptions are in part 754 
of the EAR.
    (a) In this part we tell you:
    (1) The facts that make your proposed export, reexport, or conduct 
subject to these general prohibitions, and
    (2) The ten general prohibitions.
    (b) Your obligations under the ten general prohibitions and under 
the EAR depend in large part upon the five types of information 
described in Sec. 736.2(a) of this part and upon the general 
prohibitions described in Sec. 736.2(b) of this part. The ten general 
prohibitions contain cross-references to other parts of the EAR that 
further define the breadth of the general prohibitions.

[[Page 229]]

For that reason, this part is not freestanding. In part 732, we provide 
certain steps you may follow in proper order to help you understand the 
general prohibitions and their relationship to other parts of the EAR.
    (c) If you violate any of these ten general prohibitions, or engage 
in other conduct contrary to the Export Administration Act, the EAR, or 
any order, license, License Exception, or authorization issued 
thereunder, as described in part 764 of the EAR regarding enforcement, 
you will be subject to the sanctions described in that part.



Sec. 736.2  General prohibitions and determination of applicability.

    (a) Information or facts that determine the applicability of the 
general prohibitions. The following five types of facts determine your 
obligations under the ten general prohibitions and the EAR generally:
    (1) Classification of the item. The classification of the item on 
the Commerce Control List (see part 774 of the EAR);
    (2) Destination. The country of ultimate destination for an export 
or reexport (see parts 738 and 774 of the EAR concerning the Country 
Chart and the Commerce Control List);
    (3) End-user. The ultimate end user (see General Prohibition Four 
(paragraph (b)(4) of this section) and supplement no. 1 to part 764 of 
the EAR for references to persons with whom your transaction may not be 
permitted; see General Prohibition Five (Paragraph (b)(5) of this 
section) and part 744 for references to end-users for whom you may need 
an export or reexport license).
    (4) End-use. The ultimate end-use (see General Prohibition Five 
(paragraph (b)(5) of this section) and part 744 of the EAR for general 
end-use restrictions); and
    (5) Conduct. Conduct such as contracting, financing, and freight 
forwarding in support of a proliferation project as described in part 
744 of the EAR.
    (b) General prohibitions. The following ten general prohibitions 
describe certain exports, reexports, and other conduct, subject to the 
scope of the EAR, in which you may not engage unless you either have a 
license from the Bureau of Industry and Security (BIS) or qualify under 
part 740 of the EAR for a License Exception from each applicable general 
prohibition in this paragraph. The License Exceptions at part 740 of the 
EAR apply only to General Prohibitions One (Exports and Reexports in the 
Form Received), Two (Parts and Components Reexports), and Three 
(Foreign-Produced Direct Product Reexports); however, selected License 
Exceptions are specifically referenced and authorized in part 746 of the 
EAR concerning embargo destinations and in Sec. 744.2(c) of the EAR 
regarding nuclear end-uses.
    (1) General Prohibition One--Export and reexport of controlled items 
to listed countries (Exports and Reexports). You may not, without a 
license or License Exception, export any item subject to the EAR to 
another country or reexport any item of U.S.-origin if each of the 
following is true:
    (i) The item is controlled for a reason indicated in the applicable 
Export Control Classification Number (ECCN), and
    (ii) Export to the country of destination requires a license for the 
control reason as indicated on the Country Chart at part 738 of the EAR. 
(The scope of this prohibition is determined by the correct 
classification of your item and the ultimate destination as that 
combination is reflected on the Country Chart.) \1\ Note that each 
License Exception described at part 740 of the EAR supersedes General 
Prohibition One if all terms and conditions of a given License Exception 
are met by the exporter or reexporter.
---------------------------------------------------------------------------

    \1\ See part 738 of the EAR for selected controls that are not 
specified on the Country Chart.
---------------------------------------------------------------------------

    (2) General Prohibition Two--Reexport and export from abroad of 
foreign-made items incorporating more than a de minimis amount of 
controlled U.S. content (U.S. Content Reexports). (i) You may not, 
without a license or license exception, reexport or export from abroad 
foreign-made commodities that incorporate controlled U.S.-origin 
commodities, foreign-made commodities that are ``bundled'' with 
controlled U.S.-origin software, foreign-made software that is 
commingled with controlled U.S.-origin software, or foreign-made

[[Page 230]]

technology that is commingled with controlled U.S.-origin technology if 
such items require a license according to any of the provisions in the 
EAR and incorporate or are commingled with more than a de minimis amount 
of controlled U.S. content, as defined in Sec. 734.4 of the EAR 
concerning the scope of the EAR.
    (A) It incorporates more than the de minimis amount of controlled 
U.S. content, as defined in Sec. 734.4 of the EAR concerning the scope 
of the EAR;
    (B) It is controlled for a reason indicated in the applicable ECCN; 
and
    (C) Its export to the country of destination requires a license for 
that control reason as indicated on the Country Chart. (The scope of 
this prohibition is determined by the correct classification of your 
foreign-made item and the ultimate destination, as that combination is 
reflected on the Country Chart.)
    (ii) Each License Exception described in part 740 of the EAR 
supersedes General Prohibition Two if all terms and conditions of a 
given License Exception are met by the exporter or reexporter.
    (3) General Prohibition Three--Reexport and export from abroad of 
the foreign-produced direct product of U.S. technology and software 
(Foreign-Produced Direct Product Reexports)--(i) Country scope of 
prohibition. You may not, without a license or License Exception, 
reexport or export from abroad items subject to the scope of this 
General Prohibition Three to Cuba or a destination in Country Group D:1 
(See supplement no. 1 to part 740 of the EAR).
    (ii) Product scope of foreign-made items subject to prohibition. 
This General Prohibition 3 applies if an item meets either the 
Conditions defining the direct product of technology or the Conditions 
defining the direct product of a plant in paragraph (b)(3)(ii)(A) of 
this section:
    (A) Conditions defining direct product of technology. Foreign-made 
items are subject to this General Prohibition 3 if they meet both of the 
following conditions:
    (1) They are the direct product of technology or software that 
requires a written assurance as a supporting document for a license, as 
defined in paragraph (o)(3)(i) of supplement no. 2 to part 748 of the 
EAR, or as a precondition for the use of License Exception TSR at Sec. 
740.6 of the EAR, and
    (2) They are subject to national security controls as designated on 
the applicable ECCN of the Commerce Control List at part 774 of the EAR.
    (B) Conditions defining direct product of a plant. Foreign-made 
items are also subject to this General Prohibition 3 if they are the 
direct product of a complete plant or any major component of a plant if 
both of the following conditions are met:
    (1) Such plant or component is the direct product of technology that 
requires a written assurance as a supporting document for a license or 
as a precondition for the use of License Exception TSR in Sec. 740.6 of 
the EAR, and
    (2) Such foreign-made direct products of the plant or component are 
subject to national security controls as designated on the applicable 
ECCN of the Commerce Control List at part 774 of the EAR.
    (iii) License Exceptions. Each License Exception described at part 
740 of the EAR supersedes this General Prohibition Three if all terms 
and conditions of a given exception are met by the exporter or 
reexporter.
    (4) General Prohibition Four (Denial Orders)--Engaging in actions 
prohibited by a denial order. (i) You may not take any action that is 
prohibited by a denial order issued under part 766 of the EAR, 
Administrative Enforcement Proceedings. These orders prohibit many 
actions in addition to direct exports by the person denied export 
privileges, including some transfers within a single country, either in 
the United States or abroad, by other persons. You are responsible for 
ensuring that any of your transactions in which a person who is denied 
export privileges is involved do not violate the terms of the order. 
Orders denying export privileges are published in the Federal Register 
when they are issued and are the legally controlling documents in 
accordance with their terms. BIS also maintains compilations of persons 
denied export privileges on its Web site at http://www.bis.doc.gov. BIS 
may, on an exceptional basis, authorize activity otherwise prohibited by 
a denial order. See Sec. 764.3(a)(2) of the EAR.

[[Page 231]]

    (ii) There are no License Exceptions described in part 740 of the 
EAR that authorize conduct prohibited by this General Prohibition Four.
    (5) General Prohibition Five--Export or reexport to prohibited end-
uses or end-users (End-Use End-User). You may not, without a license, 
knowingly export or reexport any item subject to the EAR to an end-user 
or end-use that is prohibited by part 744 of the EAR.
    (6) General Prohibition Six--Export or reexport to embargoed 
destinations (Embargo). (i) You may not, without a license or License 
Exception authorized under part 746, export or reexport any item subject 
to the EAR to a country that is embargoed by the United States or 
otherwise made subject to controls as both are described at part 746 of 
the EAR.
    (ii) License Exceptions to General Prohibition Six are described in 
part 746 of the EAR, on Embargoes and Other Special Controls. Unless a 
License Exception or other authorization is authorized in part 746 of 
the EAR, the License Exceptions described in part 740 of the EAR are not 
available to overcome this general prohibition.
    (7) General Prohibition Seven--Support of proliferation activities 
(U.S. person proliferation activity)--(i) Support of proliferation 
activities (U.S. person proliferation activity). (A) If you are a U.S. 
person as that term is defined in Sec. 744.6(c) of the EAR, you may not 
engage in any activities prohibited by Sec. 744.6(a) or (b) of the EAR, 
which prohibits the performance, without a license from BIS, of certain 
financing, contracting, service, support, transportation, freight 
forwarding, or employment that you know will assist in certain 
proliferation activities described further in part 744 of the EAR. There 
are no License Exceptions to this General Prohibition Seven in part 740 
of the EAR unless specifically authorized in that part.
    (B) If you are a U.S. person as that term is defined in Sec. 
744.6(c) of the EAR, you may not export a Schedule 1 chemical listed in 
supplement no. 1 to part 745 without first complying with the provisions 
of Sec. Sec. 742.18 and 745.1 of the EAR.
    (C) If you are a U.S. person as that term is defined in Sec. 
744.6(c) of the EAR, you may not export a Schedule 3 chemical listed in 
supplement no. 1 to part 745 to a destination not listed in supplement 
no. 2 to part 745 without complying with the End-Use Certificate 
requirements in Sec. 745.2 of the EAR that apply to Schedule 3 
chemicals controlled for CW reasons in ECCN 1C350, ECCN 1C355, or ECCN 
1C395.
    (8) General Prohibition Eight--In transit shipments and items to be 
unladen from vessels or aircraft (Intransit)--(i) Unlading and shipping 
in transit. You may not export or reexport an item through or transit 
through a country listed in paragraph (b)(8)(ii) of this section unless 
a License Exception or license authorizes such an export or reexport 
directly to such a country of transit, or unless such an export or 
reexport is eligible to such a country of transit without a license.
    (ii) Country scope. This General Prohibition Eight applies to 
Albania, Armenia, Azerbaijan, Belarus, Cambodia, Cuba, Georgia, 
Kazakhstan, Kyrgyzstan, Laos, Mongolia, North Korea, Russia, Tajikistan, 
Turkmenistan, Ukraine, Uzbekistan, Vietnam.
    (9) General Prohibition Nine--Violation of any order, terms, and 
conditions (Orders, Terms, and Conditions). You may not violate terms or 
conditions of a license or of a License Exception issued under or made a 
part of the EAR, and you may not violate any order issued under or made 
a part of the EAR. There are no License Exceptions to this General 
Prohibition Nine in part 740 of the EAR. Supplements Nos. 1 and 2 to 
this part provide for certain General Orders and Administrative Orders.
    (10) General Prohibition Ten--Proceeding with transactions with 
knowledge that a violation has occurred or is about to occur (Knowledge 
Violation to Occur). You may not sell, transfer, export, reexport, 
finance, order, buy, remove, conceal, store, use, loan, dispose of, 
transport, forward, or otherwise service, in whole or in part, any item 
subject to the EAR and exported or to be exported with knowledge that a 
violation of the Export Administration Regulations, the Export 
Administration Act or any order, license, License Exception, or other 
authorization issued thereunder has occurred, is about to

[[Page 232]]

occur, or is intended to occur in connection with the item. Nor may you 
rely upon any license or License Exception after notice to you of the 
suspension or revocation of that license or exception. There are no 
License Exceptions to this General Prohibition Ten in part 740 of the 
EAR.

[61 FR 12754, Mar. 25, 1996]

    Editorial Note: For Federal Register citations affecting Sec. 
736.2, see the List of CFR Sections Affected, which appears in the 
Finding Aids section of the printed volume and on GPO Access.



            Sec. Supplement No. 1 to Part 736--General Orders

    General Order No. 1 of September 16, 1998; Establishing a 24-month 
validity period on reexport authorizations issued without a validity 
period and revoking those exceeding that period.
    (a) Reexport authorizations issued within 24-months of the General 
Order. All reexport authorizations issued with no validity period within 
the 24-months preceding September 16, 1998 shall be deemed to have an 
expiration date which shall be the date 24-months from the date of 
issuance of the reexport authorization or November 16, 1998, whichever 
is longer.
    (b) Reexport authorizations issued before the 24-month period 
preceding the General Order. For reexport authorizations issued with no 
validity period before the 24-month period preceding September 16, 1998:
    (1) Effective September 16, 1998, all such outstanding reexport 
authorizations for terrorist-supporting countries (see parts 742 and 746 
of the EAR) are revoked.
    (2) Effective November 16, 1998, all other such outstanding reexport 
authorizations are revoked.
    (c) Extensions. If necessary, you may request extensions of such 
authorizations according to procedures set forth in Sec. 750.7(g) of 
the EAR.
    (d) Specific Notice from BIS. If you have received, or should you 
receive, specific notice from BIS with regard to a reexport 
authorization covered by this General Order, informing you of a 
revocation, suspension, or revision (including validity period) of any 
such reexport authorization, then the terms of that specific notice will 
be controlling.
    (e) Definition of ``authorization''. The term ``authorization'' as 
used in this General Order encompasses the range of reexport 
authorizations granted by BIS, which includes licenses, individual 
letters, and other types of notifications.
    General Order No. 2 of May 14, 2004; sections 5(a)(1) and 5(a)(2)(A) 
of the Syria Accountability and Lebanese Sovereignty Act of 2003 (Public 
Law 108-175, codified as a note to 22 U.S.C. 2151) (the SAA), require 
(1) a prohibition on the export to Syria of all items on the Commerce 
Control List (in 15 CFR part 774)(CCL) and (2) a prohibition on the 
export to Syria of products of the United States, other than food and 
medicine. The President has also exercised national security waiver 
authority pursuant to Section 5(b) of the SAA for certain transactions. 
This Order is issued consistent with Executive Order 13338 of May 11, 
2004, which implements the SAA.
    (a) License requirements. Effective May 14, 2004, a license is 
required for export or reexport to Syria of all items subject to the 
EAR, except food and medicine classified as EAR99 (medicine is defined 
in part 772 of the EAR). A license is required for the ``deemed export'' 
and ``deemed reexport,'' as described in Sec. 734.2(b) of the EAR, of 
any technology or source code on the Commerce Control List (CCL) to a 
Syrian foreign national. ``Deemed exports'' and ``deemed reexports'' 
involving technology or source code subject to the EAR but not listed on 
the CCL do not require a license to Syrian foreign nationals.
    (b) Revocation of Authority to Export under Existing Licenses. 
Effective May 14, 2004, the authority to export or reexport to Syria 
under existing licenses is hereby revoked (see savings clause in 
paragraph (e) of this General Order). License conditions requiring 
written U.S. Government authorization for the reexport, transfer (in-
country), or resale of items already exported or reexported remain in 
effect, and requests for BIS authorization to reexport, transfer (in-
country), or sell such items will require interagency approval.
    (c) License Exceptions. Effective May 14, 2004, no License 
Exceptions to the license requirements set forth in paragraph (a) of 
this General Order are available for exports or reexports to Syria, 
except the following:
    (1) TMP for items for use by the news media as set forth in Sec. 
740.9(a)(2)(viii) of the EAR,
    (2) GOV for items for personal or official use by personnel and 
agencies of the U.S. Government as set forth in Sec. 740.11(b)(2)(i) 
and (ii) of the EAR,
    (3) TSU for operation technology and software, sales technology and 
software updates pursuant to the terms of Sec. 740.13(a), (b), or (c) 
of the EAR,
    (4) BAG for exports of items by individuals leaving the United 
States as personal baggage pursuant to the terms of Sec. 740.14 (a) 
through (d) only of the EAR, and
    (5) AVS for the temporary sojourn of civil aircraft reexported to 
Syria pursuant to the terms of Sec. 740.15(a)(4) of the EAR.
    (d) Licensing policy. All license applications for export or 
reexport to Syria are subject to

[[Page 233]]

a general policy of denial. License applications for ``deemed exports'' 
and ``deemed reexports'' of technology and source code will be reviewed 
on a case-by-case basis. BIS may consider, on a case-by-case basis, 
license applications for exports and reexports of items necessary to 
carry out the President's constitutional authority to conduct U.S. 
foreign affairs and as Commander-in-Chief, including those exports and 
reexports of items necessary for the performance of official functions 
by the United States Government personnel abroad. BIS may also consider 
the following license applications on a case-by-case basis: items in 
support of activities, diplomatic or otherwise, of the United States 
Government (to the extent that regulation of such exportation or 
reexportation would not fall within the President's constitutional 
authority to conduct the nation's foreign affairs); medicine (on the 
CCL) and medical devices (both as defined in part 772 of the EAR); parts 
and components intended to ensure the safety of civil aviation and the 
safe operation of commercial passenger aircraft; aircraft chartered by 
the Syrian Government for the transport of Syrian Government officials 
on official Syrian Government business; telecommunications equipment and 
associated computers, software and technology; and items in support of 
United Nations operations in Syria. The total dollar value of each 
approved license for aircraft parts for flight safety normally will be 
limited to no more than $2 million over the 24-month standard license 
term, except in the case of complete overhauls. In addition, consistent 
with part 734 of the EAR, the following are not subject to this General 
Order: informational materials in the form of books and other media; 
publicly available software and technology; and technology exported in 
the form of a patent application or an amendment, modification, or 
supplement thereto or a division thereof (see 15 CFR 734.3(b)(1)(v), 
(b)(2) and (b)(3)).
    (e) Savings Clause. Items that are on dock for loading, on lighter, 
laden aboard an exporting carrier or en route aboard a carrier to a port 
of export on May 14, 2004, shall be subject to the licensing rules 
applicable to such items as of May 13, 2004. Any such items not actually 
exported or reexported before midnight May 28, 2004, may be exported or 
reexported only if authorized pursuant to this General Order.
    General Order No. 3 [Reserved]
    General Order No. 4 of June 13, 2008 adding mobile phones and 
related software, batteries, memory cards, chargers and other 
accessories therefor to existing licenses for exports of consolidated 
gift parcels to Cuba.
    (a) Section 740.12(a) of the EAR authorizes, among other things, 
certain exports of gift parcels to Cuba pursuant to a license exception. 
However, consolidated shipments of multiple gift parcels to Cuba require 
a license even if all of the individual items within the consolidated 
gift parcel would be eligible for this license exception if shipped 
alone.
    (b) In addition to the items stated on the license itself, licenses 
authorizing the export to Cuba of the consolidated gift parcels 
described in paragraph (a) of this order that are effective on June 13, 
2008 also authorize the export of consolidated gift parcels containing 
the mobile phones and software, batteries, chargers, memory cards and 
other accessories therefor that may be exported in gift parcels to Cuba 
pursuant to Sec. 740.12(a)(2)(i)(B)(1) of the EAR.
    (c) This General Order does not change any of the other terms 
(including total value of items that may be exported or expiration date) 
of the licenses it affects.

[63 FR 49426, Sept. 16, 1998, as amended at 65 FR 76562, Dec. 7, 2000; 
69 FR 26768, May 14, 2004; 69 FR 42333, July 15, 2004; 69 FR 76843, Dec. 
23, 2004; 71 FR 32273, June 5, 2006; 71 FR 52427, Sept. 6, 2006; 71 FR 
53965, Sept. 13, 2006; 72 FR 31718, June 8, 2007; 73 FR 33673, June 13, 
2008; 73 FR 54503, Sept. 22, 2008; 73 FR 68324, Nov. 18, 2008]



        Sec. Supplement No. 2 to Part 736--Administrative Orders

    Administrative Order One: Disclosure of License Issuance and Other 
Information. Consistent with section 12(c) of the Export Administration 
Act of 1979, as amended, information obtained by the U.S. Department of 
Commerce for the purpose of consideration of or concerning license 
applications, as well as related information, will not be publicly 
disclosed without the approval of the Secretary of Commerce. Shipper's 
Export Declarations also are exempt from public disclosure, except with 
the approval of the Secretary of Commerce, in accordance with Sec. 
301(g) of Title 13, United States Code.
    Administrative Order Two: Conduct of Business and Practice in 
Connection with Export Control Matters.
    (a) Exclusion of persons guilty of unethical conduct or not 
possessing required integrity and ethical standards.
    (1) Who may be excluded. Any person, whether acting on his own 
behalf or on behalf of another, who shall be found guilty of engaging in 
any unethical activity or who shall be demonstrated not to possess the 
required integrity and ethical standards, may be excluded from (denied) 
export privileges on his own behalf, or may be excluded from practice 
before BIS on behalf of another, in connection with any export control 
matter, or both, as provided in part 764 of the EAR.
    (2) Grounds for exclusion. Among the grounds for exclusion are the 
following:

[[Page 234]]

    (i) Inducing or attempting to induce by gifts, promises, bribes, or 
otherwise, any officer or employee of BIS or any customs or post office 
official, to take any action with respect to the issuance of licenses or 
any other aspects of the administration of the Export Administration 
Act, whether or not in violation of any regulation;
    (ii) Offering or making gifts or promises thereof to any such 
officer or employee for any other reason;
    (iii) Soliciting by advertisement or otherwise the handling of 
business before BIS on the representation, express or implied, that such 
person, through personal acquaintance or otherwise, possesses special 
influence over any officer or employee of BIS;
    (iv) Charging, or proposing to charge, for any service performed in 
connection with the issuance of any license, any fee wholly contingent 
upon the granting of such license and the amount or value thereof. This 
provision will not be construed to prohibit the charge of any fee agreed 
to by the parties; provided that the out-of-pocket expenditures and the 
reasonable value of the services performed, whether or not the license 
is issued and regardless of the amount thereof, are fairly compensated; 
and
    (v) Knowingly violating or participating in the violation of, or an 
attempt to violate, any regulation with respect to the export of 
commodities or technical data, including the making of or inducing 
another to make any false representations to facilitate any export in 
violation of the Export Administration Act or any order or regulation 
issued thereunder.
    (3) Definition. As used in this Administration Order, the terms 
``practice before BIS'' and ``appear before BIS'' include:
    (i) The submission on behalf of another of applications for export 
licenses or other documents required to be filed with BIS, or the 
execution of the same;
    (ii) Conferences or other communications on behalf of another with 
officers or employees of BIS for the purpose of soliciting or expediting 
approval by BIS of applications for export licenses or other documents, 
or with respect to quotas, allocations, requirements or other export 
control actions, pertaining to matters within the jurisdiction of BIS;
    (iii) Participating on behalf of another in any proceeding pending 
before BIS; and
    (iv) Submission to a customs official on behalf of another of a 
license or Shipper's Export Declaration or other export control 
document.
    (4) Proceedings. All proceedings under this Administrative Order 
shall be conducted in the same manner as provided in part 766 of the 
EAR.
    (b) Employees and former employees. Persons who are or at any time 
have been employed on a full-time or part-time, compensated or 
uncompensated, basis by the U.S. Government are subject to the 
provisions of 18 U.S.C. 203, 205, and 207 (Pub. L. 87-849, 87th 
Congress) in connection with representing a private party or interest 
before the U.S. Department of Commerce in connection with any export 
control matter.

[61 FR 12754, Mar. 25. 1996, as amended at 70 FR 54628, Sept. 16, 2005; 
70 FR 62238, Oct. 31, 2005]



PART 738_COMMERCE CONTROL LIST OVERVIEW AND THE COUNTRY CHART--Table of 

Contents




Sec.
738.1 Introduction.
738.2 Commerce Control List (CCL) structure.
738.3 Commerce Country Chart structure.
738.4 Determining whether a license is required.

Supplement No. 1 to Part 738--Commerce Country Chart

    Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; 10 
U.S.C. 7420; 10 U.S.C. 7430(e); 22 U.S.C. 287c; 22 U.S.C. 3201 et seq.; 
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; 22 U.S.C. 
7201 et seq.; 22 U.S.C. 7210; E.O. 13026, 61 FR 58767, 3 CFR, 1996 
Comp., p. 228; E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 783; 
Notice of July 23, 2008, 73 FR 43603 (July 25, 2008).

    Source: 61 FR 12756, Mar. 25, 1996, unless otherwise noted.



Sec. 738.1  Introduction.

    (a) Commerce Control List scope. (1) In this part, references to the 
EAR are references to 15 CFR chapter VII, subchapter C. The Bureau of 
Industry and Security (BIS) maintains the Commerce Control List (CCL) 
within the Export Administration Regulations (EAR), which includes items 
(i.e., commodities, software, and technology) subject to the export 
licensing authority of BIS. The CCL does not include those items 
exclusively controlled for export or reexport by another department or 
agency of the U.S. Government. In instances where agencies other than 
the Department of Commerce administer controls over related items, 
entries in the CCL contain a reference to these controls.
    (2) The CCL is contained in Supplement No. 1 to part 774 of the EAR. 
Supplement No. 2 to part 774 of the EAR contains the General Technology 
and

[[Page 235]]

Software Notes relevant to entries contained in the CCL.
    (b) Commerce Country Chart scope. BIS also maintains the Commerce 
Country Chart. The Commerce Country Chart, located in Supplement No. 1 
to part 738, contains licensing requirements based on destination and 
Reason for Control. In combination with the CCL, the Commerce Country 
Chart allows you to determine whether a license is required for items on 
the CCL to any country in the world.



Sec. 738.2  Commerce Control List (CCL) structure.

    (a) Categories. The CCL is divided into 10 categories, numbered as 
follows:

0--Nuclear Materials, Facilities and Equipment and Miscellaneous
1--Materials, Chemicals, ``Microorganisms,'' and Toxins
2--Materials Processing
3--Electronics
4--Computers
5--Telecommunications and Information Security
6--Lasers and Sensors
7--Navigation and Avionics
8--Marine
9--Propulsion Systems, Space Vehicles and Related Equipment

    (b) Groups. Within each category, items are arranged by group. Each 
category contains the same five groups. Each Group is identified by the 
letters A through E, as follows:

A--Equipment, Assemblies and Components
B--Test, Inspection and Production Equipment
C--Materials
D--Software
E--Technology

    (c) Order of review. In order to classify your item against the CCL, 
you should begin with a review of the general characteristics of your 
item. This will usually guide you to the appropriate category on the 
CCL. Once the appropriate category is identified, you should match the 
particular characteristics and functions of your item to a specific 
ECCN. If the ECCN contains a list under the Items heading, you should 
review the list to determine within which subparagraph(s) your items are 
identified.
    (d) Entries--(1) Composition of an entry. Within each group, 
individual items are identified by an Export Control Classification 
Number (ECCN). Each number consists of a set of digits and a letter. The 
first digit identifies the general category within which the entry falls 
(e.g., 3A001). The letter immediately following this first digit 
identifies under which of the five groups the item is listed (e.g., 3 
A001). The second digit differentiates individual entries by identifying 
the type of controls associated with the items contained in the entry 
(e.g., 3A001). Listed below are the Reasons for Control associated with 
this second digit.

0: National Security reasons (including Dual Use and Wassenaar 
Arrangement Munitions List) and Items on the NSG Dual Use Annex and 
Trigger List
1: Missile Technology reasons
2: Nuclear Nonproliferation reasons
3: Chemical & Biological Weapons reasons
9: Anti-terrorism, Crime Control, Regional Stability, Short Supply, UN 
Sanctions, etc.

    (i) Since Reasons for Control are not mutually exclusive, numbers 
are assigned in order of precedence. As an example, if an item is 
controlled for both National Security and Missile Technology reasons, 
the entry's third digit will be a ``0''. If the item is controlled only 
for Missile Technology the third digit will be ``1''.
    (ii) The numbers in either the second or third digit (e.g., 3A001) 
serve to differentiate between multilateral and unilateral entries. An 
entry with the number ``9'' as the second digit, identifies the entire 
entry as controlled for a unilateral concern (e.g., 2B991 for anti-
terrorism reasons). If the number ``9'' appears as the third digit, the 
item is controlled for unilateral purposes based on a proliferation 
concern (e.g., 2A292 is controlled for unilateral purposes based on 
nuclear nonproliferation concerns).
    (iii) The last digit within each entry (e.g., 3A001) is used for the 
sequential numbering of ECCNs to differentiate between entries on the 
CCL.
    (2) Reading an ECCN. A brief description is provided next to each 
ECCN. Following this description is the actual entry containing 
``License Requirements,'' ``License Exceptions,'' and ``List of Items 
Controlled'' sections. A brief description of each section and its use 
follows:

[[Page 236]]

    (i) License Requirements. This section contains a separate line 
identifying all possible Reasons for Control in order of precedence, and 
two columns entitled ``Control(s)'' and ``Country Chart''.
    (A) The ``Controls'' header identifies all applicable Reasons for 
Control, in order of restrictiveness, and to what extent each applies 
(e.g., to the entire entry or only to certain subparagraphs). Those 
requiring licenses for a larger number of countries and/or items are 
listed first. As you read down the list the number of countries and/or 
items requiring a license declines. Since Reasons for Control are not 
mutually exclusive, items controlled within a particular ECCN may be 
controlled for more than one reason. The following is a list of all 
possible Reasons for Control:

AT Anti-Terrorism
CB Chemical & Biological Weapons
CC Crime Control
CW Chemical Weapons Convention
EI Encryption Items
FC Firearms Convention
MT Missile Technology
NS National Security
NP Nuclear Nonproliferation
RS Regional Stability
SS Short Supply
UN United Nations Embargo
SI Significant Items
SL Surreptitious Listening

    (B) The ``Country Chart'' header identifies, for each applicable 
Reason for Control, a column name and number (e.g., CB Column 1). These 
column identifiers are used to direct you from the CCL to the 
appropriate column identifying the countries requiring a license. 
Consult part 742 of the EAR for an indepth discussion of the licensing 
requirements and policies applicable to each Country Chart column.
    (ii) License Exceptions. This section provides a brief eligibility 
statement for each ECCN-driven License Exception that may be applicable 
to your transaction, and should be consulted only AFTER you have 
determined a license is required based on an analysis of the entry and 
the Country Chart. The brief eligibility statement in this section is 
provided to assist you in deciding which ECCN-driven License Exception 
related to your particular item and destination you should explore prior 
to submitting an application. The term ``Yes'' (followed in some 
instances by the scope of Yes) appears next to each available ECCN-
driven License Exception. The term ``N/A'' will be noted for License 
Exceptions that are not available within a particular entry. If one or 
more License Exceptions appear to apply to your transaction, you must 
consult part 740 of the EAR to review the conditions and restrictions 
applicable to each available License Exception. The list of License 
Exceptions contained within each ECCN is not an all-exclusive list. 
Other License Exceptions, not based on particular ECCNs, may be 
available. Consult part 740 of the EAR to determine eligibility for non-
ECCN-driven License Exceptions.
    (iii) List of Items Controlled--(A) Units. The unit of measure 
applicable to each entry is identified in the ``Units'' header. Most 
measurements used in the CCL are expressed in metric units with an inch-
pound conversion where appropriate. Note that in some ECCNs the inch-
pound unit will be listed first. In instances where other units are in 
general usage or specified by law, these will be used instead of metric. 
Generally, when there is a difference between the metric and inch-pound 
figures, the metric standard will be used for classification and 
licensing purposes.
    (B) Related definitions. This header identifies, where appropriate, 
definitions or parameters that apply to all items controlled by the 
entry. The information provided in this section is unique to the entry, 
and hence not listed in the definitions contained in part 772 of the 
EAR.
    (C) Related controls. If another U.S. government agency or 
department has export licensing authority over items related to those 
controlled by an entry, a statement is included identifying the agency 
or department along with the applicable regulatory cite. An additional 
cross-reference may be included in instances where the scope of controls 
differs between a CCL entry and its corresponding entry on list 
maintained by the European Union. This information is provided to assist 
readers who use both lists.
    (D) Items. This header contains a positive list of all items 
controlled by

[[Page 237]]

a particular entry and must be reviewed to determine whether your item 
is controlled by that entry. In some entries, the list is contained 
within the entry heading. In these entries a note is included to direct 
you to the entry heading.

[61 FR 112756, Mar. 25, 1996, as amended at 61 FR 68579, Dec. 30, 1996; 
62 FR 25456, May 9, 1997; 64 FR 17970, Apr. 13, 1999; 27141, May 18, 
1999; 70 FR 54628, Sept. 16, 2005; 71 FR 20883, Apr. 24, 2006; 71 FR 
67035, Nov. 20, 2006; 72 FR 43531, Aug. 6, 2007]



Sec. 738.3  Commerce Country Chart structure.

    (a) Scope. The Commerce Country Chart allows you to determine the 
Commerce Control List (CCL) export and reexport license requirements for 
most items listed on the CCL. Such license requirements are based on the 
Reasons for Control listed in the Export Control Classification Number 
(ECCN) that applies to the item. Some ECCNs, however, impose license 
requirements either without reference to a reason for control code that 
is listed on the Commerce Country Chart, or in addition to such a 
reference. Those ECCNs may state their license requirements in full in 
their ``Reasons for Control'' sections or they may refer the reader to 
another provision of the EAR for license requirement information. In 
addition, some ECCNs do not impose license requirements, but refer the 
reader to the regulations of another government agency that may impose 
license requirements on the items described in that ECCN.
    (1) ECCNs 0A983, 5A980, 5D980, and 5E980. A license is required for 
all destinations for items controlled under these entries. For items 
controlled by 0A983 and 5E980, no License Exceptions apply. For items 
controlled by 5A980 and 5D980, License Exception GOV may apply if your 
item is consigned to and for the official use of an agency of the U.S. 
Government (see Sec. 740.2(a)(3)). If your item is controlled by 0A983, 
5A980, 5D980, or 5E980 you should proceed directly to part 748 of the 
EAR for license application instructions and Sec. 742.11 or Sec. 
742.13 of the EAR for information on the licensing policy relevant to 
these types of applications.
    (2) [Reserved]
    (b) Countries. The first column of the Country Chart lists all 
countries in alphabetical order. There are a number of destinations that 
are not listed in the Country Chart contained in Supplement No. 1 to 
part 738. If your destination is not listed on the Country Chart and 
such destination is a territory, possession, or department of a country 
included on the Country Chart, the EAR accords your destination the same 
licensing treatment as the country of which it is a territory, 
possession, or department. For example, if your destination is the 
Cayman Islands, a dependent territory of the United Kingdom, consult the 
United Kingdom on the Country Chart for licensing requirements.
    (c) Columns. Stretching out to the right are horizontal headers 
identifying the various Reasons for Control. Under each Reason for 
Control header are diagonal column identifiers capping individual 
columns. Each column identifier consists of the two letter Reason for 
Control and a column number. (e.g., CB Column 1). The column identifiers 
correspond to those listed in the ``Country Chart'' header within the 
``License Requirements'' section of each ECCN.
    (d) Cells. The symbol ``X'' is used to denote licensing requirements 
on the Country Chart. If an ``X'' appears in a particular cell, 
transactions subject to that particular Reason for Control/Destination 
combination require a license. There is a direct correlation between the 
number of ``X''s applicable to your transaction and the number of 
licensing reviews your application will undergo.

[61 FR 12756, Mar. 25, 1996, as amended at 63 FR 42228, Aug. 7, 1998; 65 
FR 55178, Sept. 13, 2000; 70 FR 8249, Feb. 18, 2005; 71 FR 67035, Nov. 
20, 2006]



Sec. 738.4  Determining whether a license is required.

    (a) Using the CCL and the Country Chart--(1) Overview. Once you have 
determined that your item is classified under 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. Note that not all license requirements

[[Page 238]]

set forth under the ``License Requirements'' section of an ECCN refer 
you to the Commerce Country Chart, but in some cases this section will 
contain references to a specific section in the EAR for license 
requirements. In such cases, this section would not apply.
    (2) License decision making process. The following decision making 
process must be followed in order to determine whether a license is 
required to export or reexport a particular item to a specific 
destination:
    (i) Examine the appropriate ECCN in the CCL. Is the item you intend 
to export or reexport controlled for a single Reason for Control?
    (A) If yes, identify the single Reason for Control and the relevant 
Country Chart column identifier (e.g., CB Column 1).
    (B) If no, identify the Country Chart column identifier for each 
applicable Reason for Control (e.g., NS Column 1, NP Column 1, etc.).
    (ii) Review the Country Chart. With each of the applicable Country 
Chart Column identifiers noted, turn to the Country Chart (Supplement 
No. 1 to part 738). Locate the correct Country Chart column identifier 
on the diagonal headings, and determine whether an ``X'' is marked in 
the cell next to the country in question for each Country Chart column 
identified in the applicable ECCN. If your item is subject to more than 
one reason for control, repeat this step using each unique Country Chart 
column identifier.
    (A) If yes, a license application must be submitted based on the 
particular reason for control and destination, unless a License 
Exception applies. If ``Yes'' is noted next to any of the listed License 
Exceptions, you should consult part 740 of the EAR to determine whether 
you can use any of the available ECCN-drvien License Exceptions to 
effect your shipment, rather than applying for a license. Each 
affirmative license requirement must be overcome by a License Exception. 
If you are unable to qualify for a License Exception based on each 
license requirement noted on the Country Chart, you must apply for a 
license. Note that other License Exceptions, not related to the CCL, may 
also apply to your transaction (See part 740 of the EAR).
    (B) If no, a license is not required based on the particular Reason 
for Control and destination. Provided that General Prohibitions Four 
through Ten do not apply to your proposed transaction and that any 
applicable review requirements described in Sec. 742.15(b) of the EAR 
have been met for certain mass market encryption items controlled under 
ECCNs 5A992 or 5D992, you may effect your shipment using the symbol 
``NLR.'' Proceed to parts 758 and 762 of the EAR for information on 
export clearance procedures and recordkeeping requirements. Note that 
although you may stop after determining a license is required based on 
the first Reason for Control, it is best to work through each applicable 
Reason for Control. A full analysis of every possible licensing 
requirement based on each applicable Reason for Control is required to 
determine the most advantageous License Exception available for your 
particular transaction and, if a license is required, ascertain the 
scope of review conducted by BIS on your license application.
    (b) Sample analysis using the CCL and Country Chart--(1) Scope. The 
following sample entry and related analysis is provided to illustrate 
the type of thought process you must complete in order to determine 
whether a license is required to export or reexport a particular item to 
a specific destination using the CCL in combination with the Country 
Chart.
    (2) Sample CCL entry.

2A000: Entry heading.

License Requirements
Reason for Control: NS, NP, AT

------------------------------------------------------------------------
                 Control(s)                         Country Chart
------------------------------------------------------------------------
NS applies to entire entry.................  NS Column 2
NP applies to 2A000.b......................  NP Column 1
AT applies to entire entry.................  AT Column 1
------------------------------------------------------------------------

License Exceptions
LVS: $5,000
GBS: Yes
CIV: N/A
List of Items Controlled
Unit: Number
Related Definition: N/A
Related Controls: N/A
Items: a. Having x.
    b. Having z.

    (3) Sample analysis. After consulting the CCL, I determine my item, 
valued

[[Page 239]]

at $10,000, is classified under ECCN 2A000.a. I read that the entire 
entry is controlled for national security, and anti-terrorism reasons. 
Since my item is classified under paragraph .a, and not .b, I understand 
that though nuclear nonproliferation controls apply to a portion of the 
entry, they do not apply to my item. I note that the appropriate Country 
Chart column identifiers are NS Column 2 and AT Column 1. Turning to the 
Country Chart, I locate my specific destination, India, and see that an 
``X'' appears in the NS Column 2 cell for India, but not in the AT 
Column 1 cell. I understand that a license is required, unless my 
transaction qualifies for a License Exception or Special Comprehensive 
License. From the License Exception LVS value listed in the entry, I 
know immediately that my proposed transaction exceeds the value 
limitation associated with LVS. Noting that License Exception GBS is 
``Yes'' for this entry, I turn to part 740 of the EAR to review the 
provisions related to use of GBS.

[61 FR 12756, Mar. 25, 1996, as amended at 67 FR 38861, June 6, 2002; 70 
FR 54628, Sept. 16, 2005; 73 FR 57503, Oct. 3, 2008]

[[Page 240]]

          Supplement No. 1 to Part 738--Commerce Country Chart

                                                                                      [Reason for control]
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                   Chemical and biological          Nuclear       National  security   Missile       Regional        Firearms           Crime control           Anti-terrorism
                                           weapons             nonproliferation  --------------------   tech         stability      convention -------------------------------------------------
           Countries           --------------------------------------------------                    ------------------------------------------
                                  CB 1      CB 2      CB 3      NP 1      NP 2      NS 1      NS 2      MT 1      RS 1      RS 2       FC 1       CC 1      CC 2      CC 3      AT 1      AT 2
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Afghanistan...................        X         X         X         X   ........        X         X         X         X         X   ..........        X   ........        X
Albania.......................        X         X   ........        X   ........        X         X         X         X         X   ..........        X         X
Algeria.......................        X         X   ........        X   ........        X         X         X         X         X   ..........        X   ........        X
Andorra.......................        X         X   ........        X   ........        X         X         X         X         X   ..........        X   ........        X
Angola........................        X         X   ........        X   ........        X         X         X         X         X   ..........        X   ........        X
Antigua and Barbuda...........        X         X   ........        X   ........        X         X         X         X         X          X          X   ........        X
Argentina.....................        X   ........  ........  ........  ........        X         X         X         X         X          X          X   ........        X
Armenia.......................        X         X         X         X   ........        X         X         X         X         X   ..........        X         X
Aruba.........................        X         X   ........        X   ........        X         X         X         X         X   ..........        X   ........        X
Australia.....................        X   ........  ........  ........  ........        X   ........        X         X
Austria.......................        X   ........  ........  ........  ........        X   ........        X         X         X   ..........        X   ........        X
Azerbaijan....................        X         X         X         X   ........        X         X         X         X         X   ..........        X         X
Bahamas, The..................        X         X   ........        X   ........        X         X         X         X         X          X          X   ........        X
Bahrain.......................        X         X         X         X   ........        X         X         X         X         X   ..........        X   ........        X
Bangladesh....................        X         X   ........        X   ........        X         X         X         X         X   ..........        X   ........        X
Barbados......................        X         X   ........        X   ........        X         X         X         X         X          X          X   ........        X
Belarus.......................        X         X         X   ........  ........        X         X         X         X         X   ..........        X         X
Belgium.......................        X   ........  ........  ........  ........        X   ........        X         X
Belize........................        X         X   ........        X   ........        X         X         X         X         X          X          X   ........        X
Benin.........................        X         X   ........        X   ........        X         X         X         X         X   ..........        X   ........        X
Bhutan........................        X         X   ........        X   ........        X         X         X         X         X   ..........        X   ........        X
Bolivia.......................        X         X   ........        X   ........        X         X         X         X         X          X          X   ........        X
Bosnia and Herzegovina........        X         X   ........        X   ........        X         X         X         X         X   ..........        X   ........        X
Botswana......................        X         X   ........        X   ........        X         X         X         X         X   ..........        X   ........        X
Brazil........................        X         X   ........  ........  ........        X         X         X         X         X          X          X   ........        X
Brunei........................        X         X   ........        X   ........        X         X         X         X         X   ..........        X   ........        X
Bulgaria......................        X   ........  ........  ........  ........        X   ........        X         X
Burkina Faso..................        X         X   ........        X   ........        X         X         X         X         X   ..........        X   ........        X
Burma.........................        X         X         X         X   ........        X         X         X         X         X   ..........        X   ........        X
Burundi.......................        X         X   ........        X   ........        X         X         X         X         X   ..........        X   ........        X
Cambodia......................        X         X   ........        X   ........        X         X         X         X         X   ..........        X         X
Cameroon......................        X         X   ........        X   ........        X         X         X         X         X   ..........        X   ........        X
Canada........................        X   ........  ........  ........  ........  ........  ........  ........  ........  ........         X
Cape Verde....................        X         X   ........        X   ........        X         X         X         X         X   ..........        X   ........        X
Central African Republic......        X         X   ........        X   ........        X         X         X         X         X   ..........        X   ........        X
Chad..........................        X         X   ........        X   ........        X         X         X         X         X   ..........        X   ........        X
Chile.........................        X         X   ........        X   ........        X         X         X         X         X          X          X   ........        X
China.........................        X         X         X         X   ........        X         X         X         X         X   ..........        X   ........        X
Colombia......................        X         X   ........        X   ........        X         X         X         X         X          X          X   ........        X
Comoros.......................        X         X   ........        X   ........        X         X         X         X         X   ..........        X   ........        X

[[Page 241]]

 
Congo (Democratic Republic of         X         X   ........        X   ........        X         X         X         X         X   ..........        X   ........        X
 the).........................
Congo (Republic of the).......        X         X   ........        X   ........        X         X         X         X         X   ..........        X   ........        X
Costa Rica....................        X         X   ........        X   ........        X         X         X         X         X          X          X   ........        X
Cote d'Ivoire.................        X         X   ........        X   ........        X         X         X         X         X   ..........        X   ........        X
Croatia.......................        X   ........  ........        X   ........        X         X         X         X         X   ..........        X   ........        X   ........
Cuba..........................                  See part 746 of the EAR to determine whether a license is required in order to export or reexport to this destination.
Cyprus........................        X   ........  ........  ........  ........        X         X         X         X         X   ..........        X   ........        X
Czech Republic................        X   ........  ........  ........  ........        X   ........        X         X
Denmark.......................        X   ........  ........  ........  ........        X   ........        X         X
Djibouti......................        X         X   ........        X   ........        X         X         X         X         X   ..........        X   ........        X
Dominica......................        X         X   ........        X   ........        X         X         X         X         X          X          X   ........        X
Dominican Republic............        X         X   ........        X   ........        X         X         X         X         X          X          X   ........        X
East Timor....................        X         X   ........        X   ........        X         X         X         X         X   ..........        X   ........        X
Ecuador.......................        X         X   ........        X   ........        X         X         X         X         X          X          X   ........        X
Egypt.........................        X         X         X         X   ........        X         X         X         X         X   ..........        X   ........        X
El Salvador...................        X         X   ........        X   ........        X         X         X         X         X          X          X   ........        X
Equatorial Guinea.............        X         X   ........        X   ........        X         X         X         X         X   ..........        X   ........        X
Eritrea.......................        X         X   ........        X   ........        X         X         X         X         X   ..........        X   ........        X
Estonia.......................        X   ........  ........        X   ........        X   ........        X         X
Ethiopia......................        X         X   ........        X   ........        X         X         X         X         X   ..........        X   ........        X
Fiji..........................        X         X   ........        X   ........        X         X         X         X         X   ..........        X         X         X
Finland.......................        X   ........  ........  ........  ........        X   ........        X         X         X   ..........        X   ........        X
France........................        X   ........  ........  ........  ........        X   ........        X         X
Gabon.........................        X         X   ........        X   ........        X         X         X         X         X   ..........        X   ........        X
Gambia, The...................        X         X   ........        X   ........        X         X         X         X         X   ..........        X   ........        X
Georgia.......................        X         X         X         X   ........        X         X         X         X         X   ..........        X         X
Germany.......................        X   ........  ........  ........  ........        X   ........        X         X
Ghana.........................        X         X   ........        X   ........        X         X         X         X         X   ..........        X   ........        X
Greece........................        X   ........  ........  ........  ........        X   ........        X         X
Grenada.......................        X         X   ........        X   ........        X         X         X         X         X          X          X   ........        X
Guatemala.....................        X         X   ........        X   ........        X         X         X         X         X          X          X   ........        X
Guinea........................        X         X   ........        X   ........        X         X         X         X         X   ..........        X   ........        X
Guinea-Bissau.................        X         X   ........        X   ........        X         X         X         X         X   ..........        X   ........        X
Guyana........................        X         X   ........        X   ........        X         X         X         X         X          X          X   ........        X
Haiti.........................        X         X   ........        X   ........        X         X         X         X         X          X          X   ........        X
Honduras......................        X         X   ........        X   ........        X         X         X         X         X          X          X   ........        X
Hong Kong.....................        X         X   ........        X   ........        X   ........        X         X         X   ..........        X   ........        X
Hungary.......................        X   ........  ........  ........  ........        X   ........        X         X
Iceland.......................        X   ........  ........        X   ........        X   ........        X         X
India.........................        X         X         X         X   ........        X         X         X         X         X   ..........        X   ........        X
Indonesia.....................        X         X   ........        X   ........        X         X         X         X         X   ..........        X   ........        X
Iran..........................                  See part 746 of the EAR to determine whether a license is required in order to export or reexport to this destination.
Iraq \1\......................        X         X         X         X         X         X         X         X         X         X   ..........        X         X
Ireland.......................        X   ........  ........  ........  ........        X   ........        X         X         X   ..........        X   ........        X
Israel........................        X         X         X         X         X         X         X         X         X         X   ..........        X   ........        X
Italy.........................        X   ........  ........  ........  ........        X   ........        X         X
Jamaica.......................        X         X   ........        X   ........        X         X         X         X         X          X          X   ........        X
Japan.........................        X   ........  ........  ........  ........        X   ........        X         X
Jordan........................        X         X         X         X   ........        X         X         X         X         X   ..........        X   ........        X

[[Page 242]]

 
Kazakhstan....................        X         X         X   ........  ........        X         X         X         X         X   ..........        X         X
Kenya.........................        X         X   ........        X   ........        X         X         X         X         X   ..........        X   ........        X
Kiribati......................        X         X   ........        X   ........        X         X         X         X         X   ..........        X   ........        X
Korea, North..................  See Sections 742.19 and 746.4 of the EAR to determine whether a license is required in order to export or reexport to this destination.
Korea, South..................        X   ........  ........  ........  ........        X   ........        X         X         X   ..........        X   ........        X
Kosovo........................        X         X   ........        X   ........        X         X         X         X         X   ..........        X         X         X
Kuwait........................        X         X         X         X   ........        X         X         X         X         X   ..........        X   ........        X
Kyrgyzstan....................        X         X         X         X   ........        X         X         X         X         X   ..........        X         X
Laos..........................        X         X   ........        X   ........        X         X         X         X         X   ..........        X         X
Latvia........................        X   ........  ........  ........  ........        X   ........        X         X
Lebanon.......................        X         X         X         X   ........        X         X         X         X         X   ..........        X   ........        X
Lesotho.......................        X         X   ........        X   ........        X         X         X         X         X   ..........        X   ........        X
Liberia.......................        X         X   ........        X   ........        X         X         X         X         X   ..........        X   ........        X
Libya.........................        X         X         X         X         X         X         X         X         X         X   ..........        X   ........        X
Liechtenstein.................        X         X   ........        X   ........        X         X         X         X         X   ..........        X   ........        X
Lithuania.....................        X   ........  ........        X   ........        X   ........        X         X
Luxembourg....................        X   ........  ........  ........  ........        X   ........        X         X
Macau.........................        X         X         X         X   ........        X         X         X         X         X   ..........        X   ........        X
Macedonia (The Former Yugoslav        X         X   ........        X   ........        X         X         X         X         X   ..........        X   ........        X
 Republic of).................
Madagascar....................        X         X   ........        X   ........        X         X         X         X         X   ..........        X   ........        X
Malawi........................        X         X   ........        X   ........        X         X         X         X         X   ..........        X   ........        X
Malaysia......................        X         X   ........        X   ........        X         X         X         X         X   ..........        X   ........        X
Maldives......................        X         X   ........        X   ........        X         X         X         X         X   ..........        X   ........        X
Mali..........................        X         X   ........        X   ........        X         X         X         X         X   ..........        X   ........        X
Malta.........................        X   ........  ........        X   ........        X         X         X         X         X   ..........        X   ........        X
Marshall Islands..............        X         X   ........        X   ........        X         X         X         X         X   ..........        X   ........        X
Mauritania....................        X         X   ........        X   ........        X         X         X         X         X   ..........        X   ........        X
Mauritius.....................        X         X   ........        X   ........        X         X         X         X         X   ..........        X   ........        X
Mexico........................        X         X   ........        X   ........        X         X         X         X         X          X          X   ........        X
Micronesia (Federated State           X         X   ........        X   ........        X         X         X         X         X   ..........        X   ........        X
 of)..........................
Moldova.......................        X         X         X         X   ........        X         X         X         X         X   ..........        X         X
Monaco........................        X         X   ........        X   ........        X         X         X         X         X   ..........        X   ........        X
Mongolia......................        X         X         X         X   ........        X         X         X         X         X   ..........        X         X
Montenegro....................        X         X   ........        X   ........        X         X         X         X         X   ..........        X         X         X
Morocco.......................        X         X   ........        X   ........        X         X         X         X         X   ..........        X   ........        X
Mozambique....................        X         X   ........        X   ........        X         X         X         X         X   ..........        X   ........        X
Namibia.......................        X         X   ........        X   ........        X         X         X         X         X   ..........        X   ........        X
Nauru.........................        X         X   ........        X   ........        X         X         X         X         X   ..........        X   ........        X
Nepal.........................        X         X   ........        X   ........        X         X         X         X         X   ..........        X   ........        X
Netherlands Antilles..........        X         X   ........        X   ........        X         X         X         X         X   ..........        X   ........        X

[[Page 243]]

 
Netherlands...................        X   ........  ........  ........  ........        X   ........        X         X
New Zealand...................        X   ........  ........  ........  ........        X   ........        X         X
Nicaragua.....................        X         X   ........        X   ........        X         X         X         X         X          X          X   ........        X
Niger.........................        X         X   ........        X   ........        X         X         X         X         X   ..........        X   ........        X
Nigeria.......................        X         X   ........        X   ........        X         X         X         X         X   ..........        X   ........        X
Norway........................        X   ........  ........  ........  ........        X   ........        X         X
Oman..........................        X         X         X         X   ........        X         X         X         X         X   ..........        X   ........        X
Pakistan......................        X         X         X         X         X         X         X         X         X         X   ..........        X   ........        X
Palau.........................        X         X   ........        X   ........        X         X         X         X         X   ..........        X   ........        X
Panama........................        X         X   ........        X   ........        X         X         X         X         X          X          X   ........        X
Papua New Guinea..............        X         X   ........        X   ........        X         X         X         X         X   ..........        X   ........        X
Paraguay......................        X         X   ........        X   ........        X         X         X         X         X          X          X   ........        X
Peru..........................        X         X   ........        X   ........        X         X         X         X         X          X          X   ........        X
Philippines...................        X         X   ........        X   ........        X         X         X         X         X   ..........        X   ........        X
Poland........................        X   ........  ........  ........  ........        X   ........        X         X
Portugal......................        X   ........  ........  ........  ........        X   ........        X         X
Qatar.........................        X         X         X         X   ........        X         X         X         X         X   ..........        X   ........        X
Romania.......................        X   ........  ........  ........  ........        X   ........        X         X
Russia........................        X         X         X   ........  ........        X         X         X         X         X   ..........        X         X
Rwanda \1\....................        X         X   ........        X   ........        X         X         X         X         X   ..........        X         X         X
St. Kitts and Nevis...........        X         X   ........        X   ........        X         X         X         X         X          X          X   ........        X
St. Lucia.....................        X         X   ........        X   ........        X         X         X         X         X          X          X   ........        X
St. Vincent and the Grenadines        X         X   ........        X   ........        X         X         X         X         X          X          X   ........        X
 Samoa........................        X         X   ........        X   ........        X         X         X         X         X   ..........        X   ........        X
San Marino....................        X         X   ........        X   ........        X         X         X         X         X   ..........        X   ........        X
Sao Tome and Principe.........        X         X   ........        X   ........        X         X         X         X         X   ..........        X   ........        X
Saudi Arabia..................        X         X         X         X   ........        X         X         X         X         X   ..........        X   ........        X
Senegal.......................        X         X   ........        X   ........        X         X         X         X         X   ..........        X   ........        X
Serbia........................        X         X   ........        X   ........        X         X         X         X         X   ..........        X         X         X
Seycheles.....................        X         X   ........        X   ........        X         X         X         X         X   ..........        X   ........        X
Sierra Leone..................        X         X   ........        X   ........        X         X         X         X         X   ..........        X   ........        X
Singapore.....................        X         X   ........        X   ........        X         X         X         X         X   ..........        X   ........        X
Slovakia......................        X   ........  ........  ........  ........        X   ........        X         X
Slovenia......................        X   ........  ........  ........  ........        X   ........        X         X
Solomon Islands...............        X         X   ........        X   ........        X         X         X         X         X   ..........        X   ........        X
Somalia.......................        X         X   ........        X   ........        X         X         X         X         X   ..........        X   ........        X
South Africa..................        X         X   ........  ........  ........        X         X         X         X         X   ..........        X   ........        X
Spain.........................        X   ........  ........  ........  ........        X   ........        X         X
Sri Lanka.....................        X         X   ........        X   ........        X         X         X         X         X   ..........        X   ........        X
Sudan.........................        X         X   ........        X   ........        X         X         X         X         X   ..........        X   ........        X         X         X
Suriname......................        X         X   ........        X   ........        X         X         X         X         X          X          X   ........        X
Swaziland.....................        X         X   ........        X   ........        X         X         X         X         X   ..........        X   ........        X
Sweden........................        X   ........  ........  ........  ........        X   ........        X         X         X   ..........        X   ........        X
Switzerland...................        X   ........  ........  ........  ........        X   ........        X         X         X   ..........        X   ........        X
Syria.........................        X         X         X         X   ........        X         X         X         X         X   ..........        X   ........        X         X
Taiwan........................        X         X         X         X   ........        X         X         X         X         X   ..........        X   ........        X
Tajikistan....................        X         X         X         X   ........        X         X         X         X         X   ..........        X         X
Tanzania......................        X         X   ........        X   ........        X         X         X         X         X   ..........        X   ........        X
Thailand......................        X         X   ........        X   ........        X         X         X         X         X   ..........        X   ........        X

[[Page 244]]

 
Togo..........................        X         X   ........        X   ........        X         X         X         X         X   ..........        X   ........        X
Tonga.........................        X         X   ........        X   ........        X         X         X         X         X   ..........        X   ........        X
Trinidad and Tobago...........        X         X   ........        X   ........        X         X         X         X         X          X          X   ........        X
Tunisia.......................        X         X   ........        X   ........        X         X         X         X         X   ..........        X   ........        X
Turkey........................        X   ........  ........  ........  ........        X   ........        X         X
Turkmenistan..................        X         X         X         X   ........        X         X         X         X         X   ..........        X         X
Tuvalu........................        X         X   ........        X   ........        X         X         X         X         X   ..........        X   ........        X
Uganda........................        X         X   ........        X   ........        X         X         X         X         X   ..........        X   ........        X
Ukraine.......................        X   ........  ........  ........  ........        X         X         X         X         X   ..........        X         X
United Arab Emirates..........        X         X         X         X   ........        X         X         X         X         X   ..........        X   ........        X
United Kingdom................        X   ........  ........  ........  ........        X   ........        X         X
Uruguay.......................        X         X   ........        X   ........        X         X         X         X         X          X          X   ........        X
Uzbekistan....................        X         X         X         X   ........        X         X         X         X         X   ..........        X         X
Vanuatu.......................        X         X   ........        X   ........        X         X         X         X         X   ..........        X   ........        X
Vatican City..................        X         X   ........        X   ........        X         X         X         X         X   ..........        X   ........        X
Venezuela.....................        X         X   ........        X   ........        X         X         X         X         X          X          X   ........        X
Vietnam.......................        X         X         X         X   ........        X         X         X         X         X   ..........        X         X
Western Sahara................        X         X   ........        X   ........        X         X         X         X         X   ..........        X   ........        X
Yemen.........................        X         X         X         X   ........        X         X         X         X         X   ..........        X   ........        X
Zambia........................        X         X   ........        X   ........        X         X         X         X         X   ..........        X   ........        X
Zimbabwe......................        X         X   ........        X   ........        X         X         X         X         X   ..........        X   ........        X
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ This country is subject to sanctions implemented by the United Nations Security Council. See Sec.  746.3 for license requirements for exports and reexports to Iraq or transfer within
  Iraq, as well as regional stability licensing requirements not included in the Country Chart. See Sec.  746.8 for license requirements for exports and reexports to Rwanda.


[64 FR 17970, Apr. 13, 1999, as amended at 64 FR 28908, May 28, 1999; 64 
FR 42011, Aug. 3, 1999; 64 FR 60340, Nov. 5, 1999; 65 FR 38150, June 19, 
2000; 65 FR 60854, Oct. 13, 2000; 66 FR 12846, Mar. 1, 2001; 66 FR 
18402, Apr. 9, 2001; 66 FR 49523, Sept. 28, 2001; 67 FR 10613, Mar. 8, 
2002; 67 FR 11897, Mar. 18, 2002; 67 FR 37981, May 31, 2002; 67 FR 
55596, Aug. 29, 2002; 67 FR 70546, Nov. 25, 2002; 68 FR 60289, Oct. 22, 
2003; 69 FR 3005, Jan. 22, 2004; 69 FR 21056, Apr. 20, 2004; 69 FR 
23628, Apr. 29, 2004; 69 FR 36010, June 28, 2004; 69 FR 41879, July 12, 
2004; 69 FR 46074, July 30, 2004; 69 FR 77892, Dec. 29, 2004; 70 FR 
14389, Mar. 22, 2005; 70 FR 45278, Aug. 5, 2005; 70 FR 51252, Aug. 30, 
2005; 70 FR 67348, Nov. 7, 2005; 71 FR 33618, June 12, 2006; 71 FR 
51717, Aug. 31, 2006; 71 FR 68439, Nov. 27, 2006; 72 FR 3724, Jan. 26, 
2007; 72 FR 52002, Sept. 12, 2007; 73 FR 51218, Sept. 2, 2008]

[[Page 245]]



PART 740_LICENSE EXCEPTIONS--Table of Contents




Sec.
740.1 Introduction.
740.2 Restrictions on all License Exceptions.
740.3 Shipments of limited value (LVS).
740.4 Shipments to Country Group B countries (GBS).
740.5 Civil end-users (CIV).
740.6 Technology and software under restriction (TSR).
740.7 Computers (APP).
740.8 [Reserved]
740.9 Temporary imports, exports, and reexports (TMP).
740.10 Servicing and replacement of parts and equipment (RPL).
740.11 Governments, international organizations, and international 
          inspections under the Chemical Weapons Convention (GOV).
740.12 Gift parcels and humanitarian donations (GFT).
740.13 Technology and software--unrestricted (TSU).
740.14 Baggage (BAG).
740.15 Aircraft and vessels (AVS).
740.16 Additional permissive reexports (APR).
740.17 Encryption commodities, software and technology (ENC).
740.18 Agricultural commodities (AGR).

Supplement No. 1 to Part 740--Country Groups
Supplement No. 2 to Part 740--Items That May Be Donated to Meet Basic 
          Human Needs Under the Humanitarian License Exception
Supplement No. 3 to Part 740--License Exception ENC Favorable Treatment 
          Countries

    Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; 22 
U.S.C. 7201 et seq.; E.O. 13026, 61 FR 58767, 3 CFR, 1996 Comp., p. 228; 
E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 783; Notice of July 23, 
2008, 73 FR 43603 (July 25, 2008).



Sec. 740.1  Introduction.

    In this part, references to the EAR are references to 15 CFR chapter 
VII, subchapter C.
    (a) Scope. A ``License Exception'' is an authorization contained in 
this part that allows you to export or reexport under stated conditions, 
items subject to the Export Administration Regulations (EAR) that would 
otherwise require a license under General Prohibition One, Two, Three, 
or Eight, as indicated under one or more of the Export Control 
Classification Numbers (ECCNs) in the Commerce Control List (CCL) in 
Supplement No. 1 to part 774 of the EAR and items subject to the EAR 
that would require a license based on the embargo policies described in 
part 746 of the EAR. If your export or reexport is subject to General 
Prohibition Six for embargoed destinations, refer to part 746 of the EAR 
to determine the availability of any License Exceptions. Special 
commodity controls apply to short supply items. License Exceptions for 
items listed on the CCL as controlled for Short Supply reasons are found 
in part 754 of the EAR. If your export or reexport is subject to General 
Prohibition Five, consult part 744 of the EAR. If your export or 
reexport is subject to General Prohibitions Four, Seven, Nine, or Ten, 
then no License Exceptions apply.
    (b) Certification. By using any of the License Exceptions you are 
certifying that the terms, provisions, and conditions for the use of the 
License Exception described in the EAR have been met. Please refer to 
part 758 of the EAR for clearance of shipments and documenting the use 
of License Exceptions.
    (c) License Exception symbols. Each License Exception bears a three 
letter symbol that will be used for export clearance purposes (see 
paragraph (d) of this section).
    (d) Shipper's Export Declaration or Automated Export System (AES) 
record. You must enter on any required Shipper's Export Declaration 
(SED) or Automated Export System (AES) record the correct License 
Exception symbol (e.g., LVS, GBS, CIV) and the correct Export Control 
Classification Number (ECCN) (e.g., 4A003, 5A002) for all shipments of 
items exported under a License Exception. Items temporarily in the 
United States meeting the provisions of License Exception TMP, under 
Sec. 740.9(b)(3), are excepted from this requirement. See Sec. 758.1 
of the EAR for Shipper's Export Declaration or Automated Export System 
(AES) requirements.
    (e) Destination Control Statement. You may be required to enter an 
appropriate Destination Control Statement

[[Page 246]]

on commercial documents in accordance with Destination Control Statement 
requirements of Sec. 758.6 of the EAR.
    (f) Recordkeeping. Records of transactions involving exports under 
any of the License Exceptions must be maintained in accordance with the 
recordkeeping requirements of part 762 of the EAR.

[61 FR 12768, Mar. 25, 1996, as amended at 61 FR 64274, Dec. 4, 1996; 62 
FR 25457, May 9, 1997; 65 FR 42568, July 10, 2000; 66 FR 36680, July 12, 
2001; 66 FR 42109, Aug. 10, 2001; 68 FR 50472, Aug. 21, 2003]



Sec. 740.2  Restrictions on all License Exceptions.

    (a) You may not use any License Exception if any one or more of the 
following apply:
    (1) Your authorization to use a License Exception has been suspended 
or revoked, or your intended export does not qualify for a License 
Exception.
    (2) The export or reexport is subject to one of the ten General 
Prohibitions, is not eligible for a License Exception, and has not been 
authorized by BIS.
    (3) The item is primarily useful for surreptitious interception of 
wire, oral, or electronic communications, or related software, 
controlled under ECCNs 5A980 or 5D980, unless the item is consigned to 
and for the official use of an agency of the U.S. Government (see Sec. 
740.11(b)(2)(ii) of this part, Governments (GOV)).
    (4) The item being exported or reexported is subject to the license 
requirements described in Sec. 742.7 of the EAR and the export or 
reexport is not:
    (i) Being made to Australia, Japan, New Zealand, or a NATO (North 
Atlantic Treaty Organization) member state (see NATO membership listing 
in Sec. 772.1 of the EAR);
    (ii) Authorized by Sec. 740.11(b)(2)(ii) (official use by personnel 
and agencies of the U.S. government); or
    (iii) Authorized by Sec. 740.14(e) of the EAR (certain shotguns and 
shotgun shells for personal use).
    (5)(i) The item is controlled for missile technology (MT) reasons, 
except that the items described in ECCNs 6A008, 7A001, 7A002, 7A004, 
7A101, 7A102, 7A103, 7A104, 7B001, 7D001, 7D002, 7D003, 7D101, 7D102, 
7E003, or 7E101, may be exported as part of a manned aircraft, land 
vehicle or marine vehicle or in quantities appropriate for replacement 
parts for such applications under Sec. 740.9(a)(2)(ii) (License 
Exception TMP for kits consisting of replacement parts), Sec. 740.10 
(License Exception RPL), Sec. 740.13 (License Exception TSU), or Sec. 
740.15(c) (License Exception AVS for equipment and spare parts for 
permanent use on a vessel or aircraft).
    (ii) MT controlled commodities described in ECCN 2A001 may be 
exported or reexported under Sec. 740.9(a)(2)(ii) (License Exception 
TMP) or Sec. 740.10 (License Exception RPL) as one-for-one replacement 
for equipment previously legally exported or reexported.
    (6) The export or reexport is to a comprehensively embargoed 
destination (Cuba, Iran, and North Korea), unless a license exception or 
portion thereof is specifically listed in the license exceptions 
paragraph pertaining to a particular embargoed country in part 746 of 
the EAR.
    (7) ``Space qualified'' items. Commodities defined in ECCNs 
3A001.b.8 (Traveling Wave Tube Amplifiers (TWTAs) exceeding 18 GHz), 
6A002.e, 6A008.j.1, or 6A998.b; ``software'' for commodities defined in 
ECCNs 3A001.b.8 (Traveling Wave Tube Amplifiers (TWTAs) exceeding 18 
GHz), 6A002.e, 6A008.j.1, or 6A998.b and controlled under ECCNs 3D001 
(Traveling Wave Tube Amplifiers (TWTAs) exceeding 18 GHz), 6D001, 6D002, 
6D991; and ``technology'' for commodities defined in ECCNs 3A001.b.8 
(Traveling Wave Tube Amplifiers (TWTAs) exceeding 18 GHz), 6A002.e, 
6A008.j.1, or 6A998.b and controlled under ECCNs 3E001, 6E001, 6E002, 
6E101, 6E991.
    (8) The item is controlled under ECCNs 2A983, 2D983 or 2E983 and the 
License Exception is other than:
    (i) RPL, under the provisions of Sec. 740.10, including Sec. 
740.10(a)(3)(v), which prohibits exp