[Federal Register Volume 76, Number 217 (Wednesday, November 9, 2011)]
[Rules and Regulations]
[Pages 69609-69612]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-28916]
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DEPARTMENT OF COMMERCE
Bureau of Industry and Security
15 CFR Part 748
[Docket No. 110804481-1527-01]
RIN 0694-AF32
Amendment to Existing Validated End-User Authorizations in the
People's Republic of China: National Semiconductor Corporation and
Semiconductor Manufacturing International Corporation
AGENCY: Bureau of Industry and Security, Commerce.
ACTION: Final rule.
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SUMMARY: In this rule, the Bureau of Industry and Security (BIS) amends
the Export Administration Regulations (EAR) to remove National
Semiconductor Corporation (National Semiconductor) from the list of
``Validated End-Users'' and ``Eligible Destinations'' in the People's
Republic of China (PRC). BIS also removes one facility from the list of
``Eligible Destinations'' for Semiconductor Manufacturing International
Corporation (SMIC) in the PRC, the Semiconductor Manufacturing
International (Chengdu) Corporation, Assembly and Testing (AT2)
Facility (SMIC AT2 facility). These amendments are due to material
changes in the ownership and control of National Semiconductor and the
SMIC AT2 facility. These amendments are not the result of activities of
concern by National Semiconductor or SMIC and do not establish any new
license requirements or licensing policies for exports, reexports, or
transfers (in-country) of items to National Semiconductor, SMIC, or
their facilities.
DATES: This rule is effective November 9, 2011.
FOR FURTHER INFORMATION CONTACT: Karen Nies-Vogel, Chair, End-User
Review Committee, Bureau of Industry and Security, U.S. Department of
Commerce, 14th Street & Pennsylvania Avenue NW., Washington, DC 20230;
by telephone: (202) 482-5991, by fax: (202) 482-3991, or email:
[email protected].
SUPPLEMENTARY INFORMATION:
Background
Authorization Validated End-User (VEU)
BIS amended the EAR in a final rule on June 19, 2007 (72 FR 33646),
creating a new authorization for ``validated end-users'' (VEUs) located
in eligible destinations to which eligible items may
[[Page 69610]]
be exported, reexported, or transferred (in-country) under a general
authorization instead of a license, in conformance with section 748.15
of the EAR. VEUs may obtain eligible items that are on the Commerce
Control List, set forth in Supplement No. 1 to Part 774 of the EAR,
without having to wait for their suppliers to obtain export licenses
from BIS. Eligible items may include commodities, software, and
technology, except those controlled for missile technology or crime
control reasons.
The VEUs listed in Supplement No. 7 to Part 748 of the EAR were
reviewed and approved by the U.S. Government in accordance with the
provisions of section 748.15 and Supplement Nos. 8 and 9 to Part 748 of
the EAR.
Amendment to Existing Validated End-User Authorizations for the PRC
Removal of VEU Authorization for National Semiconductor Corporation
(National Semiconductor)
In a rule published in the Federal Register on October 19, 2007 (72
FR 59164), BIS designated National Semiconductor as a VEU and
identified three of its facilities (NSC VEU facilities) as ``Eligible
Destinations,'' thus authorizing exports, reexports, and transfers (in-
country) of certain eligible items to the three eligible facilities
under Authorization VEU. Due to a material change in the ownership and
control of National Semiconductor, National Semiconductor asked that
its VEU authorization be ended. Accordingly, consistent with section
748.15 of the EAR, BIS now amends Supplement No. 7 to Part 748 of the
EAR to remove National Semiconductor from the list of approved VEUs and
eligible destinations. As a result of this rule, National Semiconductor
Corporation and the NSC VEU facilities at the following addresses are
no longer authorized to receive items under Authorization VEU:
National Semiconductor Hong Kong Limited, Beijing Representative
Office, Room 604, CN Resources Building, No. 8 Jianggumenbei A,
Beijing, China, 100005.
National Semiconductor Hong Kong Limited, Shanghai Representative
Office, Room 903-905 Central Plaza, No. 227 Huangpi Road North,
Shanghai, China, 200003.
National Semiconductor Hong Kong Limited, Shenzhen Representative
Office, Room 1709 Di Wang Commercial Centre, Shung Hing Square, 5002
Shenna Road East, Shenzhen, China, 518008.
This amendment is made due to a material change in the ownership
and control of National Semiconductor and is not the result of
activities of concern by National Semiconductor or the NSC VEU
facilities. This action does not establish any new license requirements
or licensing policies for exports, reexports or transfers (in-country)
of items to National Semiconductor. Rather, the license requirements
set forth in the EAR continue to apply to this entity and its
facilities. Parties seeking to export, reexport or transfer (in-
country) items under the EAR to National Semiconductor or these
facilities may now have to obtain a license to do so, depending on the
item at issue.
All conditions and restrictions that applied to transactions that
were undertaken pursuant to Authorization VEU prior to the effective
date of this amendment that involved National Semiconductor or the NSC
VEU facilities continue to apply to those transactions. These
restrictions and conditions include any that were imposed on National
Semiconductor or the NSC VEU facilities in connection with its
eligibility for Authorization VEU, as established by BIS in its
communications authorizing National Semiconductor's participation in
the VEU program.
Removal of Semiconductor Manufacturing International (Chengdu)
Corporation, Assembly and Testing (AT2) Facility (SMIC AT2 Facility)
From the List of VEU Semiconductor Manufacturing International
Corporation's (SMIC's) Approved Facilities in the PRC
In a rule published in the Federal Register on October 19, 2007 (72
FR 59164), BIS designated SMIC as a VEU, thus authorizing certain
specific exports, reexports and transfers (in-country) to five listed
facilities of the company, including the SMIC AT2 facility. Due to a
material change in the ownership and control of the SMIC AT2 facility,
SMIC has requested that BIS remove that facility's VEU authorization.
Accordingly, in this rule, BIS further amends Supplement No. 7 to Part
748 of the EAR to remove the SMIC AT2 facility and its address (8-8
Kexin Road, Export Processing Zone (West Area), Chengdu, China 611731)
from the list of SMIC's authorized VEU facilities. This change leaves
three SMIC facilities that are approved to receive eligible items under
SMIC's VEU authorization.
As a result of this rule, the SMIC AT2 facility is no longer
authorized to receive items under Authorization VEU. Thus, parties
seeking to export, reexport, or transfer (in-country) items under the
EAR to the SMIC AT2 facility may now need to obtain a license to do so,
depending on the item at issue.
This amendment is made due to a material change in the ownership
and control at the SMIC AT2 facility and is not the result of
activities of concern by the SMIC AT2 facility or SMIC. SMIC remains a
qualified participant in the VEU program, and thus exports, reexports
and transfers (in-country) of the items controlled under the ECCNs
listed in SMIC's entry in Supplement No. 7 to Part 748 of the EAR to
the SMIC facilities listed in the same part may continue to be made
under Authorization VEU. This action does not establish any new license
requirements or licensing policies for exports, reexports or transfers
(in-country) of items to the SMIC AT2 facility. Rather, the license
requirements set forth in the EAR continue to apply to this entity and
its facilities.
This amendment applies only to transactions under Authorization VEU
involving the SMIC AT2 facility. All conditions and restrictions that
applied to transactions that were undertaken pursuant to Authorization
VEU prior to the effective date of this amendment, and that involved
the SMIC AT2 facility, continue to apply to those transactions. These
restrictions and conditions include any that were imposed on the SMIC
AT2 facility in connection with its eligibility for Authorization VEU,
as established by BIS in its communications authorizing the SMIC AT2
facility's participation in the VEU program.
Saving Clause
Shipments of items removed from eligibility for export, reexport or
transfer (in-country) under Authorization VEU (i.e., under the
designator VEU) as a result of this regulatory action that were on dock
for loading, on lighter, laden aboard an exporting carrier, or en route
aboard a carrier to a port of export, on November 9, 2011, pursuant to
actual orders for export, reexport or transfer (in-country) to an
eligible destination, may proceed to that destination under the
previously applicable Authorization so long as they are exported,
reexported or transferred (in-country) before November 25, 2011. Any
such items not actually exported, reexported or transferred (in-
country) before midnight, on November 25, 2011, require an individual
license or other applicable authorization under the EAR.
Since August 21, 2001, the Export Administration Act (the Act) has
been in lapse and the President, through Executive Order 13222 of
August 17,
[[Page 69611]]
2001 (3 CFR, 2001 Comp., p. 783 (2002)), as extended most recently by
the Notice of August 12, 2011, 76 FR 50661 (August 16, 2011), has
continued the EAR in effect under the International Emergency Economic
Powers Act. BIS continues to carry out the provisions of the Act, as
appropriate and to the extent permitted by law, pursuant to Executive
Order 13222.
Rulemaking Requirements
1. Executive Orders 13563 and 12866 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). Executive
Order 13563 emphasizes the importance of quantifying both costs and
benefits, of reducing costs, of harmonizing rules, and of promoting
flexibility. This rule has been determined to be not significant for
purposes of Executive Order 12866.
2. This rule involves collections previously approved by the Office
of Management and Budget (OMB) under Control Number 0694-0088, ``Multi-
Purpose Application,'' which carries a burden hour estimate of 43.8
minutes to prepare and submit form BIS-748; and for recordkeeping,
reporting and review requirements in connection with Authorization VEU,
which carries an estimated burden of 30 minutes per submission. This
rule is expected to result in a decrease in license applications
submitted to BIS. Total burden hours associated with the Paperwork
Reduction Act of 1995 (44 U.S.C. 3501 et seq.) (PRA) and OMB Control
Number 0694-0088 are not expected to increase significantly as a result
of this rule.
Notwithstanding any other provisions of law, no person is required
to respond or to be subject to a penalty for failure to comply with a
collection of information, subject to the requirements of the PRA,
unless that collection of information displays a currently valid OMB
Control Number.
3. This rule does not contain policies with Federalism implications
as that term is defined under Executive Order 13132.
4. There is good cause under 5 U.S.C. 553(b)(B) to waive the
provisions of the Administrative Procedure Act (APA) requiring prior
notice and the opportunity for public comment because, specific to this
rule, they are unnecessary, impracticable, and contrary to the public
interest.
In determining whether to grant or revoke VEU designations, a
committee of U.S. Government agencies evaluates a variety of
information, the nature and terms of which are set forth in 15 CFR part
748, supplement No. 8. The criteria for evaluation by the committee are
set forth in 15 CFR 748.15(a)(2). The information, commitments, and
criteria for this extensive review were all established through the
notice of proposed rulemaking and public comment process (71 FR 38313,
July 2, 2006, and 72 FR 33646, June 19, 2007). Thus, authorization of a
VEU is similar to granting a license: To receive authorization VEU, an
application must be submitted on behalf of an entity; the entity must
be found to meet certain previously identified criteria; and the
application must be approved. Because the authorization granted by BIS
pursuant to 15 CFR 748.15 is similar to that granted to exporters for
individual licenses, which do not undergo public review when they are
approved, denied, revoked, or amended, allowing public review and
comments to this rule is unnecessary.
Publication of this rule in other than final form is unnecessary
because the procedure for revocation of a VEU or facility from the
Authorized VEU list is similar to the license revocation procedure,
which does not undergo public review. During the revocation procedure,
the U.S. Government analyzes confidential business information
according to set criteria to determine whether a given authorized VEU
entity remains eligible for VEU status. Revocation may, as in this
case, be the result of a material change in circumstance at the VEU or
the VEU's authorized facility. Examples of such a material change
include changes in the operational status of a VEU facility or changes
in the end-use of the products produced at the facility. Such changes
may result in a VEU or VEU facility no longer meeting the eligibility
criteria for Authorization VEU, and may thus lead the U.S. Government
to modify or revoke VEU authorization. VEUs or VEU facilities that
undergo material changes that result in their no longer meeting the
criteria to be eligible VEUs must, according to the VEU program, have
their VEU status revoked. Here, National Semiconductor requested
removal from the VEU program and SMIC requested that BIS remove the
SMIC AT2 facility from the VEU program due to material changes in
ownership and control. Consequently, BIS is removing National
Semiconductor from the list of ``Validated End-Users'' and ``Eligible
Destinations'' and removing the SMIC AT2 facility from ``Eligible
Destinations'' in the EAR. Public comments on whether to make these
removals are unnecessary.
Additionally, allowing for prior public notice and comment on this
rule may be impracticable and contrary to the public interest. The EAR
advance U.S. national security, foreign policy, and economic objectives
by ensuring an effective export control system. In accordance with the
pre-set criteria, the U.S. Government reviews each VEU and its
facilities to ensure that exports, reexports and transfers (in-country)
of specified items to these entities are consistent with such
objectives. Accordingly, VEUs and their facilities may receive through
export, reexport or transfer (in-country) items that would otherwise
require a license and transaction-specific review, in part due to
national security concerns. However, the VEU and listed facility here
are no longer eligible to receive items under Authorized VEU, and in
order to protect national security, the restrictions of the EAR must be
in place as soon as possible. Allowing public comments on this rule
would hinder the ability of BIS to enforce the EAR's restrictions on
exports without a license to the listed facilities. Thus public comment
on this rule is both impracticable, because allowing such comment would
prevent BIS from undertaking its statutory duties, and contrary to the
public's national security interests.
In addition, BIS finds good cause to waive the requirement of 5
U.S.C. 553(d)(3) to delay the effectiveness of this regulation, because
such a delay is contrary to the public's interest. When the U.S.
Government has been notified of or has identified a material change in
circumstances that warrants revocation or modification of VEU status
for an end-user or a facility of an end-user, there is a need to
quickly alert the public that the facility is no longer authorized as a
recipient of items under Authorization VEU. Delaying this action's
effectiveness could result in items that otherwise require licenses
being exported, reexported, or transferred (in-country), license-free,
to an ineligible facility, at risk to national security. Accordingly,
it would be contrary to the public interest to delay this rule's
effectiveness.
No other law requires that a notice of proposed rulemaking and an
opportunity for public comment be given for this final rule. Because a
notice of proposed rulemaking and an opportunity for public comment are
not required to be given for this rule under the APA or by any other
law, the analytical requirements of the
[[Page 69612]]
Regulatory Flexibility Act (5 U.S.C. 601 et seq.) are not applicable
and no regulatory flexibility analysis has been prepared.
List of Subjects in 15 CFR Part 748
Administrative practice and procedure, Exports, Reporting and
recordkeeping requirements.
Accordingly, part 748 of the EAR (15 CFR parts 730-774) is amended
as follows:
PART 748--[AMENDED]
0
1. The authority citation for 15 CFR part 748 continues to read as
follows:
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 August 12, 2011, 76
FR 50661 (August 16, 2011).
0
2. Supplement No. 7 to Part 748 is amended by:
0
a. Removing the entire entry for National Semiconductor Corporation;
and
0
b. Removing ``Semiconductor Manufacturing International (Chengdu)
Corporation, Assembly and Testing (AT2) Facility, 8-8 Kexin Road,
Export Processing Zone (West Area), Chengdu, China 611731'' from the
``Eligible Destinations'' column in ``China (People's Republic of)''.
Dated: November 1, 2011.
Kevin J. Wolf,
Assistant Secretary for Export Administration.
[FR Doc. 2011-28916 Filed 11-8-11; 8:45 am]
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