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Code · REGISTER · 2007-06-19 · Bureau of Industry and Security, Commerce · Rules and Regulations

Rules and Regulations. Final rule

34,378 words·~156 min read·/register/2007/06/19/07-2985

A research copy — for the controlling text, always check the official state or federal source. Not legal advice.

BILLING CODE 4910-13-M DEPARTMENT OF COMMERCE Bureau of Industry and Security 15 CFR Parts 742, 743, 744, 748, 750 and 758 [Docket No. 061205125-7125-01] RIN 0694-AD75 Revisions and Clarification of Export and Reexport Controls for the People's Republic of China (PRC); New Authorization Validated End-User; Revision of Import Certificate and PRC End-User Statement Requirements AGENCY: Bureau of Industry and Security, Commerce. ACTION: Final rule. SUMMARY: In this final rule, the Bureau of Industry and Security
(BIS)amends the Export Administration Regulations
(EAR)to revise and clarify U.S. licensing requirements and licensing policy on exports and reexports of items to the People's Republic of China (PRC). BIS published a revised policy and related amendments in proposed form in the **Federal Register** with a request for comments. This final rule establishes a control, based on knowledge of a “military end-use,” on exports and reexports to the PRC of certain items on the Commerce Control List
(CCL)that otherwise do not require a license to the PRC. It also includes a revision to the license application review policy for items destined for the PRC that are controlled on the CCL for reasons of national security, and revises the license review policy for items controlled for reasons of chemical and biological weapons proliferation, nuclear nonproliferation, and missile technology for export to the PRC, requiring that applications involving such items be reviewed in conjunction with the revised national security licensing policy. This rule also creates a new authorization for “validated end-users” to which specified items may be exported or reexported without a license. Validated end-users will be placed on a list in the EAR after review and approval by the United States Government. The process for such review is also set forth in this final rule. This rule also revises the circumstances in which End-User Statements, issued by the PRC Ministry of Commerce (MOFCOM), must be obtained, requiring them for transactions that both require a license to the PRC for any reason and (for most exports) exceed a total value of $50,000. This final rule also includes other minor corrections and conforming amendments. DATES: This rule is effective June 19, 2007. Comments may be submitted at any time. ADDRESSES: Although this is a final rule, BIS welcomes comments, which should be sent by fax to
(202)482-3355, e-mail to *publiccomments@bis.doc.gov,* or by mail to Sheila Quarterman, Regulatory Policy Division, Bureau of Industry and Security, Department of Commerce, P.O. Box 273, Washington, DC 20044. Please refer to regulatory identification number
(RIN)0694-[AD75 final] in all comments, and in the subject line of e-mail comments. Comments on the collection of information should be sent to David Rostker, Office of Management and Budget
(OMB)by e-mail to *David_Rostker@omb.eop.gov* , or by fax to
(202)395-7285. FOR FURTHER INFORMATION CONTACT: For technology related issues, contact Bernard Kritzer, Director, Office of National Security and Technology Transfer Controls, Bureau of Industry and Security, Department of Commerce, P.O. Box 273, Washington, DC 20044; by telephone
(202)482-0092; or by e-mail to *bkritzer@bis.doc.gov.* For issues related to the Validated End-User authorization, contact Michael Rithmire, Export Administration Intelligence Liaison, Bureau of Industry and Security, Department of Commerce, P.O. Box 273, Washington, DC 20044; by telephone
(202)482-6105; or by e-mail to *mrithmir@bis.doc.gov.* For general questions or a copy of the economic analysis, please contact Sheila Quarterman at the address listed in the ADDRESSES section. SUPPLEMENTARY INFORMATION: Background It is the policy of the United States Government to facilitate U.S. exports to legitimate civilian end-users in the People's Republic of China (PRC), while preventing exports that would enhance the military capability of the PRC. Consistent with this policy, the Bureau of Industry and Security
(BIS)is amending the Export Administration Regulations
(EAR)by revising and clarifying United States licensing requirements and licensing policy on exports and reexports of goods and technology to the PRC. As the PRC has increased its participation in the global economy, bilateral trade has grown rapidly, and the PRC has emerged as a major market for U.S. exports and investment. This greatly expanded economic relationship is beneficial for both nations, and has increased the prosperity of both the American and Chinese people. The United States therefore seeks to encourage and facilitate exports to legitimate civil end-users in the PRC. At the same time, the United States has a longstanding policy of not permitting exports that would make a direct and significant contribution to the PRC's military capability. Moreover, the United States has an interest in restricting exports of certain dual-use products and technologies that would not otherwise need an export license, if those items are destined for a “military end-use” in the PRC. BIS is therefore amending the EAR to revise and clarify U.S. licensing requirements and licensing policy on exports and reexports of items to the PRC, and to establish a new authorization that is intended to facilitate exports to validated civilian end-users in the PRC. On July 6, 2006, BIS published a proposed rule and requested public comments (71 FR 38313). On October 19, 2006, the original comment period deadline of November 3, 2006 was extended until December 4, 2006 (71 FR 61692). The detailed rationale for the proposed rule's provisions is provided in the preamble to the proposed rule and is not repeated here. In general, however, this rule proposes certain revisions and clarifications to licensing requirements and policies with regard to the PRC to more precisely reflect U.S. foreign policy and national security interests. Revision of Licensing Review Policy and License Requirements To strengthen efforts to prevent U.S. exports to the PRC that would enhance the PRC's military capabilities, this rule revises the licensing review policy for items controlled on the Commerce Control List for reasons of national security. Specifically, this rule amends section 742.4(b)(7) to make clear that the overall policy of the United States for exports to the PRC of these items is to approve exports for civil end-uses but generally to deny exports that will make a direct and significant contribution to Chinese military capabilities. BIS makes further revisions to the EAR to clarify that it will review license applications to export or reexport to the PRC items controlled for chemical and biological weapons proliferation, nuclear nonproliferation, and missile technology under sections 742.2, 742.3 and 742.5, respectively, of the EAR, in accordance with the licensing policies in both paragraph
(b)of the applicable section and with the revised licensing policy in paragraph 742.4(b)(7) of the EAR, which provides a presumption of denial for license applications to export, reexport, or transfer items that would make a direct and significant contribution to the PRC's military capabilities such as, but not limited to, the major weapons systems described in new Supplement No. 7 to Part 742 of the EAR. This rule also implements a new control on exports to the PRC of certain CCL items that otherwise do not require a license to the PRC when the exporter has knowledge, as defined in section 772.1 of the EAR, that such items are destined for “military end-use” in the PRC or is informed that such items are destined for such an end-use. The list of items subject to this “military end-use” restriction covers approximately 20 products and associated technologies, as described in the entries of 31 full or partial Export Control Classification Numbers (ECCNs). The list was based on a review of public comments and a careful interagency review of items listed on the CCL that currently do not require a license for export to the PRC but have the potential to advance the military capabilities of the PRC. Applications to export, reexport, or transfer items controlled pursuant to the “military end-use” control will be reviewed on a case-by-case basis to determine whether the export, reexport, or transfer will make a material contribution to the military capabilities of the PRC and would result in advancing the country's military activities contrary to the national security interests of the United States. Other end-use controls in part 744 of the EAR continue to apply. New Authorization Validated End-User
(VEU)To facilitate legitimate exports to civilian end-users, BIS establishes in this rule a new authorization Validated End-User. The authorization will allow the export, reexport, and transfer of eligible items to specified end-users in an eligible destination, initially the PRC. Validated end-users will be those entities that meet a number of criteria, including a demonstrated record of engaging only in civil end-use activities. This rule outlines clear procedures to request Validated End-User authorization, the procedures and timelines to be used by an interagency committee established to consider such requests, and the criteria for evaluating requests. Revision of End-User Statement Requirements To strengthen implementation of the April 2004 end-use visit understanding between the Vice Minister of Commerce of the PRC and the U.S. Under Secretary of Commerce for Industry and Security, this rule requires exporters to obtain PRC End-User Statements from the Ministry of Commerce of the PRC for all exports of items on the CCL requiring a license to the PRC over a specific value, which for most exports will be a new, higher threshold of $50,000. BIS anticipates that this change will facilitate BIS's ability to conduct end-use checks on exports or reexports of controlled goods and technologies to the PRC, consistent with the existing end-use visit understanding with the Government of the PRC, without resulting in an overall annual increase in the number of such statements required from U.S. exporters. The facilitation of end-use checks should, in turn, facilitate increased U.S. exports to the PRC. Comments and Responses BIS received 57 public comments, amounting to more than 1000 pages of comments on the proposed rule. Summaries of those comments and BIS responses appear below by topic. Similar comments are consolidated. Revised License Review Policy for Items Controlled for National Security Reasons to the PRC *Comment 1:* A number of commenters asserted that the “material contribution to military capability” standard used in the proposed rule with respect to BIS's review of license applications involving items controlled for national security is too broad. In addition, certain commenters stated that the concept of “material contribution to military capability” is largely subjective, and best left to military experts in the Government. Moreover, they asserted that the proposed definition of “military end-use” goes far beyond even the broad scope of the “material contribution to military capability” standard used elsewhere in the proposed rule and that it is unlikely that this problem can be resolved by revising that definition. *Response:* BIS has considered the public comments received regarding the appropriate license review standard to apply to license applications involving items controlled for national security
(NS)reasons. BIS had proposed revising section 742.4(b)(7) of the EAR to establish a policy of reviewing applications involving items controlled for NS reasons to determine if the items would make a “material contribution” to the PRC's military capabilities. This proposal would have changed the review standard in the EAR, in place since 1983, which provided that BIS would conduct an extended review or deny applications to export or reexport items that would make a “direct and significant contribution” to a series of listed PRC military activities. Having reviewed public comments, BIS and its interagency partners have decided to maintain the “direct and significant” standard and not to adopt a new “material contribution” standard. BIS agreed with commenters that the “material contribution” standard was too broad for a review of NS-controlled items. Although the “direct and significant” standard is being retained, BIS has decided to apply it to PRC military capabilities as a whole, rather than a limited list of military activities. To update and better inform exporters of this license application review policy, and to add clarity to the term “military capabilities,” BIS is adding new Supplement No. 7 to Part 742 of the EAR, which provides an illustrative list of weapons systems that could constitute PRC military capabilities. BIS developed this illustrative list in conjunction with its interagency partners. Military End-Use License Requirement for Certain Exports and Reexports to the PRC *Comment 2:* Many commenters claimed that, due to widespread foreign availability, including production of such items in the PRC, the export, reexport, or transfer to the PRC of the listed items to which the proposed “military end-use” license requirement for the PRC would apply (set forth in Supplement No. 2 to Part 744) would not make an impact on the military capability of the PRC. Some of those commenters claimed that many of the items subject to the new “military end-use” license requirement have been exempted from most export restrictions and national security controls because they were deemed not useful for “military end-use” purposes. *Response:* BIS reviewed each comment received regarding the list of ECCNs proposed for the new “military end-use” control. In response to these comments, BIS conducted a thorough review and analysis of each proposed ECCN, considering the following factors:
(1)The military applicability of each item;
(2)the relative foreign availability of each item; and
(3)the level of U.S. commercial exports of each item to the PRC. Each ECCN was evaluated individually against all three criteria, with no one criterion being solely determinative. Greatest weight was given to the military applicability of each item, based on an evaluation of the contribution the items covered by the ECCN could make to a military capability if used in a “military end-use,” as defined in this final rule. With regard to foreign availability, indigenous availability within the PRC was given greater weight than evidence of foreign availability from countries that cooperate with the United States in multilateral export control regimes, though all evidence of foreign availability was considered. When BIS found significant evidence of foreign availability and a high level of commercial exports, but limited military applicability, the ECCN was removed from the proposed list. When BIS found limited evidence of foreign availability and significant military applicability, the item remained on the proposed list, even if it was a major commercial export. As a result of this analysis, BIS determined that it was appropriate to reduce the number of ECCNs subject to the “military end-use” licensing requirement from 47 to 31 full and partial ECCNs. For certain items, the list in Supplement No. 2 to part 744 includes particular commodities, as well as the software and technology associated with such commodities. Thus, the resulting list of full and partial ECCNs covers approximately 20 distinct product areas, including items such as aircraft and aircraft engines, underwater systems, lasers, depleted uranium, certain composite materials, airborne communications systems and inertial navigation systems, and certain highly specialized telecommunications equipment useful for electronic warfare, space communications, or air defense. The final list published with this rule clearly identifies those items that have the potential to contribute to the military end-uses that this final rule is intended to control, consistent with overall U.S. policy toward the PRC. *Comment 3:* A number of commenters asserted that imposing the “military end-use” control on 47 ECCNs would have a commercial impact that extended beyond these items. Several commenters noted that, as proposed, the “military end-use” control extended to items classified under ECCNs 5A992 and 5D992, items that have never been controlled for export or reexport to the PRC. At the same time, items with higher-level encryption functionality would be eligible for export to the PRC under License Exception ENC. The commenters asserted that this would create an incentive for exporters to add cryptography to their items in order to be exempt from the “military end-use” licensing requirement. *Response:* As noted in response to Comment 2, this final rule has been amended such that ECCNs 5A992 and 5D992 are no longer subject to the “military end-use” control. As a result, any such incentive that might have been present is no longer present. *Comment 4:* A number of commenters asserted that the “military end-use” license requirement will be unilateral because some European members of the Wassenaar Arrangement have stated that they do not plan to implement the Wassenaar Arrangement Statement of Understanding on Control of Non-Listed Dual-Use Items to the PRC. *Response:* The United States is committed to maintaining and implementing trade controls decided on a multilateral basis with like minded countries, such as other member countries of the Wassenaar Arrangement. To that end, this rule is consistent with U.S. commitments as a Participating State in the Wassenaar Arrangement. At the December 2003 Wassenaar Arrangement Plenary, Wassenaar Arrangement members agreed in a Statement of Understanding on Control of Non-Listed Dual-Use Items to adopt and implement measures controlling exports of dual-use items destined for “military end-use” in a country subject to a United Nations or relevant regional arms embargo. Commenters are correct that some Wassenaar Arrangement members have stated that they would not implement similar “military end-use” controls on dual-use exports to the PRC. However, other Wassenaar Arrangement members have said that they would consider such controls. The revisions made by this final rule are intended to align U.S. export controls with overall U.S. national security and foreign policy interests, consistent with our multilateral commitments but also recognizing the unique nature of U.S. military and security interests in the Asia-Pacific region. *Comment 5:* Some commenters asserted that the “military end-use” license requirement will be burdensome to U.S. exporters and would be difficult to comply with, as proposed, because the definition of “military end-use” was overly broad and vague. They argued that the breadth of the definition would result in encompassing more items and transactions than those that potentially could enhance the military capabilities of the PRC. Some commenters argued that terms such as “deployment” and “support” were too vague to be readily understood by exporters screening their transactions, while other commenters noted that the definition of “military end-use” did not use well-understood terms from the EAR. *Response:* To address the commenters' argument that the definition of “military end-use,” as proposed, may have been insufficiently precise, BIS, in conjunction with its interagency partners, has revised the definition of “military end-use” in section 744.21(f) of the EAR to add additional clarity and specificity. The revised definition draws extensively on the definition of military end-use already contained in section 744.17 of the EAR, which restricts certain exports and reexports of general purpose microprocessors for “military end-use” and to “military end-users.” Like the proposed rule, this final rule continues to define “military end-use” as including incorporation into a military item described on the U.S. Munitions List, International Munitions List, and items listed under ECCNs ending in “A018” on the CCL. However, it clarifies that “military end-use” also means for the “use”, “development,” or “production” (each as defined in part 772 of the EAR) of such items, and that it means for the “deployment” only of those items covered under ECCN 9A991 as described in Supplement No. 2 to Part 744. In addition, for purposes of this “military end-use” control, in a new note to section 744.21(f), BIS has provided definitions for “operation,” “installation,” “maintenance,” and “deployment.” These are terms not previously defined in the EAR, and BIS intends such definitions to clarify the scope of the military end-use control. *Comment 6:* Some commenters asserted that the license application review standard related to the “military end-use” control also was overly broad and vague. They argued that this, too, would result in the rule encompassing more items and transactions than those that potentially could enhance the military capabilities of the PRC. They pointed out that the “military end-use” control would apply to items previously removed from control by agreement of various multilateral regimes, and commented that the concept of “material contribution” was imprecise. *Response:* In response to comments received, BIS reviewed the breadth and clarity of the license review standard set forth in proposed section 744.21(e). This section provided that license applications involving the “military end-use” control would be reviewed on a case-by-case basis to determine whether they would make a “material contribution” to the military capabilities of the PRC and would result in advancing the country's military activities contrary to U.S. national security interests. This final rule reflects BIS's continued belief that this standard is the appropriate basis through which it will review such license applications. Items subject to the “military end-use” control were determined to be more sensitive when destined for a “military end-use” than when they are simply controlled for national security reasons, and therefore BIS determined that they are more appropriately subject to a different licensing review standard, consistent with U.S. foreign and related export control policies for the PRC. (BIS's consideration of “material contribution” is also discussed in response to Comment 1.) In addition, in reviewing public comments, BIS determined that the license review standard set forth in the proposed rule did not specify how BIS would treat a license application if it were determined that the criteria set forth in the standard were satisfied. In this final rule, BIS is revising the proposed license review standard to specify that when it is determined that these criteria are met, the license application will be denied. *Comment 7:* A number of commenters stated that U.S. exporters, especially those exporting to distributors, would experience an undue burden and an increase in liability because they do not always have accurate information on the specific end-use of their products. Commenters further stated that it is difficult to know about customers' intentions with respect to resale, especially after reincorporation into a new product. They argued that the lack of clarity as to the expected degree of due diligence for complying with the “military end-use” control would exacerbate this problem, particularly because knowledge of a “military end-use” is determined using the existing standard of knowledge in the EAR instead of an actual and positive knowledge standard. In this context, some commenters also argued that the high costs of compliance U.S. exporters would experience would place them at a competitive disadvantage in the PRC market. *Response:* BIS has reviewed the comments received regarding the knowledge standard set forth in the proposed “military end-use” control. Applying the EAR's existing knowledge standard provides exporters and reexporters with a familiar standard for screening or evaluating intended exports, reexports or transfers of items subject to the “military end-use” control. Under the EAR, exporters and reexporters already are responsible for ensuring that they do not, without a license, knowingly export or reexport any item subject to the EAR to an end-user or end-use that is restricted by part 744 of the EAR. The term “knowledge” used throughout part 744 (as defined in section 772.1 of the EAR) encompasses both actual knowledge and reason to know. Therefore, BIS believes that most exporters and reexporters already have screening procedures or internal controls in place to address the ramifications of having or gaining knowledge of an unauthorized end-use. The comments received did not provide evidence to support assertions that exporters will incur high costs of compliance related to the new “military end-use” control, nor was evidence provided to demonstrate that compliance burdens would be any greater than those currently required by provisions in part 744 of the EAR, which require exporters to apply for licenses based on their “knowledge” of the intended end-user or end-use of an item. Moreover, because this final rule reduces the number of ECCNs subject to the “military end-use” licensing requirement and further clarifies the definition of “military end-use,” BIS believes that the overall scope of the control has narrowed in a way that will minimize any additional burden of complying with these requirements. *Comment 8:* Some commenters recommended that a better approach to the “military end-use” control would be for BIS to publish a list, similar to the Unverified List or Entity List in the EAR, which would name specific prohibited military end-users in the PRC. Commenters argued that such a publication would shift the burden from the U.S. exporters to the U.S. Government. *Response:* BIS agrees that the EAR should provide exporters with as much clarity as possible regarding specific end-users of concern and end-users that merit greater scrutiny, as well as end-users that have been validated as legitimate civilian customers. As a result of this rule, BIS anticipates publishing the names of validated end-users. Another proposed rule, published on June 5, 2007 (72 FR 31005), would expand the criteria by which BIS could place end-users on the Entity List to include military end-users, thereby alerting exporters to the need for licenses. Yet even as BIS takes steps to identify for exporters customers of concern as well as legitimate civilian customers, BIS believes it remains critical for exporters to know their customers and perform due diligence to ensure that certain items destined for a “military end-use” in the PRC are reviewed by BIS. With regard to the suggestion that BIS publish a list of military end-users, it is important to recall that this rule controls certain items based on their end-use, not on the end-user. The control depends on the circumstances of how the item will be used, not necessarily by whom it will be used. Therefore, BIS does not believe that a special list of military end-users in the PRC is appropriate for this rule. BIS has other end-user controls and other lists to identify end-users of concern. *Comment 9:* One commenter suggested that BIS clarify the relationship between existing License Exceptions available for the PRC and the proposed military end-use control. *Response:* BIS has revised section 744.21(c) to state more clearly that certain provisions of License Exception GOV are available for items requiring a license as a result of the military end-use control. Absent such a license requirement or another relevant license requirement set forth elsewhere in the EAR ( *e.g.* , for a proliferation end-use restricted under part 744), items listed in Supplement No. 2 to Part 744 would be exported to the PRC without a license. *Comment 10:* Some commenters stated that because the “military end-use” control will have a significant impact, it should have been determined to be a “major rule” for purposes related to requirements of the Congressional Review Act
(CRA)and that BIS's analysis of the projected impact of the rule should be made public. *Response:* Under the CRA, the OMB determines whether a rule is a “major rule.” OMB has determined, without regard to whether the proposed rule may have been major, that this final rule is not major because its annual effect on the economy is well below the $100 million threshold provided in the CRA. BIS's analysis for this final rule demonstrates that the changes to the EAR (End-User Statement
(EUS)requirement; Validated End-User
(VEU)authorization; and “military end-use” control) that have the potential to have an annual effect on the economy will actually have little overall effect. The EUS requirement will result in little, if any additional cost to U.S. exporters. EUSs are now required for all license exports exceeding $50,000 in value (except for computers subject to the provisions of section 748.10(b)(3) or to items classified under ECCN 6A003). While this changes the distribution of license applications requiring EUSs, the higher dollar threshold triggering the need for an EUS will keep the overall number of license applications that require EUSs about the same as it was before this revision. The VEU authorization will actually reduce costs of U.S. exporters because it will eliminate the need for individual export licenses to specified customers in the PRC. Eliminating export license applications could save U.S. exporters as much as several million dollars annually. While the rule does establish reporting requirements on U.S. companies that export without a license under the VEU authorization, these requirements are not appreciably more than existing recordkeeping requirements and should be far less than the cost of license applications avoided by the U.S. exporters. Finally, the “military end-use” control established by this rule covers a small set of items. U.S. exporters should already be screening these exports, as well as all items subject to the EAR (items numbering in the thousands) for reasons of control that are set forth in part 744 of the EAR (including weapons of mass destruction end-uses and involvement of persons denied export privileges). The most direct potential cost of the “military end-use” control would be export license applications now required when previously they were not. Based on existing data, this control could result in additional export licenses for approximately $5,000,000 worth of goods annually, with a cost, using a very high estimate, of $500,000. Commenters did not provide data to allow BIS to evaluate what increased compliance costs, if any, entities would incur with this additional screening requirement. Thus, the overall annual effect on the economy of this rulemaking, using a very high estimate, will not be more than about several million dollars, which is well below the $100 million threshold required for a major rule. *Comment 11:* Two commenters asserted that BIS does not have the statutory authority to promulgate this regulation. In particular, one commenter asserted that BIS does not have authority to amend the EAR to impose unilateral national security controls on exports to China. *Response:* Although the EAA has been in lapse since August 21, 2001, BIS amends the EAR under the authority conferred by Executive Order 13222 of August 17, 2001, as extended most recently by the Notice of August 3, 2006 (71 FR 44551 (Aug. 7, 2006)). Therein, the President, by reason of the expiration of the EAA, invoked his authority, including authority under the International Emergency Economic Powers Act, to continue in effect the system of controls that had been maintained under the EAA. In addition, as noted in response to Comment 4, BIS is imposing this “military end-use” control consistent with U.S. commitments as a Participating State in the Wassenaar Arrangement, under the Arrangement's policy of national discretion in implementation. Moreover, other Participating States are considering their own measures to implement those commitments. *Comment 12:* Two commenters asserted that, in drafting the final version of this rule, BIS should include a provision for contract sanctity in order to avoid adverse effects on existing business contracts. In particular, one commenter stated that BIS should allow exports under open, unshipped orders or contracts and allow companies to continue to satisfy warranty obligations for spare parts, service and maintenance, as well as non-warranty obligations for machines that are already installed. *Response:* BIS recognizes that exporters and reexporters may have ongoing contractual obligations to service items previously shipped to the PRC. This is the case whenever BIS issues a rule that imposes a new license requirement. Accordingly, BIS has a practice of including contract sanctity language in the Saving Clause section of such rules, and has included such language in this rule. This language provides that there is a thirty-day delay between publication of this rule and the rule's effective date. Expansion of End-User Statement Requirement for the PRC *Comment 13:* Many commenters stated that an expansion of the End-User Certificate
(EUC)requirement to encompass items that require a license for any reason to the PRC and exceed $5,000 would pose a substantial burden for exporters and reexporters because it would increase the number of EUCs required for exports of items to the PRC. Currently, they argued, U.S. exporters experience delays in obtaining EUCs from the PRC's Ministry of Commerce (MOFCOM). They further argued that having to obtain additional EUCs from MOFCOM would protract these delays because MOFCOM does not have sufficient resources to accommodate such an increase in requests. In this context, some commenters also asserted that BIS should not implement the expanded EUC requirement until the government of the PRC agrees to provide the certificates in a timely manner. *Response:* As an initial matter, BIS notes that to conform with nomenclature that is recognized by MOFCOM, BIS is amending the EAR to label documents previously described as PRC End-User Certificates as End-User Statements (EUSs). This change was implemented in response to commenters' requests that BIS increase its coordination and cooperation with MOFCOM regarding EUSs. In this rule, this amendment to the EAR is being made in sections 748.9, 748.10 and 748.12. Like the proposed rule, this final rule continues to provide in section 748.10(a) that it applies to transactions involving items controlled for reasons of national security that are destined for any country identified in section 748.9(b)(2) of the EAR and that, in the case of the PRC, it applies to transactions involving all items that require a license to the PRC for any reason. Based on public comments, however, BIS has reassessed the value threshold at which an EUS will be required for the PRC. As compared to the proposed rule, this final rule, in section 748.10(b)(4), increases the threshold at which an EUS will be required for most items from $5,000 to $50,000. In recent years, exporters and reexporters to the PRC have obtained between 500 and 600 EUSs each year. BIS selected the $50,000 threshold so that the number of EUSs obtained would remain approximately the same, thereby addressing commenters' concerns regarding the burden of obtaining an increased number of EUSs and the burden on MOFCOM of processing an increased number of requests for EUSs. While some exporters (those that export items controlled for reasons other than national security, especially in the chemical sector) will face a new requirement to obtain EUSs, other exporters (those exporting items controlled for reasons of national security valued under $50,000) will have a reduced burden. In raising this threshold, BIS has acted to provide some relief from burdens commenters state that exporters experience with paperwork and the EUS requirement for applicable transactions above $5,000. The new $50,000 threshold will not apply to items classified under ECCN 6A003 (cameras) or to exports to the PRC of computers subject to section 748.10(b)(3). BIS's analysis of licensing data revealed that nearly all transactions for items controlled under ECCN 6A003 are valued at below $50,000. Because BIS believes there is a continued national security need to require EUSs to conduct end-use checks on the sensitive commodities covered by ECCN 6A003, BIS left the $5,000 threshold in place for these commodities. Items classified under ECCN 6A003 are controlled for national security reasons; as a result, this action does not result in imposing a new requirement but simply maintains an existing one. Excluding computers subject to section 748.10(b)(3) from the $50,000 threshold also maintains an existing requirement. As to any delay in the PRC's implementation of this new EUS requirement, as noted above, the U.S. Government and the Government of the PRC continue a dialogue to address obstacles that may impede the timely processing of requests for EUSs. *Comment 14:* Some commenters argued that the $5,000 threshold for the EUC requirement is too low. *Response:* As noted in response to Comment 13, above, BIS is raising the EUC threshold for most items to $50,000. The response to Comment 13 provides BIS's rationale for raising this threshold. *Comment 15:* Commenters also argued that the expansion of the EUC requirement would protract delays in export licensing because of the lack of sufficient U.S. Government personnel in the PRC to conduct end-use visits and because the Department of Commerce would use the expanded EUC requirement as a basis to increase the number of end-use visits in the PRC. *Response:* As noted in the response to Comment 13, BIS does not expect this final rule to result in any significant increase in the number of EUSs required per year. The application of the EUS requirement to items other than those controlled for NS reasons is intended to broaden the variety of situations in which end-use visits may be performed (to include end-use visits concerning items controlled for chemical or biological weapons proliferation reasons, for example). The increased dollar threshold is intended to substantially minimize any increase in the overall number of such visits. *Comment 16:* Some commenters stated that the issuance of EUCs depends on the cooperation of senior officials of the government of the PRC. These commenters contend that expanding this requirement would harm the bilateral economic relationship, as well as significant political, military, and foreign policy relationships, between the United States and the PRC, thereby disrupting the necessary cooperation. *Response:* As noted in the response to Comment 13, this final rule will require EUSs in circumstances where they were not previously required, but because of the higher dollar threshold this amendment to the EAR is not expected to result in an overall increase in the number of EUSs required. The fact that the Governments of the United States and the PRC are currently engaged in productive dialogue to facilitate end-use visits counters the notion that the changes to the EUS requirement would harm the bilateral relationship. *Comment 17:* Some commenters stated that the consequence of the expanded EUC requirement would be a decrease in the volume of U.S. exports to the PRC because customers in the PRC would look to non-U.S. suppliers that do not maintain a similar requirement. They argue that this outcome would be contrary to the purpose of facilitating end-use visits and increased U.S. exports to the PRC, which was explained in the proposed rule. *Response:* As explained in the response to Comment 13, the effect of the change to the EUS requirement is not expected to result in a great impact either in terms of costs to the exporter or reexporter or in terms of compliance burden. As a result, BIS does not anticipate that this amendment to the EAR would cause customers in the PRC to turn to non-U.S. suppliers. *Comment 18:* Some commenters argued that BIS should exempt companies that are granted Validated End-User status from the EUC requirement. *Response:* Section 748.10 of the EAR requires that EUSs be obtained in situations in which a license is required. As Validated End-User authorization eliminates a license requirement, eligible items exported, reexported or transferred under that authorization will not need EUSs. *Comment 19:* One commenter stated that the proposed rule should be clarified to indicate whether the expanded EUC requirement covered exports of technology. *Response:* Section 748.9(a)(7) provides that exports and reexports of software and technology are exempt from support documentation requirements; BIS proposed no change to this exemption and has made none in this final rule. *Comment 20:* One commenter asserted that the EUC requirement constitutes a non-tariff barrier to trade with the PRC. Another commenter asserted that, given the difficulty of obtaining EUCs and the inconsistent information and lack of transparency of MOFCOM in issuing EUCs, U.S. exporters may be required to increase their Foreign Corrupt Practices Act
(FCPA)compliance costs to ensure that no prohibited payments are made. *Response:* The need for an EUS has been a long standing requirement in the Export Administration Regulations. As noted in response to Comment 13, this final rule merely widens the scope of circumstances in which an EUS is required without increasing the number of EUSs that must be obtained. In addition, BIS notes that the requirement for U.S. exporters to obtain an EUS stems from the Chinese determination that EUSs are required for end-use checks. BIS does not agree that EUSs pose a non-tariff barrier to trade, and without concrete information has no basis to assess possible FCPA-compliance issues raised by this commenter. *Comment 21:* Some commenters asserted that the expansion of the EUS requirement implicates requirements of the Paperwork Reduction Act of 1955 (44 U.S.C. 3501 *et seq.* ) (PRA). *Response:* The impact of the revision of the EUS requirement has been addressed above in the response to Comment 13. BIS prepared a PRA package in connection with the EUS element of this rule. Authorization Validated End-User
(VEU)*Comment 22:* Several commenters claimed that the VEU authorization may benefit exporters that have a small customer base, but would not benefit exporters that sell to a large number of customers in the PRC that will in turn act as resellers, distributors, or retailers of those products in the Chinese market to a wide variety of customers. *Response:* VEU authorization is intended to facilitate exports by removing the requirement for an individual license for end-users that meet the criteria for VEU authorization. BIS has set no limit on how many customers may apply to receive exports under VEU authorization, and has not precluded resellers from receiving VEU status. *Comment 23:* Some commenters asserted that the VEU authorization presents an additional administrative burden because of the associated VEU certification, recordkeeping and reporting requirements, which are similar to the requirements associated with Special Comprehensive Licenses (SCLs). *Response:* Authorization VEU is voluntary and therefore does not present an additional administrative burden for any entity that does not choose to avail itself of the authorization. Exporters or customers who believe the VEU requirements are too burdensome may continue to apply for individual licenses if they so choose. Nevertheless, following our review of comments, in this final rule, BIS has established procedures for applying for VEU status that were designed to be as straightforward and present as little burden as possible, consistent with the requirements of national security. VEU status would provide significant benefits for end-users, as well as entities that export or reexport to validated end-users. In addition, BIS believes that the requirements for recordkeeping and reporting associated with VEU status are less burdensome than those currently in effect for other authorizations such as special licenses that are available under the EAR to companies that meet specified criteria. *Comment 24:* Several commenters claimed that the VEU authorization would be burdensome because it would require a complex internal control commitment from Chinese customers or end-users. Those end-users would require assistance from exporters or reexporters in order to request the authorization. *Response:* End-users will wish to evaluate the benefit of holding a VEU authorization, and exporters, similarly, will want to consider for themselves the benefits of working with their customers to apply for such authorization. As noted in response to Comment 23, VEU authorization is entirely voluntary, but those that meet its criteria will be afforded the significant benefit of receiving certain items without the need for an individual license for each transaction. Also as noted in response to Comment 23, BIS has established procedures for applying for VEU status that were designed to be as straightforward and present as little burden as possible, consistent with the requirements of national security. BIS offers assistance for exporters and end-users in complying with the EAR, and anticipates conducting additional outreach to clarify the procedures and benefits of the VEU authorization. *Comment 25:* Several commenters questioned whether the VEU authorization offers a benefit. They asserted that U.S. exporters would go through an administratively burdensome and costly process of preparing and submitting a request for VEU authorization only to have their Chinese customers made public on the BIS Web site. This would result in the exporters losing competitive advantage as their competitors would have access to their customers. *Response:* See responses to Comments 23 and 24. In developing the VEU authorization, BIS reviewed an extensive amount of licensing data, which indicated that many Chinese end-users are served by multiple U.S. exporters, all of whom would benefit if the end-user were to be granted VEU status. BIS believes that identifying Chinese customers as validated end-users will help to expand high-technology trade and U.S. exports by making clear to all potential U.S. exporters that there is a universe of end-users in the PRC that may receive certain items on the CCL without the administrative burden of receiving an individual license. *Comment 26:* Several commenters stated that BIS should ensure that no violations of Section 12(c) of the Export Administration Act of 1979, as amended (EAA), occur when BIS publishes information related to the VEU authorization or information about end-users who are granted VEU authorization. *Response:* BIS agrees that it is critical to protect information covered by Section 12(c) of the EAA. BIS conscientiously protects all proprietary information, and will continue to ensure that the requirements of Section 12(c) are met in its administration of VEU authorization. *Comment 27:* Some commenters asserted that VEU authorization would present problems for companies in the PRC unwilling to submit to U.S. legal jurisdiction because of possible penalties under the laws of the PRC. They argued that the Government of the PRC might discourage companies from applying for VEU authorization, and further claimed that MOFCOM would refuse to allow end-use checks to be conducted on such companies. *Response:* BIS designed the VEU authorization program to correspond to existing requirements of the EAR and to impose as little additional burden as possible on exporters, reexporters and Chinese end-users that currently use individual licenses or SCLs. BIS notes that Chinese end-users currently receiving items under individual licenses or SCLs are already (and have long been) required by the EAR to maintain certain records and to comply with certain license conditions. These activities are similar to the activities required of validated end-users in section 748.15 of the EAR. Hence, the VEU program will not substantially add compliance responsibilities for companies in China whose activities are subject to the EAR. BIS will continue to explain the VEU authorization to the Government of the PRC, and to encourage that Government's cooperation with the program. However, it is important to note that decisions regarding export licenses and export authorizations for items subject to the EAR are made solely by the United States Government. *Comment 28:* Some commenters asserted that the potential benefit or usefulness of VEU authorization is reduced because vetted end-users would not be allowed to receive all products and technology under all ECCNs under the EAR. *Response:* Authorization VEU is not intended to eliminate the requirement that exporters or others comply with applicable provisions of law or the EAR. By statute, BIS must require a license for items controlled for missile technology or crime control reasons that will be exported or reexported to the PRC. While BIS recognizes that entities designated as validated end-users would like to be exempt from all EAR licensing requirements, BIS has designed the VEU authorization to ensure that exports under VEU are relevant to the validated end-user's business. It would not be appropriate, for example, to permit exports under authorization VEU of semiconductor manufacturing equipment to a chemical factory, or of aircraft parts to a plant producing computers. For that reason, BIS will require applicants for VEU authorization to identify those ECCNs that they wish to receive under the authorization, and will decide whether those items are appropriate based on the circumstances of the case. *Comment 29:* Many commenters asserted that there would be negative consequences for companies who apply for and do not receive VEU authorization, implicitly creating a “black list,” thus posing a risk of application that most U.S. exporters would be unwilling to take. Commenters further stated that BIS should make clear that applying for and not obtaining VEU authorization would not be considered a “red flag” for a transaction. In addition, one commenter stated that BIS should delete language regarding possible “other actions,” in addition to removal from the VEU list, as a penalty for non-compliance with VEU requirements. *Response:* Based on these comments, BIS has specifically noted in the chapeau to section 748.15 that if an application for VEU authorization for a particular end-user is not granted, no new license requirement is triggered and the end-user is not rendered ineligible for license approvals from BIS. Moreover, VEU status is pertinent only to transactions in which licenses would otherwise be required. Accordingly, lack of approval of a VEU request would neither add to nor take away from the licensing requirements applicable to exports or reexports to an end-user that is not validated. Actions taken in the context of VEU authorization, including non-compliance with VEU requirements, that violate the EAA, the EAR, or any order, license, or authorization issued thereunder may form the basis for enforcement action. *Comment 30:* Many commenters claimed that the selection process for granting VEU authorization is unclear and the evaluation factors are too extensive and ill-defined. The commenters further stated that providing illustrative examples of evaluation factors, such as an example of the factor “party's relationships with U.S. and foreign companies,” might increase exporters' understanding of the VEU process. Several commenters further asserted that a published model VEU request would provide U.S. exporters and potential VEUs guidance on BIS's expectations. *Response:* BIS agrees that it is important to be explicit about the type of criteria that BIS and its interagency partners will consider in evaluating VEU candidates, as well as the process that BIS and its interagency partners will use in making such determinations. As a result, in this final rule, BIS has attempted to explain in great detail how VEU authorizations will be administered by the U.S. Government. Section 748.15(a)(1) provides that BIS will accept applications from exporters, reexporters, or end-users and identifies the address to which such applications must be submitted. Section 748.15(a)(2) of this rule specifies that, in determining which end-users will be approved for VEU status, BIS will consider a range of information, including such factors as: the entity's record of exclusive engagement in civil end-use activities; the entity's compliance with U.S. export controls; the need for an on-site review prior to approval; the entity's capability of complying with the requirements of authorization VEU; the entity's agreement to on-site reviews to ensure adherence to the conditions of the VEU authorization by representatives of the U. S. Government; and the entity's relationships with United States and foreign companies. Section 748.15(a)(2) also specifies that when evaluating the eligibility of an end-user, agencies will consider the status of export controls and the support and adherence to multilateral export control regimes of the government of the eligible destination. In addition, new Supplement No. 8 to Part 748 provides details as to the specific information that must be submitted to BIS in a VEU authorization request. Finally, new Supplement No. 9 to Part 748 provides details as to the decision-making process of the End-User Review Committee (ERC), including timeframes for decision-making. The ERC is composed of representatives of the Departments State, Defense, Energy, and Commerce and other agencies, as appropriate. All of these changes are intended to address public comments encouraging BIS to explain the VEU authorization process in as much detail as possible. In addition, BIS plans to conduct extensive outreach to explain to exporters and potential VEU candidates the procedures and requirements for applying for this authorization, and will consider sample or model requests as part of this outreach and education. *Comment 31:* Some commenters stated that BIS should identify a time limit for approving or rejecting VEU requests. *Response:* BIS agrees that it is important to establish specific time deadlines for approving or rejecting VEU applications. Supplement No. 9 to Part 748, paragraph 4, provides that the ERC will make determinations whether to grant VEU authorization to each VEU candidate no later than 30 calendar days after the candidate's complete application is circulated to all ERC agencies. Prior to or during its review of an application, BIS or the Committee may determine that it is appropriate to request additional information from the applicant or potential validated end-user. When BIS or the ERC requests such information, the 30-day clock is put on hold while the ERC is waiting for additional information. *Comment 32:* One commenter stated that BIS should: expressly limit audits associated with VEU authorization to activities that occur under the authorization; not extend such audits to other areas of compliance; identify which U.S. Government agency would conduct VEU visits; and specify how frequently such visits will occur. In this context, the commenter stated that visits should occur no more than three times per year, and that advance notice should be provided—preferably 14 days in advance of the visit. *Response:* In this rule, based on public comments, BIS clarifies that reviews for purposes of administering and enforcing the provisions of authorization VEU are not financial audits, as the term may have been interpreted. As BIS implements the VEU authorization, BIS will continue to consider the recommendation that reviews should occur no more than three times per year and with 14 days advance notice. Visits will be conducted and led by personnel of the Commerce Department, in coordination with the U.S. Embassy, and may include representatives of other U.S. Government agencies, as appropriate. *Comment 33:* Some commenters stated that BIS should clarify whether BIS's reference to “items” in the VEU authorization includes technology and hardware. *Response:* As stated in section 772.1 of the EAR, “item” means “commodities, software, and technology.” As such, commodities, software, and technology are eligible items under authorization VEU. *Comment 34:* Some commenters stated that BIS should clarify whether the knowledge standard set forth in the EAR applies to exporters' actions under the VEU authorization. *Response:* As provided in section 764.2(e) of the EAR, no person may take certain actions with respect to any item subject to the EAR with knowledge that a violation of the EAA, EAR, or any order, license or authorization issued thereunder, has occurred, is about to occur, or is intended to occur in connection with the item. The term “knowledge” is defined in section 772.1. Authorization VEU is an authorization covered by section 764.2(e), and the knowledge standard set forth in section 772.1 applies to actions under the VEU authorization. *Comment 35:* Some commenters recommended that BIS extend the VEU authorization program to other destinations such as India and Taiwan. *Response:* The United States Government believes that authorization VEU could be a valuable tool to facilitate exports to civilian end-users in other destinations, and is actively considering making additional destinations eligible for authorization VEU. *Comment 36:* Some commenters advised that the VEU authorization should apply to subsidiaries, subcontractors, and multiple facilities of the same end-user. *Response:* BIS agrees that it may be appropriate for VEU authorization to cover multiple facilities of the same end-user. Such entities are free to request authorization for multiple locations or facilities. If so, pursuant to the requirements of Supplement No. 9 to Part 748, paragraph 1, they must provide with their applications the physical addresses of each location in the eligible destination. BIS will consider requests to cover multiple facilities according to the criteria and procedures listed in new Supplements 8 and 9 to Part 748. In particular, as described in Supplement No. 8 to Part 748, BIS requires that VEU applications provide an overview of the structure, ownership and business of the prospective validated end-user, which should include subsidiaries and joint-venture projects. Applicants must also provide the physical address(es) of the location(s) where the item(s) will be used, if this address is different from the address of the prospective validated end-user. *Comment 37:* Some commenters requested that BIS allow a more permissive VEU certification process for subsidiaries of U.S. companies. *Response:* BIS believes that it is important to maintain the same procedure for all applicants for VEU authorization. Subsidiaries of U.S. companies are certainly eligible to apply for VEU authorization; their applications will be reviewed against the criteria listed in section 748.15(a)(2). *Comment 38:* One commenter suggested that the U.S. Government, on its own, identify companies to be granted VEU status. *Response:* BIS agrees that it is important for the U.S. Government to be able to identify possible VEU candidates. As such, Supplement No. 9 to Part 748, paragraph 3, specifies that the ERC will consider candidates for VEU authorization that are identified by the U.S. Government. *Comment 39:* Some commenters suggested that end-users under the Special Comprehensive License
(SCL)program should be given special consideration in obtaining VEU authorization and that the SCL approval process for end-users should warrant “de facto” authorization for VEU status. *Response:* BIS will consider all applicants for VEU status, and status as an SCL consignee or end-user will be taken into account if such consignees or end-users are VEU candidates. The SCL approval process will not, however, be “de facto” VEU authorization because SCL status and VEU authorization are materially different from one another, and consequently the criteria BIS uses to evaluate applicants for SCL status (set forth in Part 752 of the EAR) and VEU authorization (set forth in section 748.15 of the EAR and in Supplement No. 8 to Part 748) are different. Because these differing sets of criteria are tailored toward the distinct and differing features of SCL and VEU status, respectively, BIS has made the decision not to grant special consideration to VEU applications from SCL end-users or consignees. Such applications will be evaluated on the basis of the criteria set forth in section 748.15 and Supplement No. 8 to Part 748 of the EAR. *Comment 40:* One commenter argued that there is a significant disconnect between the VEU authorization and BIS's deemed exports licensing policy. This commenter urged that BIS allow authorization VEU to cover exports of technology to foreign national employees of authorized companies normally employed inside the United States, if the employees are nationals of a country eligible for VEU status. Similarly, another commenter argued that BIS should confirm in this final rule that authorization VEU will allow the release of technology to PRC nationals in the United States if the PRC national is a full-time employee of an entity with approved VEU status. *Response:* If a validated end-user is approved to receive specific eligible technology, part of that VEU authorization is the authorization for Chinese employees of that validated end-user to receive the same technology, including through a transfer inside the United States. *Comment 41:* One commenter argued that BIS should clarify the impact of this rule on deemed exports. In particular, this commenter stated that this rule should not apply to technical information that flows between affiliated entities, particularly with respect to Chinese subsidiaries of U.S. parent corporations. *Response:* Under the new “military end-use” control, a license is now required for any deemed export covered by section 744.21 of the EAR. In addition, the revised licensing policy for items controlled for national security reasons will apply to license applications involving deemed exports. The intersection between the VEU authorization and transfers of technology inside the United States is discussed above in response to Comment 39. Under the current regulations, the deemed export rule does not regulate the flow of information between exporters in the U.S. and affiliated entities overseas that the commenter describes as a deemed export transaction. The deemed export rule regulates the transfer of controlled technology to foreign nationals working in the United States. Under the EAR, unless a License Exception applies, an export license is required if technology that requires a license is to be released to an affiliated entity overseas. *Comment 42:* Some commenters stated that BIS should publish in Chinese the names of entities that receive VEU authorization. These commenters also recommended that the Entity List and Unverified Parties List be published in Chinese. *Response:* BIS agrees that it is important to provide as much information as possible to exporters and reexporters regarding U.S. export controls. However, the **Federal Register** , which officially publishes all U.S. Government regulations, only publishes documents in the English language. In addition, BIS's limited resources do not allow such information to be published on the BIS Web site at this time. BIS will continue to consider this recommendation as part of its outreach effort to educate exporters and customers in the United States and the PRC. *Comment 43:* One commenter argued that instead of the VEU authorization, BIS should consider a “gold card” license for certain exporters that would allow those exporters to export a pre-identified range of products to any qualified customer in the PRC. *Response:* The VEU accomplishes the same goal as that proposed by the commenter. It allows U.S. exporters to export a pre-identified range of products to qualified customers. For national security reasons, however, the U.S. Government must retain the ability to determine who is a “qualified customer” for controlled items exported by any exporter, no matter how “gold.” The VEU program facilitates civilian high-technology trade, in a way that will be neither overly burdensome nor intrusive. The VEU program creates positive, market-based incentives and rewards for companies that act responsibly with sensitive products. Firms with established civilian credentials and a good record of handling such products will enjoy better access to controlled technology than their competitors, and U.S. exporters will be able to sell more efficiently to their best civilian customers. *Comment 44:* Some commenters argued that instead of the VEU authorization, companies in the PRC should be allowed to provide certificates to BIS in which they agree to end-use checks. *Response:* A VEU authorization will take the place of individual licenses. Consequently, there are a number of factors to be considered, in addition to willingness to host on-site reviews, in determining whether a customer in the PRC will be approved as a VEU. As set forth in section 748.15, these factors include the entity's record of exclusive engagement in civil end-use activities, the entity's compliance with U.S. export controls, the need for an on-site review prior to approval, and the entity's capability of complying with the requirements of authorization VEU, as well as an agreement to accept on-site reviews. Moreover, on-site reviews by U.S. Government officials are to verify the end-user's compliance with the conditions of the VEU authorization. Thus, VEU on-site reviews are separate and distinct from End-Use Visits as defined in the End-Use Visit Understanding established between the Governments of the U.S. and the PRC. *Comment 45:* Some commenters argued that BIS should provide another opportunity for industry to comment on the VEU authorization before it becomes effective. *Response:* BIS has considered the 57 public comments received, many of which included statements regarding the VEU authorization. Having thoroughly reviewed these comments, BIS believes it has a basis to move forward with the VEU authorization program. However, BIS accepts comments on an ongoing basis, as noted in the ADDRESSES section of this Action. BIS is always considering how to improve the EAR, and will consider any such comments received as it goes forward with the VEU program. Changes from the Proposed Rule After considering the public comments and consulting with its interagency partners, BIS is implementing the proposed rule, with the modifications described below. 1. Amendments To License Review Policy and License Requirements With Respect to the PRC With respect to the license review policy for items controlled for national security reasons destined for the PRC, the proposed rule provided that there would be a presumption of denial for items that would make a “material contribution” to the military capabilities of the PRC. This amendment would have modified Section 742.4(b)(7) of the EAR, which previously provided that applications involving items destined for the PRC that are controlled for national security reasons received extended review or denial if they would make a “direct and significant contribution” to certain specified aspects of PRC military development. BIS is retaining its “direct and significant contribution” standard in this final rule, but has amended the list of PRC military capabilities. An illustrative list of PRC military capabilities is presented in new Supplement No. 7 to Part 742 of the EAR (Description of Major Weapons Systems). BIS also is implementing the “military end-use” control set forth in the proposed rule. BIS has reviewed the proposed list of items covered by this new control, which are set forth in Supplement No. 2 to Part 744 of the EAR, and determined that rather than the 47 ECCNs identified in the proposed rule, this final rule will apply the “military end-use” control to items covered under 31 ECCNs, entirely or in part, covering commodities, software, and technology for approximately 20 distinct product groups. All of the 31 full or partial ECCNs included in this final rule were also included in the proposed rule. With respect to the “military end-use” control, BIS is also changing the definition of “military end-use” that was set forth in Section 744.21(f) of the proposed rule. In this final rule “military end-use” means: incorporation into a military item described on the U.S. Munitions List
(USML)(22 CFR part 121, International Traffic in Arms Regulations); incorporation into a military item described on the International Munitions List
(IML)(as set out on the Wassenaar Arrangement Web site at *http://www.wassenaar.org* ); incorporation into items listed under ECCNs ending in “A018” on the CCL in Supplement No. 1 to part 774 of the EAR; or for the “use”, “development”, “production”, or deployment of military items described on the USML or the IML, or items listed under ECCNs ending in “A018” on the CCL. For purposes of section 744.21, deployment applies only to commodities covered under ECCN 9A991 as described in Supplement No. 2 to Part 744 of the EAR. In connection with the definition of “military end-use,” BIS is also amending the EAR to include a note to section 744.21(f) that defines, for purposes of the “military end-use” control, the terms, “operation,” “installation,” “maintenance,” and “deployment.” 2. Revision of End-User Statement Requirements BIS is amending the EAR to provide that what were previously described as “End-User Certificates” are now properly termed “End-User Statements”
(EUSs)with respect to the PRC. This amendment affects sections 748.9, 748.10 and 748.12. In the proposed rule, BIS originally stated that it planned to expand the requirement for EUSs to items that require a license for any reason to the PRC and exceed a total value of $5,000. In this final rule, BIS has raised the threshold dollar amount for required EUSs for the PRC in section 748.10 of the EAR to $50,000 for most items. The raised threshold will not apply to items classified under ECCN 6A003 (cameras) and exports to the PRC of computers subject to section 748.10(b)(3). The threshold amount for items classified under ECCN 6A003 remains $5,000, as set forth in the proposed rule. Also in this final rule, BIS has raised the threshold dollar amount for required Import Certificates for items controlled for national security reasons to any destination listed in section 748.9(b)(2) from the $5,000 specified in the proposed rule to $50,000. Finally, BIS is amending Supplement No. 4 to Part 748 to provide the correct name of the branch of the Government of the PRC that issues EUSs. 3. Authorization Validated End-User
(VEU)BIS is adding Authorization Validated End-User
(VEU)to the EAR, in new section 748.15. With this final rule, BIS amends the EAR to provide detailed information to the exporting community regarding the VEU authorization. Information required to be submitted with VEU authorization applications is set forth in new Supplement No. 8 to Part 748 of the EAR (Information Required for Requests for Validated End-User Authorization). In addition, section 748.15 establishes the End-User Review Committee, which is responsible for making determinations on VEU candidates. New Supplement No. 9 to Part 748 sets forth the membership of the Committee and the procedures that the Committee will follow. In connection with these amendments to the EAR regarding VEU authorization, BIS is also making conforming changes. BIS is adding new paragraph
(3)to section 743.1 (Wassenaar Arrangement), which informs exporters of the Wassenaar Arrangement of reporting requirements related to VEU authorization; new paragraph
(b)to section 750.2 (Processing of Classification Requests and Advisory Opinions), which informs exporters of the timeframe in which VEU applications will be considered; and new paragraph (b)(5) to section 758.1 (The Shipper's Export Declaration
(SED)or Automated Export System
(AES)record), which informs exporters that shipping documentation must be filed with the U.S. Government for all exports under VEU authorization. Saving Clause Shipments of items removed from eligibility for a License Exception or for export or reexport without a license
(NLR)as a result of this regulatory action that were on dock for loading, on lighter, laden aboard an exporting or reexporting carrier, or en route aboard a carrier to a port of export or reexport on June 19, 2007, pursuant to actual orders for export or reexport to a foreign destination, may proceed to that destination under the previous eligibility for a License Exception or export or reexport without a license
(NLR)so long as they are exported or reexported before July 19, 2007. Any such items not actually exported or reexported before midnight on July 19, 2007 require a license in accordance with this rule. Rulemaking Requirements 1. This final rule has been determined to be significant for purposes of Executive Order 12866. 2. Notwithstanding any other provision of law, no person is required to respond to, nor shall any person be subject to a penalty for failure to comply with, a collection of information subject to the requirements of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 *et seq.* ) (PRA), unless that collection of information displays a currently valid Office of Management and Budget
(OMB)Control Number. This rule contains collections of information subject to the requirements of the PRA. These collections have been approved by OMB under Control Numbers 0694-0088 (Multi-Purpose Application), which carries a burden hour estimate of 58 minutes to prepare and submit form BIS-748, and 0694-0093, “Import Certificates and End-User Certificates (End-User Statements when referring to the PRC),” which carries a burden of 15 minutes per submission. This rule also contains a revision to the existing collection under Control Number 0694-0088 for recordkeeping, reporting and review requirements, which would be required in connection with authorization Validated End-User and would carry an estimated burden of 30 minutes per submission. An amendment to the existing collection under Control Number 0694-0088 reflecting this revision has been submitted to OMB for approval. This rule is not expected to result in a significant increase in license applications or other documentation submitted to BIS. Send comments regarding this burden estimate or any other aspect of this collection of information, including suggestions for reducing the burden, to David Rostker, Office of Management and Budget (OMB), and to the Regulatory Policy Division, Bureau of Industry and Security, Department of Commerce, as indicated in the ADDRESSES section of this rule. 3. This rule does not contain policies with Federalism implications as that term is defined under Executive Order 13132. 4. The provisions of the Administrative Procedure Act (5 U.S.C. 553) requiring notice of proposed rulemaking and the opportunity for public participation are inapplicable because this regulation involves a military or foreign affairs function of the United States (5 U.S.C. 553(a)(1)). Further, no other law requires that a notice of proposed rulemaking and an opportunity for public comment be given for this rule. Because a notice of proposed rulemaking and an opportunity for public comment are not required to be given for this rule by 5 U.S.C. 553, or by any other law, the analytical requirements of the Regulatory Flexibility Act, 5 U.S.C. 601 *et seq.* , are not applicable. This regulation is issued in final form. Although the formal comment period closed on December 4, 2006, public comments on this regulation are welcome on a continuing basis. Comments should be submitted to Sheila Quarterman, Office of Exporter Services, Bureau of Industry and Security, Department of Commerce, P.O. Box 273, Washington, DC 20044. List of Subjects 15 CFR Part 742 Exports, Terrorism. 15 CFR Part 743 Administrative practice and procedure, Reporting and recordkeeping requirements. 15 CFR Part 744 Exports, Reporting and recordkeeping requirements, Terrorism. 15 CFR Parts 748, 750 and 758 Administrative practice and procedure, Exports, Reporting and recordkeeping requirements. Accordingly, parts 742, 743, 744, 748, 750 and 758 of the Export Administration Regulations (15 CFR Parts 730-774) are amended as follows: PART 742—[AMENDED] 1. The authority citation for 15 CFR part 742 continues to read as follows: Authority: 50 U.S.C. app. 2401 *et seq.* ; 50 U.S.C. 1701 *et seq.* ; 18 U.S.C. 2510 *et seq.* ; 22 U.S.C. 3201 *et seq.* ; 42 U.S.C. 2139a; Sec. 901-911, Pub. L. 106-387; Sec. 221, Pub. L. 107-56; Sec. 1503, Pub. L. 108-11,117 Stat. 559; E.O. 12058, 43 FR 20947, 3 CFR, 1978 Comp., p. 179; E.O. 12851, 58 FR 33181, 3 CFR, 1993 Comp., p. 608; E.O. 12938, 59 FR 59099, 3 CFR, 1994 Comp., p. 950; E.O. 13026, 61 FR 58767, 3 CFR, 1996 Comp., p. 228; E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 783; Presidential Determination 2003-23 of May 7, 2003, 68 FR 26459, May 16, 2003; Notice of August 3, 2006, 71 FR 44551 (August 7, 2006); Notice of October 25, 2005, 71 FR 64109 (October 31, 2006). 2. Amend § 742.2 by adding paragraph (b)(4) to read as follows: § 742.2 Proliferation of chemical and biological weapons.
(b)* * *
(4)License applications for items described in paragraph
(a)of this section, when destined for the People's Republic of China, will be reviewed in accordance with the licensing policies in both paragraph
(b)of this section and § 742.4(b)(7). 3. Amend § 742.3 by adding paragraph (b)(4) to read as follows: § 742.3 Nuclear nonproliferation.
(b)* * *
(4)License applications for items described in paragraph
(a)of this section, when destined to the People's Republic of China, will be reviewed in accordance with the licensing policies in both paragraph
(b)of this section and § 742.4(b)(7). 4. Amend § 742.4 by revising paragraph (b)(7) to read as follows: § 742.4 National security.
(b)* * *
(7)For the People's Republic of China (PRC), there is a general policy of approval for license applications to export, reexport, or transfer items to civil end-uses. There is a presumption of denial for license applications to export, reexport, or transfer items that would make a direct and significant contribution to the PRC's military capabilities such as, but not limited to, the major weapons systems described in Supplement No. 7 to Part 742 of the EAR. 5. Amend § 742.5 by adding paragraph (b)(4) to read as follows: § 742.5 Missile technology.
(b)* * *
(4)License applications for items described in paragraph
(a)of this section, when destined for the People's Republic of China, will be reviewed in accordance with the licensing policies in both paragraph
(b)of this section and § 742.4(b)(7). 6. Supplement No. 7 to Part 742 is added to read as follows: SUPPLEMENT NO. 7 TO PART 742—DESCRIPTION OF MAJOR WEAPONS SYSTEMS
(1)Battle Tanks: Tracked or wheeled self-propelled armored fighting vehicles with high cross-country mobility and a high-level of self protection, weighing at least 16.5 metric tons unladen weight, with a high muzzle velocity direct fire main gun of at least 75 millimeters caliber.
(2)Armored Combat Vehicles: Tracked, semi-tracked, or wheeled self-propelled vehicles, with armored protection and cross-country capability, either designed and equipped to transport a squad of four or more infantrymen, or armed with an integral or organic weapon of a least 12.5 millimeters caliber or a missile launcher.
(3)Large-Caliber Artillery Systems: Guns, howitzers, artillery pieces combining the characteristics of a gun or a howitzer, mortars or multiple-launch rocket systems, capable of engaging surface targets by delivering primarily indirect fire, with a caliber of 75 millimeters and above.
(4)Combat Aircraft: Fixed-wing or variable-geometry wing aircraft designed, equipped, or modified to engage targets by employing guided missiles, unguided rockets, bombs, guns, cannons, or other weapons of destruction, including versions of these aircraft which perform specialized electronic warfare, suppression of air defense or reconnaissance missions. The term “combat aircraft” does not include primary trainer aircraft, unless designed, equipped, or modified as described above.
(5)Attack Helicopters: Rotary-wing aircraft designed, equipped or modified to engage targets by employing guided or unguided anti-armor, air-to-surface, air-to-subsurface, or air-to-air weapons and equipped with an integrated fire control and aiming system for these weapons, including versions of these aircraft that perform specialized reconnaissance or electronic warfare missions.
(6)Warships: Vessels or submarines armed and equipped for military use with a standard displacement of 750 metric tons or above, and those with a standard displacement of less than 750 metric tons that are equipped for launching missiles with a range of at least 25 kilometers or torpedoes with a similar range.
(7)Missiles and Missile Launchers:
(a)Guided or unguided rockets, or ballistic, or cruise missiles capable of delivering a warhead or weapon of destruction to a range of at least 25 kilometers, and those items that are designed or modified specifically for launching such missiles or rockets, if not covered by systems identified in paragraphs
(1)through
(6)of this Supplement. For purposes of this rule, systems in this paragraph include remotely piloted vehicles with the characteristics for missiles as defined in this paragraph but do not include ground-to-air missiles;
(b)Man-Portable Air-Defense Systems (MANPADS); or
(c)Unmanned Aerial Vehicles
(UAVs)of any type, including sensors for guidance and control of these systems.
(8)Offensive Space Weapons: Systems or capabilities that can deny freedom of action in space for the United States and its allies or hinder the United States and its allies from denying an adversary the ability to take action in space. This includes systems such as anti-satellite missiles, or other systems designed to defeat or destroy assets in space.
(9)Command, Control, Communications, Computer, Intelligence, Surveillance, and Reconnaissance (C4ISR): Systems that support military commanders in the exercise of authority and direction over assigned forces across the range of military operations; collect, process, integrate, analyze, evaluate, or interpret information concerning foreign countries or areas; systematically observe aerospace, surface or subsurface areas, places, persons, or things by visual, aural, electronic, photographic, or other means; and obtain, by visual observation or other detection methods, information about the activities and resources of an enemy or potential enemy, or secure data concerning the meteorological, hydrographic, or geographic characteristics of a particular area, including Undersea communications. Also includes sensor technologies.
(10)Precision Guided Munitions (PGMs), including “smart bombs”: Weapons used in precision bombing missions such as specially designed weapons, or bombs fitted with kits to allow them to be guided to their target.
(11)Night vision equipment: Any electro-optical device that is used to detect visible and infrared energy and to provide an image. This includes night vision goggles, forward-looking infrared systems, thermal sights, and low-light level systems that are night vision devices, as well as infrared focal plane array detectors and cameras specifically designed, developed, modified, or configured for military use; image intensification and other night sighting equipment or systems specifically designed, modified or configured for military use; second generation and above military image intensification tubes specifically designed, developed, modified, or configured for military use, and infrared, visible and ultraviolet devices specifically designed, developed, modified, or configured for military application. PART 743—[AMENDED] 7. The authority citation for 15 CFR part 743 continues to read as follows: Authority: 50 U.S.C. app. 2401 *et seq.* Pub. L. 106-508; 50 U.S.C. 1701 *et seq.* Notice of August 3, 2006, 71 FR 44551 (August 7, 2006). 8. Paragraph (b)(3) is added to § 743.1 to read as follows: § 743.1 Wassenaar Arrangement.
(b)* * *
(3)Exports authorized under the Validated End-User authorization (see § 748.15 of the EAR). PART 744—[AMENDED] 9. The authority citation for 15 CFR part 744 continues to read as follows: Authority: 50 U.S.C. app. 2401 *et seq.* ; 50 U.S.C. 1701 *et seq.* ; 22 U.S.C. 3201 *et seq.* ; 42 U.S.C. 2139a; Sec. 901-911, Pub. L. 106-387; Sec. 221, Pub. L. 107-56; E.O. 12058, 43 FR 20947, 3 CFR, 1978 Comp., p. 179; E.O. 12851, 58 FR 33181, 3 CFR, 1993 Comp., p. 608; E.O. 12938, 59 FR 59099, 3 CFR, 1994 Comp., p. 950; E.O. 12947, 60 FR 5079, 3 CFR, 1995 Comp., p. 356; E.O. 13026, 61 FR 58767, 3 CFR, 1996 Comp., p. 228; E.O. 13099, 63 FR 45167, 3 CFR, 1998 Comp., p. 208; E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 783; E.O. 13224, 66 FR 49079, 3 CFR, 2001 Comp., p. 786; Notice of August 3, 2006, 71 FR 44551 (August 7, 2006); Notice of October 27, 2006, 71 FR 64109 (October 31, 2006). 10. Section 744.21 is added to read as follows: § 744.21 Restrictions on certain military end-uses in the People's Republic of China (PRC).
(a)*General prohibition.* In addition to the license requirements for items specified on the Commerce Control List (CCL), you may not export, reexport, or transfer any item listed in Supplement No. 2 to Part 744 to the PRC without a license if, at the time of the export, reexport, or transfer, you know, meaning either:
(1)You have knowledge, as defined in § 772.1 of the EAR, that the item is intended, entirely or in part, for a “military end-use,” as defined in paragraph
(f)of this section, in the PRC; or
(2)You have been informed by BIS, as described in paragraph
(b)of this section, that the item is or may be intended, entirely or in part, for a “military end-use” in the PRC.
(b)*Additional prohibition on those informed by BIS.* BIS may inform you either individually by specific notice, through amendment to the EAR published in the **Federal Register** , or through a separate notice published in the **Federal Register** , that a license is required for specific exports, reexports, or transfers of any item because there is an unacceptable risk of use in or diversion to “military end-use” activities in the PRC. Specific notice will be given only by, or at the direction of, the Deputy Assistant Secretary for Export Administration. When such notice is provided orally, it will be followed by written notice within two working days signed by the Deputy Assistant Secretary for Export Administration or the Deputy Assistant Secretary's designee. The absence of BIS notification does not excuse the exporter from compliance with the license requirements of paragraph
(a)of this section.
(c)*License exception.* Despite the prohibitions described in paragraphs
(a)and
(b)of this section, you may export items subject to the EAR under the provisions of License Exception GOV set forth in §§ 740.11(b)(2)(i) and
(ii)of the EAR.
(d)*License application procedure.* When submitting a license application pursuant to this section, you must state in the “additional information” section of the BIS-748P “Multipurpose Application” or its electronic equivalent that “this application is submitted because of the license requirement in § 744.21 of the EAR (Restrictions on Certain Military End-uses in the People's Republic of China).” In addition, either in the additional information section of the application or in an attachment to the application, you must include all known information concerning the military end-use of the item(s). If you submit an attachment with your license application, you must reference the attachment in the “additional information” section of the application.
(e)*License review standards.*
(1)Applications to export, reexport, or transfer items described in paragraph
(a)of this section will be reviewed on a case-by-case basis to determine whether the export, reexport, or transfer would make a material contribution to the military capabilities of the PRC and would result in advancing the country's military activities contrary to the national security interests of the United States. When it is determined that an export, reexport, or transfer would make such a contribution, the license will be denied.
(2)Applications may be reviewed under chemical and biological weapons, nuclear nonproliferation, or missile technology review policies, as set forth in §§ 742.2(b)(4), 742.3(b)(4) and 742.5(b)(4) of the EAR, if the end-use may involve certain proliferation activities.
(3)Applications for items requiring a license for other reasons that are destined to the PRC for a military end-use also will be subject to the review policy stated in paragraph (e)(1) of this section.
(f)In this section, “military end-use” means: incorporation into a military item described on the U.S. Munitions List
(USML)(22 CFR part 121, International Traffic in Arms Regulations); incorporation into a military item described on the International Munitions List
(IML)(as set out on the Wassenaar Arrangement Web site at *http://www.wassenaar.org* ); incorporation into items listed under ECCNs ending in “A018” on the CCL in Supplement No. 1 to part 774 of the EAR; or for the “use”, “development”, or “production” of military items described on the USML or the IML, or items listed under ECCNs ending in “A018” on the CCL. “Military end-use” also means “deployment” of items classified under ECCN 9A991 as set forth in Supplement No. 2 to Part 744. Note to paragraph
(f)of this section: As defined in Part 772 of the EAR, “ *use* ” means operation, installation (including on-site installation), maintenance (checking), repair, overhaul and refurbishing; *“development”* is related to all stages prior to serial production, such as: design, design research, design analyses, design concepts, assembly and testing of prototypes, pilot production schemes, design data, process of transforming design data into a product, configuration design, integration design, layouts; and *“production”* means all production stages, such as: product engineering, manufacturing, integration, assembly (mounting), inspection, testing, quality assurance. For purposes of this section, *operation* means to cause to function as intended; *installation* means to make ready for use, and includes connecting, integrating, incorporating, loading software, and testing; *maintenance* means performing work to bring an item to its original or designed capacity and efficiency for its intended purpose, and includes testing, measuring, adjusting, inspecting, replacing parts, restoring, calibrating, overhauling; and *deployment* means placing in battle formation or appropriate strategic position. 11. Supplement No. 2 to Part 744 is added to read as follows: SUPPLEMENT NO. 2 TO PART 744—LIST OF ITEMS SUBJECT TO THE MILITARY END-USE LICENSE REQUIREMENT OF § 744.21 The following items, as described, are subject to the military end-use license requirement in § 744.21.
(1)Category 1—Materials, Chemicals, Microorganisms, and Toxins
(i)1A290 Depleted uranium (any uranium containing less than 0.711% of the isotope U-235) in shipments of more than 1,000 kilograms in the form of shielding contained in X-ray units, radiographic exposure or teletherapy devices, radioactive thermoelectric generators, or packaging for the transportation of radioactive materials.
(ii)1C990 Limited to fibrous and filamentary materials other than glass, aramid or polyethylene not controlled by 1C010 or 1C210, for use in “composite” structures and with a specific modulus of 3.18x106m or greater and a specific tensile strength of 7.62x104m or greater.
(iii)1C996 Hydraulic fluids containing synthetic hydrocarbon oils, having all the characteristics in the List of Items Controlled.
(iv)1D993 “Software” specially designed for the “development”, “production”, or “use” of equipment or materials controlled by 1C210.b, or 1C990.
(v)1D999 Limited to specific software controlled by 1D999.b for equipment controlled by 1B999.e that is specially designed for the production of prepregs controlled in Category 1, n.e.s.
(vi)1E994 Limited to “technology” for the “development”, “production”, or “use” of fibrous and filamentary materials other than glass, aramid or polyethylene controlled by 1C990.
(2)Category 2—Materials Processing
(i)2A991 Limited to bearings and bearing systems not controlled by 2A001 and with operating temperatures above 573K (300 °C).
(ii)2B991 Limited to “numerically-controlled” machine tools having “positioning accuracies”, with all compensations available, less (better) than 9μ along any linear axis; and machine tools controlled under 2B991.d.1.a.
(iii)2B992 Non-“numerically controlled” machine tools for generating optical quality surfaces, and specially designed components therefor.
(iv)2B996 Limited to dimensional inspection or measuring systems or equipment not controlled by 2B006 with measurement uncertainty equal to or less (better) than (1.7 + L/1000) micrometers in any axes (L measured Length in mm).
(3)Category 3—Electronics Design, Development and Production
(i)3A292.d Limited to digital oscilloscopes and transient recorders, using analog-to-digital conversion techniques, capable of storing transients by sequentially sampling single-shot inputs at greater than 2.5 giga-samples per second.
(iii)3A999.c All flash x-ray machines, and components of pulsed power systems designed thereof, including Marx generators, high power pulse shaping networks, high voltage capacitors, and triggers.
(ii)3E292 Limited to “technology” according to the General Technology Note for the “development”, “production”, or “use” of digital oscilloscopes and transient recorders with sampling rates greater that 2.5 giga-samples per second, which are controlled by 3A292.d.
(4)Category 4—Computers
(i)4A994 Limited to computers not controlled by 4A001 or 4A003, with an Adjusted Peak Performance (“APP”) exceeding 0.5 Weighted TeraFLOPS (WT).
(ii)4D993 “Program” proof and validation “software”, “software” allowing the automatic generation of “source codes”, and operating system “software” not controlled by 4D003 that are specially designed for real time processing equipment.
(iii)4D994 Limited to “software” specially designed or modified for the “development”, “production”, or “use” of equipment controlled by 4A101.
(5)Category 5—(Part 1) Telecommunications
(i)5A991 Limited to telecommunications equipment designed to operate outside the temperature range from 219K (-54 °C) to 397K (124 °C), which is controlled by 5A991.a., radio equipment using Quadrature-amplitude-modulation
(QAM)techniques, which is controlled by 5A991.b.7., and phased array antennae, operating above 10.5 Ghz, except landing systems meeting ICAO standards (MLS), which are controlled by 5A991.f.
(ii)5D991 Limited to “software” specially designed or modified for the “development”, “production, or “use” of equipment controlled by 5A991.a., 5A991.b.7., and 5A991.f., or of “software” specially designed or modified for the “development”, “production”, or “use” of equipment controlled by 5A991.a., 5A991.b.7., and 5A991.f.
(v)5E991 Limited to “technology” for the “development”, “production” or “use” of equipment controlled by 5A991.a., 5A991.b.7., or 5A991.f., or of “software” specially designed or modified for the “development”, “production”, or “use” of equipment controlled by 5A991.a., 5A991.b.7., and 5A991.f.
(6)Category 6—Sensors and Lasers
(i)6A995 “Lasers”, not controlled by 6A005 or 6A205.
(ii)6C992 Optical sensing fibers not controlled by 6A002.d.3 which are modified structurally to have a “beat length” of less than 500 mm (high birefringence) or optical sensor materials not described in 6C002.b and having a zinc content of equal to or more than 6% by “mole fraction.”
(7)Category 7—Navigation and Avionics
(i)7A994 Other navigation direction finding equipment, airborne communication equipment, all aircraft inertial navigation systems not controlled under 7A003 or 7A103, and other avionic equipment, including parts and components, n.e.s.
(ii)7B994 Other equipment for the test, inspection, or “production” of navigation and avionics equipment.
(iii)7D994 “Software”, n.e.s., for the “development”, “production”, or “use” of navigation, airborne communication and other avionics.
(iv)7E994 “Technology”, n.e.s., for the “development”, “production”, or “use” of navigation, airborne communication, and other avionics equipment.
(8)Category 8—Marine
(i)8A992 Limited to underwater systems or equipment, not controlled by 8A001, 8A002, or 8A018, and specially designed parts therefor.
(ii)8D992 “Software” specially designed or modified for the “development”, “production” or “use” of equipment controlled by 8A992.
(iii)8E992 “Technology” for the “development”, “production” or “use” of equipment controlled by 8A992.
(9)Category 9—Propulsion Systems, Space Vehicles and Related Equipment
(i)9A991 Limited to “aircraft”, n.e.s., and gas turbine engines not controlled by 9A001 or 9A101.
(ii)9D991 “Software”, for the “development” or “production” of equipment controlled by 9A991 or 9B991.
(iii)9E991 “Technology”, for the “development”, “production” or “use” of equipment controlled by 9A991 or 9B991. PART 748—[AMENDED] 12. 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 3, 2006, 71 FR 44551 (August 7, 2006). 13. Section 748.3 is amended by adding paragraph (c)(3) to read as follows: § 748.3 Classification requests, advisory opinions, and encryption review requests.
(c)* * *
(3)Requests for Validated End-User authorization should be submitted in accordance with the provisions set forth in § 748.15 and Supplement Nos. 8 and 9 to this part. 14. Section 748.9 is amended: a. By revising paragraph (b)(1) introductory text; b. By revising paragraph (b)(2) introductory text before the list of countries; c. By revising paragraph (b)(2)(i); d. By revising paragraph
(c)introductory text; and e. By revising paragraph (c)(1). The revisions read as follows: § 748.9 Support documents for license applications.
(b)* * *
(1)Does your transaction involve items controlled for national security reasons? Does your transaction involve items destined for the People's Republic of China (PRC)?
(2)Does your transaction involve items controlled for national security reasons destined for one of the following countries? (This applies only to those overseas destinations specifically listed.) If your item is destined for the PRC, does your transaction involve items that require a license to the PRC for any reason?
(i)If *yes,* your transaction may require an Import Certificate or End-User Statement. If your transaction involves items destined for the PRC that are controlled to the PRC for any reason, your transaction may require a PRC End-User Statement. Note that if the destination is the PRC, a Statement of Ultimate Consignee and Purchaser may be substituted for a PRC End-User Statement when the item to be exported ( *i.e.* , replacement parts and sub-assemblies) is for servicing previously exported items and is valued at $75,000 or less.
(c)*License applications requiring support documents.* License applications requiring support by either a Statement by the Ultimate Consignee and Purchaser or an Import Certificate or End-User Statement must indicate the type of support document obtained in Block 6 or 7 on your application with an “X” in the appropriate box. If the support document is an Import Certificate or End User Statement, you must also identify the originating country and number of the Certificate or Statement in Block 13 on your application. If a license application is submitted without either the correct Block or Box marked on the application or the required support document, the license application will be immediately returned without action unless the satisfactory reasons for failing to obtain the document are supplied in Block 24 or in an attachment to your license application.
(1)*License applications supported by an Import Certificate or End-User Statement.* You may submit your license application upon receipt of a facsimile or other legible copy of the Import Certificate or End-User Statement, provided that no shipment is made against any license issued based upon the Import Certificate or End-User Statement prior to receipt and retention of the original statement by the applicant. 15. Section 748.10 is amended: a. By revising the section heading; b. By revising paragraph (a); c. By revising the heading and introductory text for paragraph (b); d. By revising paragraph (b)(4); e. By revising paragraph (c); and f. By revising paragraph (g). The revisions read as follows: § 748.10 Import Certificates and End-User Statements.
(a)*Scope.* There are a variety of Import Certificates and End-User Statements currently in use by various governments. The control exercised by the government issuing the Import Certificate or End-User Statement is in addition to the conditions and restrictions placed on the transaction by BIS. The laws and regulations of the United States are in no way modified, changed, or superseded by the issuance of an Import Certificate or End-User Statement. This section describes exceptions and relationships true for both Import Certificates and End-User Statements, and applies only to transactions involving national security controlled items destined for one of the countries identified in § 748.9(b)(2) of this part. In the case of the PRC, this section applies to transactions involving all items that require a license to the PRC for any reason.
(b)*Import Certificate or End-User Statement.* An Import Certificate or End-User Statement must be obtained, unless your transaction meets one of the exemptions stated in § 748.9(a) of this part, if:
(4)Your license application involves the export of commodities and software classified in a single entry on the CCL, and your ultimate consignee is in any destination listed in § 748.9(b)(2), and the total value of your transaction exceeds $50,000. Note that this $50,000 threshold does not apply to exports to the PRC of computers subject to the provisions of § 748.10(b)(3) or to items classified under ECCN 6A003.
(i)Your license application may list several separate CCL entries. If *any* individual entry including an item that is controlled for national security reasons exceeds $50,000, then an Import Certificate must be obtained covering all items controlled for national security reasons on your license application. If the total value of entries on a license application that require a license to the PRC for *any* reason listed on the CCL exceeds $50,000, then a PRC End-User Statement covering all such controlled items that require a license to the PRC on your license application must be obtained;
(ii)If your license application involves a lesser transaction that is part of a larger order for items controlled for national security reasons (or, for the PRC, for any reason) in a single ECCN exceeding $50,000, an Import Certificate, or a PRC End-User Statement, as appropriate, must be obtained.
(iii)You may be specifically requested by BIS to obtain an Import Certificate for a transaction valued under $50,000. You also may be specifically requested by BIS to obtain an End-User Statement for a transaction valued under $50,000 or for a transaction that requires a license to the PRC for reasons in the EAR other than those listed on the CCL.
(c)*How to obtain an Import Certificate or End-User Statement.*
(1)Applicants must request that the importer ( *e.g.* , ultimate consignee or purchaser) obtain the Import Certificate and that it be issued covering only those items that are controlled for national security reasons. Exporters should not request that importers obtain Import Certificates for items that are controlled for reasons other than national security. Note that in the case of the PRC, applicants must request that the importer obtain an End-User Statement for all items on a license application that require a license to the PRC for any reason listed on the CCL. Applicants must obtain original Import Certificate or End-User Statements from importers.
(2)The applicant's name must appear on the Import Certificate or End-User Statement submitted to BIS as either the applicant, supplier, or order party. The Import Certificate may be made out to either the ultimate consignee or the purchaser, even though they are different parties, as long as both are located in the same country.
(3)If your transaction requires the support of a PRC End-User Statement, you must ensure that the following information is included on the PRC End-User Statement signed by an official of the Department of Mechanic, Electronic and High Technology Industries, Export Control Division I, of the PRC Ministry of Commerce (MOFCOM), with MOFCOM's seal affixed to it:
(i)Title of contract and contract number (optional);
(ii)Names of importer and exporter;
(iii)End-User and end-use;
(iv)Description of the item, quantity and dollar value; and
(v)Signature of the importer and date. Note to paragraph
(c)of this section: You should furnish the consignee with the item description contained in the CCL to be used in applying for the Import or End-User Statement. It is also advisable to furnish a manufacturer's catalog, brochure, or technical specifications if the item is new.
(g)*Submission of Import Certificates and End-User Statements.* Certificates and Statements must be retained on file by the applicant in accordance with the recordkeeping provisions of part 762 of the EAR, and should not be submitted with the license application. For more information on what Import Certificate and End-User Statement information must be included in license applications, refer to § 748.9(c) of the EAR. In addition, as set forth in § 748.12(e), to assist in license reviews, BIS will require applicants, on a random basis, to submit specific original Import Certificate and End-User Statements. § 748.12 [Amended] 16. Section 748.12 is amended by removing and reserving paragraph (a). 17. Section 748.15 is added to read as follows: § 748.15 Authorization Validated End-User (VEU). Authorization Validated End-User
(VEU)permits the export, reexport, and transfer to validated end-users of any eligible items that will be used in a specific eligible destination. Validated end-users are those who have been approved in advance pursuant to the requirements of this section. To be eligible for authorization VEU, exporters, reexporters, and potential validated end-users must adhere to the conditions and restrictions set forth in paragraphs
(a)through
(f)of this section. If a request for VEU authorization for a particular end-user is not granted, no new license requirement is triggered. In addition, such a result does not render the end-user ineligible for license approvals from BIS.
(a)*Eligible end-users.* The only end-users to whom eligible items may be exported, reexported, or transferred under VEU are those validated end-users identified in Supplement No. 7 to Part 748, according to the provisions in this section and those set forth in Supplement Nos. 8 and 9 to this part that have been granted VEU status by the End-User Review Committee
(ERC)according to the process set forth in Supplement No. 9 to this part.
(1)Requests for authorization must be submitted in the form of an advisory opinion request, as described in § 748.3(c)(2), and should include a list of items (items for purposes of authorization VEU include commodities, software and technology, except as excluded by paragraph
(c)of this section), identified by ECCN, that exporters or reexporters intend to export, reexport or transfer to an eligible end-user, once approved. To ensure a thorough review, requests for VEU authorization must include the information described in Supplement No. 8 to this part. Requests for authorization will be accepted from exporters, reexporters or end-users. Submit the request to: The Office of Exporter Services, Bureau of Industry and Security, U.S. Department of Commerce, 14th Street and Pennsylvania Avenue, NW., Room 2705, Washington, DC 20230; or to The Office of Exporter Services, Bureau of Industry and Security, U.S. Department of Commerce, P.O. Box 273, Washington, DC 20044. Mark the package sent to either address “Request for Authorization Validated End-User.”
(2)In evaluating an end-user for eligibility under authorization VEU, the ERC will consider a range of information, including such factors as: the entity's record of exclusive engagement in civil end-use activities; the entity's compliance with U.S. export controls; the need for an on-site review prior to approval; the entity's capability of complying with the requirements of authorization VEU; the entity's agreement to on-site reviews to ensure adherence to the conditions of the VEU authorization by representatives of the U.S. Government; and the entity's relationships with U.S. and foreign companies. In addition, when evaluating the eligibility of an end-user, the ERC will consider the status of export controls and the support and adherence to multilateral export control regimes of the government of the eligible destination.
(3)The VEU authorization is subject to revision, suspension or revocation entirely or in part.
(4)Information submitted in a VEU request is deemed to constitute continuing representations of existing facts or circumstances. Any material or substantive change relating to the authorization must be promptly reported to BIS, whether VEU authorization has been granted or is still under consideration.
(b)*Eligible destinations.* Authorization VEU may be used for the following destinations:
(1)The People's Republic of China.
(2)[Reserved]
(c)*Item restrictions.* Items controlled under the EAR for missile technology
(MT)and crime control
(CC)reasons may not be exported or reexported under this authorization.
(d)*End-use restrictions.* Items obtained under authorization VEU may be used only for civil end-uses and may not be used for any activities described in part 744 of the EAR. Exports, reexports, or transfers made under authorization VEU may only be made to an end-user listed in Supplement No. 7 to this part if the items will be consigned to and for use by the validated end-user. Eligible end-users who obtain items under VEU may only:
(1)Use such items at the end-user's own facility located in an eligible destination or at a facility located in an eligible destination over which the end-user demonstrates effective control;
(2)Consume such items during use; or
(3)Transfer or reexport such items only as authorized by BIS. Note to paragraph (d): Authorizations set forth in Supplement No. 7 to this part are country-specific. Authorization as a validated end-user for one country specified in paragraph
(b)of this section does not constitute authorization as a validated end-user for any other country specified in that paragraph.
(e)*Certification and recordkeeping.* Prior to an initial export or reexport to a validated end-user under authorization VEU, exporters or reexporters must obtain certifications from the validated end-user regarding end-use and compliance with VEU requirements. Such certifications must include the contents set forth in Supplement No. 8 to this part. Certifications and all records relating to VEU must be retained by exporters or reexporters in accordance with the recordkeeping requirements set forth in part 762 of the EAR.
(f)*Reporting and review requirements.* —(1)(i) *Reports* . Exporters and reexporters who make use of authorization VEU are required to submit annual reports to BIS. These reports must include, for each validated end-user to whom the exporter or reexporter exported or reexported eligible items:
(A)The name and address of each validated end-user to whom eligible items were exported or reexported;
(B)The eligible destination to which the items were exported or reexported;
(C)The quantity of such items;
(D)The value of such items; and
(E)The ECCN(s) of such items.
(ii)Reports are due by February 15 of each year, and must cover the period of January 1 through December 31 of the prior year. Reports must be sent to: Office of Exporter Services, Bureau of Industry and Security, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Room 2705, Washington, DC 20230. Mark the package “Authorization Validated End-User Reports”.
(2)*Reviews.* Records related to activities covered by authorization VEU that are maintained by exporters, reexporters, and validated end-users who make use of authorization VEU will be reviewed on a periodic basis. Upon request by BIS, exporters, reexporters, and validated end-users must allow review of records, including on-site reviews covering the information set forth in paragraphs
(e)and (f)(1) of this section. 18. Supplement No. 4 to Part 748, is amended by revising the heading and the entry for “China, People's Republic of”, to read as follows: Supplement No. 4 to Part 748—Authorities Administering Import Certificate/Delivery Verification (IC/DV) and End-User Statement Systems in Foreign Countries. Country IC/DV authorities System administered * * * * * * * China, People's Republic of Export Control Division I, Department of M, E & HT I, No. 2 Dong Chang An Street, Beijing Phone: 8610-6519-7366, Fax: 8610-6519-7926 PRC, End-User Statement. * * * * * * * 19. Supplement No. 7 to Part 748 is added and reserved to read as follows: SUPPLEMENT NO. 7 TO PART 748—AUTHORIZATION VALIDATED END-USER (VEU): LIST OF VALIDATED END-USERS, RESPECTIVE ELIGIBLE ITEMS AND ELIGIBLE DESTINATIONS [RESERVED] 20. Supplement No. 8 to Part 748 is added to read as follows: SUPPLEMENT NO. 8 TO PART 748—INFORMATION REQUIRED IN REQUESTS FOR VALIDATED END-USER
(VEU)AUTHORIZATION VEU authorization applicants must provide to BIS certain information about the prospective validated end-user. This information must be included in requests for authorization submitted by prospective validated end-users, or exporters or reexporters who seek to have certain entities approved as validated end-users. BIS may, in the course of its evaluation, request additional information. Required Information for Validated End-User Authorization Requests
(1)Name of proposed VEU candidates, including all names under which the candidate conducts business; complete company physical address (simply listing a post office box is insufficient); telephone number; fax number; e-mail address; company Web site (if available); and name of individual who should be contacted if BIS has any questions. If the entity submitting the application is different from the prospective validated end-user identified in the application, this information must be submitted for both entities. If the candidate has multiple locations, all physical addresses located in the eligible destination must be listed.
(2)Provide an overview of the structure, ownership and business of the prospective validated end-user. Include a description of the entity, including type of business activity, ownership, subsidiaries, and joint-venture projects, as well as an overview of any business activity or corporate relationship that the entity has with either government or military organizations.
(3)List the items proposed for VEU authorization approval and their intended end-uses. Include a description of the items; the ECCN for all items, classified to the subparagraph level, as appropriate; technical parameters for the items including performance specifications; and end-use description for the items. If BIS has previously classified the item, the Commodity Classification Automated Tracking System (CCATS) number may be provided in lieu of the information listed in the foregoing provisions of this paragraph.
(4)Provide the physical address(es) of the location(s) where the item(s) will be used, if this address is different from the address of the prospective validated end-user provided in paragraph
(1)of this supplement.
(5)If the prospective validated end-user plans to reexport or transfer the item, specify the destination to which the items will be reexported or transferred.
(6)Specify how the prospective validated end-user's record keeping system will allow compliance with the recordkeeping requirements set forth in § 748.15(e) of the EAR. Describe the system that is in place to ensure compliance with VEU requirements.
(7)Include an original statement on letterhead of the prospective validated end-user, signed and dated by a person who has authority to legally bind the prospective validated end-user, certifying that the end-user will comply with all VEU requirements. This statement must include acknowledgement that the prospective end-user:
(i)Has been informed of and understands that the item(s) it may receive as a validated end-user will have been exported in accordance with the EAR and that use or diversion of such items contrary to the EAR is prohibited;
(ii)Understands and will abide by all authorization VEU end-use restrictions, including the requirement that items received under authorization VEU will only be used for civil end-uses and may not be used for any activities described in part 744 of the EAR;
(iii)Will comply with VEU recordkeeping requirements; and
(iv)Agrees to allow on-site reviews by U.S. Government officials to verify the end-user's compliance with the conditions of the VEU authorization. 21. Supplement No. 9 to Part 748 is added to read as follows: SUPPLEMENT NO. 9 TO PART 748—END-USER REVIEW COMMITTEE PROCEDURES
(1)The End-User Review Committee (ERC), composed of representatives of the Departments of State, Defense, Energy, and Commerce, and other agencies, as appropriate, is responsible for determining whether to add to, to remove from, or otherwise amend the list of validated end-users and associated eligible items set forth in Supplement No. 7 to this part. The Department of Commerce chairs the ERC.
(2)Unanimous vote of the Committee is required to authorize VEU status for a candidate or to add any eligible items to a pre-existing authorization. Majority vote of the Committee is required to remove VEU authorization or to remove eligible items from a pre-existing authorization.
(3)In addition to requests submitted pursuant to § 748.15, the ERC will also consider candidates for VEU authorization that are identified by the U.S. Government. When the U.S. Government identifies a candidate for VEU authorization, relevant parties ( *i.e.* , end-users and exporters or reexporters, when they can be identified) will be notified, before the ERC determines whether VEU authorization is appropriate, as to which end-users have been identified as potential VEU authorization candidates. End-users are not obligated to accept the Government's nomination.
(4)The ERC will make determinations whether to grant VEU authorization to each VEU candidate no later than 30 calendar days after the candidate's complete application is circulated to all ERC agencies. The Committee may request additional information from an applicant or potential validated end-user related to a particular VEU candidate's application. The period during which the ERC is waiting for additional information from an applicant or potential validated end-user is not included in calculating the 30 calendar day deadline for the ERC's determination.
(5)If an ERC agency is not satisfied with the decision of the ERC, that agency may escalate the matter to the Advisory Committee on Export Policy (ACEP). The procedures and time frame for escalating any such matters are the same as those specified for license applications in Executive Order 12981, as amended by Executive Orders 13020, 13026 and 13117 and referenced in § 750.4 of the EAR.
(6)A final determination at the appropriate decision-making level to amend the VEU authorization list set forth in Supplement No. 7 to this part operates as clearance by all member agencies to publish the amendment in the **Federal Register** .
(7)The Deputy Assistant Secretary of Commerce for Export Administration will communicate the determination on each VEU request to the requesting party and the end-user. PART 750—[AMENDED] 22. The authority citation for 15 CFR part 750 continues to read as follows: Authority: 50 U.S.C. app. 2401 *et seq.* ; 50 U.S.C. 1701 *et seq.* ; Sec. 1503, Pub. L. 108-11,117 Stat. 559; E.O. 13026, 61 FR 58767, 3 CFR, 1996 Comp., p. 228; E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 783; Presidential Determination 2003-23 of May 7, 2003, 68 FR 26459, May 16, 2003; Notice of August 3, 2006, 71 FR 44551 (August 7, 2006). 23. Paragraph
(b)of § 750.2 is revised to read as follows: § 750.2 Processing of Classification Requests and Advisory Opinions.
(b)*Advisory Opinion requests.* All advisory opinions submitted in accordance with procedures described in § 748.3(a) and
(c)of the EAR will be answered within 30 calendar days after receipt. Requests to obtain Validated End-User authorization will be resolved within 30 calendar days as described in Supplement No. 9 to Part 748 of the EAR. PART 758—[AMENDED] 24. The authority citation for 15 CFR to part 758 continues to read as follows: Authority: 50 U.S.C. app. 2401 *et seq.;* 50 U.S.C. 1701 *et seq.;* E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 783; Notice of August 3, 2006, 71 FR 44551 (August 7, 2006). 25. Section 758.1 is amended: a. By removing the conjunction “or” from the end of paragraph (b)(3) and placing “or” and a semicolon at the end of paragraph (b)(4); and b. By adding paragraph (b)(5) to read as follows: § 758.1 The Shipper's Export Declaration
(SED)or Automated Export System
(AES)record.
(b)* * *
(5)For all items exported under authorization Validated End-User (VEU). Dated: June 12, 2007. Christopher A. Padilla, Assistant Secretary for Export Administration. [FR Doc. E7-11588 Filed 6-18-07; 8:45 am] BILLING CODE 3510-33-P SOCIAL SECURITY ADMINISTRATION 20 CFR Part 404 [Docket No. SSA-2007-0026] RIN 0960-AG51 Extension of the Expiration Date for Several Body System Listings AGENCY: Social Security Administration (SSA). ACTION: Final rule. SUMMARY: We use the Listing of Impairments (the listings) at the third step of the sequential evaluation process when we evaluate your claim for benefits based on disability under title II and title XVI of the Social Security Act (the Act). This final rule extends until July 1, 2008, the date on which the listings for eight body systems will no longer be effective. Other than extending the effective date of the listings, we have made no revisions to the listings; they remain the same as they now appear in the Code of Federal Regulations. This extension will ensure that we continue to have the medical evaluation criteria in the listings to adjudicate disability claims involving these body systems at the third step of the sequential evaluation process. DATES: This final rule is effective on June 19, 2007. FOR FURTHER INFORMATION CONTACT: Jim Julian, Director, Office of Medical Policy, 6401 Security Boulevard, Baltimore, MD 21235-6401,
(410)965-4015. For information on eligibility or filing for benefits, call our national toll-free number, 1-800-772-1213 or TTY 1-800-325-0778, or visit out Internet site, Social Security Online, at *http://www.socialsecurity.gov.* SUPPLEMENTARY INFORMATION: Electronic Version The electronic file of this document is available on the date of publication in the **Federal Register** at *http://www.gpoaccess.gov/fr/index.html.* Background We use the listings in appendix 1 to subpart P of part 404 at the third step of the sequential evaluation process to evaluate claims filed by adults and children for benefits based on disability under the title II and title XVI programs. The listings are in two parts. There are listings for adults (part A) and for children (part B). If you are an individual age 18 or over, we apply the listings in part A when we assess your claim, and we never use the listings in part B. If you are an individual under age 18, we first use the criteria in part B of the listings. Part B contains criteria that apply only to individuals who are under age 18. If the criteria in part B do not apply, we may use the criteria in part A when those criteria give appropriate consideration to the effects of the impairment(s) in children. (See §§ 404.1525 and 416.925.) Explanation of Changes In this final rule, we are extending until July 1, 2008, the date on which the listings for the following eight body systems will no longer be effective: Growth Impairment (100.00). Respiratory System (3.00 and 103.00). Digestive System (5.00 and 105.00). Hematological Disorders (7.00 and 107.00. Endocrine System (9.00 and 109.00). Neurological (11.00 and 111.00). Mental Disorders (12.00 and 112.00). Immune System (14.00 and 114.00). As a result of medical advances in disability evaluation and treatment, and our program experience, we periodically review and update the listings. We intend to publish proposed and final rules to update the listings as expeditiously as possible. However, we will not be able to publish final rules revising the listings for these body systems by July 2, 2007, the current expiration date. Therefore, we are extending the current expiration date for the listings as indicated above. In final rules published on June 16, 2005 (70 FR 35028), we extended to July 2, 2007, the date on which the listings for the following eight body systems would no longer be effective: Growth Impairment; Special Senses and Speech; Respiratory System; Hematological Disorders; Endocrine System; Neurological; Mental Disorders; and Immune System. In final rules published on May 05, 2006 (71 FR 26411), we extended to July 2, 2007, the date on which the listings for the Digestive System would no longer be effective. Not all listings require effective date extensions at this time. The following chart shows the listings that do not require effective date extensions and are not affected by this final rule. Listing Revised Date no longer effective unless extended or revised and promulgated again Musculoskeletal System 1.00 and 101.00 November 19, 2001, 66 FR 58010 February 19, 2009, 66 FR at 58037. Special Senses and Speech 2.00 and 102.00 November 20, 2006 (visual disorders) 71 FR 67037 February 20, 2015, 71 FR at 67039. Cardiovascular System 4.00 and 104.00 January 13, 2006, 71 FR 2312 January 13, 2011, 71 FR at 2313. Genitourinary Impairments 6.00 and 106.00 July 05, 2005, 70 FR 38582 September 06, 2013, 70 FR at 38584. Skin Disorders 8.00 and 108.00 June 09, 2004, 69 FR 32260 July 09, 2012, 69 FR at 32262. Multiple Body Systems 10.00 and 110.00 August 30, 2005, 70 FR 51252 October 31, 2013, 70 FR at 51254. Malignant Neoplastic Diseases 13.00 and 113.00 November 15, 2004, 69 FR 67018 December 15, 2009, 69 FR at 67019. Regulatory Procedures Justification for Final Rule Pursuant to section 702(a)(5) of the Social Security Act, 42 U.S.C. 902(a)(5), we follow the Administrative Procedure Act
(APA)rulemaking procedures specified in 5 U.S.C. 553 in the development of regulations. The APA provides exceptions to its notice and public comment procedures when an agency finds there is good cause for dispensing with such procedures on the basis that they are impracticable, unnecessary, or contrary to the public interest. We have determined that, under 5 U.S.C. 553(b)(B), good cause exists for dispensing with the notice and public comment procedures for this rule. Good cause exists because this final rule only extends the date on which these body system listings will no longer be effective. It makes no substantive changes to those listings. The current regulations expressly provide that listings may be extended, as well as revised and promulgated again. Therefore, we have determined that opportunity for prior comment is unnecessary, and we are issuing this regulation as a final rule. In addition, we find good cause for dispensing with the 30-day delay in the effective date of a substantive rule provided by 5 U.S.C. 553(d)(3). As explained above, we are not making any substantive changes in these body system listings. Without an extension of the expiration dates for these listings, we will lack the medical evaluation criteria needed for assessing impairments in these body systems at the third step of the sequential evaluation process. In order to ensure that we continue to have these listings in our rules, we find that it is in the public interest to make this final rule effective on the date of publication. Executive Order 12866 We have consulted with the Office of Management and Budget
(OMB)and determined that this final rule does not meet the criteria for a significant regulatory action under Executive Order 12866, as amended. Thus, OMB did not review it. We have also determined that this final rule meets the plain language requirement of Executive Order 12866, as amended. Regulatory Flexibility Act We certify that this final rule does not have a significant economic impact on a substantial number of small entities because it affects only individuals. Therefore, a regulatory flexibility analysis, as provided in the Regulatory Flexibility Act, as amended, is not required. Paperwork Reduction Act This final rule imposes no reporting/recordkeeping requirements necessitating clearance by OMB. (Catalog of Federal Domestic Assistance Program Nos. 96.001, Social Security-Disability Insurance; 96.002, Social Security-Retirement Insurance; 96.004, Social Security-Survivors Insurance; 96.006, Supplemental Security Income) List of Subjects in 20 CFR Part 404 Administrative practice and procedure, Blind, Disability benefits, Old-Age, Survivors and Disability Insurance, Reporting and recordkeeping requirements, Social Security. Dated: June 12, 2007. Michael J. Astrue, Commissioner of Social Security. For the reasons set forth in the preamble, part 404, subpart P, chapter III of title 20 of the Code of Federal Regulations is amended as set forth below. PART 404—FEDERAL OLD-AGE, SURVIVORS AND DISABILITY INSURANCE (1950— ) Subpart P—[Amended] 1. The authority citation for subpart P of part 404 continues to read as follows: Authority: Secs. 202, 205(a), (b), and (d)-(h), 216(i), 221(a) and (i), 222(c), 223, 225, and 702(a)(5) of the Social Security Act (42 U.S.C. 402, 405(a), (b), and (d)-(h), 416(i), 421(a) and (i), 422(c), 423, 425, and 902(a)(5)); sec. 211(b), Pub. L. 104-193, 110 Stat. 2105, 2189; sec. 202, Pub. L. 108-203, 118 Stat. 509 (42 U.S.C. 902 note). 2. Appendix 1 to subpart P of part 404 is amended by revising items 1, 4, 6, 8, 10, 12, 13, and 15 of the introductory text before Part A to read as follows: Appendix 1 to Subpart P of Part 404—Listing of Impairments 1. Growth Impairment (100.00): July 1, 2008. 4. Respiratory System (3.00 and 103.00): July 1, 2008. 6. Digestive System (5.00 and 105.00): July 1, 2008. 8. Hematological Disorders (7.00 and 107.00): July 1, 2008. 10. Endocrine System (9.00 and 109.00): July 1, 2008. 12. Neurological (11.00 and 111.00): July 1, 2008. 13. Mental Disorders (12.00 and 112.00): July 1, 2008. 15. Immune System (14.00 and 114.00): July 1, 2008. [FR Doc. E7-11752 Filed 6-18-07; 8:45 am] BILLING CODE 4191-02-P DEPARTMENT OF HEALTH AND HUMAN SERVICES Food and Drug Administration 21 CFR Part 74 [Docket No. 1995C-0286 (formerly Docket No. 95C-0286)] Listing of Color Additives Subject to Certification; D&C Black No. 3 AGENCY: Food and Drug Administration, HHS. ACTION: Final rule. SUMMARY: The Food and Drug Administration
(FDA)is amending the color additive regulations to provide for the safe use of D&C Black No. 3 (bone black, subject to FDA batch certification) as a color additive in eyeliner, eye shadow, mascara, and face powder. This action is in response to a petition filed by Ebonex Corp. DATES: This rule is effective July 20, 2007. Submit written or electronic objections and requests for a hearing by July 19, 2007. See section VIII of the SUPPLEMENTARY INFORMATION section of this document for information on the filing of objections. ADDRESSES: You may submit written or electronic objections and requests for a hearing, identified by Docket No 1995C-0286, by any of the following methods: *Electronic Submissions* Submit electronic objections in the following ways: • Federal eRulemaking Portal: *http://www.regulations.gov* . Follow the instructions for submitting comments. • Agency Web site: *http://www.fda.gov/dockets/ecomments* . Follow the instructions for submitting comments on the agency Web site. *Written Submissions* Submit written objections in the following ways: • FAX: 301-827-6870. • Mail/Hand delivery/Courier [For paper, disk, or CD-ROM submissions]: Division of Dockets Management (HFA-305), Food and Drug Administration, 5630 Fishers Lane, rm. 1061, Rockville, MD 20852. To ensure more timely processing of objections, FDA is no longer accepting objections submitted to the agency by e-mail. FDA encourages you to continue to submit electronic objections by using the Federal eRulemaking Portal or the agency Web site, as described in the *Electronic Submissions* portion of this paragraph. *Instructions* : All submissions received must include the agency name and docket number for this rulemaking. All objections received will be posted without change to *http://www.fda.gov/ohrms/dockets/default.htm* , including any personal information provided. For detailed instructions on submitting objections, see the “Objections” heading of the SUPPLEMENTARY INFORMATION section of this document. *Docket* : For access to the docket to read background documents or objections received, go to *http://www.fda.gov/ohrms/dockets/default.htm* and insert the docket number, found in brackets in the heading of this document, into the “Search” box and follow the prompts and/or go to the Division of Dockets Management, 5630 Fishers Lane, rm. 1061, Rockville, MD 20852. FOR FURTHER INFORMATION CONTACT: Judith Kidwell, Center for Food Safety and Applied Nutrition (HFS-265), Food and Drug Administration, 5100 Paint Branch Pkwy., College Park, MD 20740, 301-436-1071. SUPPLEMENTARY INFORMATION: I. Background In a notice published in the **Federal Register** of September 1, 1995 (60 FR 45724), FDA announced that a color additive petition (CAP 5C0247) had been filed by the Ebonex Corp., P.O. Box 3247, Melvindale, MI 48122. The petition proposed to amend the color additive regulations to provide for the safe use of bone black as a color additive in cosmetics, including cosmetics intended for use in the eye area. The petitioner subsequently narrowed the proposed uses of bone black to eyeliner, eye shadow, mascara, and face powder. During its review of the petition, the agency determined that the color additive, bone black, will require batch certification by FDA. The agency intends to give each certified batch of the subject color additive the name D&C Black No. 3. Therefore, this color additive will be identified as D&C Black No. 3. The requested use of D&C Black No. 3 includes cosmetics for use in the area of the eye. The term “area of the eye” is defined in § 70.3(s) (21 CFR 70.3(s)) as “the area enclosed within the circumference of the supra-orbital ridge and the infra-orbital ridge, including the eyebrow, the skin below the eyebrow, the eyelids and the eyelashes, and conjunctival sac of the eye, the eyeball, and the soft areolar tissue that lies within the perimeter of the infra-orbital ridge.” Section 70.5(a) (21 CFR 70.5(a)) states that “No listing or certification of a color additive shall be considered to authorize the use of any such color additive in any article intended for use in the area of the eye unless such listing or certification of such color additive specifically provides for such use.” II. Identity and Specifications D&C Black No. 3 is a black pigment made from calcined cattle bones. The bones are heated twice to temperatures in excess of 700°C for at least 6 hours each time. The twice burned char is then washed. The carbon content is approximately 8 percent to 10 percent and most of the remaining composition is tricalcium phosphate (as calcium hydroxyapatite). As explained under section III.B of this document, D&C Black No. 3 may contain low levels of potentially carcinogenic polycyclic aromatic hydrocarbon
(PAH)impurities. To limit the amounts of these impurities in the color additive, FDA is setting a specification for total PAHs and is requiring that D&C Black No. 3 be from a batch of bone black certified by FDA. To limit the amounts of heavy metals in the color additive, which may be derived from the source of the color and the manufacturing process, the agency also is setting specifications for arsenic and lead. To ensure purity of the color additive, the agency also is setting specifications for carbon, calcium hydroxyapatite, moisture, and silica. To be used lawfully in cosmetics in the United States, all batches of bone black must meet the specifications identified in the regulation. III. Safety Evaluation A. Determination of Safety Under section 721(b)(4) of the Federal Food, Drug, and Cosmetic Act (the act) (21 U.S.C. 379e(b)(4)), the “general safety standard” for color additives, a color additive cannot be listed for a particular use unless a fair evaluation of the data and information available to FDA establishes that the color additive is safe for that use. FDA's color additive regulations (§ 70.3(i)) define safe as “convincing evidence that establishes with reasonable certainty that no harm will result from the intended use of the color additive.” The anticancer clause of the color additive amendments (section 721(b)(5)(B) of the act), also known as the Delaney clause) provides that for any use of a color additive which will or may result in ingestion of all or part of such additive, the color additive shall be deemed to be unsafe and shall not be listed if the additive is found to induce cancer when ingested by man or animal, or if it is found, after tests which are appropriate for the evaluation of the safety of additives for use in food, to induce cancer in man or animal (section 721(b)(5)(B)(i) of the act). Further, under section 721(b)(5)(B)(ii) of the act, for any use of a color additive which will not result in ingestion of any part of such additive, the color additive shall be deemed to be unsafe and shall not be listed if, after tests which are appropriate for the evaluation of the safety of additives for such use, or after other relevant exposure of man or animal to such additive, it is found to induce cancer in man or animal. Importantly, however, the Delaney clause applies to the additive itself and not to impurities in the additive. That is, where an additive itself has not been shown to cause cancer, but contains a carcinogenic impurity, the additive is properly evaluated under the general safety standard using risk assessment procedures to determine whether there is a reasonable certainty that no harm will result from the intended use of the additive ( *Scott* v. *FDA* , 728 F.2d 322 (6th Cir. 1984)). B. Safety of Petitioned Use of the Additive Because D&C Black No. 3 is made from cattle bones, one potential safety concern is the risk from using cattle materials in the preparation of bone black that could be infected with the agent that causes Bovine Spongiform Encephalopathy (BSE). To address the potential risk of BSE, FDA prohibits the use of certain cattle materials in human food and cosmetics. FDA also requires that manufacturers and processors of human food and cosmetics that are manufactured from, processed with, or otherwise contain, material from cattle establish and maintain records sufficient to demonstrate that the human food or cosmetic is not manufactured from, processed with, or does not otherwise contain, prohibited cattle materials (21 CFR 189.5 and 700.27). FDA's regulatory measures to prevent BSE contamination of U.S. food and cosmetics ensure that cattle materials that carry the highest risk of transmitting the agent that causes BSE are excluded from being used as a source to produce D&C Black No. 3 for use in cosmetics. Therefore, FDA concludes that D&C Black No. 3 prepared in compliance with these measures is safe with respect to the potential concern from using cattle materials. Toxicity studies provided by the petitioner, including a dermal irritation study, an ocular irritation study, a delayed-contact hypersensitivity study, and a bioavailability study, demonstrate the color additive itself is safe for the proposed cosmetic uses. However, the color additive has been shown to contain several impurities in trace amounts, including carcinogenic PAHs. To minimize exposure to PAH impurities, the agency is setting a limit for total PAHs in D&C Black No. 3 of not more than 5 milligrams (mg)/kilogram
(kg)(5 parts per million). As discussed in the next three paragraphs, the limit for total PAHs for D&C Black No. 3 will provide a reasonable certainty that no harm will result from the intended use of the color additive. Current data have shown that benzo(a)pyrene (B[ *a* ]P) is one of the most potent carcinogens of the PAH family. To assess the risk from exposure to PAHs, FDA used toxic equivalency factors
(TEFs)to express the comparative toxicity of individual PAHs as fractions of the toxicity of B[ *a* ]P. This approach expresses the amount of PAHs present in terms of B[ *a* ]P equivalents and estimates the risk for a mixture of PAHs as if it were comprised of one chemical compound. Under this methodology, B[ *a* ]P was assigned a TEF of 1. In estimating the exposure of B[ *a* ]P equivalents from the petitioned uses of the color additive, FDA normalized the residue levels of the individual PAHs to yield a total PAH concentration of approximately 5 mg/kg (the limit for total PAHs set by the regulation). Multiplying the normalized residue level for each PAH by the TEF for that PAH and summing the results yields a B[ *a* ]P-equivalent PAH concentration of approximately 1.2 mg/kg. Data from a bioavailability study presented in the petition show that B[ *a* ]P is not absorbed in appreciable amounts from cosmetic matrices (4 percent to 6 percent absorption) (Refs. 1 and 2). However, as a conservative assumption based on the chemical composition of the additive, the agency concluded that up to 50 percent of the total PAHs were likely to be extracted from the additive under typical use conditions, and thus available for absorption by the body (i.e., not bound to the cosmetic formulation). The agency used data from a carcinogenesis bioassay on B[ *a* ]P (Ref. 3), to estimate the upper-bound limit of lifetime human risk from exposure to B[ *a* ]P equivalents resulting from the petitioned uses of the color additive. This bioassay reported treatment-related benign forestomach tumors or esophageal tumors in male rats exposed to B[ *a* ]P. Using a linear-at-low-dose extrapolation method and tumor incidence data from the bioassay, FDA estimated the carcinogenic unit risk for B[ *a* ]P to be 1.75 (mg/kg body weight/day) -1 . Using this unit risk and an estimated daily exposure of 5 x 10 -8 mg of B[ *a* ]P equivalents/kg body weight/day, FDA estimates the upper-bound lifetime human risk from the petitioned uses of the color additive to be 8.8 x 10 -8 (Ref. 1). Because conservative assumptions were used to estimate exposure, an individual's actual exposure to PAHs is expected to be substantially less than the estimated exposure. The agency concludes that there is reasonable certainty that no harm from exposure to PAHs would result from the petitioned use of the color additive 1 (Ref. 4). 1 FDA also estimated the upper-bound lifetime risk to PAHs using the worst-case assumption that PAHs are present at the maximum allowable limit of 5 mg/kg, and that all PAHs present have carcinogenic potency equivalent to B[ *a* ]P. Based on this very conservative approach, the upper-bound limit of lifetime human risk from the petitioned uses of the additive is 3.7 x 10 -7 (Ref. 1). The agency also considered the potential risk from benzaldehyde, benzonitrile, biphenyl, isoquinoline, pyridine and quinoline, which are additional impurities produced in trace amounts in the color additive from the manufacturing process. The agency concludes that none of these substances is present in the color additive at levels that raise any safety concerns, and that no specifications are necessary to control the amount of these substances as impurities in the color additive (Ref. 4). IV. Conclusions Based on data in the petition and other relevant considerations discussed previously, FDA concludes that there is a reasonable certainty that no harm will result from the petitioned use of D&C Black No. 3 as a color additive in eyeliner, eye shadow, mascara, and face powder. The agency also concludes that the color additive will achieve its intended technical effect, and thus, is suitable for this use. The agency further concludes that, in accordance with 21 CFR 71.20(b), batch certification of D&C Black No. 3 is necessary to protect the public health because of the need to limit the level of PAH impurities, some of which have been shown to be carcinogenic. Therefore, 21 CFR part 74 should be amended as set forth in this document. V. Inspection of Documents In accordance with § 71.15 (21 CFR 71.15), the petition and the documents that FDA considered and relied upon in reaching its decision to approve the petition will be made available for inspection at the Center for Food Safety and Applied Nutrition by appointment with the information contact person (see FOR FURTHER INFORMATION CONTACT ). As provided in § 71.15, the agency will delete from the documents any materials that are not available for public disclosure before making the documents available for inspection. VI. Environmental Impact The agency has carefully considered the potential environmental effects of this action. FDA has concluded that the action will not have a significant impact on the human environment, and that an environmental impact statement is not required. The agency's finding of no significant impact and the evidence supporting that finding, contained in an environmental assessment, may be seen in the Division of Dockets Management (see ADDRESSES ) between 9 a.m. and 4 p.m., Monday through Friday. VII. Paperwork Reduction Act of 1995 This final rule contains no collection of information. Therefore, clearance by the Office of Management and Budget under the Paperwork Reduction Act of 1995 is not required. VIII. Objections This rule is effective as shown in the “ DATES ” section of this document; except as to any provisions that may be stayed by the filing of proper objections. Any person who will be adversely affected by this regulation may file with the Division of Dockets Management (see ADDRESSES ) written or electronic objections. Each objection shall be separately numbered, and each numbered objection shall specify with particularity the provisions of the regulation to which objection is made and the grounds for the objection. Each numbered objection on which a hearing is requested shall specifically so state. Failure to request a hearing for any particular objection shall constitute a waiver of the right to a hearing on that objection. Each numbered objection for which a hearing is requested shall include a detailed description and analysis of the specific factual information intended to be presented in support of the objection in the event that a hearing is held. Failure to include such a description and analysis for any particular objection shall constitute a waiver of the right to a hearing on the objection. Three copies of all documents are to be submitted and are to be identified with the docket number found in brackets in the heading of this document. Any objections received in response to the regulation may be seen in the Division of Dockets Management between 9 a.m. and 4 p.m., Monday through Friday. FDA will publish notice of the objections that the agency has received or lack thereof in the **Federal Register** . IX. References The following references have been placed on display in the Division of Dockets Management (see ADDRESSES ) and may be seen by interested persons between 9 a.m. and 4 p.m., Monday through Friday. 1. Memorandum from Folmer, Division of Petition Review, Chemistry Review Team, to Kidwell, Division of Petition Review, July 6, 2005. 2. Memorandum from Yourick, Cosmetics Toxicology Branch, Division of Cosmetics and Compliance, to Kidwell, Division of Petition Review, May 13, 2005. 3. Brune, H., R.P. Deutsch-Wenzel, M. Habs, et al., “Investigation of the Tumorigenic Response to Benzo[ *a* ]pyrene in Aqueous Caffeine Solution Applied Orally to Sprague-Dawley Rats,” *Journal of Cancer Research and Clinical Oncology* , 102:153-157, 1981. 4. Memorandum from Carlson, Division of Petition Review, Toxicology Review Group I, to Kidwell, Division of Petition Review, February 15, 2006. List of Subjects in 21 CFR Part 74 Color additives, Cosmetics, Drugs. Therefore, under the Federal Food, Drug, and Cosmetic Act and under authority delegated to the Commissioner of Food and Drugs, 21 CFR part 74 is amended as follows: PART 74—LISTING OF COLOR ADDITIVES SUBJECT TO CERTIFICATION 1. The authority citation for 21 CFR part 74 continues to read as follows: Authority: 21 U.S.C. 321, 341, 342, 343, 348, 351, 352, 355, 361, 362, 371, 379e. 2. Section 74.2053 is added to subpart C to read as follows: § 74.2053 D&C Black No. 3.
(a)*Identity* . The color additive D&C Black No. 3 is a washed bone char prepared from calcined cattle bones. The bones are twice heated in excess of 700°C for at least 6 hours.
(b)*Specifications* . D&C Black No. 3 shall conform to the following specifications and shall be free from impurities other than those named, to the extent that such other impurities may be avoided by current good manufacturing practices:
(1)Calcium hydroxyapatite (CaO and P <sup>2</sup> O <sup>5</sup> ), not less than 75 percent and not more than 84 percent;
(2)Elemental carbon, not less than 7 percent;
(3)Moisture, not more than 7 percent;
(4)Silica (SiO <sup>2</sup> ), not more than 5 percent;
(5)Arsenic, not more than 3 milligrams (mg)/kilogram
(kg)(3 parts per million (ppm));
(6)Lead, not more than 10 mg/kg (10 ppm); and
(7)Total polycyclic aromatic hydrocarbons (PAHs), not more than 5 mg/kg (5 ppm).
(c)*Uses and restrictions* . Cosmetics containing D&C Black No. 3 must comply with § 700.27 of this chapter with respect to prohibited cattle materials in cosmetic products. D&C Black No. 3 may be safely used for coloring the following cosmetics in amounts consistent with current good manufacturing practice: Eyeliner, eye shadow, mascara, and face powder.
(d)*Labeling* . The label of the color additive shall conform to the requirements of § 70.25 of this chapter.
(e)*Certification* . All batches of D&C Black No. 3 shall be certified in accordance with regulations in part 80 of this chapter. Dated: June 11, 2007. Jeffrey Shuren, Assistant Commissioner for Policy. [FR Doc. E7-11801 Filed 6-18-07; 8:45 am] BILLING CODE 4160-01-S DEPARTMENT OF HEALTH AND HUMAN SERVICES Food and Drug Administration 21 CFR Part 1271 [Docket No. 1997N-0484T] Human Cells, Tissues, and Cellular and Tissue-Based Products; Donor Screening and Testing, and Related Labeling AGENCY: Food and Drug Administration, HHS. ACTION: Final rule. SUMMARY: The Food and Drug Administration
(FDA)is adopting as a final rule, without change, the provisions of the interim final rule that amended certain regulations regarding the screening and testing of donors of human cells, tissues, and cellular and tissue-based products (HCT/Ps), and related labeling. FDA is taking this action to complete the rulemaking initiated with the interim final rule. DATES: This rule is effective June 19, 2007. FOR FURTHER INFORMATION CONTACT: Brenda R. Friend, Center for Biologics Evaluation and Research (HFM-17), Food and Drug Administration, 1401 Rockville Pike, suite 200N, Rockville, MD 20852-1448, 301-827-6210. SUPPLEMENTARY INFORMATION: I. Background In the **Federal Register** of May 25, 2005 (70 FR 29949), FDA issued an interim final rule on Human Cells, Tissues, and Cellular and Tissue-Based Products; Donor Screening and Testing, and Related Labeling (hereinafter referred to as the interim final rule). These regulations became effective upon the date of publication in the **Federal Register** . We issued the interim rule to assure that the changes became effective concurrently with the Eligibility Determination for Donors of Human Cells, Tissues, and Cellular and Tissue-Based Products final rule (69 FR 29786, May 25, 2004) and the Current Good Tissue Practice for Human Cell, Tissue, and Cellular and Tissue-Based Product Establishments; Inspection and Enforcement final rule (69 FR 68612, November 24, 2004) on May 25, 2005. In this way, establishments were not required to take steps to comply with the provisions in part 1271 (21 CFR part 1271) that were replaced by the changes set out in the interim final rule, and certain HCT/Ps would continue to be available. II. Comments on the Interim Final Rule and FDA Responses We received several comments on the interim final rule. To make it easier to identify comments and our responses, the word “Comment,” in parentheses, will appear before the comment's description, and the word “Response,” in parentheses, will appear before our response. We have also numbered each comment to help distinguish between different comments. The number assigned to each comment is purely for organizational purposes and does not signify the comment's value or importance or the order in which it was received. (Comment 1) A comment appreciated and applauded the change to § 1271.370(b)(4) to allow labeling with warning(s) to accompany the HCT/P when the HCT/P container is too small to accommodate the warning(s) on the label. Another comment expressed concern that the accompanying labeling could be ignored or lost. (Response) We acknowledge and appreciate the supportive comment. This requirement addresses the situation where it is not physically possible to include warnings directly on the HCT/P label, either because the container is too small or the HCT/P is cryopreserved, which may interfere with adherence of label materials. In these situations, the warnings must accompany the HCT/P. We acknowledge the comment's concern that it is better to provide information on the HCT/P's label. However, we permit other important information, such as the summary of records, to accompany the HCT/P; such important information is not present on the HCT/P label. We believe that consignees are generally careful to make sure information accompanying HCT/Ps is not ignored or lost, and we believe that the accompanying information will be available. Necessity compels this authorization for certain information to accompany an HCT/P when it is not possible to include it on the label, and we conclude that it is adequate to provide such information in accompanying documents when it is necessary to do so. (Comment 2) A comment noted that § 1271.55(a)(1) requirements (i.e., affixing a distinct identification code to the HCT/P container) were clearly designed to maintain donor anonymity. However, the comment asked if fertility clinics could write in information about the recipient (e.g., name, account number) because by the time a donor's HCT/P is collected, a specific recipient has already been identified. The comment stated that fertility clinics, for example, never collect anonymously donated oocytes without already having a recipient identified and ready to receive the donation. (Response) The requirements in § 1271.55(a)(1) are focused on protecting the identity of the donor in the interest of confidentiality. We note that this provision prescribes how an establishment must label the HCT/P before releasing it for distribution, but does not prohibit the addition of the recipient's name once the donor eligibility determination is completed and the reproductive HCT/P is released for distribution. For an oocyte donation, the release determination is likely to be completed very soon after collection. (Comment 3) A few comments suggested changes to the timing of the specimen collection in § 1271.80(b). In particular, a comment noted that § 1271.80(b)(1) permits testing on oocyte donors up to 30 days before recovery, while § 1271.80 seems to maintain a 7-day testing window for semen donors, whose spermatozoa will combine with the oocytes to create an embryo for a gestational carrier cycle, and stated that both these donors should have a 30-day testing window. Another comment stated that testing donors of sperm, oocytes, and embryos at the time of donation is “superior” but noted that the American Association of Tissue Banks guidelines for accredited tissue banks recommend that all donors be tested within 7 days of collection. The comment recommended that FDA go back to 7-day testing. One comment recommended that any individual intending to cryopreserve his/her HCT/P be tested 7 to 10 days prior to cryopreservation or within a short period after cryopreservation. (Response) The interim final rule modified the timing of blood specimen collection for oocyte donors to permit the determination of donor eligibility before the donor's conditioning regimen begins. We did not change the timing of blood specimen collection for semen donors, because they do not undergo any conditioning regimen. Collecting blood specimens from donors of semen, oocytes, and embryos at the time of donation is sometimes impractical because of the time it takes to obtain the test results. We have made exceptions to the requirement for testing within 7 days in situations where the donor has to undergo conditioning in advance. This is also the case where the recipient undergoes myeloablative treatment and there is a need to determine the eligibility of the donor before the recipient's treatment. Establishments are welcome to establish more restrictive testing criteria as noted in the American Association of Tissue Banks standards. (Comment 4) A comment responded to FDA's solicitation for comments on the effectiveness of § 1271.90(a)(4), (a new exception from the donor-eligibility determination requirement for certain cryopreserved embryos) to enhance the availability of embryos, and the potential benefits, risks, and any other direct or indirect effects of this change. The comment pointed out that cryopreserved embryos (and HCT/Ps) are often exposed to liquid nitrogen, and research articles have reported that hepatitis B and bovine hepatitis virus can be transmitted through liquid nitrogen contamination. Therefore, cryopreserved embryos from untested semen and oocyte donors, commingling with cryopreserved embryos from tested donors, may place recipients, cryostorage centers, and assisted reproductive technology facilities at risk. Simply having warning(s) appear on the label of the cryopreserved HCT/P specimen from an untested donor, under revised §§ 1271.90(b)(2) and (b)(3), or having the warning(s) accompany such HCT/Ps, under revised § 1271.370(b)(4), would not eliminate the risks and may even result in an increased number of tort cases. (Response) We decline to require separate storage for tested and untested HCT/Ps, though establishments may choose to utilize physically separated areas for tested and untested HCT/Ps. To reduce risk of contamination/cross-contamination from HCT/Ps that are untested or determined ineligible because of a reactive screening test, reproductive establishments could verify or validate that the cryocontainers (vials or straws) meet specifications and are not subject to breakage at the temperatures and conditions at which they are stored. Verification could be accomplished by the establishment that uses the cryocontainers or by the vendor that supplies the cryocontainers. (Comment 5) A comment recommended a quarantine period of 6 months for any reproductive HCT/P from directed donors and anonymous donors, including anonymous donors whose identity might be disclosed. The comment also recommended mandatory retesting of oocyte donors (for donated embryos created using a donor oocyte) and embryo donors (semen and oocyte donors) prior to transfer of the donated HCT/P. (Response) In the Eligibility Determination for Donors of Human Cells, Tissues, and Cellular and Tissue-Based Products final rule (69 FR 29786 at 29800), we explained why quarantine and retesting are required for anonymous semen donors but not for other reproductive donors. We considered comments concerning decreased pregnancy success rates for cryopreserved semen from directed donors and for cryopreserved embryos. In addition, techniques for the successful cryopreservation of oocytes are still being developed. Accordingly, we have declined to increase quarantine requirements for oocyte and embryo donations. (Comment 6) A comment requested clarification on the use of the warning “FOR AUTOLOGOUS USE ONLY” under § 1271.90(b)(1), and particularly, FDA's definition of “autologous” for certain circumstances related to in vitro fertilization. (Response) We define “autologous” in § 1271.3(a) as meaning the implantation, transplantation, infusion, or transfer of human cells or tissue back into the individual from whom the cells or tissue were recovered. Transfer of an embryo into the woman who contributed the oocytes would not be considered autologous because the embryo is formed by gametes from two individuals. This means that in the circumstances related to in vitro fertilization, use of a label “FOR AUTOLOGOUS USE ONLY” would not be appropriate for labeling a cryopreserved embryo. Other labeling requirements listed in § 1271.90(b) would apply based on the test status of the gamete donors. (Comment 7) We received several comments that, although they relate to significant issues, are not relevant to the interim final rule. These comments concerned:
(1)A request that donors with a curable communicable disease be eligible to donate reproductive HCT/Ps after receiving treatment and retesting negative for the communicable disease;
(2)the definition of “responsible person” under § 1271.3(t);
(3)certification or registration requirements, other than those applicable under the Clinical Laboratory Improvement Amendments of 1988 (42 U.S.C. 263a), for a clinical laboratory to perform donor screening; and
(4)issues associated with the storage of embryos and other HCT/Ps, but unrelated to the potential for transmission of communicable disease (e.g., abandonment, legal responsibility, and nonpayment). (Response) These comments are on matters outside the scope of the interim final rule and this final rule. Relevant communicable disease agent or disease was addressed in previously finalized portions of part 1271, subpart C. The definitions in § 1271.3 were not discussed or addressed in the interim final rule. Registration requirements applicable to testing laboratories are addressed in part 1271, subparts A and B, and certification requirements are discussed in part 1271, subpart C. FDA expects that the contractual agreement between the cryostorage facility and the individual(s) storing the HCT/P will address financial and legal issues unrelated to the potential for communicable disease transmission. III. Analysis of Impacts FDA has examined the impacts of the final rule under Executive Order 12866 and the Regulatory Flexibility Act (5 U.S.C. 601-612), and the Unfunded Mandates Reform Act of 1995 (Public Law 104-4). Executive Order 12866 directs agencies to assess all costs and benefits of available regulatory alternatives and, when regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety, and other advantages; distributive impacts; and equity). The analysis of costs and benefits of available regulatory alternatives contained in the interim final rule (70 FR 29949 at 29951) is adopted without change in this final rule. By now reaffirming that interim final rule, FDA has not imposed any new requirements. Therefore, there are no additional costs and benefits associated with this final rule. The Regulatory Flexibility Act requires agencies to analyze regulatory options that would minimize any significant impact of a rule on small entities. Because this final rule does not make any changes to the interim final rule or our analysis included therein, the agency certifies that the final rule will not have a significant economic impact on a substantial number of small entities. Section 202(a) of the Unfunded Mandates Reform Act of 1995 requires that agencies prepare a written statement, which includes an assessment of anticipated costs and benefits, before issuing “any rule that includes any Federal mandate that may result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100,000,000 or more (adjusted annually for inflation) in any one year.” The current threshold after adjustment for inflation is $122 million, using the most current
(2005)Implicit Price Deflator for the Gross Domestic Product. FDA does not expect this final rule to result in any 1-year expenditure that would meet or exceed this amount. IV. The Paperwork Reduction Act of 1995 This final rule contains no collections of information. Therefore, clearance by OMB under the Paperwork Reduction Act of 1995 is not required. V. Environmental Impact The agency has determined under 21 CFR 25.30(i) and
(j)that this action is of a type that does not individually or cumulatively have a significant effect on the human environment. Therefore, neither an environmental assessment nor an environmental impact statement is required. VI. Federalism FDA has analyzed this final rule in accordance with the principles set forth in Executive Order 13132. FDA has determined that the rule does not contain policies that have substantial direct effects on the States, on the relationship between the National Government and the States, or on the distribution of power and responsibilities among the various levels of government. Accordingly, the agency has concluded that the rule does not contain policies that have federalism implications as defined in the Executive order and, consequently, a federalism summary impact statement is not required. List of Subjects in 21 CFR Part 1271 Biological Drugs, Communicable diseases, HIV/AIDS, Human cells, tissues, and cellular and tissue-based products, Medical devices, Reporting and recordkeeping requirements. Therefore, under the Public Health Service Act, and under authority delegated to the Commissioner of Food and Drugs, 21 CFR part 1271 is amended as follows: PART 1271—HUMAN CELLS, TISSUES, AND CELLULAR AND TISSUE-BASED-PRODUCTS Accordingly, the interim final rule amending 21 CFR part 1271 which was published at 70 FR 29949 on May 25, 2005, is adopted as a final rule without change. Dated: May 26, 2007. Jeffrey Shuren, Assistant Commissioner for Policy. [FR Doc. E7-11795 Filed 6-18-07; 8:45 am] BILLING CODE 4160-01-S DEPARTMENT OF STATE 22 CFR Part 62 RIN 1400-AC15 [Public Notice 5824] Exchange Visitor Program—Trainees and Interns AGENCY: United States Department of State. ACTION: Interim final rule with request for comment. SUMMARY: The Department is hereby revising its regulations regarding, Trainees and Interns to, among other things, eliminate the distinction between “non-specialty occupations” and “specialty occupations,” establish a new internship program, and modify the selection criteria for participation in a training program. The new regulations also require sponsors to screen, vet, and enter into written agreements with third parties who assist them in recruiting, selecting, screening, orienting, placing, training, or evaluating foreign nationals who participate in training and internship programs. Sponsors must fully complete and secure signatures on a Form DS-7002, Training/Internship Placement Plan (T/IPP) for each trainee and intern prior to issuing a Form DS-2019. The Department adopts no changes to existing flight training regulations. DATES: This rule becomes effective July 19, 2007. The Department will accept comments from the public up to 30 days from June 19, 2007. ADDRESSES: You may submit comments by any of the following methods: • Persons with access to the Internet may also view this notice and provide comments by going to the regulations.gov Web site at: *http://www.regulations.gov/index.cfm.* • *Mail (paper, disk, or CD-ROM submissions):* U.S. Department of State, Office of Exchange Coordination and Designation, SA-44, 301 4th Street, SW., Room 734, Washington, DC 20547. • *E-mail: jexchanges@state.gov.* You must include the RIN (1400-AC15) in the subject line of your message. FOR FURTHER INFORMATION CONTACT: Stanley S. Colvin, Director, Office of Exchange Coordination and Designation, U.S. Department of State, SA-44, 301 4th Street, SW., Room 734, Washington, DC 20547; 202-203-5096 or e-mail at *jexchanges@state.gov.* SUPPLEMENTARY INFORMATION: The U.S. Department of State designates U.S. government, academic, and private sector entities to conduct educational and cultural exchange programs pursuant to a broad grant of authority provided by the Mutual Educational and Cultural Exchange Act of 1961, as amended (Fulbright-Hays Act), 22 U.S.C. 2451 *et seq.* ; the Immigration and Nationality Act, 8 U.S.C. 1101(a)(15)(J); the Foreign Affairs Reform and Restructuring Act of 1998, Public Law 105-277; the Illegal Immigration Reform and Immigrant Responsibility Act (IIRIRA) of 1996, Public Law 104-208, as amended; Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (USA PATRIOT ACT) (Pub. L. 107-56), Sec. 416; the Enhanced Border Security and Visa Entry Reform Act of 2002, Public Law 107-173; and other statutory enactments, Reorganization Plans, and Executive Orders. Under those authorities, designated program sponsors facilitate the entry into the United States of more than 300,000 exchange participants each year, of which approximately 27,000 are trainees. The former United States Information Agency
(USIA)and, as of October 1, 1999, its successor, the U.S. Department of State, have promulgated regulations governing the Exchange Visitor Program. Those regulations appear at 22 CFR part 62. Regulations specifically governing training programs appear at 22 CFR 62.22. These regulations largely have remained unchanged since 1993, when the USIA undertook a major regulatory reform of the Exchange Visitor Program. Since then, the Department and the Government Accountability Office
(GAO)have reviewed the implementation of these regulations. While training programs overall have been highly successful in meeting the goals of the Fulbright-Hays Act, both the Department and the GAO have found there have been occasions where training programs were being misused by some sponsors (e.g.; trainees were actually being used as “employees” and the J visa was being used in lieu of the H visa or as a stepping stone for another longer-term non-immigrant or immigrant classification that may have been unavailable at the time of visa application). In particular, the GAO Report (“Stronger Action Needed to Improve Oversight and Assess Risks of the Summer Work Travel and Trainee Categories of the Exchange Visitor Program,” Report GAO-06-106, October 2005) found that “the potential exists for the Trainee Program to be misused as an employment program. Regulations strictly prohibit the use of the trainee category for ordinary employment purposes, stating in particular that sponsors must not place trainee participants in positions that are filled or would be filled by full-time or part-time employees.” (GAO Report, p. 20). The Department agrees with the GAO on this point. At the same time, the Department recognizes that work is an essential component of on-the-job training, and that in many respects there are no conceptual or legal distinctions between an employee and a trainee. These two perspectives are not inconsistent. While a trainee is performing work as a component of his/her training experience, the work is only a part of the learning program that is designed to enhance the trainee's skills in his/her occupational specialty through exposure to American techniques, methodologies, and expertise. By the same token, the Fulbright-Hays Act and the Exchange Visitor Program regulations were not meant to supply U.S. employers with employees under the guise of being trainees. The legislative and regulatory intent was, and continues to be, that trainees enter the United States, are exposed to American techniques, methodologies, and expertise, gain a better understanding of American culture and society, and then return to their homelands to share that learning with their countrymen. Trainees (and the new sub-category Interns) are not meant to fill positions that are or could be occupied by American workers on a full- or part-time or temporary or permanent basis. Thus, the new regulations contain provisions that will permit the Department more closely to monitor training programs to ensure that they are consistent with the purposes and intent of the Fulbright-Hays Act and are not subject to abuses similar to those it and the GAO found with respect to certain training programs. Also, the 1993 overhaul of the Exchange Visitor Program regulations included a provision governing training programs that distinguished among training in “specialized” occupations, “non-specialized” occupations, and “unskilled” occupations. Time has proven that the distinctions among these three occupational categories are conceptually artificial and do not adequately describe the types of training that the Department desires to promote in the national interest. In that regard, the Department has concluded that it is more *the amount* of prior experience that the trainee has acquired, rather than some artificial categorization of *the type* of training, that should be determinative as to whether the trainee should be permitted to enter the United States for further training. Accordingly, the regulations will require that to be eligible to participate in a training program, trainees must have either
(1)a degree or professional certificate from a post-secondary academic institution outside the United States and at least one year of prior related work experience in their occupational field acquired outside the United States or
(2)five years of work experience outside the United States in their occupational field. This provision ensures that prospective participants have an established connection with their home country at the time of application for participation in a training program. In order to ensure that trainees and interns are sufficiently fluent in English to benefit from and comprehend fully the training being undertaken, the regulations require that they have verifiable English language skills sufficient to function on a day-to-day basis in the training environment. Trainees' and interns' English language skills must be verified by a recognized English language test, by signed documentation from an academic institution or English language school, or through a documented interview conducted by program sponsors or a third party in person, by videoconferencing, or by web camera. The Department will designate training and internship programs in the following occupational categories: Agriculture, Forestry, and Fishing; Arts and Culture; Aviation (subject to the Statement of Policy set forth at 71 **Federal Register** 3913, January 24, 2006); Construction and Building Trades; Education, Social Sciences, Library Science, Counseling and Social Services; Health Related Occupations; Hospitality and Tourism; Information Media and Communications; Management, Business, Commerce and Finance; Public Administration and Law; and the Sciences, Engineering, Architecture, Mathematics, and Industrial Occupations; and such other occupational categories that the Department may from time to time include in training and internship programs. Regulations are being developed that will establish a subcategory of Student Intern within the College and University Students category (§ 62.23) for use by U.S. post-secondary academic institutions. The regulations the Department adopted in 1993 required the completion of structured training plans for trainees [22 CFR 62.22(f) and (g)]. The Department's experience since then, however, has shown that the regulations regarding the content and use of such training plans have not been effective and do not adequately assist the Department in determining whether real training is being provided to the trainee or whether a “boilerplate” structured training plan is truly descriptive of what the individual trainee is actually doing in the workplace. Accordingly, the Department is replacing the existing training plan regulations with new regulations for both training and internship placement plans, which are located at 22 CFR 62.22(i), *Training/Internship Placement Plan (T/IPP)—Form DS-7002.* The Department also recognizes that foreign nationals who are current students at or recent graduates of degree- or certificate-granting post-secondary academic institutions and who have not yet had the opportunity to acquire experience in their academic field may also be interested in pursuing training in the United States. This sub-set of participants has in the past been the source of discussions regarding eligibility and regulatory compliance as the existing training plan requirements and selection criteria do not readily accommodate the inclusion of this significant portion of the population. The Department has concluded that it is in furtherance of the goals of the Fulbright-Hays Act that such current students and recent graduates be permitted and, indeed, encouraged to enter the United States to participate in the Exchange Visitor Program. Accordingly, these regulations create a new intern sub-category within the regulations governing trainees. It is imperative that the new internship program be a true learning experience for the participant, one that is an integral part of the on-going education of the participant and one that is in harmony with what the Congress intended when it enacted the Fulbright-Hays Act. To that end, and based upon the requirements for participation in the training program, the new intern regulations require sponsors to permit foreign nationals who
(1)are currently enrolled in and pursuing studies at a degree-or certificate-granting post-secondary academic institution or
(2)graduated from such an institution no more than 12 months prior to their exchange visitor program begin date to participate in an internship program. Sponsors must ensure that interns have verifiable English language skills sufficient to function on a day-to-day basis in their program environment. Interns may remain in the United States as a participant in a designated internship program for a maximum of 12 months. The training and internship program will also be subject to a number of other sections of the Exchange Visitor Program regulations, including the General Provisions. 22 CFR 62.1 through 62.17. Training programs in the field of agriculture and in the “Hospitality and Tourism” occupational category will be limited to 12 months. The Department is of the view that 12 months is sufficient time to train a person in these occupational fields or categories, especially in light of the fact that, before entering the United States to participate in a training program, trainees must already have either
(1)a degree or professional certificate from a foreign post-secondary academic institution and at least one year of prior related work experience in their occupational field acquired outside the United States or
(2)five years of work experience outside the United States in their occupational field. However, the new regulations also provide that the duration of a training program in the field of agriculture may be up to 18 months if at least six months of the program is classroom participation and studies. Moreover, the Department also recognizes there are training programs in the field of agriculture or in the “Hospitality and Tourism” occupational category that are, in reality, management programs ( *e.g.* , hotel or restaurant management, turf grass management). Such management programs may last up to 18 months. The new regulations give the Department the flexibility to classify such programs under the occupational code of “Management, Business, Commerce, and Finance,” as opposed to “Agriculture” or “Hospitality and Tourism” occupational codes. Training programs in all other occupational categories will have a maximum duration of 18 months. The new regulations also provide that trainees may return to the United States for additional training. Should a trainee wish to enter the United States for advanced training or for training in a different field, they may do so as long as they meet the selection criteria and have been absent from the United States for no less than two years after the completion of their initial training program. The new regulations substantially change the former provisions dealing with the obligations of program sponsors and any third parties—either domestic or overseas—with whom sponsors contract to assist them in recruiting, selecting, screening, orienting, placing, training, or evaluating foreign nationals who participate in training and internship programs. The regulations require sponsors to enter into a written agreement with third parties outlining the full relationship between the parties on all matters involving the Exchange Visitor Program. Third parties must provide a Dun & Bradstreet identification number. At the recommendation of industry comments, the Department is also changing its regulations to require sponsors to screen and vet all third parties. Sponsors often contract with third parties operating outside the United States to recruit, select, or screen program participants. The regulations require sponsors to vet such third parties to ensure that they are legitimate businesses in the context of their home country. A wide range of U.S. businesses and governmental or non-governmental entities host participants in training and internship programs on behalf of sponsors. These regulations set baseline standards to which sponsors are required to adhere to ensure that such host organizations are legitimate entities, are appropriately registered or licensed to conduct their activities in their jurisdiction, and possess and maintain the ability and resources to provide structured and guided work-based experience according to individualized T/IPPs. In some instances, sponsors also will be required to conduct a site visit of the host organization's training location. The goal of the sponsor in vetting host organizations is to collect sufficient evidence to support a finding that participants are properly placed with host organizations that meet these standards. Finally, the regulations prohibit sponsors from placing trainees or interns in unskilled or casual labor positions, in positions that require or involve child care or elder care, or in any kind of position that involves patient care or contact. Further, sponsors must not place trainees or interns in positions that involve more than 20 per cent clerical work during their programs. Analysis of Comments The Department received a total of 1,591 comments on the proposed trainee and intern regulations set forth at 22 CFR 62.22 and published in the **Federal Register** on April 7, 2006. Of this total, 1,332 responses were identical form letters encouraged through writing campaigns directed by either the Alliance for International Educational and Cultural Exchange or by German and French academic institutions and organizations with ties to the Exchange Visitor Program. The remaining 259 responses were from Exchange Visitor Program sponsors and the general public. The commenting parties addressed the following issues: Section 62.22(d)(2) received 1,580 comments, of which all were opposed to the change and recommended that the Department allow post-secondary students to participate in the Intern category. The Department concurs and has amended the definition of an Intern to include post-secondary students. Section 62.22(d)(3) received 705 comments, of which all were opposed to the change. Due to the difficulty limiting testing and tying a score to one type of English proficiency test, the Department has eliminated the TOEFL requirement and amends the regulations to require sponsors to conduct a thorough screening of potential trainees or interns, including a documented interview in-person, by videoconference, or by web camera. Section 62.22(e) and (e)(1) received three comments, of which all were opposed to the change with the opinion that trainees and interns receive stipends and do not need the additional screening. The Department has determined that the financial screening of an applicant and having a Training/Internship Placement Plan in place is critical to a successful program and therefore upholds the requirement as outlined in Section (e). Section 62.22(f)(1)(ix) received four comments, of which all were opposed to the change which required certification by agricultural programs to meet the Fair Labor Standards Act. The Department adopts this change and has incorporated the certification on the Training/Internship Placement Plan (Form DS-7002). Section 62.22(f)(2) received 426 comments, of which all were opposed to the change. Several parties, however, recommended allowing a Third Party to conduct the interview. The Department has reviewed the comments and agrees to allow a third party to conduct the initial screening as identified in a third-party agreement with the sponsor. Section 62.22(f)(2)(v) received 662 comments, of which all were opposed to the three year experience requirement for trainees. The Department has reviewed all comments and has redefined the experience requirements for trainees and interns. Section 62.22(g)(1) received 389 comments, of which all were opposed to the change, but, however, recommended implementation of careful vetting requirements by sponsors. The Department adopts the requirement for site visits to host organizations; however amends the requirement to host organizations that have not previously participated successfully in the sponsor's training or internship programs and that have fewer than 25 employees or less than three million dollars in annual revenue. Section 62.22(g)(2) received 377 comments, of which all were opposed to the change and recommended elimination of this requirement. The Department concurs and eliminates this requirement. Section 62.22(g)(4) received six comments, of which all were opposed to the change and recommended clarification of the arrival date versus program begin date. The Department amends this requirement to require training and internship sponsors to ensure that trainees and interns are appropriately selected, placed, oriented, supervised and evaluated. Section 62.22(j)(2) received two comments, both of which were opposed to the change and recommended that the Department not define a percentage of time. The Department upholds and adopts this requirement. Section 62.22(k) received 392 comments, of which all were opposed to the change regarding the duration of training and internship programs in the occupational fields of agriculture and hospitality. The Department is of the view that 12 months is sufficient time to train a person in these occupational fields or categories, especially in light of the fact that, before entering the United States to participate in a training program, trainees must already have either
(1)a degree or professional certificate from a foreign post-secondary academic institution and at least one year of prior related work experience in their occupational field acquired outside the United States or
(2)five years of work experience outside the United States in their occupational field. Therefore, the Department adopts the duration of program participation as outlined in 62.22(k). Section 62.22(l) received one favorable comment. Section 62.22(n) received 22 comments, of which all were opposed to the repeat participation requirement. The Department has taken the comments into consideration and has amended the section to permit interns to participate in additional internship programs as long as they maintain student status or begin a new internship program within 12 months of graduation. Trainees are eligible for additional training programs after a period of at least two years residency outside the United States following their initial training program. Section 62.22(o) received six comments, of which all were opposed to the change and recommended rewriting this section. The Department has decided not to make any changes to this section at this time. Section 62.22 received eight comments requesting elimination of the requirement that Internships be directly related to an Intern's field of study. The Department has reviewed the comments and upholds the requirement as defined. Section 62.22 received ten comments stating that the proposed regulations will negatively impact U.S. students. The Department has reviewed all comments and finds that the new definition of an Intern, as defined in this Interim Final Rule, will help alleviate the negative impact on U.S. students abroad. Section 62.22 received six comments requesting the reinstatement of “Counseling and Social Services” in the list of occupational categories. The elimination of the occupational categories of Counseling and Social Services in the proposed rule was an oversight and has been reinstated in the Interim Final Rule. The Department recognizes the concerns regarding eligibility and monitoring of trainees and interns and therefore adopted several of the suggested changes as appropriate. Administrative Procedure Act, Unfunded Mandates Reform Act of 1995, and Small Business Regulatory Enforcement Fairness Act of 1996 The Department originally published this rulemaking as a Proposed Rule, with a 60-day comment period (See: 71 **Federal Register** 177768, April 7, 2006). Some 1,591 comments were received and analyzed and a number of the suggestions made in the comments have been incorporated in this Interim Final Rule. This rule is issued on an interim final basis as an accommodation to the Department's designated sponsor community. This approach will provide the opportunity for straightforward amendment of regulatory language, if necessary, but will also permit this rule to be implemented in a timely manner. This rulemaking process has been conducted without prejudice to whether it involves a foreign affairs function of the United States exempt from the requirements of 5 U.S.C. 553 and without prejudice to whether the Department may invoke that exemption in other contexts. This Interim Rule has been found not to be a major rule within the meaning of the Small Business Regulatory Enforcement Fairness Act of 1996. It will not have a substantial effect on the States, the relationship between the National Government and the States, or on the distribution of power and responsibilities among the various levels of government. Therefore, it has been determined that the Interim Final Rule does not have sufficient federalism implications to warrant application of the consultation provisions of Executive Orders 12372 and 13132. Regulatory Flexibility Act/Executive Order 13272: Small Business In its April 7, 2006 promulgation of the Proposed Rule, 71 **Federal Register** 177768, the Department certified that the proposed changes to the regulations were not expected to have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act, 5 U.S.C. 601 through 612, and Executive Order 13272, section 3(b). By letter dated May 30, 2006, the Office of Advocacy of the Small Business Administration opined that the Department's certification lacked a factual basis in that the Proposed Rule, if adopted as written, could have significant impact on a substantial number of small entities, in particular, nine flight training schools that utilize the J visa. After receiving and analyzing the aforementioned 1,591 comments and after consultation with affected stakeholders, a number of changes have been made to the proposed regulation. With respect to the flight training schools, the Department has decided to make no changes to existing regulations governing flight training in this Interim Final Rule. Therefore, the changes proposed in this Rule do not impact such schools. After revising the Proposed Rule, the Department again reviewed the regulations being promulgated in this Interim Final Rule in order to determine if they would potentially have a significant economic impact on any other small entities utilizing the J visa. Other than those comments received from flight training sponsors, no other comments asserted potential significant economic impact on small entities. Accordingly, the Department has determined and hereby certifies that the Interim Final Rule is not expected to have an economic impact on a substantial number of small entities. In cases where a rulemaking involves a foreign affairs function, the rulemaking is not subject to 5 U.S.C. 553, and therefore is not subject to sections 603 and 604 of the Regulatory Flexibility Act, 5 U.S.C. sections 601 through 612, or section 3(b) of Executive Order 13272. In this case, the Department's certification concerning impact on small entities is made without prejudice to whether this rulemaking involves a foreign affairs function of the United States exempt from the Regulatory Flexibility Act and without prejudice to whether the Department may invoke that exemption in any other contexts. Executive Order 12866 The Department of State does not consider this Interim Final Rule to be a “significant regulatory action” under Executive Order 12866, section 3(f), Regulatory Planning and Review. In addition, the Department is exempt from Executive Order 12866 except to the extent that it is promulgating regulations in conjunction with a domestic agency that are significant regulatory actions. The Department has nevertheless reviewed the Interim Final Rule to ensure its consistency with the regulatory philosophy and principles set forth in that Executive Order. Executive Order 12988 The Department has reviewed this Interim Final Rule in light of sections 3(a) and 3(b)(2) of Executive Order 12988 to eliminate ambiguity, minimize litigation, establish clear legal standards, and reduce burden. Paperwork Reduction Act The information collection requirements contained in this rulemaking (Form DS-7002) have been approved by the Office of Management and Budget pursuant to the Paperwork Reduction Act, 44 U.S.C. Chapter 35, under OMB Control Number 1405-0170, expiration date: 07/31/2009. The Proposed Rule for Trainees and Interns, published 4/07/2006, stated in its PRA section that the Department would develop and publish a new form (Form DS-7002—Training/Internship Placement Plan). This form was designed and developed and a Notice of request for public comment was published. The proposed data collection and Form DS-7002 published in the **Federal Register** on 06/01/2006. The Notice directed that all comments and questions be directed to OMB. Final approval of the form and data collection was issued on 07/31/2006. List of Subjects in 22 CFR Part 62 Cultural exchange programs, Reporting and recordkeeping requirements. Accordingly, 22 CFR part 62 is amended as follows: PART 62—EXCHANGE VISITOR PROGRAM 1. The authority citation for part 62 is revised to read as follows: Authority: 8 U.S.C. 1101(a)(15)(J), 1182, 1184, 1258, 1372 (2001), 1701-1775 (2002); 22 U.S.C. 1431-1442, 2451-2460; 6501 (1998); 5 U.S.C. app. § 1-11 (1977); Reorganization Plan No. 2 of 1977, 3 CFR, 1977 Comp. p. 200; E.O. 12048 of March 27, 1978; 3 CFR, 1978 Comp. p. 168. 2. Section 62.2 is amended by removing the definitions for “Non-specialty occupation” and “Specialty occupation” and by adding the following definitions for “Clerical”, “Host Organization”, “Intern”, “Internship Program”, “Staffing Agency”, “Trainee”, and “Training Program”, to read as follows: § 62.2 Definitions *Clerical* —means routine administrative work generally performed in an office or office-like setting, such as data entry, filing, typing, mail sorting and distribution, and other general office tasks. *Host Organization* —means a in the United States that conducts training or internship programs on behalf of designated program sponsors pursuant to an executed written agreement between the two parties. *Intern* —means a foreign national who either
(1)Is currently enrolled in and pursuing studies at a degree- or certificate-granting post-secondary academic institution outside the United States or
(2)Graduated from such an institution no more than 12 months prior to his/her exchange visitor program begin date, and who enters the United States to participate in a structured and guided work-based internship program in his/her specific academic field. *Internship Program* —means a structured and guided work-based learning program as set forth in an individualized Training/Internship Placement Plan (T/IPP) that reinforces a student's or recent graduate's academic study, recognizes the need for work-based experience, provides on-the-job exposure to American techniques, methodologies, and expertise, and enhances the Intern's knowledge of American culture and society. *Staffing/Employment Agency* —means a U.S. business that hires individuals for the express purpose of supplying workers to other businesses. Typically, the other businesses with which workers are placed pay an hourly fee per employee to the Staffing/Employment Agency, of which the worker receives a percentage. *Trainee* —means a foreign national who has either:
(1)A degree or professional certificate from a foreign post-secondary academic institution and at least one year of prior related work experience in his/her occupational field acquired outside the United States, or
(2)Five years of work experience outside the United States in his/her occupational field, and who enters the United States to participate in a structured and guided work-based training program in his/her specific occupational field. *Training Program* —means a structured and guided work-based learning program set forth in an individualized Trainee/Internship Placement Plan (T/IPP) that enhances both a trainee's understanding of American culture and society and his/her skills in his/her occupational field through exposure to American techniques, methodologies, and expertise. 3. Section 62.22 is revised to read as follows: § 62.22 Trainees and interns.
(a)*Introduction.* These regulations govern Exchange Visitor Programs under which foreign nationals have the opportunity to receive training in the United States. These regulations also establish a new internship program under which foreign nationals who:
(1)Are currently enrolled in and pursuing studies at a degree- or certificate-granting post-secondary academic institution outside the United States or
(2)Graduated from such an institution no more than 12 months prior to their exchange visitor program begin date may enter the United States to obtain work-based learning to build on their academic experience by developing practical skills. Regulations dealing with training opportunities for certain foreign students who are studying at post-secondary accredited educational institutions in the United States are located at § 62.23 (“College and University Students”). Regulations governing alien physicians in graduate medical education or training are located at § 62.27 (“Alien Physicians”).
(b)*Purpose.* (1)(i) The primary objectives of the programs offered under these regulations are to enhance the skills and expertise of exchange visitors in their academic or occupational fields through participation in structured and guided work-based training and internship programs and to improve participants' knowledge of American techniques, methodologies, and expertise. Such training and internship programs are also intended to increase participants' understanding of American culture and society and to enhance Americans' knowledge of foreign cultures and skills through an open interchange of ideas between participants and their American associates. A key goal of the Fulbright-Hays Act, which authorizes these programs, is that participants will return to their home countries and share their experiences with their countrymen.
(ii)Exchange Visitor Program training and internship programs must not be used as substitutes for ordinary employment or work purposes; nor may they be used under any circumstances to displace American workers. The requirements in these regulations for trainees are designed to distinguish between *bona fide* training, which is permitted, and merely gaining additional work experience, which is not permitted. The requirements in these regulations for interns are designed to distinguish between a period of work-based learning in the intern's academic field, which is permitted, and unskilled labor, which is not.
(2)In addition, a specific objective of the new internship program is to provide foreign nationals who are currently enrolled in and pursuing studies at a degree- or certificate-granting post-secondary academic institution or graduated from such an institution no more than 12 months prior to their exchange visitor program begin date a period of work-based learning to allow them to develop practical skills that will enhance their future careers. Bridging the gap between formal education and practical work experience and gaining substantive cross-cultural experience are major goals in educational institutions around the world. By providing training opportunities for current foreign students and recent foreign graduates at formative stages of their development, the U.S. Government will build partnerships, promote mutual understanding, and develop networks for relationships that will last through generations as these foreign nationals move into leadership roles in a broad range of occupational fields in their own societies. These results are closely tied to the goals, themes, and spirit of the Fulbright-Hays Act.
(c)*Designation.*
(1)The Department may, in its sole discretion, designate as sponsors entities meeting the eligibility requirements set forth in Subpart A of 22 CFR Part 62 and satisfying the Department that they have the organizational capacity successfully to administer and facilitate training and internship programs.
(2)Sponsors must provide training and internship programs only in the occupational category or categories for which the Department has designated them as sponsors. The Department will designate training and internship programs in any of the following occupational categories:
(i)Agriculture, Forestry, and Fishing;
(ii)Arts and Culture;
(iii)Aviation;
(iv)Construction and Building Trades;
(v)Education, Social Sciences, Library Science, Counseling and Social Services;
(vi)Health Related Occupations;
(vii)Hospitality and Tourism;
(viii)Information Media and Communications;
(iv)Management, Business, Commerce and Finance;
(x)Public Administration and Law; and
(xi)The Sciences, Engineering, Architecture, Mathematics, and Industrial Occupations.
(d)*Selection Criteria.*
(1)In addition to satisfying the general requirements set forth in § 62(10)(a), sponsors must ensure that trainees and interns have verifiable English language skills sufficient to function on a day-to-day basis in their training environment. English language proficiency must be verified by a recognized English language test, by signed documentation from an academic institution or English language school, or through an interview conducted by the sponsor, or an in-person, by videoconference, or by web camera.
(2)Sponsors of training programs must verify that all potential trainees are foreign nationals who have either a degree or professional certificate from a foreign post-secondary academic institution and at least one year of prior related work experience in their occupational field acquired outside the United States or five years of work experience outside the United States in their occupational field.
(3)Sponsors of internship programs must verify that all potential interns are foreign nationals who are currently enrolled in and pursuing studies at a degree-or certificate-granting post-secondary academic institution outside the United States or graduated from such an institution no more than 12 months prior to their exchange visitor program begin date.
(e)*Issuance of Forms DS-2019.* In addition to the requirements set forth in Subpart A, sponsors must ensure that:
(1)They do not issue Forms DS-2019 to potential participants in training and internship programs until they secure placements for trainees or interns and complete and secure requisite signatures on Form DS-7002, Training/Internship Placement Plan (T/IPP or Forms DS-7002);
(2)Trainees and interns have sufficient finances to support themselves for their entire stay in the United States, including housing and living expenses; and
(3)The training and internship programs expose participants to American techniques, methodologies, and expertise and expand upon the participants' existing knowledge and skills. Programs must not duplicate the participants' prior work experience or training received elsewhere.
(f)*Obligations of Training and Internship Program Sponsors.*
(1)Sponsors designated by the Department to administer training and internship programs must:
(i)Ensure that trainees and interns are appropriately selected, placed, oriented, supervised, and evaluated;
(ii)Be available to trainees and interns (and host organizations, as appropriate) to assist as facilitators, counselors, and information resources;
(iii)Ensure that training and internship programs provide a balance between the trainees' and interns' learning opportunities and their contributions to the organizations in which they are placed;
(iv)Ensure that the training and internship programs are full-time (minimum of 32 hours a week); and
(v)Ensure that any host organizations and third parties involved in the recruitment, selection, screening, placement, orientation, evaluation for, or the provision of training and internship programs are sufficiently educated on the goals, objectives, and regulations of the Exchange Visitor Program and adhere to all regulations set forth in this Part as well as all additional terms and conditions governing Exchange Visitor Program administration that the Department may from time to time impose.
(2)Sponsors must ensure that they or any host organization acting on the sponsor's behalf:
(i)Have sufficient resources, plant, equipment, and trained personnel available to provide the specified training and internship program;
(ii)Provide continuous on-site supervision and mentoring of trainees and interns by experienced and knowledgeable staff;
(iii)Ensure that trainees and interns obtain skills, knowledge, and competencies through structured and guided activities such as classroom training, seminars, rotation through several departments, on-the-job training, attendance at conferences, and similar learning activities, as appropriate in specific circumstances;
(iv)Conduct periodic evaluations of trainees and interns, as set forth in § 62.22(l);
(v)Do not displace full-or part-time or temporary or permanent American workers or serve to fill a labor need and ensure that the positions that trainees and interns fill exist solely to assist trainees and interns in achieving the objectives of their participation in training and internship programs; and
(vi)Certify that training and internship programs in the field of agriculture meet all the requirements of the Fair Labor Standards Act, as amended (29 U.S.C. 201 *et seq.* ) and the Migrant and Seasonal Agricultural Worker Protection Act, as amended (29 U.S.C. 1801 *et seq.* ).
(3)Sponsors or any third parties acting on their behalf must conduct a thorough screening of potential trainees or interns, including a documented interview in-person, by videoconference, or by web camera.
(4)Sponsors must retain all documents referred to in § 62.22(f) for at least three years following the completion of all training and internship programs. Documents and any requisite signatures may be retained in either hard copy or electronic format.
(g)*Use of Third Parties* —
(1)*Sponsors Use of Third Parties.* Sponsors may engage third parties (including, but not limited to host organizations, partners, local businesses, governmental entities, academic institutions, and other foreign or domestic agents) to assist them in the conduct of their designated training and internship programs. Such third parties must have an executed written agreement with the sponsor to act on behalf of the sponsor in the conduct of the sponsor's program. This agreement must outline the full relationship between the sponsor and third party on all matters involving the administration of their exchange visitor program. A sponsor's use of a third party does not relieve the sponsor of its obligations to comply with and to ensure third party compliance with Exchange Visitor Program regulations. Any failure by any third party to comply with the regulations set forth in this Part or with any additional terms and conditions governing Exchange Visitor Program administration that the Department may from time to time impose will be imputed to the sponsor.
(2)*Screening and Vetting Third Parties Operating Outside the United States.* U.S. sponsors must ascertain that third parties operating outside the United States are legitimate entities within the context of their home country environment. For third parties that operate as businesses, sponsors must obtain relevant home country documentation, such as business registration or certification, and Dun & Bradstreet identification numbers. Written agreements between sponsors and third parties operating outside the United States must include an annually updated price list for training and internship programs offered by each third party, and must ensure that such overseas third parties are sufficiently trained in all aspects of the programs they represent, including the regulations set forth in this Part.
(3)*Screening and Vetting Host Organizations.* Sponsors must adequately screen all potential host organizations at which a trainee or intern will be placed by obtaining the following information:
(i)The Dun & Bradstreet identification number (unless the host organization is an academic institution, government entity, or family farm);
(ii)Employer Identification Number
(EIN)used for tax purposes;
(iii)Verification of telephone number, address, and professional activities via advertising, brochures, Web site, and/or feedback from prior participants; and
(iv)Verification of Workman's Compensation Insurance Policy.
(4)*Site Visits of Host Organizations.* Sponsors must conduct site visits of host organizations that have not previously participated successfully in the sponsor's training and internship programs and that have fewer than 25 employees or less than three million dollars in annual revenue. Placements at academic institutions or at federal, state, or local government offices are specifically excluded from this requirement. The purpose of the site visits is for the sponsors to ensure that host organizations possess and maintain the ability and resources to provide structured and guided work-based learning experiences according to the individualized T/IPPs and that host organizations understand and meet their obligations set forth in this Part.
(h)*Host Organization Obligations.* Sponsors must ensure that:
(1)Host organizations sign a completed Form DS-7002 to verify that all placements are appropriate and consistent with the objectives of the trainees or interns as outlined in their program applications and as set forth in their T/IPPs. All parties involved in internship programs should recognize that interns are seeking entry-level training and experience. Accordingly, all placements must be tailored to the skills and experience level of the individual intern;
(i)Host organizations notify sponsors promptly of any concerns about, changes in, or deviations from T/IPPs during training and internship programs and contact sponsors immediately in the event of any emergency involving trainees or interns;
(ii)Host organizations abide by all Federal, State, and Local occupational health and safety laws; and
(iii)Host organizations abide by all program rules and regulations set forth by the sponsor, including the completion of all mandatory program evaluations.
(i)*Training/Internship Placement Plan (Form DS-7002).*
(1)Sponsors must fully complete and obtain requisite signatures for a Form DS-7002 for each trainee or intern before issuing a Form DS-2019. Sponsors must provide each signatory an executed copy of the Form DS-7002. Upon request, trainees and interns must present their fully executed Form DS-7002 to a Consular Official during their visa interview.
(2)To further distinguish between bona fide training for trainees or work-based learning for interns, which are permitted, and ordinary employment or unskilled labor which are not, all T/IPPs must
(i)State the specific goals and objectives of the training and internship program (for each phase or component, if applicable);
(ii)Detail the knowledge, skills, or techniques to be imparted to the trainee or intern (for each phase or component, if applicable); and
(iii)Describe the methods of performance evaluation and the supervision for each phase or component, if applicable.
(3)A T/IPP for trainees must be divided into specific and various phases or components, and for each phase or component must
(i)Describe the methodology of training and
(ii)Provide a chronology or syllabus.
(4)A T/IPP for interns must:
(i)Describe the role of the intern in the organization and, if applicable, identify various departments or functional areas in which the intern will work and
(ii)Identify the specific tasks and activities the intern will complete.
(j)*Program Exclusions.* Sponsors designated by the Department to administer training and internship programs must not:
(1)Place trainees or interns in unskilled or casual labor positions, in positions that require or involve child care or elder care, or in clinical or any other kind of work that involves patient care or contact, including any work that would require trainees or interns to provide therapy, medication, or other clinical or medical care ( *e.g.* , sports or physical therapy, psychological counseling, nursing, dentistry, veterinary medicine, social work, speech therapy, or early childhood education);
(2)Place trainees or interns in positions, occupations, or businesses that could bring the Exchange Visitor Program or the Department into notoriety or disrepute; or
(3)Engage or otherwise cooperate or contract with a Staffing/Employment Agency to recruit, screen, orient, place, evaluate, or train trainees or interns, or in any other way involve such agencies in an Exchange Visitor Program training and internship program.
(4)Designated sponsors must ensure that the duties of trainees or interns as outlined in the T/IPPs will not involve more than 20 per cent clerical work, and that all tasks assigned to trainees or interns are necessary for the completion of training and internship program assignments.
(5)Sponsors must also ensure that all “Hospitality and Tourism” training and internship programs of six months or longer contain at least three departmental or functional rotations.
(6)Place interns in the field of aviation.
(k)*Duration.* The duration of a trainee's or intern's participation in a training and internship program must be established before a sponsor issues a Form DS-2019. Except as noted below, the maximum duration of a training program is 18 months, and the maximum duration of an internship programs is 12 months. For training programs in the field of agriculture and in the “Hospitality and Tourism” occupational category, the maximum duration is 12 months. Training programs in the field of agriculture are permitted to last a total of 18 months, if in development of the T/IPP the additional six months of the program consists of classroom participation and studies. Program extensions are permitted within maximum durations as long as the need for an extended training and internship program is documented by the full completion and execution of a new Form DS-7002.
(l)*Evaluations.* In order to ensure the quality of training and internship programs, sponsors must develop procedures for evaluating all trainees and interns. All required evaluations must be completed prior to the conclusion of a training and internship program, and both the trainees and interns and their immediate supervisors must sign the evaluation forms. For programs exceeding six months' duration, at a minimum, midpoint and concluding evaluations are required. For programs of six months or less, at a minimum, concluding evaluations are required. Sponsors must retain trainee and intern evaluations (electronic or hard copy) for a period of at least three years following the completion of each training and internship program.
(m)*Issuance of Certificate of Eligibility for Exchange Visitor (J-1) Status.* Sponsors must not deliver or cause to be delivered any Certificate of Eligibility for Exchange Visitor (J-1) Status (Form DS-2019) to potential trainees or interns unless the individualized Form DS-7002 required by § 62.22(i) has been completed and signed by all requisite parties.
(n)*Additional Training and Internship Program Participation.* Foreign nationals who enter the United States under the Exchange Visitor Program to participate in training and internship programs are eligible to participate in additional training and internship programs under certain conditions. For both trainees and interns, additional training and internship programs must address the development of more advanced skills or a different field of expertise. Interns may participate in additional internship programs as long as they maintain student status or begin a new internship program within 12 months of graduation. Trainees are eligible for additional training programs after a period of at least two years residency outside the United States following their initial training program. Participants who have successfully completed internship programs and no longer meet the selection criteria for internship programs may participate in a training program after a two-year period of residency outside the United States following their internship program. As long as participants meet the selection criteria and fulfill these conditions, there is no limit to the number of times they may participate in a training and internship program.
(o)*Flight Training.*
(1)The Department will consider the application for designation of a flight training program if such programs comply with the above regulations, and, additionally:
(i)Is, at the time of making said application, a Federal Aviation Administration certificated pilot school pursuant to title 14 CFR part 141; and
(ii)At the time of making said application is accredited as an flight training program by an accrediting agency which is listed in the current edition of the U.S. Department of Education's “Nationally Recognized Accrediting Agencies and Associations,” or is accredited as a flight training program by a member of the Council on Postsecondary Accreditation; or
(iii)At the time of making said application has formally commenced the accreditation process with an accrediting agency which is listed in the current edition of the U.S. Department of Education's “Nationally Recognized Accrediting Agencies and Associations,” or with a member of the Council on Postsecondary Accreditation. If the application for designation is approved, such designation will be for up to 12 months duration, with continued designation thereafter conditioned upon completion of the accreditation process.
(2)Notwithstanding the provisions of § 62.22(k), the maximum period of participation for exchange visitors in designated flight training programs must not exceed 24 months total. Any request for extension of time in excess of that authorized under this subsection must be made in accordance with § 62.43.
(3)For purposes of meeting the evaluation requirements set forth in § 62.22(m), sponsors and/or third parties conducting the training may utilize the same training records as are required by the Federal Aviation Administration to be maintained pursuant to 14 CFR 141.101. Dated: March 12, 2007. Stanley S. Colvin, Director, Office of Exchange Coordination and Designation, Bureau of Educational and Cultural Affairs, Department of State. [FR Doc. E7-11703 Filed 6-18-07; 8:45 am] BILLING CODE 4710-05-P DEPARTMENT OF DEFENSE Office of the Secretary 32 CFR Part 75 [DoD-2007-OS-0047] Conscientious Objectors AGENCY: Department of Defense. ACTION: Final rule. SUMMARY: This document removes part 75, “Conscientious Objectors” presently in Title 32 of the Code of Federal Regulations. The document on which this part was based has been revised and is limited only to DoD personnel management matters, affects only DoD military personnel, and has no impact on the public. DATES: *Effective Date:* June 19, 2007. FOR FURTHER INFORMATION CONTACT: CDR Lesa J. Kirsch, 703-697-4959. SUPPLEMENTARY INFORMATION: This part 75 is removed as a part of a DoD exercise to remove CFR parts no longer required to be codified. The corresponding DoD Instruction 1300.06 is available at *http://www.dtic.mil/whs/directives.* List of Subjects in 32 CFR Part 75 Conscientious objectors, Military personnel. PART 75—[REMOVED] Accordingly, by the authority of 10 U.S.C. 301, 32 CFR part 75 is removed. Dated: June 11, 2007. C.R. Choate, Alternate OSD Federal Register Liaison Officer, Department of Defense. [FR Doc. 07-2985 Filed 6-18-07; 8:45 am]
Connectionstraces to 33
Traces to 33 documents
27 references not yet in our index
  • 22 CFR 121
  • 15 CFR 742
  • 15 CFR 743
  • 15 CFR 744
  • Pub. L. 106-387
  • Pub. L. 107-56
  • Pub. L. 108-11
  • 117 Stat. 559
  • Pub. L. 106-508
  • 15 CFR 748
  • 15 CFR 750
  • 20 CFR 404
  • Pub. L. 104-193
  • Pub. L. 108-203
  • 118 Stat. 509
  • 21 CFR 74
  • 728 F.2d 322
  • 21 CFR 1271
  • 5 USC 601-612
  • Pub. L. 104-4
  • 22 CFR 62
  • Pub. L. 105-277
  • Pub. L. 104-208
  • Pub. L. 107-173
  • 22 USC 1431-1442
  • 14 CFR 141
  • 32 CFR 75
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Fed. Reg.Notices
U.S.C.§ 3501
Fed. Reg.Notices
Fed. Reg.Proposed Rules
U.S.C.§ 553
U.S.C.§ 601
U.S.C.§ 1701
U.S.C.§ 2510
U.S.C.§ 3201
F. App'x728 F.2d 322
Cite22 CFR 121
Cite15 CFR 742
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