Removal of Commercial Communications Satellites and Related Items from the Department of Commerce's Commerce Control List for Retransfer to the Department of State's United States Munitions List

DEPARTMENT OF COMMERCE

Bureau of Export Administration

15 CFR parts 734, 740, 742, 752, 772, and 774.

[Docket No. 990311067-9067-01]

RIN: 0694-AB84

Removal of Commercial Communications Satellites and Related Items

from the Department of Commerce's Commerce Control List for Retransfer

to the Department of State's United States Munitions List

AGENCY: Bureau of Export Administration, Commerce.

ACTION: Final rule.

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SUMMARY: The Bureau of Export Administration (BXA) is amending the

Export Administration Regulations (EAR) by removing commercial

communications satellites and related items from the Commerce Control

List (CCL) and retransferring these items to the United States

Munitions List (USML). This regulation shall not apply to any export

license issued by the Department of Commerce before March 15, 1999, or

to any export license application filed under the Export Administration

Regulations on or before March 14, 1999, and subsequently issued by the

Department of Commerce.

DATES: This rule is effective March 15, 1999.

FOR FURTHER INFORMATION CONTACT: James A. Lewis, Office of Strategic

Trade and Foreign Policy Controls, Bureau of Export Administration,

Telephone: (202) 482-4196.

SUPPLEMENTARY INFORMATION:

Background

On October 17, 1998, the President signed the Strom Thurmond

National Defense Authorization Act for Fiscal Year 1999 (Pub. L. 105-

261), which requires all satellites and related items on the Commerce

Control List of the EAR be retransferred to the USML and controlled

under Section 38 of the Arms Export Control Act. The Act defined

``related items'' to mean, ``satellite fuel, ground support equipment,

test equipment, payload adapter or interface hardware, replacement

parts, and non-embedded solid propellant orbit transfer engines.'' This

retransfer reverses Presidential decisions shifting commercial

communications satellites (COMSATS) from the jurisdiction of the

Department of State to the Department of Commerce. Further, section

1514(a)(3) of the Act mandates that in the event of the failure of a

launch from a foreign country of a satellite of United States origin,

the activities of United States persons or entities in connection with

any subsequent investigation of the failure are subject to the controls

established under section 38 of the Arms Export Control Act, including

requirements for licenses issued by the Secretary of State for

participation in that investigation.

In accordance with the FY 1999 National Defense Authorization Act,

this regulation returns COMSATS and related items to the jurisdiction

of the Department of State. However, the international space station,

which is controlled under the same entry on the CCL as COMSATS, remains

subject to the jurisdiction of the Department of Commerce. Items

specific to the international space station transferred to the

Department of Commerce by commodity jurisdiction action and controlled

under ECCN 9A004 also remain subject to Department of Commerce

jurisdiction. All other commodities and software for ``spacecraft''

previously transferred by commodity jurisdiction will be reviewed in

light of this rule. BXA will be contacting persons who have received

commodity classifications that are affected by this change. In

addition, entries on the CCL containing items that are ``space-

qualified'' will be reviewed within 30 days of this retransfer to

determine the appropriate jurisdiction and may result in a rule change.

The effective date for the retransfer of jurisdiction of COMSATS

from the Department of Commerce to the Department of State is March 15,

1999. In accordance with the FY 1999 National Defense Authorization

Act, this retransfer shall not affect any export license issued before

March 15, 1999, or any export license application filed under the

Export Administration Regulations on or before March 14, 1999, and

subsequently issued by the Department of Commerce. COMSATS licensed by

the Department of Commerce, including those already exported, remain

subject to the EAR and all terms and conditions of issued export

licenses until their stated expiration date. Although this rule

eliminates SI controls for items listed in ECCN 9A004, all Department

of Commerce issued COMSAT licenses, including licenses issued after

March 15, 1999, remain subject to SI controls throughout the validity

of the license.

Although the Export Administration Act (EAA) expired on August 20,

1994, the President invoked the International Emergency Economic Powers

Act and continued in effect the EAR, and to the extent permitted by

law, the provisions of the EAA, as amended, in Executive Order 12924 of

August 19, 1994, as extended by the President's notices of August 15,

1995 (60 FR 42767), August 14, 1996 (61 FR 42527) August 13, 1997 (62

FR 43629) and August 13, 1998 (63 FR 44121).

Rule Making Requirements

1. This final rule has been determined to be significant for

purposes of E.O. 12866.

2. Notwithstanding any other provision of law, no person is

required to respond to nor be subject to a penalty for failure to

comply with a collection of information subject to the requirements of

the Paperwork Reduction Act unless that collection of information

displays a current valid OMB Control Number. This regulation involves

collections previously approved by the Office of Management and Budget

under control numbers 0694-0088, ``Multi-Purpose Application,'' which

carries a burden hour estimate of 45 minutes per manual submission and

40 minutes per electronic submission. In addition, miscellaneous and

recordkeeping activities account for 12 minutes per submission. In

Fiscal Year 1997, there were 12 applications submitted for exports of

commercial communications satellites. As a result, the paper work

burden on the public is reduced by 11 hours on an annual basis.

3. This rule does not contain policies with Federalism implications

sufficient to warrant preparation of a Federalism assessment under

Executive Order 12612.

4. The provisions of the Administrative Procedure Act requiring

notice of proposed rule making, the opportunity for public

participation, and a delay in effective date, are inapplicable because

this regulation involves a military or foreign affairs function of the

United States (see 5

[[Page 13339]]

U.S.C. 553(a)(1)). Further, no other law requires that a notice of

proposed rule making and an opportunity for public comment be given for

this rule. Because a notice of proposed rule making and opportunities

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 inapplicable.

Therefore, this regulation is issued in final form. Although there

is no formal comment period, public comments on this regulation are

welcome on a continuing basis. Comments should be submitted to Frank J.

Ruggiero, Office of Exporter Services, Bureau of Export Administration,

Department of Commerce, P.O. Box 273, Washington, D.C. 20044.

List of Subjects

15 CFR part 734

Administrative practice and procedure, Exports, Foreign trade.

15 CFR parts 740 and 752

Administrative practice and procedure, Exports, Foreign trade,

Reporting and record keeping requirements.

15 CFR parts 742, 772, and 774

Exports, Foreign Trade.

Accordingly, parts 734, 740, 742, 752, 772, and 774 of the Export

Administration Regulations (15 CFR Parts 730-774) are amended as

follows:

1. The authority citation for 15 CFR Part 734 continues to read as

follows:

Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.;

E.O. 12924, 3 CFR, 1994 Comp., p. 917; E.O. 12938, 3 CFR, 1994

Comp., p. 950; E.O. 13020, 3 CFR, 1996 Comp. p. 219; E.O. 13026, 3

CFR, 1996 Comp., p. 228; Notice of August 13, 1997, 3 CFR, 1997

Comp., p. 306; Notice of August 13, 1998 (63 FR 44121, August 17,

1998).

2. The authority citation for 15 CFR Part 740 continues to read as

follows:

Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.;

E.O. 12924, 3 CFR, 1994 Comp., p. 917; E.O. 13020, 3 CFR, 1996 Comp.

p. 219; E.O. 13026, 3 CFR, 1996 Comp., p. 228; Notice of August 13,

1997, 3 CFR, 1997 Comp., p. 306; Notice of August 13, 1998 (63 FR

44121, August 17, 1998).

3. 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;

E.O. 12058, 43 FR 20947, 3 CFR, 1978 Comp., p. 179; E.O. 12851, 3

CFR, 1993 Comp., p. 608; E.O. 12924, 59 FR 43437, 3 CFR, 1994 Comp.,

p. 917; E.O. 12938, 3 CFR, 1994 Comp., p. 950; E.O. 13020, 3 CFR,

1996 Comp. p. 219; E.O. 13026, 3 CFR, 1996 Comp., p. 228; Notice of

August 13, 1997, 3 CFR, 1997 Comp., p. 306; Notice of August 13,

1998 (63 FR 44121, August 17, 1998).

4. The authority citation for 15 CFR Part 752 continues to read as

follows:

Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.;

E.O. 12924, 3 CFR, 1994 Comp., p. 917; E.O. 13020, 3 CFR, 1996 Comp.

p. 219; Notice of August 13, 1997, 3 CFR, 1997 Comp., p. 306; Notice

of August 13, 1998 (63 FR 44121, August 17, 1998).

5. The authority citation for 15 CFR Part 772 continues to read as

follows:

Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.;

E.O. 12924, 3 CFR, 1994 Comp., p. 917; E.O. 13026, 3 CFR, 1996

Comp., p. 228; Notice of August 13, 1997, 3 CFR, 1997 Comp., p. 306;

Notice of August 13, 1998 (63 FR 44121, August 17, 1998).

6. The authority citations for 15 CFR Part 774 continues to read as

follows:

Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.;

10 U.S.C. 7420; 10 U.S.C. 7430(e); 18 U.S.C. 2510 et seq.; 22 U.S.C.

287c; 22 U.S.C. 3201 et seq.; 22 U.S.C. 6004; Sec. 201, Pub. L. 104-

58, 109 Stat. 557 (30 U.S.C. 185(s)); 30 U.S.C. 185(u); 42 U.S.C.

2139a; 42 U.S.C. 6212; 43 U.S.C. 1354; 46 U.S.C. app. 466c; 50

U.S.C. app. 5; E.O. 12924, 3 CFR, 1994 Comp., p. 917; E.O. 13020, 3

CFR, 1996 Comp. p. 219; E.O. 13026, 3 CFR, 1996 Comp., p. 228;

Notice of August 13, 1997, 3 CFR, 1997 Comp., p. 306; Notice of

August 13, 1998 (63 FR 44121, August 17, 1998).

PART 734--[AMENDED]

7. Section 734.2 is amended by removing the second sentence of

paragraph (b)(1) and the second sentence of paragraph (b)(4).

8. Section 734.4 is amended by revising paragraph (b) to read as

follows:

Sec. 734.4 De minimis U.S. content.

* * * * *

(b) There is no de minimis level for the reexport of foreign-origin

items that incorporate ``Information security'' systems and equipment,

cryptographic devices, software and components specifically designed or

modified therefor, and related technology controlled for ``EI'' reasons

under ECCNs 5A002, 5D002, and 5E002. Certain mass market encryption

software may become eligible for de minimis only after a one-time BXA

review (refer to Sec. 742.15(b)(1)).

* * * * *

PART 740--[AMENDED]

Sec. 740.2 [Amended]

9. Section 740.2 is amended by revising the phrase ``manned

aircraft, satellite,'' in paragraph (a)(5) to read ``manned

aircraft,''.

PART 742--[AMENDED]

10. Section 742.14 is revised to read as follows:

Sec. 742.14 Significant items: hot section technology for the

development, production or overhaul of commercial aircraft engines,

components, and systems.

(a) License requirement. Licenses are required for all

destinations, except Canada, for ECCNs having an ``SI'' under the

``Reason for Control'' paragraph. These items include hot section

technology for the development, production or overhaul of commercial

aircraft engines controlled under ECCN 9E003.a.1. through a.12., .f,

and related controls.

(b) Licensing policy. Pursuant to section 6 of the Export

Administration Act of 1979, as amended, foreign policy controls apply

to technology required for the development, production or overhaul of

commercial aircraft engines controlled by ECCN 9E003.a.1. through a.12,

.f, and related controls. These controls supplement the national

security controls that apply to these items. Applications for export

and reexport to all destinations will be reviewed on a case-by-case

basis to determine whether the export or reexport is consistent with

U.S. national security and foreign policy interests. The following

factors are among those that will be considered to determine what

action will be taken on license applications:

(1) The country of destination;

(2) The ultimate end-user(s);

(3) The technology involved;

(4) The specific nature of the end-use(s); and

(5) The types of assurance against unauthorized use or diversion

that are given in a particular case.

(c) Contract sanctity. Contract sanctity provisions are not

available for license applications reviewed under this Sec. 742.14.

(d) [Reserved]

* * * * *

PART 752--[AMENDED]

Sec. 752.3 [Amended]

11. Section 752.3 is amended by removing paragraph (a)(8) and

redesignating paragraphs (a)(9), (a)(10), and (a)(11) as paragraphs

(a)(8), (a)(9), and (a)(10).

PART 772--[AMENDED]

12. Part 772 is amended by removing the definition of ``export of

satellites''.

Part 774--[AMENDED]

13. In Supplement No. 1 to part 774, Category 9--Propulsion

Systems, Space

[[Page 13340]]

Vehicles and Related Equipment is amended by revising ECCN 9A004:

9A004 Space launch vehicles and ``spacecraft''.

License Requirements

Reason for Control: NS and AT

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Control(s) Country chart

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NS applies to entire entry............... NS Column 1

AT applies to entire entry............... AT Column 1

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License Exceptions

LVS: N/A

GBS: N/A

CIV: N/A

List of Items Controlled

Unit: Equipment in number. Components, parts and accessories in

$ value. Related Controls: (1.) See also 9A104. (2.) Space launch

vehicles are under the jurisdiction of the Department of State. (3.)

Effective March 15, 1999, all satellites, including commercial

communications satellites, are subject to the ITAR. Effective March

15, 1999, all license applications for the export of commercial

communications satellites will be processed by the State Department,

Office of Defense Trade Controls. Retransfer of jurisdiction for

commercial communications satellites and related items shall not

affect the validity of any export license issued by the Department

of Commerce prior to March 15, 1999, or of any export license

application filed under the Export Administration Regulations on or

before March 14, 1999, and subsequently issued by the Department of

Commerce. Commercial communications satellites licensed by the

Department of Commerce, including those already exported, remain

subject to the EAR and all terms and conditions of issued export

licenses until their stated expiration date. All licenses issued by

the Department of Commerce for commercial communications satellites,

including licenses issued after March 15, 1999, remain subject to SI

controls throughout the validity of the license. Effective March 15,

1999, Department of State jurisdiction shall apply to any instance

where a replacement license would normally be required from the

Department of Commerce. Transferring registration or operational

control to any foreign person of any item controlled by this entry

must be authorized on a license issued by the Department of State,

Office of Defense Trade Controls. This requirement applies whether

the item is physically located in the United States or abroad. (4.)

All other ``spacecraft'' not controlled under 9A004 and their

payloads, and specifically designed or modified components, parts,

accessories, attachments, and associated equipment, including ground

support equipment, are subject to the export licensing authority of

the Department of State unless otherwise transferred to the

Department of Commerce via a commodity jurisdiction determination by

the Department of State. (5.) Exporters requesting a license from

the Department of Commerce for ``spacecraft'' and their associated

parts and components, other than the international space station,

must provide a statement from the Department of State, Office of

Defense Trade Controls, verifying that the item intended for export

is under the licensing jurisdiction of the Department of Commerce.

All specially designed or modified components, parts, accessories,

attachments, and associated equipment for ``spacecraft'' that have

been determined by the Department of State through the commodity

jurisdiction process to be under the licensing jurisdiction of the

Department of Commerce and that are not controlled by any other ECCN

on the Commerce Control List will be assigned a classification under

this ECCN 9A004. (6.) Technical data required for the detailed

design, development, manufacturing, or production of the

international space station (to include specifically designed parts

and components) remains under the jurisdiction of the Department of

State. This control by the ITAR of detailed design, development,

manufacturing or production technology for NASA's international

space station does not include that level of technical data

necessary and reasonable for assurance that a U.S.-built item

intended to operate on NASA's international space station has been

designed, manufactured, and tested in conformance with specified

requirements (e.g., operational performance, reliability, lifetime,

product quality, or delivery expectations). All technical data and

all defense services, including all technical assistance, for launch

of the international space station, including launch vehicle

compatibility, integration, or processing data, are controlled and

subject to the jurisdiction of the Department of State, in

accordance with 22 CFR parts 120 through 130.

Items

a. The international space station being developed, launched and

operated under the supervision of the U.S. National Aeronautics and

Space Administration. Hardware specific to the international space

station transferred to the Department of Commerce by commodity

jurisdiction action is also included.

b. Specific items as may be determined to be not subject to the

ITAR through the commodity jurisdiction procedure administered by the

Department of State after March 15, 1999.

Dated: March 15, 1999.

R. Roger Majak,

Assistant Secretary for Export Administration.

[FR Doc. 99-6721 Filed 3-16-99; 12:02 pm]

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