81 FR 87426 - Amendment to the Export Administration Regulations: Removal of Semiconductor Manufacturing International Corporation From the List of Validated End-Users in the People's Republic of China

DEPARTMENT OF COMMERCE
Bureau of Industry and Security

Federal Register Volume 81, Issue 233 (December 5, 2016)

In this rule, the Bureau of Industry and Security (BIS) amends the Export Administration Regulations (EAR) to remove one end-user from the list of validated end-users in the People's Republic of China (PRC). Specifically, BIS amends Supplement Number 7 to part 748 of the EAR to remove the Semiconductor Manufacturing International Corporation (SMIC) as a validated end-user in the PRC. BIS makes this change at the company's request, and not in response to activities of concern.

[Federal Register Volume 81, Number 233 (Monday, December 5, 2016)]
[Rules and Regulations]
[Pages 87426-87427]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-29057]


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DEPARTMENT OF COMMERCE

Bureau of Industry and Security

15 CFR Part 748

[Docket No. 161005927-6927-01]
RIN 0694-AH16


Amendment to the Export Administration Regulations: Removal of 
Semiconductor Manufacturing International Corporation From the List of 
Validated End-Users in the People's Republic of China

AGENCY: Bureau of Industry and Security, Commerce.

ACTION: Final rule.

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SUMMARY: In this rule, the Bureau of Industry and Security (BIS) amends 
the Export Administration Regulations (EAR) to remove one end-user from 
the list of validated end-users in the People's Republic of China 
(PRC). Specifically, BIS amends Supplement Number 7 to part 748 of the 
EAR to remove the Semiconductor Manufacturing International Corporation 
(SMIC) as a validated end-user in the PRC. BIS makes this change at the 
company's request, and not in response to activities of concern.

DATES: This rule is effective December 5, 2016.

FOR FURTHER INFORMATION CONTACT: Chair, End-User Review Committee, 
Office of the Assistant Secretary, Export Administration, Bureau of 
Industry and Security, U.S. Department of Commerce, Phone: 202-482-
5991; Email: [email protected].

SUPPLEMENTARY INFORMATION:

Background

Authorization Validated End-User

    Validated end-users (VEUs) are designated entities located in 
eligible destinations to which eligible items may be exported, 
reexported, or transferred (in-country) under a general authorization 
instead of a license. The names of the VEUs, as well as the dates they 
were so designated, and their respective eligible destinations 
(facilities) and items are identified in Supplement No. 7 to part 748 
of the EAR (15 CFR part 748). Under the terms described in that 
supplement, and in conformity with section 748.15 of the EAR, VEUs may 
obtain eligible items without an export license from BIS. Eligible 
items vary between VEUs, and may include commodities, software, and 
technology, except items controlled for missile technology or crime 
control reasons on the Commerce Control List (CCL) (part 774 of the 
EAR).
    VEUs are reviewed and approved by the U.S. Government in accordance 
with the provisions of section 748.15 and Supplement Nos. 8 and 9 to 
part 748 of the EAR. The End-User Review Committee (ERC), composed of 
representatives from the Departments of State, Defense, Energy, 
Commerce, and other agencies, as appropriate, is responsible for 
administering the VEU program. BIS amended the EAR in a final rule 
published on June 19, 2007 (72 FR 33646), to create Authorization VEU.

Amendment to the List of Validated End Users (VEU) in the People's 
Republic of China (PRC)

Removal of the Semiconductor Manufacturing International Corporation 
(SMIC) From the List of VEUs in the PRC

    In this final rule, BIS amends Supplement No. 7 to part 748 of the 
EAR (Supplement No. 7) to remove the VEU SMIC from the list of VEUs in 
the PRC. Specifically, BIS removes information for SMIC from Supplement 
No. 7. BIS takes this action at SMIC's request. BIS makes this change 
to Supplement No. 7 at the company's request and not in response to 
activities of concern.

Export Administration Act

    Although the Export Administration Act expired on August 20, 2001, 
the President, through Executive Order 13222 of August 17, 2001, 3 CFR, 
2001 Comp., p. 783 (2002), as amended by Executive Order 13637 of March 
8, 2013, 78 FR 16129 (March 13, 2013), and as extended by the Notice of 
August 4, 2016, 81 FR 52587 (August 8, 2016), has continued the EAR in 
effect under the International Emergency Economic Powers Act. BIS 
continues to carry out the provisions of the Export Administration Act, 
as appropriate and to the extent permitted by law, pursuant to 
Executive Order 13222 as amended by Executive Order 13637.

Rulemaking Requirements

    1. Executive Orders 13563 and 12866 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). Executive 
Order 13563 emphasizes the importance of quantifying both costs and 
benefits, reducing costs, harmonizing rules, and promoting flexibility. 
This rule has been determined to be not significant for purposes of 
Executive Order 12866.
    2. This rule involves collections previously approved by the Office 
of Management and Budget (OMB) under Control Number 0694-0088, ``Multi-
Purpose Application,'' which carries a burden hour estimate of 43.8 
minutes to prepare and submit form BIS-748; and for recordkeeping, 
reporting and review requirements in connection with Authorization VEU, 
which carries an estimated burden of 30 minutes per submission. Total 
burden hours associated with the Paperwork

[[Page 87427]]

Reduction Act of 1995 (44 U.S.C. 3501 et seq.) (PRA) and OMB Control 
Number 0694-0088 are not expected to increase significantly as a result 
of this rule. Notwithstanding any other provisions of law, no person is 
required to respond to, nor be subject to a penalty for failure to 
comply with a collection of information subject to the requirements of 
the PRA, unless that collection of information displays a currently 
valid OMB Control Number.
    3. This rule does not contain policies with Federalism implications 
as that term is defined under Executive Order 13132.
    4. Pursuant to the Administrative Procedure Act (APA), 5 U.S.C. 
553(b)(B), BIS finds good cause to waive requirements that this rule be 
subject to notice and the opportunity for public comment because they 
are unnecessary. In determining whether to grant or remove VEU 
designations, a committee of U.S. Government agencies evaluates 
information about and commitments made by candidate companies, the 
nature and terms of which are set forth in 15 CFR part 748, Supplement 
Nos. 8 and 9. The criteria for evaluation by the committee are set 
forth in 15 CFR 748.15(a)(2) and the authority to remove VEU 
designations is contained in 15 CFR 748.15(a)(3). The information, 
commitments, and criteria for this extensive review were all 
established through the notice of proposed rulemaking and public 
comment process (71 FR 38313 (July 6, 2006) (proposed rule), and 72 FR 
33646 (June 19, 2007) (final rule)). In publishing this final rule, BIS 
removes a VEU from the list of VEUs in the PRC, at the request of the 
VEU, similar to past requests by other VEUs, approved by the End-User 
Review Committee. This change has been made within the established 
regulatory framework of the VEU program. Further, this rule does not 
abridge the rights of the public or eliminate the public's option to 
export under any of the forms of authorization set forth in the EAR.
    Publication of this rule in other than final form is unnecessary 
because the procedure for revocation of a VEU or facility from the 
Authorized VEU list is similar to the license revocation procedure, 
which does not undergo public review. During the VEU revocation 
procedure, the U.S. Government analyzes confidential business 
information according to set criteria to determine whether a given 
authorized VEU entity remains eligible for VEU status. Revocation may 
be the result of a material change in circumstance at the VEU or the 
VEU's authorized facility. Such changes may be the result of a VEU or 
VEU facility no longer meeting the eligibility criteria for 
Authorization VEU, and may thus lead the U.S. Government to modify or 
revoke VEU authorization. VEUs or VEU facilities that undergo material 
changes that result in their no longer meeting the criteria to be 
eligible VEUs must, according to the VEU program, have their VEU status 
revoked. Here, however, SMIC requested removal from the VEU program. 
Consequently, BIS is removing SMIC from the list of VEUs. Public 
comment on whether to make the removal is unnecessary.
    Section 553(d) of the APA generally provides that rules may not 
take effect earlier than thirty (30) days after they are published in 
the Federal Register. However, BIS finds good cause to waive the 30-day 
delay in effectiveness for this rule pursuant to 5 U.S.C. 553(d)(3) 
because the delay would be contrary to the public interest. BIS is 
simply removing SMIC as a VEU. In this rule, BIS amends the EAR 
consistent with established objectives and parameters administered and 
enforced by the responsible designated departmental representatives to 
the End-User Review Committee. Delaying this action's effectiveness 
would likely cause confusion regarding which items are authorized by 
the U.S. government, and in turn stifle the purpose of the VEU program. 
Accordingly, it would be contrary to the public interest to delay this 
rule's effectiveness.
    No other law requires that a notice of proposed rulemaking and an 
opportunity for public comment be given for this final rule. Because a 
notice of proposed rulemaking and an opportunity for public comment are 
not required under the APA or by any other law, the analytical 
requirements of the Regulatory Flexibility Act (5 U.S.C. 601et seq.) 
are not applicable. As a result, no final regulatory flexibility 
analysis is required and none has been prepared.

List of Subjects in 15 CFR Part 748

    Administrative practice and procedure, Exports, Reporting and 
recordkeeping requirements.

    Accordingly, part 748 of the EAR (15 CFR parts 730-774) is amended 
as follows:

PART 748--[AMENDED]

0
1. The authority citation for part 748 continues to read as follows:

    Authority: 50 U.S.C. 4601 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 4, 2016, 81 FR 
52587 (August 8, 2016).

Supplement No. 7 to Part 748--[AMENDED]

0
2. Amend Supplement No. 7 to Part 748 by removing the entire entry for 
``Semiconductor Manufacturing International Corporation,'' in ``China 
(People's Republic of)''.

    Dated: November 23, 2016.
Kevin J. Wolf,
Assistant Secretary for Export Administration.
[FR Doc. 2016-29057 Filed 12-2-16; 8:45 am]
BILLING CODE 3510-33-P