Federal Register Vol. 81, No.197,

Regulation E, which implements the Electronic Fund Transfer Act,1 and the official interpretations to the regulation are codified in 12 CFR part 1005.2 Regulation E provides comprehensive consumer protections for consumers using electronic fund transfer and remittance transfer systems. Current Regulation E inadvertently contains several errors, as described below. The Bureau is publishing this final rule to correct these errors. No substantive change is intended by the corrections herein.

Section 1005.7 Initial Disclosures. Section 1005.7(b)(11) in 12 CFR part 1005 cross-references the definition of an “automated teller machine operator” as defined in “§ 1005.16(a)(1).” This is a clerical error, as there is no such paragraph in § 1005.16. The definition of “automated teller machine operator” is set forth in § 1005.16(a). Accordingly, this final rule corrects the erroneous cross reference in § 1005.7(b)(11) by changing it from § 1005.16(a)(1) to § 1005.16(a).

Model form for error resolution and cancellation disclosures (short). Model Form A-37 in appendix A to part 1005 sets forth language about the rights of a remittance transfer sender regarding error resolution and cancellation. Pursuant to § 1005.31(b)(2)(vi), it should contain language that informs a sender that the sender can contact the State agency that licenses or charters a remittance transfer provider and the Bureau for questions or complaints about the remittance transfer provider.3 However, the model form that was adopted only included this language in part. To correct this clerical error, Model Form A-37 is amended so that it now contains the disclosure required by § 1005.31(b)(2)(vi) in its entirety. The Bureau notes that other model forms in subpart B that contain the statement required by § 1005.31(b)(2)(vi) accurately reflect the statement.

Official interpretation to § 1005.33(a) and (g). Section 1005.33(a)(1)(iv) provides that a remittance transfer provider's failure to make funds available to a designated recipient by the date of availability disclosed to the sender is an error unless an exception applies. One such exception, set forth in § 1005.33(a)(1)(iv)(D), is if the failure to make funds available is due to the sender having provided the remittance transfer provider with an incorrect account number for the designated recipient's account and the remittance transfer provider has met the conditions set forth in § 1005.33(h). Comment 33(a)-9 explains the application of § 1005.33(a)(1)(iv)(D). However, it erroneously cross-references § 1005.30(h)(2) when it should have crossed-referenced § 1005.33(a)(1)(iv)(D). This final rule corrects this error by removing the erroneous cross reference to § 1005.30(h)(2) and replacing it with the correct cross reference to § 1005.33(a)(1)(iv)(D). Additionally, comment 33(g)-1 contains a cross reference to the requirement set forth in the regulation that remittance transfer providers are subject to § 1005.13's record retention requirements. However, instead of cross-referencing § 1005.33(g)(2), where this requirement resides, the comment cross-references § 1005.31(g)(2). This final rule corrects the erroneous cross reference in comment 33(g)-1 by changing it from § 1005.31(g)(2) to § 1005.33(g)(2).

Official interpretation to § 1005.36. Currently, there are two section headings in the commentary to § 1005.36 (Transfers Scheduled before the Date of Transfer). The existence of two separate headings for the commentary to § 1005.36 is a clerical error. Further, one of the headings is different from the heading of § 1005.36 in the regulatory text. This final rule removes the erroneous heading so that the heading that remains in the commentary to § 1005.36 has the same heading as the heading of § 1005.36 in the regulatory text. Additionally, this final rule moves the commentary set forth under the erroneous heading and places it under the remaining heading.

The Bureau is publishing this technical correction as a final rule that will be effective 30 days after the date of publication in the Federal Register. The Bureau finds that there is good cause to publish this final rule without seeking public comment. See 5 U.S.C. 553(b)(3)(B). Public comment is unnecessary because the rule corrects inadvertent, clerical errors about which there is minimal, if any, basis for substantive disagreement.

Background

This final rule is part of the Administration's Export Control Reform Initiative (the “Initiative”), the objective of which is to protect and enhance U.S. national security interests. The Initiative began in August 2009 when President Obama directed the Administration to conduct a broad-based review of the U.S. export control system to identify additional ways to enhance national security. The Department of State's International Traffic in Arms Regulations (ITAR) and its U.S. Munitions List (USML) are being amended to control only the items that provide the United States with a critical military or intelligence advantage or otherwise warrant such controls, and the Export Administration Regulations (EAR) are being amended to control military items that do not warrant USML controls. These changes will enhance national security by (i) improving interoperability of U.S. military forces with allied countries, (ii) strengthening the U.S. industrial base by, among other things, reducing incentives for foreign manufacturers to design out and avoid U.S.-origin content and services, and (iii) allowing export control officials to focus government resources on transactions that pose greater concern.

Pursuant to section 38(f) of the Arms Export Control Act (AECA), the President is obligated to review the USML “to determine what items, if any, no longer warrant export controls under” the AECA. The President must report the results of the review to Congress and wait 30 days before removing any such items from the USML. The report must “describe the nature of any controls to be imposed on that item under any other provision of law.” 22 U.S.C. 2778(f)(1).

Following the structure set forth in the final rule entitled “Revisions to the Export Administration Regulations: Initial Implementation of Export Control Reform” (78 FR 22660, April 16, 2013), BIS published a proposed rule entitled “Revisions to the Export Administration Regulations (EAR): Control of Fire Control, Range Finder, Optical, and Guidance and Control Equipment the President Determines No Longer Warrant Control Under the United States Munitions List (USML)” (80 FR 25798, May 5, 2015) (“May 2015 rule”). That proposed rule was published in conjunction with a proposed rule published by the Department of State's Directorate of Defense Trade Controls (DDTC) to propose controls for the ITAR's USML Category XII. After reviewing public comments to the May 2015 rule, BIS published a second proposed rule entitled “Revisions to the Export Administration Regulations (EAR): Control of Fire Control, Laser, Imaging, and Guidance and Control Equipment the President Determines No Longer Warrant Control Under the United States Munitions List (USML)” (81 FR 8421) (“February 2016 rule”). This second proposed rule was also published in conjunction with a second proposed rule published by DDTC to propose new controls for USML Category XII.

In response to the February 2016 rule, BIS received twenty public comments. Eleven commenters believed that the February 2016 rule was an improvement over the May 2015 rule, while no commenters believed that the February 2016 rule was worse than the May 2015 rule. The commenters supported the efforts, including the greater use of “specially designed,” to reduce controlling items in normal commercial use in USML Category XII or the corresponding 600 series entries in the CCL. Further, many commenters noted that the revisions in the February 2016 rule created a more transparent and predictable structure and reduced confusion and complexity associated with terminology proposed in the May 2015 rule. With the changes made in the February 2016 rule, many commenters believed that the proposals would better balance national security concerns while reflecting technological advancement and the increasing commercial market demand for many items in the laser, photonics, optics, infrared detection, and related industries. Consequently, some commenters stated that the February 2016 rule would help reduce current and future competitive disadvantages for U.S. industry and reduce the incentive to offshore production and research activities.

Some commenters also expressed general concerns regarding the February 2016 rule. Many commenters believed that the increased controls proposed for infrared detection items were still too strict, overly complicated, and not reflective of foreign availability and licensing policies of Wassenaar-member countries and non-Wassenaar countries. To address some of these concerns, BIS is amending some of the proposed controls, as described further herein. Additionally, to address concerns on complexity and increased costs of compliance, especially for small businesses, BIS will continue to conduct extensive outreach to assist organizations in their compliance efforts. A summary of the public comments and changes made to the proposed rule are addressed below.

In this final rule, all references to the USML are to the list of defense articles that are controlled for the purpose of export or temporary import pursuant to the ITAR, and not to the defense articles on the USML that are controlled by the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) for the purpose of permanent import under its regulations (see 27 CFR part 447). Pursuant to § 38(a)(1) of the AECA, all defense articles controlled for export or import are part of the USML under the AECA. For the sake of clarity, the list of defense articles controlled by ATF for the purpose of permanent import is the United States Munitions Import List (USMIL). The transfer of defense articles from the ITAR's USML to the EAR's CCL for the purpose of export controls does not affect the list of defense articles controlled on the USMIL under the AECA for the purpose of permanent import.

The February 2016 rule included two proposed changes to harmonize provisions in the EAR—removing controls related to certain QRS-11 sensors and revising license requirements related to certain uncooled thermal imaging cameras. This final rule adopts the proposed changes for QRS-11 sensors but does not adopt the proposed changes for license requirements related to uncooled thermal imaging cameras.

As described in the February 2016 rule, BIS published a final rule in 2007 to control certain QRS-11 sensors that were previously subject to the ITAR. These sensors were originally designed for military application but began to be used in civil aircraft, which would have required State Department authorization for exports and reexports, as the ITAR does not contain a de minimis level or a general exception for controlled content embedded within uncontrolled systems. Since ECR accounts for the movement of items from control on the ITAR to control on the EAR, BIS proposed to remove special controls related to such QRS-11 sensors, including removing the RS Column 1 control and references to such sensors from ECCN 7A994, the 0% de minimis level for such sensors in § 734.4(a)(3), the restriction on the availability of license exceptions for such sensors in § 740.2(a)(9), references to the sensors in ECCNs 7E994 (Related Controls) and 9A991 (License Requirement Notes and Related Controls), and the reference to such sensors in Note 1 to the definition of “specially designed” in part 772.

BIS did not receive any public comments on QRS-11 sensors and thus adopts the changes as proposed in this final rule. To the extent that such sensors are not described on the USML (and the agencies do not believe that any of the sensors are described on the revised USML), one would follow the Order of Review in Supplement No. 4 to part 774 to determine whether the sensors may be captured under a 600 series ECCN or under a dual-use ECCN.

The February 2016 rule proposed to revise license requirements and license exception eligibility for certain uncooled thermal imaging cameras. Under the current provisions of § 742.6, the RS Column 1 reason for control in ECCN 6A003 does not apply to exports or reexports to countries in Country Group A:1 if certain uncooled thermal imaging cameras are fully packaged for use as consumer ready civil products or if such cameras with not more than 111,000 elements are to be embedded in civil products by authorized companies. Additionally, paragraph (b) of License Exception APR is available for such cameras when reexported to and among countries in Country Group A:1. In the February 2016 rule, BIS proposed to remove this license requirement and license exception structure (which for ease of reference is described in this rule as an authorization construct). As part of this proposed removal, BIS proposed to make all cameras in ECCN 6A003 subject to an RS1 control, because the agency believed that License Exception STA would be available for such transactions and thus the complexity of this authorization structure was no longer needed.

Two commenters expressed concerns about these proposed changes. One commenter stated that removing this authorization construct for such cameras would put U.S. industry at a competitive disadvantage with respect to companies in the European Union and Japan. The commenter noted that License Exception APR is not available for items exported under License Exception STA, and the commenter pointed out that exports to Mexico for these cameras would now require a license and STA would not be available for such transactions. BIS agrees that there is a distinct difference between this authorization construct and License Exception STA. Consequently, this final rule retains the current provisions in §§ 742.6(a)(2) and (a)(4)(ii), the reporting requirement in § 743.3, endnotes 2 and 4 used in the Commerce Country Chart (Supplement No. 1 to part 738), and the provision in paragraph (b) of License Exception APR for such cameras (see further below for additional revisions to License Exception APR).

Two commenters also recommended revising the scope of RS1 and RS2 controls that apply to ECCN 6A003. One commenter suggested making all 6A003 cameras with a frame rate of less than or equal to 60 Hz subject to RS2 controls in order to harmonize U.S. controls with other Wassenaar countries. In addition, another commenter suggested revising Note 3 to 6A003.b.4.b so that 6A003 does not control imaging cameras with a maximum frame rate equal to or less than 60 Hz and a focal plane array with not more than 328,000 elements. The commenter further noted if that change was not possible, then all items in 6A003 should be subject to an RS2 control rather than RS1 control due to foreign availability for such items and that the industry standard for number of elements has increased to 328,000. At this time, BIS is electing to maintain the current RS1 and RS2 controls for ECCN 6A003. BIS notes that the use of specially designed in USML Category XII reduces the likelihood of the ITAR controlling items in normal commercial use, and this clearer jurisdictional line should greatly benefit industry. That change, coupled with the retention of the authorization construct in § 742.6 for certain uncooled thermal imaging cameras, is sufficient at this time to address the commenters' concerns.

To address the sensitivity of certain dual-use items related to infrared detection capability, the February 2016 rule included proposed restrictions for the export or reexport of several sensors and cameras, and related software and technology, that provide important night vision capability for military use but are also widely used in civil products and applications. This final rule adopts many of those proposals, with changes noted below, by amending §§ 734.4, 740.2, 740.16, 740.20, 742.6, and 744.9 of the EAR. In addition, this final rule adds ECCN 0E987 and revises parts of ECCNs 0A987, 6A002, 6A003, 6A990, 6A993, 6D002, 6D003, 6D991, 6E001, 6E002, and 6E990.

Section 744.9 requires a license for the export or reexport to any destination other than Canada for cameras controlled by ECCNs 6A003.b.3, 6A003.b.4.b, or 6A003.b.4.c when the exporter or reexporter knows or is informed that the item is intended to be used by a military end-user or to be incorporated into a military commodity controlled by ECCN 0A919, in addition to other applicable license requirements in the EAR.

The February 2016 rule proposed to revise § 744.9 to require a license for exports, reexports, or transfers (in-country) of commodities controlled by ECCNs 0A987 (incorporating items in ECCNs 6A002 and 6A003, or certain cameras in 6A993.a), 6A002, 6A003, 6A990, 6A993.a (commodities meeting the criterion of Note 3.a to 6A003.b.4), 8A002.d.1.c, and 8A002.d.2, when the exporter, reexporter, or transferor knows or is informed that the item is intended to be used by a military end user or to be incorporated into a military commodity controlled by ECCN 0A919. This final rule adopts these changes to § 744.9 with changes described below.

Three commenters made recommendations to address concerns regarding the proposed expansion of § 744.9. Two commenters requested that 9 Hz cameras in 6A993.a be removed from the scope of § 744.9. They asserted that including 9 Hz cameras would put U.S. companies at a competitive disadvantage since all other countries do not consider them to be dual use. Also, one of the commenters mentioned that adding 9 Hz cameras would greatly increase complexity and burden since such cameras are often low-cost consumer goods available through distributors and retail. Also, the commenter was unaware of any 9 Hz cameras being used in military commodities and recommended focusing § 744.9 only on those commodities that are easily incorporated into other items. BIS notes that while the commenter's 9 Hz cameras may not be ideal for incorporation into a foreign military commodity, the U.S. Government is aware of 9 Hz cameras being used and advertised in foreign military commodities. Also, BIS believes that the end-use and end-user based controls in § 744.9 are sufficiently tailored to have less impact on U.S. companies as one must know or have reason to know that such items will be used by a military end user or incorporated into a foreign military commodity. However, to further narrow the scope of the control and provide greater clarity, BIS is adding new paragraph (a)(2) to note that the license requirement of § 744.9 does not apply to exports, reexports, or transfers (in-country) when the items described above are being exported, reexported, or transferred as part of a military deployment by a unit of the government of a country in Country Group A:1 (see Supplement No. 1 to part 740). Similar language is currently used in § 742.6(a)(3).

One commenter recommended removing the license requirement based on military end user but maintaining the license requirement based on incorporation into a foreign military commodity. The commenter noted that the control based on military end user can be confusing since the same item being used for the same purpose would not require a license in one scenario (e.g., security camera for a factory) but would require a license in another scenario (e.g., security camera for a military installation). BIS believes that the addition of paragraph (a)(2) will help partially address this concern. However, BIS is maintaining the license requirement based on military end user since it is a defined term, and BIS believes it is appropriate to require a license in such circumstances.

This final rule also makes additional conforming changes to § 744.9. On September 20, 2016, BIS published a final rule (81 FR 64656) revising the CCL to implement changes to the Wassenaar Arrangement's List of Dual-Use Goods and Technologies. As part of these revisions, BIS amended ECCN 8A002 to remove items previously controlled in 8A002.d.1.c and redesignate items previously controlled in 8A002.d.2 as 8A002.d. Since the February 2016 rule proposed that 8A002.d.1.c and d.2 items be subject to the license requirement of § 744.9, this final rule revises § 744.9 to refer to 8A002.d rather than 8A002.d.1.c and d.2. Further, this final rule makes one clarifying change to § 744.9. In order to more accurately describe the scope of the license requirement, this final rule revises the title of § 744.9 to “[r]estrictions on exports, reexports, and transfers (in-country) of certain cameras, systems, or related components.”

ECCN 0A919 controls “military commodities” produced and located outside the United States that are not subject to the ITAR and incorporate one or more cameras controlled under ECCNs 6A003.b.3, 6A003.b.4.b, or 6A003.b.4.c. In addition, ECCN 0A919 controls such “military commodities” if they incorporate more than a de minimis amount of U.S.-origin 600 series content or are the direct products of U.S.-origin 600 series technology or software.

The February 2016 rule proposed to control the reexport of such military commodities that incorporate a wider group of infrared detection items on the CCL. Thus, the February 2016 rule proposed to re-structure the sub-paragraphs in the Items paragraph in that ECCN and expand 0A919 to control military commodities produced outside the United States that are not subject to the ITAR and incorporate commodities classified under ECCNs 6A002, 6A003, 6A990, or 6A993.a (having a maximum frame rate equal to or less than 9 Hz as and thus meeting the criterion specified in Note 3.a to ECCN 6A003.b.4.b). BIS received no public comments on these changes, and this final rule maintains the proposed expansion of the scope of ECCN 0A919 with the clarification described below.

Section 734.4(a)(5) of the EAR currently provides that there is no de minimis level for foreign military commodities, i.e., those described in ECCN 0A919, that incorporate certain infrared detection items. The February 2016 rule proposed to amend the de minimis treatment for 0A919 items incorporating infrared detection content to make them consistent with 0A919 items incorporating 600 series content by limiting the 0% de minimis level to Country Group D:5 only. BIS received no public comments on this proposed revision. Thus, this final rule amends § 734.4(a)(5) to provide that there is no de minimis level for foreign-made military commodities incorporating one or more of the commodities described in ECCN 0A919.a.1 when destined for a country in Country Group D:5. When destined for a country outside of Country Group D:5, such 0A919 commodities would be subject to the 25% de minimis threshold. To reflect this change to § 734.4(a)(5), this final rule also revises 0A919.a.1 to clarify that the sub-paragraph captures foreign-made military commodities that “[i]ncorporate more than a de minimis amount of U.S.-origin controlled content classified under ECCNs 6A002, 6A003, 6A990, or 6A993.a (having a maximum frame rate equal to or less than 9 Hz and thus meeting the criterion of Note 3.a to 6A003.b.4).”

ECCN 0A987 controls certain optical devices for firearms and related components. The February 2016 rule proposed to revise ECCN 0A987.f to specify that the entry controls laser aiming devices or laser illuminators “specially designed” for use on firearms, and having an operational wavelength exceeding 400 nm but not exceeding 710 nm. A proposed note to ECCN 0A987.f further specified that the entry does not control laser boresighting devices that must be placed in the bore or chamber to provide a reference for aligning the firearms sights. BIS received no public comments on these proposed changes and thus adopts them in this final rule.

The February 2016 rule also proposed to revise the Related Controls to refer readers to applicable controls in USML Category XII as well as the proposed license requirement for certain 0A987 items under § 744.9. BIS received no public comments on revisions to the Related Controls. This final rule amends the Related Controls paragraph to reflect revisions in the Department of State's final rule regarding controls for weapons sights to advise that sighting devices using second generation image intensifier tubes having luminous sensitivity greater than 350 µA/lm, or third generation or higher image intensifier tubes, are subject to the ITAR. Moreover, this final rule adds a reference in the Related Controls to riflescopes subject to the ITAR under USML Category I(f). This final rule also retains the reference to the § 744.9 license requirement since that license requirement is being adopted under this final rule.

The February 2016 rule further proposed creating a new ECCN for technology required for the “development” or “production” of commodities controlled by ECCN 0A987, if such commodities incorporate a focal plane array or image intensifier tube. Such technology would be subject to RS Column 1 and Anti-Terrorism (AT) Column 1 controls. BIS received no public comments on this proposal and thus adopts the establishment of ECCN 0E987 as proposed.

ECCN 6A002 controls specified optical sensors or equipment and components therefor. The February 2016 rule proposed to maintain the existing reasons for control and did not include a worldwide RS control that was first proposed in the May 2015 rule. Also, the February 2016 rule proposed to add a reference to corresponding controls for focal plane arrays, image intensifier tubes, and related parts and components in USML Category XII(e) and a reference to the proposed license requirement in § 744.9. This final rule makes those changes to 6A002, but clarifies that the type of focal plane arrays controlled in Category XII(e) are primarily infrared focal plane arrays. This final rule also adds a reference in the Related Controls to refer readers to space-qualified focal plane arrays subject to the ITAR in USML Category XV(e) to help readers understand the potential jurisdiction of various types of focal plane arrays. Additional limitations on the use of license exceptions for 6A002 items are addressed further herein.

BIS received five public comments on proposed changes to ECCN 6A002. One commenter supported the removal of the aforementioned worldwide RS control. Another commenter stated that it was unclear what two-dimensional focal plane arrays will be EAR99 or controlled on the CCL. Focal plane arrays are controlled based on the technical parameters in ECCN 6A002.

Two commenters requested that BIS evaluate whether square pixel one-dimensional focal plane arrays with a peak response in the wavelength range exceeding 1200 nm but not exceeding 3000 nm should continue to be controlled in 6A002.a.3.d since they are used almost exclusively for commercial applications and are similar to other focal plane arrays that are EAR99. Removing these square pixel focal plane arrays from 6A002 would require multilateral agreement at the Wassenaar Arrangement and thus exceeds the scope of this rule. However, commenters are welcome to submit additional information to BIS to help inform further discussion on whether a Wassenaar proposal to amend this ECCN is warranted.

Two commenters stated that BIS should carve out civil automotive focal plane arrays from being controlled under ECCN 6A002. The commenters asserted that this change would be consistent with other CCL technologies when used for civil automotive applications and would help ensure further research and development into collision avoidance systems. BIS does not accept this recommendation because such a change would require agreement with Wassenaar members and thus exceeds the scope of this rule. However, commenters are welcome to submit additional information to BIS to help inform further discussion on whether a Wassenaar proposal to amend this ECCN is warranted.

ECCN 6A003 controls specified cameras, systems or equipment and components therefor. As previously described, this final rule does not adopt the proposed changes to the authorization construct for certain uncooled thermal imaging cameras. Thus, this final rule does not amend the reasons for control in 6A003.

The February 2016 rule proposed to include additional changes to 6A003, such as adding a reference to USML Category XII and revising the reference to the license requirement in § 744.9. BIS received no comments on these changes, and thus adopts them in this final rule. However, this final rule updates the reference to the ITAR in order to point out that cameras subject to the ITAR are found in USML Category XII(c) and (e). In addition, BIS is adding a License Requirement Note to provide further clarification on what constitutes a “camera” for purposes of classifying items under 6A003. The License Requirement Note provides that “[c]ommodities that are not subject to the ITAR but are of the type described in USML Category XII(c) are controlled as cameras in ECCN 6A003 when they incorporate a camera controlled in this ECCN.” This note is consistent with Interpretation 2 in § 770.2, confirms BIS's existing classification practice for items in 6A003, and is intended to link the more specific terminology of USML Category XII with the Wassenaar-based terminology of 6A003.

Three commenters also provided feedback and recommendations on other aspects of 6A003. One commenter was concerned that researchers may be burdened with additional license requirements for items deployed internationally for field research due to the removal of STA. BIS notes that this final rule does not remove STA availability for 6A003 items being exported or reexported to countries in Country Group A:5. The commenter also supported keeping the related technology control for “use” technology unchanged. While this rule does affect STA availability for related technology (see further below), the commenter is correct that all six elements of the definition of “use” technology must be met for that control to apply.

One commenter also requested that BIS revise 6A003 so that certain linescan cameras incorporating one-dimensional square pixel focal plane arrays would not be controlled under 6A003. The commenter stated that such cameras are generally intended for commercial use. Another commenter requested that BIS add a note to exclude civil automotive infrared focal plane array systems from control under ECCN 6A003. As with the comments regarding similar items in 6A002, these changes to 6A003 would require agreement with Wassenaar members and exceed the scope of this rule. However, commenters are welcome to submit additional information to BIS to help inform further discussion on whether a Wassenaar proposal to amend this ECCN is warranted.

ECCN 6A990 controls certain read-out integrated circuits (ROICs) that enable 3D automotive imaging and ranging. The February 2016 rule proposed to expand the scope of ROICs controlled under that ECCN by controlling ROICs that are specially designed for focal plane arrays controlled under ECCN 6A002.a.3. Such ROICs would be subject to an RS1 control but would be eligible for License Exception LVS. However, under the proposed rule, ROICs specially designed for civil automotive applications would not be controlled under 6A990.

One commenter expressed support for controlling ROICs “specially designed” for 6A002.a.3 focal plane arrays under the EAR rather than the ITAR. However, three commenters also expressed concerns or requested clarification on the proposals for ROICs in 6A990. One commenter opposed expanding the scope of 6A990 to include certain non-ITAR ROICs that are currently EAR99. The commenter cited foreign availability for such ROICs that today may be exported without a license. BIS believes that expanding the scope of 6A990 is warranted to address military applications of dual-use ROICs. Also, BIS believes that industry will benefit from the clearer bright line control for ROICs in the State Department's final rule, which should reduce the possibility of commercial ROICs becoming controlled under the ITAR. With respect to foreign availability, BIS plans to work with its interagency colleagues to propose a control for ROICs on the Wassenaar Arrangement Dual-Use List.

One commenter expressed confusion regarding the proposed note carving out ROICs specially designed for civil automotive applications from control under 6A990. The commenter believed that most or all ROICs used in civil automotive applications are part of general purpose infrared focal plane arrays that are used in numerous applications. Thus, it was unclear how a ROIC could be specially designed for only civil automotive applications. As a result of reviewing commodity jurisdiction determinations, BIS believes that there are ROICs that have been specially designed for civil automotive applications. To the extent that a ROIC is specially designed for a general purpose focal plane array controlled under 6A002, then it would be controlled under 6A990.

One commenter also recommended that all ROICs specially designed for civil applications be excluded from control under 6A990. For the reasons described above regarding concern over military applications and the added benefit of clarity of the potential impact of the ITAR on commercial ROICs, BIS does not accept this recommendation.

One commenter stated that commercial ROICs should be EAR99 and requested clarification on how commercial ROICs would be controlled under the February 2016 rule. Under this final rule, ROICs that are not ITAR controlled (i.e., are not infrared focal plane array ROICs specially designed for a defense article) would be controlled under 6A990 if they are specially designed for a focal plane array in 6A002.a.3. If a ROIC is not specially designed for a 6A002.a.3 focal plane array, then the ROIC would be designated EAR99. Also, if a ROIC is specially designed for civil automotive applications, then the ROIC would also be designated EAR99.

One commenter also stated that the $500 LVS exception is reasonable but requested clarification on whether the value limit would apply to each ROIC or to a wafer of ROICs. The $500 value limit does not apply to an individual ROIC or a wafer of ROICs but rather to the actual total selling price of all 6A990 ROICs in the same order. Section 740.3 describes the terms and conditions of using License Exception LVS, including the requirements for valuing the commodities at issue. In addition to properly valuing the order, orders may not be split to meet the applicable value limit, and the total value of exports per calendar year to the same ultimate or intermediate consignee may not exceed twelve times the value limit.

For the reasons stated above, this final rule revises ECCN 6A990 as proposed in the February 2016 rule, with one addition to the Related Controls paragraph. Since the ITAR also controls ROICs under Category XV(e)(3), this final rule adds a reference to those ROICs as well as those controlled under Category XII(e). Also, since this final rule adopts the changes to § 744.9 and 0A919, this final rule also maintains reference to those provisions in the Related Controls of this ECCN. Finally, additional limitations on the use of license exceptions for this ECCN are addressed further herein.

ECCN 6E990 controls technology required for the development or production of ROICs controlled in 6A990. The February 2016 rule proposed to revise the Related Controls paragraph to reference the corresponding USML control for technical data directly related to ROICs described in Category XII. BIS received no public comments on this revision and adopts it in this final rule, but makes one corresponding change. Since this final rule revises the Related Controls paragraph of 6A990 to refer to ROICs controlled under Category XV, this final rule also refers to the applicable technical data control in Category XV for such ROICs.

ECCN 6A993 controls cameras in 6A993.a having a maximum frame rate equal to or less than 9 Hz and thus meeting the criterion specified in Note 3.a to ECCN 6A003.b.4.b. The February 2016 rule proposed to revise the Related Controls paragraph to remind readers of the applicability of § 744.9 and ECCN 0A919 to 9 Hz cameras. Since this final rule revises § 744.9 and ECCN 0A919 to add 9 Hz cameras to those provisions, this final rule adopts the proposal to add references to those provisions in the Related Controls paragraph of 6A993.

BIS did not receive public comments on the Related Controls paragraph, but did receive two comments related to 6A993. One commenter stated that 6A993 should control cameras having an operating speed of 60 Hz or less and incorporating a focal plane array in 6A003.b.4.b with a maximum of 328,000 elements or less. BIS rejects this recommendation as this would require agreement with Wassenaar members and is beyond the scope of this rule. One commenter expressed concerns that 6A993 items could be pulled into the ITAR due to the use of specially designed for infrared focal plane arrays in the State Department's second proposed rule. While the State Department's final rule addresses this issue, BIS notes that the intent was to control uniquely military infrared detection items (even comparatively lower performing military items) on the ITAR; therefore the EAR controls the commercial and dual-use infrared detection items. Thus, the commenter's concern is correct, but that was intended under the February 2016 rules as well as under these final rules.

The Wassenaar Arrangement's List of Dual-Use Goods and Technologies imposes limited controls on software related to commodities controlled under ECCNs 6A002 and 6A003. As a result, the CCL currently has the following multilateral and unilateral software controls related to such items: ECCN 6D002 (software specially designed for the use of commodities controlled under ECCN 6A002.b), ECCN 6D003.c (software designed or modified for cameras incorporating focal plane arrays specified by ECCN 6A002.a.3.f and designed or modified to remove a frame rate restriction and allow the camera to exceed the frame rate specified in ECCN 6A003.b.4 Note 3.a), and ECCN 6D991 (software, n.e.s., specially designed for the development, production, or use of commodities controlled under ECCN 6A002.a.1.d or 6A990).

To address concerns regarding the lack of comprehensive software controls related to commodities controlled under ECCNs 6A002 and 6A003, the February 2016 rule proposed to consolidate existing, unilateral software controls and expand them to revise ECCN 6D991 to also control software, not elsewhere specified, that is specially designed for the development, production, or use of commodities controlled by ECCNs 6A002 or 6A003. The February 2016 rule proposed to make such software subject to the RS Column 1 reason for control. Also, the February 2016 rule proposed to remove eligibility to use License Exception TSR for the software described above in ECCNs 6D002 and 6D003.c. To prevent confusion over multiple ECCNs potentially controlling the same software, the February 2016 rule proposed to add language to the Related Controls paragraphs of ECCN 6D991 to confirm that software currently controlled under ECCNs 6D002 and 6D003.c would remain controlled under those provisions. To reflect this understanding, the February 2016 rule also proposed to revise the Related Controls paragraphs of ECCNs 6D002 and 6D003 to provide references to ECCNs 6D991.

Four commenters expressed concerns about the proposed revisions to the software controls described above. Two commenters recommended removing “use” software for 6A002 and 6A003 commodities from the scope of ECCN 6D991. One of those commenters stated that software field upgrades would be more challenging and costly, which would put U.S. suppliers at a competitive disadvantage. The other commenter mentioned that even though typical operation software would be unlikely to meet all six elements of the definition of “use,” the control could create confusion. BIS agrees with the second commenter that it is unlikely that operation software would meet all six elements of “use.” Further, BIS believes that it is unlikely that software for field upgrades, which would likely be focused on camera maintenance, would include all six elements of “use” and thus be controlled. Therefore, BIS does not accept this recommendation.

Another commenter expressed concerns that the proposed expansion of 6D991 could affect software used in the production and testing of 6A003 and possibly 6A993 items, but the commenter noted it was unclear the extent to which the controls would apply to certain types of software due to difficulty in applying the definition of “specially designed” in the context of software. The commenter also expressed concerns on needing to get a license to provide field testing software to service centers. BIS notes that the intent of expanding 6D991, among other things, was to include software specially designed for the production of 6A003 cameras. This does not include software used for testing 6A003 cameras for purposes outside of the production or development process. Therefore, BIS believes that the scope of control in 6D991 is appropriate. With respect to applying the definition of “specially designed” to software, BIS notes that any software would be caught by paragraph (a) if it achieves the parameters described in the relevant USML or CCL entry as a result of “development” or if it is used in or with a commodity enumerated on the CCL or USML. Software is, however, eligible for the paragraph (b) releases. For example, if software used for the production of a controlled item has the same function, performance capabilities, and the same or equivalent form and fit, as software used in the production of an item controlled for AT reasons only, then such software would qualify for the release under paragraph (b)(3). Note 3 to paragraph (b)(3) also provides guidance on interpreting “form,” “fit,” “function,” and “performance capability” with respect to software. Finally, with respect to software for field testing centers, such software would have to meet all six elements of the definition of “use” in order to be controlled in 6D991.

One commenter stated that software used to operate a camera should be EAR99 and further expressed concern that a license would be required for software that interfaces with the arrays for either manufacturing or testing applications. Under the February 2016 proposed rule and this final rule, software simply used to operate a camera would not be controlled under 6D991 and would be EAR99. Again, all six elements of the “use” definition must be met in order to be considered “use” software under 6D991. In addition, BIS reiterates that software used for testing outside of the production or development process would not be captured by 6D991. Software that is used to test during the production or development process and that meets the definition of “specially designed” would be controlled by 6D991.

One commenter opposed removing the ability to use License Exception TSR for 6D002 (software “specially designed” for the “use” of commodities controlled under ECCN 6A002.b) and 6D003.c. The commenter cited concerns about U.S. competitiveness and working cooperatively in Wassenaar countries. BIS believes that U.S. competitiveness will be greatly improved by the bright line approach in the State Department's final rule for USML Category XII, which makes clear that commercial items (and related technology and software) are not generally intended to be controlled under the ITAR. BIS believes that removing TSR eligibility for these ECCNs is warranted.

BIS received no comments related to other aspects of the changes to ECCNs 6D002, 6D003, and 6D991. For the reasons described above, this final rule adopts the proposed changes to those ECCNs without revision.

ECCNs 6E001 and 6E002 control development and production technology, respectively, related to multiple ECCNs in Category 6, including items related to infrared detection in ECCNs 6A002 and 6A003. The February 2016 rule proposed to remove eligibility to use License Exception TSR for all 6E001 or 6E002 technology related to commodities controlled under 6A002 or 6A003. Further, the February 2016 rule proposed to add guidance to the Related Controls paragraphs in those ECCNs to provide clarity on technology controls related to commodities subject to the ITAR.

BIS received two public comments in response to the proposed changes to 6E001 and 6E002. One commenter stated that the February 2016 rule would put restrictions on the commodities related to manufacturing a focal plane array, including “substrates, epitaxial grown materials, zinc diffusion, software, and firmware in cameras.” The controls in 6E001 and 6E002 apply to technology for the development or production of certain commodities (and software in the case of 6E001). Those controls do not apply to the commodities themselves, which are found in ECCNs 6A002 and 6A003. In addition, the applicable software controls are found in ECCNs 6D002, 6D003, and 6D991.

One public commenter expressed concerns about the removal of License Exception TSR due to concerns about U.S. competitiveness and working cooperatively in Wassenaar countries. As previously mentioned, BIS believes that U.S. competitiveness will be greatly improved by the bright line approach in the State Department's final rule for USML Category XII, which makes clear that commercial items (and related technology and software) are not generally intended to be controlled under the ITAR. BIS believes that removing TSR eligibility for these ECCNs is warranted.

This final rule revises ECCNs 6E001 and 6E002 as proposed, but amends the availability of License Exception TSR for certain technology related to 6A003 cameras. That change is described further below in response to public comments regarding License Exception STA.

Section 740.2 sets forth restrictions on all license exceptions, and the February 2016 rule proposed a new restriction in § 740.2(a)(7) that would apply to 6E001 or 6E002 technology required for the development or production of the following focal plane arrays: Photon detector, microbolometer detector, pyroelectric, or multispectral detector infrared focal plane arrays (IRFPAs), described in ECCN 6A002, having a peak response within the wavelength range exceeding 900 nm but not exceeding 30,000 nm, excluding lead sulfide or lead selenide infrared focal plane arrays having a peak response within the wavelength range exceeding 1,000 nm but not exceeding 5,000 nm and not exceeding 16 detector elements. Moreover, under the February 2016 rule, § 740.2(a)(7) would apply to 6E001 or 6E002 technology required for the development or production of third generation image intensifier tubes or image intensifier tubes greater than third generation (e.g., EBAPS). BIS received no public comments on this provision and adopts it in this final rule. To provide further clarity, this final rule includes the full name for EBAPS, Electron Bombarded Active Pixel Sensor. As mentioned in the February 2016 rule and adopted in this final rule, the 6E001 and 6E002 technology described above will be eligible for License Exception GOV under § 740.11(b)(2) of the EAR.

License Exception APR currently authorizes specified reexports of items subject to the EAR by certain countries to specified destinations without individual licenses from BIS. The February 2016 rule proposed to increase the number of items ineligible for § 740.16(b) by including all items in ECCNs 6A002, 6A003, and 6A990 in the restrictions found in paragraph (a)(2) of that section. BIS received one general comment that opposed any reduction in the availability of license exceptions, but the commenter did not address any specific concerns regarding APR. Consequently, BIS adopts the changes proposed for paragraph (a) of APR in this final rule and makes only slight revisions to that paragraph for clarity.

As previously mentioned, this final rule retains the license requirement and license exception construct for certain uncooled thermal imaging cameras. This construct includes provisions in paragraph (b) of APR. However, this final rule adopts the non-substantive changes to paragraph (b) that were proposed in the February 2016 rule and rearranges the list of items to make the text clearer. BIS received no comments on the clarifying, non-substantive changes to § 740.16(b) and adopts them in this final rule while keeping the existing special provision for certain uncooled thermal imaging cameras in § 740.16(b)(3).

Section 740.20(b)(2)(x) restricts the use of License Exception STA for specific commodities controlled by ECCN 6A002, as well as related technology controlled by 6E001 or 6E002. The February 2016 rule proposed to expand that restriction to include all items in the following ECCNs: 6A002; 6A990; 6D002 (for the use of commodities controlled under ECCN 6A002.b); 6D003.c; 6D991 (for the development, production, or use of commodities controlled under ECCNs 6A002, 6A003, or 6A990); 6E001 (for the development of commodities controlled under ECCNs 6A002 or 6A003); 6E002 (for the production of commodities controlled under ECCNs 6A002 or 6A003); and 6E990. Additionally, the February 2016 rule proposed to add new ECCN 0E987 to the list of items restricted from STA under § 740.20(b)(2)(ii).

Three commenters expressed concerns with those proposed restrictions. One commenter recommended that STA be allowed for all items in 6A002 and 6A990. The commenter noted that doing so would be consistent with continuing to allow STA for 6A003 cameras. Also, the commenter believed this restriction would put U.S. companies at a competitive disadvantage due to foreign availability for such items for which there are less restrictive controls, and that some development technology for 6A990 read-out integrated circuits (ROICs) is already publicly available. The commenter also noted that ROICs not subject to the ITAR have historically been EAR99. BIS does not accept this recommendation at this time. Items controlled in 6A002 and 6A990, while dual use, have important military applications, and thus removal of STA eligibility is warranted. However, after the effective date of this rule, BIS will assess licensing volumes and re-evaluate whether a change to STA eligibility is necessary. Further, BIS notes that some items in 6A002 are only subject to NS2 and AT controls, so STA would not be needed to export or reexport to countries in Country Group A:1.

In addition to opposing the removal of STA for 6A002 and 6A990, one commenter also opposed the license exception's removal for ECCNs 6D002, 6D003, 6D991, 6E001, and 6E002. The commenter stated removing STA would hurt U.S. competitiveness, harm the ability to work internally and cooperatively within affiliates in Wassenaar countries, increase administrative burden, and could require licenses for providing field testing software to service centers. As previously mentioned, BIS believes that this software and technology has important military applications, and thus excluding the use of STA is warranted. Also, BIS believes that U.S. competitiveness will be greatly improved by the bright line approach in the State Department's final rule for USML Category XII, which makes clear that commercial items (and related technology and software) are not generally intended to be controlled under the ITAR. With respect to providing field testing software, BIS believes that such software is unlikely to meet the definition of “use” and unlikely to be controlled under ECCNs 6D002, 6D003, or 6D991.

One commenter requested that BIS allow STA for 6E001 and 6E002 technology for civil automotive far infrared night vision systems at the camera level. The commenter mentioned that the company has used STA when civil automotive vehicle manufacturers have required audits on products and manufacturing, which includes sharing design and manufacturing technology with non-U.S. nationals. BIS accepts this recommendation in part. This final rule revises § 740.20(b)(2)(x) to remove STA eligibility as described in the February 2016 rule. However, this final rule revises the eligibility to use License Exception TSR under ECCNs 6E001 and 6E002 to allow technology for the integration of 6A003 cameras into camera systems specially designed for civil automotive applications. Under this change, this technology may be released to Country Group B destinations or nationals so long as all terms and conditions of TSR are complied with, including obtaining a written assurance. This ability to use TSR is limited to specific 6E001 or 6E002 technology related to 6A003 cameras, and does not apply to 6E001 or 6E002 technology related to 6A002 items within the 6A003 cameras.

As previously mentioned, this final rule retains the provisions in § 742.6 that apply to the authorization construct for certain uncooled thermal imaging cameras. However, the February 2016 rule also proposed revisions to licensing policy for items controlled for RS reasons by revising § 742.6(b)(1) to include new licensing policy for 6E001 or 6E002 technology for the development or production of focal plane arrays or image intensifier tubes described in 6A002, or for 6E990 technology. Under the February 2016 rule, such technology would be subject to a presumption of denial for license applications for exports or reexports to countries in Country Group D:5. BIS received no public comments on this proposal and is adopting the proposed changes to § 742.6(b)(1) in this final rule.

BIS is also removing the heading in § 742.6(b)(1)(i), which was proposed in the February 2016 rule to read “9x515 and `600 series' ECCNs.” BIS is making this change because that paragraph applies to more than just 9x515 and 600 series items. Finally, as described below under ECCN 7E611, this final rule removes the proposed worldwide RS control for 7E611.a, and thus removes proposed § 742.6(a)(8) and references to that paragraph in § 742.6(b)(1).

The May 2015 rule proposed establishing two separate 600 series controls in 6x615 and 7x611. The February 2016 rule proposed to consolidate those entries and establish a single “600 series” by revising ECCN 7A611 and adding new ECCNs 7B611, 7D611, and 7E611 for military fire control, laser, imaging, and guidance and control commodities, software, and technology. Two commenters supported this simplified structure, and this final rule adopts the proposed consolidation of 600 series controls under 7x611 ECCNs.

Since categories 6 and 7 of the CCL currently control certain laser, imaging, and guidance items, the February 2016 rule also proposed to amend ECCN 6A611 to refer readers to Category 7 to locate the appropriate controls. BIS received no comments on this revision. This final rule revises 6A611 to add the reference to 7A611, but this final rule revises the term “guidance and control” to “guidance” to conform to changes made in the State Department's final rule. References to “control” are similarly removed throughout these 600 series entries to conform to the State Department's final rule.

Three commenters provided comments on these proposed 600 series entries. Revisions to the proposed 600 series ECCNs are described below.

As described in the February 2016 rule, ECCN 7A611 would control military fire control, laser, imaging, and guidance and control equipment that would be removed from USML Category XII and that are not covered by an existing ECCN subject to controls for reasons other than AT reasons. This included controlling certain guidance, navigation, or control systems; inertial measurement units; accelerometers; gyros or angular rate sensors; and gravity meters (gravimeters) in paragraphs .a through .e. Paragraph .x would control parts, components, accessories, and attachments that are specially designed for a commodity controlled by ECCN 7A611 (except 7A611.y) or a defense article in USML Category XII and not controlled elsewhere on the USML or in 7A611.y or 3A611.y. All items that would be controlled under 7A611.a-.x would be controlled for NS, RS, AT, and UN reasons. Paragraph .y, which would be controlled for AT reasons, would control specific parts, components, accessories, and attachments specially designed for a commodity subject to control in ECCN 7A611, or a defense article in USML Category XII and not elsewhere specified on the USML or in the CCL, and parts, components, accessories, and attachments specially designed therefor. The February 2016 rule did not include any items in 7A611.y. This final rule revises ECCN 7A611 with revisions to the February 2016 proposed rule as described below.

Two commenters provided recommendations or requested clarification on ECCN 7A611. One commenter pointed out that certain dual-use items controlled in CCL Category 7 may become controlled under 7A611 because such dual-use items would not qualify for the release in paragraph (b)(3) of the definition of “specially designed,” which applies to parts, components, accessories, or attachments that have the same function, performance capabilities, and the same or equivalent form and fit, as a commodity used in or with an item that is or was in production and is either not enumerated on the CCL or USML, or is described in an ECCN controlled only for AT reasons. Since many of the Category 7 parts and components are incorporated into Category 7 higher-level assemblies that are subject to NS or MT reasons, such parts and components would not be eligible for the (b)(3) release of specially designed.

To address this concern, BIS is revising and restructuring 7A611.x to specify that 7A611.x does not control items described in ECCNs 6A007, 6A107, 7A001, 7A002, 7A003, 7A101, 7A102, or 7A103. Essentially, this revision is an exception to the normal process of the Order of Review in which 600 series entries normally take precedence over dual-use entries in the CCL. BIS believes this change is warranted to address the concern raised by the commenter, and BIS believes that the dual-use controls provide sufficient levels of control to capture military items previously in USML Category XII that meet the parameters in one of the dual-use ECCNs listed above. As part of this change, BIS is also removing the entries that were proposed in 7A611.b-.e for inertial measurement units, accelerometers, gyros or angular rate sensors, and gravity meters (gravimeters). These items will be controlled under 7A611.x to the extent that they are specially designed and not controlled under the list of dual-use ECCNs described above. To ensure clarity on where such items are controlled, BIS is also adding text to 7A611.x to specifically name such items.

One commenter also questioned why 7A611 does not include the missile technology (MT) reason for control. BIS concurs that MT should be added to 7A611, and this final rule adds that control to the ECCN for commodities in 7A611.a that meet or exceed the parameters in 7A103.b or .c. Also, with the change described above to 7A611.x, ECCNs 6A107, 7A101, 7A102, and 7A103 will address those other items potentially controlled for MT reasons.

One commenter recommended that infrared optical elements, such as optical blanks and lenses, should not be controlled using “specially designed” under 7A611.x. Instead, the commenter believed that only certain germanium blanks and infrared lenses with certain resistivity should be controlled in 7A611. The commenter believed that all other optics blanks and infrared lenses should be EAR99. To support these recommendations, the commenter stated that applying “specially designed” would be burdensome since many of these products are made according to customer specifications and may have overlapping size, curvature, and fit requirements among both military and commercial customers. The commenter also believed that such controls would be more restrictive than the EU's export control regime. BIS believes that the commenter's recommended controls would not capture all optical blanks and infrared lenses that warrant control. Further, it is BIS's understanding that such items would be controlled under ML 15 of the Wassenaar Arrangement if they are specially designed. Therefore, BIS does not accept this recommendation. To the extent that optical blanks or infrared lenses meet the definition of “specially designed,” they would be controlled under 7A611.x.

BIS is also making additional conforming changes. This final rule revises the Related Controls paragraph to add references to ECCNs 6A107 and 7A103 since those ECCNs control related items. Also, this final rule removes the sentence in the Related Controls regarding navigation and avionics equipment specially designed for military application. In the February 2016 rule, that sentence referred readers to ECCN 3A611, which is incorrect. Such equipment is currently controlled in ECCN 9A610. Additionally, this final rule removes the word “control” from “guidance, navigation, and control systems” in 7A611.a and from the first sentence in the Related Controls to conform with changes made in the State Department's final rule.

The February 2016 rule proposed creating ECCN 7B611 to impose controls on test, inspection, and production equipment and related commodities specially designed for military fire control, laser, imaging, and guidance and control equipment. Paragraph .a would control such equipment specially designed for the development, production, repair, overhaul, or refurbishing of items controlled in ECCN 7A611 (except 7A611.y) or commodities in USML Category XII that are not enumerated in USML Category XII or controlled by a 600 series ECCN. Paragraph .b would control environmental test facilities specially designed for certification, qualification, or testing of commodities controlled in ECCN 7A611 (except 7A611.y) or commodities in USML Category XII that are not enumerated in USML Category XII or a 600 series ECCN. Paragraph .c would control field test equipment specially designed to evaluate or calibrate the operation of systems described in USML Category XII(a), (b), or (c). Paragraph .x would control parts, components, accessories, and attachments that are specially designed for such test, inspection and production equipment that are not enumerated on the USML or controlled by another 600 series ECCN. Items in ECCN 7B611 would be controlled for NS, RS, AT, and UN reasons.

BIS did not receive any public comments specific to ECCN 7B611. This final rule adopts the proposal to add 7B611 to the CCL, with three conforming changes. First, as previously mentioned, this final rule is revising references to “guidance and control” to just “guidance.” This final rule makes that change in the heading of the ECCN. Second, this final rule adds an MT control for 7B611.a commodities specially designed for 7A611.a commodities controlled for MT reasons. This change is being made to correspond to the addition of an MT control in 7A611. Third, paragraphs .b and .c now specify that those paragraphs control items not controlled by another 600 series to bring them into conformity with prior language used in other 600 series ECCNs for test, inspection, and production equipment.

The February 2016 rule proposed adding ECCN 7D611 to control software specially designed for the development, production, operation, or maintenance of commodities controlled by 7A611 or 7B611. Such software would be controlled for NS, RS, AT, and UN reasons. Any software added to 7D611.y would be controlled for AT reasons only.

BIS did not receive any public comments specific to ECCN 7D611. Thus, this final rule adopts the proposal to add 7D611 to the CCL with one conforming change. This final rule adds an MT control for 7D611.a software specially designed for 7A611.a commodities controlled for MT reasons. This change is being made to correspond to the addition of an MT control in 7A611.

The February 2016 rule proposed adding ECCN 7E611 to control technology required for the development, production, operation, installation, maintenance, repair, overhaul, or refurbishing of items controlled by 7A611, 7B611, or 7D611. Such technology would be controlled for NS, RS, AT, and UN reasons, but certain technology described in proposed 7E611.a (technology required for the development or production of commodities controlled by proposed 7A611.a-.e) would be subject to a worldwide RS reason for control, pursuant to proposed text added to § 742.6(a)(8). All other technology in 7E611, other than 7E611.y, would be subject to an RS Column 1 control. Any technology added to 7E611.y would be controlled for AT reasons only.

When adding the worldwide RS control to 7E611 in the February 2016 rule, BIS believed that the worldwide RS control would only affect technical data currently controlled in USML Category XII(f) that is not eligible for the Canadian exemption under Supplement No. 1 to part 126 of the ITAR. As described in proposed § 742.6(b)(1), proposed 7E611.a technology would be subject to the same licensing policy as other 600 series items. In addition, License Exception STA would not be available for 7E611.a technology but would be available for technology in 7E611.b or .c for exports or reexports to Country Group A:5.

BIS received one public comment pertaining to ECCN 7E611, and that commenter supported limiting a worldwide RS control to technology proposed to be controlled in 7E611.a. However, by revising 7A611.x so that it does not control items described in ECCNs 6A007, 6A107, 7A001, 7A002, 7A003, 7A101, 7A102, or 7A103, this final rule significantly reduces the scope of items in 7A611 and related technology in 7E611. Consequently, BIS believes that the proposed worldwide RS control is no longer warranted. This final rule removes the worldwide RS control in 7E611 and § 742.6(a)(8), removes the restriction on the use of License Exception STA for Country Group A:5, and restructures the Items paragraph to match the normal structure for a 600 series technology ECCN. ECCN 7E611.a will control technology required for the development, production, operation, installation, maintenance, repair, overhaul, or refurbishing of commodities or software controlled by ECCN 7A611 (except 7A611.y), 7B611, or 7D611 (except 7D611.y). ECCN 7E611.y will control specific technology required for the production, development, operation, installation, maintenance, repair, or overhaul of commodities or software controlled by ECCNs 7A611.y or 7D611.y.

This final rule also adds an MT control for technology for 7E611.a technology if required for items controlled for MT reasons in 7A611.a, 7B611.a, or 7D611.a. This change is being made to correspond to the addition of an MT control in 7A611, 7B611, and 7D611.

BIS received no public comments regarding the description of the license requirement for 7E611.a in § 742.6(a)(1) or the revisions to § 742.6(b)(1) describing licensing policy for RS Column 1 items and ECCN 7E611.a. Consequently, this final rule revises those sections consistent with the February 2016 rule.

The February 2016 rule proposed to revise many existing dual-use ECCNs to provide cross references to USML Category XII for similar items subject to the ITAR. BIS received no public comments on the proposed changes to the Related Controls paragraphs of those dual-use ECCNs. Therefore, this final rule revises the Related Controls to cross-reference similar items subject to the ITAR in ECCNs 6A004, 6A005, 6A007, 6A107, 7A001, 7A002, 7A003, 7A005, 7A101, and 7A102. The February 2016 rule also proposed to revise the Related Controls paragraph in ECCN 8A002 to refer readers to the potential license requirement in § 744.9, which would apply to commodities in 8A002.d.1.c or .d.2. Since this final rule adopts the proposed increase in scope of § 744.9 for 8A002.d items, this final rule also revises the Related Controls reference to that section in 8A002.

BIS also proposed to revise the Related Controls paragraph of ECCN 2A984, which controls certain concealed object detection equipment. This final rule maintains the cross reference to USML Category XII(c) for related terahertz imaging systems subject to the ITAR, but moves the reference to the first sentence of the Related Controls paragraph. Additionally, this final rule also revises the scope of control of ECCN 2A984. The State Department's February 2016 rule proposed to change the scope of terahertz imaging systems subject to the ITAR by controlling those that have a peak response in the frequency range exceeding 30 GHz but not exceeding 3000 GHz, and having a resolution less (better) than 0.1 milliradians at a standoff range of 100 m. This would have led to an inadvertent result where terahertz imaging systems having a peak response in the frequency range exceeding 30 GHz but not exceeding 3000 GHz, and having a resolution of 0.1 to 0.5 milliradians at a standoff range of 100 m would be designated EAR99, while less capable terahertz imaging systems would be controlled under 2A984. To address this gap, this final rule amends the heading of 2A984 to control concealed object detection equipment operating in the frequency range from 30 GHz to 3000 GHz and having a spatial resolution of 0.1 milliradian up to and including 1 milliradian at a standoff distance of 100 meters (and parts and components not elsewhere specified), and makes conforming changes to the related controls section.

Finally, BIS proposed to revise ECCN 6A008 to add a sentence to the Related Controls paragraph for certain laser detection and ranging (LADAR), light detection and ranging (LIDAR), or range-gated systems subject to the ITAR. One commenter recommended that BIS expand an existing sentence in the Related Controls on car radar designed for collision avoidance to provide that 6A008 does not control civil automotive radar or LIDAR. BIS does not accept this recommendation as making this change would require agreement with other Wassenaar members. Therefore, this final rule revises the Related Controls paragraph as proposed.

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 Export Administration Regulations 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.

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, distribute impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This rule has been designated a “significant regulatory action,” although not economically significant, under section 3(f) of Executive Order 12866. Accordingly, the rule has been reviewed by the Office of Management and Budget (OMB).

2. Notwithstanding any other provision of law, no person is required to respond to, nor is 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 OMB control number. This proposed rule would affect two approved collections: Simplified Network Application Processing + System (control number 0694-0088), which includes, among other things, license applications, and License Exceptions and Exclusions (0694-0137).

As stated in a proposed rule published on July 15, 2011 (76 FR 41958) (“July 15 proposed rule”), BIS initially believed that the combined effect of all rules to be published adding items to the EAR that will be removed from the ITAR as part of the Administration's Export Control Reform Initiative would increase the number of license applications to be submitted by approximately 16,000 annually. As the review of the USML has progressed, the interagency group has gained more specific information about the number of items that will come under BIS jurisdiction and whether those items would be eligible for export under license exceptions. As of June 21, 2012, BIS revised that estimate to an increase in license applications of 30,000 annually, resulting in an increase in burden hours of 8,500 (30,000 transactions at 17 minutes each) under control number 0694-0088. BIS continues to believe that its revised estimate is accurate.

Some items formerly on the USML would become eligible for License Exception STA under this rule. As stated in the July 15 proposed rule, BIS believes that the increased use of License Exception STA resulting from the combined effect of all rules to be published adding items to the EAR that would be removed from the ITAR as part of the Administration's Export Control Reform Initiative would increase the burden associated with control number 0694-0137 by about 23,858 hours (20,450 transactions at 1 hour and 10 minutes each).

BIS expects that this increase in burden would be more than offset by a reduction in burden hours associated with approved collections related to the ITAR. This proposed rule addresses controls on fire control, laser, imaging, and guidance and control items. With few exceptions, most exports of such items, even when destined to NATO member states and other close allies, require State Department authorization. In addition, the exports of technology necessary to produce such items in the inventories of the United States and its NATO and other close allies require State Department authorizations. Under the EAR, as proposed, such technology that would be subject to the EAR would become eligible for export to NATO member states and other close allies under License Exception STA unless otherwise specifically excluded. Use of License Exception STA imposes a paperwork and compliance burden because, for example, exporters must furnish information about the item being exported to the consignee and obtain from the consignee an acknowledgement and commitment to comply with the EAR. However, the Administration believes that complying with the requirements of STA is likely less burdensome than applying for licenses. For example, under License Exception STA, a single consignee statement can apply to an unlimited number of products, need not have an expiration date, and need not be submitted to the government in advance for approval. Suppliers with regular customers can tailor a single statement and assurance to match their business relationship rather than applying repeatedly for licenses with every purchase order to supply reliable customers in countries that are close allies or members of export control regimes or both.

3. This rule does not contain policies with Federalism implications as that term is defined under E.O. 13132.

4. The Regulatory Flexibility Act (RFA), as amended by the Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA), 5 U.S.C. 601 et seq., generally requires an agency to prepare a regulatory flexibility analysis of any rule subject to the notice and comment rulemaking requirements under the Administrative Procedure Act (5 U.S.C. 553) or any other statute, unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities. Under section 605(b) of the RFA, however, if the head of an agency (or his or her designee) certifies that a rule will not have a significant impact on a substantial number of small entities, the statute does not require the agency to prepare a regulatory flexibility analysis. Pursuant to section 605(b), the Chief Counsel for Regulation, Department of Commerce, submitted a memorandum to the Chief Counsel for Advocacy, Small Business Administration, certifying that the May 5 proposed rule would not have a significant impact on a substantial number of small entities. The rationale for that certification was set forth in the preamble to that proposed rule. Although BIS received no comments on that rationale, and has accordingly made no changes to the proposed rule based on the RFA certification, BIS has determined that, in the interest of openness and transparency, it will briefly restate the rationale behind the certification here.

This proposed rule is part of the Administration's Export Control Reform Initiative, which seeks to revise the USML to a positive list—one that does not use generic, catch-all controls for items listed—and to move some items that the President has determined no longer merit control under the ITAR to control under the CCL.

Although BIS does not collect data on the size of entities that apply for and are issued export licenses, and is therefore unable to estimate the exact number of small entities—as defined by the Small Business Administration's regulations implementing the RFA—BIS acknowledges that some small entities may be affected by this proposed rule.

The main effects on small entities resulting from this rule will be in application times, costs, and delays in receiving licenses to export goods subject to the CCL. However, while small entities may experience some costs and time delays for exports due to the license requirements of the CCL, these costs and delays will likely be significantly less than they were for items previously subject to the USML. BIS believes that in fact this rule will result in significantly reduced administrative costs and delays for exports of items that will, upon this rule's implementation, be subject to the EAR rather than the ITAR. Currently, USML applicants must pay to use the USML licensing procedure even if they never actually are authorized to export. Registration fees for manufacturers and exporters of articles on the USML start at $2,250 per year, increase to $2,750 for organizations applying for one to ten licenses per year and further increases to $2,750 plus $250 per license application (subject to a maximum of three percent of total application value) for those who need to apply for more than ten licenses per year. By contrast, BIS is statutorily prohibited from imposing licensing fees. In addition, exporters and reexporters of goods that would become subject to the EAR under this rule would need fewer licenses because their transactions would become eligible for license exceptions that were not available under the ITAR. Additionally, the ITAR controls parts and components even when they are incorporated—in any amount—into a foreign-made product. That limitation on the use of US-made goods subject to the ITAR discouraged foreign manufacturers from importing US goods. However, the EAR has a de minimis exception for US-manufactured goods that are incorporated into foreign-made products. This exception may benefit small entities by encouraging foreign producers to use more US-made items in their goods.

Even where an exporter or reexporter would need to obtain a license under the EAR, that process is both cheaper and more flexible than obtaining a license under the ITAR. For example, unlike the ITAR, the EAR does not require license applicants to provide BIS with a purchase order with the application, meaning that small (or any) entities can enter into negotiations or contracts for the sale of goods without having to caveat any sale presentations with a reference to the need to obtain a license under the ITAR before shipment can occur. Second, the EAR allows license applicants to obtain licenses to cover all expected exports or reexports to a particular consignee over the life of a license, rather than having to obtain a new license for every transaction.

In short, BIS expects that the changes to the EAR proposed in this rule will have a positive effect on all affected entities, including small entities. While BIS acknowledges that this rule may have some cost impacts to small (and other) entities, those costs are more than offset by the benefits to the entities from the licensing procedures under the EAR, which are much less costly and less time consuming than the procedures under the ITAR. Accordingly, the Chief Counsel for Regulation for the Department of Commerce has certified that this rule, if implemented, will not have a significant economic impact on a substantial number of small entities. Accordingly, a regulatory flexibility analysis is not required, and none has been prepared.

For the reasons stated in the preamble, the Export Administration Regulations (15 CFR parts 730-774) are amended as follows:

I. Background

On July 9, 2012, section 617 of FDASIA (Pub. L. 112-144), amended the FD&C Act (21 U.S.C. 301 et seq.), to require changes in the implementation of the custom device exemption under section 520(b) of the FD&C Act (21 U.S.C. 360j(b)) (Ref. 1). Under the revised provision, as under the original custom device exemption, a device that meets the qualification of a custom device is exempt from 510(k) and Premarket Approval (PMA) submissions under sections 514 and 515 of the FD&C Act (21 U.S.C. 360d and 360e) (see also §§ 807.85 and 812.3(b) (21 CFR 807.85 and 812.3(b)). Because of the amendments to section 520(b) of the FD&C Act, the current regulatory definition for a custom device, set forth in §§ 807.85(a) and 812.3(b), is no longer consistent with the statute. This technical amendment will correct the regulations by revising the definition of a custom device to restate the statute.

Under existing regulations at § 807.85(a), a custom device is exempt from premarket notification under section 510(k) of the FD&C Act. In the Federal Register of August 23, 1977 (42 FR 42520 at 42523), FDA published a final rule establishing the form and manner for 510(k) premarket notifications, which identified a custom device as an exemption from the premarket approval requirement because a principal purpose for requiring 510(k) premarket notification is absent. The final rule explained that the exemption for manufacturers of custom devices is intended to apply only to those who are manufacturing a custom device to fit the needs of a particular patient, so the manufacturer will not be required to file a premarket notification for each particular device.

In the Federal Register of January 18, 1980 (45 FR 3732 at 3740), FDA published a final rule setting forth the rules and conditions under which investigations for medical devices involving human subjects may be exempt from certain requirements of the FD&C Act. The 1980 final rule provided clarification for the definition of “custom devices” under § 812.3(b) for Investigational Device Exemptions (IDE) unless used to determine safety and effectiveness for commercial distribution. A device used to conduct a clinical trial cannot qualify as a custom device.

Section 520(b) of the FD&C Act, as amended by section 617 of FDASIA, changed some of the criteria to qualify for the custom device exemption, which is different from the criteria currently described in the regulations. The amendment to section 520(b) of the FD&C Act states that a device will qualify as a “custom device” by meeting new enumerated statutory requirements, including, among others, the following for each device: (1) Is created or modified in order to comply with the order of an individual physician or dentist (or other specially qualified person); (2) necessarily deviates from an otherwise applicable performance standard under section 514 or requirement under section 515 of the FD&C Act; (3) is not generally available in the United States in finished form through labeling or advertising by the manufacturer, importer, or distributor for commercial distribution; (4) is designed to treat a unique pathology or physiological condition that no other device is domestically available to treat; (5) either (a) is intended to meet the special needs of such physician or dentist in the course of the professional practice of such physician or dentist (or other specially qualified person as designated) in the course of their professional practice or (b) is intended for use by an individual patient named in the order of a physician or dentist (or other specially qualified person as designated); (6) is assembled from components or manufactured and finished on a case-by-case basis to accommodate the unique needs of individuals, physician, or dentist; and (7) may have common, standardized design characteristics, chemical and material compositions, and manufacturing processes as commercially distributed devices (21 U.S.C. 360j(b)).

The new provisions for the custom device exemption also include the following limitations: (1) The device is for the purpose of treating a “sufficiently rare condition, such that conducting clinical investigations on such device would be impractical;” (2) the production of the device must be “limited to no more than five units per year of a particular device type”; and (3) a manufacturer is required to submit an annual report to FDA on the custom devices it supplied.

This technical amendment to the regulations for the custom device exemption will ensure clarity and consistency with the requirements of the FD&C Act. Some manufacturers might be unaware that certain medical devices that they distribute as custom devices do not meet the statutory definition as currently described in the regulations and are subject to premarket review. Also, FDA issued the final guidance entitled, “Custom Device Exemption” (Ref. 2) explaining the new statutory provisions for custom devices. The guidance provides definitions of certain terms used in connection with the custom device exemption and explains how FDA interprets the devices that may qualify for the custom device exemption under section 520(b) of the FD&C Act. The guidance also describes in further detail what information should be submitted in an annual report, and provides recommendations on how to submit an annual report for custom devices distributed under the exemption (Ref. 2). FDA finds good cause for issuing this amendment as a final rule without notice and comment because this amendment only corrects the implementing regulation to restate the statute (5 U.S.C. 553(b)(B)). “[W]hen regulations merely restate the statute they implement, notice-and-comment procedures are unnecessary.” Gray Panthers Advoc. Committee v. Sullivan , 936 F.2d 1284, 1291 (D.C. Cir. 1991). The amendments to §§ 807.85(a) and 812.3(b) merely incorporate applicable requirements of the FD&C Act, making notice-and-comment procedures unnecessary in this case. Therefore, publication of this document constitutes final action on this change under the Administrative Procedure Act (APA) (5 U.S.C. 553).

In addition, FDA finds good cause for these amendments to become effective on the date of publication of this action. The APA allows an effective date less than 30 days after publication as “provided by the agency for good cause found and published with the rule” (5 U.S.C. 553(d)(3)). A delayed effective date is unnecessary in this case because the amendments to §§ 807.85 and 812.3(b) do not impose any new regulatory requirements on affected parties. As a result, affected parties do not need time to prepare before the rule takes effect. Therefore, FDA finds good cause for this correction to become effective on the date of publication of this action.

The following references have been placed on display in the Division of Dockets Management (located at 5630 Fishers Lane, Rm. 1061, Rockville, MD 20852), and may be seen by interested persons between 9 a.m. and 4 p.m., Monday through Friday. (FDA has verified the Web site address, but we are not responsible for any subsequent changes to the Web site after this document publishes in the Federal Register.)

1. The Food and Drug Administration Safety and Innovation Act, available at http://www.fda.gov/RegulatoryInformation/Legislation/SignificantAmendmentstotheFDCAct/FDASIA/ucm20027187.htm or at https://www.congress.gov/112/plaws/publ144/PLAW-112publ144.pdf.

2. Custom Device Exemption; Guidance for Industry and Food and Drug Administration Staff; September 24, 2014, available at http://www.fda.gov/ucm/groups/fdagov-public/@fdagov-meddev-gen/documents/document/ucm415799.pdf.

Therefore, under the Federal Food, Drug, and Cosmetic Act and under the authority delegated to the Commissioner of Food and Drugs, 21 CFR parts 807 and 812 are amended as follows:

The Directorate of Defense Trade Controls (DDTC), U.S. Department of State, administers the International Traffic in Arms Regulations (ITAR) (22 CFR parts 120-130). The items subject to the jurisdiction of the ITAR, i.e., defense articles, are identified on the ITAR's U.S. Munitions List (USML) (22 CFR 121.1). With few exceptions, items not subject to the export control jurisdiction of the ITAR are subject to the jurisdiction of the Export Administration Regulations (EAR), 15 CFR parts 730-774, which includes the Commerce Control List (CCL) in Supplement No. 1 to Part 774, administered by the Bureau of Industry and Security (BIS), U.S. Department of Commerce. Both the ITAR and the EAR impose license requirements on exports and reexports. Items not subject to the ITAR or to the exclusive licensing jurisdiction of any other set of regulations are subject to the EAR. The revisions contained in this rule are part of the Department of State's retrospective plan under E.O. 13563.

All references to the USML in this rule are to the list of defense articles that are controlled for the purpose of export or temporary import pursuant to the ITAR, and not to the defense articles on the USML that are controlled by the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) for the purpose of permanent import under its regulations (see 27 CFR part 447). Pursuant to § 38(a)(1) of the Arms Export Control Act (AECA), all defense articles controlled for export or temporary import are part of the USML under the AECA. For the sake of clarity, the list of defense articles controlled by ATF for the purpose of permanent import is the United States Munitions Import List (USMIL). The transfer of defense articles from the ITAR's USML to the EAR's CCL for the purpose of export control does not affect the list of defense articles controlled on the USMIL under the AECA for the purpose of permanent import.

The revision of USML Category XII (RIN 1400-AD32) was first published as a proposed rule on May 5, 2015, for public comment (see 80 FR 25821) (1st proposed rule). The comment period ended July 6, 2015. One hundred twenty parties submitted public comments, which were reviewed and considered by the Department and other agencies.

A second proposed rule was published on February 19, 2016 for public comment (see 81 FR 8438) (2nd proposed rule). The comment period ended on April 4, 2016. Thirty-eight parties submitted public comments, which were reviewed and considered by the Department and other agencies. The discussion below, regarding items added or modified to Category XII, refers to text proposed in one or both of the two proposed rules, unless otherwise stated.

The majority of the public comments stated that the proposed controls in USML Category XII drew a clear line between the USML and CCL for items that are exclusively military vice those that have commercial and civil applications. Individual commenters addressed specific issues with some of the proposed provisions, which are described below.

One commenter requested a 365-day delayed effective date before this final rule goes into effect. The Department does not accept this comment. The rule will be effective on December 31, 2016.

One commenter stated that small businesses face a substantial cost disadvantage when having to deal with export compliance regulations and fees when compared to their larger counterparts, who often have in-house legal counsel and other resources that would be prohibitively expensive for small and mid-size businesses. The commenter requested that the Department enhance export assistance resources, particularly for small businesses. The Department accepts this comment. As part of ECR, the Department and our interagency partners have increased our industry outreach, and particularly our outreach to small and mid-size businesses.

One commenter raised questions regarding the use of the term “specially designed” which is set forth in the ITAR at § 120.41. The commenter stated that, as exporters are explicitly authorized to self-determine the jurisdiction of their item, including for those controls that use “specially designed” as a control parameter, there may be situations where the U.S. government does not agree with the self-determination. The commenter stated that a number of Department of Commerce license applications have been returned without action due to the U.S. government's uncertainty about the jurisdiction of the item. As the commenter further notes, in such instances, the Department's position is that a Commodity Jurisdiction (CJ) determination is the only official method for determining an item's jurisdiction. The commenter stated that this process is contrary to ECR. The Department does not accept this comment. While exporters are obligated to determine jurisdiction, they must do so correctly. In instances where an exporter submits an application to the Department of Commerce that is incorrect, or potentially incorrect, it is the U.S. government's responsibility to question that self-determination, and the only method for officially resolving questions of jurisdiction is a CJ determination.

The commenter also stated their concern that items may still be within the scope of Category XII, even though the items are not described in the control paragraphs. The commenter posited that there is a policy that the revised Category XII is intended to retain most items on the USML and that, therefore, how an item was controlled under the prior Category XII may still be relevant as to whether that item is controlled in Category XII today. The Department does not accept this comment. While it is true that the transfer to the CCL of lower level military parts and components was greater in other USML categories than in Category XII, it is because the parts and components that will remain in Category XII continue to warrant ITAR control. Through ECR, Category XII, and other USML categories, have been revised to be a positive list of defense articles. If an item is not within the scope of one or more of the control paragraphs, that item is not a defense article and is not ITAR controlled. For additional information, see the Department's Transition Plan, which addresses prior CJ determinations (78 FR 22740, 22747-22751).

One commenter requested that the Department remove the phrases “specially designed for articles in this subchapter” and “specially designed for articles in this category” and replace them with “specially designed for a military end user,” throughout Category XII. The commenter stated that they read the two phrases as overly broad and confusing when applied to academic instrumentation, and were concerned that they will “catch” many items designed for civilian use. They also stated concern that there is no contingency to “release” items as currently written. The Department does not accept this comment. The Category describes the items that warrant control on the USML.

The revised USML Category XII introduces a new concept that has not been used in the other revised USML categories, explicitly controlling certain articles based on the original intended end user. In paragraphs (b)(6), (c)(1)(iii), (c)(3), (c)(4)(ii), (c)(5), (c)(6)(viii)(b), and (c)(7)(ii), items are identified as defense articles if they are specially designed for a military end user. The definition of military end user in the new Note to Category XII is borrowed from the EAR (see 15 CFR 744.21(g)), as further harmonization under ECR. A military end user is defined as the national armed services, national guard, national police, government intelligence or reconnaissance organizations, or any person or entity whose actions or functions are intended to support military end uses. An item is specially designed for a military end user if it was developed for use by a military end user or users. If an item is developed for both military and non-military end users, or if the item was created for no specific end user, then it is not specially designed for a military end user. Contemporaneous documents are required to support the design intent; otherwise, use by a military end user establishes that the item is specially designed for a military end user.

If exporters are unable to determine the proper jurisdiction of an item, the Department has the CJ process available to provide definitive guidance. A request for a CJ determination under the control text below may be submitted up to 60 days prior to the effective date of this rulemaking.

Many commenters submitted public comments identifying concerns with this control structure. The Department and its interagency partners reviewed these comments and largely agree with the commenters that control based on original design intent is more difficult to implement than a control based on technical parameters. However, the Department initially proposed technical parameter based controls in the 1st proposed rule, and the public comments asserted, to the Department's satisfaction, that commercial and civil variants exist that meet those technical parameters. Therefore, the Department developed and published the “specially designed for a military end user” in response to these public comments. The Department cannot yet articulate objective technical criteria that would establish a bright line between military and commercial and civil systems. The public comments to the 1st and 2nd proposed rules also did not identify any such objective criteria for these seven paragraphs. The Department will publish a notice of inquiry (NOI) later this year soliciting public input on suggested control parameters for these seven paragraphs.

One commenter asked whether this control will limit defense articles no longer in development to USML Category XII. The Department acknowledges that once an item is out of development, it is not possible to change the original intended end user of the item. It is for that reason that the Department will consider CJ applications based on information other than documents contemporaneous with the development of the item.

One commenter stated that, while the definition of “military end user” is borrowed from the EAR, the purpose of the definition under the EAR is the imposition of a license requirement; it is not appropriate for the ITAR, where the purpose is to determine jurisdiction. Specifically, the commenter noted that the definition would result in commercial infrared cameras being subject to the ITAR. The Department does not accept this comment. While the definition does serve a different purpose under the ITAR than the EAR, it is an established definition. Additionally, the Department notes that the controls on infrared cameras in XII(e)(4) do not use the control parameters “specially designed for a military end user,” but rather use the control parameters “specially designed for an article in the subchapter.” While both controls use the term “specially designed,” defined in § 120.41, they are very different in application. For example, an infrared camera would not be “specially designed for an article in the subchapter” if it is used in or with a system subject to the EAR that is in production, under paragraph (b)(3) of § 120.41.

Several commenters stated that it may be difficult for purchasers and subsequent users to know the jurisdictional status of items because they may not be privy to the design intent of the original manufacturer or know all other uses of an item. The Department acknowledges that cooperation with the manufacturer in such cases to identify the proper jurisdiction of USML defense articles is critical for a successful compliance program. Moreover, this provision does not add new obligations on parties because most provisions of the USML in place prior to the reform effort required an investigation into the design intent behind a product's development. The revised USML has substantially reduced the need to conduct such investigations, but has not yet eliminated it.

One commenter requested that the Department revise the note so that, in the absence of contemporaneous documentation, use by a military end user does not establish that an item is specially designed for a military end user, and instead make the note say that use by a commercial/civil end user establishes that an item is not specially designed for a military end user. The Department does not accept this comment. The items controlled under the seven paragraphs that use “specially designed for a military end user” are items that warrant ITAR control, even if these items have been used by a commercial/civil end user. However, if such items have transitioned to normal commercial use, the Department would review an application for a CJ requesting the Department to establish that the item is not subject to the ITAR.

One commenter noted that designing an item to a military specification for a military end user will make that item specially designed for a military end user. The Department confirms this comment. However, if the item was originally designed for both military and non-military end users, then the fact that a military specification was included as a design requirement does not render the systems ITAR controlled.

The commenter also noted that making other modifications to a commercially available item for a military end user will make that item specially designed for a military end user. The Department confirms this comment as well because the version modified for a military end user is a different item than the one originally developed for a non-military end user.

Several commenters noted that the definition of “military end user” includes national police, and that, in the United States, portions of the U.S. government could meet the definition of national police. Some commenters requested further clarification on the term's potential scope. The Department confirms that some portions of the U.S. government may qualify as “national police” within the definition of “military end user.” If you have any questions as to whether a particular project involving a department or agency of the U.S. government is controlled in this paragraph, the Department suggests that you address that issue directly with that department or agency or submit a request for a CJ determination to the Department.

Several commenters stated that the phrase “. . . any person or entity whose actions or functions are intended to support military end uses” is very broad. The Department acknowledges that the definition of military end user is broad and intends it to be so.

One commenter asked whether the scope of “military end uses” is tied to a “military end user” (i.e., are all activities of a “military end user” considered “military end uses”?). The Department notes, as described above, that the definition of “military end user” is borrowed from the EAR. The EAR defines “military end use” in 15 CFR 744.21(f) as (1) incorporation into an item on the USML or the Wassenaar Arrangement Munitions List (WAML) or military commodities subject to the EAR; or (2) the use, development, or production such items. As the Department is borrowing this phrase from the EAR, the Department may look to the EAR, including the definition of “military end use,” for interpretive guidance.

Several commenters stated that it may be difficult to find “documents contemporaneous with the development” for items developed in the past. The Department acknowledges that the contemporaneous documentation may not have been created, may no longer exist, or may not be accessible by the person making the determination. However, if an item described in one of the seven paragraphs is used by a military end user, the lack of contemporaneous documentation will require a determination by the applicant that the item is “specially designed for a military end user” in the absence of a CJ determination that the item is not subject to the ITAR.

Several commenters noted that items not originally designed for a military end user may be within the scope of the control, because no “documents contemporaneous with the development” exist that can substantiate the original intended civil or dual use applications. The Department acknowledges that some items may fall within the scope of the control, even though they were originally developed for civil or dual use applications, because they are now used by a military end user and there is no documentation of the original intention. For the purpose of establishing clear controls, the Department has determined that without such documentation, the items should be USML controlled. However, the Department will consider a request for a CJ determination that the item be determined to be not subject to the ITAR, and may consider any relevant information, such as that which substantiates the original design intent.

One commenter requested that the Department allow a manufacturer to self-determine dual use design intent with post-development documentation. The Department does not accept this comment, as post-development documentation is not a sufficient criteria for self-determination. However, the Department will consider CJ applications supported by post-development documentation.

One commenter stated that one of the purposes of ECR was to avoid design intent based controls. The Department agrees with the commenter that technical parameter based controls are preferred to design intent or end user based controls. However, being unable at this time to determine appropriate technical parameters that differentiate critical military systems from highly capable civil and commercial systems, the Department has adopted the second best option, a design intent based control. As noted above, the Department continues to evaluate the practicality of technical parameter based controls and will be publishing a NOI soliciting public input on suggested control parameters.

One commenter suggested that the Department abandon the term “military end user” and replace it with “military purpose” and suggested a definition:

The Department does not accept the comment. The term “military end user” sufficiently describes those items of most interest to the Department, those that warrant control on the USML, while describing the smallest number of items that do not warrant such control, all of which still have military applications. Additionally, the Department is borrowing the term “military end user” and its definition from BIS and that harmonization of terms has independent value under ECR. The definition proposed by the commenter would be more difficult to apply and would not sufficiently describe all of the items that provide the United States with a critical military or intelligence advantage, and is therefore insufficient as a USML control criteria.

One commenter suggested that the Department use specially designed as defined in § 120.41 and state that items in these paragraphs are not eligible for the releases in § 120.41(b). The Department is using specially designed as defined in § 120.41, with the addition of an important caveat. The systems controlled using the “specially designed for a military end user” control are systems that would be caught under § 120.41(a)(1), and therefore, the releases in paragraph (b) would not be available. The Department determined that such a control would be too restrictive and has introduced the ability to self-determine jurisdiction based on documents contemporaneous to the development that establish commercial or civil applications, similar to releases (b)(4) and (b)(5) of § 120.41. The characteristic described under § 120.41(a)(1) is being for a military end user, as defined by the Note to Category XII.

The commenter also asked the Department to confirm that the releases in § 120.41(b) apply to the items controlled using “specially designed for a military end user.” The Department does not accept this comment. As systems (as opposed to parts, components, accessories, attachments, and software), § 120.41(a)(1) governs the “specially designed” analysis and the releases in (b) do not apply.

One commenter stated that the inclusion of the phrase “specially designed for a military end user” generally helps address the jurisdiction of off-the-shelf (commercial) items used with defense articles, but notes that there are many situations when off-the-shelf items do not meet the specifications required for scientific instrumentation developed at universities for civilian end uses. The commenter recommends that the use of “specially designed for a military end user” be extended to ensure that custom-made items used in conjunction with defense articles for civilian end uses are not ITAR controlled. The Department does not accept this recommendation. The Department does confirm that making a custom item for a civilian end user does not make an item “specially designed for a military end user” even if a controlled good is involved. However, if the control parameter is “specially designed for an article in this subchapter” then making a custom item for a defense article would result in the item being a defense article, even if it is for use by a civilian end user.

Paragraph (a) is revised to add subparagraphs (1) through (9) to more clearly describe the articles controlled in (a). Paragraph (a)(2) in the 2nd proposed rule was moved to paragraph (c)(2) in this final rule. This resulted in the remaining subparagraphs of paragraph (a) being renumbered. The Department also reordered subparagraphs (5)-(7) to more logically track the progression of devices, from those that detect ordnance launch, to those that guide the ordnance, and finally to those that track the ordnance. The Department addresses the public comments below.

Paragraph (a)(1) is added for fire control systems.

One commenter requested that the Department clarify the difference between fire control systems in paragraph (a)(1) and the items controlled in paragraphs (a)(2)-(10) of the proposed rule. Because there is a control in paragraph (e) for all specially designed parts and components for fire control systems in paragraph (a)(1) and remote wind-sensing systems specially designed for ballistic-corrected aiming in paragraph (a)(8), but not the other subparagraphs of (a), the commenter stated they were confused about the proper application of the specially designed parts and components controls. The Department confirms that a fire control system is a complex system that may perform some of the functions described in the other subparagraphs within paragraph (a). Additionally, each item described in another subparagraph of paragraph (a) can be a stand-alone system that is not part of a larger fire control system. When such items are part of a fire control system, all specially designed parts and components are controlled for that larger system, including the parts and components of the subsystem that perform the functions described elsewhere in paragraph (a). However, when they are stand-alone systems, or part of systems other than a fire control system, any specially designed parts and components, not elsewhere specified on the USML, would be subject to the EAR and controlled in Export Control Classification Number (ECCN) 7A611.x.

One commenter requested that the Department provide guidance on how to classify items explicitly described by the prior USML Category XII(a) but no longer described on the USML. The commenter specifically identified periscopes and certain weapon sights, weapon aiming systems, and weapon imaging systems. If such items are described in another paragraph on the USML, such as electro-optical periscopes with infrared capabilities in paragraphs (c)(3) of Category XII or weapons sights or imaging systems in paragraph (c)(2) of Category XII, then they are controlled there. If they are a specially designed part or component for a fire control system, then they would be controlled in paragraph (e)(1) of Category XII. If they are not described on the USML, then they would be subject to the EAR and controlled in the appropriate ECCN.

One commenter stated that they did not find Remote Weapons Stations (RWS) or Remote Controlled Weapons Stations (RCWS) within the proposed Category XII. The commenter defines RWS as systems that allow a weapon operator to operate and fire a weapon from inside the protection of a building or a wide variety of vehicle, vessel and aircraft platforms; and a RCWS as essentially the same as a RWS, except that it allows the operator to control the weapon from a distant or remote location. The Department partially accepts this comment. An RCW or RCWS that has a weapon in the system is a Category I or Category II weapons system. An RCW or RCWS that does not have an integrated weapon is a fire control system and is described in paragraph (a)(1).

Paragraph (a)(2), formerly paragraph (a)(3) in the 2nd proposed rule, is added for electronic or optical weapon positioning, laying, or spotting systems. The Department received no comments on this proposed control.

Paragraph (a)(3), formerly paragraph (a)(4) in the 2nd proposed rule, is added for certain laser spot trackers and laser spot detectors that are for laser target designators or coded laser target markers controlled in paragraph (b)(1). The Department revised this control from the 1st proposed rule by tying it to paragraph (b)(1) to more specifically describe the kinds of items controlled by this paragraph. The Department received no comments on this proposed control.

Paragraph (a)(4), formerly paragraph (a)(5) in the 2nd proposed rule, is added for bomb sights and bombing computers. The Department received no comments on this proposed control.

Paragraph (a)(5), formerly paragraph (a)(8) in the 2nd proposed rule, is added for electro-optical systems that automatically detect and locate ordnance launch, blast, or fire. The Department determined that the control text in the 2nd proposed rule was inexact, as it identified weapons launch or fire, where the launch, blast or fire is actually of the ordnance from the weapon. Therefore, the Department revised the control text to more clearly state the scope of the control. The Department received no comments on this proposed control.

Paragraph (a)(6), formerly paragraph (a)(7) in the 2nd proposed rule, is added for electro-optical ordnance guidance systems. The Department received no comments on this proposed control.

Paragraph (a)(7), formerly paragraph (a)(6) in the 2nd proposed rule, is added for missile or ordnance electro-optical tracking systems. One commenter noted that some military sensor pods do not clearly meet the description of paragraph (a)(6) or (a)(7) in the 2nd proposed rule, but which are treated as USML today and which the commenter believes warrant continued USML control. The Department accepts this comment and revised the control to more clearly state the scope of the control is for electro-optical systems for tracking missiles or ordnance. The Department also revised paragraph (c)(3) to describe military reconnaissance, surveillance, target detection, or target acquisition systems, which includes the sensor pods identified by the commenter.

Paragraph (a)(8), formerly paragraph (a)(9) in the 2nd proposed rule, is added for remote wind sensing systems specially designed for ballistic-corrected aiming. One commenter stated that the use of the word remote in the control would remove systems mounted on vehicles from the scope of the control. The Department does not accept this comment. The control text does not require that the wind sensing system be remote from the weapons system. The systems described in paragraph (a)(8) are those that sense the wind at a remote location to provide ballistic corrected aiming for the delivery of munitions or ordnance to a target, presumably at, or near the location where the wind is being sensed.

Paragraph (a)(9), formerly paragraph (a)(10) in the 2nd proposed rule, is added for certain helmet mounted display (HMD) systems. The Department redrafted the control to maintain the scope, but make it easier to read. The Department also moved the exemplary parenthetical in the 2nd proposed rule to its new location in order to clarify the types of items intended to be captured by the control.

One commenter stated that the control is difficult to read and that the commenter read it to control HMDs that have the ability to connect to a weapons sight. The Department accepts this comment and has revised the control text by setting out the various elements in subparagraphs to more clearly articulate the scope of the control. The Department also confirms that the paragraph does not control a HMD solely on the basis of being capable of connecting to a weapons sight.

One commenter noted that the control is designated Significant Military Equipment (SME), as is all of paragraph (a), but that it controls equipment very similar to the HMDs controlled in Category VIII, which are not designated SME. The Department accepts this comment and has removed the SME designation from this control.

One commenter requested that the Department add “specially designed for military end use” to this control. The Department does not accept this comment. The items described in this control have significant military utility and no non-military applications have been identified.

Paragraph (b) is revised to add subparagraphs (1) through (7) to more clearly describe the articles controlled in (b). Controls on lasers and others parts and components of laser systems are moved to paragraph (e).

Paragraph (b)(1) is added for laser target designators or coded target markers that mediate the delivery of ordnance to a target. The Department received no comments on this proposed control.

Paragraph (b)(2) is added for infrared laser target illumination systems having a variable beam divergence. The Department made the control text from the 2nd proposed rule more specific by adding “or track” to more completely describe the defense articles controlled by this paragraph.

One commenter requested that the Department define “target” and limit the control to only laser-based illumination systems that are designed and intended for use with weapons systems or other military applications. The Department does not accept this comment. The Department believes that the systems described by the control, variable beam infrared target illumination systems, are used primarily by the military and the commenter provided no specific examples of civil or commercial systems.

One commenter requested that the Department add “specially designed for military end use” to the control. The Department does not accept this comment. The systems identified by the commenter are not variable beam systems, and no such non-military systems have been identified. Thus, there is no reason to so limit the control because it already only controls military systems.

Paragraph (b)(3) is added for certain laser range finders that either: (1) operate at a wavelength of 1064 nm and have a Q-switched pulse output, or (2) operate in excess of 1064 nm and meet certain technical parameters. The Department revised subparagraph (A) to clarify that systems that send out multiple laser pulses within one second are also within the scope of the control.

One commenter stated that laser range finders are ubiquitous and used in civil and commercial applications involving light detection and ranging (LIDAR) and laser detection and ranging (LADAR), and requested that the Department replace the control parameters with “specially designed for military end use.” The Department does not accept this comment. This control is for stand-alone laser range finders, the LIDAR and LADAR systems on the USML are described in paragraph (b)(6).

One commenter stated that civil and commercial systems use long range laser range finders and requested that the Department revise the control to state: “A system which is capable of calculating a certified Category I or II target location solution, using navigation data embedded in the system or externally supplied, and laser rangefinder data.” The Department does not accept this comment. The civil applications identified by the commenter do not meet the accuracy parameters of the control text.

Paragraph (b)(4) is added for certain targeting or target location systems. One commenter stated that the control would describe commercial and civil systems, such as robotic package handling. The Department does not accept the comment because the control requires that the item include a Global Navigation Satellite System (GNSS), guidance, or navigation defense article controlled in paragraph (d). The Department has revised the text of the control to more clearly describe the items controlled.

Paragraph (b)(5) is added for optical augmentation systems. Several commenters stated that commercial and civil systems use infrared retroflectance, such as commercial automotive, biometric, and 3D imaging, and requested that the Department remove the word “personnel” and insert the descriptor “military.” The Department partially accepts the comment by removing the word “personnel,” which addresses the applications identified by the commenters. The Department does not believe that the civil or automotive applications described by the commenters meet the control text. However, if there is any confusion regarding the jurisdiction of a specific item, the Department encourages exporters to submit a request for a CJ determination.

Paragraph (b)(6) is added for light detection and ranging (LIDAR), laser detection and ranging (LADAR), or range-gated systems specially designed for a military end user. One commenter stated inclusion of the phrase “specially designed for a military end user” resolves any question regarding the jurisdiction of their meteorological LIDARs. The Department accepts the comment.

Paragraph (b)(7) is added for developmental lasers and laser systems funded by the Department of Defense (DoD), with certain exceptions. Several commenters submitted comments on (b)(7), as well as the other developmental paragraphs in the 2nd proposed rule, paragraphs (c)(9), (d)(6) and (e)(23), now paragraphs (c)(10), (d)(6) and (e)(24). The Department does not accept these comments.

Several commenters stated that controlling future systems during their development based solely on DoD funding improperly presumed that all items funded by the DoD under this category are for military end use, that such a control would impede multi-source funding by universities and companies, and that DoD contracting officers may not be willing to make an export control jurisdiction determination in the contracting documents. The Department does not accept this comment. The developmental paragraphs only control items during their developmental phase, based on the premise that the government does not know, and thus cannot positively describe, those items that will be developed in the future. The Department did not explicitly limit the control text with a phrase such as “specially designed for a military end use” because the determination of the military utility of a DoD-funded system at its developmental stage is a role for the government. An item being developed with whole or partial DoD funding will be outside the scope of this control if the funding document with DoD simply states that it is being developed for both civil and military applications. The contract need not, and should not, make a jurisdictional determination. For items with civil or commercial applications that nonetheless warrant ITAR control because they provide a critical military or intelligence advantage, the Department will have the ability to explicitly add them to the USML, notwithstanding the statement in the funding document, whether in production or development. DoD has undertaken a substantial effort to educate contracting officers and others in the DoD research and supply chain communities regarding the scope and intent of these developmental paragraphs. Additionally, a request for a CJ determination is another means of determining if a specific DoD-funded developmental item warrants ITAR control. These developmental paragraphs have been included in other USML Categories as part of the ECR review and appear to be working smoothly.

One commenter expressed concern that the developmental control would prevent fundamental research funded by DoD. The Department does not accept this comment. The ITAR currently allows fundamental research into defense technologies at accredited U.S. colleges and universities. See § 120.11(a)(8). The inclusion of these developmental systems on the USML does not change the ability of researchers to conduct fundamental research and publish the results. Publication and dissemination restrictions in the funding documents will be the primary mechanism for determining if DoD funding of a project prohibits that project from being considered as fundamental research.

One commenter asked the Department to clarify how the CJ determination release in Note 1 will work for an item identified in another USML paragraph because Note 2 states that Note 1 does not apply to items enumerated elsewhere on the USML. The commenter specifically inquired as to how this will interact with the control in paragraph (b)(6) for LIDAR systems specially designed for a military end user. If the Department issues a CJ determination that an item is not subject to the ITAR, then that item is not specially designed under § 120.41. The item is no longer described in a paragraph that uses specially designed as a control parameter, whether that control is for items specially designed for a defense article or specially designed for a military end user. Therefore, the item for which the CJ applied would not be within another USML paragraph and Note 2 would not apply.

Paragraph (c) is revised to add subparagraphs (1) through (10) to more clearly describe the articles controlled in (c). Controls on night vision and infrared cameras are moved from paragraph (c)(1) in the 2nd proposed rule to paragraph (e)(4) and comments on paragraph (c)(1) will be addressed below. Controls on weapons sights and weapon imaging systems are moved from paragraph (a) of the proposed rule to paragraph (c).

Paragraph (c)(1), formerly paragraph (c)(2) in the 2nd proposed rule, is added for certain binoculars, bioculars, monoculars, goggles, or head or helmet-mounted imaging systems. The Department revised the text from the 2nd proposed rule to clarify the scope of the control. Subparagraph (i) is revised to clarify that it controls articles that employ autogated third generation image intensifier tubes (IITs) or a higher generation IIT. The Department revised subparagraph (ii) to clarify that it controls articles that are sensor fused with an IIT and an infrared focal plane array (IRFPA) having a peak response wavelength greater than 1,000 nm. Such articles with an IRFPA or infrared imaging camera are controlled if specially designed for a military end user.

One commenter requested that the Department add “head or helmet-mounted” to the parenthetical in paragraph (c)(1). The Department does not accept this comment because the text would be redundant. The control is for systems where both the sensor and the display are on the head or helmet. However, there may be such systems where the sensor and a near-to-eye display are both attached to the head or the helmet, but not attached to each other.

One commenter stated that the control describes hardware used for medical applications and requested that the Department add “specifically designed for military systems” to the entire control. The Department does not accept this comment. As noted above, the control is for systems where both the sensor and the display are on the head or helmet. The Department is unaware of such systems that include the sensors described in the control being used in medical applications. The commenter did not provide any examples of such systems.

One commenter stated that a monocular could be within the scope of this control, even if it is not specially designed for a military end use and it includes an IIT that is not ITAR controlled, simply because the IIT is an autogated third generation IIT. The Department confirms this comment. Monoculars and other similar systems with an autogated third generation IIT have significant military capability and provide the United States with a critical military and intelligence advantage. Therefore, they warrant ITAR control.

The commenter further stated that it was incongruous to have the control on IITs, in paragraph (e), different from the control parameter for binoculars, bioculars, monoculars, goggles, or head or helmet-mounted imaging systems that incorporate an IIT. The comment claimed that a monocular could include a non-autogated third generation IIT that was specially designed for a defense article, and that in such a scenario the monocular would be subject to the EAR, even though it includes an IIT that is ITAR controlled. The Department does not accept this comment. If a non-autogated third generation IIT is controlled in paragraph (e)(7) (paragraph (e)(6) in the 2nd proposed rule) on the basis of being specially designed for a defense article, the use of that IIT in a monocular that is not otherwise within the scope of (c)(1) would result in the IIT being not specially designed on the basis of § 120.41(b)(3). Therefore, a monocular subject to the EAR cannot include an IIT that is subject to the ITAR, excluding a developmental monocular or a DOD funded developmental IIT.

Paragraph (c)(2) is added for weapons sights and aiming or imaging systems, specially designed to mount to a weapon or to withstand weapon shock or recoil, with certain IRFPAs, IITs, ballistic computers, or lasers. These items were described in paragraph (a)(2) of the 2nd proposed rule. The Department moved the control to paragraph (c) as these systems are controlled largely on the basis of the incorporation of an imaging device, such as an IRFPA or IIT and are similar to the items described in paragraph (c)(1).

One commenter requested that the Department define “weapons sight.” The Department does not accept this comment to the extent that it asks for “weapons sight” to be a defined term. However, the Department has revised the control text to describe those items that are within the scope of the control more directly. The Department added the parenthetical phrase “(i.e., with a reticle)” following weapon sight to more specifically identify the items described by that term. The Department also added that the systems must be specially designed to mount to a weapon or specially designed to withstand weapon shock or recoil. These features are critical capabilities for differentiating a weapons sight from other infrared and night vision devices.

One commenter stated that the inclusion of clip-on systems in the same sub-category as weapons sights creates confusion and recommended that clip-on systems be separated into another subcategory as they are multi-functional devices and are not directly related to designated weapon sights. The Department does not accept this comment. A clip-on is controlled if it is specially designed to mount to a weapon or specially designed to withstand weapon shock or recoil, and meets one of the technical parameters. The Department notes that the control is for clip-ons that are specially designed to attach to a weapon, not to a day-scope. This means that a clip-on that is truly multi-functional, and designed to attach to binoculars, monoculars, and other infrared and night vision devices via a universal attachment, would not be controlled in this paragraph, unless it was also specially designed to withstand weapons shock or recoil. Systems specially designed for weapons shock warrant USML control.

One commenter stated that the controls in the 2nd proposed rule would include weapons sights incorporating 2nd generation IITs, some of which have previously been subject to the EAR. The Department acknowledges the comment and adopts a technical parameter of 350 microamps per lumen for the control.

One commenter stated that the 2nd proposed rule would include any night vision weapon sight specially designed for any type of weapon listed in Category I of the USML. The Department confirms this understanding. While the Department has revised the control parameter from “specially designed for a defense article” to “specially designed to mount to a weapon to withstand weapon shock or recoil,” this change is a clarification only that does not reduce the scope of the control.

One commenter noted that the “specially designed for a military end user” control was not used for weapons sights, but was used for the binoculars, bioculars, monoculars, goggles, or head or helmet-mounted imaging systems in paragraph (c)(2) of the 2nd proposed rule. The Department acknowledges the comment. The Department was able to describe those weapons sights and imaging or aiming systems that warrant USML control positively using technical parameters. Unfortunately, that was not possible for certain binoculars, bioculars, monoculars, goggles, or head or helmet-mounted imaging systems, so they are controlled when specially designed for a military end user.

One commenter claimed that the 2nd proposed rule described weapons sights in a way that could make an infrared imaging camera a weapons sight. The Department does not accept this comment. Additionally, the Department has revised the control to more specifically describe those items.

One commenter requested that the Department limit the scope of the control based on the incorporation of an infrared focal plane array to systems with two-dimensional arrays. The Department does not accept this comment. If a system meets all of the other parameters of the control and the IRFPA is a one-dimensional array, that system still warrants control on the USML.

Paragraph (c)(3) is added for electro-optical reconnaissance, surveillance, target detection, or target acquisition systems, specially designed for defense articles. The Department consolidated the control in paragraph (c)(3) of the 2nd proposed rule for targeting systems with the control in paragraph (c)(5)(ix) for all infrared systems that are specially designed for a defense article. This also addresses the comment to paragraph (a)(7), described above. The Department also incorporated the missile technology control designation (MT) from paragraph (c)(5)(ix).

Paragraph (c)(4) is added for certain infrared search and track (IRST) systems. The Department revised this control to include the positive technical parameter based control that was published in the 2nd proposed rule, for systems that utilize a longwave IRFPA and maintain positional or angular state of a target through time, and added a separate control for all other IRST systems that are specially designed for a military end user. The Department revised this control from the 1st proposed rule in response to public comments regarding certain non-military systems.

Two commenters expressed concern that certain civil and commercial systems that utilize long wave infrared imaging, such as a civil automotive system for searching and tracking pedestrians and other vehicles and aerial commercial systems used for infrared detection and quantification of hydrocarbon gas leaks (e.g., methane), may be controlled. One commenter requested that the Department add the control parameter “for military applications” and the other asked the Department to move the control into paragraph (c)(5). The Department does not accept these comments. The Department confirms that IRST is a military capability used in airborne and naval platforms and does not include normal commercial systems such as civilian automotive and hydrocarbon gas leak detection systems.

Paragraph (c)(5) is added for infrared distributed aperture systems that are specially designed for defense articles. This paragraph was not expressly in the 2nd proposed rule, but the items described in this entry were within the control in paragraph (c)(5)(ix) of the 2nd proposed rule. This logically includes all infrared systems that are specially designed for a defense article, and thus would include all such distributed aperture systems with infrared detectors, including those with additional visible light or other non-infrared detectors.

Paragraph (c)(6), formerly paragraph (c)(5) in the 2nd proposed rule, is added for certain infrared imaging systems, described in eight subparagraphs. These paragraphs describe systems with infrared detectors, including those with additional visible light or other non-infrared detectors. One commenter requested that the Department define imaging systems and suggested that such definition exclude those systems that include an infrared detector but which do not use the detector to capture video or pictures. The Department does not accept this comment. Paragraph (c)(6) controls systems that have an infrared imager and does not require that those system produce a human viewable image. The commenter also noted confusion with classifying their items within the USML, noting that systems described in USML Category XI(a)(4)(i) may include an imager. The Department notes that USML Category XI(a) explicitly states that it is for systems not described in USML Category XII. Therefore, if your system is described in USML Category XII, that is where it should be classified.

Subparagraph (i) is added for mobile systems that provide real-time target recognition at ranges greater than 3 km and includes a note to describe the size of the target that the system must be able to identify. One commenter suggested that the proposed control text was broad and would include non-military systems used for search and rescue, civil law enforcement, border protection, and commercial applications related to security surveillance systems for high value asset protection. The Department accepted this comment and revised the control to more specifically describe the critical military systems. The Department revised the control by switching the operative function from “target location” to “target recognition” and added a note to describe the size of the target as a NATO standard tank. The Department moved the range from 5km to 3km because target locating is possible at twice the distance as target recognition. Therefore, the change is actually an increase in the capabilities of the systems that are subject to control.

Subparagraph (ii) is added for airborne stabilized systems specially designed for military reconnaissance. The Department received no comments on this proposed control.

Subparagraph (iii) is added for automated multispectral imaging systems that classify or identify military or intelligence targets or characteristics. Two commenters stated that the proposed control could describe civil and commercial multispectral systems because it is unknown whether the spectral signatures that they classify are considered military or intelligence characteristics by the Department. The Department accepts this comment and revised the control to only those systems that provide automated classification or identification of the military or intelligence targets or characteristics.

Subparagraph (iv) is added for automated missile detection or warning systems. The Department received no comments on this proposed control.

Subparagraph (v) is added for systems hardened to withstand electromagnetic pulse (EMP), directed energy, chemical, biological, or radiological threats. The Department revised subparagraph (v) to include infrared imaging systems hardened against directed energy weapons. Such systems are also described in USML Category XVIII, but the Department determined that the inclusion in this subparagraph would assist exporters in the identification of their systems, as this subparagraph controls similarly shielded systems. The Department received no comments on this proposed control.

Subparagraph (vi) is added for systems incorporating mechanisms to reduce the optical chain signature for optical augmentation. One commenter stated that the proposed control could describe non-military systems, as it did not describe the kind of signature or level of signature reduction that would trigger the control. The commenter noted that a commercial infrared imaging system incorporating insulation that provides audible noise reduction or flat black paint to reduce reflections could be described, as noise reduction and reflection reduction could be considered signature reduction. The Department accepts this comment and revised the control to identify the optical chain signature for optical augmentation specifically.

Subparagraph (vii) is added for certain aerial persistent surveillance systems. The Department clarified the proposed control by noting that the technical parameters for systems that can detect a certain ground sample distance at 10,000 feet above ground level also described systems that can obtain the same or greater performance at greater altitude. The Department received no comments on this proposed control.

Subparagraph (viii) is added for certain gimbaled infrared systems. Two commenters stated that the control for a turret with a ball of 15 inches or greater includes civil and commercial systems. The commenters asserted that large sized turret balls are not a uniquely military capability and that the commercial and civil users require large turret balls as well. The Department does not accept these comments. Stable turrets with balls greater than 15 inches provide significant military capability and warrant ITAR control.

Paragraph (c)(7), formerly paragraph (c)(6) in the 2nd proposed rule, is added for certain terahertz imaging systems. One commenter requested that the Department limit the terahertz imaging systems within the control to concealed object detection systems to mirror the dual use control in ECCN 2A984. The Department partially accepts this comment. The Department revised the control to limit those systems meeting or exceeding the technical parameters described in the 2nd proposed rule to concealed object detection systems, and added an additional control for all terahertz imaging systems specially designed for a military end user. As a result of the revision to the control text, the Department of Commerce revised ECCN 2A984 by changing the lower end of the controls from 0.5 milliradians to 0.1 milliradians, and the Department is making conforming changes to USML Category XI, paragraphs (a)(3)(ii) and (a)(10), which exclude those items controlled in ECCN 2A984.

Paragraph (c)(8), formerly paragraph (c)(7) in the 2nd proposed rule, is added for systems or equipment incorporating an ultraviolet or infrared beacon or emitter specially designed for Combat Identification. The Department revised this entry to include ultraviolet Combat Identification systems. The Department received no comments on this proposed control.

Paragraph (c)(9), formerly paragraph (c)(8) in the 2nd proposed rule, is added for systems that project radiometrically calibrated scenes directly into the entrance aperture of an electro-optical or infrared (EO/IR) sensor controlled in this subchapter within either the spectral band exceeding 10 nm but not exceeding 400 nm, or the spectral band exceeding 900 nm but not exceeding 30,000 nm. The Department received no comments on this proposed control.

Paragraph (c)(10), formerly paragraph (c)(9) in the 2nd proposed rule, is added for developmental imaging systems funded by the DoD.

One commenter stated that the developmental paragraph should be deleted because DoD funds basic research. The Department does not accept this comment.

One commenter stated that it supported the developmental paragraph due to the inclusion of Note 1. The commenter stated that throughout the microelectronics industry, there are many “electro-optical” companies that have received rather modest, yet ultimately critical research and development funding from DoD to migrate their core commercial off-the-shelf (COTS) technology into specialized and vitally important applications in support of the Armed Forces. According to the commenter, in many cases, that research and development funding was sufficiently necessary that, but for such funding, the Armed Forces would not have gained the support of a given manufacturer. The costs of migrating a COTS product to a specialized military item, even if relatively modest technically, might have been too expensive for a small company to undertake, given the relatively fewer units that would eventually be sold for military uses. The commenter noted that Note 1 allows DoD to specify upfront and without ambiguity what will be the desired status of DoD-funded research and development efforts in private industry. If the contract explicitly specifies that the intended results of such a research and development program are to enable “both civil and military applications,” that specificity will, by itself, be sufficient to settle whether the “military” version is to be treated as an ITAR-controlled item. The commenter continued that the principle set out in Note 1 is that, once DoD has so stated, then the resulting “military” part is to be considered outside the purview of USML Category XII and to be controlled only under the EAR. That removes both ambiguity and cost to private industry, directly in understanding what will happen to the item even before it is developed and then, afterwards, when that item has been developed and goes to actual commercial production and distribution, including elimination of an unnecessary CJ request. The Department accepts this comment.

Paragraph (d) is revised to add subparagraphs (1) through (6) to more clearly describe the articles controlled. One commenter requested that the Department revise the introductory text in proposed paragraph (d) by adding “specially designed for military systems” to clarify that industrial control systems are not within the scope of this paragraph, citing, for example, an industrial control system that performs a function which involves linear acceleration levels exceeding 25g. The Department partially accepts this comment. The Department revised the introductory text to guidance and navigation systems and end items, and also removed “control” from paragraph (d)(1). This paragraph is for guidance and navigation systems that control the movement of other systems, not for industrial control systems.

Paragraph (d)(1) is added for certain guidance or navigation systems. The Department revised the text of paragraph (d)(1)(i) from the proposed by correcting “circle of equal probability” to “circular error probability”.

One commenter stated that the use of technical parameters, in paragraph (d)(1) and the controls for accelerometers and gyroscopes in paragraph (e), without limiting the control to those systems “specially designed” for the military, could result in commercial products being controlled on the USML, particularly if the items are validated on an individual item-by-item basis, rather than as a product line, due to run-to-run variation in performance. The Department does not accept this comment to the extent it is a request to include “specially designed for the military” as a control parameter. The Department notes that the question of whether a system is validated to USML technical control parameter thresholds on an individual item-by-item basis or on a product line basis is a question that involves all of the USML. The Department will address this issue in a separate rulemaking.

One commenter requested that the Department add the word “or” between each subparagraph, rather than just the final two subparagraphs, to clarify that the systems need only meet one of the technical parameters. In response to this comment, the Department revised the introductory text to paragraph (d)(1) to state “having any of the following” to clarify that an item will be within the scope of this control if it meets any of the technical parameters identified.

One commenter suggested that the Department delete paragraph (d)(1) in its entirety. The commenter reasoned that the MT control text in the parenthetical describes those systems that warrant control. The Department does not accept this comment. An MT parenthetical is not control text. It is an identification of those portions of the control text that are controlled for missile technology reasons and are reviewed under the missile technology review policies. If the system is not described in the control text, it is not subject to the USML.

One commenter requested that the Department add “for airborne applications” in paragraph (d)(1)(i), “for land applications” in paragraph (d)(1)(ii), and “for maritime applications” in paragraph (d)(1)(iii). The Department does not accept this comment. While paragraph (d)(1)(i) will primarily describe systems that are used in airborne applications, paragraph (d)(1)(ii) will primarily describe systems that are used in land applications, and paragraph (d)(1)(iii) will primarily describe systems that are used in maritime applications, the controls are based on the technical parameters.

One commenter requested that the Department add “without the use of positional aiding references” to proposed paragraph (d)(1)(ii). The Department accepts this comment.

One commenter requested that the Department adding the qualifier “50%” to the term “CEP” used in proposed paragraphs (d)(1)(i) and (d)(1)(iii) to clarify that 50% is the appropriate threshold, not 95%. The Department accepts this comment.

Several commenters requested that the Department revise proposed paragraph (d)(1)(iv) to control only those systems that meet or exceed its normal performance parameters at linear acceleration levels exceeding 25g, as opposed to those systems that merely continue to function with degraded performance. The Department accepts this comment.

One commenter requested that the Department increase the performance parameter in proposed paragraph (d)(1)(iv) from 25g to 35g. The Department does not accept this comment. Providing a high level of performance at linear acceleration levels exceeding 25g provides a critical military or intelligence advantage and warrants ITAR control.

One commenter requested that the Department revise the control parameter to “continuous linear accelerations levels” to avoid controlling those items that can continue to function after a shock or period that includes a 25g environment. The Department does not accept this comment. The control is for systems that provide continued performance during a 25g or greater environment, not those systems that can operate after such shock or environment (such as space launch) has ceased.

One commenter requested that the Department add a note, mirroring a note in the EAR, stating, “[Such equipment and systems] incorporate accelerometers or gyroscopes to measure velocity and orientation in order to determine or maintain heading or position without requiring an external reference once aligned.” The Department does not accept this comment. The proposed note is a generally accurate description of modern guidance and navigation systems. However, the control in this paragraph is intended to describe all guidance and navigation systems that meet the technical parameters, so such a note that is limited to today's technology would not be appropriate.

Paragraph (d)(2) is added for GNSS receiving equipment. This control is moved from Category XV(c). The Department revised paragraphs (d)(2)(iii) and (d)(2)(iv) to clarify that the controls apply to all GNSS systems, not just U.S. Global Positioning System (GPS) systems.

One commenter stated that the control in paragraph (d)(2)(i) includes all GNSS systems that are specially designed for the military, even if those systems do not have specific military GNSS capabilities, such as military-grade encryption or access to the U.S. military-only precise positioning service (PPS) signals. The Department confirms this comment. All GNSS receiving equipment that is specially designed for the military warrants ITAR control. Since GPS was first identified on the USML in 1992, the USML has included all receiving equipment specifically designed, modified, or configured for military use in Category XV(c). When the Department revised Category XV in 2014 as part of ECR, the phrase “specifically designed, modified, or configured for military use” was replaced with the new control text “specially designed for military application” to reflect the updated ECR terminology. The scope of the control was not changed, and any item that would be within the scope of the proposed control is, and has been, ITAR controlled. For questions about the jurisdiction of a particular piece of GNSS receiving equipment, please review the definition of specially designed in § 120.41, and if you have any further doubt, please submit an application for a CJ determination.

One commenter noted there are discrepancies between the parenthetical MT reference for paragraph (d)(2)(i) and the Missile Technology Control Regime (MTCR) Annex in § 121.16. The Department acknowledges that § 121.16 is out of date, it was last updated in 2006, and it will be removed through a separate rulemaking. The parenthetical MT references in each paragraph are current and more accurately reflect U.S. international commitments.

One commenter stated that the GNSS receiving equipment in paragraph (d)(2)(iii), specially designed for use with an antenna described in Category XI(c)(10), may soon include commercial and civil system, due to advancements in the field. The Department does not accept this comment. This control is for GNSS receiving equipment that uses the military antennae identified in Category XI(c)(10). If the antennae currently described in Category XI(c)(10) are in such wide commercial use that USML control is no longer appropriate, then the solution is to revise Category XI(c)(10). The Department is committed to continuously reviewing the USML and is currently finalizing the first final rule to re-review the first USML categories that were revised as part of ECR. The Department will continue to re-review the categories published under ECR.

Paragraph (d)(3) is added for GNSS anti-jam systems specially designed for use with the anti-jam antennae described in Category XI(c)(10). One commenter stated that the GNSS anti-jam systems in paragraph (d)(3), specially designed for use with an antenna described in Category XI(c)(10), may soon include commercial and civil systems, due to advancements in the field. The Department does not accept this comment. As discussed above, the issue of commercial use of antennae described in Category XI(c)(10) should be address through Category XI.

Paragraph (d)(4) is added for certain mobile relative gravimeters. The Department received no comments on this paragraph.

Paragraph (d)(5) is added for certain mobile gravity gradiometers. The Department received no comments on this paragraph.

Paragraph (d)(6) is added for developmental guidance, navigation, or control systems funded by the DoD. Several commenters stated that developmental funding from DoD is not a proper control parameter. The Department does not agree, as discussed above in paragraphs (b)(6) and (c)(10).

Paragraph (e) is revised to add subparagraphs (1) through (24) to more clearly describe the parts and components for the systems in (a)-(d) that are controlled in (e).

One commenter requested that the Department add “specially designed for a military end use” to the introductory text. The Department does not accept this comment. Each subparagraph within paragraph (e) stands on its own terms. Additionally, the Department does not agree that the term “military use” is a clear control parameter when applied to all of the items within paragraph (e).

One commenter requested that the Department identify military-grade items by technical parameter, rather than control those specially designed for another defense article, specifically discussing IITs, IRFPAs, and thermal imaging cores. The Department does not accept this comment. The Department published the 1st proposed rule, which identified most items in this Category, and specifically IITs, IRFPAs, and thermal imaging cores, by technical parameters. The public comments in response to the 1st proposed rule showed that the technical parameters identified by the Department did not adequately distinguish civil and military systems but did not provide alternative technical parameters that would adequately distinguish the critical military systems. The Department is open to replacing the existing controls with objective technical parameters and will invite public comments on how to accomplish this in a future rulemaking.

Paragraph (e)(1) is added for parts and components specially designed for articles described in paragraph (a)(1) or (a)(5). The 2nd proposed rule identified parts and components specially designed for articles described in paragraph (a)(1) or (a)(8), and paragraph (a)(8) from the 2nd proposed rule is paragraph (a)(5) in this final rule.

One commenter requested that the Department clarify how paragraph (b)(3) of specially designed in § 120.41 applies to the parts and components of the now paragraph (a)(5) systems. The Department notes that, in determining if a part or component of an (a)(5) system is specially designed for that system, it is easier to move to paragraphs (a)(2) of § 120.41. While the part or component may also meet the criteria in paragraphs (a)(1) of § 120.41, such analysis is not necessary if it also meets (a)(2). If the item is a part or component, a necessary condition for control under paragraph (e)(1), paragraph (b) of § 120.41 applies, including (b)(3). Assuming that the item has not been subject to a CJ determination under (b)(1), is not one of the minor types of items identified in (b)(2), and that contemporaneous development documentation does not exist for (b)(4) or (b)(5), the item can be released under (b)(3), if it meets the criteria.

Paragraph (e)(2) is added for lasers specially designed for defense articles. The Department received no comments on this proposed control.

Paragraph (e)(3) is added for laser stacked arrays specially designed for defense articles. The Department received no comments on this proposed control.

Paragraph (e)(4), formerly paragraph (c)(1) in the 2nd proposed rule, is added for night vision or infrared cameras specially designed for defense articles. The Department moved this entry from paragraph (c)(1) of the 2nd proposed rule to list all components controlled in paragraph (e) and to respond to several public comments asking about the applicability of paragraph (b) of § 120.41 due to the control's inclusion within paragraph (c). The Department confirms that the releases in paragraph (b) of specially designed in § 120.41 may be applied when determining if a night vision or infrared camera is with the scope of paragraph (e)(4). One commenter also stated that the detector and camera used in commercial LADAR systems would be included within the control. The Department does not accept this comment. If a LADAR system is itself a defense article under paragraph (b)(6), or another entry on the USML, then a detector or camera that is specially designed for that LADAR would itself be USML controlled. However, if the LADAR is not itself a defense article, or the detector or camera is not specially designed for a defense article LADAR, then the detector or camera would not be USML controlled.

Paragraph (e)(5), formerly paragraph (e)(4) in the 2nd proposed rule, is added for IRFPAs specially designed for defense articles. The Department received only comments in support of this proposed control.

Paragraph (e)(6), formerly paragraph (e)(5) in the 2nd proposed rule, is added for certain charge multiplication focal plane arrays specially designed for defense articles. The Department received no comments on this proposed control.

Paragraph (e)(7), formerly paragraph (e)(6) in the 2nd proposed rule, is added for second generation and greater IITs specially designed for defense articles, and specially designed parts and components therefor. This control includes third generation IITs, Electron Bombarded Active Pixel Sensor (EBAPS), night vision and thermal fused IITs, and all subsequent IIT designs that are specially designed for a defense article.

One commenter stated that, as the integrator of IITs into higher-level assemblies, they would not necessarily be capable of classifying the IITs that they obtain from manufacturers, particularly foreign manufacturers. The Department does not accept this comment. An exporter must classify the item based on the information available. If the exporter is using the IIT in a defense article, it therefore meets the catch in paragraph (a)(2) of specially designed in § 120.41; then it is specially designed, unless the exporters know that one of the releases in paragraph (b) applies. If the exporter is using the IIT in an item subject to the EAR, as long as that item is in production the exporter knows that paragraph (b)(3) of § 120.41 is met, regardless of any other information about the IIT.

The commenter further stated that the proposed control text creates a potential for all 2nd generation and above IITs to be subject to the ITAR, unless the foreign manufacturers can provide contemporaneous data to prove their design intent. The Department does not accept this comment. If an IIT is only used in defense articles, then it is true that it is within the scope of paragraph (e)(7), unless there is a CJ determination or the manufacturer has contemporaneous developmental documentation showing dual use intent. However, if the IIT is used in items that are subject to the EAR, paragraph (b)(3) of § 120.41 is met and the IIT would not be specially designed.

Paragraph (e)(8), formerly paragraph (e)(7) in the 2nd proposed rule, is added for parts and components specially designed for articles described in paragraph (c)(3), (c)(4), (c)(5), or (c)(6)(vi)-(vii). The Department revised paragraph (e)(8) of the proposed rule by adding paragraph (c)(5) and updating the numbering to reflect the revised numbering in this final rule. The Department received no comments on this proposed control.

Paragraph (e)(9), formerly paragraph (e)(8) in the 2nd proposed rule, is added for inertial measurement units specially designed for defense articles. The Department received no comments on this proposed control.

Paragraph (e)(10), formerly paragraph (e)(9) in the 2nd proposed rule, is added for GNSS security devices, Selective Availability Anti-Spoofing Module (SAASM), Security Module (SM), and Auxiliary Output Chip (AOC) chips. The Department received no comments on this proposed control.

Paragraph (e)(11), formerly paragraph (e)(10) in the 2nd proposed rule, is added for accelerometers that meet certain technical parameters. One commenter requested that licensing jurisdiction of these items be determined based on the ensemble performance of a particular device model (a product line), and not based on the performance of an individual sensor. As noted above in a response to a similar comment to paragraph (d)(1), this is a question that involves all of the USML and the Department will address it in a separate rulemaking.

Paragraph (e)(12), formerly paragraph (e)(11) in the 2nd proposed rule, is added for certain gyroscopes and angular rate sensors that meet the technical parameters.

One comment noted the term in the control text, namely “bias,” is different from the term in the MT parenthetical, namely “drift,” and suggested that the Department revise the MT parenthetical to use “bias.” The Department does not accept this comment. The control text defines the scope of the items on the USML. An MT parenthetical only identifies that portion of the items covered by the control text for which licenses for export will be reviewed under missile technology review policies. The MT text is drawn from the Missile Technology Control Regime Annex, a multilaterally agreed control list.

One commenter stated that the MT parenthetical should be revised to apply to items that are specified to function at constant acceleration levels greater than 100g, to clarify that the control does not apply to systems that can survive such a shock, but do not perform to specifications through shock levels above 100g. The Department confirms that this portion of the MT parenthetical only applies to those systems that continue to function to specification during a 100g environment. The Department is not revising the text of the MT parenthetical. As noted above, the MT parenthetical does not determine jurisdiction, only the license review policies of those items described in the control text.

One commenter stated that the MT parenthetical describes gyroscopes used in commercial satellites and requested that the Department add “specially designed for articles in this subchapter” to the control text. The Department does not accept this comment. As described above, the MT parenthetical is not control text. Items that meet the MT parenthetical but are not within the scope of the control are subject to the EAR and are very likely to be identified in an ECCN with an MT reason for control.

One commenter requested that jurisdiction of these items be determined based on the ensemble performance of a particular device model (a product line), and not based on the performance of an individual sensor. As noted above in a response to a similar comment to paragraph (d)(1), this is a question that involves many other parts of the USML and the Department will address it in a separate rulemaking.

Paragraph (e)(13), formerly paragraph (e)(12) in the 2nd proposed rule, is added for optical sensors that have a spectral filter that is specially designed for items controlled in USML Category XI(a)(4) and optical sensor assemblies that provide threat warning or tracking for those items controlled in USML Category XI(a)(4). One commenter requested that the Department move this control to paragraph XI(c) or add a note to paragraph (XI)(c)(4). The Department does not accept this comment. Many systems described in Category XII, as well as in Category XI, are subsystems of platforms and other defense articles. In general, cross-references are not added to the USML. As optical sensors are controlled in Category XII, when determining the jurisdiction of an optical sensor, an exporter must review Category XII, regardless of the kind of system that the optical sensor will be used in.

Paragraph (e)(14), formerly paragraph (e)(13) in the 2nd proposed rule, is added for IRFPA read-out integrated circuits (ROICs) specially designed for defense articles. Two commenters stated that the proposed control would include ROICs for systems other than IRFPAs. The Department accepts this comment and adds “infrared focal plane array” to clarify the scope of the control.

Paragraph (e)(15), formerly paragraph (e)(14) in the 2nd proposed rule, is added for integrated dewar cooler assemblies (IDCA) specially designed for defense articles, with or without an infrared focal plane array, and any specially designed parts and components therefor.

One commenter stated that the phrase “other than Category XV” is not clear. The Department accepts this comment and removes the phrase. If an IDCA is specially designed for a spacecraft described in Category XV, it warrants ITAR control, except that space-qualified mechanical cryocoolers and active cold fingers are controlled in Category XV(e)(4).

One commenter requested that the Department revise the control to cover IDCAs specially designed for a military end use, rather than specially designed for a defense article, because they may be used for scientific and research purposes, such as in astronomical telescopes. The Department does not accept this comment. In general, astronomical telescopes are not described on the USML and are not subject to the ITAR. Therefore, an IDCA that is for an astronomical telescope is not likely to be specially designed for a defense article. In the event that the use of the IDCA within an astronomical telescope is not sufficient to meet the release in paragraph (b)(3) of § 120.41 and the use in the astronomical telescope is the only non-military use of that IDCA, then it would be specially designed for a defense article under § 120.41.

Paragraph (e)(16), formerly paragraph (e)(15) in the 2nd proposed rule, is added for gimbals specially designed for defense articles in this category. The Department received no comments on this proposed control.

Paragraph (e)(17), formerly paragraph (e)(16) in the 2nd proposed rule, is added for IRFPA Joule-Thomson (JT) self-regulating cryostats specially designed for defense articles. The Department received no comments on this proposed control.

Paragraph (e)(18), formerly paragraph (e)(17) in the 2nd proposed rule, is added for infrared lenses, mirrors, beam splitters or combiners, filters, and treatments and coatings, specially designed for defense articles.

One commenter requested that the Department revise the control to be only for those items specially designed for a military end use, rather than specially designed for a defense article, because they may be used for scientific and research purposes, such as in infrared telescopes. The Department does not accept this comment. In general, scientific or research telescopes are not described on the USML and are not subject to the ITAR. Therefore, an infrared lens or mirror that is for a scientific or research telescope is not likely to be specially designed for a defense article, particularly as the commenter states that the items are generally customized for the telescope.

One commenter requested that the Department add a note clarifying that the application of a coating, once applied and dried to an item, does not by itself change the jurisdiction of the item to which it was applied. The Department does not accept this comment. The Department adds a note to clarify that the treatments and coatings controlled in this paragraph are eligible to be analyzed under paragraph (b) of § 120.41.

One commenter objected to infrared lenses being ITAR control based on being specially designed for a defense article, rather than by technical parameter. The Department does not accept this comment. Infrared lenses that are unique to a defense article warrant ITAR control.

Paragraph (e)(19), formerly paragraph (e)(18) in the 2nd proposed rule, is added for drive, control, signal, or image processing electronics specially designed for defense articles in this category.

One commenter requested that the Department revise the control to be only those items specially designed for a military end use, rather than specially designed for a defense article, because they may be used with an ITAR controlled IRFPA for research. The Department does not accept this comment. In general, if an ITAR controlled IRFPA is being used, then the research involves a defense article. This is because the IRFPA is ITAR controlled if it is specially designed for a defense article. If the IRFPA is ITAR controlled, then any specially designed drive, control, signal, or image processing electronics for that IRFPA warrant ITAR control.

One commenter requested that the Department limit this control to drive, control, signal, or image processing electronics specially designed for optical sensors and not for the ITAR controlled accelerometers and gyroscopes. The Department does not accept this comment. ITAR control for such electronics is warranted when specially designed for one of the defense articles described in this category.

One commenter requested that the Department clarify whether populated circuit card assemblies (PCCAs) related to drive, control, signal, or image processing and specially designed for defense articles in Category XII should be controlled in this paragraph; or in Category XI(c)(2), in the paragraph for PCCAs with a layout specially designed for a defense article. The Department acknowledges that defense articles may be described in more than one paragraph on the USML. When determining the proper classification within the USML, specifically described controls take precedence over general, catch-all controls. This control, for specially designed drive, control, signal, or image processing electronics, is more specific that the control in Category XI(c)(2), so these items would be controlled in Category XII.

Paragraph (e)(20), formerly paragraph (e)(19) in the 2nd proposed rule, is added for near-to-eye displays specially designed for defense articles in this category. The Department added a parenthetical “(e.g., micro-displays)” to clarify the scope of the control. The Department received no comments on this proposed control.

Paragraph (e)(21), formerly paragraph (e)(20) in the 2nd proposed rule, is added for resonators, receivers, transmitters, modulators, gain media, drive electronics, and frequency converters specially designed for defense articles in this category. The Department received no comments on this proposed control.

Paragraph (e)(22), formerly paragraph (e)(21) in the 2nd proposed rule, is added for two-dimensional infrared scene projector emitter arrays (i.e., resistive arrays) specially designed for infrared scene generators controlled in USML Category IX(a)(10). The Department received no comments on this proposed control.

Paragraph (e)(23), formerly paragraph (e)(22) in the 2nd proposed rule, is added for classified parts, components, accessories, attachments, and associated equipment. The Department received no comments on this proposed control.

Paragraph (e)(24), formerly paragraph (e)(23) in the 2nd proposed rule, is added for developmental IITs, FPAs, ROICs, accelerometers, gyroscopes, angular rate sensors, and inertial measurement units funded by the DoD. One commenter stated that the control needed further explanation to address projects partially funded by DoD. The Department does not accept this comment. Any amount of DoD funding for a developmental IIT, FPA, ROIC, accelerometer, gyroscope, angular rate sensor, and inertial measurement unit described in the control meets the DoD-funding threshold.

Paragraph (f) is revised to more clearly describe the technical data and defense services controlled in paragraph (f). No changes are made from the 2nd proposed rule. One commenter requested that the Department define the term “directly related.” The term directly related is used in every USML category, and therefore the comment is beyond the scope of this final rule. The Department will, however, address the issue in a separate rulemaking.

A new paragraph (x) has been added to USML Category XII, allowing ITAR licensing for commodities, software, and technology subject to the EAR provided those commodities, software, and technology are to be used in or with defense articles controlled in USML Category XII and are described in the purchase documentation submitted with the application.

The proposed rules included certain definitions to assist commenters in responding to the proposed controls. They included “charge multiplication,” “focal plane array,” “image intensifier tube,” and “multispectral.” One commenter requested that the Department include these definitions within the regulatory text of the ITAR. The Department does not accept this comment. These definitions reflect the standard, generally applicable definitions of these terms, as used in both the Wassenaar Arrangement and the Export Administration Regulations. The Department provided these definitions in the proposed rules to assist commenters who may not have sufficient technical knowledge. The Department does not generally provide definitions within the ITAR, unless the definition intended by the Department is different from a dictionary or industry standard definition. As these definitions are the standard definitions of these terms, the Department is not including them within the text of the regulations.

Finally, articles common to the Missile Technology Control Regime (MTCR) Annex and the USML are to be identified on the USML with the parenthetical “(MT)” at the end of each section containing such articles. A separate proposed rule will address the sections in the ITAR that include MTCR definitions.

The Department of State is of the opinion that controlling the import and export of defense articles and services is a foreign affairs function of the United States Government and that rules implementing this function are exempt from sections 553 (rulemaking) and 554 (adjudications) of the Administrative Procedure Act (APA). Although the Department is of the opinion that this rule is exempt from the rulemaking provisions of the APA, the Department has published two NPRMs as part of this rulemaking and has addressed the relevant public comments; this was done without prejudice to its determination that controlling the import and export of defense services is a foreign affairs function.

Since this rule is exempt from the rulemaking provisions of 5 U.S.C. 553, it does not require analysis under the Regulatory Flexibility Act.

This amendment does not involve a mandate that will result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100 million or more in any year and it will not significantly or uniquely affect small governments. Therefore, no actions were deemed necessary under the provisions of the Unfunded Mandates Reform Act of 1995.

This amendment has been found not to be a major rule within the meaning of the Small Business Regulatory Enforcement Fairness Act of 1996.

This amendment will not 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. Therefore, in accordance with Executive Order 13132, it is determined that this amendment does not have sufficient federalism implications to require consultations or warrant the preparation of a federalism summary impact statement. The regulations implementing Executive Order 12372 regarding intergovernmental consultation on Federal programs and activities do not apply to this amendment.

Executive Orders 13563 and 12866 direct agencies to assess 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, distributed impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This rule has been designated a “significant regulatory action,” although not economically significant, under section 3(f) of Executive Order 12866. Accordingly, the rule has been reviewed by the Office of Management and Budget (OMB).

The Department of State has reviewed the amendment in light of Executive Order 12988 to eliminate ambiguity, minimize litigation, establish clear legal standards, and reduce burden.

The Department of State has determined that this rulemaking will not have tribal implications, will not impose substantial direct compliance costs on Indian tribal governments, and will not preempt tribal law. Accordingly, Executive Order 13175 does not apply to this rulemaking.

Following is a listing of approved Department of State information collections that will be affected by revision of the U.S. Munitions List (USML) and the Commerce Control List pursuant to the President's Export Control Reform (ECR) initiative. This final rule continues the implementation of ECR. The list of collections and the description of the manner in which they will be affected pertains to revision of the USML in its entirety, not only to the categories published in this rule.

The Department is not proposing or making changes to these collections in this rule. The information collections impacted by the ECR initiative are as follows:

(1) Statement of Registration, DS-2032, OMB No. 1405-0002.

(2) Application/License for Permanent Export of Unclassified Defense Articles and Related Unclassified Technical Data, DSP-5, OMB No. 1405-0003.

(3) Application/License for Temporary Import of Unclassified Defense Articles, DSP-61, OMB No. 1405-0013.

(4) Application/License for Temporary Export of Unclassified Defense Articles, DSP-73, OMB No. 1405-0023.

(5) Application for Amendment to License for Export or Import of Classified or Unclassified Defense Articles and Related Technical Data, DSP-6, -62, -74, -119, OMB No. 1405-0092.

(6) Request for Approval of Manufacturing License Agreements, Technical Assistance Agreements, and Other Agreements, DSP-5, OMB No. 1405-0093.

(7) Maintenance of Records by Registrants, OMB No. 1405-0111.

Accordingly, for the reasons set forth above, title 22, chapter I, subchapter M, part 121 is amended as follows:

On March 30, 2016, BOEM published in the Federal Register (81 FR 18111), a final rule entitled Leasing of Sulfur or Oil and Gas in the Outer Continental Shelf, (leasing rule) which updated and streamlined the Outer Continental Shelf (OCS) oil and gas and sulfur leasing regulations, and became effective on May 31, 2016. On May 24, 2016, BOEM published a proposed rule to revise the leasing rule in order to clarify the language in one definition in Part 556 of that rule (81 FR 32694). In this final rule, BOEM amends 30 CFR 556.105 to revise that definition.

The term “You” was defined in Section 556.105 of the leasing rule by providing a list of categories of persons to whom the term applies. The definition also included an introductory sentence to clarify that some persons not yet in a legal relationship with BOEM were affected by portions of Part 556. That definition read as follows: “You means any party that has, or may have, legal obligations to the Federal government with respect to any operations on the OCS in which it is or may become involved. Depending on the context of the regulation, the term “you” may include a lessee (record title owner), an operating rights owner, a designated operator or agent of the lessee, a predecessor lessee, a holder of a State or Federal RUE, or a pipeline ROW holder.”

The first sentence of that definition, by its reference to operations, might have caused confusion as to who is considered to be subject to the regulations in Part 556. Therefore, BOEM published a proposed rule and solicited public comments on its proposal to change the wording of the definition. In order to clarify the meaning of the definition, BOEM proposed to remove the introductory sentence of the definition and add specific references to: a bidder; a prospective bidder; and an applicant seeking to become an assignee of record title or operating rights. Those changes clarified the categories of persons who (depending on the context of the regulations) must comply with certain sections of Part 556, without the ambiguity of the definition as it was stated in the leasing rule.

BOEM also proposed to clarify the term “a holder of a State or Federal RUE” contained in the definition. A RUE is not correctly described as being “State” or “Federal.” Rather, a RUE should be described on the basis of whether it is granted in order to service or support either a State or a Federal lease. Therefore, a holder of a RUE (the person to whom the RUE is granted) is correctly referred to as a “RUE holder for a State or Federal lease.”

BOEM received two comments on the proposed rule. One of those comments was non-substantive, while the other commended BOEM for its efforts to update and streamline the OCS oil and gas and sulfur leasing regulations, including the clarification at issue in this rulemaking. Neither comment recommended any changes to the proposed rule's definition of “you.” As a result, neither comment resulted in any changes to the proposed rule. Therefore, the final rule incorporates the exact wording of the proposed rule's definition of “you” into Section 556.105.

As amended, the definition of “you” in Section 556.105 will read: “You, depending on the context of the regulations, means a bidder, a prospective bidder, a lessee (record title owner), an operating rights owner, an applicant seeking to become an assignee of record title or operating rights, a designated operator or agent of the lessee, a predecessor lessee, a RUE holder for a State or Federal lease, or a pipeline ROW holder.”

Section V, Legal and Regulatory Analyses, of the leasing rule issued on March 30, 2016 (81 FR 18145), summarizes BOEM's analyses of the rule pursuant to applicable statutes and executive orders. This amendment to that rule would not change any conclusion described in that section, because the amendment is only intended to clarify the meaning of one definition in one provision of the regulatory text in the leasing rule and would not require any additional actions by either BOEM or the regulated community. Therefore, no additional analysis is necessary.

For the reasons stated in the preamble, BOEM amends 30 CFR part 556 as follows:

I. Table of Abbreviations CFR Code of Federal Regulations DHS Department of Homeland Security FR Federal Register NPRM Notice of proposed rulemaking § Section U.S.C. United States Code II. Background Information and Regulatory History

The Coast Guard is issuing this temporary rule without prior notice and opportunity to comment pursuant to authority under section 4(a) of the Administrative Procedure Act (APA) (5 U.S.C. 553(b)). This provision authorizes an agency to issue a rule without prior notice and opportunity to comment when the agency for good cause finds that those procedures are “impracticable, unnecessary, or contrary to the public interest.” Under 5 U.S.C. 553(b)(B), the Coast Guard finds that good cause exists for not publishing a notice of proposed rulemaking (NPRM) with respect to this rule because the event sponsor submitted the event application on August 9, 2016. This late submission did not give the Coast Guard enough time to complete the full NPRM process. It is impracticable to publish an NPRM because we must establish this safety zone by September 1, 2016.

We are issuing this rule, and under 5 U.S.C. 553(d)(3), the Coast Guard finds that good cause exists for making it effective less than 30 days after publication in the Federal Register. Delaying this rule would be contrary to public interest of ensuring the safety of spectators and vessels during the event. Immediate action is necessary to prevent possible loss of life and property during the hazards created by a barge-based fireworks display near and over the navigable waterway.

The Coast Guard is issuing this rule under authority in 33 U.S.C. 1231. The Captain of the Port Ohio Valley (COTP) has determined the need to protect persons, property, and infrastructure during the fireworks display taking place on the left descending bank of Tennessee River at mile marker 646.9 to 647.1 during University of Tennessee home football games. This rule is needed to protect personnel, vessels, and these navigable waters before, during, and after the fireworks display take place.

The Captain of the Port Ohio Valley is establishing this safety zone effective from September 1, 2016 through November 19, 2016, for all waters of the Tennessee River beginning at mile marker 646.9 and ending at mile marker 647.1. The periods of enforcement will be 30 minutes prior to, during, and 30 minutes after any fireworks display that takes place on the left descending bank during University of Tennessee home football games. The Coast Guard was informed that there will be a total of seven football games that will have fireworks take place. Safety zone enforcement times will be announced via Broadcast Notice to Mariners (BNM), Local Notices to Mariners (LNM), or through other public notice and at least 12-24 hour notice will be provided before each enforcement period. Any deviations from this rule are prohibited unless specifically authorized by the COTP Ohio Valley, or a designated representative. Deviation requests will be considered and reviewed on a case-by-case basis. The COTP Ohio Valley may be contacted by telephone at 1-800-253-7465 or can be reached by VHF-FM channel 16.

The duration of each safety zone enforcement period is intended to protect persons, property, and infrastructure from safety hazards associated with fireworks displays. No vessel or person would be permitted to enter the safety zone without obtaining permission from the COTP or a designated representative. The regulatory text we are establishing appears at the end of this document.

We developed this rule after considering numerous statutes and Executive orders related to rulemaking. Below we summarize our analyses based on a number of these statutes and Executive Orders, and we discuss First Amendment rights of protestors.

Executive Orders 12866 and 13563 direct agencies to assess the costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits. Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This rule has not been designated a “significant regulatory action,” under Executive Order 12866. Accordingly, it has not been reviewed by the Office of Management and Budget.

This regulatory action determination is based on the size, location, duration, and time-of-day of the safety zone.

This safety zone prohibits transit on the Tennessee River from mile 646.9 to mile 647.1, 30 minutes prior to, during, and 30 minutes after fireworks displays from the left descending bank during approximately seven University of Tennessee home football games from September 1, 2016 through November 19, 2016. Broadcast Notices to Mariners and Local Notices to Mariners will also inform the community of the safety zone enforcement periods through BNM, LNM and other forms of public notice so that they may plan accordingly for each short enforcement period restricting transit. Vessel traffic may request permission from the COTP Ohio Valley or a designated representative to enter the restricted area.

The Regulatory Flexibility Act of 1980, 5 U.S.C. 601-612, as amended, requires Federal agencies to consider the potential impact of regulations on small entities during rulemaking. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. The Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities.

While some owners or operators of vessels intending to transit the safety zone area may be small entities, for the reasons stated in section V.A above this rule would not have a significant economic impact on any vessel owner or operator.

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we want to assist small entities in understanding this rule. If the rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please contact the person listed in the FOR FURTHER INFORMATION CONTACT section.

Small businesses may send comments on the actions of Federal employees who enforce, or otherwise determine compliance with, Federal regulations to the Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards. The Ombudsman evaluates these actions annually and rates each agency's responsiveness to small business. If you wish to comment on actions by employees of the Coast Guard, call 1-888-REG-FAIR (1-888-734-3247). The Coast Guard will not retaliate against small entities that question or complain about this rule or any policy or action of the Coast Guard.

This rule will not call for a new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520).

A rule has implications for federalism under Executive Order 13132, federalism, if it has a substantial direct effect 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. We have analyzed this rule under that Order and have determined that it is consistent with the fundamental federalism principles and preemption requirements described in Executive Order 13132.

Also, this rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it does not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes. If you believe this rule has implications for federalism or Indian tribes, please contact the person listed in the FOR FURTHER INFORMATION CONTACT section above.

The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) requires Federal agencies to assess the effects of their discretionary regulatory actions. In particular, the Act addresses actions that may result in the expenditure by a State, local, or tribal government, in the aggregate, or by the private sector of $100,000,000 (adjusted for inflation) or more in any one year. Though this rule will not result in such expenditure, we do discuss the effects of this rule elsewhere in this preamble.

We have analyzed this rule under Department of Homeland Security Management Directive 023-01 and Commandant Instruction M16475.lD, which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (42 U.S.C. 4321-4370(f), and have determined that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. This rule involves a safety zone that would prohibit entry to unauthorized vessels. It is categorically excluded from further review under paragraph 34(g) of Figure 2-1 of the Commandant Instruction. An environmental analysis checklist supporting this determination and a Categorical Exclusion Determination are available in the docket where indicated under ADDRESSES. We seek any comments or information that may lead to the discovery of a significant environmental impact from this rule.

The Coast Guard respects the First Amendment rights of protesters. Protesters are asked to contact the person listed in the FOR FURTHER INFORMATION CONTACT section to coordinate protest activities so that your message can be received without jeopardizing the safety or security of people, places or vessels.

For the reasons discussed in the preamble, the U.S. Coast Guard amends 33 CFR part 165 as follows:

Throughout this document whenever “we,” “us,” or “our” is used, we mean EPA.

Organization of this document. The following outline is provided to aid in locating information in this preamble.

States are required to submit a progress report in the form of a SIP revision every five years that evaluates progress towards the RPGs for each mandatory Class I Federal area within the state and in each mandatory Class I Federal area outside the state which may be affected by emissions from within the state. See 40 CFR 51.308(g). In addition, the provisions under 40 CFR 51.308(h) require States to submit, at the same time as the 40 CFR 51.308(g) progress report, a determination of the adequacy of the state's existing regional haze SIP. The first progress report SIP is due five years after submittal of the initial regional haze SIP.

On July 19, 2016 (81 FR 46866), EPA published a notice of proposed rulemaking (NPR) proposing approval of New Hampshire's December 16, 2014 Regional Haze 5-Year Progress Report SIP revision on the basis that it satisfies the requirements of 40 CFR 51.308(g) and (h). The NPR also proposed to approve, and incorporate into the New Hampshire SIP, New Hampshire's revised section Env-A 2302.02 Emission Standards Applicable to Tangential-Firing, Dry Bottom Boilers which had been revised to include more stringent particulate matter emission limits.

The specific details of New Hampshire's December 16, 2014 SIP revision and the rationale for EPA's approval are discussed in the NPR and will not be restated here. No public comments were received on the NPR.

EPA is approving New Hampshire's December 16, 2014 Regional Haze 5-Year Progress Report as meeting the requirements of 40 CFR 51.308(g) and (h). In addition, EPA is approving, and incorporating into the New Hampshire SIP, New Hampshire's revised section Env-A 2302.02 Emission Standards Applicable to Tangential-Firing, Dry Bottom Boilers.

In this rule, the EPA is finalizing regulatory text that includes incorporation by reference. In accordance with requirements of 1 CFR 51.5, the EPA is finalizing the incorporation by reference of New Hampshire's regulation described in the amendments to 40 CFR part 52 set forth below. The EPA has made, and will continue to make, these documents generally available through http://www.regulations.gov.

Under the Clean Air Act, the Administrator is required to approve a SIP submission that complies with the provisions of the Act and applicable Federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in reviewing SIP submissions, EPA's role is to approve state choices, provided that they meet the criteria of the Clean Air Act. Accordingly, this action merely approves state law as meeting Federal requirements and does not impose additional requirements beyond those imposed by state law. For that reason, this action:

• Is not a significant regulatory action subject to review by the Office of Management and Budget under Executive Orders 12866 (58 FR 51735, October 4, 1993) and 13563 (76 FR 3821, January 21, 2011);

• Does not impose an information collection burden under the provisions of the Paperwork Reduction Act (44 U.S.C. 3501 et seq.);

• Is certified as not having a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.);

• Does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Public Law 104-4);

• Does not have Federalism implications as specified in Executive Order 13132 (64 FR 43255, August 10, 1999);

• Is not an economically significant regulatory action based on health or safety risks subject to Executive Order 13045 (62 FR 19885, April 23, 1997);

• Is not a significant regulatory action subject to Executive Order 13211 (66 FR 28355, May 22, 2001);

• Is not subject to requirements of Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) because application of those requirements would be inconsistent with the Clean Air Act; and

• Does not provide EPA with the discretionary authority to address, as appropriate, disproportionate human health or environmental effects, using practicable and legally permissible methods, under Executive Order 12898 (59 FR 7629, February 16, 1994).

In addition, the SIP is not approved to apply on any Indian reservation land or in any other area where EPA or an Indian tribe has demonstrated that a tribe has jurisdiction. In those areas of Indian country, the rule does not have tribal implications and will not impose substantial direct costs on tribal governments or preempt tribal law as specified by Executive Order 13175 (65 FR 67249, November 9, 2000).

The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the Small Business Regulatory Enforcement Fairness Act of 1996, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. EPA will submit a report containing this action and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of the rule in the Federal Register. A major rule cannot take effect until 60 days after it is published in the Federal Register. This action is not a “major rule” as defined by 5 U.S.C. 804(2).

Under section 307(b)(1) of the Clean Air Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by December 12, 2016. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).)

Part 52 of chapter I, title 40 of the Code of Federal Regulations is amended as follows:

I. Background

In our proposed rule (PR) (81 FR 53365, Aug. 12, 2016), the EPA proposed to approve SIP revisions submitted by the State of Wyoming on May 28, 2015 and November 6, 2015. The amendments proposed to update the version of the CFR incorporated by reference into the rules of the State of Wyoming for Chapter 2, Ambient Standards for Particulate Matter, Section 12; and Chapter 3, General Emission Standards, Section 9. The EPA also proposed to approve updates to a citation to a Federal Register article (i.e., Federal Register notice) under the definition of “tpy CO2 equivalent emissions (CO2e),” and a new minor source baseline date for fine particulate for Sweetwater County of December 12, 2012 into WAQSR Chapter 6, Section 4. The EPA proposed to approve an update to the primary air quality standard for PM2.5 that reflects federal updates that went into effect in January 2013 into WAQSR Chapter 2, Section 2 subsections (b), (b)(i), (b)(i)(A), (b)(i)(B) and (b)(ii), and which renumbered some portions of Section 2 subsection (b) to (b)(iii), other portions of Section 2 subsection (b) to (c), and Section 2 subsection (c) to (d). The EPA also proposed to approve an update to the version of the American Society for Testing and Materials incorporated by reference into WAQSR for Chapter 3, Section 9.

Additionally, in our PR, the EPA proposed to approve infrastructure elements (C) and (D)(i)(II) prong 3 for the 2008 ozone NAAQS from the State's February 6, 2014 certification. Infrastructure requirements for SIPs are set forth in Section 110(a)(1) and (2) of the CAA. Section 110(a)(2) lists the specific infrastructure elements that a SIP must contain or satisfy.

No comments were received during the public comment period.

For the reasons expressed in the proposed rule, the EPA is taking final action to approve SIP revisions submitted by the State of Wyoming on May 28, 2015 and November 6, 2015 discussed in Section I. The EPA is also approving infrastructure elements (C) and (D)(i)(II) prong 3 for the 2008 ozone NAAQS from the State's February 6, 2014 certification.

In this rule, the EPA is finalizing regulatory text that includes incorporation by reference. In accordance with requirements of 1 CFR 51.5, the EPA is finalizing the incorporation by reference of the WAQSR pertaining to General Emission Standards, Prevention of Significant Deterioration, and Ambient Standards, as discussed in Section I. Therefore, these materials have been approved by EPA for inclusion in the State implementation plan, have been incorporated by reference by EPA into that plan, are fully federally enforceable under sections 110 and 113 of the CAA as of the effective date of the final rulemaking of EPA's approval, and will be incorporated by reference by the Director of the Federal Register in the next update to the SIP compilation.1 The EPA has made, and will continue to make, these documents generally available electronically through www.regulations.gov and/or at the EPA Region 8 Office (please contact the person identified in the “For Further Information Contact” section of this preamble for more information).

Under the Clean Air Act, the Administrator is required to approve a SIP submission that complies with the provisions of the Act and applicable federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in reviewing SIP submissions, the EPA's role is to approve state choices, provided that they meet the criteria of the Clean Air Act. Accordingly, this action merely approves state law as meeting federal requirements and does not impose additional requirements beyond those imposed by state law. For that reason, this action:

• Is not a “significant regulatory action” subject to review by the Office of Management and Budget under Executive Orders 12866 (58 FR 51735, October 4, 1993) and 13563 (76 FR 3821, January 21, 2011);

• does not impose an information collection burden under the provisions of the Paperwork Reduction Act (44 U.S.C. 3501 et seq.);

• is certified as not having a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.);

• does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4);

• does not have Federalism implications as specified in Executive Order 13132 (64 FR 43255, August 10, 1999);

• is not an economically significant regulatory action based on health or safety risks subject to Executive Order 13045 (62 FR 19885, April 23, 1997);

• is not a significant regulatory action subject to Executive Order 13211 (66 FR 28355, May 22, 2001);

• is not subject to requirements of Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) because application of those requirements would be inconsistent with the Clean Air Act; and

• does not provide the EPA with the discretionary authority to address, as appropriate, disproportionate human health or environmental effects, using practicable and legally permissible methods, under Executive Order 12898 (59 FR 7629, February 16, 1994).

In addition, the SIP is not approved to apply on any Indian reservation land or in any other area where the EPA or an Indian tribe has demonstrated that a tribe has jurisdiction. In those areas of Indian country, the rule does not have tribal implications and will not impose substantial direct costs on tribal governments or preempt tribal law as specified by Executive Order 13175 (65 FR 67249, November 9, 2000).

The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the Small Business Regulatory Enforcement Fairness Act of 1996, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. The EPA will submit a report containing this action and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of the rule in the Federal Register. A major rule cannot take effect until 60 days after it is published in the Federal Register. This action is not a “major rule” as defined by 5 U.S.C. 804(2).

Under Section 307(b)(1) of the Clean Air Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by December 12, 2016. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. (See CAA Section 307(b)(2)).

40 CFR part 52 is amended to read as follows:

The Gulf reef fish fishery, which includes red grouper, is managed under the FMP. The FMP was prepared by the Council and is implemented through regulations at 50 CFR part 622 under the authority of the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act).

On July 26, 2016, NMFS published a proposed rule for the framework action and requested public comment (81 FR 48728). The proposed rule and the framework action outline the rationale for the actions contained in this final rule. A summary of the management measures described in the framework action and implemented by this final rule is provided below.

This final rule revises the commercial quota (which is equivalent to the commercial ACT) and ACL, and the recreational ACT and ACL for Gulf red grouper. All weights described in this final rule are in gutted weight.

The current red grouper commercial quota and ACL, and recreational ACT and ACL were implemented through a 2011 regulatory amendment (79 FR 67618, November 2, 2011) and Amendment 32 to the FMP (77 FR 6988, February 10, 2012). The current commercial quota is 5,720,000 lb (2,590,000 kg) and the commercial ACL is 6,030,000 lb (2,735,000 kg). The current recreational ACT is 1,730,000 lb (785,000 kg) and the recreational ACL is 1,900,000 lb (862,000 kg).

For Gulf red grouper, 76 percent of the stock ACL is allocated to the commercial sector and 24 percent of the ACL is allocated to the recreational sector. The commercial quota is set by applying a 5-percent buffer to the commercial ACL to account for management uncertainty and the recreational ACT is set by applying an 8-percent buffer to the recreational ACL to account for management uncertainty.

This final rule increases catch levels for both sectors. The commercial quota will be revised to 7,780,000 lb (3,528,949 kg) and the commercial ACL will be revised to 8,190,000 lb (3,714,922 kg). Additionally, the recreational ACT will be revised to 2,370,000 lb (1,075,014 kg) and the recreational ACL to 2,580,000 lb (1,170,268 kg).

The revised commercial quota in this final rule will provide the commercial sector additional harvest opportunities as a result of the increased commercial quota that will be distributed upon the effective date of this final rule in the 2016 fishing year. NMFS notes that the increase to the red grouper commercial multi-use allocation, that is a function of the groupers and tilefish individual fish quota (IFQ) program, will not be distributed in the 2016 fishing year to ensure that the gag commercial ACL is not exceeded as a result of that increase. The increase to the red grouper commercial multi-use allocation will be distributed to the applicable IFQ participants on January 1, 2017, the start of the next fishing year. The increase in the recreational ACL is expected to allow the recreational sector to remain open for the entire fishing year by avoiding the implementation of an in-season accountability measure.

A total of 28 comment submissions were received on the framework action and the proposed rule from commercial and recreational fishers, college students, and a sport-fishing club. Ten of the comments received were against increasing the red grouper allowable harvest while six were in favor of the increase. Five commenters stated that the recreational quota should be increased but that the commercial quota should not be increased. Seven additional comments were submitted that were not related to the proposed rule or the framework action; several of these questioned the rationale for the allocation between the commercial and recreational sectors. Specific comments related to the actions in the framework action and the proposed rule as well as NMFS' respective responses, are summarized below.

Comment 1: There is no need to raise catch levels because setting a one-fish recreational bag limit would allow the recreational season to remain open all year.

Response: The Council did not consider reducing the recreational bag limit to one fish in this framework action because the increase in the recreational ACL is expected to allow the recreational sector to remain open the entire fishing year. The Council determined and NMFS agrees that this increase in the recreational ACL is supported by the results of the most recent stock assessment.

Comment 2: Only the recreational quota should be increased, not the commercial quota.

Response: NMFS disagrees that only the recreational quota should be increased through this final rule. Red grouper are managed as an overall Gulf stock and any change to the total allowable catch is allocated to both sectors consistent with the allocations established in Amendment 30B to the FMP (72 FR 17603, April 16, 2009). The Council did not consider and this final rule does not alter current sector allocations. Therefore, both the commercial and recreational sectors will have their respective catch limits increased in this final rule.

Comment 3: The combination of red grouper mortality from red tide events and the associated destruction of red grouper habitat is detrimental to the species. When this mortality and habitat loss is considered in addition to the uncertainty of the actual recreational landings, the Council and NMFS should take a precautionary approach to any increase of the ACL.

Response: NMFS and the Council considered natural mortality and any relevant landings data uncertainty when deciding what catch levels were appropriate. First, the Council's Integrated Ecosystem Assessment Group (IEA) considered the linkage of natural mortality and recruitment to ecosystem processes including predation, red tide events, and oceanographic conditions to produce estimates of natural mortality for different life stages of red grouper that were incorporated into SEDAR 42. Based on the results of SEDAR 42, the Council's Science and Statistical Committee (SSC) provided two alternative overfishing limit (OFL) and acceptable biological catch (ABC) recommendations: As a declining yield stream and as a constant catch during this period. The Council chose the constant catch OFL and ABC, 14.16 million lb (6.42 million kg), gutted weight, and 13.92 million lb (6.31 million kg), gutted weight, respectively, but chose a more conservative approach in setting the catch levels, basing them on the minimum ABC of 10.77 million lb (4.89 million kg), gutted weight, from the declining yield stream. Second, the uncertainty in recreational landings was accounted for by the Council by applying the ACL/ACT control rule, which resulted in the recreational ACT being set 8 percent below the recreational sector ACL. For the commercial sector, the quota is set 5 percent below the ACL to account for the management uncertainty associated with the multi-use provisions in the IFQ program.

Comment 4: The increase of the red grouper ABC and total ACL should not be approved by NMFS because the bag limit was recently reduced from four to two fish, which should allow the recreational fishing season the remain open throughout the fishing year.

Response: NMFS disagrees that the two fish bag limit will allow the recreational season to remain open for the entire fishing year. Although the recreational bag limit reduction from four to two fish was implemented in the spring of 2015, recreational fishing for red grouper closed on October 8, 2015. Further, as explained in the framework action, both the two-fish bag limit and the increase in the recreational catch level resulting from the implementation of this final rule are necessary to allow the recreational season to remain open through the end of the 2016 fishing year.

Comment 5: The commercial IFQ program for groupers and tilefish should land 95 percent of the red grouper commercial quota for a minimum of 3 to 5 years prior to any red grouper commercial quota increase.

Response: NMFS disagrees. There are a variety of potential reasons why 100 percent of the red grouper commercial quota has not been harvested since the implementation of the IFQ program, including, but not limited to, the current 35 fathom longline closure that occurs annually from June through August, the moratorium on the issuance of new longline endorsements to the Federal reef fish permit, inactive IFQ accounts, and low catch and effort rates. Additionally, individual commercial vessels strive to maximize profits across a diverse range of reef fish and other Gulf species and their harvest strategies, both at the trip level and throughout the fishing year, may result in some red grouper commercial quota not being harvested during a fishing year. Based upon historical landings, NMFS does not expect negative effects on the red grouper stock from increased fishing pressure or ex-vessel market prices to change significantly as a result of this final rule. Additional information on the potential effects to commercial fishing vessels from this action may be found in the Classification Section of this final rule.

In addition to the measures contained in this final rule, this framework action also revises the Gulf red grouper OFL and ABC based upon the results of SEDAR 42.

The stock OFL in this framework action is increased to 14,160,000 lb (6,422,868 kg) from the current stock OFL of 8,100,000 lb (3,674,098 kg). The ABC in this framework action is also increased from the current red grouper stock ABC of 7,930,000 lb (3,596,987 kg) to an ABC of 13,920,000 lb (6,314,006 kg).

The Regional Administrator, Southeast Region, NMFS, has determined that this final rule is consistent with the framework action, the FMP, the Magnuson-Stevens Act, and other applicable laws.

This final rule has been determined to be not significant for purposes of Executive Order 12866.

The Magnuson-Stevens Act provides the statutory basis for this rule. The final rule and the preamble to this final rule provide a statement of the need for and objectives of this rule. No duplicative, overlapping, or conflicting Federal rules have been identified. In addition, no new reporting, record-keeping, or other compliance requirements are introduced by this final rule.

In compliance with section 604 of the RFA, NMFS prepared a final regulatory flexibility analysis (FRFA) for this final rule. The FRFA follows.

Public comments relating to socio-economic implications and potential impacts on small businesses are addressed in the response to Comment 5 in the Comments and Responses section of this final rule. No changes to this final rule were made in response to public comments. No comments were received from the Office of Advocacy for the Small Business Administration.

NMFS agrees that the Council's choice of preferred alternatives will best achieve the Council's objectives for the framework action while minimizing, to the extent practicable, the adverse effects on fishers, support industries, and associated communities.

NMFS expects this final rule to directly affect all commercial vessels that harvest red grouper under the FMP.

Only recreational anglers, who may fish from shore, man-made structures, private, rental, or charter vessels, and headboats, are allowed a recreational bag or possession limit of reef fish species in the Gulf. Captains or crew members on federally-permitted charter vessels or headboats (for-hire vessels) cannot harvest or possess Gulf red grouper or other reef fish under the recreational bag limits. Therefore, only recreational anglers would be directly affected by the changes to the red grouper recreational ACL and ACT. Recreational anglers, however, are not considered to be small entities under the RFA, so the economic effects of this final rule on these anglers are outside the scope of the RFA.

For-hire vessels are entities that sell fishing services to recreational anglers. The changes to the recreational red grouper ACL and ACT would not directly alter the services sold by these vessels. Any change in demand for these fishing services and associated economic effects as a result of this final rule would be a consequence of a behavioral change by anglers, secondary to any direct effect on anglers and, therefore, an indirect effect of this final rule. Because the only effects on for-hire vessels would be indirect, they fall outside the scope of the RFA.

As of March 7, 2016, there were 852 valid or renewable Federal Gulf commercial reef fish permits. Each of these permits is associated with an individual vessel. To harvest red grouper, a vessel permit must be linked to an IFQ account and possess sufficient allocation (pounds of fish) for this species. IFQ accounts can be opened and valid Federal commercial reef fish permits can be linked to IFQ accounts at any time during the year. Allocation is distributed at the beginning of each fishing year based on the shares held by each IFQ participant. Eligible vessels can also purchase red grouper allocation or shares from other IFQ participants. On average (2010 through 2014), 397 commercial vessels landed red grouper each year. Their average annual vessel-level revenue for 2010 through 2014 was approximately $99,000 (2015 dollars), of which $41,000 was from red grouper.

The maximum annual revenue reported by a single one of these vessels in 2014 was approximately $1.5 million (2015 dollars).

On December 29, 2015, NMFS issued a final rule establishing a small business size standard of $11 million in annual gross receipts for all businesses primarily engaged in the commercial fishing industry (NAICS 11411) for RFA compliance purposes only (80 FR 81194, December 29, 2015). Under this rule, a business primarily engaged in commercial fishing (NAICS code 11411) is classified as a small business if it is independently owned and operated, is not dominant in its field of operation (including its affiliates), and has combined annual receipts not in excess of $11 million for all its affiliated operations worldwide. The $11 million standard became effective on July 1, 2016, and is to be used in place of the U.S. Small Business Administration's (SBA) current standards of $20.5 million, $5.5 million, and $7.5 million for the finfish (NAICS 114111), shellfish (NAICS 114112), and other marine fishing (NAICS 114119) sectors of the U.S. commercial fishing industry in all NMFS rules subject to the RFA after July 1, 2016. Id. at 81194.

Pursuant to the RFA, and prior to July 1, 2016, an initial regulatory flexibility analysis was developed for this framework action using SBA's size standards. NMFS has reviewed the analyses prepared for this framework action with respect to the new size standard. All of the entities directly regulated by this framework action are commercial fishing businesses and were considered small under the SBA's size standards, and they all would continue to be considered small under the new NMFS standard. Thus, NMFS has determined that the new size standard does not affect analyses prepared for this framework action. No other small entities that would be directly affected by this final rule have been identified.

Of the 852 commercial vessels eligible to fish for the species managed under the FMP, 397 are expected to be affected by this final rule (approximately 47 percent). Because all entities expected to be affected by this final rule are small entities, NMFS has determined that this final rule would affect a substantial number of small entities. Moreover, the issue of disproportionate effects on small versus large entities does not arise in the present case.

Using the Council's preferred alternative, this final rule will set the commercial ACL for red grouper at a constant catch value of 8,190,000 lb (3,714,922 kg). The commercial quota will be set at 95 percent of the commercial ACL. This will represent a 2,060,000 lb (934,400 kg) (36 percent) increase in the commercial quota relative to the status quo. The increased quota is expected to result in an increase in commercial red grouper harvests, although this increase will be constrained by industry capacity, individual harvesters' profit maximization strategies, and current Federal management restrictions. Economic benefits may accrue to the commercial sector as a result of the increased landings and availability of red grouper allocation; however, these would be tempered by potential decreases in ex-vessel and IFQ allocation prices. It is not possible to quantify these economic effects with available data. For 2016, it is unlikely that the Gulf reef fish commercial fleet will be able to harvest all of the additional red grouper amounts made available by the ACL and ACT increases in this final rule because this framework action will likely not be effective until late October 2016. In subsequent fishing years, commercial fishermen may or may not be able to scale-up their operations to harvest the full commercial quota. Price effects in both the ex-vessel and allocation transfer markets will depend on the price elasticity of demand for red grouper and red grouper allocation, respectively. Assuming the price elasticity of demand (percentage change in quantity demanded divided by the percentage change in price) for red grouper in the ex-vessel market is greater than one (i.e., the percentage change in quantity demanded is greater than the percentage change in price), then an increase in landings will result in an increase in ex-vessel revenue and vice versa. Assuming the price elasticity of demand for red grouper allocation is greater than 1, IFQ shareholders will experience an overall increase in allocation transfer proceeds and vice versa. With respect to IFQ share value, if investors believe that the discounted future revenue stream associated with shares is greater under the new commercial quota than under the current quota, then IFQ share prices will likely increase, otherwise they will remain the same or decrease. IFQ account holders that routinely purchase red grouper allocation will likely benefit from the wider availability and cheaper price of allocation. Again, these cost savings may be offset by changes in ex-vessel prices. Additionally, those fishers that have already purchased annual allocation for use later in 2016 will incur supplementary costs because they will have likely overpaid for the allocation. Finally, the increased commercial quota could result in increased congestion of fishing grounds, which in turn, could have a minor impact on harvesting costs.

The following discussion describes the alternatives that were not selected as preferred by the Council.

Four alternatives, including the preferred alternative discussed above, were considered for modifying the red grouper OFL, ABC, and commercial and recreational sector catch levels. The first alternative, the no action alternative, would not be expected to affect current commercial red grouper harvests. This alternative was not selected because the OFL and ABC would not be based on the best scientific information available and economic benefits derived from increased commercial and recreational harvests would be forgone, possibly preventing the achievement of OY.

The second alternative would adopt the OFL and ABC schedule recommended by the SSC for 2016 through 2020. Using the current sector allocation, the commercial and recreational ACLs would be set at 76 percent and 24 percent of the ABC, respectively. Under the second alternative, the commercial quota would be set at 95 percent of the commercial ACL and the recreational ACT would be set at 92 percent of the recreational ACL. This alternative would result in a 154 percent increase in the commercial quota in 2016, followed by successively lower quotas through 2020. In 2020 and subsequent fishing years, the red grouper commercial ACL and quota would be equivalent to the constant catch values specified in the preferred alternative. Economic effects to commercial vessels under this alternative would depend on the capacity of the fleet, individual harvesters' profit maximization strategies, current Federal management restrictions, and the effects of the quota increase on ex-vessel, IFQ allocation, and IFQ share prices. Given the very substantial size of the quota increases under this alternative, the 35-fathom (64-m) bottom longline closure during June through August each year, and the lack of issuance of new eastern Gulf reef fish bottom longline endorsements, it is not likely that the commercial fleet would be able to harvest all of its quota each year. Therefore, although positive direct economic benefits may result from additional red grouper harvests, increased availability of allocation, and potential increases in IFQ share value, they would be constrained by the industry's capacity and tempered by negative price effects. It is possible that negative price effects from increased allocation and landings could actually result in a decrease in allocation transfer proceeds and ex-vessel revenues, respectively. As for IFQ share prices, NMFS expects they would fluctuate in the short-term as allocation and ex-vessel markets re-stabilize and investors speculate on future market and stock conditions, as well as future Federal management measures. Finally, the increased commercial quotas could result in increased congestion of fishing grounds, which in turn could have a minor impact on harvesting costs. This alternative was not selected because the Council preferred to take a more conservative approach to setting the OFL, ABC, and commercial and recreational catch levels in order to account for scientific uncertainty in the stock assessment, specifically the below average red grouper recruitment in the Gulf since 2005, and to reduce the chances of negative economic effects to commercial vessels from a large increase in the red grouper commercial quota.

The third alternative would implement the constant catch OFL and ABC recommended by the SSC. Using the current sector allocation, the commercial and recreational ACLs would be set at 76 percent and 24 percent of the ABC, respectively. The commercial quota would be set at 95 percent of the commercial ACL and the recreational ACT would be set at 92 percent of the recreational ACL. This would represent a 76 percent increase in the commercial quota from the current quota. This alternative would result in a greater commercial quota compared to the preferred alternative, but a lesser quota compared to the second alternative through 2017. After 2017, the constant catch commercial ACL and quota under this alternative would be greater than both the preferred alternative and the second alternative. Economic effects to commercial vessels under this alternative would depend on the capacity of the fleet, individual harvesters' profit maximization strategies, current Federal management restrictions, and the effects of the quota increase on ex-vessel and IFQ allocation and share prices. As with the second alternative, given the very substantial size of the quota increase under this alternative, the 35-fathom (64-m) bottom longline closure during June through August each year, and the lack of issuance of new eastern Gulf reef fish bottom longline endorsements, it is not likely that the commercial fleet would be able to harvest all of its quota each year. Therefore, although positive direct economic benefits may result from additional red grouper harvests, increased availability of allocation, and potential increases in IFQ share value, they would be constrained by the industry's capacity and tempered by negative price effects. As discussed earlier, these negative price effects could outweigh the economic benefits of increased allocation and landings. Additionally, IFQ share prices would likely fluctuate in the short-term. There would also be an increased potential for fishing congestion and, in turn, increased harvesting costs. Because the commercial quota would be less than under the second alternative but greater than under the preferred alternative, it would be expected to fall in between those alternatives in terms of potential landings and likelihood of negative price effects for 2016 and 2017. In the long-term, this alternative would result in the greatest increase in the commercial quota and greatest potential landings. Because there is insufficient data to estimate the total expected change in landings and revenue, it is not possible to definitively state which alternative would be expected to result in the greatest economic benefits to the commercial sector. This alternative was not selected for the same reasons the Council did not select the second alternative.

This final rule is exempt from the requirement to delay the effectiveness of a final rule by 30 days after publication in the Federal Register, under 5 U.S.C. 553(d)(1) because the measures implemented by this final rule relieve restrictions on the regulated community as a result of increased catch levels for the commercial and recreational sectors. Specifically, the revised commercial quota in this final rule will provide the commercial sector additional harvest opportunities as a result of the increased commercial quota that will be distributed upon the effective date of this final rule in the 2016 fishing year. The increase in the recreational ACL is expected to allow the recreational sector to remain open for the entire 2016 fishing year by avoiding the implementation of an in-season accountability measure as a result of the recreational ACL being reached. For these same reasons, NMFS finds good cause under 5 U.S.C. 553(d)(3) to waive the delay in the effective date of this final rule. Delaying implementation of these measures for red grouper could result in a recreational fishing closure and will provide less time for commercial fishermen to harvest the catch level increase before the fishing year's end. Therefore, a delay in effectiveness would diminish the social and economic benefits for reef fish fishermen this final rule provides, which is part of the purpose of the rule itself. Finally, this final rule creates no new duties, obligations, or requirements for the regulated community that would necessitate delaying this rule's effectiveness to allow them to come into compliance with it. Thus, this final rule is effective upon publication.

Section 212 of the Small Business Regulatory Enforcement Fairness Act of 1996 states that, for each rule or group of related rules for which an agency is required to prepare a FRFA, the agency shall publish one or more guides to assist small entities in complying with the rule, and shall designate such publications as ‘small entity compliance guides.’ The agency shall explain the actions a small entity is required to take to comply with a rule or group of rules. As part of this rulemaking process, NMFS prepared a fishery bulletin, which also serves as a small entity compliance guide. The fishery bulletin will be sent to all interested parties.

For the reasons set out in the preamble, 50 CFR part 622 is amended as follows:

Regulations implemented under the authority of the Atlantic Tunas Convention Act (ATCA; 16 U.S.C. 971 et seq.) and the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act; 16 U.S.C. 1801 et seq.) governing the harvest of BFT by persons and vessels subject to U.S. jurisdiction are found at 50 CFR part 635. Section 635.27 subdivides the U.S. BFT quota recommended by the International Commission for the Conservation of Atlantic Tunas (ICCAT) among the various domestic fishing categories, per the allocations established in the 2006 Consolidated Highly Migratory Species Fishery Management Plan (2006 Consolidated HMS FMP) (71 FR 58058, October 2, 2006), as amended by Amendment 7 to the 2006 Consolidated HMS FMP (Amendment 7) (79 FR 71510, December 2, 2014). NMFS is required under ATCA and the Magnuson-Stevens Act to provide U.S. fishing vessels with a reasonable opportunity to harvest the ICCAT-recommended quota.

The base quota for the General category is 466.7 mt. See § 635.27(a). Each of the General category time periods (January, June through August, September, October through November, and December) is allocated a portion of the annual General category quota. Although it is called the “January” subquota, the regulations allow the General category fishery under this quota to continue until the subquota is reached or March 31, whichever comes first. Based on the General category base quota of 466.7 mt, the subquotas for each time period are as follows: 24.7 mt for January; 233.3 mt for June through August; 123.7 mt for September; 60.7 mt for October through November; and 24.3 mt for December. Any unused General category quota rolls forward within the fishing year, which coincides with the calendar year, from one time period to the next, and is available for use in subsequent time periods. On December 14, 2015, NMFS published an inseason action transferring 24.3 mt of BFT quota from the December 2016 subquota to the January 2016 subquota period (80 FR 77264). To date this year, NMFS has published two actions that have adjusted and/or distributed available 2016 Reserve category quota to other quota categories (81 FR 19, January 4, 2016; and 81 FR 60286, September 1, 2016). The Reserve category balance currently is 200.58 mt.

The 2016 General category fishery was open January 1, 2016, through March 31, 2016, reopened June 1, 2016, and remains open until December 31, 2016, or until the General category quota is reached, whichever comes first.

Under § 635.27(a)(9), NMFS has the authority to transfer quota among fishing categories or subcategories, after considering 14 determination criteria provided under § 635.27(a)(8), including five new criteria added in Amendment 7.

NMFS has considered all of the relevant determination criteria and their applicability to this inseason quota transfer and change in retention limit in the General category fishery. The criteria and their application are discussed below.

For the inseason quota transfer, NMFS considered the usefulness of information obtained from catches in the particular category for biological sampling and monitoring of the status of the stock (§ 635.27(a)(8)(i)), biological samples collected from BFT landed by General category fishermen and provided by tuna dealers provide NMFS with valuable parts and data for ongoing scientific studies of BFT age and growth, migration, and reproductive status. Additional opportunity to land BFT in the General Category would support the continued collection of a broad range of data for these studies and for stock monitoring purposes.

NMFS also considered the catches of the General category quota to date and the likelihood of closure of that segment of the fishery if no adjustment is made (§ 635.27(a)(8)(ii)). As of October 5, 2016, the General category has landed all 466.7 mt of its 2016 quota. Without a quota transfer, NMFS would have to close the 2016 General category fishery for the remainder of the year. Regarding the projected ability of the vessels fishing under the particular category quota (here, the General category) to harvest the additional amount of BFT before the end of the fishing year (§ 635.27(a)(8)(iii), NMFS considered catches during the winter fishery in the last several years. General category landings in the winter BFT fishery, which typically begins in December or January each year, are highly variable and depend on availability of commercial-sized BFT. Commercial-sized BFT have continued to be available to General category vessels currently, and NMFS believes that the General category vessels will be able to harvest the additional amount (125 mt) of quota before the end of the fishing year.

NMFS also considered the estimated amounts by which quotas for other gear categories of the fishery might be exceeded (§ 635.27(a)(8)(iv)) and the ability to account for all 2016 landings and dead discards. Overall, approximately 56 percent of the total of the currently available commercial BFT subquotas for 2016 has been harvested. NMFS will need to account for 2016 landings and dead discards within the adjusted U.S. quota, consistent with ICCAT recommendations and anticipates having sufficient quota to do that even with this transfer from the Reserve category. This quota transfer would provide additional opportunities to harvest the U.S. BFT quota without exceeding it, while preserving the opportunity for General category fishermen to participate in the winter BFT fishery.

Another principal consideration is the objective of providing opportunities to harvest the full annual U.S. BFT quota without exceeding it based on the goals of the 2006 Consolidated HMS FMP and Amendment 7, including to achieve optimum yield on a continuing basis and to optimize the ability of all permit categories to harvest their full BFT quota allocations (§ 635.27(a)(8)(vi)). This transfer is consistent with the quotas established and analyzed in the most recent BFT quota final rule (80 FR 52198, August 28, 2015) and with objectives of the 2006 Consolidated HMS FMP and amendments, and is not expected to negatively impact stock health or to affect the stock in ways not already analyzed in those documents (§ 635.27(a)(8)(v) and (x)).

Based on the considerations above, NMFS is transferring 125 mt of Reserve category quota to the General category for the remainder of 2016, resulting in adjusted General and Reserve category quotas for 2016 of 591.7 mt and 75.6 mt, respectively. NMFS will close the 2016 General category fishery when the adjusted General category quota of 591.7 mt has been reached, unless future adjustments are warranted (as described in the Monitoring and Reporting section below), or it will close automatically on December 31, 2016.

Under § 635.23(a)(4), NMFS may increase or decrease the daily retention limit of large medium and giant BFT over a range of zero to a maximum of five per vessel based on consideration of the relevant criteria provided under § 635.27(a)(8), and listed above. NMFS adjusted the daily retention limit for the 2016 January subquota period (which closed March 31) from the default level of one large medium or giant BFT to three large medium or giant BFT in December 2016 (80 FR 77264, December 14, 2015). NMFS adjusted the daily retention limit to five large medium or giant BFT for the June through August 2016 subquota period (81 FR 29501, May 12, 2016), and again for the September, October through November, and December periods (81 FR 59153, August 29, 2016). NMFS has considered the relevant criteria and their applicability to the General category BFT retention limit for the remainder of the fishing year.

As described above with regard to the quota transfer, additional opportunity to land BFT would support the continued collection of a broad range of data for the biological studies and for stock monitoring purposes (§ 635.27(a)(8)(i)). Regarding the effects of the adjustment on BFT stock rebuilding and the effects of the adjustment on accomplishing the objectives of the fishery management plan (§ 635.27(a)(8)(v) and (x)), this action would be taken consistent with the previously implemented and analyzed quotas, and it is not expected to negatively impact stock health or otherwise affect the stock in ways not previously analyzed. It is also supported by the Environmental Analysis for the 2011 final rule regarding General and Harpoon category management measures, which established the current range over which we may set the General category daily retention limit (i.e., from zero to five fish) (76 FR 74003, November 30, 2011).

As described above, a principal consideration is the objective of providing opportunities to harvest the available U.S. BFT quota without exceeding that quota, based on the goals of the 2006 Consolidated HMS FMP and Amendment 7. The retention limit currently is five fish. We are setting the retention limit at four through this action because, given the expected level of fishing effort and catch rates, a continued level of five fish may lead to exceeding the adjusted category quota, and less than four would likely result in underharvest.

Based on these considerations, NMFS has determined that a four-fish General category retention limit is warranted for the remainder of the year. It would provide a reasonable opportunity to harvest the U.S. quota of BFT without exceeding it, while maintaining an equitable distribution of fishing opportunities, help optimize the ability of the General category to harvest its available quota, allow collection of a broad range of data for stock monitoring purposes, and be consistent with the objectives of the 2006 Consolidated HMS FMP and amendments. Therefore, NMFS adjusts the General category retention limit from five to four large medium or giant BFT per vessel per day/trip, effective October 9, 2016 through December 31, 2016.

Regardless of the duration of a fishing trip, the daily retention limit applies upon landing. For example (and specific to the limit that will apply through the end of the year), whether a vessel fishing under the General category limit takes a two-day trip or makes two trips in one day, the day/trip limit of four fish applies and may not be exceeded upon landing. This General category retention limit is effective in all areas, except for the Gulf of Mexico, where NMFS prohibits targeted fishing for BFT, and applies to those vessels permitted in the General category, as well as to those HMS Charter/Headboat permitted vessels fishing commercially for BFT.

NMFS will continue to monitor the BFT fishery closely. Dealers are required to submit landing reports within 24 hours of a dealer receiving BFT. General, HMS Charter/Headboat, Harpoon, and Angling category vessel owners are required to report the catch of all BFT retained or discarded dead, within 24 hours of the landing(s) or end of each trip, by accessing hmspermits.noaa.gov. Depending on the level of fishing effort and catch rates of BFT, NMFS may determine that additional action (i.e., quota and/or daily retention limit adjustment, or closure) is necessary to ensure available quota is not exceeded or to enhance scientific data collection from, and fishing opportunities in, all geographic areas. If needed, subsequent adjustments will be published in the Federal Register. In addition, fishermen may call the Atlantic Tunas Information Line at (978) 281-9260, or access hmspermits.noaa.gov, for updates on quota monitoring and inseason adjustments.

The Assistant Administrator for NMFS (AA) finds that it is impracticable and contrary to the public interest to provide prior notice of, and an opportunity for public comment on, this action for the following reasons:

The regulations implementing the 2006 Consolidated HMS FMP and amendments provide for inseason retention limit adjustments to respond to the unpredictable nature of BFT availability on the fishing grounds, the migratory nature of this species, and the regional variations in the BFT fishery. Affording prior notice and an opportunity for public comment to implement the quota transfer and daily retention limit for the remainder of the year is impracticable as NMFS must react as quickly as possible to updated data and information that then requires immediate action to be effective on the fishing grounds and thus efficiently manage the fishery. NMFS could not effectively react to this data if, in implementing the retention limit, it allowed a public comment period, which, for both the quota transfers, would preclude fishermen from harvesting BFT that are legally available consistent with all of the regulatory criteria.

Delays in adjusting the retention limit may result in the available quota being exceeded and NMFS needing to close the fishery earlier than otherwise would be necessary under a lower limit. This could adversely affect those General and HMS Charter/Headboat category vessels that would otherwise have an opportunity to harvest BFT under retention limits set in response to the most recent data available. Limited opportunities to harvest the respective quotas may have negative social and economic impacts for U.S. fishermen that depend upon catching the available quota within the time periods designated in the 2006 Consolidated HMS FMP, as amended. Adjustment of the retention limit needs to be effective as soon as possible to extend fishing opportunities for fishermen in geographic areas with access to the fishery only during this time period. Therefore, the AA finds good cause under 5 U.S.C. 553(b)(B) to waive prior notice and the opportunity for public comment. For these reasons, there is good cause under 5 U.S.C. 553(d) to waive the 30-day delay in effectiveness.

This action is being taken under §§ 635.23(a)(4) and 635.27(a)(9), and is exempt from review under Executive Order 12866.