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Proposed Rule

Issuance of Electronic Document and Related Recordkeeping Requirements

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Information about this document as published in the Federal Register.

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Start Preamble

AGENCY:

Bureau of Industry and Security, Commerce.

ACTION:

Proposed rule.

SUMMARY:

The Bureau of Industry and Security (BIS) is proposing to eliminate the use of most paper documents that it sends to parties having business before the agency. The documents that would be affected by this proposed rule are: Export and reexport licenses, notices of denial of license applications, notices of return of a license application without action, classification results, License Exception AGR notification results and encryption review request results. This proposed rule would modify the Export Administration Regulations (EAR) to implement those changes. This proposed rule also would make changes to the recordkeeping requirements associated with the elimination of paper documents. BIS is proposing to make these changes to reduce mailing costs and to free up staff time currently devoted to mailing these documents for use in other tasks.

DATES:

Comments must be received by BIS no later than February 2, 2010.

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FOR FURTHER INFORMATION CONTACT:

Thomas Andrukonis, Office of Exporter Services, Bureau of Industry and Security, U.S. Department of Commerce at 202 482 6393 or e-mail tandrukoi@bis.doc.gov.

End Further Info End Preamble Start Supplemental Information

SUPPLEMENTARY INFORMATION:

Background

The Bureau of Industry and Security administers an export licensing program pursuant to the Export Administration Regulations. As part of this program, BIS issues various documents in response to applications and notifications submitted to BIS by the public. Those documents include export licenses, reexport licenses, notice that an export or reexport license applications has been denied, notice that an export or reexport license application is being returned to the applicant without action, responses to License Exception AGR notifications, and notice of the results of a classification request. Collectively, these documents are referred to in this preamble as license related documents.

Currently, BIS issues the license related documents in two ways: Electronically in BIS's Simplified Network Application Processing Redesign system (SNAP-R) and on paper. Most license related documents are issued in both electronic and paper form. However, a few documents are issued only on paper. BIS now proposes to eliminate the paper version of the license related documents that it currently issues both electronically in SNAP-R and on paper.

The EAR require that export license applications, reexport license applications and License Exception AGR notifications, encryption review requests and classification requests be submitted to BIS electronically using SNAP-R unless BIS authorizes a paper submission. The license related documents associated with a SNAP-R submission are issued on line in SNAP-R where the submitter may view, save or print a copy. In addition, a paper version of each of those documents is mailed to the party. BIS does not issue electronic license related documents in situations in which BIS authorized a paper submission and in situations in which BIS must reissue the license related documents because it reopened a matter previously considered to be completed. BIS is not proposing to stop issuing paper license related documents in these two situations in which it currently issues only paper documents. BIS also is not proposing to change its practices regarding issuance of Special Comprehensive Licenses or Special Iraq Reconstruction Licenses. BIS is proposing to discontinue issuing paper documents in the situations where it currently issues both paper and electronic versions of the license related documents. BIS is also proposing to make certain changes to the recordkeeping requirements in connection with this change.

Specific Proposed Changes

Clarification that Electronic Notification in SNAP-R is Considered, for Purposes of the EAR, Written Notification of the Results of a License Exception AGR Request

This proposed rule would revise § 740.18(c)(5) to state that BIS will issue confirmation in SNAP-R or by other written notification of the decision that no agency has objected to a party's proposed use of License Exception AGR. Currently, that section merely states that BIS will issue written confirmation.

Removal of Requirement to Maintain a Log of Electronic Submissions

This proposed rule would remove the requirement currently found in § 748.7(c) that companies maintain a log of electronic submissions. The requirement was established in connection with BIS' initial electronic application process, which was instituted in the 1980s. At that time, electronic submissions were facilitated by a number of private sector vendors and the logs may have been necessary for auditing purposes. However, currently, the information required to be kept in the log duplicates information that parties are required to include in their SNAP-R submissions or that is automatically recorded by SNAP-R. BIS is proposing to discontinue the log keeping requirement because it is redundant of information available to BIS in SNAP-R. The proposed rule would accomplish this change by removing paragraph (c) of § 748.7 and Start Printed Page 63686redesignating existing paragraph (d) as paragraph (c).

Removal of Language Relating to “Computer Generated” Licenses, the Department of Commerce Seal and Attachments to Licenses

The proposed rule would revise § 750.7(b) to state merely that BIS may issue export and reexport licenses either electronically or on paper and that each license will bear a license number. Existing language regarding “computer generated” licenses, the Department of Commerce seal and attachments to licenses would be removed as would an explicit requirement that exporters use the license number when communicating with BIS about the license. The proposed language would allow BIS to exercise discretion in deciding whether to issue a license electronically in SNAP-R or on paper. However, BIS expects that it will issue nearly all licenses electronically. Unless some exceptional circumstances exist, only licenses for which the applicant was authorized to file on paper and licenses that BIS cannot issue electronically (currently, only reopened licenses) will be issued on paper. BIS is proposing this change to reduce the costs of generating and mailing paper copies of licenses and to be able to assign to other tasks staff currently assigned to handling paper licenses. Because no EAR provision currently addresses issuance of the other license related documents with the specificity that § 750.7(b) addresses licenses, only § 750.7(b) need be modified to implement this change. However, BIS's intent is to issue only the electronic version of all license related documents unless BIS authorized paper submission of the original application, notice or request, or BIS cannot issue an electronic version of the applicable license related documents.

Removal of Requirement To Attach a Replacement License to the Original

This proposed rule would revise § 750.7(h)(4) to remove a requirement that the license holder attach a replacement license issued by BIS to the original license that it replaces. That requirement dates to an era in which electronic licenses did not exist and is impractical with electronic licenses issued in SNAP-R. The proposed rule would retain the requirement that the license holder keep both the original license and the replacement license.

Removal of Requirement To Retain Copies of Documents Submitted to BIS Via the SNAP-R System

This proposed rule would exempt parties who submit documents to BIS via BIS's SNAP-R system from requirements to retain copies of documents so submitted even though those documents are “export control documents” as defined in part 772 of the EAR. BIS believes the reliability of the SNAP-R system provides adequate assurance that the documents received by BIS were submitted and that all submitted documents are received by BIS. This proposed change would not preclude parties from storing copies of these documents.

Addition of Certain Documents to Recordkeeping Requirements in Part 762

This proposed rule would add the following documents to the list of documents required to be kept found in § 762.2(a)(10): Notification from BIS that an application is being returned without action; Notification from BIS that an application is being denied; Notification from BIS of the results of a commodity classification or encryption review request conducted by BIS. BIS believes that requiring recipients of these documents to retain them is needed to confirm receipt and to verify that the recipient received notice of the terms of the document. BIS is not proposing to require parties to retain requests for additional information concerning active matters that they receive from BIS.

Application of Original Document Retention Requirement to Documents Issued in SNAP-R

This proposed rule would state that parties who receive documents issued by BIS in SNAP-R may store the documents in one of two ways and that either way would meet the requirement of § 762.5 that original documents be retained. The two methods are: Storage of complete documents issued by BIS in SNAP-R electronically in a format readable by software possessed by the recipient party; or printing out and storing a complete paper copy of the document. BIS believes that either method that would be authorized by the proposed changes to § 762.5 would provide an accurate representation of the contents of the record and, therefore, either method should be treated as the equivalent of an original document.

Reasons for the Proposed Changes

Under its current procedure, BIS is expending funds and staff time to mail information to certain parties that is entirely duplicative of information that BIS sends to the same parties electronically. BIS is proposing these changes to reduce its operating costs and to free the staff time currently devoted to mailing paper documents for other purposes. BIS estimates that it currently spends approximately $25,000 annually in direct mailing costs (envelopes, supplies and postage) to send out paper copies of the licenses, and responses to classification requests, encryption review requests and License Exception AGR notifications. BIS also estimates that about 1.5 hours of staff time is expended each day in connection with mailing these documents.

Rulemaking Requirements

1. This rule has been determined to be not significant for purposes of E.O. 12866.

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 Office of Management and Budget (OMB) Control Number. This regulation contains a collection previously approved by OMB under control number 0694-0096.

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

4. The Chief Counsel for Regulations of the Department of Commerce has certified to the Chief Counsel for Advocacy of the Small Business Administration that this proposed rule, if adopted in final form, would not have a significant economic impact on a substantial number of small entities.

Economic Impact

BIS implemented a revised version of its Simplified Network Applications Processing System (SNAP-R) in October 2006. The SNAP-R system provides a Web based mechanism for parties to submit license applications, classification requests, License Exception AGR notifications and encryption review requests electronically and for BIS to respond electronically to each matter. In October 2008, BIS made use of the SNAP-R system mandatory except in five specified circumstances. SNAP-R is the vehicle through which BIS receives most of the submissions for which SNAP-R is available.

During the period from January 1, 2009 through May 31, 2009, BIS Start Printed Page 63687received 11,580 submissions via SNAP-R and 36 submissions via the paper application forms. Under existing procedures BIS would send the final results for the 11,580 SNAP-R submissions to the submitting party both electronically in SNAP-R and on paper. Under this proposed rule, BIS would send those final results via SNAP-R only. Final responses in the 36 instances in which BIS accepted a paper submission would continue to receive paper responses under this proposed rule. In addition, during the period from January 1, 2009 through May 31, 2009, BIS reopened 246 matters relating to submissions affected by this rule that previously had been considered to be closed. BIS would continue to issue the documents announcing the decision in these reopened matters on paper because the SNAP-R system currently is incapable of issuing such documents.

The parties who currently receive both a SNAP-R and a paper response may fulfill the EAR recordkeeping requirement for these documents by either storing the electronic version in appropriate media or by storing the paper copy. Under the proposed rule parties who store the electronic document could continue doing so without any change. Parties who currently store only the paper copy would have to convert to electronic storage or would have to print out a paper copy of the electronic document and store that copy.

BIS believes that the burden on parties that would have to change their procedures would be negligible. Only parties who submitted an application, notification or request electronically are affected by this rule. The fact that a party makes an electronic submission is a good indication that the party is equipped to store incoming documents electronically. In addition, BIS believes that the burden of printing out a paper copy of a document and filing it is not substantially greater than the burden of routing a paper envelope to the proper person, opening the envelope and filing the contents.

Number of Small Entities

In fiscal year 2008, BIS processed nearly 30,000 transactions that would be subject to this rule. BIS does not know the number of small entities that would be affected by this rule. BIS does not know the size of all of the entities that submit the applications, notifications and requests to which this rule applies nor does BIS know which such entities currently utilize paper recordkeeping. However, two of the criteria under which BIS authorizes paper submissions (lack of access to the Internet and no more than one submission in the previous twelve months) are likely to remove the smallest of businesses from the impact of this rule.

Conclusion

Regardless of the number of entities affected, the burden that would be imposed by the rule is negligible.

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List of Subjects

, 748 and 750

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Accordingly, the Export Administration Regulations (15 CFR Parts 730-774) are proposed to be amended as follows:

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PART 740—[AMENDED]

1. The authority citation for part 740 continues to read as follows:

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Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; 22 U.S.C. 7201 et seq.; E.O. 13026, 61 FR 58767, 3 CFR, 1996 Comp., p. 228; E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 783; Notice of August 13, 2009, 74 FR 41325 (August 14, 2009).

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2. Section 740.18 is amended by revising the sixth sentence of paragraph (c)(5) to read as follows:

Agricultural commodities.
* * * * *

(c) * * *

(5) * * * BIS will issue written confirmation electronically in SNAP-R or via paper. * * *

* * * * *
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PART 748—[AMENDED]

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

Start Authority

Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; E.O. 13026, 61 FR 58767, 3 CFR, 1996 Comp., p. 228; E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 783; Notice of August 13, 2009, 74 FR 41325 (August 14, 2009).

End Authority
[Amended]

4. Section 748.7 is amended by removing paragraph (c) and redesignating paragraph (d) as paragraph (c).

End Part Start Part

PART 750—[AMENDED]

5. The authority citation for part 750 continues to read as follows:

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Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; Sec. 1503, Pub. L. 108-11, 117 Stat. 559; E.O. 13026, 61 FR 58767, 3 CFR, 1996 Comp., p. 228; E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 783; Presidential Determination 2003-23 of May 7, 2003, 68 FR 26459, May 16, 2003; Notice of August 13, 2009, 74 FR 41325 (August 14, 2009).

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6. Section 750.7 is amended by removing the final sentence from paragraph (a) and by revising paragraph (b) and paragraph (h)(4) to read as follows:

Issuance of licenses
* * * * *

(b) Issuance of a license. BIS may issue a license electronically via its Simplified Network Application Processing (SNAP-R) system or via paper or both electronically and via paper. Each license has a license number that will be shown on the license.

* * * * *

(h) * * *

(4) Replacement license. If you have been issued a “replacement license” (for changes to your original license not covered in paragraph (c) of this section), you must retain both the original and the replacement license.

* * * * *
End Part Start Part

PART 762—[AMENDED]

7. The authority citation for part 762 continues to read as follows:

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Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 783; Notice of August 13, 2009, 74 FR 41325 (August 14, 2009).

End Authority

8. Section 762.2 is amended by:

a. Revising paragraph (a)(1),

b. Removing the comma and the word “and” from the end of paragraph (a)(9),

c. Inserting a semicolon at the end of paragraph (a)(9),

d. Redesignating paragraph (a)(10) as paragraph (a)(11), and

e. Adding a new paragraph (a)(10) to read as follows:

Records to be retained.

(a) * * *

(1) Export control documents as defined in part 772 of the EAR, except parties submitting documents electronically to BIS via the SNAP-R system are not required to retain copies of documents so submitted;

* * *

(10) Notification from BIS of an application being returned without action; Notification by BIS of an application being denied; Notification by BIS of the results of a commodity Start Printed Page 63688classification or encryption review request conducted by BIS; and,

* * * * *

9. Section 762.4 is amended by adding a sentence at the end of the section to read as follows:

Original records required.

* * * With respect to documents that BIS issues to a party in SNAP-R, either an electronically stored copy in a format that makes the document readable with software possessed by that party or a paper print out of the complete document is deemed to be an original record for purposes of this paragraph.

Start Signature

Dated: November 30, 2009.

Matthew S. Borman,

Deputy Assistant Secretary for Export Administration.

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[FR Doc. E9-28982 Filed 12-3-09; 8:45 am]

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