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Export Administration Regulations: Technical Corrections

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AGENCY:

Bureau of Industry and Security, Commerce.

ACTION:

Final Rule.

SUMMARY:

This rule clarifies language concerning the de minimis provisions of the Export Administration Regulations and certain performance criteria of turning machines. It also removes obsolete cross references, removes and reserves two regulatory provisions, corrects a typographical error, and removes an unnecessary reporting requirement.

DATES:

This rule is effective June 4, 2010.

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FOR FURTHER INFORMATION CONTACT:

William H. Arvin, Regulatory Policy Division, e-mail warvin@bis.doc.gov, telephone 202 482 2440.

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SUPPLEMENTARY INFORMATION:

Background

Removal of Potentially Confusing Language Regarding De Minimis Content of Foreign Made Items

The Export Administration Regulations (EAR) generally do not apply to items that were made and are located outside the United States, and that contain only the “de minimis” level of U.S. origin content as defined in § 734.4. The procedures and standards for calculating whether an item exceeds the de minimis threshold are contained in Supplement No. 2 to Part 734 of the EAR. Section 732.2(d), which directs readers to that supplement, notes that “[t]his step [de minimis calculation] is appropriate only for items that are made outside the United States and are not currently in the United States.” Pursuant to § 734.3(a)(1), all items, regardless of level of foreign content, are subject to the EAR if they are physically located in the United States. This rule removes § 734.3(b)(4), which delineates a category of items not subject to the EAR (“foreign made items that have less than the de minimis percentage of controlled U.S. content based on the principles described in § 734.3 of this part”), because the provision could be erroneously read as applying the de minimis exclusion to foreign made items that are located in the United States. BIS attempted to remove § 734.3(b)(4) in a previous rule. (See 73 FR 75942, December 15, 2008). However, the drafting instruction in that rule erroneously read, “In § 734.4, remove paragraph (b)(4).” (Id.) Because § 734.4 does not contain a paragraph (b)(4), that instruction had no effect. This rule includes the correct drafting instruction to remove § 734.3(b)(4).

Correction of Incorrect Paragraph Designation

This rule redesignates § 740.11(d)(3)(C) of the EAR as § 740.11(d)(3)(iii), to conform to standard Code of Federal Regulations paragraph structure. The incorrect designation was created in a rule published at 75 FR 6301, February 9, 2010.

Transition to Web-Based System for Information About the Status of Certain Matters Pending With BIS

Since the mid-1980s, BIS has operated a telephone-based automated system for parties to obtain information on the status of license applications and certain other matters that are under review by BIS. This system is known as the “System for Tracking Export License Applications” or “STELA.” In 2008, BIS began offering the same automated service via a Web site (https://snapr.bis.doc.gov/​stela/​). BIS plans to phase out the telephone version of STELA because it now has few users, and maintaining such an old system is increasingly difficult. Accordingly, this rule updates references to STELA in §§ 740.5(d)(2), 740.7(d)(4)(ii) and 740.18(c)(5) to the Web address, removes references to the telephone system from all three provisions, and removes the telephone number currently listed in § 740.18(c)(5). This rule also removes and reserves § 750.5, which provided detailed instructions on how to use the telephone version of STELA, as well as references to § 750.5 from §§ 740.5(d)(2) and 740.7(d)(4)(ii).

Removal of Obsolete Provision Regarding Restrictions on Exports and Reexports Involving Persons Named in General Orders

From June 2006 until September 2008, Supplement No. 1 to part 736 of the EAR contained “General Order Number 3,” which imposed license requirements on exports and reexports of items subject to the EAR to certain listed persons. That general order was subsequently removed, and most of the persons listed therein were added to the Entity List in Supplement No. 4 to part 744 (73 FR 54503, Sept. 22, 2008). This rule removes and reserves § 744.15, which covered restrictions on exports and reexports involving persons named in general orders. With the removal of General Order Number 3, no such general orders exist; hence, § 744.15 no longer serves a purpose. This rule also removes the sentence in § 744.1(a)(1) that referred to § 744.15.

Removal of Reference to Telephonic Notification Regarding Personal Identification Numbers (PIN)

In § 748.7(a)(2)(i), this rule removes the word “telephonically” from the sentence describing BIS's notification to individual users of the electronic filing system of their PINs because BIS now uses a variety of methods for providing such notifications.

Removal of Cross References to EAR paragraph That No Longer Exists

The rule replaces references to § 748.2(c) of the EAR, which formerly contained BIS address information but no longer exists, with references to a current provision that contains appropriate current address information. Specifically, this rule replaces the reference to § 748.2(c) that appears in §§ 748.7(a)(1), 748.7(a)(2)(iv)(A) and 748.9(i)(1) with a reference to § 748.1(d)(2), which provides BIS's general mailing address. The rule also replaces the reference to § 748.2(c) in § 748.13(c)(2) with the full address of the specific BIS office currently handling the relevant documentation.

Removal of Unnecessary Notification Requirement

Under certain circumstances, BIS may request a delivery verification of items licensed for export. Such verifications are conducted by the government of the importing country. Generally, BIS would require, as a license condition, that the exporter obtain the foreign government-issued certificate of delivery verification and send the certificate to BIS. Amended § 748.13(b) provides that if the national security export control is removed from the item that is the subject of a license that is issued, the requirement to obtain the delivery verification is removed as well. Prior to publication of this rule, § 748.13(b) required the licensee to inform BIS in writing that it would not obtain the delivery verification certificate in situations where the national security license requirement had been removed. Because the national security license requirements referred to are those imposed by the EAR, BIS would be aware of their removal regardless, and therefore would not need written notice from the licensee on this subject.

Replacement of Obsolete Terminology

This rule replaces the term “Export Management System Guidelines” that appears in Supplement No.1 to Part 766 with the term “Export Management Compliance Program Guidelines,” and replaces the term “EMS Guidelines” with “EMCP Guidelines” to reflect the terminology that BIS currently uses to describe its compliance guidance.

Clarifying Language Regarding Certain Machine Tools Subject to Nuclear Proliferation Export Controls

Export Control Classification Number (ECCN) 2B001 applies, inter alia, to numerically controlled machine tools for turning that have both a positioning accuracy better than 6 μm along any linear axis, and two or more axes that can be controlled simultaneously for contouring control. Consistent with the Nuclear Suppliers Group's guidelines, the EAR's ECCN entry reflects the fact that the United States does not apply nuclear proliferation export license Start Printed Page 31680requirements and licensing policy to machines meeting those parameters if the machine is not capable of machining diameters exceeding 35 mm. Prior to publication of this rule, ECCN 2B001 stated that the nuclear proliferation reason for control (NP) does not apply to “turning machines under 2B001.a with a capacity equal to or less than 35 mm diameter.” BIS believes that this language was consistent with the meaning of the term “capacity” that is widely used in the machine tool industry, i.e., indicating a limit or a maximum amount with no extension of this capability. In addition, because the difficulty of maintaining a given positioning accuracy increases as the maximum diameter that the tool is capable of machining increases, it would make sense for BIS to apply a more stringent control to machines capable of maintaining the 6 μm positioning accuracy when machining larger parts than it would apply to machines that were capable of maintaining that level of accuracy only when machining smaller parts. Nevertheless, some parties have indicated that they find the language set forth in ECCN 2B001 confusing. Therefore, BIS is revising the entry to state that the NP reason for control does not apply to “turning machines under 2B001.a with a capacity no greater than 35 mm diameter.”

Correcting a Typographical Error Regarding Calculating the “Adjusted Peak Performance” of Digital Computers

The EAR employ a concept called “adjusted peak performance” (APP) for setting performance benchmarks that determine the classification of a digital computer on the Commerce Control List (CCL). A note entitled “Technical Note on `Adjusted Peak Performance' (`APP')” at the end of Category 4 on the CCL explains how to calculate APP. BIS's intent is that this note match the note of the same name that appears at the end of Category 4 of the List of Dual-Use Goods and Technology published by the Wassenaar Arrangement on Export Controls for Conventional Arms and Dual Use Goods and Technologies (WA list note). However, prior to the publication of this rule, in describing how APP is expressed, the CCL's Category 4 note erroneously used the number “1012” instead of the correct number, “1012,” that appears in the WA List note. This rule corrects that error.

Rulemaking Requirements

1. This rule is not a significant rule for purposes of Executive Order 12866.

2. Notwithstanding any other provision of law, no person is required to respond to, nor shall any person be subject to a penalty for failure to comply with a collection of information, subject to the requirements of the Paperwork Reduction Act, unless that collection of information displays a currently valid Office of Management and Budget Control Number. This rule involves a collection of information that has been approved by the OMB under control number 0694-0088, which carries a burden hour estimate of 58 minutes to prepare and submit form BIS-748. Miscellaneous and recordkeeping activities account for 12 minutes per submission. BIS believes that this rule will make no change to the number of submissions or to the burden imposed by this collection.

3. This rule does not contain policies with Federalism implications as that term is defined in Executive Order 13132.

4. BIS finds that there is good cause under 5 U.S.C. 553(b)(3)(B) to waive the provisions of the Administrative Procedure Act requiring prior notice and the opportunity for public comment because these revisions are administrative in nature and do not affect the rights and obligations of the public; therefore allowing prior notice and comment on these rules is unnecessary. In addition, the 30-day delay in effectiveness required by 5 U.S.C. 553(d) is not applicable here because this rule is not a substantive rule, but merely makes technical changes to the regulations. No other law requires that notice of proposed rulemaking and an opportunity for public comment be given for this rule; therefore, the analytical requirements of the Regulatory Flexibility Act (5 U.S.C. 601 et seq.) are not applicable.

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List of Subjects

, 748 and 750

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Accordingly, the Export Administration Regulations (

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PART 734—[AMENDED]

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1. The authority citation for part 734 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. 12938, 59 FR 59099, 3 CFR, 1994 Comp., p. 950; E.O. 13020, 61 FR 54079, 3 CFR, 1996 Comp., p. 219; 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); Notice of November 6, 2009, 74 FR 58187 (November 10, 2009).

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[Amended]
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2. Section 734.3 is amended by removing paragraph (b)(4).

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PART 740—[AMENDED]

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3. 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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4. Section 740.5 is amended by revising paragraph (d)(2) to read as follows:

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Civil end-users (CIV).
* * * * *

(d) * * *

(2) Confirmation of eligibility. You may not use License Exception CIV for a deemed export until you have obtained confirmation of eligibility by checking the System for Tracking Export License Applications (https://snapr.bis.doc.gov/​stela) or through the Simplified Network Application Procedure (https://snapr.bis.doc.gov).

* * * * *
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5. Section 740.7 is amended by revising paragraph (d)(4)(ii) to read as follows:

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Computers (APP).
* * * * *

(d) * * *

(4) * * *

(ii) Confirmation of eligibility. You may not use License Exception APP, until you have obtained confirmation of eligibility via either BIS's System for Tracking Export License Applications (STELA) (https://snapr.bis.doc.gov/​stela) from BIS's Simplified Network Application Procedure (SNAP). See Start Printed Page 31681 http://www.bis.doc.gov/​SNAP/​index.htm for more information about SNAP.

* * * * *
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6. Section 740.11 is amended by redesignating paragraph (d)(3)(C) as paragraph (d)(3)(iii).

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7. Section 740.18 is amended by revising paragraph (c)(5) to read as follows:

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Agricultural commodities (AGR).
* * * * *

(c) * * *

(5) Status of pending AGR notification requests. You must contact BIS's System for Tracking Export License Applications (STELA) (https://snapr.bis.doc.gov/​stela) for status of your pending AGR notification or verify the status in BIS's Simplified Network Applications Processing Redesign (SNAP-R) System. STELA will provide the date of registration of the AGR notification. If no department or agency objection is raised within 11 business days, STELA will, on the twelfth business day following the date of registration, provide you with confirmation of that fact. You may not proceed with your shipment unless you confirm with either STELA or SNAP-R that no objection has been raised. If an objection is raised, STELA and SNAP-R will indicate that a license is required. The AGR notification will then be processed as a license application. In addition, BIS may provide notice of an objection by telephone, fax, courier service, or other means.

* * * * *
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PART 744—[AMENDED]

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8. The authority citation for part 744 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. 3201 et seq.; 42 U.S.C. 2139a; 22 U.S.C. 7201 et seq.; 22 U.S.C. 7210; E.O. 12058, 43 FR 20947, 3 CFR, 1978 Comp., p. 179; E.O. 12851, 58 FR 33181, 3 CFR, 1993 Comp., p. 608; E.O. 12938, 59 FR 59099, 3 CFR, 1994 Comp., p. 950; E.O. 12947, 60 FR 5079, 3 CFR, 1995 Comp., p. 356; E.O. 13026, 61 FR 58767, 3 CFR, 1996 Comp., p. 228; E.O. 13099, 63 FR 45167, 3 CFR, 1998 Comp., p. 208; E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 783; E.O. 13224, 66 FR 49079, 3 CFR, 2001 Comp., p. 786; Notice of August 13, 2009, 74 FR 41325 (August 14, 2009); Notice of November 6, 2009, 74 FR 58187 (November 10, 2009).

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9. Section 744.1 is amended by removing the fourteenth sentence from paragraph (a)(1).

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10. Section 744.15 is removed and reserved.

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PART 748—[AMENDED]

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11. The authority citation for part 748 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. 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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12. Section 748.7 is amended by revising the second sentence of paragraph (a)(1), the second sentence of paragraph (a)(2)(i) and the second sentence of paragraph (a)(2)(iv)(A) to read as follows:

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Applying electronically for a license or classification request.

(a) * * *

(1) * * * Written requests may be faxed to (202) 219-9179 or (202) 219-9182 (Washington, DC), faxed to (949) 660-9347 (Newport Beach, CA), or submitted to the address identified in § 748.1(d)(2) of this part. Both the envelope and letter must be marked “Attn: Electronic Submission Request.” * * *

(2) * * *

(i) * * * Each person approved by BIS to submit applications electronically for the company will be assigned a personal identification number (“PIN”) by BIS. * * *

* * * * *

(iv) * * *

(A) * * * You must confirm this notification in writing within two business days to BIS at the address provided in § 748.1(d)(2) of this part.

* * * * *
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13. Section 748.9 is amended by revising paragraph (i)(1) to read as follows:

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Support documents for license applications.
* * * * *

(i) * * *

(1) The applicant must send a letter request for return of an Import or End-User Certificate to the address stated in § 748.1(d)(2) of this part, “Attn: Import/End-User Certificate Request”.

* * * * *
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14. Section 748.13 is amended by revising paragraph (b) and the last sentence of paragraph (c)(2) to read as follows:

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Delivery verification (DV).
* * * * *

(b) Exception to obtaining Delivery Verification. The DV requirement for a particular transaction does not apply if the item is no longer controlled for national security reasons following the issuance of a license.

(c) * * *

(2) * * * Once all shipments against the license have been made (or the licensee has determined that none will be), the licensee must forward, in one package, all applicable DVs to Office of Exporter Services, Export Management and Compliance Division, Room 2705, U.S. Department of Commerce, 14th Street and Pennsylvania Avenue, NW., Washington, DC 20230.

* * * * *
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PART 750—[AMENDED]

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15. 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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16. Section 750.5 is removed and reserved.

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PART 766—[AMENDED]

End Part Start Amendment Part

17. The authority citation for part 766 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).

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18. Supplement No. 1 to Part 766 is amended by revising the second and third sentences of paragraph number “2” that appears under the unnumbered italicized header “Mitigating Factors” that appears under the header “III How BIS Determines What Sanctions Are Appropriate in a Settlement” to read as follows:

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Supplement No. 1 to Part 766—Guidance on Charging and Penalty Determinations in Settlement of Administrative Enforcement Cases

* * * * *

III. How BIS Determines What Sanctions Are Appropriate in a Settlement

* * * * *

Mitigating Factors

* * * * *

(2) * * * In determining the presence of this factor, BIS will take account of the extent to which a party complies with the principles set forth in BIS's Export Management Compliance Program (EMCP) Guidelines. Information about the EMCP Guidelines can Start Printed Page 31682be accessed through the BIS Web site at www.bis.doc.gov.

* * * * *
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PART 774—[AMENDED]

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19. The authority citation for part 774 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.; 10 U.S.C. 7420; 10 U.S.C. 7430(e); 22 U.S.C. 287c, 22 U.S.C. 3201 et seq., 22 U.S.C. 6004; 30 U.S.C. 185(s), 185(u); 42 U.S.C. 2139a; 42 U.S.C. 6212; 43 U.S.C. 1354; 46 U.S.C. app. 466c; 50 U.S.C. app. 5; 22 U.S.C. 7201 et seq.; 22 U.S.C. 7210; 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 Fed. Reg. 41,325 (August 14, 2009)).

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20. In Supplement No. 1 to part 774, Category 2, Export Control Classification Number 2B001, revise the “Controls” paragraph of the “License Requirements” section to read as follows:

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Supplement No. 1 to Part 774—The Commerce Control List

* * * * *

2B001 Machine tools and any combination thereof, for removing (or cutting) metals, ceramics or “composites”, which, according to the manufacturer's technical specifications, can be equipped with electronic devices for “numerical control”; and specially designed components as follows (see List of Items Controlled).

License Requirements

Reason for Control: NS, NP, AT

Control(s)Country chart
NS applies to entire entryNS Column 1.
NP applies to 2B001.a, .b, .c, and .d, EXCEPT: (1) turning machines under 2B001.a with a capacity no greater than 35 mm diameter; (2) bar machines (Swissturn), limited to machining only bar feed through, if maximum bar diameter is equal to or less than 42 mm and there is no capability of mounting chucks. (Machines may have drilling and/or milling capabilities for machining parts with diameters less than 42 mm); or (3) milling machines under 2B001.b.with x-axis travel greater than two meters and overall “positioning accuracy” on the x-axis more (worse) than 0.030 mm.NP Column 1.
AT applies to entire entryAT Column 1.
* * * * *
Start Amendment Part

21. In Supplement No. 1 to part 774, Category 4, the Technical Note on “Adjusted Peak Performance” (“APP”) that appears at the end of Category 4, revise the definition of “APP” that appears under the heading “Abbreviations Used in This Technical Note” to read as follows:

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Supplement No. 1 to Part 774—The Commerce Control List

* * * * *

Category 4—Computers

* * * * *

Technical Note on “Adjusted Peak Performance” (“APP”)

* * * * *

Abbreviations Used in This Technical Note

* * * * *

APP is expressed in Weighted TeraFLOPS (WT) in units of 1012 adjusted floating point operations per second.

* * * * *
Start Signature

Dated: May 24, 2010.

Kevin J. Wolf,

Assistant Secretary for Export Administration.

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[FR Doc. 2010-13243 Filed 6-3-10; 8:45 am]

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