AGENCY:

Bureau of Industry and Security, Commerce.

ACTION:

Interim final rule; request for comments.

SUMMARY:

Huawei Technologies Co., Ltd. (Huawei) and 114 of its foreign affiliates were added to the Entity List by the Bureau of Industry and Security (BIS) in 2019, but continue to participate in many important international standards organizations in which U.S. companies also participate. As international standards serve as the building blocks for product development and help ensure functionality, interoperability, and safety of the products, it is important to U.S. technological leadership that U.S. companies be able to work in these bodies in order to ensure that U.S. standards proposals are fully considered. Since Huawei's addition to the Entity List, organizations have consequently sought clarity about U.S. industry participation in standards development. BIS is amending the Export Administration Regulations (EAR) to authorize the release of certain technology to Huawei and its affiliates on the Entity List without a license if such release is made for the purpose of contributing to the revision or development of a “standard” in a “standards organization.” For the purpose of this interim final rule, a “standard” is as defined in Office of Management and Budget (OMB) Circular A-119: Federal Participation in the Development and Use of Voluntary Consensus Standards and in Conformity Assessment Activities, and a “standards organization,” is the equivalent of a “voluntary consensus standards body” as defined in Office of Management and Budget (OMB) Circular A-119: Federal Participation in the Development and Use of Voluntary Consensus Standards and in Conformity Assessment Activities. This interim final rule does not change the assessment of whether “technology” is subject to the EAR. BIS is requesting comments on the impact of these revisions.

DATES:

This rule is effective June 18, 2020. Submit comments on or before August 17, 2020.

ADDRESSES:

You may submit comments, identified by docket number BIS 2020-0017 or RIN 0694-AI06, through the Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments.

All filers using the portal should use the name of the person or entity submitting comments as the name of their files, in accordance with the instructions below. Anyone submitting business confidential information should clearly identify the business confidential portion at the time of submission, file a statement justifying nondisclosure and referencing the specific legal authority claimed, and provide a non-confidential version of the submission.

For comments submitted electronically containing business confidential information, the file name of the business confidential version should begin with the characters “BC.” Any page containing business confidential information must be clearly marked “BUSINESS CONFIDENTIAL” on the top of that page. The corresponding non-confidential version of those comments must be clearly marked “PUBLIC.” The file name of the non-confidential version should begin with the character “P.” The “BC” and “P” should be followed by the name of the person or entity submitting the comments or rebuttal comments. All filers should name their files using the name of the person or entity submitting the comments. Any submissions with file names that do not begin with a “BC” or “P” will be assumed to be public and will be made publicly available through http://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT:

Susan Kramer, Regulatory Policy Division, Bureau of Industry and Security, Department of Commerce. Phone: (202) 482-2440; Fax (202) 482-3355; Email: Susan.Kramer@bis.doc.gov.

SUPPLEMENTARY INFORMATION:

Background

The Bureau of Industry and Security (BIS) has continued to receive questions regarding the applicability of the Export Administration Regulations (15 CFR 730-774) (EAR) in the context of standards setting or development in light of the addition of Huawei Technologies Co., Ltd. (Huawei) and its 114 non-U.S. affiliates to the Entity List (Supplement No. 4 to part 744 of the EAR) (see 84 FR 22961 (May 21, 2019) and 84 FR 43493 (August 21, 2019)) and the Temporary General License (TGL). The TGL was published on May 22, 2019 (84 FR 23468), extended and amended through a final rule published on August 21, 2019 (84 FR 43487), and is currently extended through August 13, 2020 in a final rule published on May 18, 2020 (85 FR 29610). On August 19, 2019, BIS posted a “General Advisory Opinion Concerning Prohibited Activities in the Standards Setting or Development Context When a Listed Entity Is Involved” to the BIS website that addressed the applicability of § 734.7 of the EAR (Published) (15 CFR 734.7) to certain types of releases. With publication of this rule, that advisory opinion is rescinded, and BIS has removed the guidance from its website. This rule removes certain license requirements imposed by the original listing, removing the need to determine the application of controls to those releases.

The assessment of whether “technology” is subject to the EAR is the same regardless of whether a person on the Entity List is a member of, or participates in, the standards setting or development group or body. Because of the importance of U.S. participation and leadership in standards organizations, and in view of the consistent concerns expressed with Huawei's participation therein, this rule revises the Entity List to authorize certain releases of technology without a license. Specifically, technology subject to the EAR that is designated as EAR99 or controlled on the Commerce Control List only for anti-terrorism (AT) reasons may be released to members of a standards organization without a license, including Huawei, if released for the purpose of contributing to the revision or development of a standard. This interim final rule adopts in § 772.1 (Definitions) the definitions of “standard” and “standards organization” from the Office of Management and Budget (OMB) Circular A-119: Federal Participation in the Development and Use of Voluntary Consensus Standards and in Conformity Assessment Activities (81 FR 4673 (January 27, 2016), available at https://www.nist.gov/​system/​files/​revised_​circular_​a-119_​as_​of_​01-22-2016.pdf.

To implement these changes, this interim final rule revises ninety-three entries, which list Huawei and its 114 non-U.S. affiliates, on the Entity List. Specifically, BIS is modifying the existing ninety-three entries for Huawei and its 114 non-U.S. affiliates by changing the text in the Licensing Requirement column for these entries from “For all Items subject to the EAR (See § 744.11 of the EAR)” to “For all items subject to the EAR (see § 744.11 of the EAR), EXCEPT for technology subject to the EAR that is designated as EAR99, or controlled on the Commerce Control List for anti-terrorism reasons only, when released to members of a “standards organization” (see § 772.1) for the purpose of contributing to the revision or development of a “standard” (see § 772.1).” This interim final rule also adds definitions of “standard” and “standards organization” to § 772.1 of the EAR (Definitions). Note that even when this license requirement does not apply, items that are “subject to the EAR” are still subject to recordkeeping or other applicable EAR requirements (see, e.g., § 762.1 of the EAR).

Request for Comments

BIS welcomes comments on the impact of these changes. Instructions for the submission of comments, including comments that contain business confidential information, are found in the ADDRESSES section of this interim final rule.

Export Control Reform Act of 2018

On August 13, 2018, the President signed into law the John S. McCain National Defense Authorization Act for Fiscal Year 2019, which included the Export Control Reform Act of 2018 (ECRA) (50 U.S.C. 4801-4852). ECRA provides the legal basis for BIS's principal authorities and serves as the authority under which BIS issues this rule. As set forth in Section 1768 of ECRA, all delegations, rules, regulations, orders, determinations, licenses, or other forms of administrative action that were made, issued, conducted, or allowed to become effective under the Export Administration Act of 1979 (previously, 50 U.S.C. 4601 et seq.) (as in effect prior to August 13, 2018 and as continued in effect pursuant to the International Emergency Economic Powers Act (50 U.S.C. 1701 et seq.)) or the Export Administration Regulations, and were in effect as of August 13, 2018, shall continue in effect according to their terms until modified, superseded, set aside, or revoked under the authority of ECRA.

Rulemaking Requirements

1. Executive Orders 13563 and 12866 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This interim final rule has been designated as not significant for purposes of Executive Order 12866. Since the rule is non-significant per Executive Order 12866, it is not subject to the requirements of Executive Order 13771.

2. Notwithstanding any other provision of law, no person is required to respond to or be 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 interim final rule involves the collection currently approved by OMB under the BIS control number: Simplified Network Application Processing System (control number 0694-0088), which includes, among other things, license applications. The information collection under control number 0694-0088, carries a burden estimate of 42.5 minutes for a manual or electronic submission for a total burden estimate of 31,878 hours. Total burden hours associated with the PRA and OMB control number 0694-0088 are not expected to increase as a result of this rule. Written comments and recommendations for the proposed information collection should be sent within 30 days of publication of this notice to www.reginfo.gov/​public/​do/​PRAMain. Find this particular information collection by selecting “Currently under 30-day Review—Open for Public Comments” or by using the search function.

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

4. Pursuant to section 1762 of ECRA, this action is exempt from the Administrative Procedure Act (5 U.S.C. 553) requirements, including prior notice and the opportunity for public comment.

5. Because a notice of proposed rulemaking and an opportunity for public comment are not required to be given for this rule by 5 U.S.C. 553, or by any other law, the analytical requirements of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq., are not applicable. Accordingly, no regulatory flexibility analysis is required, and none has been prepared.

List of Subjects

15 CFR Part 744

• Exports
• Reporting and recordkeeping requirements
• Terrorism

15 CFR Part 772

• Exports

Accordingly, parts 744 and 772 of the Export Administration Regulations (15 CFR parts 730 through 774) are amended as follows:

PART 744—[AMENDED]

1. The authority citation for 15 CFR part 744 continues to read as follows:

Authority: 50 U.S.C. 4801-4852; 50 U.S.C. 4601 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; E.O. 13637, 78 FR 16129, 3 CFR, 2014 Comp., p. 223; Notice of November 12, 2019, 84 FR 61817 (November 13, 2019).

2. Supplement No. 4 to part 744 is amended in the table by revising:

a. The Argentina entity, “Huawei Tech Investment Co., Ltd. Argentina”.

b. The Australia entity, “Huawei Technologies (Australia) Pty Ltd.”.

c. The Bahrain entity, “Huawei Technologies Bahrain”.

d. The Belarus entity, “Bel Huawei Technologies LLC”.

e. The Belgium entity, “Huawei Technologies Research & Development Belgium NV”.

f. The Bolivia entity, “Huawei Technologies (Bolivia) S.R.L.”.

g. The Brazil entity, “Huawei do Brasil Telecomunicacoes Ltda”.

h. The Burma entity, “Huawei Technologies (Yangon) Co., Ltd.”.

i. The Canada entity, “Huawei Technologies Canada Co., Ltd”.

j. The Chile entity, “Huawei Chile S.A.”.

k. The China entities, “Beijing Huawei Digital Technologies Co., Ltd.”, “Chengdu Huawei High-Tech Investment Co., Ltd.”, “Chengdu Huawei Technologies Co., Ltd.”, “Dongguan Huawei Service Co., Ltd.”, “Dongguan Lvyuan Industry Investment Co., Ltd.”, “Gui'an New District Huawei Investment Co., Ltd.”, “Hangzhou Huawei Digital Technology Co., Ltd.”, “HiSilicon Optoelectronics Co., Ltd.”, “HiSilicon Technologies Co., Ltd (HiSilicon)”, “HiSilicon Tech (Suzhou) Co., Ltd.”, “Huawei Device Co., Ltd.”, “Huawei Device (Dongguan) Co., Ltd.”, “Huawei Device (Shenzhen) Co., Ltd.”, “Huawei Machine Co., Ltd.”, “Huawei Software Technologies Co., Ltd.”, “Huawei Technical Service Co., Ltd.”, “Huawei Technologies Co., Ltd.”, “Huawei Technologies Service Co., Ltd.”, “Huawei Training (Dongguan) Co., Ltd.”, “Huayi internet Information Service Co., Ltd.”, “Hui Tong Business Ltd.,”, “North Huawei Communication Technology Co., Ltd.”, “Shanghai Haisi Technology Co., Ltd.”, “Shanghai HiSilicon Technologies Co., Ltd.,”, “Shanghai Mossel Trade Co., Ltd.”, “Shenzhen HiSilicon Technologies Co., Electrical Research Center”, “Shenzhen Huawei Technical Services Co., Ltd.”, “Shenzhen Huawei Terminal Commercial Co., Ltd.”, “Shenzhen Huawei Training School Co., Ltd.”, “Shenzhen Huayi Loan Small Loan Co., Ltd.”, “Shenzhen Legrit Technology Co., Ltd.”, “Shenzhen Smartcom Business Co., Ltd.”, “Suzhou Huawei Investment Co., Ltd.”, “Wuhan Huawei Investment Co., Ltd.”, “Xi'an Huawei Technologies Co., Ltd.”, and “Xi'an Ruixin Investment Co., Ltd.”.

l. The Costa Rica entity, “Huawei Technologies Costa Rica SA”.

m. The Cuba entity, “Huawei Cuba”.

n. The Denmark entity, “Huawei Denmark”.

o. The Egypt entity, “Huawei Technology”.

p. The France entity, “Huawei France”.

q. The Germany entity, “Huawei Technologies Deutschland GmbH”.

r. The Hong Kong entities, “Hua Ying Management Co. Limited”, “Huawei Device (Hong Kong) Co., Limited”, “Huawei International Co., Limited”, “Huawei Tech. Investment Co., Limited”, “Huawei Technologies Co. Ltd.”, and “Smartcom (Hong Kong) Co., Limited”.

s. The India entity, “Huawei Technologies India Private Limited”.

t. The Indonesia entity, “Huawei Tech Investment, PT”.

u. The Italy entities, “Huawei Italia”, and “Huawei Milan Research Institute”.

v. The Jamaica entity, “Huawei Technologies Jamaica Company Limited”.

w. The Japan entity, “Huawei Technologies Japan K.K.”.

x. The Jordan entity, “Huawei Technologies Investment Co. Ltd.”.

y. The Kazakhstan entity, “Huawei Technologies LLC Kazakhstan”.

z. The Lebanon entity, “Huawei Technologies Lebanon”.

aa. The Madagascar entity, “Huawei Technologies Madagascar Sarl”.

bb. The Mexico entity, “Huawei Technologies De Mexico S.A.”.

cc. The Netherlands entity, “Huawei Technologies Coöperatief U.A.”.

dd. The New Zealand entity, “Huawei Technologies (New Zealand) Company Limited”.

ee. The Oman entity, “Huawei Tech Investment Oman LLC”.

ff. The Pakistan entity, “Huawei Technologies Pakistan (Private) Limited”.

gg. The Panama entity, “Huawei Technologies Cr Panama S.A”.

hh. The Paraguay entity, “Huawei Technologies Paraguay S.A.”.

ii. The Portugal entity, “Huawei Technology Portugal”.

jj. The Qatar entity, “Huawei Tech Investment Limited”.

kk. The Romania entity, “Huawei Technologies Romania Co., Ltd.”.

ll. The Russia entity, “Huawei Russia”.

mm. The Singapore entity, “Huawei International Pte. Ltd.”.

nn. The South Africa entity, “Huawei Technologies South Africa Pty Ltd.”.

oo. The Sri Lanka entity, “Huawei Technologies Lanka Company (Private) Limited”.

pp. The Sweden entity, “Huawei Sweden”.

qq. The Switzerland entity, “Huawei Technologies Switzerland AG”.

rr. The Taiwan entity, “Xunwei Technologies Co., Ltd.”

ss. The Thailand entity, “Huawei Technologies (Thailand) Co.”.

tt. The United Kingdom entities, “Centre for Integrated Photonics Ltd.”, “Huawei Global Finance (UK) Limited”, “Huawei Technologies (UK) Co., Ltd.”, “Proven Glory”, and “Proven Honour”.

uu. The Vietnam entities, “Huawei Technologies (Vietnam) Company Limited” and “Huawei Technology Co. Ltd.”.

The revisions read as follows:

Supplement No. 4 to Part 744—Entity List

PART 772—[AMENDED]

3. The authority citation for part 772 is revised to read as follows:

Authority: 50 U.S.C. 4801-4852; 50 U.S.C. 4601 et seq.; 50 U.S.C. 1701 et seq.; E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 783.

4. Section 772.1 is amended by adding the definitions of “Standard” and “Standards organization” in alphabetical order to read as follows: