§ 748.15 Authorization Validated End-User (VEU).

Authorization Validated End-user (VEU) includes two types of VEUs: General VEU Authorization and Data Center VEU Authorization. General VEU Authorizations permit the export, reexport, and transfer to validated end-users of any eligible items that will be used in a specific eligible destination. Data Center VEU Authorizations permit the export and reexport to validated end-users of any eligible items that will be used in specific data centers. In country transfers are not permitted under Data Center VEU Authorization unless the transfer (in-country) is to a VEU authorized location by the same VEU. Reexports by a VEU require separate authorization. Validated end-users are those who have been previously approved by BIS pursuant to the requirements of this section. To be eligible for authorization VEU, exporters, reexporters, and validated end-user applicants must adhere to the conditions and restrictions set forth in paragraphs (a) through (f) of this section. If a request for VEU authorization for a particular end-user is not granted, no new license requirement is triggered. In addition, such a result does not render the end-user ineligible for license approvals from BIS.

(a)(1) Eligible end-users for General VEU Authorizations and Data Center VEU Authorizations. The only end-users to whom eligible items may be exported, reexported, or transferred under a General VEU Authorization or exported or reexported under a Data Center VEU Authorization are those validated end-users identified in supplement no. 7 to part 748, according to the provisions in this section and those set forth in supplement nos. 8 and 9 to this part that have been granted VEU status by the End-User Review Committee (ERC) according to the process set forth in supplement no. 9 to this part.

(2) Requests for authorizations. To apply for a General VEU Authorizations or Data Center VEU Authorization requests for authorization must be submitted in the form of an advisory opinion request, as described in § 748.3(c), and must include a list of items (items for purposes of authorization VEU include commodities, software and technology, except as excluded by paragraph (c) of this section), identified by ECCN , that exporters or reexporters intend to export, reexport or transfer to an eligible end-user, once approved. To ensure a thorough review, requests for VEU authorization must include the information described in supplement no. 8 to this part. Requests for authorization will be accepted from exporters, reexporters, or end-users. Submit the request to: The Office of Exporter Services, Bureau of Industry and Security, U.S. Department of Commerce, 14th Street and Pennsylvania Avenue NW, Room 2099B, Washington, DC 20230. Mark the package “Request for [insert either “General” or “Data Center,” as appropriate] Authorization Validated End-user.”

(3) Conditions and Restrictions. In evaluating an end user for eligibility under authorization VEU, the ERC will consider a range of information, including but not limited to such factors as: the end user's record of exclusive engagement in appropriate end-use activities; the end user's compliance with U.S. export controls; the need for an on-site review prior to approval; the end user's capability of complying with the requirements of authorization VEU, the ability of the end user to guard against both the misuse and diversion of computing resources; the end user's technology roadmap; the end user's technology control plan; the end user's agreement to on-site reviews by representatives of the U.S. Government to ensure adherence to the conditions of the VEU authorization; and the end user's relationships with U.S. and foreign companies. In addition, when evaluating the eligibility of an end user, the ERC will consider the status of the eligible destination country's export controls and the support and adherence to multilateral export control regimes of the government of the eligible destination.

(4) VEU Status. The VEU authorization is subject to revision, suspension, or revocation entirely or in part.

(5) Continuing Representations. Information submitted in a VEU request is deemed to constitute continuing representations of existing facts or circumstances. Any material or substantive change relating to the authorization must be promptly reported to BIS, whether VEU authorization has been granted or is still under consideration.

(b) Eligible destinations—(1) General VEU Authorizations. General VEU Authorizations may be used for the following destinations:

(i) The People's Republic of China.

(ii) India.

(2) Data Center VEU Authorizations. Data Center VEU Authorizations may be used for any destination for which a license is required for ECCN 3A090, 4A090 items, and .z items in Categories 3, 4, and 5, except for destinations in Country Groups D:5 countries.

(c) Item restrictions. (1) Items controlled under the EAR for missile technology (MT) and crime control (CC) reasons may not be exported or reexported under General or Data Center VEU Authorizations.

(2) Eligible items for Data Center VEU Authorizations are all those items on the Commerce Control List, that require a license to the destination excluding “600 series” items, and are necessary for a data center.

(d) End-use restrictions—(1) General VEU Authorizations. Items obtained under General VEU Authorizations in China may be used only for civil end uses and may not be used for any activities described in part 744 of the EAR . The restrictions of §§ 744.6(c)(2)(i) through (iii) and 744.23(a)(1) and (a)(2) of the EAR do not apply to VEUs identified in supplement no. 7 to part 748 as excluded from §§ 744.6(c)(2)(i) through (iii) and 744.23(a)(1) and (a)(2) of the EAR . Items obtained under General VEU Authorizations in India may be used for either civil or military end uses and may not be used for any activities described in part 744 of the EAR . Exports, reexports, or transfers made under authorization VEU may be made to an end user listed in supplement No. 7 to this part only if the items will be consigned to and for use by the validated end user. Eligible end-users who obtain items under VEU may only:

(i) Use such items at the end-user's own facility located in an eligible destination or at a facility located in an eligible destination over which the end-user demonstrates effective control;

(ii) Consume such items during use; or

(iii) Transfer or reexport such items only as authorized by BIS.

(2) Data Center VEU Authorizations. Items obtained under Data Center VEU Authorizations may not be used for any activities described in part 744 of the EAR . Eligible validated end users who obtain items under VEU may only:

(i) Use such items at the end user's own facility located in an authorized destination;

(ii) Consume such items during use; or

(iii) Reexport such items by a Data Center VEU is permitted only as specifically authorized by BIS. In country transfers are not permitted under Data Center VEU Authorization unless the transfer (in-country) is to a VEU authorized location by the same VEU.

Authorizations set forth in supplement no. 7 to this part are country-specific. Authorization as a validated end-user for one country specified in paragraph (b) of this section does not constitute authorization as a validated end-user for any other country specified in that paragraph.

(e) Certification and recordkeeping. Prior to an initial export or reexport to a validated end-user under General or Data Center VEU Authorization, exporters or reexporters must obtain certifications from the validated end-user regarding end-use and compliance with VEU requirements. Such certifications must include the contents set forth in supplement no. 8 to this part. Certifications and all records relating to VEU must be retained by exporters or reexporters in accordance with the recordkeeping requirements set forth in part 762 of the EAR .

(f) Reporting and review requirements—(1) Reports. (i) Reexport Information Required for both Types of VEU Authorizations. Reexporters who make use of General VEU Authorizations are required to submit annual reports to BIS. Reexporters who make use of Data Center VEU Authorizations are required to submit semi-annual reports to BIS. For either authorization, reexporters must include, for each validated end user to whom the exporter or reexporter exported or reexported eligible items:

(A) The name and address of each validated end-user to whom eligible items were reexported;

(B) The eligible destination to which the items were reexported;

(C) The quantity of such items;

(D) The value of such items; and

(E) The ECCN (s) of such items.

(ii) End User Reports for Data Center VEU Authorizations. End users who make use of Data Center VEU Authorizations must submit reports to BIS semi-annually. End users must submit the following information, including, as appropriate:

(A) A record of current inventory of eligible items received;

(B) Dates of when eligible items were received and by whom;

(C) A description of how current compute is being utilized; and

(D) A list of current customers with a description of their utilization.

(iii) Deadlines. For reexporters making use of General VEU Authorization, reports are due by February 15 of each year, and must cover the period of January 1 through December 31 of the prior year. For reexporters and end users making use of Data Center VEU Authorization, reports are due semiannually:

(1) The first report is due July 15 of each year and must cover the period of January 1 through June 30;

(2) The second report is due January 15 and must cover the period from June 30 to December 31 of the previous year.

(iii) Reports must be sent to: Office of Exporter Services, Bureau of Industry and Security, U.S. Department of Commerce, 14th Street and Constitution Avenue NW, Room 2099B, Washington, DC 20230. Mark the package “General Authorization Validated End-User Report” or “Data Center Authorization Validated End-user Report.”

(2) Reviews. Records related to activities covered by General or Data Center VEU Authorizations that are maintained by exporters, reexporters, transferors, and validated end-users who make use of authorization VEU will be reviewed on a periodic basis. Upon request by BIS, exporters, reexporters, transferors, and validated end-users must allow review of records, including on-site reviews covering the information set forth in paragraphs (e) and (f)(1) of this section.

(g) Notification requirement. Exporters and reexporters shipping under General or Data Center VEU Authorizations and persons transferring (in-country) under General VEU Authorization are required to provide the VEUs to which they are shipping or transferring notice of the shipment or transfer. Such notification must be conveyed to the VEU in writing and must include a list of the VEU-authorized contents of the shipment or transfer and a list of the ECCN s under which the VEU-authorized items in the shipment or transfer are classified, as well as a statement that the items are being, will be, or were shipped or transferred pursuant to relevant VEU Authorization. Notification of the export, reexport or transfer (in-country) to the VEU must be made within a timeframe agreed to in writing by the VEU and the person exporting, reexporting or transferring (in-country). The VEU and the person exporting, reexporting or transferring (in-country) must agree to the notification timeframe prior to the initial shipment or transfer under the VEU Authorizations. Depending on the agreement between the VEU and the person exporting, reexporting or transferring (in-country), a notification may be for individual shipments or for multiple shipments. Exporters, reexporters and VEUs are required to maintain the notifications they send or receive in accordance with their recordkeeping requirements.

(h) Termination of Conditions on VEU Authorizations. VEUs that are subject to item-specific conditions and have received items subject to such conditions under General or Data Center VEU Authorizations are no longer bound by the conditions associated with the items if the items no longer require a license for export or reexport to the PRC, India, or data center location, as applicable, or become eligible for shipment under a license exception to the destination. Items that become eligible for a license exception are subject to the terms and conditions of the applicable license exception and the restrictions in § 740.2 of the EAR . Items that become eligible for export without a license and that remain subject to the EAR may only be exported, reexported, transferred (in-country) or disposed of in accordance with the requirements of the EAR . Termination of VEU conditions does not relieve a validated end-user of its responsibility for violations that occurred prior to the availability of a license exception or prior to the removal of license requirements.

(i) Records. Records of items that were shipped under General or Data Center VEU Authorizations prior to the removal of a license requirement or the availability of a license exception remain subject to the review requirements of paragraph (f)(2) of this section on and after the date that the license requirement was removed or the license exception became applicable.