Federal Register / Vol. 73, No. 163 / Thursday, August 21, 2008 / Rules and Regulations 49311 

DEPARTMENT OF COMMERCE 

Bureau of Industry and Security 

15 CFR Parts 730, 744 and 756 

[Docket No. 0612243150–8535–02] 

RIN 0694–AD82 

Authorization To Impose License 

Requirements for Exports or 

Reexports to Entities Acting Contrary 

to the National Security or Foreign 

Policy Interests of the United States 

AGENCY: Bureau of Industry and 

Security, Commerce. 

ACTION: Final rule. 

SUMMARY: The Entity List (Supplement 

No. 4 to Part 744 of the Export 

Administration Regulations (EAR)) 

provides notice to the public that 

certain exports and reexports to parties 

identified on the Entity List require a 

license from the Bureau of Industry and 

Security (BIS) and that availability of 

License Exceptions in such transactions 

is limited. This rule expands the scope 

of reasons for adding parties to the 

Entity List. This rule also amends the 

EAR to state explicitly that a party listed 

on the Entity List has a right to request 

that its listing be removed or modified 

and sets procedures for addressing such 

requests. 

DATES: This rule is effective August 21, 

2008. 

FOR FURTHER INFORMATION CONTACT: 

Karen Nies-Vogel, Chair, End-User 

Review Committee, Office of the 

Assistant Secretary, Bureau of Industry 

and Security, kniesv@bis.doc.gov, (t) 

202–482–3811, (f) 202–482–3911. 

SUPPLEMENTARY INFORMATION: 

Background 

The Entity List (Supplement No. 4 to 

Part 744 of the EAR) provides notice to 

the public of the identity of certain 

parties whose presence as a recipient of 

items subject to the EAR can result in 

the imposition of a license requirement 

in an export or reexport transaction. 

BIS published a proposed rule (72 FR 

31005, June 5, 2007) to authorize adding 

to the Entity List entities that BIS has 

reasonable cause to believe, based on 

specific and articulable facts, have been, 

are or pose a risk of being involved in 

activities that are contrary to the 

national security or foreign policy 

interests of the United States or those 

acting on behalf of such entities. This 

new authorization would not be used to 

add to the Entity List entities that are 

U.S. persons (as defined in § 772.1 of 

the EAR). The proposed rule also 

provided a procedure for entities listed 

on the Entity List to request removal or 

modification of their entries. After 

review of the comments on the 

proposed rule, BIS is publishing this 

final rule. 

Reasons for This Rule 

This rule will allow BIS to focus its 

export control efforts more closely on 

problematic recipients of items that are 

subject to the EAR, where those 

recipients do not meet the criteria set 

forth in §§ 744.2, 744.3, 744.4, 744.6, 

744.10, 744.17, 744.20 or 744.21 for 

addition to the Entity List. Pursuant to 

this rule, the U.S. government will be 

able to conduct prior review and make 

appropriate licensing decisions 

regarding proposed exports and 

reexports to such recipients to the 

degree necessary to protect United 

States national security or foreign policy 

interests. The government will be able 

to tailor license requirements and 

availability of license exceptions for 

exports and reexports to parties that 

have taken, are taking, or pose a 

significant risk of taking actions that are 

contrary to U.S. national security or 

foreign policy interests without 

imposing additional license 

requirements that apply broadly to 

entire destinations or items. BIS 

believes that such targeted application 

of license requirements provides the 

flexibility to prevent items subject to the 

EAR from being used in ways that are 

inimical to the interests of the United 

States, with minimal costs to and 

disruption of legitimate trade. As export 

controls continue to focus not just on 

countries, but also on individual 

customers or entities, BIS believes it is 

important to provide more information 

to the public about entities of concern. 

Implementation of this rule will provide 

additional information to enhance the 

ability of members of the public to 

screen potential recipients of items 

subject to the EAR. 

In addition, this rule will simplify the 

EAR by reducing the need to issue 

general orders that impose license 

requirements on specific parties, 

thereby reducing the number of EAR 

provisions that the public would be 

required to review to determine license 

requirements under the EAR. 

Summary of the Provisions of This Rule 

This rule authorizes imposing foreign 

policy export and reexport license 

requirements, limiting the availability of 

license exceptions, and setting license 

application review policy for exports 

and reexports to entities under certain 

circumstances. Specifically, such steps 

may be taken where there is reasonable 

cause to believe, based on specific and 

articulable facts, that an entity has been 

involved, is involved or poses a risk of 

being involved in activities that are 

contrary to the national security or 

foreign policy interests of the United 

States or is acting on behalf of such an 

entity. Under this rule, the activities at 

issue need not involve items or 

activities that are subject to the EAR in 

order for the entity to be placed on the 

Entity List. Pursuant to this rule, BIS 

will implement changes to the Entity 

List made by decision of an interagency 

committee called the End-User Review 

Committee (the ‘‘Committee’’). The EndUser Review Committee will consist of 

representatives of the Departments of 

Commerce, State, Defense, Energy and, 

if appropriate in a particular case, the 

Treasury. The grounds for changes to 

the Entity List established by this rule 

are in addition to the grounds provided 

in §§ 744.2, 744.3, 744.4, 744.6, 744.10 

744.17, 744.20 and 744.21 of the EAR. 

This rule lists, as illustrative 

examples, five types of conduct that the 

End-User Review Committee could 

determine are contrary to U.S. national 

security or foreign policy interests. The 

five types of conduct are: 

(i) Supporting persons engaged in acts 

of terror. 

(ii) Actions that could enhance the 

military capability of, or the ability to 

support terrorism of governments that 

have been designated by the Secretary of 

State as having repeatedly provided 

support for acts of international 

terrorism. 

(iii) Transferring, developing, 

servicing, repairing, or producing 

conventional weapons in a manner that 

is contrary to United States national 

security or foreign policy interests or 

enabling such transfer, development, 

service, repair or production by 

supplying parts, components, 

technology, or financing for such 

activity. 

(iv) Preventing accomplishment of an 

end use check conducted by or on 

behalf of BIS or the Directorate of 

Defense Trade Controls of the 

Department of State by: precluding 

access to; refusing to provide 

information about; or providing false or 

misleading information about parties to 

the transaction or the item to be 

checked. The conduct in this example 

includes: expressly refusing to permit a 

check, providing false or misleading 

information, or engaging in dilatory or 

evasive conduct that effectively 

prevents the check from occurring or 

makes the check inaccurate or useless. 

A nexus between the conduct of the 

party to be listed and the failure to 

produce a complete, accurate and useful 

check is required, even though an 


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express refusal by the party to be listed 

is not required. 

(v) Engaging in conduct that poses a 

risk of violating the EAR when such 

conduct raises sufficient concern that 

prior review of exports or reexports 

involving the party and the possible 

imposition of license conditions or 

license denial enhances BIS’s ability to 

prevent violations of the EAR. 

These examples are illustrative of 

conduct that could be contrary to the 

national security or foreign policy 

interests of the United States. An entity 

could be added to the Entity List if 

specific and articulable facts provided 

reasonable cause to believe that the 

entity is involved in, has been involved 

in, or poses a significant risk of being or 

becoming involved in conduct 

described by one or more of the five 

listed illustrative examples or other 

activities that are contrary to U.S. 

national security or foreign policy 

interests. 

This rule also authorizes BIS to 

modify the license requirements, license 

exception availability or license 

application review policy that applies to 

any entity placed on the Entity List 

pursuant to this rule. As with decisions 

to place an entity on the Entity List, BIS 

will make such modifications in 

accordance with the decisions of the 

End-User Review Committee. 

This rule does not authorize adding to 

the Entity List an entity to which 

exports or reexports require a license 

pursuant to §§ 744.12, 744.13, 744.14 or 

744.18 of the EAR. Those sections 

impose license requirements because of 

the presence of certain parties on the 

List of Specially Designated Nationals 

and Blocked Persons published by the 

U.S. Department of the Treasury, Office 

of Foreign Assets Control. This rule 

does not authorize placing U.S. persons, 

as defined in § 772.1 of the EAR, on the 

Entity List. 

All impositions of license 

requirements or statements of license 

application review policy or any 

modification thereof pursuant to this 

rule must be done by publishing an 

amendment to the Entity List found at 

Supplement No. 4 to part 744 of the 

EAR. License exceptions are not 

available for any entity added to the 

Entity List pursuant to this rule unless 

specifically authorized in the entry for 

the entity. 

This rule permits a party listed on the 

Entity List to request that its listing be 

removed or modified. Such requests, 

including reasons therefor, must be 

made in writing, and BIS will provide 

a written response. Such requests will 

be reviewed by an End-User Review 

Committee composed of representatives 

of the Departments of Commerce, State, 

Defense, and Energy and, if appropriate 

in a particular case, the Treasury. The 

End-User Review Committee will make 

a decision in accordance with the 

procedures set forth in Supplement No. 

5 to part 744 of the EAR. The Deputy 

Assistant Secretary for Export 

Administration will convey the decision 

to the requesting party. This decision 

shall be the final agency action on such 

a request and may not be appealed to 

the Under Secretary for Industry and 

Security under part 756 of the EAR. 

Summary of the Changes From the 

Proposed Rule 

Changes to § 744.11 

Section 744.11 of the proposed rule 

included an introductory paragraph, set 

forth criteria for listing a party on the 

Entity List and provided five illustrative 

examples of conduct that could meet the 

criteria. In response to the public 

comments, this final rule revises the 

introductory paragraph, paragraph (b), 

the criteria and two of those illustrative 

examples. 

This final rule adds two sentences to 

the end of the introductory paragraph of 

§ 744.11 in the proposed rule. This final 

rule also replaces the phrase ‘‘that BIS 

has reasonable cause to believe’’ in the 

criteria with the phrase ‘‘for which there 

is reasonable cause to believe.’’ BIS is 

making these changes in the final rule 

in response to public comments stating 

that more information about the 

procedure for adding, removing and 

modifying Entity List listings pursuant 

to this rule should be disclosed. This 

addition and replacement are intended 

to make clear that decisions to add, 

remove or modify Entity List listings 

pursuant to § 744.11 are made by an 

interagency End-User Review 

Committee. 

This final rule revises the first 

sentence of paragraph (b) to clarify the 

meaning of that sentence. This final rule 

also revises the fifth sentence in 

paragraph (b) to clarify that the list of 

examples is merely illustrative not 

exhaustive. 

The second illustrative example 

addresses actions that benefit 

governments that have been designated 

by the Department of State as sponsors 

of terrorism. In this final rule that 

example has been revised to remove a 

reference to actions that are detrimental 

to the human rights of citizens of those 

governments. BIS believes that this 

revision makes the example clearer and 

more focused. 

The fourth illustrative example 

addresses lack of cooperation with end 

use checks. As proposed, the example 

read ‘‘Deliberately failing or refusing to 

comply with an end use check 

conducted by or on behalf of BIS or the 

Directorate of Defense Trade Controls of 

the Department of State, by denying 

access, by refusing to provide 

information about parties to a 

transaction, or by providing information 

about such parties that is false or that 

cannot be verified or authenticated.’’ In 

response to requests that the example be 

more clearly distinguished from the 

criteria for placing an entity on a BIS 

publication entitled ‘‘The Unverified 

List,’’ this final rule emphasizes that 

some conduct on the part of the party 

to be listed that makes conducting the 

check impossible or that renders its 

results inaccurate or useless would 

justify placing the entity on the Entity 

List although that conduct need not be 

an express refusal to permit the check. 

Accordingly, in this final rule, the 

example has been revised to read: 

‘‘Preventing accomplishment of an end 

use check conducted by or on behalf of 

BIS or the Directorate of Defense Trade 

Controls of the Department of State by: 

precluding access to; refusing to provide 

information about; or providing false or 

misleading information about parties to 

the transaction or the item to be 

checked. The conduct in this example 

includes: expressly refusing to permit a 

check, providing false or misleading 

information, or engaging in dilatory or 

evasive conduct that effectively 

prevents the check from occurring or 

makes the check inaccurate or useless. 

A nexus between the conduct of the 

party to be listed and the failure to 

produce a complete, accurate and useful 

check is required, even though an 

express refusal by the party to be listed 

is not required.’’

This final rule also revises the fifth 

illustrative example, which, in the 

proposed rule, read: ‘‘Engaging in 

conduct that poses a risk of violating the 

EAR and raises sufficient concern that 

BIS believes that prior review of exports 

or reexports involving the party and the 

possible imposition of license 

conditions or license denial enhances 

BIS’s ability to prevent violations of the 

EAR.’’ In response to public comments 

recommending the example be modified 

to apply only to imminent and serious 

violations of the EAR, this final rule 

revises the example to read: ‘‘Engaging 

in conduct that poses a risk of violating 

the EAR when such conduct raises 

sufficient concern that the End-User 

Review Committee believes that prior 

review of exports or reexports involving 

the party and the possible imposition of 

license conditions or license denial 

enhances BIS’s ability to prevent 


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Federal Register / Vol. 73, No. 163 / Thursday, August 21, 2008 / Rules and Regulations 49313 

violations of the EAR.’’ BIS believes 

that, given the varying consequences of 

violations based on the facts in 

individual cases, declaring certain 

violations to be a priori less serious than 

others would be unwise. BIS also notes 

that preventing an ‘‘imminent’’ violation 

is part of the standard for imposing a 

temporary denial order under part 766 

of the EAR. However, BIS concludes 

that the proposed example would be 

more precise and useful if it more 

clearly and directly tied imposing 

license requirements, possibly 

restricting the availability of license 

exceptions and setting licensing policy, 

to the ability to prevent violations. In 

addition, this final rule replaces the 

phrase ‘‘that BIS believes’’ with the 

phrase ‘‘that the End-User Review 

Committee believes’’ because decisions 

to add, remove or modify an Entity List 

listing pursuant to § 744.11 of the EAR 

will be made by the End-User Review 

Committee. 

Changes to § 744.16 of the EAR 

Section 744.16 of the EAR sets forth 

the procedure by which listed parties 

may request modification or removal of 

their listing. In the proposed rule, that 

section included the following 

statement: ‘‘BIS will review such 

requests in conjunction with the 

Departments of Defense, State and 

Energy, and, if appropriate in a 

particular case, the Treasury.’’ The 

corresponding language in the final rule 

reads: ‘‘The End-User Review 

Committee will review such requests in 

accordance with the procedures set 

forth in Supplement No. 5 of this part’’

to make clear the role of the End-User 

Review Committee in these decisions. 

This rule also revises § 744.16 of the 

EAR to provide that decisions on a 

listed entity’s request to have its listing 

modified or removed will be conveyed 

to the requester by the Deputy Assistant 

Secretary for Export Administration. 

The proposed rule provided that such 

decisions would be conveyed by the 

chairman of the End User Review 

Committee. BIS is making this change to 

make the procedure for delivering 

decisions pursuant to § 744.16 EAR 

consistent with the procedure for 

delivering ‘‘is informed’’ letters under 

§§ 744.2, 744.3, 744.4, 744.6, 744.17 and 

744.21of the EAR. 

Addition of New Supplement to Part 

744 

In response to public comments 

requesting more information about the 

procedures by which the Entity List 

would be modified pursuant to this rule, 

this final rule adds a new supplement: 

Supplement No. 5 to Part 744—

Procedures for End-User Review 

Committee Entity List Decisions. This 

Committee is the body for all decisions 

to make changes to the Entity List 

pursuant to §§ 744.11 and 744.16 of the 

EAR. 

Conforming and Technical Changes 

Made by This Rule 

The proposed rule stated the decision 

on a party’s request to have its listing 

removed or modified would be the final 

agency action on the request. BIS 

intended that language to mean that no 

further administrative procedures for 

changing the decision are available. As 

a conforming change, this final rule 

adds language to § 756.1 excluding 

decisions made by the End-User Review 

Committee pursuant to § 744.16 of the 

EAR from the appeal procedure of part 

756 of the EAR. Such express exclusion 

is not needed with respect to End-User 

Review Committee decisions pursuant 

to § 744.11 of the EAR because those 

decisions must, in all instances, be 

implemented through an amendment to 

the EAR and are excluded from § 756.1 

by preexisting language. 

In response to a suggestion in the 

public comments, this rule revises 

§ 744.11 of the EAR to reference Supp. 

No. 4 to part 744 of the EAR. That 

reference was not in the proposed rule. 

Summary of the Public Comments and 

BIS’s Responses to Those Comments 

Comment on Rulemaking Requirements 

1. One commenter stated that this 

proposed rule should be designated as 

a major rule because of its broad 

implications and the economic 

consequences that could arise for U.S. 

exporters if the rule results in a larger 

effort by foreign companies to design 

out U.S. products. 

The Office of Management and Budget 

(OMB) has authority to designate rules 

as major under the Congressional 

Review Act. OMB has determined that 

this rule is not a major rule for purposes 

of that Act. The Department of 

Commerce does not have authority to 

designate a rule as major for purposes of 

the Congressional Review Act. 

General Comments on the Proposed 

Rule 

2. Three commenters expressed 

support in principle for the concept of 

targeted entity based license 

requirements. The reasons cited for 

support of the concept were that such 

controls are better suited to the global 

nature of national security and other 

threats than are broader, country based 

controls, that such controls have 

potential to employ more efficiently 

enforcement and compliance resources 

by government and the private sector by 

focusing on entities of concern and that 

such controls would allow BIS to 

conduct more prior reviews of exports 

to risky users. However, all of the 

commenters, whether or not they 

expressed support for the concept in 

principle, expressed reservations or 

suggested changes to some aspect of the 

concept as noted in the following 

paragraphs. 

3. One commenter stated that adding 

new entries to the Entity List creates 

minimal disruption to private sector 

screening programs and specifically 

contrasted that procedure to the recently 

promulgated ‘‘China rule.’’

BIS believes that the targeted end-user 

controls set forth in this rule are 

valuable because they minimize 

disruption to business. However, the 

military end-use license requirements 

set forth in the ‘‘China rule’’ are also 

important instruments of United States 

policy. The reasons for those license 

requirements were set forth in the 

preamble to that rule (72 FR 33646, June 

19, 2007) and need not be repeated here. 

4. Two commenters suggested that all 

entries on the Entity List identify the 

EAR section on which that listing was 

based. 

As set forth in the proposed rule and 

in this final rule, all of the entries to be 

added pursuant to § 744.11 as created by 

this rule will be identified as being 

added pursuant to § 744.11. The 

proposal to add section references to all 

of the existing entities on the Entity List 

that do not currently have such 

references is beyond the scope of this 

rule. At this time, BIS does not have 

plans to add such references to any preexisting entries that do not already have 

such references. However, BIS plans to 

have the interagency End-User Review 

Committee conduct annual reviews of 

the Entity List. The Committee may 

consider the proposal in this comment 

as part of its review. 

5. One commenter asserted that the 

proposed rule is seriously flawed and 

imprecise, offering a dubious process, 

which could be more effectively 

handled by existing mechanisms under 

the Export Administration Regulations. 

BIS believes that the final rule is 

sufficiently precise. This rule will 

provide a mechanism for listing parties 

in the Code of Federal Regulations 

whose activities raise sufficient concern 

to justify imposing export and reexport 

license requirements on items to be sent 

to them. By doing so, all potential 

exporters and reexporters will have 

access to information about these parties 

of concern. BIS agrees that more public 

disclosure than was provided in the 


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proposed rule of the process by which 

entities will be added to the Entity List 

pursuant to this rule is warranted. 

Accordingly, this rule includes a new 

Supplement No. 5 to part 744, setting 

forth the process by which changes to 

the Entity List will be made. 

BIS is publishing this rule precisely to 

make its license requirements more 

easily identifiable by the public and 

therefore more effective. License 

requirements based on country or item 

may be too broad to deal with problems 

that apply to particular recipients of 

EAR items. A denial of export privileges 

may be too rigid or unwarranted in a 

particular case. Adding a name to the 

Unverified List does not impose a 

license requirement and, therefore, does 

not allow BIS to scrutinize transactions 

in advance. This rule will reduce the 

need for ad hoc procedures such as use 

of general orders to impose license 

requirements on transactions involving 

problematic entities. 

6. One commenter stated that foreign 

availability should be a key factor in all 

decisions, particularly with respect to 

items that may pose little or no national 

security or foreign policy concerns. If a 

foreign company presents such concerns 

that it must be listed, controls should be 

applied only to items that present a 

national security or foreign policy 

concern rather than across the board. 

Decisions to set the license 

requirements, license exception 

availability and licensing policy for any 

entity listed pursuant to § 744.11 will be 

made by the End-User Review 

Committee. Nothing in this rule either 

precludes or requires considering 

foreign availability in the Committee’s 

deliberations. Because this rule is 

intended to focus license requirements 

on specific entities based on the 

conduct of those entities, BIS believes 

that decisions about the factors to 

consider and items to control should be 

decided on a case-by-case basis. 

7. One commenter stated that the 

preamble to the proposed rule states 

that the reasons for which BIS may 

place an entity on the Entity List are 

stated in §§ 744.2, 744.3, 744.4, 744.6, 

744.10 and 744.20. However, only 

§§ 744.10 and 744.20 referred to Supp. 

4 of the EAR. The commenter 

recommended that BIS add a reference 

to Supp 4 in §§ 744.2, 744.3, 744.4, and 

744.6 and proposed § 744.11. 

Although §§ 744.2, 744.3, 744.4 and 

744.6 of the EAR do not explicitly 

mention Supp. No. 4 to part 744, they 

do provide for BIS to inform by 

amendment to the Export 

Administration Regulations that exports 

or reexports to certain parties require a 

license because those parties pose an 

unacceptable risk of use in or diversion 

to the activities set forth in those 

sections. Such amendments take the 

form of amendments to Supp. No. 4 to 

part 744 of the EAR. BIS believes that 

adding a reference to Supp. No. 4 in 

these sections is unnecessary and 

beyond the scope of this rule. Section 

744.11 of the EAR in the proposed rule 

referred to the Entity List, but did not 

explicitly identify the Entity List as 

Supp. No. 4 to part 744. BIS believes 

that such identification would be useful. 

Accordingly, this final rule revises the 

introductory text of § 744.11 of the EAR 

to make such identification. 

8. The proposed rule provided that 

new § 744.11 could not be used to add 

to the Entity List parties for whom a 

license is required pursuant to 

§§ 744.12, 13, 14 or 18 of the EAR. 

Those sections apply a BIS license 

requirement to certain entities that 

appear on the List of Specially 

Designated Nationals and Blocked 

Persons that is published by the Office 

of Foreign Assets Control in the 

Department of the Treasury. Two 

commenters recommended that the 

same limitation apply to entities added 

to the Entity List pursuant to § 744.20 of 

the EAR. Section 744.20 provides for 

inclusion on the Entity List certain 

parties who are sanctioned under 

certain statutes by the Department of 

State. Both § 744.20 and the new 

§ 744.11 established by this rule are 

foreign policy based export controls. 

One commenter expressed concern that 

not excluding entities listed pursuant to 

§ 744.20 from listing pursuant to new 

§ 744.11 could cause differences of 

opinion between the Departments of 

State and Commerce in the EAR as to 

which entities are listed because of the 

foreign policy concerns that underlie 

§ 744.11 and those listed because of the 

concerns that underlie § 744.20. The 

other commenter expressed concern that 

not excluding entities listed pursuant to 

§ 744.20 from listing pursuant to new 

§ 744.11 could lead to duplicate listings 

on the Entity List based on the two 

sections. 

BIS believes that the potential 

consequences cited by these two 

commenters are not likely to pose 

problems in practice and that no change 

to the rule is needed on this point. A 

single committee (the End-User Review 

Committee) will vote on all changes to 

the Entity List regardless of the section 

that authorizes placement of the entity 

on the Entity List. The Department of 

State will have a representative on that 

Committee. Therefore, conflicting 

interagency opinions regarding a 

proposed listing are likely to be resolved 

before that listing is published. If the 

Committee were to conclude that more 

than one section supported placing an 

entity on the list, it could list all of the 

applicable sections with that entity’s 

entry rather than have multiple listings. 

9. One commenter recommended that 

BIS use the new § 744.11 to impose 

license requirements on entities that 

have been targeted for non-proliferation 

reasons by the United States 

government or by foreign governments 

where other provisions of part 744 do 

not authorize inclusion on the Entity 

List. 

BIS believes that no change to the 

language of the proposed rule is needed 

because of the issues raised by this 

comment. Sections 744.2, 744.3, and 

744.4 of the EAR provide a basis for 

listing entities on the Entity List because 

‘‘there is an unacceptable risk of use in 

or diversion to’’ proliferation activities 

related to certain nuclear end-uses, 

certain rocket systems and unmanned 

air vehicles and certain chemical or 

biological weapons end-uses. Section 

744.6 provides a basis for listing an 

entity on the Entity List because 

activities of U.S. persons in connection 

with that entity could involve certain 

nuclear activities, certain missile related 

activities or certain chemical or 

biological weapons activities. In 

addition, to the extent that an entity’s 

proliferation related activities meet the 

criteria in new § 744.11, that section 

could serve as a basis for listing the 

entity. BIS believes that these sections 

provide sufficient basis for using the 

Entity List to promote non-proliferation 

interests and that the decisions to list an 

entity should be made on a case-by-case 

basis. 

Comments on Proposed § 744.11(b) 

Criteria for Revising the Entity List—In 

General 

10. One commenter stated that BIS 

should ensure that the criteria for 

making a decision to list an entity are 

well defined and clear, to avoid 

capturing entities that are in compliance 

with their countries’ laws and 

regulations, particularly if those 

companies are located in countries that 

are allies or major trading partners of 

the United States. 

Because the criteria set forth in the 

proposed rule are intended to protect 

U.S. national security and foreign policy 

interests, BIS believes that revising the 

criteria to preclude listing parties who 

are acting in accordance with their own 

countries’ laws and regulations would 

undermine the purpose for imposing 

these license requirements. 

Nevertheless, BIS understands the need 

to act consistently with overall U.S. 

government interests, including the 


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interest in maintaining appropriate 

relationships with U.S. allies and major 

trading partners. BIS believes that the 

multi-agency composition of the EndUser Review Committee will provide 

balanced consideration of relevant U.S. 

government national security and 

foreign policy interests including 

interests based on relationships with 

other governments. 

11. One commenter stated that BIS 

should ensure that ‘‘behaviors’’ that can 

lead to placement on the List are at a 

comparable level in terms of failure to 

comply with U.S. government 

requirements. 

An important role of the End-User 

Review Committee is to promote 

consistent practice with respect to the 

Entity List. The Committee’s 

procedures, including the right of 

escalation by any member agency, are 

intended to promote such consistency. 

However, the criteria for placing an 

entity on the Entity List do not require 

that the party’s conduct violate a U.S. 

law or regulation. Placement on the 

Entity List pursuant to new § 744.11 

imposes a license requirement, sets 

licensing policy and sets the availability 

of license exceptions for the listed party. 

Failure to comply with government 

requirements would likely be a violation 

of law for which other actions, either 

instead of or in addition to placing an 

entity on the Entity List, would be 

appropriate. 

12. One commenter stated that actions 

that would warrant placement on the 

list should be examined principally 

against international standards for 

business conduct and internationally 

agreed upon principles for addressing 

common threats to the world 

community, rather than on purely 

unilateral considerations. 

BIS recognizes that international 

business, by its nature, must be 

conducted in accordance with the laws 

of more than one country. BIS also 

recognizes the value of international 

standards in influencing the laws and 

regulations of individual countries. In 

keeping with this recognition, the EAR 

include requirements drawn from 

multilateral export control regimes and 

United Nations arms embargoes. 

However, the EAR also include 

requirements that are based on U.S. 

interests that are not based on 

conclusions reached by a multinational 

body. BIS believes that multi agency 

participation (including the Department 

of State) on the End-User Review 

Committee will provide perspective 

(including an international perspective) 

in all decisions to modify the Entity List 

pursuant to § 744.11. However, as stated 

in both the proposed rule and in this 

final rule, the underlying purpose of the 

rule is to protect U.S. national security 

and foreign policy interests. As such, 

BIS believes that it would be 

counterproductive to adopt a rule that 

would require decisions to modify the 

Entity List pursuant to § 744.11 to meet 

an internationally agreed upon 

standard. 

Comments on the Illustrative Examples 

of Criteria for Placing an Entity on the 

Entity List § 744.11(b)—In General 

13. One commenter stated that the 

five illustrative examples of conduct are 

stated very broadly, that they are only 

illustrative and that clearer and 

narrower limits are needed to prevent 

confusion. Two commenters specifically 

stated that more guidance on the type of 

conduct that would place an entity on 

the Entity List is needed. 

BIS believes the criteria and the 

illustrative examples must be broadly 

stated to illustrate effectively the kinds 

of activities that are contrary to U.S. 

national security or foreign policy 

interests and that justify placing an 

entity on the list. BIS notes that the 

decision to place an entity on the list 

must be based on specific and 

articulable facts. In recent years, BIS has 

sought to tailor certain export license 

requirements to specific users and has 

been forced to resort to ad hoc solutions 

to do so. Section 744.20 of the EAR 

allows for placing an entity on the 

Entity List only if the party is first 

sanctioned by the Department of State 

pursuant to certain statutes. That 

section has been used only one time. 

General Order Number 3 (Supp No. 1 to 

part 736 of the EAR) has been used to 

impose license requirements on parties 

where there is no regulatory basis to list 

those parties on the Entity List. BIS 

believes that broadly stating its criteria 

for placing an entity on the list will 

reduce the need for such ad hoc 

procedures. Broad illustrative examples 

are needed to illustrate effectively the 

broad nature of the criteria. 

BIS believes that the overall effect of 

this rule will be to reduce the possibility 

of confusion by consolidating names of 

parties whose presence in a transaction 

trigger an EAR license requirement onto 

a single list. 

As noted in the discussion above of 

the changes from the proposed rule, BIS 

has modified two of the illustrative 

criteria to describe more precisely the 

conduct that could justify placing an 

entity on the Entity List. 

Comments on the Term ‘‘Specific and 

Articulable Facts’’ in § 744.11(b) 

14. One commenter asked whether 

intelligence reporting would be used in 

the process and if so, would the 

intelligence be no more than two years 

old and actionable? The commenter 

went on to recommend that only 

intelligence that has been certified by 

the Director of National Intelligence 

should be used in this process. In 

support of these recommendations, the 

commenter offered several assertions. 

This commenter asserted that, based 

on experience as a government 

employee in employment related to 

license application review, much 

intelligence information is of poor 

quality or outdated. This commenter 

also asserted that, in recent years, the 

focus of intelligence gathering has been 

closely tied to proliferation of weapons 

of mass destruction. Finally, this 

commenter asserted that a unit of the 

Department of Defense has, at times, 

stepped in to provide intelligence of 

poor quality. 

BIS intends that the End-User Review 

Committee utilize reliable information 

that is relevant to the case at hand in 

making its decisions. BIS believes that 

the Committee will be in a position to 

evaluate the reliability of information on 

a case-by-case basis. Adding a provision 

to this final rule prohibiting the use of 

information because of its age, source, 

whether it is ‘‘actionable’’ or whether it 

has been certified by a particular official 

would arbitrarily restrict the Committee 

and might preclude the use of reliable 

information in some cases. BIS believes 

that a former employee’s opinions 

regarding the quality or focus of 

intelligence reporting available during 

that former employee’s government 

tenure should not be a basis for limiting 

by regulation the information that the 

End-User Review Committee may 

consider. Therefore, BIS is making no 

change to the rule based on this 

comment. 

15. One commenter stated that the 

proposed rule could present problems 

for exporters in terms of compliance and 

ability to remain competitive in the 

international arena. This commenter 

asked for additional information about 

the standards that ‘‘specific and 

articulable facts’’ would have to meet, 

specifically what universe of conduct 

would lead to imposing a license 

requirement. 

BIS believes that compliance with the 

license requirements imposed by this 

rule will impose a minimal additional 

burden on exporters. Most exporters 

will meet the definition of U.S. Person 

in § 772.1 of the EAR and thus may not 

be placed on the Entity List pursuant to 

this rule. By expanding the grounds for 

placing a name on the Entity List, BIS 

will be reducing the need to issue 

general orders that impose license 


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requirements, thereby reducing the 

number of provisions of the EAR that 

must be reviewed to identify potential 

recipients whose presence triggers a 

license requirement. BIS believes that 

describing in advance every sort of 

action that could be contrary to U.S. 

national security and foreign policy 

interests would be impossible and that 

attempting to do so would be 

counterproductive. Rather, the examples 

are intended to illustrate, in a general 

way, the nature of conduct that could be 

a basis for listing. 

Comments Relating to the First 

Illustrative Example—Supporting 

Persons Engaged in Acts of Terror 

§ 744.11(b)(1) 

16. One commenter asked that BIS 

state the meaning of ‘‘Supporting 

persons engaged in acts of terror.’’ That 

same commenter asserted that there is 

no internationally agreed definition of 

terrorism and asked what the term ‘‘acts 

of terror’’ means. 

BIS believes that the meaning of terror 

and terrorism are sufficiently 

understood in common parlance that 

defining these terms is not necessary for 

public understanding of this rule. 

However, as examples and not as 

limitations, the acts set forth in 18 

U.S.C. 2331(1), 18 U.S.C. 2331(5) and 

the acts described in the preamble to the 

General Order Concerning Mayrow 

General Trading and Related Entities (71 

FR 32272, June 5, 2006) would be 

considered supporting persons engaged 

in acts of terror for purpose of § 744.11 

of the EAR. 

This rule is intended to protect U.S. 

national security and foreign policy. 

Accordingly, obtaining international 

agreement as to the meaning of a term 

in the rule is unnecessary. 

17. One commenter asked what types 

of exports or reexports these restrictions 

are intended to cover. 

The license requirements imposed by 

adding a name to the Entity List could 

apply to any item subject to the Export 

Administration Regulations. The 

Committee could tailor the requirements 

based on the risks imposed by the party 

to be listed. The conduct that provides 

the reason for listing a party need not 

be an export or reexport of any type. 

Comments Relating to the Second 

Illustrative Example—Actions That 

Could Enhance the Military Capability 

of, or the Ability To Support Terrorism 

of Governments That Have Been 

Designated by the Secretary of State as 

Having Repeatedly Provided Support for 

Acts of International Terrorism 

§ 744.11(b)(2) 

18. One commenter stated that it is 

not clear whether the illustrative 

example applies only to governments 

that the Department of State has 

designated as supporters of terrorism. 

BIS’s intent is that any party taking 

the action described in this illustrative 

example could be placed on the Entity 

List. The action would have to enhance 

the military capability or the ability to 

support terrorism of a government that 

has been designated by the Secretary of 

State as having repeatedly provided 

support for acts of international 

terrorism. However, the action itself 

need not be taken by such a 

government. BIS does not believe that 

any change to the text of the rule is 

needed to make this point clear. 

19. One commenter asked whether the 

first clause addresses actions described 

in § 744.21 of the EAR as part of the 

China rule. 

Read as a whole, this illustrative 

example does not address actions 

described in § 744.21 of the EAR. 

Attempting to ascribe a meaning to the 

first clause of this illustrative example 

without reference to the final clause 

could be misleading. Section 744.21 of 

the EAR imposes a license requirement 

for certain exports and reexports for 

military end-uses in China where the 

exporter or reexporter knows that the 

item at issue in the specific transaction 

will be employed in a military end-use. 

This illustrative example deals with 

imposing license requirements on 

exports and reexports to certain parties 

by listing those parties and the license 

requirements on the Entity List because 

those parties have taken actions to 

enhance certain capabilities (including 

military capabilities) of governments 

that have been designated by the 

Secretary of State as having repeatedly 

provided support for acts of 

international terrorism. China has never 

been so designated. 

20. One commenter asserted that this 

section should be more clearly written 

to have the Department of State specify 

the government in question and tie the 

conduct that enhances the military 

capability of that government 

designated as supporting international 

terrorism. This, according to the 

commenter, would avoid confusion in 

the exporting community, avoid 

capricious interagency behavior and 

prevent commercial mischief. 

The Department of State determines 

that certain countries have repeatedly 

provided support for acts of 

international terrorism and so 

designates those countries pursuant to 

its statutory authority. This rule makes 

no change to that procedure. BIS 

believes that there are several provisions 

in this rule that provide reasonable 

safeguards against capricious 

interagency behavior: the requirement 

that the decisions to place an entity on 

the Entity List be supported by specific 

and articulable facts, the multi-agency 

composition of the End-User Review 

Committee that makes decisions to 

place an entity on the Entity List, and 

the right of agencies to escalate as 

provided in Supplement No. 5 to part 

744 of this final rule. The fact that 

identifying information about the 

entities will be published will serve to 

reduce opportunities for confusion 

among any segment of the public that is 

engaged in exporting or reexporting 

items that are subject to the EAR. 

Comments Relating to the Third 

Illustrative Example—Transferring, 

Developing, Servicing, Repairing or 

Producing Conventional Weapons in a 

Manner That Is Contrary to United 

States National Security or Foreign 

Policy Interests or Enabling Such 

Transfer, Service, Repair, Development, 

or Production by Supplying Parts, 

Components, Technology, or Financing 

for Such Activity—744.11(b)(3) 

21. One commenter stated that the 

language of this illustrative example 

‘‘should not be a back door maneuver 

seeking to penalize parties for certain 

conduct’’ that was in the proposed 

version of the recently published China 

rule but that was removed from the final 

version of that rule. 

BIS believes that this comment is 

inapposite. The proposed modification 

to § 744.6 of the EAR to which the 

commenter alludes would have applied 

a license requirement to certain support 

activities if done with knowledge that 

the underlying export or reexport 

transaction was occurring without a 

required license (See 72 FR 33817, July 

6, 2006). This illustrative example 

describes a type of conduct, including 

support activities related to that 

conduct, that, when done contrary to 

United States national security or 

foreign policy interests, could justify 

imposing a license requirement for 

shipments to the party who engaged in 

that conduct and for notifying the 

public of the existence of that license 

requirement through publication on the 

Entity List. 


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22. Two commenters suggested that 

the conduct in this illustrative example 

could cover situations in which foreign 

companies are complying with the laws 

and regulations of their own countries 

and that these situations are best dealt 

with through government to government 

negotiations rather than by imposing a 

license requirement on the party 

involved. One of these commenters 

noted that other governments may have 

bilateral arms arrangements and defense 

cooperation agreements and that BIS 

should not drive foreign policy by 

penalizing entities engaged in trade that 

is in compliance with their own 

domestic laws and regulations. The 

other commenter asked specifically in 

what ‘‘manner’’ the entity would have to 

be involved in such activities to be 

placed on the list. 

BIS is aware that not all other 

countries share the views of the U.S. 

government and that those countries 

may enter into arrangements and 

agreements consistent with their own 

interests. Nevertheless, an important 

part of BIS’s role is to regulate exports 

in a manner that is consistent with U.S. 

foreign policy interests. The 

participation of the Department of State 

on the End-User Review Committee 

provides an opportunity for foreign 

policy input so that the Committee’s 

actions are consistent with overall U.S. 

foreign policy interests. Moreover, the 

placement of an entity on the Entity List 

pursuant to this rule would not 

preclude the Department of State from 

engaging with another government 

regarding that government’s policies 

and practices. 

The use of the word ‘‘manner’’ in this 

illustrative example is intended to make 

clear that any of the activities in this 

illustrative example must be contrary to 

U.S. national security or foreign policy 

interests to serve as a basis for placing 

a name on the Entity List. 

Comments Relating to the Fourth 

Proposed Illustrative Example—

Deliberately Failing or Refusing to 

Comply With an End Use Check 

Conducted by or on Behalf of BIS or 

DTC by Denying Access, by Refusing to 

Provide Information About Parties to a 

Transaction, or by Providing 

Information About Such Parties That is 

False or That Cannot be Verified or 

Authenticated—§ 744.11(b)(4) 

23. One commenter stated that ‘‘some 

parties have not been notified that they 

have been deemed to fail end use 

checks—either because they hadn’t 

failed such checks or because the checks 

never even had been attempted.’’ The 

rule ‘‘as applied [should] include steps 

to ensure that such parties are not added 

to the Entity List in these 

circumstances.’’

All proposed additions to the Entity 

List pursuant to § 744.11 will be 

reviewed by the multi-agency End-User 

Review Committee. The Committee will 

be in a position to inquire into the 

details and circumstances of the end use 

check before making a decision. In 

addition, the Committee’s procedures 

allow any participating agency to 

escalate the decision to a higher level. 

Finally, this rule contains a provision 

for the listed entity to seek to have its 

listing removed or modified and to 

present information supporting its 

request to the Committee. BIS believes 

that these procedures are sufficient to 

provide reasonable assurances against 

errors of the types described in the 

comment. BIS has modified the 

language of this illustrative example to 

emphasize that some conduct on the 

part of the party to be listed that makes 

conducting the check impossible or that 

renders its results inaccurate or useless 

must be present for the terms of this 

example to be met. 

24. Two commenters compared this 

illustrative example with the existing 

Unverified List published by BIS. One 

commenter stated that this illustrative 

example conflicted with the Unverified 

List because the Unverified List stated 

that it did not create a license 

requirement. The other commenter 

stated that the existing mechanism 

under the EAR for addressing entities in 

countries where BIS has been unable to 

conduct pre-license checks or post 

shipment verifications is more than 

adequate because it requires enhanced 

due diligence. This commenter asserted 

that establishing new license 

requirements on U.S. companies for 

actions that could be seen by other 

countries as their sovereign right could 

have consequences for U.S. 

manufacturers as those companies could 

decide to ‘‘design out’’ their [the U.S. 

manufacturers] products. 

BIS believes that conduct described in 

this illustrative example is sufficiently 

distinct from the conduct that would 

form a basis for placing a party on BIS’s 

Unverified List that conflicting 

decisions are unlikely. Moreover, the 

existing Unverified List is not adequate 

to address the situations covered by this 

rule. BIS may place entities on the 

Unverified List because BIS is unable to 

perform an end use check or where BIS 

is unable to verify the existence or 

authenticity of the end user, 

intermediate consignee, ultimate 

consignee or other party to an export 

transaction for reasons outside the 

control of the U.S. government (See 67 

FR 40910, June 14, 2002 and 69 FR 

42652, July 16, 2004). This illustrative 

example requires a deliberate refusal or 

a pattern of conduct by the party to be 

listed that makes the check impossible 

to conduct or that makes the results of 

the check inaccurate or useless. To 

emphasize this point, BIS has revised 

the language published in the proposed 

rule. BIS believes that conduct of the 

type described in this illustrative 

example can warrant imposing a license 

requirement on transactions with the 

parties who engage in the conduct 

because a license requirement will 

result in more comprehensive scrutiny 

of transactions than would identifying 

the party’s presence as a red flag thereby 

requiring additional scrutiny by a 

private sector party. Although nothing 

in the EAR expressly precludes an 

entity from being listed simultaneously 

on the Unverified List and on the Entity 

List, BIS expects that such an event is 

unlikely given the differences in criteria 

underlying the two lists. 

Although some risk exists that 

manufacturers will attempt to design 

out U.S. origin components because of 

any U.S. export control regulation, BIS 

believes that judicious review by the 

End-User Review Committee will 

provide reasonable assurance that the 

Committee will list only entities whose 

conduct truly merits placement on the 

Entity List. 

Comments Relating to the Proposed 

Fifth Illustrative Example—Engaging in 

Conduct That Poses a Risk of Violating 

the EAR and Raises Sufficient Concern 

That BIS Believes That Prior Review of 

Exports or Reexports Involving the Party 

and the Possible Imposition of License 

Conditions or License Denial Enhances 

BIS’s Ability To Prevent Violations of 

the EAR.—§ 744.11(b)(5) 

25. One commenter stated that more 

information is needed for the fifth 

illustrative example. The commenter 

stated that the example should be 

replaced with more specific illustrations 

of conduct that is of concern to BIS. The 

commenter stated that some violations 

are minor and that BIS should spell out 

in detail those types of violation risks 

that cause it concern. The commenter 

suggested that if this illustrative 

example is to be maintained, some form 

of materiality standard should be added 

and suggested ‘‘engaging in conduct that 

poses a substantial risk of imminent and 

serious violation of the EAR’’ as a 

possible materiality standard. 

Although many acts could pose a risk 

of violating the EAR, the acts that would 

meet the terms of this example are 

limited to those where the End-User 

Review Committee believes that 

imposing license requirements through 


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the Entity List enhances BIS’s ability to 

prevent violations of the EAR. In this 

final rule, BIS has modified the 

language of this illustrative example to 

emphasize that connection. BIS believes 

that replacing this illustrative example 

with several more specific examples, 

which inevitably would be more narrow 

in scope, could mislead readers into 

focusing on the specific conduct in the 

examples themselves rather than on the 

nexus between the conduct that poses a 

risk of violating the EAR and enhanced 

ability to prevent violations that would 

result from an Entity List listing. 

BIS believes that it would not be 

prudent to designate some EAR 

violations as, a priori, more serious than 

others. The seriousness of a violation 

may vary according to the facts of a 

particular case. This illustrative 

example, as clarified in this final rule, 

is designed to illustrate that there must 

be a nexus between the conduct of the 

party to be placed on the Entity List and 

the enhanced ability of BIS to prevent 

violations through imposing a license 

requirement. BIS believes that further 

illustrations are not needed to explain 

this point. 

‘‘[P]revent[ing] an imminent 

violation’’ is the standard for imposing 

temporary denial orders pursuant to 

§ 766.24 of the EAR. BIS believes that, 

in some instances, a license requirement 

may prevent a violation even in the 

absence of an imminent threat and that 

§ 744.11 of the EAR could be used in 

such instances. 

26. One commenter stated that it 

would be better for BIS to engage in a 

partnership with U.S. industry in order 

to find ways to prevent potential 

violations rather than impose additional 

licensing requirements on a U.S. 

company. 

BIS is open to suggestion from any 

member of the public as to ways to 

prevent violations and welcomes all 

such recommendations. However, 

members of the public vary in their 

willingness and ability to detect and 

deter violations. This rule recognizes 

that in some instances, a license 

requirement, which enables the 

government to review the proposed 

transaction, impose license conditions, 

or, if necessary, deny the license 

application, is needed to prevent 

violations. This final rule revises this 

illustrative example to tie more 

explicitly the conduct of the party to be 

added to the Entity List to the risk of a 

violation and to the End-User Review 

Committee’s belief that imposing the 

review associated with license 

applications will aid BIS in preventing 

violations. 

Comments Relating to the Listing 

Process—§ 744.11 of the EAR 

27. One commenter stated that more 

information should be provided about 

the process for listing entities on the 

Entity List pursuant to this rule. 

Specifically, the commenter wanted 

more information on the process that 

will be employed to determine whether 

non-EAR related activities would 

provide a basis for listing, who would 

determine the national security interests 

of the United States, the levels at which 

interagency consultations will take 

place, who will make listing 

determinations with respect to non-EAR 

activities and, the checks that will be in 

place to prevent lower level officials 

from applying their own notions of 

national security and foreign policy. 

BIS agrees that this rule should 

disclose more information on the 

process by which Entity List decisions 

will be made pursuant to §§ 744.11 and 

744.16 than the proposed rule disclosed. 

Accordingly, this final rule includes, as 

a supplement to part 744, the 

procedures to be used by the End-User 

Review Committee in making such 

decisions. Those procedures provide 

that the Committee will include 

representatives from the Departments of 

State, Defense, Energy and Commerce, 

and the Treasury as appropriate. 

Decisions to make changes to the Entity 

List will be made by majority vote of the 

Committee. Any participating agency 

that disagrees with the outcome may 

escalate the matter according to the 

same procedures that are used to 

escalate interagency disputes regarding 

export license applications. BIS believes 

that these procedures provide 

reasonable assurances that low level 

officials will not impose any personal 

notions of national security or foreign 

policy that are inconsistent with actual 

U.S. national security or foreign policy 

interests. 

Under this rule, the activity that forms 

a basis for listing an entity need not be 

an activity that is a violation of the EAR 

or even be an activity that is regulated 

pursuant to the EAR. BIS believes that 

the multi-agency composition of the 

End-User Review Committee and its 

procedures as set forth in new 

Supplement No. 5 to part 744 of the 

EAR will provide reasonable assurance 

that any activity forming the basis for 

listing an entity will be consistent with 

the criteria set forth in § 744.11. 

28. Two commenters proposed that 

any entity under consideration for 

placement on the Entity List should be 

notified and afforded an opportunity to 

state its position, provide information 

and present arguments against the 

listing before any action is taken. 

BIS is not adopting this proposal 

because other provisions of the EAR 

provide adequate provision for listed 

parties to be heard. This rule provides 

a procedure in new § 744.16 that allows 

a listed entity to present information to 

the End-User Review Committee. In 

addition, placement on the Entity List 

results in the imposition of a license 

requirement, the establishment of 

licensing policy, and the establishment 

of limits on use of License Exceptions 

for that entity. If any license application 

to send an item that is subject to the 

EAR to a listed entity subsequently is 

denied, that entity, as a person directly 

and adversely affected by the denial, 

would have a right to appeal under part 

756 of the EAR. 

29. Two commenters stated that 

certain members of the public 

(particularly U.S. exporters) who could 

be affected by new Entity List listings 

should have an opportunity to present 

information before a final decision is 

made to place an entity on the Entity 

List. 

BIS believes that it is not necessary to 

notify the public at large of impending 

Entity List changes. Placement of an 

entity on the Entity List results in the 

imposition of a license requirement, the 

establishment of licensing policy, and 

the establishment of limits on use of 

license exceptions for that entity. If any 

license application to send an item that 

is subject to the EAR to a listed entity 

subsequently is denied, the license 

applicant, as a person directly and 

adversely affected by the denial, would 

have a right to appeal under part 756 of 

the EAR. 

30. One commenter stated that BIS 

failed to provide a transparent and 

rational process, raising serious issues 

under the national treatment provisions 

of the WTO treaty. 

BIS does not know what this 

commenter means by ‘‘serious issues.’’

BIS is not aware of any treaty provision 

that this rule would contravene. 

Comments Concerning § 744.16—

Procedure for Requesting Removal or 

Modification of an Entity List Entry 

31. One commenter asserted that the 

need for more information about the 

process would be vital for persons 

seeking removal from the list and that 

given the broad and far reaching nature 

of criteria for listing an entity, senior 

level officials should have a greater role 

in the removal process. 

BIS agrees that this rule should 

disclose more information on the 

process by which Entity List decisions 

will be made than the proposed rule 


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disclosed. Decisions made pursuant to 

§ 744.16 (requests for removal or 

modification) will be made by the same 

End-User Review Committee that makes 

decisions to add an entity pursuant to 

§ 744.11 Accordingly, this final rule 

includes, as a supplement to part 744, 

the procedures that the End-User 

Review Committee will use in making 

such decisions. That procedure provides 

that a member agency that disagrees 

with a decision has the right to escalate 

the matter to more senior officials. 

32. One commenter stated that 

persons whose requests for removal are 

denied by the interagency review 

committee should have an express right 

of appeal. 

BIS believes that a right of appeal for 

listing decisions on the Entity List is not 

necessary as the EAR already contains a 

mechanism for appeals of decisions to 

reject license applications. A rejection 

of a party’s request to be removed from 

the Entity List retains existing license 

requirements, licensing policy and 

restrictions on availability of license 

exceptions. In the event that a license 

application on which the listed entity is 

shown as a party is denied, the listed 

entity as a party directly and adversely 

affected by that denial would have a 

right to appeal under part 756 of the 

EAR. 

33. One commenter stated that there 

should be a transparent and rational 

process that allows the listed party and 

interested parties to request removal. 

This commenter asserted that failure to 

provide a transparent and rational 

process raises serious issues under the 

national treatment provisions of the 

WTO treaty. 

BIS agrees that more disclosure than 

was contained in the proposed rule of 

the process by which Entity List 

decisions will be made pursuant to 

§ 744.11 and 744.16 is appropriate. 

Accordingly, this final rule includes, as 

a supplement to part 744, the 

procedures of the End-User Review 

Committee that will make such 

decisions. BIS does not know what this 

commenter means by ‘‘serious issues.’’

BIS is not aware of any treaty provision 

that this rule would contravene. 

Comments are not related to specific 

proposals in the proposed rule. 

34. One commenter suggested that BIS 

consider replacing the broader based 

controls as in the recent China rule with 

targeted entity based controls. 

Although BIS believes that targeted 

end-user controls are valuable, BIS also 

believes that they cannot at this replace 

end-use license requirements imposed 

by the recent China rule. The reasons for 

those license requirements were set 

forth in the preamble to that rule (72 FR 

33646, June 19, 2007) and need not be 

repeated here. 

35. One commenter stated that BIS 

should take steps to coordinate any 

expanded Entity List with the Validated 

End User process, for example, make the 

VEU process available to all entities not 

included on the Entity List or by 

creating a presumption that a party not 

included on the list should be eligible, 

in the absence of other specific and 

articulable facts, for VEU status. 

BIS believes that neither of these 

suggestions is practical. The Validated 

End User (VEU) authorization (§ 748.15 

of the EAR) allows exports and 

reexports without a specific license of 

certain items to end users who have 

been approved by the End-User Review 

Committee. Section 744.11 as set forth 

in this rule imposes license 

requirements on exports and reexports 

to certain identified parties even if such 

exports and reexports would not require 

a license in the absence of the Entity 

List listing. Between these two 

categories of potential recipients are 

many potential recipients for whom 

neither Entity List listing nor Validated 

End User status is likely to be 

appropriate. 

36. Two commenters recommended 

that the rule include a ‘‘contract 

sanctity’’ provision. One stated that 

parties should be able to complete 

transactions that were entered into 

before the date that BIS determined that 

specific and articulable facts justified 

listing of a party on the Entity List. The 

other stated that such a provision was 

needed to avoid unnecessary disruption 

to collaborative efforts that may have 

been in place for a long time. 

This rule provides the authorization 

for adding parties to the Entity List, but 

does not add any parties to the list. BIS 

believes that establishing a contract 

sanctity provision that would apply to 

all Entity List additions regardless of 

circumstances and consequences would 

be unwise. BIS notes that this rule does 

not preclude the use of a contract 

sanctity provision in an individual 

action to add a party to the Entity List 

nor does it preclude consideration of a 

preexisting contract in evaluating any 

license application for an export or 

reexport to a party added to the Entity 

List pursuant to this rule. However, BIS 

believes that foreseeing at this time all 

of the possible circumstances that 

would justify either including or 

precluding a ‘‘contract sanctity’’

provision in a particular Entity List 

decision is not possible. Accordingly, 

BIS is making no changes to the rule 

based on this comment. 

37. Two commenters recommended 

changes for improving the quality of 

information on the Entity List. Their 

recommendations included identifying 

the locations of listed entities, 

supplying known aliases and contact 

information and systematic review to 

correct or remove outdated entries or 

entries that have changed names or 

affiliations. 

BIS agrees that more systematic 

review and updating of the Entity List 

is desirable and would make the List 

more useful to the public. Therefore BIS 

intends to have the End-User Review 

Committee conduct a systematic review 

of the Entity List for the purpose of 

identifying and implementing any 

needed corrections and updates at least 

annually. The End-User Review 

Committee procedures published in 

Supplement No. 5 to part 744 as part of 

this rule reference that annual review. 

BIS expects that the first review will be 

completed no later than August 21, 

2009. 

38. One commenter noted that BIS has 

stated that it cannot supply the Chinese 

names of entities on the Entity List 

because the Federal Register cannot 

accommodate their publication. BIS 

should overcome this technical 

limitation by publishing on its Web site 

an augmented version of the Entity List 

including names of listed entities in 

original alphabets. 

BIS recognizes that making the Entity 

List as widely understood as possible 

would be beneficial to users of the list 

and to BIS’s interest in promoting 

voluntary compliance. However, given 

other priorities and BIS’s limited 

resources, implementing a 

recommendation such as this in the 

foreseeable future is unlikely. 

39. One commenter stated that BIS 

should provide clear guidance on how 

to deal with entities related to those on 

the list. BIS should explicitly state the 

extent to which the license restrictions 

on listed entities apply to related 

entities and should list all of the related 

entities to which restrictions apply. 

BIS intends to publish guidance in the 

near future on dealing with entities 

related to those on the Entity List. In 

addition, the new Supplement No. 5 to 

Part 744, which sets forth the End-User 

Review Committee’s procedures, 

provides for annual review of the Entity 

List. That annual review is to include an 

assessment of whether affiliates should 

be added to or removed from the Entity 

List. 

40. One commenter stated that the 

rule should make clear that only listed 

entities—not, for example, unlisted 

affiliates, subsidiaries or sister entities 

are covered. 


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BIS intends to publish guidance on 

dealing with entities related to those on 

the Entity List in the near future. 

41. One commenter stated that the 

Entity List should avoid capturing 

parent companies and subsidiaries, and 

ensure that a decision to do so takes into 

consideration all potential 

consequences for legitimate business of 

the parent or subsidiary, particularly if 

they could negatively impact additional 

companies far removed from the 

behavior that may cause the listing. 

BIS believes that decisions to list or 

refrain from listing a subordinate or 

affiliated entity should be made on a 

case by case basis by the End-User 

Review Committee after consideration 

of the facts relevant to that decision. 

42. One commenter suggested that BIS 

include information about the reason for 

an entity’s listing in order to inform 

exporters more about diversion risk. The 

commenter noted that the section that 

forms the basis for a listing indirectly 

suggests the reason, but that the broad 

scope of § 744.11 as proposed would 

obscure the underlying reason. The 

commenter suggested that a ‘‘warning 

list’’ published by the Japanese Ministry 

of Economy, Trade and Industry 

provides a useful model. 

Although informing the public about 

the nature of diversion risks may be 

useful, the Entity List serves to inform 

the public about license requirements 

based on diversion risks or other factors 

that meet the criteria for Entity List 

listing. Accordingly, BIS is not changing 

the structure of the Entity List at this 

time. 

43. One commenter recommended 

that BIS should consider more 

systematic use of § 744.20 of the EAR, 

which allows adding to the Entity List 

parties sanctioned by the State 

Department. The commenter noted that 

such sanctions are applied to various 

parties for proliferation related 

activities. The commenter stated that all 

of these ‘‘inherently risky’’ end-users 

should be added and retained on the list 

even after the State sanction expires 

unless the End-User Review Committee 

determines that they are no longer a 

risk. 

The recommendation to increase use 

of § 744.20 of the EAR to place more 

entities that have been sanctioned by 

the Department of State on the Entity 

List is beyond the scope of this rule. 

However, BIS notes that, the conduct for 

which the Department of State imposed 

sanctions might, in a particular case, 

also meet the standards for placing the 

party on the Entity List pursuant to new 

§ 744.11 and the End-User Review 

Committee might decide to list such an 

entity. 

44. One commenter asserted that the 

recently promulgated China rule goes 

beyond the Wassenaar Statement of 

Understanding on the Control of nonListed Dual-use Items and that the 

United States has no overarching China 

trade policy, but seeks to cobble 

together a trade policy directed to 

China, creating unpredictability for U.S. 

exporters in terms of compliance and 

ability to remain competitive. This same 

commenter also stated that the United 

States government should change its 

position on the development of an 

International Arms Trade Treaty. The 

commenter stated that seeking to 

penalize those involved in conventional 

weapons activities while not using its 

influence to work towards a meaningful 

arms trade treaty within the United 

Nations framework is dysfunctional and 

hypocritical. 

All of these ideas are outside the 

scope of the proposed rule and BIS is 

making no changes to the rule in 

response to them. BIS’s rationale for 

publishing the recently published China 

rule is set forth in the preamble to that 

rule (72 FR 33646, June 19, 2007) and 

need not be repeated here. Without 

expressing an opinion on the 

commenter’s assessment of the United 

States government’s trade policy 

towards China, BIS notes that the 

composition of the End-User Review 

Committee and the right of agencies to 

escalate disputed decisions are intended 

to provide a balanced approach that 

considers all relevant U.S. policy 

interests. BIS does not determine the 

position that the U.S. government takes 

on proposed treaties or represent the 

United States at the United Nations. 

45. One commenter asserted that 

repeated on-site visits to known 

consignees, increasing pressure from 

Congress and elsewhere and limited 

staff to conduct these visits result in 

delays and backlogs of pending license 

applications. The commenter stated that 

a better approach would be for BIS to 

work with the technical advisory 

committees to develop a risk transaction 

matrix that would identify specific 

criteria that call for such on-site visits. 

This comment addresses criteria by 

which transactions are selected for onsite visits, an issue that is beyond the 

scope of this rule. 

46. One commenter recommended 

that BIS consider the potential effect of 

listing decisions on imports from listed 

companies and resulting consequences 

for U.S. companies. 

This rule reflects BIS’s statutory 

mission to utilize export controls to 

protect United States national security 

and foreign policy interests (by listing 

problematic entities) without unduly 

burdening legitimate export activities 

(avoiding imposing license 

requirements to entire destinations or 

items when doing so is not necessary). 

If a nexus between the potential effect 

of a listing decision on imports and 

protecting U.S. national security or 

foreign policy interests exists in a 

particular case, the impact of the listing 

decision on imports properly may be 

considered in that case. BIS believes 

that determining whether such a nexus 

exists must be done on a case-by-case 

basis and that a rule requiring such 

consideration in all cases would not be 

appropriate. 

47. One commenter stated that BIS 

should conduct more training overseas 

on U.S. export control requirements to 

ensure that foreign companies and 

governments fully understand the 

extraterritorial nature of U.S. export 

controls. 

This comment is outside the scope of 

the proposed rule. BIS conducts a 

number of training sessions both in the 

United States and abroad and expects to 

do so in the future. 

Rulemaking Requirements 

1. This rule has been determined to be 

a significant rule pursuant to Executive 

Order 12866. 

2. Notwithstanding any other 

provision of law, no person is required 

to respond to nor 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 rule 

involves two collections of information 

that have been approved by OMB. 

Control number 0694–0088 ‘‘MultiPurpose Application’’ 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. Control number 0694–0134, 

Procedure for Parties on the Entity List 

to Request Removal or Modification of 

their Listing carries a burden hour 

estimate of three hours per submission 

and an estimate of five submissions per 

year. 

Send comments regarding these 

burden estimates or any other aspect of 

these collections of information, 

including suggestions for reducing the 

burden, to David Rostker, OMB Desk 

Officer, by e-mail at 

david_rostker@omb.eop.gov or by fax to 

(202) 395–7285; and to the Regulatory 

Policy Division, Bureau of Industry and 


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Security, Department of Commerce, 

Room 2705, Washington, DC 20044. 

3. This rule does not contain policies 

with Federalism implications as this 

term is defined in Executive Order 

13132. 

4. The provisions of the 

Administrative Procedure Act (5 U.S.C. 

553) requiring notice of proposed 

rulemaking, the opportunity for public 

participation, and a delay in effective 

date, are inapplicable because this 

regulation involves a military or foreign 

affairs function of the United States (see 

5 U.S.C. 553(a)(1)). Further, no other 

law requires that a notice of proposed 

rulemaking and an opportunity for 

public comment be given for this rule. 

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. However, to obtain the 

benefit of a variety of viewpoints before 

issuing this final rule, BIS issued this 

rule in proposed form with a request for 

comments. 

5. The license requirements imposed 

by this rule are an expansion of foreign 

policy export controls and require a 

report to Congress in accordance with 

section 6 of the Export Administration 

Act. The report was delivered to 

Congress on August 12, 2008. 

List of Subjects 

15 CFR Part 730 

Administrative practice and 

procedure, Advisory committees, 

Exports, Reporting and, recordkeeping 

requirements, Strategic and critical 

materials. 

15 CFR Part 744 

Exports, Reporting and recordkeeping 

requirements, Terrorism. 

15 CFR Part 756 

Administrative practice and 

procedure, Exports, Penalties. 

■ Accordingly, parts 730, 744 and 756 

of the Export Administration 

Regulations (15 CFR parts 730–774) are 

amended as follows: 

PART 730—[AMENDED] 

■ 1. The authority citation for part 730 

is revised to read as follows: 

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. 2151 note; 

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. 11912, 41 FR 15825, 3 

CFR, 1976 Comp., p. 114; E.O. 12002, 42 FR 

35623, 3 CFR, 1977 Comp., p. 133; E.O. 

12058, 43 FR 20947, 3 CFR, 1978 Comp., p. 

179; E.O. 12214, 45 FR 29783, 3 CFR, 1980 

Comp., p. 256; E.O. 12851, 58 FR 33181, 3 

CFR, 1993 Comp., p. 608; E.O. 12854, 58 FR 

36587, 3 CFR, 1993 Comp., p. 179; E.O. 

12918, 59 FR 28205, 3 CFR, 1994 Comp., p. 

899; 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. 12981, 60 FR 

62981, 3 CFR, 1995 Comp., p. 419; 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. 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; E.O. 13338, 69 FR 26751, May 13, 2004; 

Notice of July 23, 2008, 73 FR 43603 (July 25, 

2008); Notice of November 8, 2007, 72 FR 

63963 (November 13, 2007). 

■ 2. Amend Supplement No. 1 to part 

730 by adding an entry to the table 

immediately following the entry for 

collection number 0694–0132 that reads 

as follows: 

0694–0134 ............. Procedure for parties on the Entity List to Request Removal or Modification of their Listing ................ § 744.16 

PART 744—[AMENDED] 

■ 3. The authority citation for part 744 

is revised to read as follows: 

Authority: 50 U.S.C. app. 2401; 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 July 23, 

2008, 73 FR 43603 (July 25, 2008); Notice of 

November 8, 2007, 72 FR 63963 (November 

13, 2007). 

■ 4. In § 744.1(a)(1), a new sentence 

immediately following the current 

seventh sentence and a new sentence 

immediately following the current 

eighth sentence are added, to read as 

follows: 

§ 744.1 General provisions. 

(a)(1) * * * 

Section 744.11 imposes license 

requirements, to the extent specified in 

Supplement No. 4 to this part, on 

entities listed in Supplement No. 4 to 

this part for activities contrary to the 

national security or foreign policy 

interests of the United States. 

* * * 

Section 744.16 sets forth the right of 

a party listed in Supplement No. 4 to 

this part to request that its listing be 

removed or modified. 

* * * * * 

■ 5. Section § 744.11 is added to read as 

follows: 

§ 744.11 License requirements that apply 

to entities acting contrary to the national 

security or foreign policy interests of the 

United States. 

BIS may impose foreign policy export 

and reexport license requirements, 

limitations on availability of license 

exceptions, and set license application 

review policy based on the criteria in 

this section. Such requirements, 

limitations and policy are in addition to 

those set forth elsewhere in the EAR. 

License requirements, limitations on use 

of license exceptions and license 

application review policy will be 

imposed under this section by adding 

an entity to the Entity List (Supp. No. 

4 to this part) with a reference to this 

section and by stating on the Entity List 

the license requirements and license 

application review policy that apply to 

that entity. BIS may remove an entity 

from the Entity List if it is no longer 

engaged in the activities described in 

paragraph (b) of this section and is 

unlikely to engage in such activities in 

the future. BIS may modify the license 

exception limitations and license 

application review policy that applies to 

a particular entity to implement the 

policies of this section. BIS will 

implement the provisions of this section 

in accordance with the decisions of the 

End-User Review Committee or, if 

appropriate in a particular case, in 

accordance with the decisions of the 

body to which the End-User Review 

Committee decision is escalated. The 

End-User Review Committee will follow 

the procedures set forth in Supplement 

No. 5 to this part. 

(a) License requirement, availability of 

license exceptions, and license 

application review policy. A license is 

required, to the extent specified on the 

Entity List, to export or reexport any 

item subject to the EAR to an entity that 

is listed on the Entity List in an entry 

that contains a reference to this section. 

License exceptions may not be used 

unless authorized in that entry. 

Applications for licenses required by 


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this section will be evaluated as stated 

in that entry in addition to any other 

applicable review policy stated 

elsewhere in the EAR. 

(b) Criteria for revising the Entity List. 

Entities for which there is reasonable 

cause to believe, based on specific and 

articulable facts, that the entity has been 

involved, is involved, or poses a 

significant risk of being or becoming 

involved in activities that are contrary 

to the national security or foreign policy 

interests of the United States and those 

acting on behalf of such entities may be 

added to the Entity List pursuant to this 

section. This section may not be used to 

place on the Entity List any party to 

which exports or reexports require a 

license pursuant to §§ 744.12, 744.13, 

744.14 or 744.18 of this part. This 

section may not be used to place on the 

Entity List any party if exports or 

reexports to that party of items that are 

subject to the EAR are prohibited by or 

require a license from another U.S. 

government agency. This section may 

not be used to place any U.S. person, as 

defined in § 772.1 of the EAR, on the 

Entity List. Examples (1) through (5) of 

this paragraph provide an illustrative 

list of activities that could be contrary 

to the national security or foreign policy 

interests of the United States. 

(1) Supporting persons engaged in 

acts of terror. 

(2) Actions that could enhance the 

military capability of, or the ability to 

support terrorism of governments that 

have been designated by the Secretary of 

State as having repeatedly provided 

support for acts of international 

terrorism. 

(3) Transferring, developing, 

servicing, repairing or producing 

conventional weapons in a manner that 

is contrary to United States national 

security or foreign policy interests or 

enabling such transfer, service, repair, 

development, or production by 

supplying parts, components, 

technology, or financing for such 

activity. 

(4) Preventing accomplishment of an 

end use check conducted by or on 

behalf of BIS or the Directorate of 

Defense Trade Controls of the 

Department of State by: precluding 

access to; refusing to provide 

information about; or providing false or 

misleading information about parties to 

the transaction or the item to be 

checked. The conduct in this example 

includes: expressly refusing to permit a 

check, providing false or misleading 

information, or engaging in dilatory or 

evasive conduct that effectively 

prevents the check from occurring or 

makes the check inaccurate or useless. 

A nexus between the conduct of the 

party to be listed and the failure to 

produce a complete, accurate and useful 

check is required, even though an 

express refusal by the party to be listed 

is not required. 

(5) Engaging in conduct that poses a 

risk of violating the EAR when such 

conduct raises sufficient concern that 

the End-User Review committee 

believes that prior review of exports or 

reexports involving the party and the 

possible imposition of license 

conditions or license denial enhances 

BIS’s ability to prevent violations of the 

EAR. 

■ 6. Section 744.16 is added to read as 

follows: 

§ 744.16 Procedure for requesting removal 

or modification of an Entity List Entity. 

Any entity listed on the Entity List 

may request that its listing be removed 

or modified. 

(a) All such requests, including 

reasons therefor, must be in writing and 

sent to: Chair, End-User Review 

Committee, Bureau of Industry and 

Security, U.S. Department of Commerce, 

14th Street and Pennsylvania Avenue, 

NW., Room 3886, Washington, DC 

20230. 

(b) The End-User Review Committee 

will review such requests in accordance 

with the procedures set forth in 

Supplement No. 5 to this part. 

(c) The Deputy Assistant Secretary for 

Export Administration will convey the 

decision on the request to the requester 

in writing. That decision will be the 

final agency action on the request. 

■ 7. Add a new Supplement No. 5 to 

part 744 to read as follows: 

Supplement No. 5 to Part 744—

Procedures for End-User Review 

Committee Entity List Decisions 

The End-User Review Committee (ERC), 

composed of representatives of the 

Departments of Commerce, State, Defense, 

Energy and, where appropriate, the Treasury, 

will make all decisions to make additions to, 

removals from or changes to the Entity List. 

The ERC will be chaired by the Department 

of Commerce and will make all decisions to 

add an entry to the Entity List by majority 

vote and all decisions to remove or modify 

an entry by unanimous vote. 

When determining to add an entity to the 

Entity List or to modify an existing entry, the 

ERC will also specify the section or sections 

of the EAR that provide the basis for that 

determination. In addition, if the section or 

sections that form the basis for an addition 

or modification do not specify the license 

requirements, the license application review 

policy or the availability of license 

exceptions, the ERC will specify the license 

requirements, the license application review 

policy and which license exceptions (if any) 

will be available for shipments to that entity. 

Any agency that participates in the ERC 

may make a proposal for an addition to, 

modification of or removal of an entry from 

the Entity List by submitting that proposal to 

the chairman. 

The ERC will vote on each proposal no 

later than 30 days after the chairman first 

circulates it to all member agencies unless 

the ERC unanimously agrees to postpone the 

vote. If a member agency is not satisfied with 

the outcome of the vote of the ERC that 

agency may escalate the matter to the 

Advisory Committee on Export Policy 

(ACEP). A member agency that is not 

satisfied with the decision of the ACEP may 

escalate the matter to the Export 

Administration Review Board (EARB). An 

agency that is not satisfied with the decision 

of the EARB may escalate the matter to the 

President. 

The composition of the ACEP and EARB as 

well as the procedures and time frames shall 

be the same as those specified in Executive 

Order 12981 as amended by Executive Orders 

13020, 13026 and 13117 for license 

applications. If at any stage, a decision by 

majority vote is not obtained by the 

prescribed deadline the matter shall be raised 

to the next level. 

A final decision by the ERC (or the ACEP 

or EARB or the President, as may be 

applicable in a particular case) to make an 

addition to, modification of, or removal of an 

entry from the Entity List shall operate as 

clearance by all member agencies to publish 

the addition, modification or removal as an 

amendment to the Entity List even if, in the 

case of a decision by the ERC to add an entry 

or any decision by the ACEP or EARB, such 

decision is not unanimous. Such 

amendments will not be further reviewed 

through the regular Export Administration 

Regulations interagency review process. 

A proposal by the ERC to make any change 

to the EAR other than an addition to, 

modification of, or removal of an entry from 

the Entity List shall operate as a 

recommendation and shall not be treated as 

interagency clearance of an EAR amendment. 

The chairman of the ERC will be responsible 

for circulating to all member agencies 

proposals submitted to him by any member 

agency. The chairman will be responsible for 

serving as secretary to the ACEP and EARB 

for all review of ERC matters. The chairman 

will communicate all final decisions that 

require Entity List amendments or individual 

‘‘is informed’’ letters, to the Bureau of 

Industry and Security which shall be 

responsible for drafting the necessary 

changes to the Entity List. If the ERC decides 

in a particular case that a party should be 

informed individually instead of by EAR 

amendment the chairman will be responsible 

for preparing the ‘‘is informed’’ letter for the 

signature of the Deputy Assistant Secretary 

for Export Administration. 

A listed entity may present a request to 

remove or modify its Entity List entry along 

with supporting information to the chairman 

at Room 3886, U.S. Department of 

Commerce, 14th Street and Pennsylvania 

Avenue, NW., Washington, DC 20230. The 

chairman shall refer all such requests and 

supporting information to all member 

agencies. The member agencies will review 


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and vote on all such requests. The time 

frames, procedures and right of escalation by 

a member agency that is dissatisfied with the 

results that apply to proposals made by a 

member agency shall apply to these requests. 

The decision of the ERC (or the ACEP or 

EARB or the President, as may be applicable 

in a particular case) shall be the final agency 

decision on the request and shall not be 

appealable under part 756 of the EAR. The 

chairman will prepare the response to the 

party who made the request. The response 

will state the decision on the request and the 

fact that the response is the final agency 

decision on the request. The response will be 

signed by the Deputy Assistant Secretary for 

Export Administration. 

The End-User Review Committee will 

conduct a review of the entire Entity List at 

least once per year for the purpose of 

determining whether any listed entities 

should be removed or modified. The review 

will include analysis of whether the criteria 

for listing the entity are still applicable and 

research to determine whether the name(s) 

and address(es) of each entity are accurate 

and complete and whether any affiliates of 

each listed entity should be added or 

removed. 

PART 756—[AMENDED] 

■ 8. The authority citation for part 756 

is revised to read as follows: 

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 July 23, 

2008, 73 FR 43603 (July 25, 2008). 

■ 9. In § 756.1, add a new paragraph 

(a)(3) to read as follows: 

§ 756.1 Introduction. 

(a) * * * 

(3) A decision on a request to remove 

or modify an Entity List entry made 

pursuant to § 744.16 of the EAR. 

* * * * * 

Dated: August 7, 2008. 

Christopher R. Wall, 

Assistant Secretary for Export 

Administration. 

[FR Doc. E8–19102 Filed 8–20–08; 8:45 am] 

BILLING CODE 3510–33–P 

DEPARTMENT OF COMMERCE 

Bureau of Industry and Security 

15 CFR Parts 740, 742, 744, 748, 750, 

754, 764 and 772 

[Docket No. 0612242559–8545–02] 

RIN 0694–AD94 

Mandatory Electronic Filing of Export 

and Reexport License Applications, 

Classification Requests, Encryption 

Review Requests, and License 

Exception AGR Notifications 

AGENCY: Bureau of Industry and 

Security, Commerce. 

ACTION: Final rule. 

SUMMARY: This rule requires that export 

and reexport license applications, 

classification requests, encryption 

review requests, License Exception AGR 

notifications and related documents be 

submitted to the Bureau of Industry and 

Security (BIS) via its Simplified 

Network Application Process (SNAP–R) 

system. This requirement does not 

apply to applications for Special 

Comprehensive Licenses or in certain 

situations in which BIS authorizes 

paper submissions. 

DATES: Effective date October 20, 2008. 

FOR FURTHER INFORMATION CONTACT: For 

information about this rule contact 

William Arvin, e-mail 

warvin@bis.doc.gov or tel. 202–482–

2440. For information about registering 

for or using the SNAP–R system contact 

Lisa Williams at 202–482–2148. 

SUPPLEMENTARY INFORMATION: 

Background 

BIS administers a system of export 

and reexport controls in accordance 

with the Export Administration 

Regulations (EAR). In doing so, BIS 

requires that parties wishing to engage 

in certain transactions apply for 

licenses, submit encryption review 

requests, or submit certain notifications 

to BIS. BIS also reviews, upon request, 

specifications of various items and 

determines their proper classification 

under the EAR. Currently, members of 

the public submit these applications, 

requests and notifications to BIS in one 

of three ways: via SNAP–R, via BIS’s 

Electronic License Application 

Information Network (ELAIN), or via the 

paper BIS Multipurpose Application 

Form BIS 748–P and its two appendices, 

the BIS 748–P A (item appendix) and 

the BIS 748–P B (end user appendix). In 

many instances, BIS needs additional 

documents to act on the submission. For 

documents that relate to paper 

submissions, the documents can be 

mailed or delivered to BIS with the BIS 

748–P form. For submissions made 

electronically via ELAIN, the documents 

must be sent to BIS separately and 

matched up with the applications when 

they arrive. 

In 2006, BIS replaced its then existing 

Simplified Network Application 

Processing system (SNAP) with an 

improved system referred to as ‘‘SNAP 

Redesign (SNAP–R)’’. The 

improvements include the ability to 

include documents related to a 

submission in the form of PDF (portable 

document format) files as ‘‘attachments’’

to the submission. Other improvements 

include a feature that allows BIS 

personnel to securely request additional 

information from the submitting party 

and for the party to submit that 

information in a manner that ties the 

chain of communication to the 

submission. 

BIS believes that use of SNAP–R will 

reduce processing times and simplify 

compliance with and administration of 

export controls. SNAP–R provides not 

only improved efficiency in submission 

and processing, but improved end-user 

security through rights management and 

an updated application and security 

infrastructure. 

Therefore, beginning October 20, 2008 

all export and reexport license 

applications (other than Special 

Comprehensive License and Special Iraq 

Reconstruction License applications), 

classification requests, encryption 

review requests, License Exception AGR 

notifications, and ‘‘attached’’ related 

documents must be submitted to BIS via 

its Simplified Network Application 

Process Redesign (SNAP–R) system 

unless BIS authorizes paper 

submissions. This rule also sets forth 

the criteria under which BIS authorizes 

paper submissions. 

Changes Made by This Rule 

The changes that this rule makes 

center on part 748 of the EAR, which 

sets forth the principal procedures 

governing the submission of the 

applications, review requests and 

notifications affected by this rule. The 

changes are in § 748.1 ‘‘General 

provisions,’’ § 748.3 ‘‘Classification 

requests, advisory opinions, and 

encryption review requests,’’ and in 

§ 748.6 ‘‘General instructions for license 

applications.’’ The rule also makes 

conforming changes to a number of EAR 

provisions that currently employ 

language related to the paper forms. 

Substantive Changes 

Section 748.1 is revised to emphasize 

electronic filing over paper and to set 

forth the basic requirement that license 


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