Document ID: BIS-2019-0012-0001
Agency: bis
Document Type: Rule
Title: Revisions to Country Group Designations for Venezuela and Conforming Changes for License Requirements
Posted Date: 2019-05-24T04:00Z

[Federal Register Volume 84, Number 101 (Friday, May 24, 2019)]
[Rules and Regulations]
[Pages 24018-24021]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-11034]

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DEPARTMENT OF COMMERCE

Bureau of Industry and Security

15 CFR Parts 738 and 740

[Docket No. 190503423-9423-01]
RIN 0694-AH78

Revisions to Country Group Designations for Venezuela and 
Conforming Changes for License Requirements

AGENCY: Bureau of Industry and Security, Commerce.

ACTION: Final rule.

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SUMMARY: In this final rule, the Bureau of Industry and Security (BIS) 
amends the Export Administration Regulations (EAR) to remove Venezuela 
from Country Group B, which affords favorable treatment for certain 
exports of National Security-controlled items, and moves Venezuela to 
Country Group D:1, which lists countries of national security concern. 
This final rule makes these changes to the EAR to reflect current 
national security concerns related to Venezuela, e.g., the introduction 
of foreign military personnel and equipment into Venezuela, and to 
better protect U.S. national security. The changes in this final rule 
also better align the Country Group designations for Venezuela with 
other EAR national security-related provisions that already apply to 
Venezuela, e.g., the military end-use and end-user controls that apply 
to certain items for export, reexport, or transfer (in-country) and 
provisions that are specific to countries subject to U.S. arms 
embargoes. In addition, this final rule adds Venezuela to Country 
Groups D:2-4, which list countries of nuclear, chemical and biological 
weapons, and missile technology concern, respectively.

DATES: This rule is effective May 24, 2019.

FOR FURTHER INFORMATION CONTACT: Foreign Policy Division, Office of 
Nonproliferation and Treaty Compliance, Bureau of Industry and 
Security, U.S. Department of Commerce, Phone: (202) 482-4252.

SUPPLEMENTARY INFORMATION: 

Background

    In this final rule, the Bureau of Industry and Security (BIS) 
amends the Export Administration Regulations (EAR) to implement a 
decision to remove Venezuela from Country Group B, which affords 
favorable treatment for certain exports of National Security-controlled 
items, and moves Venezuela to Country Group D:1, which lists countries 
of national security concern (Supplement No. 1 to part 740). In 
addition, this final rule adds Venezuela to Country Groups D:2-4, which 
list countries of nuclear, chemical and biological weapons, and missile 
technology concern, respectively.
    This final rule protects U.S. national security interests by making 
changes to the EAR to address current national security concerns 
related to Venezuela, e.g., the introduction of foreign military 
personnel and equipment into Venezuela, and better align the Country 
Group designation for Venezuela with other EAR national security 
related provisions that apply to Venezuela. For example, Venezuela is 
included in the military end-use and end-user control in Sec.  744.21: 
Restrictions on certain `Military end uses' in the People's Republic of 
China or for a `Military end use' or `Military end user' in Russia or 
Venezuela. Venezuela is also already designated in Country Group D:5 as 
a U.S. Arms Embargoed Country, meaning that the general restrictions on 
the use of license exceptions in Sec.  740.2(a)(12) for 9x515 and ``600 
series'' items apply, along with the more restrictive license review 
policy for national security controlled items in Sec.  742.4(b)(1)(ii) 
for 9x515 and ``600 series'' items.

[[Page 24019]]

    The removal of Venezuela from Country Group B and its addition to 
Country Group D:1 will make exports and reexports to Venezuela and 
transfers within Venezuela ineligible for certain license exceptions 
set forth in Part 740. In addition, the national security licensing 
policy set forth in Sec.  742.4(b) for Country Group D:1 countries will 
apply to those exports, reexports, and transfers (in-country). The U.S. 
Government has determined that the conduct of Venezuela raises 
sufficient concern that interagency review of proposed exports, 
reexports, or transfers (in-country) of national security controlled 
items subject to the EAR, previously eligible for certain license 
exceptions to Venezuela, and the possible imposition of license 
conditions or license denials on exports, reexports, and transfers (in-
country), will enhance BIS's ability to protect U.S. national security 
interests.
    In addition, the U.S. Government has determined that Venezuela's 
increasing dependence on countries in Country Groups D:3 and E merited 
its placement in Country Groups D:2-4.

Amendments to Country Groups B and D:1-4 Affecting License Exception 
Eligibility, License Requirements (Including CCL-Based and End-Use-
Based License Requirements), and Licensing Policy for Venezuela

    Supplement No. 1 to Part 740 contains several tables of ``Country 
Groups'' that are used to identify, among other things, license 
exception eligibility and licensing policy. This rule removes Venezuela 
from Country Group B and adds Venezuela to Country Groups D:1-4.

Effects of Removing Venezuela From Country Group B

    License exceptions found in Sec.  740.3, Shipments of limited value 
(LVS); Sec.  740.4, Shipments to Country Group B countries (GBS); and 
Sec.  740.6, Technology and software under restriction (TSR) are 
available only if the destination is in Country Group B. This change 
removes Venezuela from the list of eligible destinations for exports, 
reexports, and transfers (in-country) that are authorized by License 
Exceptions LVS, GBS and TSR.

Effects of Adding Venezuela to Country Groups D:1-4

    License exceptions found in Sec.  740.9, Temporary imports, 
exports, reexports, and transfers (in-country) (TMP); Sec.  740.10, 
Servicing and replacement of parts and equipment (RPL); Sec.  740.12, 
Gift parcels and humanitarian donations (GFT); Sec.  740.14, Baggage 
(BAG); Sec.  740.15, Aircraft and vessels (AVS); Sec.  740.16, 
Additional permissive reexports (APR); and Sec.  740.17, Encryption, 
commodities, software, and technology (ENC) all contain limitations or 
restrictions on their use for exports or reexports to destinations in 
Country Groups D:1, D:2, D:3, and/or D:4. Those limitations and 
restrictions will now apply to License Exceptions TMP, RPL, GFT, BAG, 
AVS, APR, and ENC to Venezuela.
    Section 742.4(b)(2) of the EAR states the licensing policy for 
exports and reexports of national security controlled items to 
destinations in Country Group D:1. That licensing policy is to approve 
applications when BIS determines, on a case-by-case basis, that the 
items are for civilian use or otherwise would not make a significant 
contribution to the military potential of the country of destination 
that would prove detrimental to the national security of the United 
States. Applications to export or reexport national security controlled 
items to Venezuela will now be subject to this licensing policy.
    In addition, Venezuela's placement in Country Group D:1 will result 
in the imposition of restrictions on the export, reexport, and transfer 
(in-country) of certain microprocessors to military end uses and end 
users in Venezuela, pursuant to Sec.  744.17: Restrictions on certain 
exports, reexports and transfers (in-country) of microprocessors and 
associated ``software'' and ``technology'' for `military end uses' and 
to `military end users.' Furthermore, restrictions on certain exports 
and reexports to vessels and aircraft located in Venezuelan ports or 
registered in Venezuela will become effective pursuant to Sec.  744.7, 
Restrictions on certain exports to and for the use of certain foreign 
vessels or aircraft. Finally, the addition of Venezuela to Country 
Group D:1 will expand the licensing requirements for reexports of the 
foreign-produced direct product of U.S.-origin technology and software 
to Venezuela pursuant to Sec.  736.2(b)(3), General Prohibition Three.
    Consistent with adding Venezuela to Country Group D:2, a license 
will be required for the export or reexport of items subject to the 
nuclear nonproliferation column 2 (NP 2) controls [Export Control 
Classification Numbers (ECCNs) 1A290, 1C298, 2A290, 2A291, 2D290, 2E001 
(for that portion that applies for 2A290, 2A291 and 2D290) and 2E002 
(for that portion that applies to 2A290 and 2A291) and 2E290]. This 
final rule adds an ``X'' in the NP 2 column of the nuclear 
nonproliferation column in Supplement No. 1 to Part 738 of the EAR for 
Venezuela. License applications for these items will be reviewed under 
the licensing policy in Sec.  742.3 of the EAR. Consistent with adding 
Venezuela to Country Group D:2, the general prohibition in paragraph 
(a)(1)(i)(A) of Sec.  744.6, Restrictions on certain activities of U.S. 
persons, will be applicable if the U.S. person exporter, reexporter, or 
transferor has ``knowledge'' of a prohibited end use in or by 
Venezuela.
    Consistent with adding Venezuela to Country Group D:3, a license 
will be required for the export or reexport of items subject to the 
chemical and biological weapons column 3 (CB 3) controls (ECCN 
1C991.d). This final rule adds an ``X'' in column 3 of the chemical and 
biological weapons column (CB 3) in Supplement No. 1 to Part 738 of the 
EAR. License applications for these items will be reviewed under the 
licensing policy in Sec.  742.2 of the EAR.
    Consistent with adding Venezuela to Country Group D:4, the general 
prohibitions in Sec.  744.3--Restrictions on certain rocket systems 
(including ballistic missiles, space launch vehicles and sounding 
rockets) and unmanned aerial vehicles (including cruise missiles, 
target drones and reconnaissance drones) end-uses--under paragraphs 
(a)(1) and (a)(3) will be applicable if the exporter, reexporter, or 
transferor has ``knowledge'' the transaction involves one of those 
prohibited end uses in or by Venezuela. In addition, consistent with 
adding Venezuela to Country Group D:4, the general prohibitions in 
Sec.  744.6 under paragraphs (a)(1)(i)(B) and (a)(2)(i) will be 
applicable if the U.S. person exporter, reexporter, or transferor (for 
purposes of paragraph (a)(1)(i)(B)) or other activities unrelated to 
exports (for purposes of paragraph (a)(2)(i)) has ``knowledge'' the 
transaction involved one of those prohibited transactions or other 
activities in or by Venezuela.
    Prior to publication of this final rule, Venezuela was already 
included in Country Group D:5 and the license review policy under Sec.  
742.4(b)(1)(ii) continues to apply for items classified under 9x515 and 
``600 series'' ECCNs for exports and reexports to Venezuela. Pursuant 
to Sec.  742.4(b)(1)(ii), these license applications will continue to 
be ``reviewed consistent with United States arms embargo policies in 
Sec.  126.1'' of the International Traffic in Arms Regulations.

Export Control Reform Act of 2018

    On August 13, 2018, the President signed into law the John S. 
McCain National Defense Authorization Act for Fiscal Year 2019, which 
included the Export Control Reform Act of 2018

[[Page 24020]]

(ECRA) (Title XVII, Subtitle B of Pub. L. 115-232) that provides the 
legal basis for BIS's principal authorities and serves as the authority 
under which BIS issues this rule. As set forth in Section 1768 of ECRA, 
all delegations, rules, regulations, orders, determinations, licenses, 
or other forms of administrative action that have been made, issued, 
conducted, or allowed to become effective under the Export 
Administration Act of 1979 (50 U.S.C. 4601 et seq.) (as in effect prior 
to August 13, 2018 and as continued in effect pursuant to the 
International Emergency Economic Powers Act (50 U.S.C. 1701 et seq.) 
and Executive Order 13222 of August 17, 2001, 3 CFR, 2001 Comp., p. 783 
(2002), as amended by Executive Order 13637 of March 8, 2013, 78 FR 
16129 (March 13, 2013), and as extended by the Notice of August 8, 
2018, 83 FR 39871 (August 13, 2018)), or the Export Administration 
Regulations, and are in effect as of August 13, 2018, shall continue in 
effect according to their terms until modified, superseded, set aside, 
or revoked under the authority of ECRA.

Rulemaking Requirements

    1. Executive Orders 13563 and 12866 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distribute impacts, and equity). Executive 
Order 13563 emphasizes the importance of quantifying both costs and 
benefits, of reducing costs, of harmonizing rules, and of promoting 
flexibility. This final rule has been designated a ``significant 
regulatory action,'' although not economically significant, under 
section 3(f) of Executive Order 12866. This final rule will support the 
national security and foreign policy objectives of the United States by 
broadening the U.S. Government's visibility into transactions involving 
national security controlled items on the Commerce Control List and 
exports, reexports and transfers (in-country) to and in a country of 
concern.
    2. Notwithstanding any other provision of law, no person may be 
required to respond to or be subject to a penalty for failure to comply 
with a collection of information, subject to the requirements of the 
Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.) (PRA), unless 
that collection of information displays a currently valid Office of 
Management and Budget (OMB) Control Number. This regulation involves a 
collection currently approved by OMB under control number 0694-0088, 
Simplified Network Application Processing System. This collection 
includes, among other things, license applications, and carries a 
burden estimate of 42.5 minutes for a manual or electronic submission 
for a total burden estimate of 31,878 hours. BIS expects the burden 
hours associated with this collection to increase slightly by 4 hours 
for an estimated cost increase of $120. This increase is not expected 
to exceed the existing estimates currently associated with OMB control 
number 0694-0088.
    Any comments regarding the collection of information associated 
with this rule, including suggestions for reducing the burden, may be 
sent to Jasmeet K. Seehra, Office of Management and Budget (OMB), by 
email to Jasmeet_K._Seehra@omb.eop.gov, or by fax to (202) 395-7285.
    3. This rule does not contain policies with Federalism implications 
as that term is defined under Executive Order 13132.
    4. Pursuant to Sec.  1762 of the Export Control Reform Act of 2018 
(Title XVII, Subtitle B of Pub. L. 115-232), which was included in the 
John S. McCain National Defense Authorization Act for Fiscal Year 2019, 
this action is exempt from the Administrative Procedure Act (5 U.S.C. 
553) requirements for notice of proposed rulemaking, opportunity for 
public participation, and delay in effective date.
    5. Because a notice of proposed rulemaking and an opportunity for 
public comment are not required to be given for this rule by 5 U.S.C. 
553, or by any other law, the analytical requirements of the Regulatory 
Flexibility Act, 5 U.S.C. 601, et seq., are not applicable. 
Accordingly, no regulatory flexibility analysis is required and none 
has been prepared.
    6. This final rule is not subject to the requirements of E.O. 13771 
(82 FR 9339, February 3, 2017) because it is issued with respect to a 
national security function of the United States. The cost-benefit 
analysis required pursuant to Executive Orders 13563 and 12866 
indicates that this rule is intended to improve national security as 
its primary direct benefit. Specifically, the change in the Country 
Group designations for Venezuela and its impact on the availability of 
license exceptions and more restrictive license review policies 
described herein will enhance the national security of the United 
States by reducing the risk that exports, reexports, and transfers (in-
country) of items subject to the EAR could be diverted and contribute 
to the military capability of countries of concern, contrary to U.S. 
national security interests. This final rule will allow the U.S. 
Government to review transactions involving military end uses or end 
users in Venezuela prior to their completion to mitigate this risk. 
Accordingly, this rule meets the requirements set forth in the April 5, 
2017, OMB guidance implementing E.O. 13771 (82 FR 9339, February 3, 
2017), regarding what constitutes a regulation issued ``with respect to 
a national security function of the United States'' and it is, 
therefore, exempt from the requirements of E.O. 13771.

Saving Clause

    Shipments of items removed from license exception eligibility or 
eligibility for export, reexport or transfer (in-country) without a 
license as a result of this regulatory action that were on dock for 
loading, on lighter, laden aboard an exporting carrier, or en route 
aboard a carrier to a port of export, on May 24, 2019, pursuant to 
actual orders for exports, reexports and transfers (in-country) to a 
foreign destination, may proceed to that destination under the previous 
license exception eligibility or without a license so long as they have 
been exported, reexported or transferred (in-country) before June 24, 
2019. Any such items not actually exported, reexported or transferred 
(in-country) before midnight, on June 24, 2019 require a license in 
accordance with this final rule.

List of Subjects

15 CFR Part 738

    Exports.

15 CFR Part 740

    Administrative practice and procedure, Exports, Reporting and 
recordkeeping requirements.

    Accordingly, parts 738 and 740 of the Export Administration 
Regulations (15 CFR parts 730-774) are amended as follows:

PART 738--COMMERCE CONTROL LIST OVERVIEW AND THE COUNTRY CHART

0
1. The authority citation for part 738 is revised to read as follows:

    Authority:  Pub. L. 115-232, 132 Stat. 2208 (50 U.S.C. 4801 et 
seq.); 50 U.S.C. 4601 et seq.; 50 U.S.C. 1701 et seq.; 10 U.S.C. 
7420; 10 U.S.C. 7430(e); 22 U.S.C. 287c; 22 U.S.C. 3201 et seq.; 22 
U.S.C. 6004; 42 U.S.C. 2139a; 15 U.S.C. 1824a; 50 U.S.C. 4305; 22 
U.S.C. 7201 et seq.; 22 U.S.C. 7210; E.O. 13026, 61 FR 58767, 3 CFR, 
1996 Comp., p. 228; E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 
783; Notice of August 8, 2018, 83 FR 39871 (August 13, 2018).

[[Page 24021]]

0
2. Supplement No. 1 to Part 738 is amended by revising the entry for 
``Venezuela'' to read as follows:

                                                                      Supplement No. 1 to Part 738--Commerce Country Chart
                                                                                      [Reason for control]
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                                 Chemical and biological          Nuclear        National security   Missile  Regional stability    Firearms            Crime control           Anti-terrorism
                                         weapons             nonproliferation  --------------------   tech   --------------------  convention  -------------------------------------------------
          Countries          --------------------------------------------------                    ----------                    --------------
                                CB 1      CB 2      CB 3      NP 1      NP 2      NS 1      NS 2      MT 1      RS 1      RS 2        FC 1        CC 1      CC 2      CC 3      AT 1      AT 2
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
 
                                                                                          * * * * * * *
Venezuela...................        X         X         X         X         X         X         X         X         X         X             X         X   ........        X   ........  ........
 
                                                                                          * * * * * * *
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

* * * * *

PART 740--LICENSE EXCEPTIONS

0
3. The authority citation for part 740 is revised to read as follows:

    Authority:  Pub. L. 115-232, 132 Stat. 2208 (50 U.S.C. 4801 et 
seq.); 50 U.S.C. 4601 et seq.; 50 U.S.C. 1701 et seq.; 22 U.S.C. 
7201 et seq.; E.O. 13026, 61 FR 58767, 3 CFR, 1996 Comp., p. 228; 
E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 783; Notice of August 
8, 2018, 83 FR 39871 (August 13, 2018).

0
4. Supplement No. 1 to Part 740 is amended by:
0
a. Removing Venezuela from the table labeled ``Country Group B--
Countries;'' and
0
b. Revising the entry for ``Venezuela'' under ``Country Group D'' to 
read as follows:
* * * * *

                                  Supplement No. 1 to Part 740--Country Groups
                                                [Country Group D]
----------------------------------------------------------------------------------------------------------------
                                                                                                     [D: 5] U.S.
                                               [D: 1]                      [D: 3]        [D: 4]         arms
                  Country                     National       [D: 2]     Chemical and     Missile      embargoed
                                              security       Nuclear     biological    technology     countries
                                                                                                         \1\
----------------------------------------------------------------------------------------------------------------
 
                                                  * * * * * * *
Venezuela.................................            X             X             X             X             X
 
                                                  * * * * * * *
----------------------------------------------------------------------------------------------------------------
\1\ Note to Country Group D:5: Countries subject to U.S. arms embargoes are identified by the State Department
  through notices published in the Federal Register. The list of arms embargoed destinations in this paragraph
  is drawn from 22 CFR 126.1 and State Department Federal Register notices related to arms embargoes (compiled
  at http://www.pmddtc.state.gov/embargoed_countries/index.html) and will be amended when the State Department
  publishes subsequent notices. If there are any discrepancies between the list of countries in this paragraph
  and the countries identified by the State Department as subject to a U.S. arms embargo (in the Federal
  Register), the State Department's list of countries subject to U.S. arms embargoes shall be controlling.

* * * * *

    Dated: May 17, 2019.
Richard E. Ashooh,
Assistant Secretary for Export Administration.
[FR Doc. 2019-11034 Filed 5-22-19; 4:15 pm]
 BILLING CODE 3510-33-P