Document ID: BIS-2013-0026-0001
Agency: bis
Document Type: Rule
Title: Export Administration Regulations: Unverified List (UVL); Revisions
Posted Date: 2013-12-19T05:00Z

[Federal Register Volume 78, Number 244 (Thursday, December 19, 2013)]
[Rules and Regulations]
[Pages 76741-76748]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-30117]

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DEPARTMENT OF COMMERCE

Bureau of Industry and Security

15 CFR Parts 730, 740, 744, 756, 758, and 762

[Docket No. 20524116-3986-02]
RIN 0694-AF70

Revisions to the Export Administration Regulations (EAR): 
Unverified List (UVL)

AGENCY: Bureau of Industry and Security, Commerce.

ACTION: Final rule.

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SUMMARY: The Bureau of Industry and Security (BIS) is amending the 
Export Administration Regulations (EAR) by: Requiring exporters to file 
an Automated Export System (AES) record for all exports subject to the 
EAR involving a party or parties to the transaction who are listed on 
the Unverified List (the ``Unverified List'' or UVL); suspending the 
availability of license exceptions for exports, reexports, and 
transfers (in-country) involving a party or parties to the transaction 
who are listed on the UVL; requiring exporters, reexporters, and 
transferors to obtain a UVL statement from a party or parties to the 
transaction who are listed on the UVL before proceeding with exports, 
reexports, and transfers (in-country) involving items subject to the 
EAR, but where the item does not require a license, i.e., No License 
Required (NLR); publishing the UVL in the EAR; and adding to the EAR 
the procedures to request removal or modification of a UVL entry.
    These changes to the UVL enhance the U.S. Government's ability to 
verify the bona fides of parties to exports,

[[Page 76742]]

reexports, or transfers (in-country) of items subject to the EAR and 
provide the U.S. Government increased visibility into such exports, 
reexports, and transfers involving persons whose bona fides could not 
be verified.

DATES: Effective Date: This rule is effective: January 21, 2014.

FOR FURTHER INFORMATION CONTACT: Kevin Kurland, Director, Office of 
Enforcement Analysis, Bureau of Industry and Security, Department of 
Commerce, Phone: (202) 482-2385 or by email at 
Kevin.Kurland@bis.doc.gov.

SUPPLEMENTARY INFORMATION:

Background

    On June 14, 2002, the Bureau of Industry and Security (``BIS'') 
published a notice in the Federal Register (67 FR 40910) establishing 
(the ``Unverified List'' or ``UVL''), a list of persons in foreign 
countries who were parties to past export transactions with respect to 
which pre-license checks or post-shipment verifications could not be 
conducted for reasons outside the control of the U.S. Government, 
reasons such as lack of cooperation by the host government authority, 
the end user, or the ultimate consignee. That Federal Register notice 
also indicated that BIS may add to the UVL names of persons that BIS 
discovers are affiliated with a person on the UVL by virtue of 
ownership, control, position of responsibility, or other affiliation or 
connection in the conduct of trade or business. Since that time, BIS 
has issued subsequent notices that added to or removed persons from the 
UVL, as circumstances have warranted. Prior to publication of this 
rule, the UVL was published in the Federal Register in its entirety and 
updated as foreign persons are added to or removed from that list. The 
UVL is also available on the BIS Web site at http://www.bis.doc.gov/enforcement/unverifiedlist/unverified_parties.html.
    The participation of a person listed on the UVL in any proposed 
transaction raises a ``red flag'' for purposes of the ``Know Your 
Customer'' guidance set forth in Supplement No. 3 to Part 732 of the 
EAR. See 67 FR 40910 (June 14, 2002) and 69 FR 42652 (July 16, 2004). 
Under that guidance, whenever there is a ``red flag,'' exporters have 
an affirmative duty to inquire, verify, or otherwise satisfy themselves 
that the transaction does not involve a proliferation activity 
prohibited by Part 744 and does not violate other provisions of the 
EAR.
    On July 16, 2004, BIS expanded the criteria for adding persons to 
the UVL to include situations in which BIS is not able to verify the 
existence or authenticity of the end user, intermediate consignee, 
ultimate consignee, or other party to an export transaction.
    On August 21, 2008 (73 FR 49311), BIS expanded the scope of reasons 
to add persons to the Entity List. That rule amended Section 744.11 of 
the EAR to provide illustrative examples of the types of conduct that 
the U.S. Government could determine are contrary to U.S. national 
security or foreign policy interests for purposes of changes to the 
Entity List. One example listed in that section is, ``[p]reventing 
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.'' That notice also included a 
discussion of the apparent overlap in criteria for adding foreign 
persons to the Entity List and the Unverified List based on a lack of 
cooperation with an end-use check.
    End-use checks sometimes cannot be completed for reasons unrelated 
to the cooperation of the foreign party subject to the end-use check. 
In such situations, BIS has added parties to the UVL where BIS or 
federal officials acting on BIS's behalf have been unable to verify a 
foreign person's bona fides (i.e., legitimacy and reliability relating 
to the end use and end user of items subject to the EAR), where an end-
use check, such as a pre-license check (PLC) or a post-shipment 
verification (PSV), cannot be completed satisfactorily for such 
purposes for reasons outside the U.S. Government's control. For 
example, BIS sometimes initiates end-use checks and cannot find a 
foreign party at the address indicated on export documents, and cannot 
locate the party by telephone or email. Additionally, BIS sometimes is 
unable to conduct end-use checks when host government agencies do not 
respond to requests to conduct end-use checks or refuse to schedule 
them in a timely manner. Under these circumstances, there may not be a 
basis to add the foreign persons at issue to the Entity List, 
particularly if there is no nexus between the foreign person's conduct 
and the failure to produce a complete, accurate and useful check (see 
Sec.  744.11(b)(4) of the EAR (Criteria for revising the Entity List)).
    Furthermore, BIS sometimes conducts end-use checks but cannot 
verify the bona fides of a foreign party. For example, BIS may be 
unable to verify bona fides if during the conduct of an end-use check a 
recipient of items subject to the EAR is unable to produce those items 
for visual inspection or provide sufficient documentation or other 
evidence to confirm the disposition of those items. The inability of 
foreign persons subject to end-use checks to demonstrate their bona 
fides raises concerns about the suitability of such persons as 
participants in future exports, reexports, or transfers (in-country) 
and indicates a risk that items subject to the EAR may be diverted to 
prohibited end uses and/or end users. However, BIS may have 
insufficient information to establish that such persons are involved in 
activities described in Sec.  744.11 of the EAR, preventing the 
placement of the persons on the Entity List. In such circumstances, 
those foreign persons may be added to the Unverified List.
    On September 11, 2013 (78 FR 55664), BIS published a proposed rule 
to address the issues outlined above. The public comment period for the 
proposed rule closed on October 11, 2013. BIS received one (1) public 
comment in response. The comment can be found on the BIS Web site at 
http://efoia.bis.doc.gov/index.php/electronic-foia/index-of-documents.
    The recommendations set forth in the comment were broken into two 
categories: ``Suggestions regarding the language of several affected 
paragraphs'' and ``Clarify the government's position regarding the 
applicability of this proposed rule to intangible exports of technology 
and software.'' The first category included recommended changes to 
clarify or strengthen the proposed rule by modifying proposed: Sec.  
744.15(a) to state that exports, reexports, or transfers (in-country) 
subject to the EAR involving parties to the transaction who are listed 
on the UVL must be made in accordance with the criteria set forth in 
proposed Sec.  744.15; Sec.  744.15(b)(2) and (b)(2)(i) to require UVL 
statement signers to provide their titles and all relevant UVL party 
addresses on the Statement, and sign and date the Statement; Sec.  
744.15(c)(2) to state that BIS will remove persons from the UVL when 
their bona fides are validated; and Sec.  758.1(b)(8) to remove the 
phrase ``regardless of value or destination.'' BIS accepted the 
recommendations covering Sec.  744.15(a), (b)(2), (b)(2)(i), and 
(c)(2). BIS did not accept the suggested change to Sec.  758.1(b)(8). 
While BIS agrees that ``all exports'' is unlimited in scope, BIS does 
not believe the modifying phrase ``regardless of value or destination'' 
is unnecessarily redundant. BIS is including this phrase to avoid 
confusion with the general Foreign Trade

[[Page 76743]]

Regulations exemptions for Automated Export System filings involving 
low value shipments and exports to Canada not subject to a BIS license. 
The modifier is included to clarify that the UVL rule requires filings 
for any shipments to UVL persons, including any low value shipments and 
exports to Canada. This clarifying language also appears in Sec.  
758.1(b)(1) and (b)(2). BIS understands that the removal of the 
modifier would not change the scope, but it was included to be 
consistent with other parts of the EAR.
    The second public comment category suggested that BIS clarify 
whether the proposed rule applies to intangible technology and 
software. BIS intends the provisions of Sec.  744.15 to apply to 
intangible exports, reexports, and transfers (in-country) of software 
and technology to persons listed on the UVL. Therefore, BIS made edits 
to the regulatory text and the preamble to indicate that the newly 
implemented requirements are applicable to commodities, software, and 
technology. The term ``item'' is defined in Sec.  772.1 to include 
technology and software. The only other word in the regulatory text 
that could have been interpreted as restricted to tangible commodities 
was ``shipment.'' Therefore, BIS removed ``shipment'' and replaced it 
with ``export, reexport, and transfer (in-country).'' This, coupled 
with the general EAR definition of item, should make it clear that 
these new requirements are applicable to technology and software, as 
well as commodities. However, the requirement to file an AES record 
``for all exports'' cannot be fulfilled in the case of intangible 
technology or software exports. In any case, these exports are exempt 
from AES filings. Therefore, while the regulation applies to technology 
and software, in addition to commodities, the amendment to Sec.  
758.1(b)(8) only applies to exports of tangible items.
    BIS also amended the proposed text of Sec.  744.15(b)(2)(iv). As 
proposed, the UVL statement required cooperation with a pre-license 
check. However, under the terms of paragraph (b) of that section, the 
UVL statement is only necessary when no license is required. As such, 
this final rule omits the requirement that the UVL statement include an 
agreement for a pre-license check because no license is required under 
these circumstances. The UVL statement does retain the proposed rule's 
requirement that an end-use check, including a post-shipment 
verification, must be agreed to and cooperated with.

Reasons for This Rule

    This rule eliminates ambiguity for listing foreign persons on the 
UVL and the Entity List by removing lack of cooperation by a foreign 
party as a basis for revising the UVL. Where the U.S. Government 
determines that the foreign party's lack of cooperation prevented the 
accomplishment of an end-use check, BIS may add such parties to the 
Entity List on the basis of Sec.  744.11(b)(4) of the EAR.
    Specifically, BIS is amending the EAR to include the criteria for 
listing persons in the UVL, including examples of actions that could 
result in a person being listed on the UVL. These amendments, 
consistent with past practice, will apply to foreign persons who are 
parties to an export, reexport, and transfer (in-country) subject to 
the EAR if BIS, or federal officials acting on BIS's behalf, cannot 
verify the bona fides of such persons because an end-use check, such as 
a PLC or a PSV, cannot be completed satisfactorily for reasons outside 
of the U.S. Government's control. Examples of actions that could result 
in a person being listed on the UVL include: The subject of the check 
is unable to demonstrate the disposition of items during an end-use 
check; the existence or authenticity of the subject of an end-use check 
cannot be verified because, inter alia, the subject of the check cannot 
be located or contacted; or lack of cooperation by the host government 
authority.
    In addition, BIS is no longer considering affiliation with a person 
on the UVL as a basis for adding foreign persons without further 
substantiation (e.g., conduct of an end-use check at the affiliate). A 
determination to list a particular person on the UVL is premised on 
BIS's inability to evaluate the bona fides of that person by conducting 
an end-use check. The fact that another, separate person is affiliated 
with a person on the UVL will no longer be considered a dispositive 
criterion forming the basis for listing the affiliate. If BIS discovers 
a foreign person may be affiliated with a person listed on the UVL, BIS 
will initiate an end-use check on an export, reexport, or transfer (in-
country) to which that person was a party. That person may be listed on 
the UVL if BIS is unable to verify that person's bona fides through an 
end-use check in accordance with the criteria described above.
    BIS is implementing these changes to the UVL to address concerns 
raised by the public in the past about how to address a ``red flag'' 
identified by the U.S. Government. Accordingly, this regulation 
provides guidance on how exporters can conduct business with a UVL 
person. Any license requirements for exports, reexports, or transfers 
(in-country) of items subject to the EAR continue to apply. For items 
not subject to a license requirement, the exporter, reexporter, or 
transferor (in-country) must receive from the UVL-listed person a UVL 
statement prior to the export, reexport, or transfer (in-country), in 
which the UVL-listed party certifies the end use, end user, and country 
of ultimate destination of items subject to the EAR and consents to an 
end-use check by the U.S. Government. The end-use check may include 
checks to any transaction to which that person was a party for items 
subject to the EAR exported, reexported, or transferred (in country) in 
the last five years, to enable the U.S. Government to satisfy earlier 
concerns with the UVL-listed party as well as its concerns with the 
current transaction.

Changes to the EAR

    BIS is amending the EAR by: (1) Requiring exporters to file an AES 
record for all exports subject to the EAR involving persons listed on 
the UVL; (2) suspending the availability of license exceptions for 
exports, reexports, and transfers (in-country) involving persons listed 
on the UVL; (3) requiring exporters, reexporters and transferors (in-
country) to obtain a UVL statement from UVL-listed persons before 
proceeding with exports, reexports, and transfers (in-country) that are 
not otherwise subject to a license requirement under the EAR involving 
such persons; (4) adding the UVL to Supplement No. 6 to Part 744, and 
(5) adding to the EAR procedures to request removal or modification of 
a UVL entry.
    The first of these changes, requiring the filing of an AES record 
for all exports to which a person listed on the UVL is a party, as 
described in Sec.  748.5(d)-(f) of the EAR, increases U.S. Government 
awareness of exports involving U.S.-origin items to such persons. Under 
current regulations, an AES filing is only required if an export 
license is also required or if the transaction is above a certain 
value. This rule, through a change to Sec.  758.1, implements a 
requirement to submit an AES filing for all exports, regardless of 
value or destination, if a person involved in the transaction as 
described above is listed on the UVL.
    Secondly, under Sec.  740.2, this rule suspends license exceptions 
for exports, reexports, and transfers (in-country) of U.S.-origin items 
to persons listed on the UVL. The change increases U.S. Government 
insight into certain

[[Page 76744]]

transactions involving such persons of items on the Commerce Control 
List (set forth in Supplement No. 1 to Part 774 of the EAR) by 
requiring a license for those transactions. This suspension is also 
consistent with Sec.  740.2(b) of the EAR, which states, ``all License 
Exceptions are subject to revision, suspension, or revocation, in whole 
or in part, without notice.''
    Third, this rule requires exporters to obtain a signed and dated 
UVL statement from UVL-listed persons before proceeding with any 
export, reexport, or transfer (in-country) involving such persons, when 
such persons are parties to a transaction as described in Sec.  748.5 
of the EAR, and when the item at issue is subject to the EAR but does 
not require a license under the EAR.
    That section also requires that the statement certify the end use, 
end user, and country of ultimate destination of the items, and set 
forth the person's consent to an end-use check by the U.S. Government. 
To facilitate any future end-use checks by the U.S. Government, the 
UVL-listed person must also include its complete contact information in 
the UVL statement, including all relevant physical addresses (e.g., 
shipping address, corporate address, intended end user address, etc.). 
This statement establishes that the UVL-listed party knows that it is 
required to comply with the EAR and agrees to an end-use check. The 
statement also provides the U.S. Government with some assurance that 
the U.S.-origin item will be delivered to an identified end user and 
end use and that the transaction will comply with the EAR. In the 
absence of such compliance, the UVL statement will assist the U.S. 
Government's ability to take enforcement action.
    The suspension of license exceptions, which will allow prior review 
by the U.S. Government of exports, reexports, and transfers (in-
country) of certain controlled items involving persons listed on the 
UVL, coupled with the requirement for exporters to obtain a UVL 
statement for exports, reexports, and transfers (in-country) involving 
such persons of items not subject to a license requirement, provides 
greater guidance on what steps are necessary in order to undertake an 
export, reexport, or re-transfer (in-country) of items subject to the 
EAR involving a party to the transaction who is listed on the UVL.
    Specifically, when an export, reexport, or transfer (in-country) is 
otherwise eligible for a license exception, if a party to the 
transaction as described in Sec.  748.5 of the EAR is listed on the 
UVL, the use of license exceptions is not authorized. Under these 
circumstances, an exporter must apply to BIS for a license. If an 
export, reexport, or transfer (in-country) involving a person listed on 
the UVL is not subject to a license requirement under the EAR, the 
possible availability of a license exception does not arise. In such a 
case, an exporter may proceed with the export, reexport, or transfer 
(in-country) once the exporter obtains the signed UVL statement 
described herein and files an AES record in accordance with Sec.  758.1 
of the EAR, as amended. The signed UVL statement is not needed for 
transactions in which a license is required because BIS oversight of 
the transaction resulting from the grant of the license renders a UVL 
statement unnecessary.
    Fourth, this rule adds the UVL to the EAR in Supplement No. 6 to 
Part 744, but removes all persons previously listed on the UVL. BIS 
will add persons to and remove them from the UVL whenever a decision is 
made in accordance with the criteria for revising the UVL set forth in 
Sec.  744.15(c). Henceforth, when adding a person to the UVL, BIS will 
list the person's name and address, and the date on which the person 
was added to the UVL by publication in the Federal Register. Updates to 
the UVL will continue to be published in the Federal Register, and will 
remain available on the BIS Web site. The UVL will also continue to be 
included in the Consolidated Screening List, available at 
www.export.gov.
    Supplement No. 6 to Part 744 (``the UVL'') contains the names and 
addresses of foreign persons who are or have been parties to a 
transaction, as that term is described in Sec.  748.5 of the EAR, 
involving the export, reexport, or transfer (in-country) of items 
subject to the EAR, and whose bona fides BIS has been unable to verify 
through an end-use check. Any changes to the UVL will be published in 
the Federal Register as an amendment to the UVL.
    In addition to adding the UVL to Supplement No. 6 to Part 744, this 
rule adds to the regulations an overview of the UVL, the conditions it 
imposes with respect to exports, reexports, and transfers (in-country) 
to listed persons, the criteria for revising the UVL, and the 
procedures for requesting removal or modification of a UVL entry.
    BIS adds a person to the UVL under certain circumstances. For 
example, in some instances, BIS may not be able to conduct an end-use 
check, such as a PLC or a PSV, at all because, among other potential 
reasons, BIS was unable to locate or contact the subject of the check 
or the host government declined to schedule the check in a timely 
manner. Alternatively, BIS may not be able to complete a satisfactory 
end-use check because, inter alia the foreign party is unable to 
demonstrate its bona fides or the disposition of the items in question 
during the end-use check. In either circumstance, BIS may determine to 
add the foreign person to the UVL.
    BIS removes a person listed on the UVL using certain procedures. 
The successful completion of an end-use check, or, in the limited 
circumstance where such a check cannot be completed due to lack of host 
government cooperation, a suitable alternative process to verify the 
bona fides of the foreign party at issue is a prerequisite for removing 
persons from the UVL. One illustrative example of alternative 
authentication could involve the U.S. exporter or license applicant 
visiting the foreign person subject to the end-use check, at that 
person's request, and providing sufficient information to the U.S. 
Government to verify the foreign person's bona fides and satisfy 
questions relating to the end use and end user of the items in 
question. Procedures for requesting an alternative process to verify 
the bona fides of a foreign person in this circumstance are identical 
to the procedures for requesting removal of a UVL listing, set forth in 
Sec.  744.15 of the EAR.
    If BIS confirms the bona fides of a listed person based on the 
criteria in Sec.  744.15(b)(2) of the EAR, BIS will publish a final 
rule in the Federal Register removing that person from the UVL. A 
determination to remove a person from the UVL is independent of any 
determination BIS may make pursuant to Sec.  744.11(b) of the EAR. Once 
a foreign person is removed from the UVL, the provisions in the EAR 
regarding persons listed on the Unverified List will no longer apply to 
that person though other provisions in the EAR will continue to apply 
as appropriate. BIS will regularly review the UVL for the purpose of 
identifying and implementing any needed corrections and updates.
    Lastly, this rule modifies the procedures for requesting removal of 
a person listed on the UVL by adding decisions on requests to remove or 
modify a UVL entry to the list of administrative actions that are not 
subject to Part 756 appeals. Requests for removal of a UVL entry must 
be made in accordance with Sec.  744.15(d) of the EAR. Decisions 
regarding the removal or modification of UVL listings will be made by 
the Deputy Assistant Secretary for Export Enforcement, based on a 
demonstration by the listed person of its bona fides.

[[Page 76745]]

Amendment to Supplement No. 1 to Part 730

    Due to this rule's addition to the EAR of Sec.  744.15 below, this 
rule also amends Supplement No. 1 to Part 730 of the EAR to include 
references to the two additional information collections: (1) The UVL 
statement and (2) requests to remove or modify listings on the UVL. The 
collection and retention of the UVL statement by private parties in 
connection with the export, reexport, or transfer (in-country) to a 
person listed on the UVL of items not subject to a license requirement 
under the EAR shall be made under Office of Management and Budget (OMB) 
control number 0694-0122 (``Licensing Responsibilities and 
Enforcement''). The submission of information to BIS by persons listed 
on the UVL in support of an appeal for removal a UVL listing will be 
made under OMB control number 0694-0134. Accordingly, this rule amends 
Supplement No. 1 to Part 730 of the EAR by adding a reference to new 
Sec.  744.15 in connection with existing collection number 0694-0122, 
and by changing the title of existing collection number 0694-0134 to 
``Procedure for parties on the Entity List or Unverified List to 
Request Removal or Modification of their Listing'' and adding a 
reference to new Sec.  744.15 in connection with that collection 
number.

Amendments to Sec.  740.2

    This rule adds a new paragraph (a)(17) to Sec.  740.2 
``Restrictions on all License Exceptions.'' This paragraph explains 
that license exceptions may not be used where a party to the 
transaction as described in Sec.  748.5 of the EAR is listed on the 
Unverified List.

New Sec.  744.15 and Amendment to Sec.  756.1

    This rule adds a new section to Part 744 to set forth the new 
provisions pertaining to persons listed on the UVL. New Sec.  744.15 
provides an overview of the UVL, the conditions it imposes with respect 
to exports, reexports, and transfers (in-country) to listed persons, 
and the criteria for revising the UVL. This new section also includes 
the procedures for requesting removal or modification of a person on 
the UVL.
    This rule excludes appeals for removal of Unverified List entries 
from the provisions of Part 756 of the EAR. Requests for removal 
instead must made according to the procedures set forth in new Sec.  
744.15 of the EAR. Accordingly, paragraph (a)(3) of Sec.  756.1 of the 
EAR is amended by adding a reference to decisions on requests to remove 
UVL entries made pursuant to new Sec.  744.15 of the EAR. Although the 
proposed rule did not include a revision to Sec.  744.1, this rule 
makes an inconsequential revision to Sec.  744.1(a)(1), by adding a 
description of the new Sec.  744.15 and a reference to the new 
Supplement No. 6 to Part 744.

New Supplement No. 6 to Part 744

    The UVL is added to the EAR in Supplement No. 6 to Part 744. Each 
listing grouped by country, and accompanied by the person's address(es) 
as well as the Federal Register citation and date the person was added 
to the UVL. In addition, the UVL includes a citation to Sec.  744.15, 
indicating that exports, reexports, and transfers (in-country) where 
parties to the transactions are listed on the Unverified List are 
subject to the provisions of Sec.  744.15.

Amendment to Sec.  758.1

    This rule adds a new Sec.  758.1(b)(8) of the EAR, which states 
that filing an AES record is required for all exports of items subject 
to the EAR where a party to the transaction as described in Sec.  
748.5(d)-(f) is listed on the Unverified List, regardless of value or 
destination.

Amendment to Sec.  762.2

    Section 762.2(b) of the EAR contains references to parts, sections, 
and supplements of the EAR which require the retention of records or 
contain recordkeeping provisions. New Sec.  744.15 of the EAR contains 
a recordkeeping requirement related to the retention of UVL statements. 
Therefore, this rule modifies reserved paragraph Sec.  762.2(b)(13) of 
the EAR to reference the UVL statement recordkeeping requirement in new 
Sec.  744.15 of the EAR.

Export Administration Act

    Since August 21, 2001, the Export Administration Act of 1979, as 
amended, has been in lapse. However, the President, through 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, 2013, 78 FR 49107 
(August 12, 2013) has continued the EAR in effect under the 
International Emergency Economic Powers Act (50 U.S.C. 1701 et seq.). 
BIS continues to carry out the provisions of the Export Administration 
Act, as appropriate and to the extent permitted by law, pursuant to 
Executive Order 13222 as amended by Executive Order 13637.

Rulemaking Requirements

    1. Executive Orders 13563 and 12866 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). Executive 
Order 13563 emphasizes the importance of quantifying both costs and 
benefits, of reducing costs, of harmonizing rules, and of promoting 
flexibility. This rule has not been designated a ``significant 
regulatory action,'' under section 3(f) of Executive Order 12866.
    2. Notwithstanding any other provision of law, no person is 
required to respond to, nor is 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 
collections previously approved by OMB under the following control 
numbers: 0694-0088, 0694-0122, 0694-0134, and 0694-0137. Specifically, 
BIS has requested a revision and extension of existing collection OMB 
0694-0134 (Procedure for parties on the Entity List to Request Removal 
or Modification of their Listing) and non-substantive changes to OMB 
Control Numbers 0694-0088 (Simplified Network Application Processing 
and Multipurpose Application Form), 0694-0122 (Licensing 
Responsibilities and Enforcement), and 0694-0137 (License Exemptions 
and Exclusions).
    This rule slightly increases public burden in a collection of 
information approved by OMB under control number 0694-0088, which 
authorizes, among other things, export license applications. The 
removal of license exceptions for listed parties on the Unverified List 
will result in increased license applications being submitted to BIS by 
exporters. Total burden hours associated with the Paperwork Reduction 
Act and OMB control number 0694-0088 are expected to increase 
minimally, as the suspension of license exceptions will only affect 
transactions involving parties listed on the Unverified List and not 
all export transactions. Since license exceptions are restricted from 
use, this rule decreases public burden in a collection of information 
approved by OMB under control number 0694-0137 minimally,

[[Page 76746]]

as this will only affect a very small number of individual listed 
parties. The increased burden under 0694-0088 is reciprocal to the 
decrease of burden under 0694-0137, and results in no change of burden 
to the public. This rule also increases public burden in a collection 
of information under OMB control number 0694-0122, as a result of the 
exchange of UVL statements between private parties, and under OMB 
control number 0694-0134 as a result of appeals from persons listed on 
the UVL for removal of their listing. The total increase in burden 
hours associated with both of these collections is expected to be 
minimal, as they involve a limited number of persons listed on the UVL.
    3. This rule does not contain policies with Federalism implications 
as that term is defined in Executive Order 13132.
    4. The Chief Counsel for Regulation of the Department of Commerce 
has certified to the Chief Counsel for Advocacy of the Small Business 
Administration that this rule will not have a significant economic 
impact on a substantial number of small entities.
Number of Small Entities
    Currently, BIS does not collect data on the size of entities that 
apply for and are issued export licenses. Although BIS is unable to 
estimate the exact number of small entities that will be impacted by 
this rule, it acknowledges that this rule will impact some unknown 
number. This rule will affect exporters and freight forwarders, with 
obligations to apply for export licenses, obtain and retain UVL 
statements, and/or file AES records in connection with exports, 
reexports, or transfers (in-country) in which a person listed on the 
UVL is a party to the transaction. These requirements apply to all 
entities proceeding with such transactions, regardless of size.
Economic Impact
    BIS is unable to determine whether there are a substantial number 
of small entities affected by this rule. However, this rule is not 
expected to affect a disproportionate number of small entities because 
it is directed at a limited number of foreign persons and will impact 
all export transactions to these persons, regardless of whether the 
exports are made or intended to be made by small, medium, or large 
entities. BIS has administered the UVL based on listing criteria 
similar to those set forth in this rule since 2002. This rule will 
impact transactions involving persons listed on the UVL, which 
currently has 36 persons listed. Due to the limited number of persons 
expected to be maintained on the UVL, BIS estimates that the number of 
transactions involving these persons represents only a small fraction 
of the total number of transactions recorded in AES. BIS estimates that 
regulated entities will incur minimal economic burdens on transactions 
involving UVL persons as a result of this rule because there are few 
transactions involving such persons and for those transactions where 
they are involved, there is no monetary fee to apply for a BIS license 
or file a record in AES. Moreover, obtaining a signed UVL statement 
from UVL persons for items not subject to a license requirement will 
result in minimal burden to U.S. exporters, as the statement can simply 
be copied from the EAR and forwarded to the UVL person for review and 
signature. The maintenance of any such UVL statement also will have 
minimal burden on U.S. exporters as the EAR already has similar 
recordkeeping requirements under Section 762.2 of the EAR. As a result, 
the requirements of this rule will amount to very little economic 
burden.
    For the reasons above, the Chief Counsel for Regulation certified 
that this rule will not have a significant economic impact on a 
substantial number of small entities.
    No comments were received regarding the economic impact of this 
final rule. As a result, a final regulatory flexibility analysis is not 
required and one was not prepared.

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 740

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

15 CFR Part 744

    Exports, Reporting and recordkeeping requirements, Terrorism.

15 CFR Part 756

    Appeals.

15 CFR Part 758

    Export clearance requirements.

15 CFR Part 762

    Recordkeeping.

    Accordingly, Parts 730, 740, 744, 756, 758, and 762 of the Export 
Administration Regulations (15 CFR parts 730-774) are amended as 
follows:

PART 730--[AMENDED]

0
1. The authority citation for 15 CFR Part 730 continues 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; 15 U.S.C. 
1824a; 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, 3 
CFR, 2004 Comp., p 168; E.O. 13637 of March 8, 2013, 78 FR 16129 
(March 13, 2013); Notice of January 17, 2013, 78 FR 4303 (January 
22, 2013); Notice of May 7, 2013, 78 FR 27301 (May 9, 2013); Notice 
of August 8, 2013, 78 FR 49107 (August 12, 2013); Notice of 
September 18, 2013, 78 FR 58151 (September 20, 2013) ; Notice of 
November 7, 2013, 78 FR 67289 (November 12, 2013).

0
2. Supplement No. 1 to Part 730 is amended by:
0
a. Removing the phrase ``Part 758, and Sec.  748.4'' and adding in its 
place ``Sec. Sec.  744.15(b) and 748.4 and Part 758'' in the 
``Reference in the EAR'' column of 0694-0122 row;
0
b. Removing the Title ``Procedure for parties on the Entity List to 
Request Removal or Modification of their Listing'' and adding in its 
place ``Procedure for parties on the Entity List or the Unverified List 
to Request Removal or Modification of their Listing'' in the Title 
Column of the 0694-0134 row; and
0
c. Removing the reference ``Sec.  744.16'' and adding in its place 
``Sec. Sec.  744.15 and 744.16'' in the Reference in the EAR column of 
the 0694-0134 row.

PART 740--[AMENDED]

0
3. The authority citation for 15 CFR Part 740 continues to read as 
follows:

    Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; 
22 U.S.C. 7201 et seq.; E.O. 13026, 61 FR 58767, 3 CFR, 1996 Comp., 
p. 228; E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 783; Notice 
of August 8, 2013, 78 FR 49107 (August 12, 2013).

[[Page 76747]]

0
4. Section 740.2 is amended by adding paragraph (a)(17) to read as 
follows:

Sec.  740.2  Restrictions on all license exceptions.

    (a) * * *
    (17) A party to the transaction, as described in Sec.  748.5 of the 
EAR, is listed on the Unverified List in Supplement No. 6 to Part 744, 
see Sec.  744.15 of the EAR.
* * * * *

PART 744--[AMENDED]

0
5. The authority citation for 15 CFR Part 744 continues to read as 
follows:

    Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; 
22 U.S.C. 3201 et seq.; 42 U.S.C. 2139a; 22 U.S.C. 7201 et seq.; 22 
U.S.C. 7210; E.O. 12058, 43 FR 20947, 3 CFR, 1978 Comp., p. 179; 
E.O. 12851, 58 FR 33181, 3 CFR, 1993 Comp., p. 608; E.O. 12938, 59 
FR 59099, 3 CFR, 1994 Comp., p. 950; E.O. 12947, 60 FR 5079, 3 CFR, 
1995 Comp., p. 356; E.O. 13026, 61 FR 58767, 3 CFR, 1996 Comp., p. 
228; E.O. 13099, 63 FR 45167, 3 CFR, 1998 Comp., p. 208; E.O. 13222, 
66 FR 44025, 3 CFR, 2001 Comp., p. 783; E.O. 13224, 66 FR 49079, 3 
CFR, 2001 Comp., p. 786; Notice of January 17, 2013, 78 FR 4303 
(January 22, 2013); Notice of August 8, 2013, 78 FR 49107 (August 
12, 2013); Notice of September 18, 2013, 78 FR 58151 (September 20, 
2013) ; Notice of November 7, 2013, 78 FR 67289 (November 12, 2013).

0
6. Section 744.1 is amended by adding the sentence set forth below 
after the tenth sentence in paragraph (a)(1).

Sec.  744.1  General provisions.

    (a)(1) * * * Section 744.15 sets forth the conditions for exports, 
reexports, and transfers (in-country) to persons listed on the 
Unverified List (UVL) in Supplement No. 6 of this part, the criteria 
for revising the UVL, as well as procedures for requesting removal or 
modification of a listing on the UVL. * * *

0
7. Adding Sec.  744.15 to read as follows:

Sec.  744.15  Restrictions on exports, reexports and transfers (in-
country) to persons listed on the unverified list.

    (a) General requirement. In addition to the requirements set forth 
elsewhere in the EAR, exports, reexports, or transfers (in-country) 
subject to the EAR involving parties to the transaction who are listed 
on the Unverified List (UVL) must be made in accordance with paragraph 
(b) of this section. The names and addresses of foreign persons subject 
to end-user controls based on the criteria described in paragraph (c) 
of this section are identified in the Unverified List found in 
Supplement No. 6 to this part. Requirements found elsewhere in the EAR 
also apply, including but not limited to any license requirements, the 
record filing requirements pursuant to Sec.  758.1(b)(8), and the 
restrictions on license exceptions described in Sec.  740.2(a)(17) of 
the EAR.
    (b) UVL statement. Before proceeding with any export, reexport, or 
transfer (in-country) subject to the EAR that is not subject to a 
license requirement, involving a person listed on the Unverified List 
as a party described in Sec.  748.5 of the EAR, an exporter, 
reexporter, or transferor (in-country) must obtain a UVL statement from 
such person, according to the provisions set forth in this section. The 
statement must be retained in accordance with part 762 of the EAR.
    (1) One UVL statement may be used for multiple exports, reexports, 
and transfers (in-country) of the same items between the same parties, 
so long as the party names, the description(s) of the items and the 
ECCNs are correct. If one UVL statement is used for multiple exports, 
reexports, and transfers (in-country), the exporter, reexporter, and 
transferor must maintain a log or other record that identifies each 
export, reexport, and transfer (in-country) made pursuant to this 
section and the specific UVL statement that is associated with each. 
The log or record must be retained in accordance with Part 762 of the 
EAR.
    (2) The UVL statement must be in writing, signed and dated by an 
individual of sufficient authority to legally bind the UVL party, and 
state the following:
    (i) Name of UVL party; complete physical address, to include 
shipping, corporate, and end user addresses, if different (simply 
listing a post office box is insufficient); telephone number; fax 
number; email address; Web site (if available); and name and title of 
individual signing the UVL statement.
    (ii) Agrees not to use the item(s) for any use prohibited by the 
United States Export Administration Regulations (EAR), 15 CFR Parts 
730-772, and agrees not to reexport or transfer (in-country) the 
item(s) to any destination, use or user prohibited by the EAR.
    (iii) Declares that the end use, end user, and country of ultimate 
destination of the item(s) subject to the EAR are as follows: [INSERT 
END USE, END USER, AND COUNTRY OF ULTIMATE DESTINATION].
    (iv) Agrees to cooperate with end-use checks, including a Post-
Shipment Verification, conducted by or on behalf of the Bureau of 
Industry and Security, U.S. Department of Commerce, for any item 
subject to the EAR in transactions to which they were a party in the 
last five years. This cooperation includes facilitating the timely 
conduct of the check and providing full and accurate information 
concerning the disposition of items subject to the EAR.
    (v) Agrees to provide copies of this document and all other export, 
reexport or transfer (in-country) records required to be retained in 
part 762 of the EAR.
    (vi) Certifies that the individual signing the UVL statement has 
sufficient authority to legally bind the party.
    (c) Criteria for revising the Unverified List. (1) Foreign persons 
who are parties to an export, reexport, and transfer (in-country) 
subject to the EAR may be added to the Unverified List if BIS or 
federal officials acting on BIS's behalf cannot verify the bona fides 
(i.e., legitimacy and reliability relating to the end use and end user 
of items subject to the EAR) of such persons because an end-use check, 
such as a pre-license check (PLC) or a post-shipment verification 
(PSV), cannot be completed satisfactorily for reasons outside of the 
U.S. Government's control. Examples in paragraphs (c)(1)(i) through 
(iii) of this section provide an illustrative list of those 
circumstances.
    (i) During the conduct of an end-use check, the subject of the 
check is unable to demonstrate the disposition of items subject to the 
EAR.
    (ii) The existence or authenticity of the subject of an end-use 
check cannot be verified (e.g., the subject of the check cannot be 
located or contacted).
    (iii) Lack of cooperation by the host government authority prevents 
an end-use check from being conducted.
    (2) BIS will remove a person from the Unverified List when BIS is 
able to verify the bona fides of the listed person as an end user, 
consignee, or other party to exports, reexports, or transfers (in-
country) involving items subject to the EAR by completing a PLC or PSV. 
In the limited circumstance involving a PLC or PSV that cannot be 
completed due to lack of host government cooperation, an alternative 
bona fides verification process may be determined by BIS to be 
sufficient. A determination to remove a person from the Unverified List 
based on the criteria in this paragraph is separate from any 
determination made by BIS pursuant to Sec.  744.11(b) of the EAR, and 
must be requested through paragraph (d) of this section.
    (d) Procedure for requesting removal of a person on the Unverified 
List. Any person listed on the Unverified List may request that its 
listing be amended or removed.
    (1) All such requests, including reasons therefor and information 
that verifies the bona fides, i.e., legitimacy and reliability of the 
person listed on the Unverified List as an end user, consignee or other 
party to exports,

[[Page 76748]]

reexports, and transfers (in-country) of items subject to the EAR, must 
be in writing and sent to: Director, Office of Enforcement Analysis, 
Bureau of Industry and Security, U.S. Department of Commerce, 14th 
Street and Pennsylvania Avenue NW., Room 4065, Washington, DC 20230, 
via fax to (202) 482-0971, or by email to UVLRequest@bis.doc.gov.
    (2) The Deputy Assistant Secretary for Export Enforcement will 
review such requests and will convey the decision on the request to the 
requester in writing based on an assessment of the listed person's bona 
fides as a party to exports, reexports, and transfers (in-country) 
subject to the EAR. That decision will be the final agency action on 
the request.

0
8. Supplement No. 6 to Part 744 is added to read as follows:

Supplement No. 6 to Part 744--Unverified List

    Exports, reexports, and transfers (in-country) involving parties to 
the transaction who are listed in this supplement are subject to the 
restrictions outlined in Sec.  744.15 of the EAR.

------------------------------------------------------------------------
                                                       Federal Register
            Country               Listed person and   citation and date
                                       address          of publication
------------------------------------------------------------------------
Reserved.......................  Reserved..........  Reserved.
------------------------------------------------------------------------

PART 756--[AMENDED]

0
9. The authority citation for 15 CFR Part 756 continues 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 August 
8, 2013, 78 FR 49107 (August 12, 2013).

0
10. Section 756.1 is amended by revising paragraph (a)(3) to read as 
follows:

Sec.  756.1  Introduction.

    (a) * * *
    (3) A decision on a request to remove or modify an Entity List 
entry made pursuant to Sec.  744.16 of the EAR or a decision on a 
request to remove an Unverified List entry made pursuant to Sec.  
744.15 of the EAR.
* * * * *

PART 758--[AMENDED]

0
11. The authority citation for 15 CFR Part 758 continues 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 August 
8, 2013, 78 FR 49107 (August 12, 2013).
0
12. Section 758.1 is amended by adding paragraph (b)(8) to read as 
follows:

Sec.  758.1  The Automated Export System (AES) record.

* * * * *
    (b) * * *
    (8) For all exports of tangible items subject to the EAR where 
parties to the transaction, as described in Sec.  748.5(d)-(f) of the 
EAR, are listed on the Unverified List (Supplement 6 to Part 744 of the 
EAR), regardless of value or destination.
* * * * *

PART 762--[AMENDED]

0
13. The authority citation for 15 CFR Part 762 continues 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 August 
8, 2013, 78 FR 49107 (August 12, 2013).

0
14. Section 762.2 is amended by revising paragraph (b)(13) to read as 
follows:

Sec.  762.2  Records to be retained.

* * * * *
    (b) * * *
    (13) Sec.  744.15(b), UVL statement as well as any logs or records 
created for multiple exports, reexports, and transfers (in-country);
* * * * *

    Dated: December 12, 2013.
Kevin J. Wolf,
Assistant Secretary for Export Administration.
[FR Doc. 2013-30117 Filed 12-18-13; 8:45 am]
BILLING CODE 3510-33-P