Document ID: BIS-2011-0035-0001
Agency: bis
Document Type: Rule
Title: Entity List: Implementation of Annual Review Change; Additions and Removals
Posted Date: 2011-10-12T04:00Z

[Federal Register Volume 76, Number 197 (Wednesday, October 12, 2011)]
[Rules and Regulations]
[Pages 63184-63187]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-26072]

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DEPARTMENT OF COMMERCE

Bureau of Industry and Security

15 CFR Part 744

[Docket No. 110620344-1586-01]
RIN 0694-AF28

Addition of Certain Persons on the Entity List; Implementation of 
Entity List Annual Review Change; and Removal of Persons From the 
Entity List Based on Removal Requests

AGENCY: Bureau of Industry and Security, Commerce.

ACTION: Final rule.

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SUMMARY: This rule amends the Export Administration Regulations (EAR) 
by adding two persons to the Entity List. The persons who are added to 
the Entity List have been determined by the U.S. Government to be 
acting contrary to the national security or foreign policy interests of 
the United States. These persons will be listed under the destination 
of Hong Kong on the Entity List. In addition, this rule amends the 
Entity List on the basis of the annual review of the Entity List 
conducted by the End-User Review Committee (ERC) for entities located 
in Hong Kong. The ERC conducts the annual review to determine if any 
entities on the Entity List should be removed or modified. This rule 
removes one person located in Hong Kong on the basis of the annual 
review.
    Lastly, this rule removes three persons from the Entity List 
consisting of one person located in Hong Kong and two persons located 
in New Zealand. These three persons are being removed from the Entity 
List as a result of requests for removal submitted by each of these 
three persons, a review of information provided in the removal requests 
in accordance with BIS regulations, and further review conducted by the 
ERC.
    The Entity List provides notice to the public that certain exports, 
reexports, and transfers (in-country) to entities identified on the 
Entity List require a license from the Bureau of Industry and Security 
and that availability of license exceptions in such transactions is 
limited.

DATES: This rule is effective October 12, 2011.

FOR FURTHER INFORMATION CONTACT: Karen Nies-Vogel, Chair, End-User 
Review Committee, Office of the Assistant Secretary, Export 
Administration, Bureau of Industry and Security, Department of 
Commerce, Phone: (202) 482-5991, Fax: (202) 482- 3911, E-mail: 
ERC@bis.doc.gov.

SUPPLEMENTARY INFORMATION:

Background

    The Entity List provides notice to the public that certain exports, 
reexports, and transfers (in-country) to entities identified on the 
Entity List require a license from the Bureau of Industry and Security 
(BIS) and that the availability of license exceptions in such 
transactions is limited. Entities are placed on the Entity List on the 
basis of certain sections of part 744 (Control Policy: End-User and 
End-Use Based) of the EAR.
    The ERC, composed of representatives of the Departments of Commerce 
(Chair), State, Defense, Energy and, when appropriate, the Treasury, 
makes all decisions regarding additions to, removals from or other 
modifications to the Entity List. The ERC makes 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.

ERC Entity List Decisions

    This rule implements decisions of the ERC to add two additional 
persons located in Hong Kong to the Entity List and to remove two 
persons located in Hong Kong from the Entity List (one removal on the 
basis of a determination made under the annual review of the Entity 
List and the other removal on the basis of a removal request submitted 
by the listed person). The additions are described under Additions to 
the Entity List and the removals are described under Removals from the 
Entity List. This rule also removes two listed persons from the Entity 
List located in New Zealand on the basis of a removal request submitted 
by the listed persons.

Additions to the Entity List

    This rule implements the decision of the ERC to add two persons to 
the Entity List on the basis of section 744.11 (License requirements 
that apply to entities acting contrary to the national security or 
foreign policy interests of the United States) of the EAR. The two 
entries added to the Entity List are Hang Tat Electronics Enterprises 
Co., an electronic components trading company, and Cho-Man Wong, an 
employee of Hang Tat, both located in Hong Kong.
    The ERC reviewed section 744.11(b) (Criteria for revising the 
Entity List) in making the determination to add these persons to the 
Entity List. Under that paragraph, persons for which there is 
reasonable cause to believe, based on specific and articulable facts, 
that the persons have been involved, are involved, or pose 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 persons may be added 
to the Entity List pursuant to section 744.11. Paragraphs (b)(1)-(b)(5) 
include an illustrative list of activities that could be contrary to 
the national security or foreign policy interests of the United States. 
These two persons are believed to have been involved in activities 
described under paragraphs (b)(4) and (b)(5) of section 744.11. 
Specifically, Hang Tat Electronics Enterprises Co., an electronic 
components trading company located in Hong Kong, and Cho-Man Wong, an 
employee of Hang Tat, have been complicit in violations of the EAR 
involving the shipment of items from the United States to China through 
Hong Kong. BIS has determined that Hang Tat and Cho-Man Wong (hereafter 
collectively, ``Hang Tat'') purchased certain items subject to the EAR 
from

[[Page 63185]]

the United States on multiple occasions with the intention of reselling 
the items to persons in China, but did not inform the U.S. suppliers 
that the items would be resold to China, and made the sale of the items 
to persons in China contingent upon the Chinese customers' receipt of 
the items in Hong Kong and the Chinese customers' acceptance of the 
responsibility to obtain any shipment authorizations required for the 
movement of the items from Hong Kong to China. BIS has reason to 
believe that Hang Tat knew that the availability of License Exception 
``Additional Permissive Reexports'' (APR) (i.e., Section 740.16 of the 
EAR) is limited to those transactions that are made in accordance with 
the export authorizations issued by the reexporting country but did not 
explicitly inform their customers of either the EAR or the Hong Kong 
government's requirements. BIS also has reason to believe that some 
portion of the items sold by Hang Tat to persons in China were 
reexported from Hong Kong to China without the required authorization 
from the Hong Kong government, and thus were not eligible for License 
Exception APR, and required a license from BIS for reexport to China. 
BIS did not issue reexport licenses for these transactions, which 
therefore were made in violation of the EAR. In addition, the Chinese 
persons purchasing the items from Hang Tat may be involved in 
proliferation-related activities. BIS also notes that under the EAR, a 
license is required to export the subject items from the United States 
to China. BIS believes that Hang Tat's business practices are contrary 
to U.S. national security and foreign policy interests.
    For the two persons added to the Entity List, the ERC specifies a 
license requirement for all items subject to the EAR and establishes a 
license application review policy of a presumption of denial. The 
license requirement applies to any transaction in which items are to be 
exported, reexported, or transferred (in-country) to such persons or in 
which such persons act as purchaser, intermediate consignee, ultimate 
consignee, or end-user. In addition, no license exceptions are 
available for exports, reexports, or transfers (in-country) to those 
persons being added to the Entity List.
    This final rule adds the following two persons to the Entity List:

Hong Kong

    1. Cho-Man Wong, Room 2608, Technology Plaza, 29-35 Sha Tsui Road, 
Tsuen Wan, Hong Kong; and
    2. Hang Tat Electronics Enterprises Co., Room 2608, Technology 
Plaza, 29-35 Sha Tsui Road, Tsuen Wan, Hong Kong.

Removals From the Entity List

    This rule removes four entities from the Entity List consisting of 
two entities from Hong Kong (one from Hong Kong on the basis of the 
annual review of the Entity List and one from Hong Kong on the basis of 
a removal request) and two entities from New Zealand on the basis of 
removal requests submitted by each of those listed persons, as follows:
a. Removal on the Basis of the Annual Review
    This rule implements a decision of the ERC to remove one entity, 
Pelorus Enterprises Limited, located in Hong Kong, from the Entity List 
on the basis of the annual review of the Entity List conducted by the 
ERC, in accordance with the procedures outlined in Supplement No. 5 to 
part 744 (Procedures for End-User Review Committee Entity List 
Decisions). The changes from the annual review of the Entity List that 
are approved by the ERC are implemented in stages as the ERC completes 
its review of entities listed under different destinations on the 
Entity List.
    This final rule removes the following person located in Hong Kong 
from the Entity List on the basis of a decision made by the ERC during 
the annual review:

Hong Kong

    1. Pelorus Enterprises Limited, 12F Commercial VIP Building, 112-
116 Canton Rd., Tsim Sha Tsui, Hong Kong.
b. Removal on the Basis of a Removal Request
    This rule implements a decision of the ERC to remove three entities 
consisting of one person, Polar Star International Co. Ltd., located in 
Hong Kong, and two persons, Leigh Michau and Q-SPD (Q-Marine 
International Ltd.), located in New Zealand from the Entity List on the 
basis of a removal request. The ERC made a determination to remove 
these three persons as a result of these three entities' requests for 
removal from the Entity List. Based upon the review of the information 
provided in each of the three removal requests in accordance with 
section 744.16 (Procedure for requesting removal or modification of an 
Entity List entity), and after review by the ERC's member agencies, the 
ERC determined that these three persons should be removed from the 
Entity List.
    The ERC decision to remove each of these three persons took into 
account each of these persons' cooperation with the U.S. Government, as 
well each of these three person's assurances of future compliance with 
the EAR. In accordance with section 744.16(c), the Deputy Assistant 
Secretary for Export Administration has sent written notification to 
each of these three persons, informing these entities of the ERC's 
decision to remove them from the Entity List. This final rule 
implements the decision to remove this one Hong Kong person and two New 
Zealand persons from the Entity List.
    This final rule removes the following persons located in Hong Kong 
and New Zealand from the Entity List:

Hong Kong

    1. Polar Star International Co. Ltd., 1905 Yen Sheng Center, 64 Hoi 
Yuen Rd., Kwun Tong, Kin, Hong Kong.

New Zealand

    1. Leigh Michau, P.O. Box 34-881, Birkenhead, Auckland, New 
Zealand; and
    2. Q-SPD (Q-Marine International Ltd.), P.O. Box 34-881, 
Birkenhead, Auckland, New Zealand.
    The removal of the above referenced four entities from the Entity 
List eliminates the existing license requirements in Supplement No. 4 
to part 744 for exports, reexports and transfers (in-country) to these 
four entities. However, the removal of these four entities from the 
Entity List does not relieve persons of other obligations under part 
744 of the EAR or under other parts of the EAR. Neither the removal of 
an entity from the Entity List nor the removal of Entity List-based 
license requirements relieves persons of their obligations under 
General Prohibition 5 in section 736.2(b)(5) of the EAR which provides 
that, ``you may not, without a license, knowingly export or reexport 
any item subject to the EAR to an end-user or end-use that is 
prohibited by part 744 of the EAR.'' Additionally these removals do not 
relieve persons of their obligation to apply for export, reexport or 
in-country transfer licenses required by other provisions of the EAR. 
BIS strongly urges the use of Supplement No. 3 to part 732 of the EAR, 
``BIS's `Know Your Customer' Guidance and Red Flags,'' when persons are 
involved in transactions that are subject to the EAR.

Savings Clause

    Shipments of items removed from eligibility for a License Exception 
or export or reexport without a license (NLR) as a result of this 
regulatory action that were on dock for loading, on lighter, laden 
aboard an exporting or reexporting carrier, or en route aboard a

[[Page 63186]]

carrier to a port of export or reexport, on October 12, 2011, pursuant 
to actual orders for export or reexport to a foreign destination, may 
proceed to that destination under the previous eligibility for a 
License Exception or export or reexport without a license (NLR) so long 
as they are exported or reexported before October 27, 2011. Any such 
items not actually exported or reexported before midnight, on October 
27, 2011, require a license in accordance with the EAR.
    Although the Export Administration Act expired on August 20, 2001, 
the President, through Executive Order 13222 of August 17, 2001, 3 CFR, 
2001 Comp., p. 783 (2002), as extended by the Notice of August 12, 
2011, 76 FR 50661 (August 16, 2011), has continued the Export 
Administration Regulations in effect under the International Emergency 
Economic Powers Act.

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 been determined to be not significant for 
purposes of 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 regulation involves 
collections previously approved by the OMB under control numbers 0694-
0088, ``Multi-Purpose Application,'' which carries a burden hour 
estimate of 43.8 minutes for a manual or electronic submission. Total 
burden hours associated with the PRA and OMB control number 0694-0088 
are not expected to increase as a result of this rule. You may send 
comments regarding the collection of information associated with this 
rule, including suggestions for reducing the burden, to Jasmeet K. 
Seehra, Office of Management and Budget (OMB), by e-mail 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 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 comment 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)). BIS implements this rule to 
protect U.S. national security or foreign policy interests by 
preventing items from being exported, reexported, or transferred (in 
country) to the persons being added to the Entity List. If this rule 
were delayed to allow for notice and comment and a delay in effective 
date, then entities being added to the Entity List by this action would 
continue to be able to receive items without a license and to conduct 
activities contrary to the national security or foreign policy 
interests of the United States. In addition, because these parties may 
receive notice of the U.S. Government's intention to place these 
entities on the Entity List once a final rule was published it would 
create an incentive for these persons to either accelerate receiving 
items subject to the EAR to conduct activities that are contrary to the 
national security or foreign policy interests of the United States and/
or to take steps to set up additional aliases, change addresses and 
take other steps to try to limit the impact of the listing on the 
Entity List once a final rule was published. 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.

List of Subjects in 15 CFR Part 744

    Exports, Reporting and recordkeeping requirements, Terrorism.

    Accordingly, part 744 of the Export Administration Regulations (15 
CFR parts 730-774) is amended as follows:

PART 744--[AMENDED]

0
1. 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 August 12, 2011, 76 FR 50661 
(August 16, 2011); Notice of November 4, 2010, 75 FR 68673 (November 
8, 2010): Notice of January 13, 2011, 76 FR 3009, January 18, 2011.

0
2. Supplement No. 4 to part 744 is amended:
0
a. By adding two entries in alphabetical order under Hong Kong;
0
b. By removing under Hong Kong, the two Hong Kong entities: ``Pelorus 
Enterprises Limited, 12F Commercial VIP Building, 112-116 Canton Rd., 
Tsim Sha Tsui, Hong Kong'' and ``Polar Star International Co. Ltd., 
1905 Yen Sheng Center, 64 Hoi Yuen Rd., Kwun Tong, Kin, Hong Kong;'' 
and
0
c. By removing the entry for New Zealand.
    The additions read as follows:

Supplement No. 4 to Part 744--Entity List

----------------------------------------------------------------------------------------------------------------
                                                                            License review     Federal Register
         Country                   Entity           License requirement         policy             citation
----------------------------------------------------------------------------------------------------------------
 
                                                  * * * * * * *
Hong Kong...............  Cho-Man Wong Room 2608,   For all items        Presumption of       76 FR [INSERT FR
                           Technology Plaza 29-35    subject to the       denial.              PAGE NUMBER]
                           Sha Tsui Road Tsuen       EAR. (See Sec.                            October 12, 2011.
                           Wan, Hong Kong.           744.11 of the EAR).
 

[[Page 63187]]

 
                                                  * * * * * * *
                          Hang Tat Electronics      For all items        Presumption of       76 FR [INSERT FR
                           Enterprises Co. Room      subject to the       denial.              PAGE NUMBER]
                           2608, Technology Plaza    EAR. (See Sec.                            October 12, 2001.
                           29-35 Sha Tsui Road       744.11 of the EAR).
                           Tsuen Wan, Hong Kong.
 
                                                  * * * * * * *
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    Dated: October 3, 2011.
Matthew S. Borman,
Deputy Assistant Secretary for Export Administration.
[FR Doc. 2011-26072 Filed 10-11-11; 8:45 am]
BILLING CODE 3510-33-P