Document ID: BIS-2009-0014-0001
Agency: bis
Document Type: Rule
Title: Revisions to Certain End-User Controls Under the Export Administration Regulations; Clarification Regarding License Requirements for Transfers (in-country) to Persons Listed on the Entity List
Posted Date: 2009-09-08T04:00Z

[Federal Register: September 8, 2009 (Volume 74, Number 172)]
[Rules and Regulations]               
[Page 45990-45993]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr08se09-8]                         

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DEPARTMENT OF COMMERCE

Bureau of Industry and Security

15 CFR Part 744

[Docket No. 090126062-91139-01]
RIN 0694-AE54

 
Revisions to Certain End-User Controls Under the Export 
Administration Regulations; Clarification Regarding License 
Requirements for Transfers (in-country) to Persons Listed on the Entity 
List

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) to make revisions to three 
sections that are used by the United States Government as the basis for 
placing persons onto the Entity List. These three sections specified 
license requirements for exports and reexports to persons listed on the 
Entity List, however; the sections were silent regarding whether or not 
the scope of the licensing requirements included transfers (in-
country). This rule adds transfers (in-country) to the scope of the 
license requirements under each of the three sections. As a result of 
adding transfers (in-country) to these three end-user controls, all of 
the end-use and end-user controls that are used as a regulatory basis 
for placing persons on the Entity List now specify that the scope of 
the license requirements includes exports, reexports, and transfers 
(in-country).
    The Entity List provides notice to the public that certain exports, 
reexports, and transfers (in-country) to parties identified on the 
Entity List require a license from the Bureau of Industry and Security 
(BIS) and that availability of License Exceptions in such transactions 
is limited.

DATES: Effective Date: This rule is effective September 8, 2009. 
Although there is no formal comment period, public comments on this 
regulation are welcome on a continuing basis.

ADDRESSES: You may submit comments, identified by RIN 0694-AE54, by any 
of the following methods:
    E-mail: publiccomments@bis.doc.gov. Include ``RIN 0694-AE54'' in 
the subject line of the message.
    Fax: (202) 482-3355. Please alert the Regulatory Policy Division, 
by calling (202) 482-2440, if you are faxing comments.
    Mail or Hand Delivery/Courier: Timothy Mooney, U.S. Department of 
Commerce, Bureau of Industry and Security, Regulatory Policy Division, 
14th St. & Pennsylvania Avenue, NW., Room 2705, Washington, DC 20230, 
Attn: RIN 0694-AE54.
    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; and to the 
Regulatory Policy Division, Bureau of Industry and Security, Department 
of Commerce, 14th St. & Pennsylvania Avenue, NW., Room 2705, 
Washington, DC 20230. Comments on this collection of information should 
be submitted separately from comments on the final rule (i.e., RIN 
0694-AE54)--all comments on the latter should be submitted by one of 
the three methods outlined above.

FOR FURTHER INFORMATION CONTACT: Elizabeth Scott Sangine, End-User 
Review Committee, Office of the Assistant Secretary, Export 
Administration, Bureau of Industry and Security, Department of 
Commerce, Phone: (202) 482-3343, Fax: (202) 482-3911, E-mail: 
bscott@bis.doc.gov.

SUPPLEMENTARY INFORMATION:

Background

    The Entity List provides notice to the public that certain exports, 
reexports, and transfers (in-country) to parties identified on the 
Entity List require a license from the Bureau of Industry and Security 
(BIS) and that availability of license exceptions in such transactions 
is limited. Persons 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 End-User Review Committee (ERC), composed of representatives of 
the Departments of Commerce (Chair), State, Defense, Energy and, where 
appropriate, the Treasury, makes all decisions regarding additions to, 
removals from or changes to the Entity

[[Page 45991]]

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.
    There are six sections in part 744 of the EAR that provide the 
regulatory basis for putting persons on the Entity List: Sec. Sec.  
744.2, 744.3, 744.4, 744.10, 744.11, and 744.20. Sections 744.2, 744.3, 
and 744.4 are foreign policy end-use controls under the EAR that 
prohibit transactions destined for certain nuclear, missile or chemical 
and biological end-uses. Sections 744.10, 744.11, and 744.20 are 
foreign policy end-user controls that prohibit transactions destined 
for certain individuals. Prior to the publication of this rule, the 
three end-user controls each specified that they applied to exports and 
reexports, but were silent on whether these end-user controls also 
applied to transfers (in-country). The United States Government intends 
the license requirements for Sec. Sec.  744.10, 744.11, and 744.20 to 
apply to transfers (in-country) as well as to exports and reexports. 
Therefore, this rule extends the scope of these three sections to 
include transfers (in-country).
    The rationale for the extension of this license requirement to 
include transfers (in-country) is that the United States Government's 
objective in placing a person on the Entity List on the basis of one of 
the end-user controls in part 744 of the EAR is to have an opportunity 
to review any transaction involving items subject to the EAR prior to 
shipment or transfer (in-country) to a listed person. Regardless of the 
form of the transaction (export, reexport, or transfer (in-country)), 
the United States Government believes it is important to review all 
transactions involving persons listed on the Entity List prior to the 
initiation of a transaction with a listed person and/or receipt by the 
listed person of an item in a transaction.
    In publishing this rule, the United States Government is achieving 
the export control objective of allowing the United States Government 
to have prior review of any transaction involving items subject to the 
EAR and persons included on the Entity List. This prior review is 
important because the United States Government does not want these end-
users of concern (i.e., persons listed on the Entity List) to receive 
items subject to the EAR that might allow them to continue their 
activities of concern without specific United States Government 
authorization.
    This rule also clarifies that prior to the publication of this 
rule, persons added to the Entity List on the basis of their 
involvement in the activities described in sections 744.2, 744.3 and 
744.4, as described above, were subject to licensing requirements 
applicable to exports, reexports, and transfers (in-country).
    This rule makes the following revisions to the Export 
Administration Regulations:
    In Section 744.10 (Restrictions on Certain Entities in Russia), 
this rule expands the scope of this end-user control by adding transfer 
(in-country) to the license requirements of this end-user control. With 
the publication of this rule, the license requirements for this end-
user control apply to exports, reexports, and transfers (in-country). 
Specifically, this rule revises the second sentence of paragraph (a) to 
specify that a license is required, to the extent specified on the 
Entity List, to transfer (in-country) any item subject to the EAR to 
such entities (i.e., persons added to the Entity List on the basis of 
Sec.  744.10). This rule also revises paragraph (c) to specify that 
license applications to transfer (in-country) items subject to the EAR 
to these entities will be reviewed with a presumption of denial.
    In Section 744.11 (License Requirements that Apply to Entities 
Acting Contrary to the National Security or Foreign Policy Interests of 
the United States), this rule expands the scope of this end-user 
control by adding transfer (in-country) to the license requirements of 
this end-user control. With the publication of this rule, the license 
requirements for this end-user control apply to exports, reexports, and 
transfers (in-country). To broaden the scope of this end-user control, 
this rule makes three changes to this section. First, this rule revises 
the first sentence of the introductory text of this section to specify 
that transfers (in-country) are within the scope of the foreign policy 
controls that BIS may impose under this section. Second, this rule 
revises the first sentence of paragraph (a) to specify that for the 
license requirements of this section, a license is required, to the 
extent specified on the Entity List, to transfer (in-country) any item 
subject to the EAR to an entity that is listed on the Entity List in an 
entry that contains a reference to this section (i.e., persons added to 
the Entity List on the basis of Sec.  744.11). Third, under paragraph 
(b)(5), this rule adds transfer (in-country) to the scope of this 
illustrative example provided for the criteria used for revising the 
Entity List in paragraph (b) of this section.
    In Section 744.20 (License Requirements that Apply to Certain 
Sanctioned Entities), this rule expands the scope of this end-user 
control by adding transfer (in-country) to the license requirements of 
this end-user control. With the publication of this rule, the license 
requirements for this end-user control apply to exports, reexports and 
transfers (in-country). Specifically, this rule revises the 
introductory text of paragraph (a) to specify that a license is 
required, to the extent specified on the Entity List, to transfer (in-
country) any item subject to the EAR to such entities (i.e., persons 
added to the Entity List on the basis of Sec.  744.20). This rule also 
revises paragraph (b) to add transfer (in-country) to the general 
restriction on using license exceptions in paragraph (b) of this 
section. Lastly, this rule revises paragraph (c) to specify that 
license applications to transfer (in-country) items subject to the EAR 
to these entities will be reviewed with a presumption of denial.
    In Supplement No. 4 to part 744 (The Entity List) of the EAR, this 
rule revises the introductory text of the Entity List to specify that 
the license requirements for these entities includes exports, reexports 
and transfers (in-country), unless otherwise stated. This clarification 
is needed because now all of the sections of part 744 that provide the 
regulatory basis for adding a person to the Entity List include license 
requirements for exports, reexports and transfers (in-country), unless 
otherwise specifically stated in an entry on the Entity List for a 
listed person.
    Consistent with the provisions of section 6 of the Export 
Administration Act of 1979, as amended (EAA), a foreign policy report 
was submitted to Congress on August 11, 2009, notifying Congress of the 
imposition of foreign policy-based licensing requirements reflected in 
this rule.
    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 13, 
2009, 74 FR 41325 (August 14, 2009), has continued the Export 
Administration Regulations in effect under the International Emergency 
Economic Powers Act.

Rulemaking Requirements

    1. 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

[[Page 45992]]

(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 58 minutes to 
prepare and submit form BIS-748. Miscellaneous and recordkeeping 
activities account for 12 minutes per submission. Total burden hours 
associated with the Paperwork Reduction Act and Office of Management 
and Budget control number 0694-0088 are expected to increase slightly 
as a result of this rule.
    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 participation, and a delay in effective date, are inapplicable 
because this regulation involves a military or foreign affairs function 
of the United States. (See 5 U.S.C. 553(a)(1)). Further, no other law 
requires that a notice of proposed rulemaking and an opportunity for 
public comment be given for this rule. Because a notice of proposed 
rulemaking and an opportunity for public comment are not required to be 
given for this rule by 5 U.S.C. 553, or by any other law, the 
analytical requirements of the Regulatory Flexibility Act, 5 U.S.C. 601 
et seq., are not applicable.

List of Subjects in 15 CFR Part 744

    Exports, Reporting and recordkeeping requirements, Terrorism.

0
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 is revised 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 13, 2009, 74 FR 41325 
(August 14, 2009); Notice of November 10, 2008, 73 FR 67097 
(November 12, 2008).

0
2. Section 744.10 is amended:
0
a. By revising the second sentence of paragraph (a); and
0
b. By revising paragraph (c), to read as follows:

Sec.  744.10  Restrictions on certain entities in Russia.

    (a) * * * A license is required, to the extent specified on the 
Entity List, to export, reexport, or transfer (in-country) any item 
subject to the EAR to such entities.
* * * * *
    (c) License review standard. Applications to export, reexport, or 
transfer (in-country) items subject to the EAR to these entities will 
be reviewed with a presumption of denial.

0
3. Section 744.11 is amended:
0
a. By revising the first sentence of the introductory text of the 
section;
0
b. By revising the first sentence of paragraph (a); and
0
c. By revising paragraph (b)(5), to read as follows:

Sec.  744.11  License requirements that apply to entities acting 
contrary to the national security or foreign policy interests of the 
United States.

    BIS may impose foreign policy export, reexport, and transfer (in-
country) license requirements, limitations on availability of license 
exceptions, and set license application review policy based on the 
criteria in this section. * * *
    (a) * * *A license is required, to the extent specified on the 
Entity List, to export, reexport, or transfer (in-country) any item 
subject to the EAR to an entity that is listed on the Entity List in an 
entry that contains a reference to this section. * * *
    (b) * * *
    (5) Engaging in conduct that poses a risk of violating the EAR when 
such conduct raises sufficient concern that the End-User Review 
committee believes that prior review of exports, reexports, or 
transfers (in-country) involving the party and the possible imposition 
of license conditions or license denial enhances BIS's ability to 
prevent violations of the EAR.

0
4. Section 744.20 is amended:
0
a. By revising the first sentence of the introductory text of the 
section;
0
b. By revising the second sentence of paragraph (a); and
0
c. By revising paragraphs (b) and (c), to read as follows:

Sec.  744.20  License requirements that apply to certain sanctioned 
entities.

    BIS may impose, as foreign policy controls, export, reexport, and 
transfer (in-country) license requirements and set licensing policy 
with respect to certain entities that have been sanctioned by the State 
Department. * * *
    (a) * * * A license is required, to the extent specified on the 
Entity List, to export, reexport, or transfer (in-country) any item to 
such entities.
    (b) License Exceptions. No license exception may be used to export, 
reexport, or transfer (in-country) to such entities unless specifically 
authorized on the Entity List.
    (c) Licensing policy. Applications to export, reexport, or transfer 
(in-country) to such entities will be reviewed according to the 
licensing policy set forth on the Entity List.

0
5. Supplement No. 4 to part 744 is amended by revising the introductory 
text, to read as follows:

Supplement No. 4 to Part 744--Entity List

----------------------------------------------------------------------------------------------------------------
                                                            License         License review     Federal Register
             Country                    Entity            requirement           policy             citation
----------------------------------------------------------------------------------------------------------------
This Supplement lists certain entities subject to license requirements for specified items under this part 744
 of the EAR. License requirements for these entities include exports, reexports, and transfers (in-country)
 unless otherwise stated. This list of entities is revised and updated on a periodic basis in this Supplement by
 adding new or amended notifications and deleting notifications no longer in effect.
----------------------------------------------------------------------------------------------------------------

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[[Page 45993]]

    Dated: August 31, 2009.
Matthew S. Borman,
Acting Assistant Secretary for Export Administration.
[FR Doc. E9-21367 Filed 9-4-09; 8:45 am]

BILLING CODE 3510-33-P