Document ID: BIS-2014-0022-0001
Agency: bis
Document Type: Rule
Title: Addition of Certain Persons to the Entity List; and Removal of Person from the Entity List Based on Removal Request
Posted Date: 2014-06-26T04:00Z

[Federal Register Volume 79, Number 123 (Thursday, June 26, 2014)]
[Rules and Regulations]
[Pages 36199-36203]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-14935]

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DEPARTMENT OF COMMERCE

Bureau of Industry and Security

15 CFR Part 744

[Docket No. 140522446-4446-01]
RIN 0694-AG19

Addition of Certain Persons to the Entity List; and Removal of 
Person From the Entity List Based on Removal Request

AGENCY: Bureau of Industry and Security, Commerce.

[[Page 36200]]

ACTION: Final rule.

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SUMMARY: This rule amends the Export Administration Regulations (EAR) 
by adding four persons under five entries 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 on the Entity List under the destinations of China and Hong 
Kong. There are five entries for four persons because one person is 
listed under multiple countries, resulting in one additional entry. 
Specifically, the one additional entry covers one person in China who 
also has an address in Hong Kong.
    In addition, this rule removes one person from the Entity List, as 
the result of a request for removal submitted by the person, a review 
of information provided in the removal request in accordance with the 
EAR, and further review conducted by the End-User Review Committee 
(ERC).

DATES: Effective Date: This rule is effective June 26, 2014.

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, Email: 
ERC@bis.doc.gov.

SUPPLEMENTARY INFORMATION:

Background

    The Entity List (Supplement No. 4 to Part 744) notifies the public 
about entities that have engaged in activities that could result in an 
increased risk of the diversion of exported, reexported or transferred 
(in-country) items to weapons of mass destruction (WMD) programs. Since 
its initial publication, grounds for inclusion on the Entity List have 
expanded to include activities sanctioned by the State Department and 
activities contrary to U.S. national security or foreign policy 
interests, including terrorism and export control violations involving 
abuse of human rights. Certain exports, reexports, and transfers (in-
country) to entities identified on the Entity List require licenses 
from BIS and are usually subject to a policy of denial. The 
availability of license exceptions in such transactions is very 
limited. The license review policy for each entity is identified in the 
license review policy column on the Entity List and the availability of 
license exceptions is noted in the Federal Register notices adding 
persons to the Entity List. BIS places entities on the Entity List 
based on 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 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

Additions to the Entity List

    This rule implements the decision of the ERC to add four persons 
under five entries to the Entity List on the basis of Sec.  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 five entries added to the Entity List consist of four 
entries in China, and one entry in Hong Kong.
    The ERC reviewed Sec.  744.11(b) (Criteria for revising the Entity 
List) in making the determination to add these four persons to the 
Entity List. Under that paragraph, persons for whom there is reasonable 
cause to believe, based on specific and articulable facts, 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. Paragraphs 
(b)(1) through (b)(5) of Sec.  744.11 include an illustrative list of 
activities that could be contrary to the national security or foreign 
policy interests of the United States.
    The four persons being added have been determined by the ERC to be 
involved in activities that are contrary to the national security or 
foreign policy interests of the United States, including the activities 
described under paragraph (b)(2) and (b)(5) of Sec.  744.11.
    The ERC determined that Poly Technologies Inc., Xinshidai Company 
(New Era Group), and Panda International Information Technology 
Company, all located in China, and HWA Create, located in China and 
Hong Kong, be added to the Entity List on the basis of their attempts 
to procure items, including U.S.-origin items, for activities contrary 
to the national security and foreign policy interests of the United 
States. The ERC determined that these persons' activities have included 
the activities described under paragraph (b)(2) and (b)(5) of Sec.  
744.11 of the EAR. Specifically, these companies have attempted to 
supply items to the People's Liberation Army and/or to export items to 
destinations sanctioned by the United States. The Department of State 
sanctioned Poly Technologies Inc. under the Iran, North Korea and Syria 
Nonproliferation Act (INKSNA) in February 2013. Xinshidai Company was 
sanctioned in 2004 by the Departments of State and the Treasury under 
Executive Order 12938, and again by the State Department under INKSNA 
in 2008.
    Pursuant to Sec.  744.11(b)(2) and (b)(5) of the EAR, the ERC 
determined that the conduct of these four persons raises sufficient 
concern that prior review of exports, reexports, or transfers (in-
country) of items subject to the EAR involving these persons, and the 
possible imposition of license conditions or license denials on 
shipments to the persons, will enhance BIS's ability to prevent 
violations of the EAR.
    For the four persons recommended for addition, the ERC specified a 
license requirement for all items subject to the EAR and a license 
review policy of presumption of denial. The license requirements apply 
to any transaction in which items are to be exported, reexported, or 
transferred (in-country) to any of the 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 the persons being added to the 
Entity List in this rule.
    This final rule adds the following four persons under five entries 
to the Entity List:

China

    (1) China Xinshidai Company, a.k.a., the following one alias:
    --China New Era Group, Xinshidai Plaza, Plaza No. 7 Huayuan Rd., 
Beijing, China;
    (2) HWA Create, 5/F, Xinshidai Building/New Era Mansion, 7 Huayuan 
Rd., Beijing, China; and
    No. B3 Huayuan Rd., Beijing, China (See alternate addresses under 
Hong Kong);
    (3) Panda International Information Technology Company, Ltd., 7/F, 
B Tower, Yingwu Conference Center, No. 6. Huayuan Road, Haidian 
District, Beijing, China; and
    Rm 606 Block B, Beijing Agricultural Science Building, Shugang 
Garden Haidian Middle Rd, Beijing, China; and

[[Page 36201]]

    (4) Poly Technologies Inc., 11F Poly Plaza, 14 Dongzhimen Nandajie, 
Beijing China; and
    27 Wanshoulu, Haidian district, Beijing, China.

Hong Kong

    (1) HWA Create, Unit 1001-1002, 10F, Chinachem Building, 34-37 
Connaught Rd., Hong Kong; and
    Unit A 5th Floor, Cheong Commercial Building, 19-25 Jervois St, 
Hong Kong; and
    Unit B, 6/F, Dah Sing Life Building, 99--1-5 Des Voeux Rd, Hong 
Kong (See alternate addresses under China).

Removal From the Entity List

    This rule implements a decision of the ERC to remove one person, 
Masoud Est. for Medical and Scientific Supplies, located in Jordan, 
from the Entity List as a result of the person's request for removal 
from the Entity List. Based upon the review of the information provided 
in the removal request in accordance with Sec.  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 this 
person should be removed from the Entity List.
    The ERC decision to remove this person took into account this 
person's cooperation with the U.S. Government during the appeal 
process. In accordance with Sec.  744.16(c), the Deputy Assistant 
Secretary for Export Administration has sent written notification to 
this person, informing this entity of the ERC's decision to remove it 
from the Entity List. This final rule implements the decision to remove 
the following person located in Jordan from the Entity List:

Jordan

    (1) Masoud Est. for Medical and Scientific Supplies, 74 First 
Floor, Tla'a Al Ali Khali Al Salim Street, Amman, Jordan 11118.
    The removal of the one entity referenced above, which was made on 
the basis of a Sec.  744.16 removal request and was approved by the 
ERC, eliminates the existing license requirements in Supplement No. 4 
to part 744 for exports, reexports and transfers (in-country) to the 
entity. However, the removal of this entity 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 
Sec.  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 this removal does 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 en route aboard a carrier to a port of 
export or reexport, on June 26, 2014, 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).

Export Administration Act

    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 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, 2013, 78 FR 49107(August 12, 2013), has continued 
the Export Administration Regulations in effect under the International 
Emergency Economic Powers Act. 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 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 OMB under control number 0694-0088, 
Simplified Network Application Processing System, which includes, among 
other things, license applications and carries a burden 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 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 in Executive Order 13132.
    4. For the four persons added under five entries to the Entity List 
in this final rule, 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 if a proposed rule is published, doing so 
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, or to take steps to set up

[[Page 36202]]

additional aliases, change addresses, and other measures 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. Accordingly, 
no regulatory flexibility analysis is required and none has been 
prepared.
    5. For the one removal from the Entity List in this final rule, 
pursuant to the Administrative Procedure Act (APA), 5 U.S.C. 
553(b)(3)(B), BIS finds good cause to waive requirements that this rule 
be subject to notice and the opportunity for public comment because it 
would be contrary to the public interest.
    In determining whether to grant removal requests from the Entity 
List, a committee of U.S. Government agencies (the End-user Review 
Committee (ERC)) evaluates information about and commitments made by 
listed persons requesting removal from the Entity List, the nature and 
terms of which are set forth in 15 CFR part 744, Supplement No. 5, as 
noted in 15 CFR 744.16(b). The information, commitments, and criteria 
for this extensive review were all established through the notice of 
proposed rulemaking and public comment process (72 FR 31005 (June 5, 
2007) (proposed rule), and 73 FR 49311 (August 21, 2008) (final rule)). 
This removal has been made within the established regulatory framework 
of the Entity List. If the rule were to be delayed to allow for public 
comment, U.S. exporters may face unnecessary economic losses as they 
turn away potential sales because the customer remained a listed person 
on the Entity List even after the ERC approved the removal pursuant to 
the rule published at 73 FR 49311 on August 21, 2008. By publishing 
without prior notice and comment, BIS allows the applicant to receive 
U.S. exports immediately since the applicant already has received 
approval by the ERC pursuant to 15 CFR part 744, Supplement No. 5, as 
noted in 15 CFR 744.16(b).
    The removals from the Entity List granted by the ERC involve 
interagency deliberation and result from review of public and non-
public sources, including sensitive law enforcement information and 
classified information, and the measurement of such information against 
the Entity List removal criteria. This information is extensively 
reviewed according to the criteria for evaluating removal requests from 
the Entity List, as set out in 15 CFR part 744, Supplement No. 5 and 15 
CFR 744.16(b). For reasons of national security, BIS is not at liberty 
to provide to the public the information on which the ERC relied to 
make the decision to remove this entity. In addition, the information 
included in the removal request is specific to information exchanged 
between the applicant and the ERC, which by law (section 12(c) of the 
Export Administration Act), BIS is restricted from sharing with the 
public. The removal requests from the Entity List contain confidential 
business information, which is necessary for the extensive review 
conducted by the U.S. Government in assessing such removal requests.
    Section 553(d) of the APA generally provides that rules may not 
take effect earlier than thirty (30) days after they are published in 
the Federal Register. BIS finds good cause to waive the 30-day delay in 
effectiveness under 5 U.S.C. 553(d)(1) because this rule is a 
substantive rule which relieves a restriction. This rule removes a 
requirement (the Entity-List-based license requirement and limitation 
on use of license exceptions) on this one person being removed from the 
Entity List. The rule does not impose a requirement on any other person 
for this one removal from the Entity List.
    No other law requires that a notice of proposed rulemaking and an 
opportunity for public comment be given for this final rule. Because a 
notice of proposed rulemaking and an opportunity for public comment are 
not required under the APA or by any other law, the analytical 
requirements of the Regulatory Flexibility Act (5 U.S.C. 601 et seq.) 
are not applicable. As a result, no final regulatory flexibility 
analysis is required and none has been prepared.

List of Subject 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 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); Notice of January 21, 2014, 79 FR 3721 (January 
22, 2014).

0
2. Supplement No. 4 to part 744 is amended:
0
a. By adding under China, in alphabetical order, four Chinese entities; 
and
0
b. By adding under Hong Kong, in alphabetical order, one Hong Kong 
entity.
0
c. By removing the heading ``Jordan,'' and one Jordanian entity, 
``Masoud Est. for Medical and Scientific Supplies, 74 First Floor, 
Tla'a Al Ali Khali Al Salim Street, Amman, Jordan 11118.''
    The additions read as follows:

Supplement No. 4 to Part 744--Entity List

--------------------------------------------------------------------------------------------------------------------------------------------------------
              Country                           Entity                License requirement     License review policy       Federal Register citation
--------------------------------------------------------------------------------------------------------------------------------------------------------
 
                                                                      * * * * * * *
CHINA, PEOPLE'S REPUBLIC OF
 
                                                                      * * * * * * *
                                     China Xinshidai Company,     For all items subject to    Presumption of denial  79 FR [INSERT FR PAGE NUMBER 6-26-
                                      a.k.a., the following one    the EAR. (See Sec.                                 14].
                                      alias: -China New Era        744.11 of the EAR).
                                      Group.

[[Page 36203]]

 
                                     Xinshidai Plaza, Plaza No.
                                      7 Huayuan Rd., Beijing,
                                      China.
 
                                                                      * * * * * * *
                                     HWA Create, 5/F, Xinshidai   For all items subject to    Presumption of denial  79 FR [INSERT FR PAGE NUMBER 6-26-
                                      Building/New Era Mansion,    the EAR. (See Sec.                                 14].
                                      7 Huayuan Rd., Beijing,      744.11 of the EAR).
                                      China; and No. B3 Huayuan
                                      Rd., Beijing, China (See
                                      alternate addresses under
                                      Hong Kong).
 
                                                                      * * * * * * *
                                     Panda International          For all items subject to    Presumption of denial  79 FR [INSERT FR PAGE NUMBER 6-26-
                                      Information Technology       the EAR. (See Sec.                                 14].
                                      Company, Ltd., 7/F, B        744.11 of the EAR).
                                      Tower, Yingwu Conference
                                      Center, No. 6. Huayuan
                                      Road, Haidian District,
                                      Beijing, China; and Rm 606
                                      Block B, Beijing
                                      Agricultural Science
                                      Building, Shugang Garden
                                      Haidian Middle Rd,
                                      Beijing, China.
                                     Poly Technologies Inc., 11F  For all items subject to    Presumption of denial  79 FR [INSERT FR PAGE NUMBER 6-26-
                                      Poly Plaza, 14 Dongzhimen    the EAR. (See Sec.                                 14].
                                      Nandajie, Beijing China;     744.11 of the EAR).
                                      and 27 Wanshoulu, Haidian
                                      district, Beijing, China.
 
                                                                      * * * * * * *
HONG KONG
 
                                                                      * * * * * * *
                                     HWA Create, Unit 1001--      For all items subject to    Presumption of denial  79 FR [INSERT FR PAGE NUMBER 6-26-
                                      1002, 10F, Chinachem         the EAR. (See Sec.                                 14].
                                      Building, 34-37 Connaught    744.11 of the EAR).
                                      Rd., Hong Kong; and Unit A
                                      5th Floor, Cheong
                                      Commercial Building, 19-25
                                      Jervois St, Hong Kong; and
                                      Unit B, 6/F, Dah Sing Life
                                      Building, 99--1-5 Des
                                      Voeux Rd, Hong Kong (See
                                      alternate addresses under
                                      China).
 
                                                                      * * * * * * *
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Dated: June 20, 2014.
Kevin J. Wolf,
Assistant Secretary for Export Administration.
[FR Doc. 2014-14935 Filed 6-25-14; 8:45 am]
BILLING CODE 3510-33-P