[Federal Register Volume 64, Number 5 (Friday, January 8, 1999)]
[Rules and Regulations]
[Pages 1120-1122]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-334]


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DEPARTMENT OF COMMERCE

Bureau of Export Administration

15 CFR Parts 744 and 772

[Docket No. 981013256-8256-01]
RIN 0694-AB63


Revisions to the Export Administration Regulations; Exports and 
Reexports to Specially Designated Terrorists and Foreign Terrorist 
Organizations

AGENCY: Bureau of Export Administration, Commerce.

ACTION: Interim rule.

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SUMMARY: This interim rule amends the end-user and end-use control 
policy of the Export Administration Regulations (EAR) to impose new 
foreign policy controls on exports and certain reexports to persons 
identified as Specially Designated Terrorists or Foreign Terrorist 
Organizations and listed in the Appendices to 31 CFR Chapter V 
published by the Department of the Treasury, Office of Foreign Assets 
Control (OFAC). (The term ``person'' includes individuals as well as 
entities or other organizations.)
    Specifically, this rule creates a new Sec. 744.10 and Sec. 744.11 
that set forth the license requirements for exports and certain 
reexports of items subject to the EAR to these persons. To avoid 
duplication, the Bureau of Export Administration (BXA) will not require 
a separate license when the Office of Foreign Assets Control has 
authorized an export or reexport to a Specially Designated Terrorist.

DATES: Effective Date: This rule is effective January 8, 1999. Comment 
Date: Comments on this rule must be received on or before February 8, 
1999.

ADDRESSES: Written comments (six copies) should be sent to Denis 
Kerner, Office of Export Enforcement, Bureau of Export Administration, 
Room 4616, 14th Street and Constitution Ave., N.W., Washington, DC 
20230.

FOR FURTHER INFORMATION CONTACT: Joan Roberts, Office of Strategic 
Trade and Foreign Policy Controls, Bureau of Export Administration, 
Department of Commerce, Telephone: (202) 482-0171.

SUPPLEMENTARY INFORMATION:

Background

    This rule amends part 744 of the EAR by imposing new foreign policy 
controls on exports and certain reexports of items subject to the EAR 
to persons identified as Specially Designated Terrorists or Foreign 
Terrorist Organizations. Numerous persons have been determined pursuant 
to Executive Order 12947 of January 23, 1995 (3 CFR, 1995 Comp., p. 
319, as amended by Executive Order 13099 of August 20, 1998 (63 FR 
45167, August 25, 1998)) to be disrupting the Middle East Peace 
Process. These persons have been identified as Specially Designated 
Terrorists, are subject to OFAC's Terrorism Sanctions Regulations (31 
CFR part 595) and are listed in Appendices to 31 CFR Chapter V followed 
by the bracketed suffix initials [SDT].
    In addition, certain organizations have been designated by the 
Secretary of State as Foreign Terrorist Organizations pursuant to 8 
U.S.C. 1189 and are listed in Appendices to 31 CFR Chapter V followed 
by the bracketed suffix initials [FTO] and identified by State and 
Treasury Department notices. Funds of these organizations are subject 
to blocking pursuant to OFACs Foreign Terrorist Organizations Sanctions 
Regulations (31 CFR part 597). Criminal sanctions may also be imposed 
against any person subject to the jurisdiction of the United States who 
provides material support or resources to an FTO pursuant to 18 U.S.C. 
2339. BXA is revising the EAR to further U.S. counterterrorism 
objectives. This rule revises part 744 of the Export Administration 
Regulations (EAR) by describing the license requirements for exports 
and certain reexports to SDTs and FTOs of items subject to the EAR.
    (a) For SDTs, a license is required for:

    (1) All exports and reexports by a U.S. person of any item 
subject to the EAR; and
    (2) All exports and reexports by any person of any item subject 
to the EAR on the Commerce Control List (CCL).

To avoid duplication, exporters are not required to seek separate 
authorizations from BXA and from OFAC for an export or reexport subject 
both to the EAR and to OFAC's Terrorism Sanctions Regulations. OFAC 
regulations apply to transactions by U.S. persons with SDTs. Therefore, 
if OFAC authorizes a transaction involving an export or reexport by a 
U.S. person to a designated SDT, no separate authorization from BXA is 
necessary. An authorization issued by OFAC constitutes authorization 
under the EAR. Transactions not covered under OFAC regulations (e.g., 
reexports by non-U.S. persons to SDTs of items subject to the EAR on 
the CCL) will require a license from BXA under this rule.
    (b) For FTOs, a license is required for:

    (1) All exports and reexports by a U.S. person of any item 
subject to the EAR; and
    (2) All exports and reexports by any person of any item subject 
to the EAR on the CCL.


[[Page 1121]]


    Exporters are required to seek authorization from BXA for exports 
and certain reexports to FTOs. Applications for exports and reexports 
of all items to FTOs identified by paragraphs (1) and (2) above will 
generally be denied, to the extent they constitute material support or 
resources, as defined in 18 U.S.C. 2339A(b).
    Although the Export Administration Act (EAA) expired on August 20, 
1994, the President invoked the International Emergency Economic Powers 
Act and continued in effect the Export Administration Regulations and, 
to the extent permitted by law, the provisions of the EAA in Executive 
Order 12924 of August 19, 1994, as extended by the President's notices 
of August 15, 1995 (60 FR 42767), August 14, 1996 (61 FR 42527), August 
13, 1997 (62 FR 43629) and August 13, 1998 (63 FR 44121).
    Under a policy of conforming actions under the Executive Order to 
those under the EAA, insofar as appropriate, the Department of Commerce 
notified the Congress of this imposition of foreign policy controls on 
December 15, 1998.

Rulemaking Requirements

    1. This final rule has been determined to be significant for the 
purposes of Executive Order 12866.
    2. Notwithstanding any other provision of law, no person is 
required to respond to nor may be subject to a penalty for failure to 
comply with a collection of information subject to the requirements of 
the Paperwork Reduction Act unless that collection of information 
displays a current valid OMB Control Number. This rule involves a 
collection of information subject to the Paperwork Reduction Act of 
1980 (44 U.S.C. 3501, et seq.). This collection has been approved by 
the Office of Management and Budget under control number 0694-0088.
    3. This rule does not contain policies with Federalism implications 
sufficient to warrant preparation of a Federalism assessment under 
Executive Order 12612.
    4. Because a notice of proposed rulemaking and an opportunity for 
public comment are not required to be given for this rule by the 
Administrative Procedure Act (5 U.S.C. 553) or by any other law, under 
section 3(a) of the Regulatory Flexibility Act (5 U.S.C. 603(a) and 
604(a)) no initial or final Regulatory Flexibility Analysis has to be 
or will be prepared.
    5. 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 foreign and military affairs 
function of the United States. No other law requires that a notice of 
proposed rulemaking and an opportunity for public comment be given for 
this rule.
    However, because of the importance of the issues raised by these 
regulations, this rule is being issued in interim form and comments 
will be considered in the development of final regulations. 
Accordingly, the Department encourages interested persons who wish to 
comment to do so at the earliest possible time to permit the fullest 
consideration of their views.
    The period for submission of comments will close February 8, 1999. 
The Department will consider all comments received before the close of 
the comment period in developing final regulations. Comments received 
after the end of the comment period will be considered if possible, but 
their consideration cannot be assured. The Department will not accept 
public comments accompanied by a request that a part or all of the 
material be treated confidentially because of its business proprietary 
nature or for any other reason. The Department will return such 
comments and materials to the person submitting the comments and will 
not consider them in the development of final regulations. All public 
comments on these regulations will be a matter of public record and 
will be available for public inspection and copying. In the interest of 
accuracy and completeness, the Department requires comments in written 
form.
    Oral comments must be followed by written memoranda, which will 
also be a matter of public record and will be available for public 
review and copying. Communications from agencies of the United States 
Government or foreign governments will not be made available for public 
inspection.
    The public record concerning these regulations will be maintained 
in the Bureau of Export Administration Freedom of Information Records 
Inspection Facility, Room 4525, Department of Commerce, 14th Street and 
Pennsylvania Avenue, N.W., Washington, DC 20230. Records in this 
facility, including written public comments and memoranda summarizing 
the substance of oral communications, may be inspected and copied in 
accordance with regulations published in Part 4 of Title 15 of the Code 
of Federal Regulations. Information about the inspection and copying of 
records at the facility may be obtained from Margaret Cornejo, Bureau 
of Export Administration Freedom of Information Officer, at the above 
address or by calling (202) 482-2593.

List of Subjects

15 CFR Part 744

    Exports, Foreign trade, Reporting and recordkeeping requirements.

15 CFR Part 772

    Exports, Foreign trade.

    Accordingly, parts 744 and 772 of the Export Administration 
Regulations (15 CFR Parts 730-774) are amended as follows:

PART 744--[AMENDED]

    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; 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. 12924, 59 FR 43437, 3 CFR, 1994 Comp., p. 917; E.O. 
12938, 3 CFR, 1994 Comp., p. 950; E.O. 13026, 3 CFR, 1996 Comp., p. 
228; Notice of August 13, 1997 (62 FR 43629, August 15, 1997); 
Notice of August 13, 1998 (63 FR 44121).

    2. The authority citation for 15 CFR part 772 is revised to read as 
follows:

    Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; 
E.O. 12924, 59 FR 43437, 3 CFR, 1994 Comp., p. 917; E.O. 12938, 3 
CFR, 1994 Comp., p. 950; E.O. 13026, 3 CFR, 1996 Comp., p. 228; 
Notice of August 13, 1997 (62 FR 43629, August 15, 1997); Notice of 
August 13, 1998 (63 FR 44121, August 17, 1998).

    3. A new Sec. 744.13 is added to read as follows:


Sec. 744.13  Restrictions on exports and certain reexports to specially 
designated terrorists.

    Consistent with the purpose of Executive Order 12947 of January 23, 
1995, BXA maintains restrictions on exports and certain reexports to 
Specially Designated Terrorists. Executive Order 12947 prohibits 
transactions by U.S. persons with terrorists who threaten to disrupt 
the Middle East peace process. Pursuant to the Executive Order, the 
Department of the Treasury, Office of Foreign Assets Control (OFAC), 
maintains 31 CFR part 595, the Terrorism Sanctions Regulations. In the 
Appendices to 31 CFR Chapter V, pursuant to 31 CFR part 595, these 
Specially Designated Terrorists are identified by the bracketed suffix 
initials [SDT]. The requirements set forth below further the objectives 
of Executive Order 12947.
    (a) License requirement(s). (1) All exports and reexports to an SDT 
by a U.S. person of any item subject to the EAR; and

[[Page 1122]]

    (2) A license requirement applies to all exports and reexports to 
an SDT of any item subject to the EAR on the Commerce Control List 
(CCL).
    (3) To avoid duplication, U.S. persons are not required to seek 
separate authorization for an export or reexport subject both to the 
EAR and to OFAC's Terrorism Sanctions Regulations. Therefore, if OFAC 
authorizes an export or reexport by a U.S. person to a SDT, no separate 
authorization from BXA is necessary.
    (4) Any export or reexport by a U.S. person of any item subject to 
both the EAR and OFAC's Terrorism Sanctions Regulations and not 
authorized by OFAC is a violation of the EAR. Any export from abroad or 
reexport by a non-U.S. person of items requiring a license pursuant to 
this section and not authorized by BXA is a violation of the EAR.
    (5) These licensing requirements supplement any other requirements 
set forth elsewhere in the EAR.
    (b) Exceptions. No License Exceptions or other BXA authorization 
for items described by paragraph (a) of this section are available for 
exports or reexports to SDTs.
    (c) Licensing policy. Applications for licenses required by 
paragraph (a) of this section generally will be denied. You should 
consult with OFAC concerning transactions subject to OFAC licensing 
requirements.
    (d) Contract sanctity. Contract sanctity provisions are not 
available for license applications reviewed under this section.
    4. A new section 744.14 is added to read as follows:


Sec. 744.14  Restrictions on exports and certain reexports to 
designated foreign terrorist organizations.

    Consistent with the objectives of sections 302 and 303 of the Anti-
Terrorism and Effective Death Penalty Act (Anti-Terrorism Act) (Pub.L. 
104-132, 110 Stat. 1214-1319), BXA maintains restrictions on exports 
and certain reexports to designated Foreign Terrorist Organizations. 
The Secretary of State has designated certain designated Foreign 
Terrorist Organizations pursuant to section 302 of the Anti-Terrorism 
Act. Also pursuant to section 302 of the Anti-Terrorism Act, the 
Department of the Treasury, Office of Foreign Assets Control, maintains 
31 CFR part 597, the Foreign Terrorist Organizations Sanctions 
Regulations, requiring U.S. financial institutions to block all 
financial transactions involving assets of designated Foreign Terrorist 
Organizations within the possession or control of such U.S. financial 
institutions. Section 303 of the Anti-Terrorism Act prohibits persons 
within the United States or subject to U.S. jurisdiction from knowingly 
providing material support or resources to a designated Foreign 
Terrorist Organization and makes violations punishable by criminal 
penalties under title 18, United States Code. These designated Foreign 
Terrorist Organizations are listed in the Appendices to 31 CFR Chapter 
V and identified by the bracketed suffix initials [FTO]. The export 
control requirements set forth below further the objectives of the 
Anti-Terrorism Act.
    (a) License requirement(s). A license requirement applies to:
    (1) All exports and reexports to an FTO of any item subject to the 
EAR on the Commerce Control List (CCL); and
    (2) All exports and reexports to an FTO by a U.S. person of any 
item subject to the EAR.
    (3) Any export or reexport by a U.S. person prohibited by the EAR 
and not authorized by BXA is a violation of the EAR. Any export from 
abroad or reexport by a non-U.S. person of items requiring a license 
pursuant to this section and not authorized by BXA is a violation of 
the EAR.
    (4) These licensing requirements supplement any other requirements 
set forth elsewhere in the EAR.
    (b) Exceptions. No License Exceptions or other BXA authorization 
for items described by paragraph (a) of this section are available for 
exports or reexports to FTOs.
    (c) Licensing policy. Applications for exports and reexports to 
FTOs of all items identified by paragraphs (a)(1) and (a)(2) of this 
section will generally be denied, to the extent they constitute 
material support or resources, as defined in 18 U.S.C. 2339A(b).
    (d) Contract sanctity. Contract sanctity provisions are not 
available for license applications reviewed under this section.

    Note to Sec. 744.14. This section does not implement, construe, 
or limit the scope of any criminal statute, including (but not 
limited to) 18 U.S.C. 2339B(a)(1) and 2339A, and does not excuse any 
person from complying with any criminal statute, including (but not 
limited to) 18 U.S.C. 2339B(a)(1) and 18 U.S.C. 2339A.

PART 772--[AMENDED]

    5. Part 772 is amended:
    a. By adding a definition for foreign terrorist organization;
    b. By revising the heading for the definition of Specially 
Designated Terrorist; and
    c. By revising the introductory text of paragraph (a) for the 
definition of ``U.S. person'' to read as follows:

PART 772--DEFINITIONS OF TERMS

* * * * *
    Foreign Terrorist Organizations (FTO). Any organization that is 
determined by the Secretary of the Treasury to be a foreign terrorist 
organization under notices or regulations issued by the Office of 
Foreign Assets Control (see 31 CFR chapter V).
* * * * *
    Specially Designated Terrorist (SDT). * * *
* * * * *
    U.S. person. (a) For purposes of Secs. 744.6, 744.10, and 744.11 of 
the EAR, the term U.S. person includes:
* * * * *
    Dated: December 29, 1998.
R. Roger Majak,
Assistant Secretary for Export Administration.
[FR Doc. 99-334 Filed 1-7-99; 8:45 am]
BILLING CODE 3510-33-P