[Federal Register Volume 64, Number 35 (Tuesday, February 23, 1999)]
[Rules and Regulations]
[Pages 8715-8720]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-4328]


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DEPARTMENT OF THE TREASURY

Office of Foreign Assets Control

31 CFR Part 539


Weapons of Mass Destruction Trade Control Regulations: 
Implementation of Executive Order 13094

AGENCY: Office of Foreign Assets Control, Treasury.

ACTION: Final rule.

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SUMMARY: The Office of Foreign Assets Control is issuing the Weapons of 
Mass Destruction Trade Control Regulations to implement additional 
import measures with respect to the proliferation of nuclear, 
biological, and chemical weapons of mass destruction and of the means 
of delivering such weapons.

EFFECTIVE DATE: February 23, 1999.

FOR FURTHER INFORMATION CONTACT: John T. Roth, Chief, Policy Planning 
and Program Management, tel.: 202/622-2500, Dennis P. Wood, Chief of 
Compliance Programs, tel.: 202/622-2490, or William B. Hoffman, Chief 
Counsel, tel.: 202/622-2410, Office of Foreign Assets Control, 
Department of the Treasury, Washington, DC 20220.

SUPPLEMENTARY INFORMATION:

Electronic Availability

    This document is available as an electronic file on The Federal 
Bulletin Board the day of publication in the Federal Register. By 
modem, dial 202/512-1387 and type ``/GO FAC,'' or call 202/512-1530 for 
disk or paper copies. This file is available for downloading without 
charge in ASCII and Adobe AcrobatR readable (*.PDF) formats. 
For Internet access, the address for use with the World Wide Web (Home 
Page), Telnet, or FTP protocol is: fedbbs.access.gpo.gov. The document 
is also accessible for downloading in ASCII format without charge from 
Treasury's Electronic Library (``TEL'') in the ``Research Mall'' of the 
FedWorld bulletin board. By modem, dial 703/321-3339, and select self-
expanding file ``T11FR00.EXE'' in TEL. For Internet access, use one of 
the following protocols: Telnet = fedworld.gov (192.239.93.3); World 
Wide Web (Home Page) = http://www.fedworld.gov; FTP = ftp.fedworld.gov 
(192.239.92.205). Additional information concerning the programs of the 
Office of Foreign Assets Control is available for downloading from the 
Office's Internet Home Page: http://www.treas.gov/ofac, or in fax form 
through the Office's 24-hour fax-on-demand service: call 202/622-0077 
using a fax machine, fax modem, or (within the United States) a touch-
tone telephone.

Background

    In Executive Order 12938 of November 14, 1994 (59 FR 59099, 3 CFR, 
1994 Comp., p. 950), President Clinton declared a national emergency 
with respect to the proliferation of nuclear, biological, and chemical 
weapons (``weapons of mass destruction'') and of the means of 
delivering such weapons, invoking the authority, inter alia, of the 
International Emergency Economic Powers Act, 50 U.S.C. 1701-1706 
(``IEEPA''), and the Arms Export Control Act, as amended, 22 U.S.C. 
2751-2799aa-2. Executive Order 12938 provided, among other things, that 
the Secretary of State and the Secretary of Commerce were to use their 
respective authorities to control certain exports if either Secretary 
determined that the export would assist a country in acquiring the 
capability to develop, produce, stockpile, deliver, or use weapons of 
mass destruction or their means of delivery. Executive Order 12938 also 
authorized the imposition of measures on a foreign person with respect 
to chemical and biological weapons proliferation if the Secretary of 
State determined that the foreign person, on or after November 16, 
1990, knowingly and materially contributed to the efforts of any 
foreign country, project, or entity to use, develop, produce, 
stockpile, or otherwise acquire chemical or biological weapons. These 
measures could include a prohibition on the procurement by the United 
States Government of goods or services from any such foreign person and 
a prohibition on the importation into the United States of products 
produced by that foreign person. Finally, the Secretary of State was 
authorized to impose certain measures against foreign countries found 
to have used or made substantial preparations to use chemical or 
biological weapons in violation of international law, or developed, 
produced, stockpiled, or otherwise acquired chemical or biological 
weapons in violation of international law.
    In Executive Order 13094 of July 28, 1998 (63 FR 40803, July 30, 
1998), the President has taken additional steps with respect to the 
national emergency declared in Executive Order 12938. Section 4 of 
Executive Order 12938 is amended to authorize the imposition of certain 
measures upon a determination by the Secretary of State that a foreign 
person has materially contributed or attempted to contribute materially 
to the efforts of any foreign country, project, or entity of 
proliferation concern to use,

[[Page 8716]]

acquire, design, develop, produce, or stockpile weapons of mass 
destruction or missiles capable of delivering such weapons. Executive 
Order 13094 provides that a procurement ban, assistance ban, and import 
ban are to be imposed on such a foreign person to the extent determined 
by the Secretary of State in consultation with the implementing agency 
and other relevant agencies. Section 1(a) of Executive Order 13094 also 
amends Executive Order 12938 to authorize the Secretary of the Treasury 
to prohibit the importation into the United States of goods, 
technology, or services, other than information or informational 
materials within the meaning of section 203(b)(3) of IEEPA, which have 
been produced or provided by a foreign person determined to be subject 
to the import ban (a ``designated foreign person''). In implementation 
of the import ban contained in section 1(a) of Executive Order 13094, 
the Office of Foreign Assets Control of the U.S. Department of the 
Treasury is promulgating the Weapons of Mass Destruction Trade Control 
Regulations (the ``Regulations'').
    Section 539.201 of the Regulations prohibits the importation of 
goods, technology, or services produced or provided by a designated 
foreign person, other than information or informational materials. 
Section 539.202 prohibits related transactions, including brokering, 
financing or other participation in the importation into the United 
States of any goods, technology, or services produced or provided by a 
designated foreign person. Section 539.203 prohibits any transaction by 
any United States person or within the United States that evades or 
avoids, or attempts to violate, these prohibitions, or any conspiracy 
to violate these prohibitions. Since the Regulations involve a foreign 
affairs function, the provisions of Executive Order 12866 and the 
Administrative Procedure Act (5 U.S.C. 553) (the ``APA'') requiring 
notice of proposed rulemaking, opportunity for public participation, 
and delay in effective date, are inapplicable. Because no notice of 
proposed rulemaking is required for this rule, the Regulatory 
Flexibility Act (5 U.S.C. 601-612) does not apply.

Paperwork Reduction Act

    As authorized in the APA, the Regulations are being issued without 
prior notice and public comment. The collections of information related 
to the Regulations are contained in 31 CFR part 501 (the ``Reporting 
and Procedures Regulations''). Pursuant to the Paperwork Reduction Act 
of 1995 (44 U.S.C. 3507), those collections of information have been 
approved by the Office of Management and Budget (``OMB'') under control 
number 1505-0164. An adjustment to the approved burden hours to reflect 
the additional burden imposed in administering the Regulations has been 
filed with OMB. An agency may not conduct or sponsor, and a person is 
not required to respond to, a collection of information unless the 
collection of information displays a valid control number.

List of Subjects in 31 CFR Part 539

    Arms and munitions, Imports, Penalties, Reporting and recordkeeping 
requirements, Weapons of mass destruction.
    For the reasons set forth in the preamble, 31 CFR part 539 is added 
to read as follows:

PART 539--WEAPONS OF MASS DESTRUCTION TRADE CONTROL REGULATIONS

Subpart A--Relation of This Part to Other Laws and Regulations

Sec.
539.101 Relation of this part to other laws and regulations.

Subpart B--Prohibitions

539.201 Prohibited importation of goods, technology, or services.
539.202 Prohibition on import-related transactions.
539.203 Evasions; attempts; conspiracies.
539.204 Exempt transactions.

Subpart C--General Definitions

539.301 Designated foreign person.
539.302 Effective date.
539.303 Entity.
539.304 Entity owned or controlled by a person listed in appendix I 
to this part.
539.305 General license.
539.306 Goods, technology, or services produced or provided by a 
designated foreign person.
539.307 Importation into the United States.
539.308 Information or informational materials.
539.309 License.
539.310 Person.
539.311 Specific license.
539.312 United States.
539.313 United States person; U.S. person.

Subpart D--Interpretations

539.401 Reference to amended sections.
539.402 Effect of amendment.
539.403 Transactions incidental to a licensed transaction.
539.404 Transshipments through the United States prohibited.
539.405 Importation of goods or technology from third countries.
539.406 Importation into and release from a bonded warehouse or 
foreign trade zone.

Subpart E--Licenses, Authorizations and Statements of Licensing Policy

539.501 General and specific licensing procedures.
539.502 Effect of license.
539.503 Exclusion from licenses.
539.504 Departments and agencies of the United States Government.

Subpart F--Reports

539.601 Records and reports.

Subpart G--Penalties

539.701 Penalties.
539.702 Prepenalty notice.
539.703 Response to prepenalty notice; informal settlement.
539.704 Penalty imposition or withdrawal.
539.705 Administrative collection; referral to United States 
Department of Justice.

Subpart H--Procedures

539.801 Procedures.
539.802 Delegation by the Secretary of the Treasury.

Subpart I--Paperwork Reduction Act

539.901 Paperwork Reduction Act notice.

Appendix I to Part 539--Designated Foreign Persons

    Authority: 3 U.S.C. 301; 22 U.S.C. 2751-2799aa-2; 31 U.S.C. 
321(b); 50 U.S.C. 1601-1651, 1701-1706; E.O. 12938, 59 FR 59099, 3 
CFR, 1994 Comp., p. 950; E.O. 13094, 63 FR 40803, July 30, 1998.

Subpart A-- Relation of This Part to Other Laws and Regulations


Sec. 539.101  Relation of this part to other laws and regulations.

    (a) This part is separate from, and independent of, the other parts 
of this chapter, with the exception of part 501 of this chapter, the 
provisions of which apply to this part. Actions taken pursuant to part 
501 of this chapter with respect to the prohibitions contained in this 
part are considered actions taken pursuant to this part. Differing 
foreign policy and national security contexts may result in differing 
interpretations of similar language among the parts of this chapter. No 
license or authorization contained in or issued pursuant to those other 
parts authorizes any transaction prohibited by this part. No license or 
authorization contained in or issued pursuant to any other provision of 
law or regulation authorizes any transaction prohibited by this part.
    (b) No license contained in or issued pursuant to this part 
relieves the involved parties from complying with any other applicable 
laws or regulations.

Subpart B--Prohibitions


Sec. 539.201  Prohibited importation of goods, technology, or services.

    Except as otherwise authorized, the importation into the United 
States, on or

[[Page 8717]]

after the effective date, directly or indirectly, of any goods, 
technology, or services produced or provided by a designated foreign 
person, other than information or informational materials, is 
prohibited.


Sec. 539.202  Prohibition on import-related transactions.

    Except as otherwise authorized, no United States person may 
finance, act as broker for, transfer, transport, or otherwise 
participate in the importation into the United States on or after the 
effective date of any goods, technology, or services produced or 
provided by a designated foreign person, other than information or 
informational materials.


Sec. 539.203  Evasions; attempts; conspiracies.

    Any transaction by any United States person or within the United 
States on or after the effective date that evades or avoids, has the 
purpose of evading or avoiding, or attempts to violate any of the 
prohibitions set forth in this part is prohibited. Any conspiracy 
formed for the purpose of engaging in a transaction prohibited by this 
part is prohibited.


Sec. 539.204  Exempt transactions.

    (a) Personal communications. The prohibitions contained in this 
part do not apply to any postal, telegraphic, telephonic, or other 
personal communication, which does not involve the transfer of anything 
of value.
    (b) Information or informational materials. (1) The prohibitions 
contained in this part do not apply to the importation from any 
country, or to the exportation to any country, whether commercial or 
otherwise, regardless of format or medium of transmission, of any 
information or informational materials as defined in Sec. 539.308, or 
any transaction directly incident to such importation or exportation.
    (2) Paragraph (b)(1) of this section does not exempt from 
regulation or authorize transactions related to information or 
informational materials not fully created and in existence at the date 
of the transaction, or to the substantive or artistic alteration or 
enhancement of information or informational materials, or to the 
provision of marketing and business consulting services. Examples of 
prohibited transactions include, but are not limited to, payment of 
advances for information or informational materials not yet created and 
completed (with the exception of prepaid subscriptions for mass-market 
magazines and other periodical publications that are widely-
circulated); importation into the United States of services to market, 
produce or co-produce, create, or assist in the creation of information 
or informational materials; and payment of royalties to a designated 
foreign person with respect to income received for enhancements or 
alterations made by U.S. persons to informational or informational 
materials imported from a designated foreign person.
    (3) Paragraph (b)(1) of this section does not exempt from 
regulation or authorize the importation into the United States of or 
transactions incident to the importation into the United States or 
leasing of telecommunications transmission facilities (such as 
satellite links or dedicated lines) for use in the transmission of any 
data.
    (c) Travel. The prohibitions contained in this part do not apply to 
transactions ordinarily incident to travel to or from any country, 
including importation of accompanied baggage for personal use, 
maintenance within any country including payment of living expenses and 
acquisition of goods or services for personal use, and arrangement or 
facilitation of such travel including nonscheduled air, sea, or land 
voyages.

Subpart C--General Definitions


Sec. 539.301  Designated foreign person.

    The term designated foreign person means any person determined by 
the Secretary of State pursuant to section 4(a) of Executive Order 
12938 of November 14, 1994 (59 FR 59099, 3 CFR, 1994 Comp., p. 950), as 
amended by section 1(a) of Executive Order 13094 of July 28, 1998 (63 
FR 40803, July 30, 1998), to be subject to import measures. Designated 
foreign persons are any persons listed in appendix I to this part and 
any entities owned or controlled by any person listed in appendix I to 
this part unless otherwise indicated in appendix I to this part.


Sec. 539.302  Effective date.

    The term effective date means the ``effective date'' specified in 
the relevant Federal Register notice issued by the Department of State 
identifying a designated foreign person. This date is listed after the 
name of each designated foreign person in appendix I to this part.


Sec. 539.303  Entity.

    The term entity means a partnership, association, trust, joint 
venture, corporation, or other organization.


Sec. 539.304  Entity owned or controlled by a person listed in appendix 
I to this part.

    The term entity owned or controlled by a person listed in appendix 
I to this part includes any subsidiaries and branches, wherever 
located, of entities listed in appendix I to this part, any successors 
to such entities, and any persons acting or purporting to act for or on 
behalf of any of the foregoing.


Sec. 539.305  General license.

    The term general license means any license the terms of which are 
set forth in this part.


Sec. 539.306  Goods, technology, or services produced or provided by a 
designated foreign person.

    With respect to the prohibitions in Secs. 539.201 and 539.202, the 
term goods, technology, or services produced or provided by a 
designated foreign person includes but is not limited to the following:
    (a) Goods grown, manufactured, extracted, or processed by a 
designated foreign person;
    (b) Technology developed, owned, licensed, or otherwise controlled 
by a designated foreign person;
    (c) Services performed by or on behalf of a designated foreign 
person, or by a third party under contract, directly or indirectly, to 
a designated foreign person, regardless of location.


Sec. 539.307  Importation into the United States.

    The term importation into the United States means:
    (a) With respect to goods or technology, the bringing of any goods 
or technology into the United States, except that in the case of goods 
or technology being transported by vessel, importation into the United 
States means the bringing of any goods or technology into the United 
States with the intent to unlade. See also Sec.  539.404.
    (b) With respect to services, the receipt in the United States of 
services or of the benefit of services wherever such services may be 
performed. The benefit of services is received in the United States if 
the services are:
    (1) Performed on behalf of or for the benefit of a person located 
in the United States;
    (2) Received by a person located in the United States;
    (3) Received by a person located outside the United States on 
behalf of or for the benefit of an entity organized in the United 
States; or
    (4) Received by an individual temporarily located outside the 
United States for the purpose of obtaining such services for use in the 
United States.
    (c) The following example illustrates the provisions of paragraph 
(b) of this section:
    Example: An employee of an entity organized in the United States 
may not, without specific authorization from the Office of Foreign 
Assets Control, receive from

[[Page 8718]]

a designated foreign person consulting services for use in the 
United States.


Sec. 539.308  Information or informational materials.

    (a) For purposes of this part, the term information or 
informational materials includes, but is not limited to, publications, 
films, posters, phonograph records, photographs, microfilms, 
microfiche, tapes, compact disks, CD ROMs, artworks, and news wire 
feeds.
    (b) To be considered information or informational materials, 
artworks must be classified under chapter heading 9701, 9702, or 9703 
of the Harmonized Tariff Schedule of the United States.


Sec. 539.309  License.

    Except as otherwise specified, the term license means any license 
or authorization contained in or issued pursuant to this part.


Sec. 539.310  Person.

    The term person means an individual or entity.


Sec. 539.311  Specific license.

    The term specific license means any license not set forth in this 
part but issued pursuant to this part.


Sec. 539.312  United States.

    The term United States means the United States, its territories and 
possessions, and all areas under the jurisdiction or authority thereof.


Sec. 539.313  United States person; U.S. person.

    The term United States person or U.S. person means any United 
States citizen, permanent resident alien, entity organized under the 
laws of the United States (including foreign branches), or any person 
in the United States.

Subpart D--Interpretations


Sec. 539.401  Reference to amended sections.

    Except as otherwise specified, reference to any provision in or 
appendix to this part or chapter or to any regulation, ruling, order, 
instruction, direction, or license issued pursuant to this part refers 
to the same as currently amended.


Sec. 539.402  Effect of amendment.

    Unless otherwise specifically provided, any amendment, 
modification, or revocation of any provision in or appendix to this 
part or chapter or of any order, regulation, ruling, instruction, or 
license issued by or under the direction of the Director of the Office 
of Foreign Assets Control does not affect any act done or omitted, or 
any civil or criminal suit or proceeding commenced or pending prior to 
such amendment, modification, or revocation. All penalties, 
forfeitures, and liabilities under any such order, regulation, ruling, 
instruction, or license continue and may be enforced as if such 
amendment, modification, or revocation had not been made.


Sec. 539.403  Transactions incidental to a licensed transaction.

    Any transaction ordinarily incident to a licensed transaction and 
necessary to give effect to the licensed transaction is also authorized 
by the license. Except as specifically authorized by the terms of the 
license, prohibited transactions involving designated foreign persons 
not named in the license are not considered incidental to a licensed 
transaction and therefore remain prohibited.


Sec. 539.404  Transshipments through the United States prohibited.

    (a) The prohibitions in Secs. 539.201 and 539.202 apply to the 
importation into the United States, for transshipment or transit, of 
goods, technology, or services produced or provided by a designated 
foreign person that are intended or destined for third countries.
    (b) In the case of goods or technology transported by vessel, the 
prohibitions in Secs. 539.201 and 539.202 apply to the unlading in the 
United States and the intent to unlade in the United States of goods or 
technology produced or provided by a designated foreign person that is 
intended or destined for third countries.


Sec. 539.405  Importation of goods or technology from third countries.

    Importation into the United States from third countries of goods or 
technology is prohibited if undertaken with knowledge or reason to know 
that those goods contain raw materials or components produced or 
provided by a designated foreign person or technology produced or 
provided by a designated foreign person.


Sec. 539.406  Importation into and release from a bonded warehouse or 
foreign trade zone.

    The prohibitions in Secs. 539.201 and 539.202 apply to importation 
into a bonded warehouse or a foreign trade zone of the United States.

Subpart E--Licenses, Authorizations and Statements of Licensing 
Policy


Sec. 539.501  General and specific licensing procedures.

    For provisions relating to licensing procedures, see part 501, 
subpart D, of this chapter. Licensing actions taken pursuant to part 
501 of this chapter with respect to the prohibitions contained in this 
part are considered actions taken pursuant to this part.


Sec. 539.502  Effect of license.

    (a) No license contained in this part, or otherwise issued by or 
under the direction of the Director of the Office of Foreign Assets 
Control pursuant to this part, authorizes or validates any transaction 
effected prior to the issuance of the license, unless the prior 
transaction is specifically authorized in such license.
    (b) No regulation, ruling, instruction, or license authorizes any 
transaction prohibited by this part unless the regulation, ruling, 
instruction, or license is issued by the Office of Foreign Assets 
Control and specifically refers to this part. No regulation, ruling, 
instruction, or license referring to this part authorizes any 
transaction prohibited by any provision of this chapter unless the 
regulation, ruling, instruction, or license specifically refers to such 
provision.
    (c) Any regulation, ruling, instruction, or license authorizing any 
transaction otherwise prohibited by this part has the effect of 
removing from the transaction a prohibition or prohibitions contained 
in this part, but only to the extent specifically stated by its terms. 
Unless the regulation, ruling, instruction, or license otherwise 
specifies, such an authorization does not create any right, duty, 
obligation, claim, or interest that would not otherwise exist under 
ordinary principles of law in or with respect to any property.


Sec. 539.503  Exclusion from licenses.

    The Director of the Office of Foreign Assets Control reserves the 
right to exclude any person, property, or transaction from the 
operation of any license or from the privileges conferred by any 
license. The Director of the Office of Foreign Assets Control also 
reserves the right to restrict the applicability of any license to 
particular persons, property, transactions, or classes thereof. Such 
actions are binding upon all persons receiving actual or constructive 
notice of the exclusions or restrictions.


Sec. 539.504  Departments and agencies of the United States Government.

    (a) Departments and agencies of the United States Government may by 
written authorization signed by the head of the Department or Agency or 
his designee provide for:
    (1) Procurement contracts necessary to meet U.S. operational 
military requirements or requirements under defense production 
agreements;

[[Page 8719]]

intelligence requirements; sole source suppliers, spare parts, 
components, routine servicing and maintenance of products for the 
United States Government; and medical and humanitarian items; and
    (2) Performance pursuant to contracts in force as of 12:01 a.m. 
EDT, July 29, 1998, under appropriate circumstances.
    (b) Such written authorization shall:
    (1) Include details about the goods, technology, and services which 
have been approved for importation; the rationale for such approval; 
and 24-hour-a-day contact information for the approving official or 
designee for use by the U.S. Customs Service should questions arise 
about an approved import;
    (2) Be in the form of license, regulation, order, directive, or 
exception;
    (3) Include information about the results of prior written 
consultation with the Under Secretary of State for Arms Control and 
International Security Affairs (through the Office of Chemical, 
Biological and Missile Nonproliferation and the Office of the Assistant 
Legal Adviser for Political-Military Affairs); and
    (4) Be provided to U.S. Customs Service officials upon the 
importation of any goods or technology covered by an authorization 
described in paragraph (a) of this section in a form which clearly 
establishes that the imported goods or technology is covered by the 
authorization.

Subpart F--Reports


Sec. 539.601  Records and reports.

    For provisions relating to required records and reports, see part 
501, subpart C, of this chapter. Recordkeeping and reporting 
requirements imposed by part 501 of this chapter with respect to the 
prohibitions contained in this part are considered requirements arising 
pursuant to this part.

Subpart G--Penalties


Sec. 539.701  Penalties.

    (a) Attention is directed to section 206 of the International 
Emergency Economic Powers Act (the ``Act'') (50 U.S.C. 1705), which is 
applicable to violations of the provisions of any license, ruling, 
regulation, order, direction, or instruction issued by or pursuant to 
the direction or authorization of the Secretary of the Treasury 
pursuant to this part or otherwise under the Act. Section 206 of the 
Act, as adjusted by the Federal Civil Penalties Inflation Adjustment 
Act of 1990 (Public Law 101-410, as amended, 28 U.S.C. 2461 note), 
provides that:
    (1) A civil penalty not to exceed $11,000 per violation may be 
imposed on any person who violates or attempts to violate any license, 
order, or regulation issued under the Act;
    (2) Whoever willfully violates or willfully attempts to violate any 
license, order, or regulation issued under the Act, upon conviction, 
shall be fined not more than $50,000, and if a natural person, may also 
be imprisoned for not more than 10 years; and any officer, director, or 
agent of any corporation who knowingly participates in such violation 
may be punished by a like fine, imprisonment, or both.
    (b) The criminal penalties provided in the Act are subject to 
increase pursuant to 18 U.S.C. 3571.
    (c) Attention is also directed to 18 U.S.C. 1001, which provides 
that whoever, in any matter within the jurisdiction of any department 
or agency of the United States, knowingly and willfully falsifies, 
conceals, or covers up by any trick, scheme, or device a material fact, 
or makes any false, fictitious, or fraudulent statement or 
representation or makes or uses any false writing or document knowing 
the same to contain any false, fictitious, or fraudulent statement or 
entry shall be fined under title 18, United States Code, or imprisoned 
not more than five years, or both.
    (d) Violations of this part may also be subject to relevant 
provisions of other applicable laws.


Sec. 539.702  Prepenalty notice.

    (a) When required. If the Director of the Office of Foreign Assets 
Control has reasonable cause to believe that there has occurred a 
violation of any provision of this part or a violation of the 
provisions of any license, ruling, regulation, order, direction, or 
instruction issued by or pursuant to the direction or authorization of 
the Secretary of the Treasury pursuant to this part or otherwise under 
the International Emergency Economic Powers Act, and the Director 
determines that further proceedings are warranted, the Director shall 
issue to the person concerned a notice of intent to impose a monetary 
penalty. This prepenalty notice shall be issued whether or not another 
agency has taken any action with respect to this matter.
    (b) Contents--(1) Facts of violation. The prepenalty notice shall 
describe the violation, specify the laws and regulations allegedly 
violated, and state the amount of the proposed monetary penalty.
    (2) Right to respond. The prepenalty notice also shall inform the 
respondent of respondent's right to make a written presentation within 
30 days of the date of mailing of the notice as to why a monetary 
penalty should not be imposed or why, if imposed, the monetary penalty 
should be in a lesser amount than proposed.


Sec. 539.703  Response to prepenalty notice; informal settlement.

    (a) Deadline for response. The respondent shall have 30 days from 
the date of mailing of the prepenalty notice to make a written response 
to the Director of the Office of Foreign Assets Control.
    (b) Form and contents of response. The written response need not be 
in any particular form, but must contain information sufficient to 
indicate that it is in response to the prepenalty notice. It should 
contain responses to the allegations in the prepenalty notice and set 
forth the reasons why the respondent believes the penalty should not be 
imposed or why, if imposed, it should be in a lesser amount than 
proposed.
    (c) Informal settlement. In addition or as an alternative to a 
written response to a prepenalty notice issued pursuant to this 
section, the respondent or respondent's representative may contact the 
Office of Foreign Assets Control as advised in the prepenalty notice to 
propose the settlement of allegations contained in the prepenalty 
notice and related matters. In the event of settlement at the 
prepenalty stage, the claim proposed in the prepenalty notice will be 
withdrawn, the respondent is not required to take a written position on 
allegations contained in the prepenalty notice, and the Office of 
Foreign Assets Control will make no final determination as to whether a 
violation occurred. The amount accepted in settlement of allegations in 
a prepenalty notice may vary from the civil penalty that might finally 
be imposed in the event of a formal determination of violation. In the 
event no settlement is reached, the 30-day period specified in 
paragraph (a) of this section for written response to the prepenalty 
notice remains in effect unless additional time is granted by the 
Office of Foreign Assets Control.


Sec. 539.704  Penalty imposition or withdrawal.

    (a) No violation. If, after considering any response to a 
prepenalty notice and any relevant facts, the Director of the Office of 
Foreign Assets Control determines that there was no violation by the 
respondent named in the prepenalty notice, the Director promptly

[[Page 8720]]

shall notify the respondent in writing of that determination and that 
no monetary penalty will be imposed.
    (b) Violation. If, after considering any response to a prepenalty 
notice and any relevant facts, the Director of the Office of Foreign 
Assets Control determines that there was a violation by the respondent 
named in the prepenalty notice, the Director promptly shall issue a 
written notice of the imposition of the monetary penalty to the 
respondent.
    (1) The penalty notice shall inform the respondent that payment of 
the assessed penalty must be made within 30 days of the date of mailing 
of the penalty notice.
    (2) The penalty notice shall inform the respondent of the 
requirement to furnish the respondent's taxpayer identification number 
pursuant to 31 U.S.C. 7701 and that such number will be used for 
purposes of collecting and reporting on any delinquent penalty amount.


Sec. 539.705  Administrative collection; referral to United States 
Department of Justice.

    In the event that the respondent does not pay the penalty imposed 
pursuant to this part or make payment arrangements acceptable to the 
Director of the Office of Foreign Assets Control within 30 days of the 
date of mailing of the penalty notice, the matter may be referred for 
administrative collection measures by the Department of the Treasury or 
to the United States Department of Justice for appropriate action to 
recover the penalty in a civil suit in a Federal district court.

Subpart H--Procedures


Sec. 539.801  Procedures.

    For license application procedures and procedures relating to 
amendments, modifications, or revocations of licenses; administrative 
decisions; rulemaking; and requests for documents pursuant to the 
Freedom of Information and Privacy Acts (5 U.S.C. 552 and 552a), see 
part 501, subpart D, of this chapter.


Sec. 539.802  Delegation by the Secretary of the Treasury.

    Any action that the Secretary of the Treasury is authorized to take 
pursuant to Executive Order 12938 of November 14, 1994 (59 FR 59099, 3 
CFR, 1994 Comp., p. 950), as amended by Executive Order 13094 of July 
28, 1998 (63 FR 40803, July 30, 1998), and any further Executive orders 
relating to the national emergency declared in Executive Order 12938 
may be taken by the Director of the Office of Foreign Assets Control or 
by any other person to whom the Secretary of the Treasury has delegated 
authority so to act.

Subpart I--Paperwork Reduction Act


Sec. 539.901  Paperwork Reduction Act notice.

    For approval by the Office of Management and Budget (``OMB'') under 
the Paperwork Reduction Act of 1995 (44 U.S.C. 3507) of information 
collections relating to recordkeeping and reporting requirements, 
licensing procedures (including those pursuant to statements of 
licensing policy), and other procedures, see Sec. 501.901 of this 
chapter. An agency may not conduct or sponsor, and a person is not 
required to respond to, a collection of information unless it displays 
a valid control number assigned by OMB.

Appendix I to Part 539--Designated Foreign Persons

    The following foreign persons have been determined by the Secretary 
of State to have materially contributed or attempted to contribute 
materially to the efforts of a foreign country, project, or entity of 
proliferation concern to use, acquire, design, develop, produce, or 
stockpile weapons of mass destruction or missiles capable of delivering 
such weapons, for purposes of section 4(a) of Executive Order 12938, as 
amended by section 1(a) of Executive Order 13094, and to be subject to 
import measures authorized in Executive Orders 12938 and 13094. They, 
and any entities owned or controlled by them, unless indicated 
otherwise, are designated foreign persons for purposes of this part. 
The applicable effective date and citation to the Federal Register for 
each such person is given in brackets after that person's name and 
identifying information:
1. Baltic State Technical University, including at 1/21, 1-ya 
Krasnoarmeiskaya Ul., 198005 St. Petersburg, Russia [July 30, 1998; 
63 FR 42089, August 6, 1998].
2. Europalace 2000, including at Moscow, Russia [July 30, 1998; 63 
FR 42089, August 6, 1998].
3. Glavkosmos, including at 9 Krasnoproletarskaya St., 103030 
Moscow, Russia [July 30, 1998; 63 FR 42089, August 6, 1998].
4. Grafit, also known as (``aka'') State Scientific Research 
Institute of Graphite or NIIGRAFIT, including at 2 Ulitsa 
Elektrodnaya, 111524 Moscow, Russia [July 30, 1998; 63 FR 42089, 
August 6, 1998].
5. INOR Scientific Center, including at Moscow, Russia [July 30, 
1998; 63 FR 42089, August 6, 1998].
6. MOSO Company, including at Moscow, Russia [July 30, 1998; 63 FR 
42089, August 6, 1998].
7. Polyus Scientific Production Association, including at 3 Ulitsa 
Vvedenskogo, 117342 Moscow, Russia [July 30, 1998; 63 FR 42089, 
August 6, 1998].
8. D. Mendeleyev University of Chemical Technology of Russia, 
including at 9 Miusskaya Sq., Moscow 125047, Russia [January 8, 
1999; 64 FR 2935, January 19, 1999].
9. Moscow Aviation Institute (MAI), including at 4 Volokolamskoye 
Shosse, Moscow 125871, Russia [January 8, 1999; 64 FR 2935, January 
19, 1999].
10. The Scientific Research and Design Institute of Power 
Technology, aka NIKIET, Research and Development Institute of Power 
Engineering [RDIPE], and ENTEK, including at 101000, P.O. Box 788, 
Moscow, Russia [January 8, 1999; 64 FR 2935, January 19, 1999].

    Dated: February 1, 1999.
R. Richard Newcomb,
Director, Office of Foreign Assets Control.
    Approved: February 9, 1999.
Elisabeth A. Bresee,
Assistant Secretary (Enforcement), Department of the Treasury.
[FR Doc. 99-4328 Filed 2-18-99; 11:37 am]
BILLING CODE 4810-25-F