[Federal Register Volume 70, Number 43 (Monday, March 7, 2005)]
[Rules and Regulations]
[Pages 10865-10868]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-4325]


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DEPARTMENT OF COMMERCE

Bureau of Industry and Security

15 CFR Part 744

[Docket No. 041222360-4360-01]
RIN 0694-AD24


Licensing Policy for Entities Sanctioned Under Specified 
Statutes; License Requirement for Certain Sanctioned Entities; and 
Imposition of License Requirement for Tula Instrument Design Bureau

AGENCY: Bureau of Industry and Security, Commerce.

ACTION: Interim final rule with request for comments.

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SUMMARY: This rule states BIS's licensing policy regarding transactions 
involving entities sanctioned by the State Department under three 
specified statutes, imposes a new license requirement for certain 
entities sanctioned by the State Department, and identifies one 
specific entity subject to this new license requirement, Tula 
Instrument Design Bureau of Russia.

DATES: This rule is effective March 7, 2005. Comments must be received 
by May 6, 2005.

ADDRESSES: Comments may be submitted by e-mail to [email protected], by 
fax at (202) 482-3355, or on paper to Regulatory Policy Division, 
Office of Exporter Services, Bureau of Industry and Security, Room 
H2705, U.S. Department of Commerce, 14th Street and Pennsylvania 
Avenue, NW., Washington, DC 20230. Refer to Regulatory Identification 
Number (RIN) 0694-AD24 in all comments. Comments on the information 
collection should also be sent to David Rostker, Office of Management 
and Budget Desk Officer, by e-mail at [email protected], or by 
fax to (202) 395-7285. Refer to Regulatory Identification Number (RIN) 
0694-AD24 in all comments.

FOR FURTHER INFORMATION CONTACT: William Arvin, Regulatory Policy 
Division, Office of Exporter Services at [email protected] or (202) 
482-2440.

SUPPLEMENTARY INFORMATION: Several statutes authorize or require the 
United States Government to impose export sanctions on entities if such 
entities have engaged in activities that contribute to the 
proliferation of weapons of mass destruction or are otherwise contrary 
to the foreign policy interests of the United States. This rule sets 
forth BIS's licensing policy for entities subject to sanctions imposed 
by the State Department under the Iran-Iraq Arms Nonproliferation Act 
of 1992 (Pub. L. 102-484), the Iran Nonproliferation Act of 2000 (Pub. 
L. 107-178) and section 11B(b)(1) of the Export Administration Act of 
1979 (also known as the Missile Technology Control Act of 1990). This 
rule also imposes a new license requirement for certain entities 
sanctioned by the State Department, and identifies one specific entity, 
Tula Instrument Design Bureau of Russia, subject to this new license 
requirement.

Licensing Policy for Transactions Involving Sanctioned Entities

    This rule amends the Export Administration Regulations (EAR) by 
adding new Sec.  744.19 to set forth explicitly BIS's licensing policy 
regarding entities sanctioned by the State Department under the 
authority of three statutes. Specifically, new Sec.  744.19 provides 
that BIS's policy is to deny any export or reexport license application 
if the applicant, other party authorized to receive the license, 
purchaser, intermediate consignee, ultimate consignee, or end-user is 
subject to: (1) A sanction issued pursuant to the Iran-Iraq Arms 
Nonproliferation Act of 1992 (Pub. L. 102-484) that prohibits the 
issuance of any license for any export by or to the sanctioned person 
or, (2) a sanction issued pursuant to the Iran Nonproliferation Act of 
2000 (Pub. L. 107-178) that prohibits the granting of a license for the 
transfer to foreign persons of items, the export of which is controlled 
under the Export Administration Regulations, or (3) a sanction issued 
pursuant to section 11B(b)(1)(B)(ii) of the Export Administration Act 
of 1979, as amended (also known as the Missile Technology Control Act 
of 1990), that prohibits the issuance of new licenses for exports to 
the sanctioned entity of items controlled pursuant to the Export 
Administration Act of 1979. In addition, Sec.  744.19 sets forth BIS's 
policy to deny any export or reexport application for items listed on 
the Commerce Control List with missile technology (MT) listed as a 
reason for control if any entity subject to a sanction issued pursuant 
to section 11B(b)(1)(B)(i) of the Export Administration Act of 1979, as 
amended, is a party to the transaction. Section 11B(b)(1)(B)(i) 
prohibits the issuance of new individual licenses for exports to the 
sanctioned entity of MTCR annex equipment or technology controlled 
pursuant to the Export Administration Act of 1979.
    The State Department publishes notices of the imposition of 
sanctions under these three statutes in the Federal Register. Because 
they do not involve the imposition of any new license requirements, the 
sanctions do not require amendment of the EAR and, prior to publication 
of this rule, were not incorporated into or otherwise referenced in the 
EAR. The sanctions imposed under the three statutes, however, prescribe 
the licensing policy that BIS must apply to applications that involve 
the transfer of certain items to, and in the case of the Iran-Iraq Arms 
Nonproliferation Act of 1992 by, the sanctioned entity. New Sec.  
744.19 provides a reference to these sanctions in the EAR and also sets 
forth BIS's policy that a license application is subject to a general 
policy of denial if a sanctioned entity is listed as any party to the 
transaction, including the purchaser or intermediate consignee, on the 
license application.

New License Requirement

    This rule adds new Sec.  744.20 to the EAR to provide that BIS may 
impose, as new foreign policy controls, license requirements on exports 
and reexports of items subject to the EAR to entities sanctioned by the 
State Department. Such license requirements are in addition to those 
imposed by other provisions of the EAR. Decisions to impose such 
license requirements will be made on a case-by-case basis. In 
determining whether to impose license requirements pursuant to Sec.  
744.20, BIS will consider the nature of the action that led to the 
State Department sanction and whether, because of that action, such 
sanctioned parties would not be reliable parties to export or reexport 
transactions subject to the EAR.

[[Page 10866]]

    License requirements imposed pursuant to Sec.  744.20 are foreign 
policy controls imposed pursuant to the provisions of Sec.  6 of the 
Export Administration Act of 1979. License requirements pursuant to 
Sec.  744.20 will be imposed by adding the sanctioned entity to the 
Entity List (Supplement No. 4 to part 744). The Entity List entry will 
also refer to Sec.  744.20, state the license requirements that apply 
to the entity, what license exceptions, if any, are available, and the 
licensing policy that applies to the entity.

Addition of an Entity to the Entity List Pursuant to New Sec.  744.20

    This rule imposes a license requirement under new Sec.  744.20 for 
exports or reexports to Tula Instrument Design Bureau (all locations 
including at Tula 300001, Russia) of the government of the Russian 
Federation (Tula) for all items subject to the EAR having a 
classification other than EAR99, prohibits use of any License Exception 
for such exports or reexports, and imposes a general policy of denial 
for all license applications to export or reexport to Tula. The rule 
adds Tula to the Entity List (Supplement No. 4 to part 744 of the EAR).
    On April 21, 1999, the State Department found, inter alia, that 
Tula was a Government of Russia entity that was specifically involved 
in the transfer of lethal military equipment to a country determined by 
the Secretary of State to be a state sponsor of terrorism. Because of 
that finding, the State Department determined that ``the policy of the 
United States Government [is] to deny U.S. Government Assistance to 
[Tula]'' (see 64 FR 23148, April 29, 1999). BIS is imposing this 
license requirement, prohibition on use of license exceptions, and 
policy of denial, to further the foreign policy interest of the United 
States in deterring the transfer of lethal military equipment to state 
sponsors of terrorism.
    This action is a new foreign policy control imposed pursuant to the 
requirements of Sec.  6 of the Export Administration Act and requires a 
report to Congress. The report was delivered to Congress on February 
25, 2005.
    Although the Export Administration Act of 1979 (EAA), as amended, 
expired on August 20, 2001, Executive Order 13222 of August 17, 2001 (3 
CFR, 2001 Comp., p. 783 (2002)) as extended by the Notice of August 6, 
2004, 69 FR 48763 (August 10, 2004), continues the EAR in effect under 
the International Emergency Economic Powers Act (IEEPA).

Savings Clause

    Exports and reexports that did not require a license or that were 
eligible for a License Exception prior to publication of this rule and 
for which this rule imposes a new license requirement or removes that 
License Exception availability may be made without a license or under 
that License Exception if the items being exported or reexported were 
on dock for loading, on lighter, laden aboard an exporting carrier, or 
en route aboard a carrier to a port of export pursuant to actual orders 
for export or reexport on or before March 22, 2005, and exported or 
reexported on or before April 6, 2005. Any such exports or reexports 
not meeting those deadlines require a license in accordance with this 
rule.

Rulemaking Requirements

    1. This rule has been determined not to be significant for purposes 
of Executive Order 12866.
    2. Notwithstanding any other provision of law, no person is 
required to respond to nor be subject to a penalty for failure to 
comply with a collection of information, subject to the requirements of 
the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.) (PRA), 
unless that collection of information displays a currently valid Office 
of Management and Budget (OMB) Control Number. This regulation involves 
collections previously approved by the OMB under control numbers 0694-
0088, ``Multi-Purpose Application,'' which carries a burden hour 
estimate of 58 minutes to prepare and submit form BIS-748. 
Miscellaneous and recordkeeping activities account for 12 minutes per 
submission. Burden hours associated with the Paperwork Reduction Act 
and Office and Management and Budget control number 0694-0088 are not 
impacted by this regulation. Send comments regarding these burden 
estimates or any other aspect of these collections of information, 
including suggestions for reducing the burden, to David Rostker, OMB 
Desk Officer, by e-mail at [email protected] or by fax to 
(202) 395-7285; and to the Regulatory Policy Division, Bureau of 
Industry and Security, Department of Commerce, P.O. Box 273, 
Washington, DC 20044.
    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. However, BIS is issuing this rule in 
interim final form with a request for comments.

Request for Comments

    BIS is seeking public comments on this interim final rule. The 
period for submission of comments will close May 6, 2005. BIS will 
consider all comments received on or before that date in developing any 
final rule. Comments received after that date will be considered if 
possible, but their consideration cannot be assured. BIS 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. BIS will return such 
comments and materials to the persons submitting the comments and will 
not consider them in the development of the final rule. All public 
comments on this proposed rule must be in writing (including fax or e-
mail) and will be a matter of public record, available for public 
inspection and copying. The Office of Administration, Bureau of 
Industry and Security, U.S. Department of Commerce, displays these 
public comments on BIS's Freedom of Information Act (FOIA) Web site at 
http://www.bis.doc.gov/foia. This office does not maintain a separate 
public inspection facility. If you have technical difficulties 
accessing this Web site, please call BIS's Office of Administration at 
(202) 482-0637 for assistance.

List of Subjects in 15 CFR Part 744

    Exports, Reporting and recordkeeping requirements, Terrorism.

0
For the reasons set forth in the preamble, part 744 of the Export 
Administration Regulations (15 CFR parts 730-799) is amended as 
follows:

PART 744--[AMENDED]

0
1. The authority citation for part 744 continues to read as follows:


[[Page 10867]]


    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; Sec. 901-911, Pub. L. 106-
387; Sec. 221, Pub. L. 107-56; 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 6, 2004, 69 
FR 48763 (August 10, 2004); Notice of November 4, 2004, 69 FR 64637 
(November 8, 2004).

0
2. In Sec.  744.1, add two sentences immediately following the eighth 
sentence in paragraph (a)(1) and revise the third sentence of paragraph 
(c) to read as follows:


Sec.  744.1  General provisions.

    (a)(1) Introduction. * * * Section 744.19 sets forth BIS's 
licensing policy for applications for exports or reexports when a party 
to the transaction is an entity that has been sanctioned pursuant to 
any of three specified statutes that require certain license 
applications to be denied. Section 744.20 requires a license, to the 
extent specified in Supplement No. 4 to this part, for exports and 
reexports of items subject to the EAR destined to certain sanctioned 
entities listed in Supplement No. 4 to this part. * * *
* * * * *
    (c) * * * No License Exceptions are available for exports and 
reexports to listed entities of specified items, except License 
Exceptions for items listed in Sec.  740.2(a)(5) of the EAR destined to 
listed Indian or Pakistani entities to ensure the safety of civil 
aviation and safe operation of commercial passenger aircraft, and in 
the case of entities added to the Entity List pursuant to Sec.  744.20, 
to the extent specified on the Entity List.

0
3. In part 744, add Sec.  744.19 to read as follows:


Sec.  744.19  Licensing policy regarding persons sanctioned pursuant to 
specified statutes.

    Notwithstanding any other licensing policy elsewhere in the EAR, 
BIS will deny any export or reexport license application if the 
applicant, other party authorized to receive a license, purchaser, 
intermediate consignee, ultimate consignee, or end-user is subject to 
one or more of the sanctions described in paragraphs (a), (b), and (c) 
of this section and will deny any export or reexport license 
application for an item listed on the Commerce Control List with a 
reason for control of MT if such party is subject to a sanction 
described in paragraph (d) of this section.
    (a) A sanction issued pursuant to the Iran-Iraq Arms 
Nonproliferation Act of 1992 (Public Law 102-484) that prohibits the 
issuance of any license to or by the sanctioned entity.
    (b) A sanction issued pursuant to the Iran Nonproliferation Act of 
2000 (Public Law 106-178) that prohibits the granting of a license for 
the transfer to foreign entities of items, the export of which is 
controlled under the Export Administration Act of 1979 or the Export 
Administration Regulations.
    (c) A sanction issued pursuant to section 11B(b)(1)(B)(i) of the 
Export Administration Act of 1979, as amended, and as carried out by 
Executive Order 13222 of August 17, 2001, that prohibits the issuance 
of new licenses for exports to the sanctioned entity of items 
controlled pursuant to the Export Administration Act of 1979.
    (d) A sanction issued pursuant to section 11B(b)(1)(B)(ii) of the 
Export Administration Act of 1979, as amended (Missile Technology 
Control Act of 1990), and as carried out by an Executive Order 13222 of 
August 17, 2001, that prohibits the issuance of new licenses for 
exports to the sanctioned entity of MTCR Annex equipment or technology 
controlled pursuant to the Export Administration Act of 1979.

0
4. In part 744, add Sec.  744.20 to read as follows:


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

    BIS may impose, as foreign policy controls, export and reexport 
license requirements and set licensing policy with respect to certain 
entities that have been sanctioned by the State Department. Such 
license requirements and policy are in addition to those imposed 
elsewhere in the EAR. License requirements and licensing policy may be 
imposed pursuant to this section even when the sanction and the legal 
authority under which the State Department imposed the sanction do not 
require or authorize the imposition of any license requirement or 
licensing policy. License requirements and licensing policy will be 
imposed pursuant to this section by adding an entity to the Entity List 
in accordance with paragraphs (a), (b), and (c) of this section.
    (a) General requirement. Certain entities that have been sanctioned 
by the State Department are listed in Supplement No. 4 to this part 
(the Entity List) with a reference to this section. A license is 
required, to the extent specified on the Entity List, to export or 
reexport any item to such entities.
    (b) License exceptions. No license exception may be used to export 
or reexport to such entities unless specifically authorized on the 
Entity List.
    (c) Licensing policy. Applications to export or reexport to such 
entities will be reviewed according to the licensing policy set forth 
on the Entity List.

0
5. In Supplement No. 4 to part 744 add a new entry for the Tula 
Instrument Design Bureau under Russia, immediately following the entry 
for Moscow Aviation Institute as follows:

                                   Supplement No. 4 to Part 744.--Entity List
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                                                            License         License review     Federal Register
             Country                    Entity            requirement           policy             citation
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                                                  * * * * * * *
                                  Tula Instrument     All items subject   Presumption of      [F. Reg.
                                   Design Bureau       to the EAR having   Denial.             Citation], 03/07/
                                   (all locations,     a classification                        05.
                                   including at Tula   other than EAR99;
                                   300001, Russia)     no License
                                   (Sec.   744.20 of   Exceptions
                                   the EAR).           available.
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[[Page 10868]]

    Dated: March 2, 2005.
Matthew S. Borman,
Deputy Assistant Secretary for Export Administration.
[FR Doc. 05-4325 Filed 3-4-05; 8:45 am]
BILLING CODE 3510-33-P